A Guest Contribution from Liaison Technologies
B2B Integration is one tool that can enable businesses to achieve dramatic increases in performance, while they realize at the same time benefits from improved accuracy in the exchange of mission critical business information. Processes are automated and optimized directly from each business party’s computers to perform processes exponentially faster than manual processes and at a higher rate of accuracy.
When paper documents have been replaced with electronic transactions, it is easy to maintain electronic logs or audit trails of document handling activity. From this, businesses gain a substantial increase in the ability to track status and measure performance throughout key external processes.
Let’s take a closer look at some of the benefits using a detailed Purchase Order example.
- The process takes seconds or minutes instead of days
- The PO goes from the buyer’s computer through a network to the vendor’s computer with no human intervention at all. There is no need to copy of transcribe the PO upon receipt, eliminating the possibility of data entry error
- The electronic document has not been handled by any mailroom staff, postal or delivery service or data entry staff. It will not wait in any in-basket waiting for collection and it won’t have to wait while staff are on the phone
- The buyer receives rapid confirmation of PO receipt
These facts can translate directly into cost savings resulting from reduced cycle times, reduced overheads and improved accuracy. In today’s business environment, companies cannot afford to ignore these benefits.
B2B Integration Provides Speed
Using B2B Integration will provide specific and measurable increases in the speed of document transfer, with accompanying decreases in process cycle time.
- Sending an electronic message across the country or around the world requires only seconds or minutes as opposed to days. Such transmissions typically occur at over 1000 characters per second
- Data is available immediately for use in internal applications. Data, once received, needs only to be translated internally into the specific format required by the receiver’s application software, and it is immediately ready for use
- Reduced business cycle times provide a competitive edge in any business
B2B Integration Improves Accuracy
Electronic transfer of data eliminates the need for copying data from one paper document to another, or for keying the data into a business application screen. Every time data is transferred, there is opportunity for error to be introduced to the process. In the typical manual purchase order, a person enters or copies information from the paper form at least once. With B2B Integration, improved accuracy is obtained in several different ways.
- Electronic data is usually derived from a database, where data has been subject to prior validation by the rules included in B2B Integration solutions
- Electronic documents are transferred accurately regardless of size. If transmission of a large document is not successful, users can invoke re-transmission procedures rapidly
- Even if several different parties process the electronic document, with each party adding data to the existing document, none has the ability to alter previously entered information
B2B Integration Reduces Costs
Your company may obtain a variety of cost reductions as a result of implementing B2B Integration. These reductions can include both cost savings and cost avoidance. These points summarize just a few of the more general types of savings you can expect:
- Upon implementing B2B Integration, costs for paper, envelopes and mailing materials decrease as well as those for telephone and courier services used to support transmission of orders and paper documents. Additionally storage space for paper and supplies is freed thus reducing costs still further
- Substantial cost savings can result from reduced error rates, these savings include those such as labor costs normally used to search for errors, and in lowered expediting costs
- Reduction of inventory costs through shortening order processing and delivery cycles, and generally lowering inventory levels. As goods can be delivered more quickly the buying company need not order new products as often and can lower or eliminate its level of inventory safety stock. Lowered inventory levels also results in corresponding reductions in carrying costs. Inventory costs can, in some businesses, account for as much as 90 percent of total product cost, so even modest reductions in this area can result in dramatic savings
- If a company can receive an electronic invoice in a timely manner, the buyer can take advantage of discount terms, effectively paying less for the product. The seller, in turn, can receive payments sooner, improving its cash position and allowing it to pay less for its supplies by taking advantage of discount terms
B2B Integration Improves Operational Efficiency
In addition to improving speed, cost and accuracy, B2B Integration can impact the business in a number of other ways, improving operational efficiencies and tightening relationships with your trading community.
- Improved Trading Partner Relationships. In order to successfully transmit, interpret and process transmissions automatically, much trading partner co-operation and analysis are required. The party that originates the data depends on the sender to provide accurate and timely data. Thus it is important for both parties to agree on business procedures, data requirements, and usage, communication methods, operational windows and testing schedules prior to implementing B2B Integration. By receiving more accurate and complete data and by eliminating keyed entry errors on the receiving end, suppliers can ensure accurate and timely shipments to their customers while reducing the expenses of returned shipments of incorrect products. The higher level of customer service tends to attract new customers and increase the volume of existing customer orders
- Increasing awareness of data throughout the business cycle. Significant use of B2B Integration gives an organization visibility outside of its ‘four walls’. Although B2B Integration is not a reporting tool, a thorough implementation of B2B Integration makes everyone aware of abilities to monitor the customer’s customer, track vendor or transportation carrier performance, better understand product availability from vendors and distinguish among activities by distributors and customers
- Improved planning and processing. In an electronic environment, rapid receipt of accurate and complete business transactions is the norm. Suppliers can process orders quicker and shipments can be scheduled accordingly, while the manufacturer can anticipate quicker receipt of goods and schedule manufacturing tasks accordingly
- Finally, B2B Integration can improve cash flow. As more of a company’s applications are integrated into B2B Integration, its cash flow will improve due to overall efficiencies that B2B Integration provides. This enables managers to plan cash flow more precisely by receiving and making payments sooner, thus allowing them to take advantage of net discounts.
After all this, it’s clear that integration between buyers and sellers optimizes and improves business outcomes across most areas. Consideration at this point should be given to what technologies are used for the integrations. For example, should a real-time look on up items be used or should a catalog EDI document be exchanged? Should the common EDI (ANSI X.12) format or another be employed?
Once these questions are answered determining take special note that the provider used can determine the rate and success of adoption. As all integrations are asynchronous, choosing a provider who can support as many integration requirements as possible should be utilized to ensure smaller and larger organizations (Whether the buyer or suppliers) can accomplish desired results.