In previous blog posts, we have addressed the evolution of EDI and its 50-year history. (EDI Enters its 4th Age: the Managed Services Age Part 1 and EDI Enters its 4th Age: the Managed Services Age Part 2).
EDI (electronic data interchange) and B2Bi (business to business Integration) are complex data collaboration standards that move information between thousands of channels, generating millions of data points that require consistent, proactive monitoring, and maintenance.
Come 2020, we will be immersed in this data stream. The question is: will your organization be propelled forward in the rush of data? Or will you drown in a flood of information?
B2B integration done correctly is a chance for organizations to cut costs without reinventing the wheel. And by 2020 and beyond, many of these organizations will have taken advantage of the opportunity to do so.
Five Supply Chain Trends of the Next Decade
1. Expand Consumer Net by Collaborating on a Global Scale
According to the
International Trade Administration, less than one percent of America’s 30 million companies export goods– a percentage that is significantly lower than all other developed countries. And of U.S. companies that do export goods, 58 percent export to only one country.
These stats paint a clear picture of one change that organizations must make to compete in the global market. Collaboration with business partners; going it alone won’t be an option.
For buyers to properly compensate suppliers and for suppliers to properly meet the evolving needs of those buyers, all organizations will have to automate processes electronically.
According to a study conducted by the University of Tennessee:
Suppliers captured a 25% savings increase by processing orders electronically and 20% savings by processing invoices electronically rather than non-electronically.
Suppliers using Business to business integration as a managed service processed invoices five days faster.
By implementing an automated supply chain process, buyers can pay suppliers quicker than ever before avoiding potential supply chain disruptions. Instead of taking weeks- sometime months- to manually review invoices, buyers can pull invoices directly into their accounting system and automatically see that they received their shipment as expected.
For suppliers, supply chain automation makes it easier to comply with hundreds of different buyer standards, which greatly reduces the risk of incurring penalties, such as chargebacks, for noncompliance.
2. Embrace the Cloud
The cloud wasn’t born yesterday, but there is still much progress to be made toward codifying it as a universal business practice in 2016.
To date, 64% of DCs (distribution centers) have a WMS (warehouse management system), but only 8% are cloud-based.
By 2020, more organizations will have made the transition to a cloud-based infrastructure. After all, cash is king, and the cloud dramatically alters how much organizations have in the bank.
For example, when a large consumer product goods manufacturer moved from a direct sales force to a broker model, its brokers were incentivized to pursue large clients. Sales and revenue skyrocketed, but so did the buyer demands, now that their buyers were large retailers- such as Walmart and Academy Sports.
The growing pool of retailers selling their products each required specific EDI compliance capabilities to distribute those products to thousands of distribution points and millions of customers around the world. By expanding and embracing the power of the cloud, they were able to scale resources to meet buyer demands and expand exponentially without missing a beat.
3. Enable Better Data Capabilities for Proactive Management
When organizations work together, sustaining the forward momentum can be difficult. They have to look at collaboration as a journey, not a destination. We might call this the “Upward Data Spiral”: the ubiquitous data monitoring of supply chains and continual improvement of how you do business.
As more data enters an organization, decision makers improve their visibility, forecasting capabilities, and ERP (enterprise resource planning). It becomes a predictable way to manage something unpredictable. For instance, online shopping has made the demand of products increasingly unpredictable, but with better visibility into data points, organizations can more easily manage how a product will reach the end consumer.
“About half of the organizations surveyed moved to B2Bi managed services to comply with a customer’s request rather than as a proactive measure.” University of Tennessee Study
4. Move Towards Omni-Channel Capabilities
In 2016, major suppliers have inventory sitting in storage and distribution centers across multiple divisions in varying locations. To enable consumers to view and purchase products across a connected interface of online, mobile, in-store, and other channels, organizations must seamlessly manage their inventory across a complex array of global distribution points.
Omni-channel also offers new business opportunities in the form of expanded distribution and virtual shipping. It is often impossible for stores to hold the inventory of 100% of their buyers, 100% of the time. Yet by leveraging an omni-channel strategy, organizations can expand the number of SKUs (stock-keeping units) to create an “endless aisle” for customers with various tastes.
“Only 22% of organizations with B2Bi third party vendors have implemented the usage of an ASN, a rule that is becoming more commonplace with large buyers.” University of Tennessee study
For example, dropship suppliers must not only provide retailers with private branded packing slips, but also continually update their inventory, making what’s in stock at the moment available to the retailer- through B2B Integration.
These processes provide actionable insight, protect the buyer’s brand, and ensures customer satisfaction. Omni-channel allows suppliers to have more distribution points, buyers to offer more unique products, and consumers to get the products they want when, where, and how they prefer to receive them.
5. Enlist B2Bi Third Party Vendors to Address Rules and Standards
Given the ever-evolving nature of standards and business rules and the variety of standards across varying industries such as ANSI X12, EDIFACT, TRADACOM, PIDIX, and a variety of XML standards, organizations in 2020 and beyond will be more likely than ever to partner with a specialist with the foresight, and experience to manage and maintain compliance for their customers on both sides of the buyer-supplier relationship.
The collaborative nature of B2Bi through third party specialists establishes a new paradigm for buyers, suppliers, and consumers alike.
Organizations in 2016 have already reaped the benefits of connecting with third party vendors to help them manage these complexities.
The University of Tennessee study found:
94% saw significant improvement in their electronic connectivity capabilities when using B2Bi Managed Services
68% reported that their clients said they were easier to do business with after implementing B2Bi Managed Services
69% said they could respond more quickly to changes in their clients’ environments after implementing B2Bi Managed Services
Yet, there is still plenty of room for improvement: only 30% of the organizations surveyed are using B2Bi managed services- a good start, but far from a majority.
The future collision of supply chain-management and data-ubiquity is already well under way; it’s an upward spiral seized by the most successful retail chains and their suppliers; a collaborative success story facilitated by 3rd party B2Bi firms.
About the Author
Founding member and executive at Dicentral, a global B2B integration company with over 20 years of solving complex supply chain integration problems. I am passionate about helping people in the retail, automotive and healthcare industries achieve revenue growth through a better understanding of the world of connected commerce. Frequently published, sought after speaker and host of “The Connected Show”, a video blog that connects our viewers to the people and news that influence today’s integrated supply chains.More Content by Robert Salmon