B2B Integration: Why Your Company Needs It, What It Can Do And How It Works
Business-to-business integration has taken the logistics industry by storm in the past five years. Organizations, from retailers to manufacturers to third-party logistics providers, realize their future success depends on integrating their enterprise and/or legacy systems with their vendors’ and suppliers’ systems.
A 2013 Stanford Global Supply Chain Management Forum bemoaned the frequency with which small-to-medium-sized businesses still used phone, fax, and email data exchange, rather than B2B integration. Whether that integration comprises simple electronic data interchange of orders and invoices, or full-scale collaboration between businesses’ order management systems (OMS), the sheer amount of data prevalent in today’s supply chains requires digital collaboration. Integrating enterprise and legacy systems with a cloud-based platform is key for the success of supply chain-focused businesses.
What it can do
The software pays for itself, based solely on the time saved by eliminating manual work. Specifically, the software reduces manual data entry and eliminates orders being placed via slower methods prone to human error. The cost savings resulting from the reduction of manual entry and elimination of human error are significant.
For example, according to a 2011 ARC Research study, an integrated transportation management system can save a manufacturer transportation costs in various areas, including increased use of preferred carriers, better routing and lower cost mode selections. Similarly, the reduced amount of labor, such as excess dispatchers, can result in significant savings. In total, a well-executed TMS can realize a significant percentage of savings in a manufacturer’s transportation budget—up to 50 percent in some cases, according to ARC Research.
B2B integration optimizes processes in a similar manner, by ensuring one company’s system speaks clearly to their vendor’s system. A third-party logistics firm may wish to integrate its warehouse management system, responsible for tracking inventory, directing warehouse put-away and scheduling material handler labor, with its client’s OMS, which sends orders to the 3PL and receives the 3PL’s invoices for services rendered. The cloud-based B2B electronic integration software the 3PL chooses will integrate the two systems and allow both companies to access the information, including reports, via a secure, browser-based portal.
How it works
Cloud-based B2B integration services typically offer an application programming interface (API) to allow business partners to exchange data. The API will require a specific set of data elements and then store the data for centralized client visibility. After the API stores the data, it can be transferred to other systems and appropriate parties can receive status notifications. A secure network protocol will be used for transferring data at this point in the process.
Subscribing to a secure, cloud-based B2B service eliminates the need for the client to maintain its own software and employ expensive IT resources. The client will receive access to a secure portal that allows them to view activity and run customizable reports. Automation features offer the ability to email these reports to the client’s team members or business partners. The reports can run at specified intervals or be triggered to send based on a system activity.
The ease with which customers can access their information is a major selling point for cloud-based logistics software. It requires no on-site IT management, minimal infrastructure investment and low monthly maintenance fees. Cloud-based B2B electronic integration is an excellent choice for data-driven, high-volume companies focused on modernizing their transactional processes.
Dan Sellers is Chief Information Officer at 360data, an Appleton, Wisconsin-based logistics software offering. 360data provides scalable, cloud-based solutions, including B2B/EDI Integration, TMS, WMS and OMS solutions.
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