An efficient supply chain is a competitive advantage. Part of achieving efficiency is automation based on B2B integration between buyers and suppliers.
A recent report from SCM World entitled “The B2B Integration Path: A Roadmap for Business Value Generation” found that companies who had achieved a higher stage of B2B integration maturity experienced greater efficiency as measured by inventory turns, days sales outstanding, expedited orders, and cash conversion cycle. Only 16% of the respondents in the survey scored at stage 4 or “relational” stage. No company in the survey has achieved the highest stage of the B2B integration maturity path – the “generative” stage.
The full report, available here, lays out the complete path to maturity.
Moving from “Analytical” to “Relational”
The third stage (analytical) of B2B integration maturity path is where companies begin to gain “collaborative insight through the aggregation and analysis of connected digital demand and supply data.” At the fourth stage (relational) companies have built a responsive network, with integration of most trading partners across multi-tier demand and supply networks. For more on the definitions of the stages, read my post on the 5 Stages of B2B Integration Maturity.
So how do move you from stage 3 to 4?
According to our survey, which looks at three aspects of maturity – people, process and technology, there are several things that distinguish stage 4 from stage 3 companies.
In the people aspect, stage 4 companies are differentiated by shifts in decision making and business justification. First, stage 4 companies are more centralized in their B2B integration decision making with 32% more companies stating they have comprehensive multi-enterprise decision alignment. This means B2B integration decisions extend to trading partners up and down the supply chain. Second, the justification for integration B2B activities shifts to one that encourages collaborative business growth among partners, with 74% of stage 4 companies naming this as their justification, compared to only 15% at stage 3.
In terms of process, there is an improvement in error reporting, shifting from a reactive process to real-time reporting (50% of respondents at stage 4 vs. 33% at stage 3) and possibly automated exception management (a 13% increase from stage 3 to 4, to 33%). Stage 4 companies see a shift toward real-time processing of digital transaction with 43% reporting they have achieved this speed, while that was true for only 2% of stage 3 companies.
There are three noticeable technology differences between companies at stages 3 and 4. First, companies at stage 4 increase the availability of metrics reporting, moving from standard KPIs published at scheduled intervals, to predictive analytics spanning a multi-tier demand and supply network. (25% of respondents at stage 4, vs. 4% at stage 3).
The second difference was an improvement in data collection and organization. 62% of stage 4 companies reported they had comprehensive multi-enterprise data integration, compared to only 8% at stage 3.
Finally, stage 4 companies differ from stage 3 in the capabilities for compliance and audit, with 35% more stage 4 companies reporting they had a networked compliance management system.
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