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The Tactical View: What’s Missing in Today’s Supplier Integration Market

Posted by John DiPalo on July 08, 2016

Suppliers Need Tactical, Real-Time Information to Change or Improve Supply Chain Processes

This article was originally published by Supply Chain Digest. View the article here.

In the days of legacy tech and early ERP systems, Excel spreadsheets were a perfectly reasonable way for manufacturers to share data with suppliers and trading partners. Supply chains weren’t nearly as complex or dynamic as they are today and companies could rely on past experience and instinct to make decisions and take action on their supply chains.

Fast forward a few decades, and the supply chain looks very different. There’s a lot more to partner integration than connecting data from purchasing. Outsourcing has spread to include the make-to-ship processes and companies need downstream integration to gain visibility and control of their modern third-party network world.

Unfortunately, supply network communication methods are still 20 years behind. A recent Supply Chain Digest survey sponsored by Acsis found that 80% of manufacturers rely on email as their means of information reporting with supply chain partners – largely through spreadsheets – and 32% still use faxes.

So what’s not working with today’s common approaches to integrating partner data?

Traditional Integration Platforms

Long-established as solutions for managing demand and pre-production suppliers, traditional platforms are based on a hub-and-spoke architecture. Communications and data pass through a central hub, which transforms the data and loads it to the ERP system. Each partner has its own “spoke,” requiring a large financial and time investment to develop and deploy. The information then integrated into the ERP system is very high level and not always available in real time, making it difficult for companies to take action on product delays or complications in a timely manner.

Electronic Data Interchange (EDI)

In EDI, transactions must adhere to standardized document formats, requiring partners to conform to the dominant partner’s determined format. After a transaction occurs, a partner will electronically send a summary of the action to the dominant partner through a portal. This results in latent data at a macro level that doesn’t really provide true insight about what’s happening in the supply chain – when it’s actually happening. In addition, the time and resources required to implement EDI can be cost prohibitive for smaller partners or those without dedicated IT staff. So most dominant partners end up connecting to about half of their partners, missing out on visibility of what is going on in its smaller – but often just as critical – partners. Our survey found that nearly all respondents using EDI need to supplement with another means of integration, including spreadsheets, email and additional file-based integration systems.

Direct connect

In this last scenario, the dominant partner provides partners with access to its ERP system to input data directly in the system. This leaves the dominant partner (and its systems) open to security risks and typically results in excessive training and licensing costs. It is also impractical for manufacturers that need to onboard and offload new or seasonal partners easily.

While each of these options offers some level of visibility into downstream supply chain processes, what’s missing is the tactical, real-time information that essentially allows you to improve or correct those processes. Our survey found that the majority of respondents are dissatisfied with the level of accuracy, detail and speed of their partner network information. Here are six key partner integration must-haves, which will ensure you aren’t missing out on that actionable data:

  1. The solution shouldn’t take a lot of time or effort to deploy. Seasons change. Partners change. A lightweight solution that sits on top of your existing network and allows partners to exchange data using the technology and format of their choosing (from a web portal to automated data capture systems) enables you to implement and change very quickly – with limited impact to your business.
  2. Data is tightly integrated at a granular level in real or near real time. You can only reap the benefits of partner integration if you have the detailed information you need, when you actually need it, to act on delayed or problematic items and other supply chain issues.
  3. Your supply chain view should look the same across all types of partners in all locations regardless of the technology capabilities available to the individual partner.
  4. Interactions need to be bidirectional, so partners are not only able to share information, but also complete tasks, such as printing shipping labels and other shipping documents directly at their locations (and you can receive immediate notification of those actions).
  5. A cloud-based solution enables you and your partners to exchange data and collaborate securely, and in real time.
  6. Easy to use, task-oriented transactions can ease the deployment process and ensure seamless integration with ERP and Warehouse Management Systems.

While most manufacturers have been practicing upstream supplier integration for quite some time, they are really just scratching the surface of the benefits that can be realized from downstream partner integration. With the right solution, companies can gain real-time visibility of outsourced make-to-ship processes and product movements, without the security risks of direct connection or the costs and time-consuming training or onboarding of more complex integration solutions.

To discover more about the challenges and benefits of partner integration, watch our videocast: A Benchmark Study on Supplier Integration in an Outsourced World – Featuring Real World Experiences from DuPont, Honeywell and Acsis, Inc.