Recently I sat down with a group of global CIOs to discuss their supply chain harmonization strategies. With the disruption of the COVID-19 pandemic affecting everyone’s business, executives I spoke with were clear that supply chain visibility was required to build the business resilience and flexibility they needed. So why, I asked, is supply chain transparency still proving so elusive?
Dealing with the disruption of a pandemic has meant working more closely and flexibly with your entire value chain. While digital connectivity between trading partners has definitely grown, smooth and transparent data flows across the supply chain are still more aspiration than reality.
Research from McKinsey gives a stark illustration of the lack of visibility. In all, just over half of the respondents in a 2020 survey had visibility into their tier 1 suppliers and only 2% had visibility into tier 2 or below.
“Supply chains weren’t designed to be transparent”
Seeing what’s going on in real-time across the supply chain has most certainly become a top priority among the CIOs I spoke with, and they were open in discussing the challenges they face to achieve this. It starts with building effective digital communication with all trading partners. The seamless, speedy, and secure flow of data and transactions are the pivot upon which digital supply chains are built.
During our conversation, I was reminded of an article in the Wall Street Journal that said supply chains were never designed to be transparent. It’s a sentiment these executives would echo. In most cases, their companies had spent decades – or even more – building digital connections with their partners, usually through EDI.
They now dealt with a patchwork of different connections that often used different standards and formats. Even the same format can have any number of variations. One research report showed that 95% of EDI has some form of customization.
But the issue is more than just in one connection, the issue is gaining end-to-end supply chain visibility, which can add a mountain of complexity. The executives told me that they faced significant transparency challenges as organizations with different levels of technological maturity struggled with the great variety of EDI formats being applied inconsistently across different tiers of the supply chain.
API: A tool not a panacea
For the last few years, we’ve heard that APIs will render EDI irrelevant but it’s a brave person that’s willing to right off EDI. Certainly, the CIOs I spoke with felt that new technologies – especially API, IoT and blockchain – were able to extend and enhance their existing B2B integration infrastructure.
The organizations were supplementing EDI with new technologies to bridge maturity gaps introducing higher levels of transparency, accountability, and security. They felt that a combined solution could play a significant role in better integrating with partners. It allowed them to take control of data flows to create a “single-version-of-the-truth” to drive visibility and performance.
Enter the modern EDI VAN
However, the power of an enhanced EDI/API B2B integration solution can come at a cost. It has the potential to add to the complexity of trading partner connectivity. This level of complexity has elevated the importance of choosing a modern EDI VAN.
Today, the modern EDI VAN has evolved from a transaction-based service to one based around community enablement and empowerment. It can support all different document types, formats and standards, supporting both EDI and API. With a single source of visibility and the ability to customize how data is represented and reported, companies are better able to quickly respond to new trading mandates, new partner onboarding and new business with automated B2B processes.
To find out more about the benefits of the OpenText EDI VAN, visit our website.