Whether you are an importer or forwarder acting on their behalf, we are all familiar with the “80/20” rule and how it applies to trading partner integration strategies. We focus on fully integrating the 20% of the trading partners that make up 80% of the volume for purchase orders, transportation, customs filing and shipment tracking. However, the remaining 80% of the trading partners who are poorly integrated (if at all) make up 80% of the day-to-day business distractions. This 80% has extended lead times, little flexibility after purchase orders are launched, less reliable delivery performance, higher risk of import fines and higher costs to handle the goods when they are received.
Squeezing out costs, reducing lead times and increasing reliability is the hallmark of any good inbound supply chain strategy. For these smaller suppliers to be better trading partners they need to be integrated, but this task can be daunting as they may represent 100s if not 1,000s of trading partners – many of which come and go over time. The tools and approaches to enable and manage a large number of partners are changing. Here are 4 key points that importers and forwarders need to consider:
Many small to midsize trading partners don’t have the technical capabilities for B2B integration and you don’t want to waste your organization’s valuable time making sure their integration works. Providing portal functionality that has pre-populated key data, standard choices for responses and allows the trading partner to easily upload or receive documents, spreadsheets, scanned images, etc. enables smaller trading partners to act as if they had full B2B capabilities. Depending upon the sophistication, there could be hybrid integration where some of the data capture is automated, but some remains manual.
The responsibility for integration should fall on the trading partners. Other than providing them a name and password, the trading partner should be responsible for entering and maintaining their own configuration. There should be standard configurations depending upon trading partner type for the information they can view or enter and functionality available to them. However, some of the functionality should be configurable by the trading partner based upon their technical capabilities and business processes.
There is a tremendous amount of data leverage in logistics. Purchase orders have information used in transportation, transportation adds information used in customs filing and all three are critical in shipment/inventory tracking. Sharing this data is not enough. It needs to be captured where it is generated to ensure accuracy and reduce latency and be organized in concepts such as a “shipment folder” which captures and links the information over the purchase order to receipt lifecycle. Since trading partners provide much of that data, the solution should have a data model that supports the lifecycle and workflow to enforce its capture and validation at the trading partner.
Trading partner integration should provide more capabilities than data capture and viewing. It should enable the trading partner to be more integrated into the importer’s or forwarder’s business processes. For example, the trading partner should as part of their process generate labels that comply with the importer’s carriers, warehouse receiving processes or store ready programs. In addition, for international trading partners, the advanced solutions should capture information related to customs filings such as Importer Security Filing (ISF) to help ensure smooth flow of goods across borders and minimize fines due to poor documentation.
As it gets tougher to take out costs and lead time from the inbound supply chain, there is more reason today to get smaller trading partners to perform like the larger ones. Instead of looking at this as just a data integration exercise, importers and forwarders should see how they can get their “80%” trading partners to be more fully integrated into their business processes and take on a greater responsibility in managing their integration and capabilities within the supply chain.
Chris Jones is the Executive Vice President for Marketing and Services at Descartes. He has over 20 years of experience in the supply chain market, holding variety of senior management positions including: Senior Vice President at The Aberdeen Group’s Value Chain Research division, Executive Vice President of Marketing and Corporate Development for SynQuest and Vice President and Research Director for Enterprise Resource Planning Solutions at The Gartner Group.