Inside Logistics

Electronic integration a supply chain trend to watch

New study uncovers benefits of collaboration technology to improve supply chain efficiencies


April 15, 2016
by MM&D Online Staff

HOUSTON, Texas—New research released from the University of Tennessee’s Global Supply Chain Institute shows that more organizations today are investing in B2Bi (business to business electronic integration) to cut costs and increase business flow efficiency.

Of those surveyed, 94 percent saw significant improvement in their electronic connectivity capabilities and 68 percent reported that their clients said they were easier to do business with after using cloud-based B2Bi Managed Services.

Another major finding suggests that the opportunities for streamlining processes are richer than the resources to achieve it, as increased pressures on internal IT departments to meet core business objectives can lead to potential gaps in knowledge and technology.

Ninety-six percent of those surveyed said they are linked electronically in some way with at least one of their trading partners, yet the average organization spends just over five percent of its IT budget on electronic connections. Electronic connections are expected to increase more than 20 percent over the next three years, and 69 percent of those surveyed said that they intend to increase the number of customers they trade with electronically.

“Successfully collaborating with your business partners requires many things. But as we show in this white paper, technology plays a major role, a role that will only grow larger in the future,” said Paul Dittmann, executive director of the Global Supply Chain Institute at the UT’s Haslam College of Business.

The study presents several examples of successful collaborations that achieved impressive results. For instance, an office supplies retailer surveyed for the study invested time and technology to collaborate more effectively with a major supplier, and as a result, in-stock fill rates rose significantly to nearly 99 percent from below 95 percent. Lead times reduced nearly 60 percent. Forecast accuracy improved by more than 30 percent, and inventory turnover increased nine percent.

Although B2Bi has been around for more than 30 years, many of those surveyed felt that considering the proliferation of the Internet of Things and cloud-based applications, it is still in an early stage, especially, globally. Technology integration tools are widely implemented in some industries and sparse in others.

The study provides a framework for developing a strategy for technology-enabled collaboration and includes a self-evaluation to determine how well organizations are using technology to collaborate with their suppliers and customers, as well as a checklist for selecting a third party to manage electronic transactions.

The study gathered data through a quantitative survey of more than 200 professionals from a wide range of industries including consumer products, retailers, discrete manufacturers and process manufacturers. Companies ranged in size from $50 million to more than $2 billion.