The digital supply chain can transform your business and your ability to meet your customer’s needs. Driven by digital technologies, it brings numerous benefits to both demand and supply management. To create successful digital supply chains you need to be able to connect with your suppliers, customers and partners. So, why does trading partner enablement remain a challenge?
It’s the classic chicken and egg scenario. Did the nature of supply chains change and then technologies emerged to allow it to happen, or did the technologies appear and change what you could do with your supply chains? Either way, the old linear supply chain is disappearing and new, dynamic ecosystems are developing that let networks of companies work together and collaborate.
Deloitte calls this the Digital Supply Network, which it says enables the integration of data from different sources internally and externally to drive the production and distribution of goods. Get this right and the benefits can be enormous. Boston Consulting Group reports that the leaders in digital supply chain management have up to 110% higher operating margins and 60% fewer cash conversion days.
So, where do we start? The answer is simple and we’ve been talking about it for years. The full potential of a digital supply chain can only be realized with as close to 100% trading partner enablement as possible.
Deloitte comments, “When the cost of transactions falls, the ability to transact with more and different partners increases. This creates an opportunity to shift to a world of more networked supply chains, as companies can simply connect with more different partners when and where necessary in order to deliver substantially increased value.”
That sounds easy, but there’s one small problem: it’s not really happening yet!
The supply chain is lagging in digital transformation
Last year, a survey from McKinsey showed that the supply chain was the least digitized of the five key areas of business it looked at. According to the firm, the average supply chain had reached a digitization level of 43%, and only 2% of companies said that the supply chain was the focus of their digital strategies. The Aberdeen Group found that only 20% of even the best companies had visibility of the status of business processes at their trading partners. Some industry commentators suggest that the average company has digitally enabled less than 10% of its supply base.
What makes this more concerning is McKinsey’s finding that digitizing the supply chain brings more business benefit than digitizing any other business area. It’s research showed companies that aggressively digitized their supply chain can expect to boost annual earning growth by 3.2% and revenue by 2.3%.
McKinsey’s conclusion was revealing: “In our experience, most of the disparity between the potential and actual gains from supply chain digitization can be explained by technology gaps and management choices.”
Today, there are excellent technologies available for trading partner enablement—such as OpenText™ Active Community—so, can low enablement rates be put down to management choice? Perhaps to an extent, but the truth is that trading partner enablement, although it sounds simple, is a complex process.
The 80-20 rule is dead
We all know the general rule that 20% of your suppliers help generate 80% of your business. The result of this, understandably, has been to focus on the strategic suppliers. Those are the companies that have been digitally enabled because it is clear the benefits of this approach are worth the investment.
However, in today’s networked and dynamic supply chains, this rule no longer applies. You need to trade digitally with more and different partners, as Deloitte suggests, and encourage the 80% to contribute more to your business growth.
Cost and technology barriers to 100% trading partner enablement have been shrinking, but challenges remain. When enabling a digital supply chain, you have to consider how to onboard new suppliers, what communications protocols to use, what B2B document standards to embrace, how to manage and grow your partner community, how to foster collaboration, and how to manage compliance and risk.
A central platform for trading partner enablement
When implementing complete trading partner enablement, a central platform that simplifies how you connect and engage with partners worldwide is essential. Solutions—such as OpenText B2B Managed Services and Active Community—have a wide range of capabilities including:
- B2B integration support giving the ability to mediate between any form of B2B document and communications protocol
- Partner profile management delivering a single repository for all partner related information to ensure accuracy
- Shared customer view with all partner data and documentation accurate and accessible for greater collaboration across channels, business segments and geographies
- Streamlined communications providing advanced search, tagging and survey tools to drive partner engagement and performance improvement
- Self-service enablement to accelerate onboarding and ease administration by allowing partners to self-manage their profile and connections
- Enterprise integration with other key business applications such as ERP, CRM, PMO and warehouse systems to facilitate end-to-end processing and enable automated workflows
- Supply chain analytics to provide actionable insight on all trading partner activities to increase supply chain visibility to enhance planning and operational performance
Collaboration is the key
As much as 65% of innovation for any company is sourced externally and 80% of the business value for automotive companies comes from their partners. The increased ability to collaborate is perhaps the biggest benefit of the digital supply chain.
According to Deloitte, “As each supply node becomes more capable and connected, the supply chain collapses into a dynamic, integrated supply network. DSNs overcome the delayed action-reaction process of the linear supply chain by employing real-time data to better inform decisions, provide greater transparency, and enable enhanced collaboration across the entire supply network.”
But that only happens when you’re digitally connected to all your partners.
To find out more about how trading partner enablement can help you realize the benefits the digital supply chain, simply complete this short form.