A further complication with bringing in new suppliers is the process of integrating them into the supply chain. According to Cleo’s 2020 ‘State of Ecosystem and Application Integration Report‘ around half of the companies surveyed (those that design, build and manage applications or infrastructure integrations) say it takes them a month or longer to onboard a new trading partner.
To help deep-drive this issue, Digital Journal spoke with Tushar Patel of Cleo, to consider how companies can leverage ecosystem integration to combat unexpected global supply chain delays, such as those associated with the current COVID-19 pandemic.
Digital Journal: To what extent is COVID-19 disrupting businesses?
Tushar Patel: As the threat of the virus continues to grow, companies across the globe are now largely required by local authorities to keep their workers at home to slow the spread of COVID-19. In some cases, the virus could lead to businesses shutting down their operations entirely due to lack of on-site personnel, unless they have implemented automation and remote access control to critical business applications. Unfortunately, many companies haven’t automated the integration process to prepare for emergency situations like this one, and their reliance on manual processes, especially as it relates to integration technology, is complicating their ability to respond efficiently.
As such, what COVID-19 is plainly teaching us is that companies, to combat this or really any unforeseen disruption to their supply chain, should move now to implement agile strategies that will make their supply chain more dynamic. Having the ability to quickly shift an order or load to another trading partner who can support it or to make rapid adjustments to their supplier base for more favorable pricing terms, are just some of the value-creation benefits of supply chain agility. Integration plays a key part in this equation. Integration strategies that are pieced together run the risk of faulty integrations that result in businesses not having the goods and materials on shelves to sell to people who might need them, which directly impacts the bottom line.
DJ: What is the specific impact on supply chains?
Patel: Cutting though bureaucratic red tape, tariffs, and country-to-country trade agreements is already a challenge for many businesses, even without having to deal with a global pandemic. Now, COVID-19 presents the reality of businesses needing to find and onboard new partners and suppliers at a moment’s notice. As we’ve seen, countries that have been heavily impacted by the virus, such as China or Italy, have restricted trade and closed their borders, causing a huge disruption in supply chains and commerce. Since no one knows how long the pandemic will last, in order to stay in business companies that rely on trading partners in these countries must quickly onboard new trading partners to fill in the gaps in their supply chains. Additionally, many companies have employees based in other countries where travel has been restricted. This factor can also greatly slow down or entirely disrupt the supply chain, as many companies rely on a certain number of on-site personnel to carry out their supply chain operations.
DJ: Which types of goods are most at risk?
Patel: During this global pandemic, it’s vital to have the right products in the right place at the right time. We expect to see a series of waves of goods that will be at most risk. In the first wave, we expect medical and sanitary goods, which are essential for healthcare professionals to adequately perform their jobs, to have experience supply shortages. While this is not surprising and even predictable, the true extent of supply risk is unpredictable. For example, no one was able to predict the rapidly diminishing supply of face masks, hand sanitizer, antibacterial soap, and even toilet paper.
As such, businesses can try to proactively plan to combat these shortages, but some goods become at risk unexpectedly. The second wave of goods that we expect to see at risk falls into the wider consumer goods category. These are common everyday items such as groceries, packaged foods, beverages, and sanitary goods that will be affected to varying degrees. We expect a ripple effect starting with depleting inventory levels in warehouses that have been used to fill shelves. After this, we expect a shortage in raw materials used to manufacture goods due to factory labor shortages and delays through the supply chain from shelter-in-place and lockdown initiatives.
Lastly, there could be a wave that manifests as a shortage of labor in the logistics sector due to potential health issues related to spread of the virus. Because they are mobile, these workers are at higher risk of exposing themselves as part of continuing services to essential businesses.
Another fascinating piece of this too is seeing major manufacturers like Ford, GM, and Tesla, alter their factories to begin manufacturing products that can help boost supplies of critical items, like respirators. As those factories ramp up production, they will need to source and onboard multiple materials suppliers to keep production steady, and likely different logistics and distribution partners since they are now serving new markets and channels. Agile integration technology can help companies like Ford accommodate this socially conscious change to their business.
DJ: Why does it take so long to on-board a new trading partner?
Patel: The onboarding process isn’t inherently slow. For example, if you have a trading partner ready to be onboarded that has all of their onboarding requirements ready, the process can be very quick. It could take a mere few hours. However, the process becomes a lot more complicated if you’re using a manual integration process, lack internal integration skills, or using legacy tools that were not designed with user efficiency in mind. It could take several days to several weeks or even months in some cases if you’re not leveraging a modern ecosystem-driven integration platform that has native templates and connectors to reduce onboarding times.
In fact, nearly half of surveyed businesses report the onboarding of a new partner taking over a month. Again, this is likely because many organizations still rely on their traditional / legacy systems to manually onboard each partner rather than automating the process.
DJ: What are the optimal solutions to speed this process up?
Patel: Foremost, it’s key to understand the relationship between your business and your trading partners. Their expectations and needs as well as the opportunities that exist for business continuity play a major role in what solutions will work best for your business. After all, once this pandemic subsides, business must continue as usual. Further, companies should have a grasp on the impact to the end customer and work backwards from there. Businesses should consult an integrations solutions provider and do a gaps analysis to pinpoint all the various chokepoints where their current process is lacking and focus on areas that are most critical to their business.
Overall, many companies will start this process by migrating their business processes to the cloud to modernize their capabilities around adding scale, speed, and reliability. With that said, typically organizations can gain significant reduction in costs and improvements in team efficiency by consolidating the integration solutions that power their supply chains. Not only do you optimize user experience, but you also gain end-to-end visibility when all of your data flows through one system.
DJ: What technology solutions are there?
Patel: An ecosystem integration platform can make the onboarding process virtually instantaneous and deliver the end-to-end visibility many companies are lacking (but need) today. By blending both EDI and API capabilities on a single platform, ecosystem integration solutions enable businesses to be agile in working through onboarding a new trading partner and optimizing their supply chain operations. This is particularly relevant as such a platform also allows businesses to be more flexible when disasters and unexpected emergencies like hurricanes, geopolitical events, or COVID-19 strike.
Ultimately, it’s about creating value and achieving business outcomes. Upgrading your ecosystem integration allows you to streamline the flow of information not just inside your business, but with external partners, suppliers, vendors, and customers as well. In our recent survey, 31% of respondents admit that their company loses upwards of 50 orders each year specifically due to integration issues, with 17% losing up to 500 orders or more on an annual basis. In some 10% of cases, that’s costing them over $1 million to their bottom line.
