By Guido Haarmans, Vice President, NetSuite Developer Programs & Business Development

I recently had the opportunity to speak with B2BGateway’s CEO, Kevin Hoyle. B2BGateway is a Boston-based company that has been providing cloud-based EDI (Electronic Data Interchange) and ecommerce solutions to organizations around the world since 1999 and has been a valued partner of NetSuite since 2002. B2BGateway is a “Built for NetSuite” product and provides EDI and ecommerce integration to more than 300 NetSuite customers.

GH: Kevin, can you offer some insight into how IT, particularly EDI, is continuing to change and enhance the Wholesale Distribution (WD) industry?

KH: EDI has been around for a number of years and has evolved from simply receiving orders and sending invoices to a fully-integrated data supply chain suite. Advanced Shipping Notifications (ASNs 856), which were once the domain of the technologically advanced, are now commonplace. Inventory Inquiry (846) documents are commonly used to provide inventory info to retailers or ecommerce companies like Amazon. Through technology, many retailers never touch the goods sold. Warehouse Ship (940) orders tell the warehouse to ship goods to a certain location and the Ship Advice (945) tells how many were sent.

GH: Is EDI beating XML or will XML eventually make EDI obsolete?

KH: Years ago I thought that XML was going to overtake EDI, but that was not the case. XML is a means of disassembling data into independently tagged pieces that can be reassembled in a different format, which is very useful for EDI. Using XML, the alignment of external systems is made possible; in fact the core of B2BGateway relies on XML. NetSuite aligns business systems within the walls of the enterprise, while XML and EDI allow NetSuite users to align with external business systems.

So, is EDI beating XML? Not at all, EDI is successful due to the XML within it.

GH: We know that shrinking margins, increased competition, and technology are the top three hurdles that WD organizations have to overcome. Why is technology a hurdle?

KH: We both work in organizations where we see technological advancement as a positive change; however, some WDs look at technological advancement as a burden. Although many WDs have embraced technology, there is still a high percentage that have not. Embracing technology can be difficult due to the fear of change and the associated costs. However, some of the biggest costs in an organization are people. Although people are very important to organizations, if you have people doing things that technology should be doing, then you are wasting money. Can a computer call a customer and ask a question? Yes, but not very effectively. Can a person hand key an order into NetSuite? Yes, but not very effectively. Using technology and people appropriately will increase customer service and support and also increase efficiencies.

GH: Last year NetSuite published a paper detailing the results of a Wholesale Distribution survey. One of the top goals of WDs was better inventory management. What is your view on that and how can technology help improve inventory management?

KH: Improving inventory management increases profitability by reducing dead stock and increased turn rates. Improved inventory management reduces backorders and out-of-stock situations, which keeps customers satisfied and equates to increased sales.

Other technological tools like EDI can streamline the order fulfillment process. Not only will EDI optimize order entry, it is also used for Advanced Ship Notices (ASNs), invoicing, creation of shipping labels, Just-In-Time (JIT) inventory processing, and Vendor Managed Inventory (VMI).

GH: Do you see ecommerce playing a large part in the future of wholesale distribution?

KH: Yes. Many WDs are now selling directly to consumers through ecommerce and see it as an important driver for growth. The model ecommerce company relies on a virtual storefront to sell goods and the distributor to fulfill the orders. As such, it makes sense for the WDs to open their own virtual storefront in order to compete in this marketplace.

There are some big changes for the WDs, though; goods shipped from a WD would normally be packaged in dozens, grosses, or pallets. Now with ecommerce, direct-to-consumer packaging is often in quantities of one or two.

Further, ecommerce has substantially changed retail. In The Wall Street Journal, reporter Sarah Nasshauer describes that retail now has 13 to 20 different seasons. We know about Christmas and Halloween, but there are seasons such as Storage/Organization in January and Allergy Season in late spring, among others. WDs need technology to fulfill orders for these new seasons, and to better manage the rapidly changing inventories.

GH: We have seen the supply chain become global. Although we now see manufacturers “re-shoring,” a great number of organizations still outsource their manufacturing overseas. How is this affecting wholesale distribution?

KH: It all depends on where the particular WD fits within the supply chain. For example, B2Bgateway provides EDI services to a NetSuite customer who receives orders

for products. The products are manufactured by a sister company in Asia. So the EDI POs travel from the purchasing company to the NetSuite user and then to the sister company for manufacture. The sister company then sends out EDI documents to their supplier. When that process is completed, all of the documents have to travel in the opposite direction.

Wholesale distributors need to be technologically advanced enough to support this type of global data flow. Manufacturing is prevalent in Asia today because technology has made it possible.

GH: How can NetSuite and its partners work together to meet the needs of our wholesale distributors going forward?

KH: NetSuite is a great product for managing a wholesale distribution organization. NetSuite also has a great ecosystem of third-party add-ons like B2BGateway that can be found on the SuiteApp platform. By continuously improving and verifying these third-party applications through programs such as “Built for NetSuite,” NetSuite can assure their customers that they are getting the very best and latest in integrated cloud technology and market-leading solutions.

You can learn more about B2BGateway. Net or other SuiteApp partners by visiting SuiteApp.com