Posts Tagged ‘B2B’

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Supply Chain Integration – Are We There Yet?

Monday, August 16th, 2010

Surprisingly supply chains are not there yet in terms of supply chain integration. In a posting from SupplyChainDigest earlier this year, Strategies for Integrating Supply Chain Planning and Execution, a key takeaway from a survey of 400 supply chain managers was that supply chain integration is a major problem. The survey sited that only 10% of companies said they currently had a strong/high level of integration between planning and execution across their supply chains.



The Problem With Supply Chain Integration. The key challenge with supply chain integration is it is hard to define and get your hands around it. It is easy to define a car or a flat-screen TV, but what is supply chain integration? It is that word “integration” that embodies all the challenges with supply chain integration. A definition of integration is “the act of combining or adding parts to make a unified whole”. This is the crux of the problem. A supply chain is a bunch of distinct activities and influences that multiple businesses attempt to manage in order for it to work as an unified whole.

The Origins of Integrating Supply Chains. In the ’80s people started to use the term supply chain management and supply chains “to express the need to integrate the key business processes, from end user through original suppliers” (see ref. 5 from Wikipedia/Supply_chain). At this time businesses were starting to use computers within their supply chains to automate administrative tasks. As a by-product of automating supply chain tasks and storing electronic records, businesses began to exchange electronic documents between their trading partners. This level of supply chain integration and information exchange continues today.

From Supply Chains to Supply Networks. Thanks to information technology many businesses now have complex supply chain networks where they connect directly and indirectly with many suppliers and 3rd parties to bring goods to market. This phenomenon has increased the importance and the complexity of supply chain integration. See posting, From Supply Chains to Supply Chain Networks., Many supply chain “links” now have dependencies to far-distant links in a network. These dependencies and risks may not be known to many businesses in the supply chain network. Supply chain information flows between direct trading partners, but what about the rest of the supply chain network?

New Factors Affecting Supply Chain Integration. As our supply chains become more complex, “the act of combining or adding parts to make a unified whole” (integration) of our supply chains continue to be elusive. Coupled with this, our world is changing. Globalization continues and decision-making cycles continue to reduce or even disappear thanks to information technology and the abundance of near-real-time data. Lastly, energy costs are becoming more volatile and global resources are shrinking in comparison to demand.

Next Steps In Supply Chain Integration. Supply chain integration is more and more a business problem. For example:

    Cross-Functional Business Integration. See SupplyChainShaman posting, Make Money. Turn your Supply Chain on its Ear. Go HORIZONTAL!. This article advocates focusing supply chain integration on cross-functional processes such as margin management, contract management, demand shaping programs, working capital management, Sales and Operations Planning (S&OP), supplier development, and new product launch.

  • Transportation Functional Integration. LogisticsViewPoints posting, Differing Viewpoints on the Need for a Holistic TMS advocates breaking up transportation management silos such inbound and outbound; domestic and international; private fleet and common carriers.
  • Supply Chain Integration Technology. As for a technology solution, I would tend to not believe the technology marketers that there is a technical “silver bullet” right around the corner to solve all supply chain integration problems. The technology is here today to integrate supply chains. Businesses just need to provide a flexible, viable business model that can address their evolving and ever changing supply chain networks. Technology can then be applied in a cost-effect manner to meet the business need of supply chain integration.

See postings: B2B eCommerce Resources | B2B eComerce & EDI Trends for more information.

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The Benefits of Electronic Data Interchange Software

Monday, June 28th, 2010

When businesses first start using Electronic Data Interchange (EDI), they usually do not buy EDI software. It is usually cheaper for businesses that are just starting out with EDI to use a Value Added Network (VAN) or an EDI services company. Businesses usually start looking at EDI software as they start adding more trading partners and their EDI transaction volume starts going up. At some point it starts to be more cost-effective to buy EDI software rather than continue to pay high transactions fees to VANs and EDI service providers.

What is EDI Software? EDI software is used to import and export electronic business documents in an industry-standard data format from one business’ computer system to another business’ system using data communications. EDI software is used by a business’ internal IT staff. More and more EDI software is being offered as a Software-as-a-Service (SaaS).

What are the Benefits of Using EDI Software Versus Using a EDI Service Provider?

For medium and large businesses, there are many benefits to buying EDI software. Benefits include:

  • Fixed Cost Versus Transactional Costs. EDI software offers a way to reduce and stabilize EDI costs if your Business-To-Business (B2B) transaction volume is growing and you are continually adding trading partners.
  • Strengthen Ties With Customers and Suppliers. If you use EDI software versus using a third-party provider, you will develop a closer relationship with your business customers and your suppliers. For many large businesses, more business transactions flow through EDI interfaces than through web sites, e-mail, telephone, face-to-face, or regular mail.
  • Gain A Strategic Capability. As more business transactions convert from paper to electronic, B2B integration and EDI is becoming a core business function for many businesses.

See postings: B2B eCommerce Resources | B2B eComerce & EDI Trends for more information.

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Selecting the Right EDI Company

Monday, June 14th, 2010

There are many different types of Electronic Data Interchange (EDI) companies that provide a variety of products and services to help business exchange Business-to-Business (B2B) electronic documents with other businesses. Most businesses have a need for a third-party EDI company to help them with their B2B integration. The challenge is select the right type of EDI company that has the right mix of EDI offerings that meet a given business’ EDI needs at a competitive price.


Types of EDI Companies

Value Added Networks (VAN). Core VAN services include EDI translation services, secure data communications, and mailboxing services. Many VANs support “hub-and-spoke” operations where a major manufacturer or retailer uses the VAN to connect to thousands of their suppliers. Most VANs are also full-service EDI providers that provide a full range of B2B data integration services as well as sell EDI-related software. Example VANs: GSX, Sterling Commerce

B2B Portals. These EDI companies are similar to VANs, but cater to a specific industry or supply chain service such as reverse auctions. B2B portals are more community oriented servicing hundreds or thousands of companies that interconnect and collaborate with each other on a regular basis. Example B2B Portals: GT Nexus | Ariba Network.

EDI Software Companies. These companies provide prepackage software or Software as a Service (SaaS). With EDI software companies, they sell software and the business customer operates the EDI software to include EDI translation, secure communications, and possibly mailboxing services. Many of the larger EDI software companies also provide managed services (VAN services). Example EDI Software Companies: Softshare | NuBridges.

EDI Service Providers. EDI service providers usually cater to small and medium businesses to provide EDI translation, connectivity, and EDI supplier compliance for a given industry as well as a specific “Big Box” retailer or manufacturer. EDI service providers also provide contract EDI staff for larger businesses. Example EDI Service Providers: Best to get a referral from like trading partner in your industry or local area.

B2B Integration Companies. This is an emerging market where B2B integration companies are provide EDI tools, connectors, APIs, and services to IT shops to integrate the exchange and sharing of businesses information across multiple businesses. Example B2B Integration Companies: ECGridOS | HubSpan | E2Open


Selecting the Right EDI Company.

Businesses need EDI because they need to collaborate with other businesses to exchange electronic business documents (ex. purchase orders, invoices) and other information. Depending on the level of B2B collaboration will determine what type of EDI company that a business should use. Businesses can generally be classified into one of four types of B2B collaboration models that in turn drives their B2B integration and EDI needs. Types of business collaboration and their EDI needs are as follows:

  • Traditional – Independent, Uncertain B2B Relationships. Examples of this is any type of auction like eBay auction, reverse auctions, and commodity-type markets as well as new businesses that desire to leverage EDI technology. This level of B2B collaboration have limited EDi needs. Normally, these companies will use an industry specific B2B portal or use a niche or local EDI service provider to assist them on occasion.
  • Opportunistic – Dependent, Uncertain B2B Relationships. Example of this is a seasonal supplier or a supplier that is attempting to establish a long-term relationship with a retailer or manufacturer. Normally, these companies will use a third party provider that specializes in their industry. Their larger customers will determine if they use a VAN or directly connect to them. Their large customers may or may not provide EDI software and assistance to exchange electronic documents.



  • Tactical Collaboration – Independent, Certain B2B Relationships. Example of this is when two businesses are regularly doing businesses together, but at least one of the businesses has not realize the extent of the relationship. Medium size to large companies may elect to buy EDI software and hire their own EDI staff. Other companies may continue to outsource their EDI needs to a VAN or use a EDI services companies. Select industries will rely on a B2B portal. This level of B2B collaboration can be very expensive for some businesses if they are not proactively looking for ways to reduce costs and identify the right EDI solution for their business
  • Strategic Collaboration – Dependent, Certain B2B Relationships. Many International and large businesses as well as their suppliers seek this type of relationship. Normally, larger companies will have their own EDI shops, use EDI software, and do some level of EDI software development. Also, they will use VANs where required as well as B2B portals. In some cases, they may leverage B2B integration tools and services to gain a competitive advantages or possibly reduce costs.




See postings: The Relationship Between Business Collaboration and B2B Integration | B2B eCommerce Resources | B2B eComerce & EDI Trends for more information.

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