This paper discusses a research project to investigate how manufacturers and distributors have benefited over time from using the IDEA Connector – an electronic Master Data Management (MDM) platform – and the IDEA Exchange – an electronic data interchange (EDI) for exchanging eBusiness documents – enable trading partners across the electrical industry such as manufacturers and distributors to improve supply chains by lowering costs, reducing errors and providing accurate, up-to-date product information.
The primary motivation for implementing services such as IDEA Connector and IDEA Exchange was initially to improve operational efficiencies and increase the quality of service for transactions among trading partners and with end customers. The analysis showed that the IDEA Connector is the least costly and least error-prone method for sharing essential product data and that companies that moved ordering systems to IDEA Connector were able to lower costs by as much as 80 percent.
Because the IDEA Connector dramatically lowers ordering costs, the cost savings fall to the bottom line and directly increase profits. With manufacturers and distributors operating on razor-thin margins, strategic changes that reduce costs can have significant impacts on profitability. Survey data indicates that switching to the IDEA Connector can increase profits for a representative manufacturer by 20 percent, and by 37 percent for a representative distributor, just from cost savings in operations.
The economic value analysis model found that the availability of accurate, up-to-date product information can grow revenues and profits at a multiple of the investment required to implement the IDEA Connector and IDEA Exchange solutions. Even for smaller manufacturers and distributors, bottom-line financial benefits range from five times to over 10 times the investment. Further, the benefits may be even greater for larger organizations. The economic value model (EVM) will be described in this paper, in addition to estimates of financial costs and benefits for typical manufacturers and distributors who implement the solutions.
Read the full whitepaper from IDEA (PDF): The eBusiness and Economic Benefits of Data Synchronization