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Best Practices

From EDI to Drop Ship. How to Stay Up-to-Date With Market Demands [New Supply Chain Research]

by Peter Edlund

Your largest customer just called to say they’re shifting the majority of your orders to their online channel and they need you to begin drop shipping direct to their customers. You could be windmill high-fiving with your distribution manager like Goose and Maverick in Top Gun, having anticipated the call.

But, if you’re like 75% of small and midsize businesses, you may hang up from that call feeling like you’re in a flat spin hurdling out to sea, wondering if and how you can support your customer’s new requirements and their digital transformation strategy that prompted the call in the first place.

New Study Uncovers Strategic Approach to EDI

 

LeeAnn Taylor of Vibram and Nelson Yan of The Marklyn Group.

Only 25% of SMBs take a proactive and strategic approach to B2B integration (B2Bi) and EDI, as we discovered in a new University of Tennessee Supply Chain report sponsored by DiCentral and our partner SAP titled, Proactive Partnerships: Creating Supply Chain Value in the Digital Era.

The study identifies this relatively small segment of companies as Leaders, as opposed to Laggards and Trailers. Leaders view their B2Bi capabilities as a competitive advantage and winning edge when it comes to their trading partners. They don’t wait to hear from customers but instead proactively invest in B2B integration, often exceeding the capabilities of their trading partners.

Take An Inside-Out Approach to EDI & B2B Integration

New requirements from customers to support real-time business processes, like just-in-time inventory management, mass customization and direct-to-customer shipping, have created a new era of connected business – an era characterized by the symbiotic relationship between large businesses and SMBs.

Electronic linkages enabled by B2B integration are necessary for these relationships to thrive in both domestic supply chains and global supply networks. Electronic connections help to ensure large enterprises and SMBs more efficiently and effectively execute customer-centric procurement and fulfillment processes.

SMBs seeking to capture their growth opportunity in this connected era take an outside-in approach to B2Bi with their trading ecosystem. They understand that inter-organizational processes, enabled by automated data flows between ecosystem partners, are rooted in the physical integration of the disparate systems inside their companies. In fact, improved and streamlined business processes was the top benefit of adopting SAP reported by 66% of study participants.

From EDI Compliance to Scalable Growth

SMB executives know that compliance programs are a fact of life. So it’s not surprising that 80% of report participants indicate they’re following compliance programs that could result in charge backs – with nearly 75% of them having been subject to a fine in the past year.

In fact, study participants show an overwhelming emphasis in integrating customer-facing supply chain solutions, suggesting a likely disproportionate investment in revenue-generating activity over solutions that focus on cost cutting.

For example, 60% of study participants report that B2Bi via DiCentral and SAP, providing easier and more automated transactions with fewer errors, not only resulted in more satisfied customers but also in an increase in new customers due to their organizations’ ability to handle customer growth more efficiently.

Using EDI/B2B Integration as a Competitive Advantage

The entire economy is being transformed by digitization, automation and process acceleration. Smart SMB leaders know that their ability to handle digital data impacts the productivity and competitiveness of their company.

How to establish EDI/B2Bi as a competitive advantage:

  • Prepare for digitization by determining if your people, processes and IT infrastructure are capable of supporting your business transformation. Seek outside guidance and support if internal limitations in IT or personnel impede your business goals.

    Ensure that business objectives are understood before implementing a solution; clearly articulate and define the organization’s supply chain goals and objectives for customer service, sourcing and logistics. And take into account the needs of ecosystem participants along with the goals of their organization to make the best investment decisions possible.

    Most of our study participants have operated in traditional supply chain ecosystems with legacy infrastructure, processes and incentives that need to change as companies embrace a digital business model. Prepare your organization by acknowledging your industry’s unique dynamics, and communicate a clear digital transformation strategy.

    Leverage an outside-in approach to developing an agile supply chain operation that ensures your success when that call comes in from your largest customer, and capitalize on growth opportunities by proactively creating value for your trading partners. Using B2Bi simply makes you more responsive to your customers and allows you to say “Yes” to supporting their digital transformation.

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