Supply Chain Digital Transformation – Systems Integration

One of the greatest challenges for supply chain organisations that are looking to leverage the capabilities of new digital technologies is how to integrate these solutions with existing legacy infrastructure and applications.

Consistent transparency of materials flow, inventories and order processing requires the end-to-end integration of dynamic supply chain networks, focusing not just on internal operations and services, but also enabling the sharing of information in real-time across multiple departments, as well as with external partners both upstream and downstream.

Customer expectations are changing and their needs are continuously evolving, mounting pressure on supply chain organisations to ensure they have the flexibility to adapt as fast as possible. Integration helps enterprises in transforming external partners to create an extended enterprise, by making data and information available across the supply chain network.

Successful integration strategies focus on more than just the technology though – the people and processes involved must be included in the planning process in order to fully unlock the capabilities of investments in core businesses systems and new digital technologies.

The key business applications that should be the initial focus of integration include:

  • Enterprise Resource Planning (ERP)
  • Customer Relationship Management (CRM)
  • Warehouse Management Systems (WMS)
  • Transportation Management Systems (TMS)

Enabling these systems to communicate with each other, streamlining the transfer of data between both internal departments and the wider supply chain network is essential for the effective optimisation of processes and operations. The benefits of extended visibility that many digital technologies provide cannot be realised without this effective communication, as critical business information remains siloed and prohibits cross-functional collaboration.

EDI vs API

Electronic Data Interchange (EDI) is still by far the most commonly used method of transmitting data between business applications and supply chain partners. EDI technology was initially conceived in the 1940s and since the 1970s has been the de-facto method of application communication in supply chains, yet despite its clearly outdated approach it remains entrenched in most organisations.

While many companies claim to provide real-time visibility, for those still using EDI this is highly unlikely to be the case.  EDI communication is slow and cumbersome, provides just one-way communication and requires data to be transmitted exactly as it is received, causing many difficulties with data sharing. This makes it very costly to setup and manage, very complex to successfully implement and very susceptible to disruption whenever changes need to be made.

Application Programming Interface (API) on the other hand is a far more modern technology and has already transformed operations in many other industries, although supply chain organisations have been extremely slow to adopt this approach.

In contrast to EDI, APIs provide organisations with the capability to communicate standardised data sets from and to any source in nanoseconds, enabling truly real-time and bi-directional information sharing. This in turn enables a wide range of business processes to operate from a “single-source-of-truth”, so that all parties accessing the data – both internal and external – are assured an up-to-date record of sales, inventory and other operations.

APIs are also significantly easier to setup and manage, as well as being far more flexible than EDI.  This means making changes to application architecture, incorporating new technologies and software solutions can be achieved in considerably shorter time and at a significantly lower cost.

If supply chains are to keep up with the modern, on-demand purchasing culture and support omnichannel delivery methods, they simply must embrace API-led integration strategies to facilitate the requirements needed to remain competitive and agile enough to adapt to changing markets and conditions.