More organizations are investing in business-to-business electronic integration (B2Bi) and are reaping the benefits of lower costs and higher efficiency, according to a new study released by the University of Tennessee’s Global Supply Chain Institute, in collaboration with B2B integration provider DiCentral.
The study, Transform Your Supply Chain with Collaboration, also finds that 96 percent of the organizations are linked electronically with at least one of their trading partners, but the average organization spends just over five percent of its IT budget on electronic connections. Electronic connections are expected to increase more than 20 percent over the next three years, and 69 percent of respondents expect to increase the number of customers they trade with electronically. Of the more than 200 organizations surveyed, 94 percent reported a significant improvement in their electronic connectivity capabilities and 68 percent said they were easier to do business with after using cloud-based B2Bi managed services.
Other key findings indicate that suppliers realized a 25 percent savings by processing orders electronically, and a 20 percent savings by processing invoices electronically. In addition, suppliers processed invoices 4.5 days faster with B2Bi managed services.
“Successfully collaborating with your business partners requires many things. But as we show in this white paper, technology plays a major role, a role that will only grow larger in the future” said Dr. Paul Dittmann, executive director of the Global Supply Chain Institute at the UT’s Haslam College of Business, in a statement.
More than 40% of those surveyed experienced improved efficiency in onboarding new trading partners when using B2Bi managed services.
The good news is that there are a number of commercially available technology solutions to enable collaboration in the supply chain. Examples cited in the study include standard Electronic Data Interchange (X12-EDI) and Extensible Markup Language (XML) formats to send information electronically, which have been available for years, collaboration software to process transactions such as orders, shipments/tracking and fulfillment, supply chain event management to send alerts, and Web-based EDI platforms. Benefits to suppliers range from getting paid faster and a speedier fulfillment process to meeting compliance requirements and higher accuracy in invoicing, order processing and fulfillment.
Robert Parker, group VP for IDC Manufacturing, Retail and Energy Insights, noted in a recent webinar that “digital transformation is not just a technology trend but it is at the center of the business strategies across all industries.” Many of the B2Bi tools reside in the cloud although adoption is still in its infancy for the supply chain. For example, the report cites a recent survey that found 64 percent of distribution centers using a warehouse management system (WMS) but only eight percent resided in the cloud. IDC believes cloud adoption in the supply chain will increases significantly over the next few years. The market researcher expects more than 50 percent of large enterprises, and more than 80 percent of those with advanced digital transformation strategies, will create and/or partner with cloud platforms to scale up their digital supply chains and distribution networks by 2018.
Key advantages of the cloud cited in the DiCentral report include lower implementation cost, no hardware to buy, faster time to payback, portability of facility moves, and automatic upgrades. But there are still several end-user concerns around security of information, response time or Internet downtime, and customization and interfacing with other systems. Organizations can use third-party providers to manage these IT resources.
Benefits often cited for using third-party providers include faster implementations, leveraging their IT talent, faster problem resolution, and eliminating the need to manage or invest in hardware or software upgrades. The study finds that 44 percent of organizations were able to improve IT services when they outsourced electronic connectivity with trading partners, and 69 percent said they were able to more efficiently respond to changes in their customers’ requirements. Nearly 50 percent said it helped them better execute projects to improve their supply chain by using B2Bi managed services.
If your organization doesn’t know where to start with its digital transformation, the report provides three key ways to help organizations implement B2Bi. It provides a framework for developing a collaboration strategy, self-evaluation to determine how well an organization is using technology to collaborate with suppliers and customers, and a checklist for selecting a third-party provider to manage electronic transactions.