Geoffrey Bock, an analyst with the Patricia Seybold Group, urges retailers to give small suppliers basic training on what to expect from an online supply chain, which online forms they'll use and what kinds of follow-up communications to expect after an invoice or electronic payment. Bock also recommends that merchants supply ongoing operational support, even if this means making IT-savvy customer service representatives available. From the suppliers' perspective, a simple lack of know-how is keeping many small firms from linking to their big retail customers via XML or EDI, and small and midsize suppliers are finding that such links often require them to revamp their entire businesses. For example, most retailers want visibility into inventory levels and the flow of goods within supplier operations, but many small suppliers lack inventory management systems that can provide that data in any form. Some 44 percent of U.S. businesses with fewer than 100 employees don't even have Internet access in their offices, and an additional 37 percent don't operate a Web site, he noted.
Retail experts agree that Web links between retailers and suppliers speed up the order process.
But that link alone isn't enough. The result can be a supply chain meltdown. Cultural hurdles also can be difficult to overcome. Most small suppliers, especially those with positive cash flow, figure that if their procedures aren't broken, they shouldn't fix them. The typical large retailer lacks electronic links to about 80 percent of its suppliers, which combined account for around 20 percent of inventory, said Seybold's Bock.