Manufacturers turning to cloud based B2B integration but there are challenges ahead

Recent disruptions have exposed the fragility of the global supply chain, and manufacturers have suffered more than most. Manufacturing organizations are now looking towards digital…

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Ville Parkkinen

October 30, 20236 minute read

Recent disruptions have exposed the fragility of the global supply chain, and manufacturers have suffered more than most. Manufacturing organizations are now looking towards digital technologies to help. Their intent? Construct the resilient and agile supply chains needed to head off any future disruptions successfully. B2B integration is one of those fundamental technologies. Recent research from IDC and OpenText examined the maturity and benefits of supply chain integration in manufacturing.

In its many forms, supply chain integration has been around for years. However, recent disruptions have accelerated its adoption within manufacturing. According to our survey, more than 50% of manufacturers already use automated integration when dealing with customers. More than a quarter of organizations (24%) have reached the highest level of fully automated, real-time integration.

TodayThree years
Manual and unstructured communication (paper, fax, phone, email, file sharing, etc.)19%12%
Manual but structured communication (web EDI or other portal solutions, web forms, smart forms, etc.)27%13%
Automated message-based integration (Direct EDI integration, Value-Added Networks)30%42%
Automated real-time system integration (API-based synchronous integration24%33%
Table 1: Format of B2B transactions with customers (Source: IDC)

This picture is changing rapidly. In less than three years, manual transactions will have dropped by almost a half. Fully 75% of all B2B transactions in the manufacturing sector will soon be through automated supply chain integration.

The benefits of cloud-based integration are clear and far-reaching

Organizations have always viewed cost as a key driver of B2B integration. However, manufacturers also need resilient supply chains based around much closer working relationships and collaboration with their trading partners. This demand changes the benefits that manufacturing companies seek in their B2B investments.

When asked about the benefits of digital supply chain integration, manufacturing respondents are increasingly looking beyond financial returns. While reducing costs – such as suppliers or logistics – still ranked highly, strategic business benefits were also crucial.

Reduced operating costs41%
Improved supply chain visibility37%
Faster time to market36%
Improved market competitiveness34%
Improved data quality and accuracy34%
Reduced logistics costs31%
Improved customer satisfaction30%
Improved inventory turn rates30%
Reduced cash-to-cash cycle times29%
Reduced business and compliance risk24%
Table 2: Top 10 benefits from digitally integrating the supply chain (Source: IDC)

The benefits of digitizing supply chain documents

The benefits of effective supply chain integration became even more apparent when we studied the effects on business performance. This is especially true of digitally exchanging various business and supply chain documents. In every case, organizations that used supply chain integration for specific documents reported a significant uptick in business performance. In most cases, improvements were impressively above 70%.

Improvement to supply chain performanceShare digitally in next three years
Inventory Inquiry89%28%
Product Catalogue88%27%
Purchase Order86%41%
Functional or Order Acknowledgement86%21%
Advance Ship Notice85%34%
Request for Quote84%31%
Bill of Lading84%19%
Shipping Status83%36%
Receiving Advice82%16%
Price information79%37%
Logistics Service Request/Response79%27%
Forecast/Planning Management78%27%
Payment Remittance Advice76%25%
Customs Documents76%24%
Change Requests68%24%
Notes or other unstructured information68%19%
Table 3: Supply chain improvement through digital exchange of information type and expected adoption in next three years (Source: IDC)

As supply chains become more central to business success, these potential improvements are too significant to ignore. However, our research suggests that manufacturers must also accelerate progress toward digitizing these key supply chain documents

There is only one document – the purchase order – that over 40% of respondents expected to share digitally in the next three years. One explanation for this is that while manufacturers are accelerating the adoption of supply chain integration, integration itself is becoming more complex and challenging.

More partners, more tiers, more systems …more headaches

Undoubtedly, building new levels of agility and resilience into modern supply chains places the focus on increased digitization. It also improves integration and collaboration across increasingly global, extended, and complex supply networks. For manufacturers, modern supply chains are global, multi-tiered entities with multiple partners using multiple systems. 

Complex supply networks with multiple tiers28%
Complex products and product ranges27%
Global, extended supply chains, elongated lead times27%
Complex integration of multiple IT systems24%
Lack of budget to implement process changes24%
Frequent new products and increased product obsolescence20%
Lack of internal skills20%
Table 4: What are the major barriers to successful supply chain integration? (Source: IDC)

The challenges are large and growing even as manufacturers are increasingly aware of the need for effective supply chain integration solutions. In fact, our respondents saw integration issues on all sides as they dealt with increasingly multi-layered supply chains.

Integration between internal supply chain systems12%
Integration with third party logistics providers11%
Integration with global trade/regulatory agencies11%
Integration with suppliers10%
Integration with customers10%
Table 4: Top 5 integration challenges to supply chain operations in next two years (Source: IDC)

Implementing a cloud-based unified supply chain integration platform

Manufacturers require a centralized cloud platform connecting the company to its trading partner community. To address supply chain integration challenges. This solution should help securely connect data to people, systems, and things. A cloud-based platform offers frictionless information exchange, end-to-end business visibility and extensive collaboration with a single digital backbone across business ecosystems.

6 key capabilities manufacturers should consider in an integration solution: 

1 – A single unified integration platform

Leverage a single integration backbone that underpins digital transformation initiatives and serves as a platform for future business growth. 

2 – Fully managed services

Take advantage of a flexible team of B2B and integration experts to manage your day-to-day B2B operations and integration requirements. 

3 – Seamless any-to-any integration

Manage growing integration complexity and demands for speed while embracing old and new forms of integration, including API.

4 – Secure, global connectivity

Easily assign digital identities to people, systems and things to enhance collaboration, prevent data breaches and improve trading partner ecosystem security.

5 – Real-time business insights

Aggregate information flows across a common integration environment and delivers real-time insights into business operations to whoever needs it.

6 – Self-service integration capabilities

Get access to a comprehensive self-service tool suite that lets you manage your connectivity and day-to-day collaboration with trading partners.

Manufacturers are embracing the benefits of supply chain integration. However, our research shows that there’s still work to be done. OpenText Business Network Cloud can help manufacturers meet the challenges of increasingly global and complex supply networks and trading partner communities.

Read the full IDC report: Next-Generation B2B Integration Enables a Digital-First, Resilient Supply Chain

Find out more about OpenText supply chain integration solutions.

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Ville Parkkinen

Ville Parkkinen is a Director of Product Marketing for Business Network at OpenText. Working closely with OpenText’s Product Management, Engineering, Solution Consulting and Sales teams, Ville enjoys taking complex technical concepts and translating them into tangible business value in customer context. Solution areas that Ville focuses on include digitization and automation of supply chain processes including order-to-cash and procure-to-pay; electronic invoicing solutions; B2B/EDI integration; data visibility and analytics; and managed integration services.

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