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. They are, after all, the suppliers' biggest customers. But to place orders, process invoices and gain visibility into small companies' production systems, merchants must understand that the process is more complex than setting up small firms with a secure extranet link and calling it a day.
Some retailers have it tougher than others.
Only about 50 of REI's 2,200 suppliers are EDI-enabled, said Matt Hyde, REI's vice president of online sales. Indeed, the crux of the supply chain problem lies not in the difference between retailers and suppliers, but between small companies and large ones. For instance, consumer goods giant Kimberly-Clark, a maker of everything from Kleenex tissues to surgical products, has found that some retailers and suppliers aren't ready for online supply chain communication. The company processes roughly 80 percent of its orders in the United States using traditional EDI, but many smaller customers and suppliers submit orders via phone or fax, said CIO Terry Assink. They still think there's going to be a huge system coming in.