Important Considerations for Choosing a Solution that Your Partner Will Use
This article was originally published by Supply Chain Digest. View the article here.
For most manufacturers today, outsourcing has moved beyond the traditional supplier relationships to include downstream subcontractors, co-manufacturers and third-party distributors. And as discussed in our previous articles on Why ERP just doesn’t cut it and What’s missing in today’s supplier integration market, there are important considerations for choosing a solution that can provide visibility and data integration of the supply chain processes that are no longer managed in house.
Once you’ve crossed that hurdle, you need to actually deploy the solution to your partners…and get them to use it. Based on my experience working on integration projects with manufacturers from all verticals with all sorts of partners, there are four key factors that ensure partners can – and will – use your data integration solution.
1. They can do it their way.
When one of our customers set off to integrate nearly 200 third-party supply chain partners, they realized rather quickly that the level of technical capabilities differed vastly from partner to partner. Many of their partners were highly skilled at their supply chain function, but they did not have the systems or the technical capability to electronically communicate the results of their activities back to the customer. They were sharing data with spreadsheets sent via email or even fax! And this is not uncommon. A recent Supply Chain Digest survey sponsored by ACSIS found that 32% of manufacturers still rely on fax to communicate production status with partners. On the other end of the spectrum were partners that were accustomed to EDI and other B2B communication solutions and had applications set up to automatically transmit that information.
If you plan to integrate your entire supply network (and not just the larger, more technologically advanced ones), you need to be able to exchange data with your partners using the technology and capabilities they already have. Such connectivity options should include:
- Web portal
- Direct machine-to-machine communication
- Flat file or XML interfaces
- Excel spreadsheets
- EDI messages
When you can interact with partners in a manner they are already capable of, they won’t view the project as a source of additional costs and business disruptions. Your chance of success increases dramatically because partners can use the technology they already have.
2. Provide the tools necessary to accomplish the task, while minimizing the burden.
One example that I find relatable for almost all businesses is providing partners with the capability to print accurate, compliant shipping labels directly in their own warehouses. The efficiency and financial gains can be significant for both parties. From ensuring compliance with ever-changing regulatory standards to adhering to customer-specific requirements, labeling is both complex and critical.
However, at many manufacturers today, labeling is not fully integrated with supply chain data and processes – especially those that take place at third-party locations. By providing integration capability for label printing, you are not only providing additional value to your partners, but also ensuring accurate labeling and compliance (and avoiding noncompliance fines). Document printing is another example – when your customers receive a packaging slip with their delivery, it can have one look and feel, regardless of whether it was printed at your location or a third-party partner location.
3. Demonstrate measurable value for your partners.
As soon as your partners receive your first communication about the integration project, most of them will immediately think: What’s in it for me? You want to be able to address that question before they even ask. With bi-directional integration, the project won’t be all about you. Each of your partners will also gain the visibility and insight needed to better serve customers, manage inventory and plan activity.
The solution should provide complete visibility of upcoming requirements, such as receipts, shipments and production needs. This allows your partners to better plan their resources, making their operations more efficient and profitable.
Without visibility across your supply network, both you and your partners end up overproducing and overstocking. This can have a bullwhip effect on your entire supply chain. Let’s say the end customer increases an order by 10% – and then the distributor, warehouse and customer’s supply chain planning each increases the order by another 10% (because they don’t have visibility of what’s actually needed and what is already available), you end up producing 34% overstock. True supply and demand visibility reduces uncertainty, increases planning confidence and reduces safety buffers. And increasing inventory turns will have a dramatic impact on cash flow – for both you and your partners.
4.We are all in this together.
Finally, I want to stress that all partners of the network should be working together to satisfy end customers. A supply network either succeeds as a whole in delivering superior value to the end customer or it does not. Collaboration is critical in this team approach.
At the start of partner integration project, it’s easy to feel overwhelmed. Our survey also found that supply chain managers have been hesitant to break down the barriers to partner visibility, citing complexity as a key reason why they have been unable to electronically integrate with partners. But it doesn’t have to be difficult or complicated – as long as you have the right solution and approach – one that makes integration simple, seamless and provides value.
To learn more partner integration best practices, watch our videocast: A Benchmark Study on Supply Chain Visibility in an Outsourced World. The webinar features a case study on DuPont’s experience and lessons learned after integrating nearly 200 external supply chain partners.