Foundational Principles for Digital Transformation: Integrate Electronically with Trading Partners

July 24, 2019 Adrian Gonzalez

Getting your own house in order with regards to enabling greater collaboration between functional groups and moving up the IT sophistication curve is important but not enough. Companies in the HBM industry also need to drive alignment with their suppliers, customers, logistics service providers, and other external trading partners, as well as share data, documents, and other information with them in a timely and reliable manner.

Connecting electronically with hundreds (or even thousands) of trading partners in a cost-effective and timely manner has historically been a challenge, which is why a lot of companies have taken an 80/20 approach -- that is, they have connected electronically with only 20 percent of their trading partners that account for 80 percent of their transactions.

The HBM industry, however, is not even at the 20 percent level when it comes to trading partner connectivity. According to a survey of executives at the Command Alkon Leadership Roundtable in November 2017, email is the most common method used to exchange data with trading partners (61 percent of the responses), with phone calls and paper handoffs accounting for 13 percent, about the same as EDI.

That said, in a business environment where making smarter decisions faster is becoming more important than ever, and where the margin for error is getting smaller and smaller, the 80/20 rule to trading partner connectivity is quickly becoming obsolete — and a risk to future success and competitiveness.

Advancements in connectivity technology, including web services and APIs, are reducing the time and effort it takes to onboard trading partners, while mobile apps and devices are making it easier for users to capture and share data and information. In addition, leading companies are starting to recognize that the best connectivity platform moving forward is a Supply Chain Operating Network (SCON), which are the business equivalent of Facebook and LinkedIn.

SCONs bring together software applications, B2B connectivity, and social networking capabilities in a cloud environment, thus enabling communities of trading partners to communicate, collaborate, and execute business processes in more efficient, scalable, and innovative ways. Instead of creating and managing thousands of one-to-one connections with their trading partners, companies make a single connection to the SCON where their trading partners and thousands of other companies are also connected. SCONs also provide additional benefits related to supply chain visibility, business intelligence, and analytics, as described in more detail below.

Assessment Questions

  • What percent of your trading partners are you electronically connected with today?
  • What percent of your business transactions are driven by electronic communications?
  • What percent of your electronic connections are via EDI versus APIs or web services?
  • How long does it take you to onboard a new trading partner?
  • Who is responsible for trading partner connectivity at your company? How many people (FTE) are involved?
  • What major factors have limited your ability to date to electronically connect with your trading partners (e.g., your willingness, their willingness, lack of trust, lack of technology)?

Interested in learning more? Download Construction is Lagging In Digitization LET'S GET UNSTUCK ​for more foundational principles for digital transformation.

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