These companies will benefit massively from supplier integration, a strategy for uniting their entire value chain via a seamless flow of data. Once connected, suppliers and sellers can start communicating and collaborating effectively, working together to increase efficiency and customer experiences.
If supplier integration isn’t a top priority for your business–it should be–and this article explains why. We explore the six key benefits of supplier integration and the most accessible and impactful technology you can use to experience them.
Why Supplier Integration Is a Strategic Imperative
The speed of business is accelerating every day. Today’s customers are used to buying from Amazon and, rightly or wrongly, have come to expect rapid, seamless delivery of goods, whatever it is they’re buying.
A complicated, siloed supply chain with hundreds of suppliers, all pulling in different directions, makes meeting today’s customer expectations impossible. If you want to dominate your industry and reach your profit goals, you need a tightly integrated supply chain connected via a seamless flow of data. In short: you need supplier integration.
The Six Key Benefits of Supplier Integration
Supplier integration leads to improved overall performance and a seamless customer experience—efficiency, productivity, and profitability all increase. You can pass cost savings on to your customers or reinvest them back into your business. Either way, you can rest assured your customers will get their products on time, every time.
Here are six of the biggest benefits of supplier integration.
1. Collaboration and communication
Supplier operational integration unites management, suppliers, and customers around a single source of truth for data. Partners’ systems talk to each other (push and pull data in real-time), which keeps everybody in sync. Fewer conflicts, stronger relationships, and improved collaboration all serve to improve the customer experience, driving satisfaction and retention.
2. Visibility
A single source of truth gives management total visibility across the entire value chain. From this elevated viewpoint, management can spot potential points of failure and operational inefficiencies. As fuel prices, raw materials, human resources, and warehousing costs continue to rise, the ability to pinpoint unnecessary expenses quickly can provide substantial savings.
3. Agility and Flexibility
Fragmented supply chains are inflexible, but integrated supply chains are agile. They enable businesses to react at lightning speed to fluctuating demand, shifting safety and compliance standards, competitor behavior, and other changes in the marketplace.
4. Omnichannel
To consistently meet customer demand, B2Bs are adopting new sales channels that were traditionally reserved for B2C, such as D2C, B2B e-commerce, and even Amazon. But each additional sales channel adds another layer of complexity to a convoluted supply chain. A connected and cohesive supply chain allows you to embrace new channels without destabilizing your ability to provide outstanding customer service.
5. Sustainability
Supplier operational integration provides the efficiency and visibility you need to reduce carbon emissions. A smoother flow of business processes means fewer part loads, refused deliveries, returns, and poorly optimized routes. You can significantly reduce your carbon footprint in line with customer, employee, and regulatory demands.
6. Automation
Automation is the key to greater efficiency and productivity, improved workplace safety, and dramatically reduced costs. With automation, you can free employees from the boredom of repetitive work and redirect them to higher-value activities.
With self-driving vehicles and other technologies on the horizon, the dream of fully automated end-to-end supply chains (with zero human involvement) could be closer than you think. Document generation, fulfillment, and warehouse management can all be automated already. But this level of automation is only possible when your people, processes, systems, and suppliers are integrated.
The Best Way to Integrate Suppliers and Sellers: EDI
EDI–Electronic Data Interchange–is a means of sharing information between businesses in a structured digital format. It emerged in the 60s, was formalized in the 70s, and is now the go-to standard for B2B exchanges.
EDI is the optimal solution to integrating your systems with your most important suppliers. Instead of transmitting and receiving information manually using pen and paper, EDI shares data electronically and instantaneously without human input.
By automating data exchange, you not only save money on postage and couriers, but you also eliminate costly mistakes and miscommunication. Lines of communication are always open, keeping suppliers and sellers in sync at all times.
Why EDI?
There are three main reasons why EDI should be your first choice for supplier integration.
1. Efficiency
EDI is a highly efficient system for sharing information. Developed at a time when sending data was expensive, it relies on smashing lengthy documents down into a few short lines of “code.” These documents can be created, transmitted, and stored with ease.
2. Industry Standard
EDI uses industry-accepted standards. It provides a common “language” for interacting with suppliers. You never have to worry about sending documents in the wrong format or layout. Compliance is guaranteed.
3. Requirement
As your business grows and you start transacting with larger companies, EDI turns from a nice-to-have into a requirement. Big players like Amazon and Walmart won’t do business with any company not using EDI.
How EDI Works (Step-by-Step)
EDI is the industry-standard method of information exchange across a broad range of industries, from healthcare to distribution, manufacturing, logistics, and business services.
For the below example, however, we’re going to focus on the retail industry, specifically how trading partners can exchange one of the most common business documents–a purchase order.
Sending and receiving a PO the old-fashioned way (without EDI)
The below process generally takes several days:
Step 1: The buyer peruses the suppliers’ offering and decides what they want to purchase.
Step 2: The buyer manually creates a PO–probably in Excel–and emails or mails it to the supplier.
Step 3: The supplier receives the purchase order and manually keys the information into their internal system. If everything goes according to plan, they send the buyer an acknowledgment of the order.
The above process sounds straightforward enough, but it’s full of inefficiencies and unknowns. Creating POs and manually keying information into systems is slow, labor-intensive, and prone to error. Sending letters in the mail is slow and unreliable. And emails can be missing attachments, sent to the wrong person, or go to Spam.
Fortunately, there’s a better way to transmit business documents.
Sending and receiving a PO the modern way with EDI
The below process generally takes minutes.
Step 1: Same as above.
Step 2: EDI software automatically generates an electronic PO and transmits it to the supplier’s order entry system.
Step 3: The order entry system receives the PO and transmits an acknowledgment back to the buyer’s EDI solution.
With EDI, there’s no risk of manual error, delays, or back and forth. Transmission and system updates happen automatically, ensuring speed and alignment. The recipient is never sick or on annual leave–EDI is always on.
Summary
Supplier integration gives you a substantial competitive advantage in a world where supply chain complexity is getting ridiculous. If you want to increase efficiency, sustainability, agility, and visibility, all while reducing costs (who doesn’t), then supplier integration is the answer.
There are multiple ways to integrate your systems with your mission-critical trading partners. But one of the most accessible and impactful ways is EDI. Contact one of our EDI experts to start communicating and collaborating more effectively with your suppliers.
