Software Sentinel

New software type halts EDI scams

Unauthorized deductions retailers take during purchasing have long been the bane of consumer goods manufacturers. Practices such as applying discounts after the expiration date can cost manufacturers 5 to 10 percent of their sales revenue.

Dealing with the problem can be a thorny issue, partly because such deductions aren't always blatant or even deliberate. Likewise, some transactions may be executed before changes in policies and cost are communicated to all corners of a business. "It's a matter of aligning your business execution with your corporate objectives," says Edge Dynamics CEO John McGrory. "If you're out of alignment, that's going to cost you money."

Launched earlier this year, Edge Dynamics is developing an entirely new category of business software to help manufacturers identify and eliminate such unauthorized transactions. Dubbed "business operations compliance," the category consists of firewalls and other tools that monitor incoming electronic data interchange and XML-based transactions for trends and inconsistencies. The findings are compared against a company's business policies and, if deemed unacceptable, can trigger alerts that are then sent to the appropriate person. Additionally, the system can automatically place orders on hold or even cancel them outright.

Joshua Greenbaum, principal of Enterprise Applications Consulting, believes the system offers a unique approach to enforcing policies in the supply chain. "You're looking at taking policies, terms, and conditions and enforcing them in real time," he says. "That's not really the same as what analytic software does."

In addition to hindering unauthorized transactions, Edge Dynamics's solutions can be used to identify other potentially harmful trends, such as inventory stockpiling and miscounted orders. McGrory notes, though, that the tools aren't a replacement for existing business analysts. Rather, he sees the software as a way to help existing analysts enforce policies and reduce excess spending. "It's always hard to keep policy enforcement consistent across people and departments. This consolidates expert knowledge."

In an economy that has companies scrambling to reduce unnecessary costs, business operations compliance may prove to be a handy investment. "You can't just find new customers right now; you have to take what you've got and make it more efficient," says Greenbaum. "This is the kind of product that will help companies weather the economic storm."

— Amit Asaravala

Amit Asaravala is an independent journalist based in San Francisco.

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