Reimagining the Consumer Electronics Supply Chain: The Three Key Challenges for 2021

Disrupted Supplies

In March 2020, McKinsey forecast[1] electronics companies could face serious reductions in inventory due to epidemic-induced factory shutdowns. This was a clear signal to electronics suppliers that the diversification strategies initially developed during the predicted US-China trade war were quickly becoming a recommended path.

But while companies scrambled to onboard suppliers, the move could not mitigate the disruption. 53% of electronics industry leaders were anticipating delays or cancellations in new product launches by May 2021, with 91% of the shortage attributed to challenges in supply chain management [2].

Frenzied Demand

The need for semiconductor chips has continued to surge with the advent of newer automotive technologies such as electric vehicles, collision avoidance and automatic braking systems, real-time navigation, night vision, and lane-change warning systems. There’s no predictable relief in demand for these and other advanced technologies involving artificial intelligence and autonomous vehicles.

The Semiconductor Industry Association has projected global chip sales to grow 8.4% in 2021 – a massive 5.1% hike in a $433 billion industry. With much of the world’s workforce having migrated to home offices and home-based leisure activities, computers, tablets, and gaming consoles are in high demand and chip production is struggling to keep up. A year after McKinsey’s original forecast, the world’s biggest chipmakers like AMD and Qualcomm continue to announce new shortages.

And the impact is not limited to consumer electronics or sub-systems. GM extended its automobile production cuts in the US, Canada, and Mexico; other automotive giants like Ford, Honda, and Fiat/Chrysler have also warned investors about slowdowns in new vehicle production due to chip shortages.

So has begun a cycle of delayed customer value and intense competition among vendors and a new race to market supply chain capabilities which hold the key to delivering increased value in the supply chain.

Challenges in Supply Chain Management

This widespread shortage in semiconductor chips has underlined the critical role of their supply chain in today’s economy. While optimized supply chains in the electronics industry had helped temper the explosion of IT and digital services in the past two decades, several unexpected factors have since emerged with the potential to disrupt the optimized global model.

There are three key challenges –challenges of immediate concern and which the consumer electronics supply chain needs to address in order to deliver the right product, in the right quantity, at the right price, place, and time.

Geographical Concentration

The world’s largest chip makers continue to largely depend on manufacturing centers in China. While some supply chains had begun to migrate towards other manufacturing centers, such as those in Malaysia, Thailand, and Vietnam, these migrations occurred very close to the beginning of the pandemic.

Since then, China, who recovered rapidly from its pandemic-induced slowdown, continues to dominate US electronics imports, while the other centers have been slower to respond. They also have the disadvantage of being newer players in the market, which means less depth in terms of production inventories, staff, and other resources. 

Such geographical concentration of manufacturing activity carries an inherent risk, which was laid bare first during the US-China trade (tariff) war and then by the global pandemic. Given China’s existing supply and production infrastructures, most of the larger manufacturing entities have decided to stay put. A recent PwC survey said as much, stating that most companies are planning a ‘China +1 strategy’ once the pandemic subsides. This strategy involves relying on China as the primary source, while looking to one other country as a strategic manufacturing alternative.

US companies are similarly keen to nearshore operations to countries like Mexico; however, all of these plans have been complicated by uncertain economic and trade climates.

Product Lifecycle and Complexity

Advances in technology and rapidly changing customer behavior have also had an impact on the life of the average electronic product, leading to challenges in supply chain management. Companies have to carry larger inventories or depend on faster inventory turns; this increases overall inventory costs and significantly impacts the bottom line in the event of a short lifecycle product or worse, a product failure.

Electronics companies push for newer and more complex product variants to remain competitive. Having outsourced part or all of their manufacturing process to specialized centers, they remain vulnerable.

Integrity of Supply

Vulnerabilities increase as product components move through multiple facilities and geographies and the chance of counterfeits increases. A lack of supply chain visibility makes components and raw materials increasingly difficult to trace. While companies spread out the manufacturing of parts and assemblies across regions to reduce the risk, vulnerabilities continue to appear.

‘Nearshoring’ and localized manufacturing have the potential to enhance traceability of parts and assemblies. But consumer electronics supply chains also need solutions with increased visibility capabilities to strike a balance and mitigate multiple risks simultaneously.

Working Towards a More Distributed Supply Chain

Over the last few decades, consumer electronics companies have leveraged their global supply chains for cost advantages and specialized manufacturing expertise. But factors such as tariffs, the fallout from the pandemic, and a perceived failure of just-in-time logistics have renewed the push for regionalization.

Industry leaders must be proactive to ensure a more distributed and more collaborative future. Consumer electronics supply chains need digital solutions that facilitate easy entry into new markets and with new suppliers, centrally optimize their supply chains, and provide an end-to-end visibility from point of order to delivery.

Integrated Systems for Enhanced Collaboration

Investing in enterprise IT and supply chain solutions to optimize individual business processes shows promise. But these investments often lead to multiple solutions, ranging from spreadsheets to portals to demand and supply chain planning tools, many of which are loosely integrated at the enterprise level.

As a result, supply chain partners continue to operate on multiple systems and platforms, creating an even larger integration challenge. Network architectures with limited flexibility cannot accommodate multi‐party, multi‐tier supply chain structures that exist between customers, manufacturers, and trading partners.

A modern supply chain in the electronics industry needs access to real‐time supply and demand transactions. It needs a flexible platform that allows each company in the supply chain to implement its own processes – one that makes sense to their culture and way of doing business. More specifically, the platform should drive visibility, planning, communication, analysis, and execution in perfect orchestration across unlimited numbers of trading partners.

Such a platform will allow trading partners to execute activities in their own home-based systems and communicate along the supply chain as required for order to cash, freight, and trans-ocean transactions. This makes an agile and scalable cloud‐based architecture all the more critical. An easy-to-deploy supply chain solution can help organizations build their capabilities in stages. This ensures immediate and incremental value at each stage, paving the way for self-funded deployment and reserving capital for events yet to unfold.

About PartnerLinQ: Enterprise Connectivity at the Speed of Business

PartnerLinQ is an innovative, process-centric, easy-to-use EDI solution that enables API-led, cloud native integrations. With a simplified B2B communication engine that includes EDI, AS2, SFTP and real-time APIs, PartnerLinQ is a fully integrated platform and easily handles both standard and proprietary file-based formats, including custom integrations. The solution is well suited for retail, e-commerce, wholesale, transportation, 3PL, as well as distribution, digital, and analog partner extensible platform and helps your team achieve operational efficiency and gain real-time visibility.

PartnerLinQ is designed by a team with more than 25 years of experience in providing industry-focused leadership in technology and consulting and in the development of innovative solutions that drive global supply chain transformation from the factory floor to the consumer’s doorstep. Hosted on Microsoft Azure, the PartnerLinQ platform integrates natively with Microsoft Dynamics 365, while also providing robust support for integration with other ERP systems as well as e-commerce platforms.

 

[1] Knut Alicke, Xavier Azcue, Edward Barriball. (Mar 2020). McKinsey. Supply-chain recovery in coronavirus times

https://www.mckinsey.com/business-functions/operations/our-insights/supply-chain-recovery-in-coronavirus-times-plan-for-now-and-the-future

[2] Supplyframe. (May 2020). Supplyframe Electronics Sourcing Report.

https://supplyframe.com/press-releases/supplyframe-electronics-sourcing-report-highlights-innovation-imperative-amid-covid-19/

You are probably familiar with this ‘BIG VAN’ claim repeated early and often by the champions of value-added networks (VANs):

‘The advantage of the network is the network itself.’

The claim, like all wide-ranging quotes, is to some extent only relatively true. Its validity depends upon who you are connecting with and how actively you link up with your trading partners. A closer look at the flow of goods and information within your business network will possibly reveal that no single network or VAN can address all your B2B/B2C communication needs.

While EDI and, in some instances, the VAN does help you connect, connecting with all your trading partners translates into a significantly higher ROI.  EDI today means more than simply X12; it means supporting multiple standards, formats, and transactions from X12, UN/EDIFACT, and GS1 XML trade messages to a number of non-EDI formats like JSON, flat files, text files, and proprietary XML message formats.

Read more: The truth behind the “competitive advantage” of value-added networks

EDI also means accessing a diverse set of communication methodologies – like AS2, MFTP, FTP, SFTP, and APIs – each with their own set of variables. While transaction formats and transportation methodologies make EDI more versatile, the complexity of handling such varied data formats and communication methodologies creates its own set of challenges, particularly when you consider the ‘BIG VAN’ value proposition.

The ‘BIG VAN’ value prop proudly claims that all members in your value chain are available on the same network or VAN as yours; while true to some extent, this is not an entirely accurate assessment. A VAN connection is by all accounts handy and, in some cases, necessary to interact with some trading partners. But it certainly is not everything.

The right tool with the right EDI transportation methods delivers far more effectively than ‘BIG VAN’ and at a lesser cost.

The Significance of the EDI VAN Interconnect

The ‘BIG VAN’ claim is largely backed by the EDI VAN interconnect. The interconnect is a tool that helps your value added network communicate with other value added networks and facilitates exchange of EDI transaction documents between connected pairs of trade partners. The more partners you connect with, the bigger the benefit derived from your communication network.

VAN interconnects effectively reduce friction between and among VANs, while also reducing the need for new VANs. The largest of the VANs reduce VAN-related confusion within partner networks by making claims to connect to thousands of trading partners; in effect though, ‘BIG VAN’ highlights the characteristics of EDI under which all EDI solutions and VAN partners operate. 

But what about transactions beyond X12 EDI? 

‘BIG VAN’ and the interconnect rely on a steady stream of ISA and GS identifiers within X12 transactions to move data, without which the ‘BIG VAN’ is about as useful as a cell phone without buttons.  While the VAN connection does handle X12, what about images, APIs, or XML files? These are typically not included in ‘BIG VAN’ offerings and, in most cases, require a different product altogether, adding to your overall cost.

A closer look at the VAN interconnect reveals that the reality of ‘BIG VAN’ is very different from the claim; if the interconnect connects ALL VANs then ALL VANs have the same access to trading partners, which means that ‘BIG VAN’ has a very different concern. ‘BIG VAN’ is concerned that it will inevitably be relegated to the stature of an ‘Ordinary VAN’ and without reservation. 

‘BIG VAN’ makes a big claim and living up to that claim is becoming nearly impossible.  This makes all ‘small VAN’ operators a competitive threat – why else would ‘BIG VAN’ make such claims if not to control and confuse the market? The VAN interconnect and image files remove the confusion from the claim ‘the advantage of the network is the network itself’; what else is there to the reality of ‘BIG VAN’?

The Synergy

Architecturally speaking, an EDI solution is actually made up of three components (or solution layers, if you’ll pardon the expression) – the transportation, transformation, and integration layers. While EDI is very effective when it leverages a ‘VAN’ connection, the VAN component is only a fraction of EDI, less than 30%.

Think about your VAN connection in the same way you think about how your mobile phone functions.  Your mobile phone functions by combining the services provided by the phone manufacturer, an infrastructure provider, and a telecom company; similarly, EDI functions by leveraging the synergy of these component layers to work as a synchronous whole.

Components of the ‘VAN Solution’

• Transportation. Along with VANs, this layer works using many other methodologies such as AS2, MFTP, FTP, SFTP, and APIs. Most of these methodologies have been around for a couple of decades now. Your VAN, in fact, may still be using FTP to connect you with your VAN mailbox; if it is not leveraging FTP, it is likely using AS2. Get in touch with your EDI team representative and ask, they should be able to tell you.
• Transformation. The transformation layer facilitates translation between different (EDI) formats. Formats like X12, UN/EDIFACT, GS1 XML trade messages, JSON, flat files, text files, or proprietary XML messages are transformed into formats that your ERP systems can easily understand and use.
• Integration. In the final layer, the transformed message is available to be consumed by the ERP. API connectors have been introduced in recent years to connect you with your ERP in a normalized way, much like the ODBC connector you may have used in the past.  The integration layer can be an API or a connector like ODBC or ODATA – the main emphasis here lies in providing (a) the route for landing the messages and (b) feedback that lets you know whether the order was rejected or accepted. The latter is the target, which requires the least manual input.

Do More Connections Provide More Benefits?

The key word is ‘choice’. If one network has the potential to provide a competitive advantage, do multiple networks offer even greater benefit?

The quantity of available networks is only one criteria that determines how effective your network is.  Connecting to multiple VANs is, frankly, a drain on resources, particularly when all VANs make use of the same VAN interconnect. 

While there is a need to be mindful of the connections available to your trading partners, using multiple VAN connections to stay in touch makes no sense at all. It is like having two or more cell phones or cable TV subscriptions, particularly when methodologies like AS2, MFTP, FTP, SFTP, and APIs are available.  Many of these options have low or no cost associated with them while VAN costs are subscription based and incur transaction fees that need to be paid monthly, much like that second cell phone that we referenced earlier.

The AS2 Effect

Application Statement 2 (AS2) is used for a reliable and secure transfer of data over the Internet. It provides a direct, unhindered connection with a trading partner and delivers document receipts and real-time tracking without requiring a VAN or a VAN interconnect. Your standard internet connection serves as the transportation layer; it is payload-agnostic, which means you can use the same tool to transmit images and every business has internet connectivity today. 

Unlike a VAN, AS2 does not typically have monthly charges or transaction fees. It reduces the chances of transaction failure by establishing a one-to-one transmission channel, without the need for a middle man, a VAN interconnect, or a ubiquitous VAN. Also, there is a Message Delivery Notification, but more on the MDN at a later time.

Putting It All Together

Now that we have unpacked the ‘BIG VAN’ claim, we can conclude that your EDI solution should provide more than one communication channel, has to be capable of handling a wide range of EDI formats, and MUST integrate smoothly and automatically with your enterprise systems.

We’ve also come to the conclusion that ‘BIG VAN’ cannot support the features that you need without complicating matters with additional software and subscriptions.

That’s why PartnerLinQ is different. PartnerLinQ is not a VAN; rather, it is a highly scalable, dependable, and configurable EDI and B2B communication solution. PartnerLinQ is ‘integration without complication’ that supports integration with Microsoft Dynamics 365 and other ERP systems. It includes an AS2 solution, FTP, MFT, and SFTP and can connect with any VAN, making it the perfect tool for B2B/B2C communication for your EDI and non-EDI partners.

PartnerLinQ also supports API-based ecommerce platforms like Shopify and Magento out of the box, providing your organization a seamless shift between EDI and API integrations; there’s nothing to add and nothing to buy, it’s all in there.

The solution also operates seamlessly between EDI and non-EDI formats – from X12, UN/EDIFACT, and GS1 XML to non-EDI formats like XML and JSON. While there are too many formats to list in a blog, this is a crucial factor that make PartnerLinQ a perfect choice for your EDI, B2B, and API integration and for smooth communication, while decreasing your reliance on ‘BIG VAN.’

In football, a good team chemistry is key to gaining a winning advantage over the opposition. Your opponents, on the other hand, will pull out all the stops to stand in between your team and victory. In such a fast-paced game with continuous movement, the players are in a constant struggle to maintain balance between defence and attack. Communication and collaboration are critical, and separate the champions from mere contenders.

Similarly, the fast-paced business environment demands a lot of movement on and off the field. Just like a champion team, businesses rely on key players and a healthy supply chain. Across procurement, production, distribution, and sales, strong collaboration and clear communication help tackle changing market conditions, thus playing a key role in surpassing customer expectations.

As market complexities increase and customer needs and expectations change, so too does the frequency and severity of supply chain disruptions.

Causes Leading to Supply Chain Disruptions

Here are some causes of supply chain disruptions:

• Unexpected business interruptions
• Raw material and labor shortages
• Transportation network disruptions
• Natural or environmental disasters
• Geopolitical instability
• Telecommunication or electric infrastructure failures
• Cyber-attacks and other disruptions to IT infrastructure and services

The differences between local and global supply chain disruptions can no longer be measured in mere degrees. As your business, like thousands of others, is more interconnected and dependent on trading partners than ever before, global disruptions affect a wide range of business functions and require innovative solutions.

Disruptions Due to the Pandemic

The COVID-19 pandemic wreaked havoc across world economies and the impact was felt by every business, both on the supply and demand side. Factory output slowed or stopped entirely, warehouses and transportation companies operated far below capacity or closed down, and productivity dipped, mirroring a shallow drop in consumer demand.

Some estimates indicated a 20% decline in consumer demand and recovery is expected to take months.

Below, we highlight a few examples of how different business teams were affected by the most recent global supply chain disruptions.

• Suppliers – You need carriers and trucks to get your products to the market. These carriers need to be integrated with your enterprise systems to receive messages such as load tenders. Suddenly your connection is disrupted and getting them re-connected takes time with your present EDI solution – time that you don’t have.
• Retailers – Your stores have been closed and you need 3PL providers to ship your products directly to customers. You have no experience with direct-to-consumer shipments and have no idea where to begin integrating. Everyone you talk to is an expert with their own solution.  But you need to sort this out and integrate several shipments with the factor of time working against you.
• Logistic Services – Your services are in high demand and customers are interested in doing business with you. Your team has been integrating customers one at a time for years without a problem. Now you face an onslaught of new customers. Your team is currently working from home and is unable to integrate them quickly enough.
• Food Service – Restaurants are closed for dine-in and your sales have been impaired. You know that orders are being distributed directly to customers through telephonic ordering and 3PLs. Going direct-to-consumer will work, but you need to get there first.

Consequences of Supply Chain Disruptions

Decrease in Profitability

Supply chain disruptions are more likely than ever to adversely affect the short- and long-term profitability of your business with losses in market share and sales. Are you prepared to capitalize on market demand outside of your normal business operations?

Loss of Productivity

Supply chain disruptions also negatively impact the productivity and utilization of assets. The firm may end up with excess inventory for some products and experience stock-outs and backorders for others. Equipment over-utilization and under-utilization is likely, which could lead to poor asset and inventory performance.

Retailers are taking the brunt of it. With numerous big retail companies closing down their stores, they are struggling to sell out overstocked inventories.  Are you ready to trade quickly with new partners?

Diminishing Customer Loyalty

When customers are unable to get what they want and when they want it, they will go elsewhere. This is exactly what you did when you changed shops to get the goods that you needed for your family. As an outcome, your loyalties may have changed. Different brands, different stores, and different locations have all become part of your normal routine.

Much the same can be said of your customers. Have you been able to provide them with the same level of products and services? Could you scale up to provide new goods and services and gain new customers? If not, what stopped you?

Increase in Costs

Disruptions can increase the costs associated with expediting, premium freight, obsolete inventory, additional transactions, storage and moving, selling, and penalties paid to the customer. Also, the loss of reputation and credibility associated with disruptions may require firms to increase their marketing expenses to reinstate their credibility and reputation. Additionally, raising capital can be more expensive as investors ask for a higher premium to lend to firms whose credibility and reputation is questionable.

Factors Exacerbating the Effects of Global Supply Chain Disruptions

Inefficient Communication

Supply chains change and so do trading partners. So as a product moves from origin to destination, it is increasingly important for all stakeholders to have a digital supply chain connectivity solution that knows where the product is and who has interacted with it.

It becomes increasingly difficult to stay on the same page without a well-planned communication channel. How else would businesses know that best practices and important policies are being followed?

Poor communication leads to untimely deliveries, or worse, deliveries that cannot be made. This leads to a slowdown in other activities, further impacting your customers and your business. The associated costs run far beyond poor customer experience and negative brand recognition and reputation.

Electronic communication through EDI is particularly efficient. Sending load tenders to your carriers faster than your competitor ensures getting your products to market and attending to tomorrow’s pickup. EDI processes automatically create, transform, and transmit transactions as they occur – this is far more efficient than old manual processes involving phone calls and emails, and a walk next door to accommodate.

Slow Response to Technology

In an age where you can order from Amazon, receive an instant response, and get a package the same day, are your processes taking all day? E2E visibility, transparency, and agility all add up to drive a lean and responsive supply stream.

Technological innovations like Big Data and Internet of Things are reported to be crucial to a company’s success story. Do you still rely on error-prone manual processes and is your business slow to respond to rapid technological advancements? Are you facing rising labor costs, retiring workers, older technologies, inefficient service delivery, and reduced transparency?

Consider the case of the frozen food industry in the US. Restocking of frozen food requires refrigerated transport containers called REFERs. When frozen food were flying off the shelves, retailers sought to restock them and in short order. The result was a shortage of refrigerated containers, which impacted the supply chains of other refrigerated products like milk, cheese, and meat. When there are no refrigerated containers available to bring the produce to markets, the supply chain is impacted and so are customers.

EDI is the Answer

Supply chain disruption means (1) you cannot operate at peak efficiency when you interact with your trading partners, and (2) you are unable to act quickly to seize an opportunity or overcome an obstacle when that time comes.

So how can EDI help your supply chain and boost recovery?

Think of it in terms of an off-season transfer by recruiting a new player for your team. A unified supply chain solution helps you address local disruptions as well as widespread ones like that following the COVID-19 outbreak. EDI provides visibility into what your customers want, what your suppliers have to offer, and where your goods are in the middle of uncertainty.

Exchanging business data with trading partners and organizations does not have to be expensive or technically challenging. Many EDI solutions charge by transaction, discouraging smaller partners from establishing critical lines of communication. But it doesn’t have to be that way.

If your current EDI solution fails to scale, has trouble with high volumes, or is becoming sluggish under peak loads, there is another way.

PartnerLinQ: A Unified Supply Chain Solution

PartnerLinQ’s digital supply chain connectivity solution helps you overcome all your challenges related to supply chain disruptions. With the following key features, it is the perfect tool for B2B communication for your EDI and non-EDI trading partners alike:

• Pre-installed and easy to use and maintain
• Simplifies onboarding process with easy configuration and business rules
• Supports robust, multi-user, ‘log in anywhere’ access
• Maintains a wide variety of standards and formats
• Increases throughput by scaling to thousands of transactions per hour
• Supports real-time error detection and ‘fix on the fly‘ remediation
• Provides built-in access to leverage various transport protocols
• Keeps users informed with a real-time dashboard and detailed reports
• Includes an AS2 solution

With PartnerLinQ, it’s all included; there’s nothing else to buy.

Conclusion

When your supply chain runs at peak efficiency, your business operates better and is more likely to overcome supply chain disruptions. An easy-to-use, easy-to-deploy, reliable, secure, and unified supply chain solution will help your supply chain prepare for the next disruption and make sure that you come out on top.

Discover PartnerLinQ and PartnerLinQ will help you discover the value of frictionless EDI. Talk with our experts and see it for yourself.

Managing an organization is a constant juggling act across finance, sales, operations, HR, and other departments. ERP systems help keep important business data in one place, ensuring it’s safe, organized, and accessible.

Time is Running Out for Businesses that Still Use Dynamics AX

Dynamics AX is a legacy ERP solution that was offered by Microsoft for mid-sized to large organizations beginning in 2008. Mainstream support for Dynamics AX 2009, 2012, and 2012 R2 ended in 2018, while mainstream support for Dynamics AX 2012 R3 will end in 2021.

Beyond October 2021 Microsoft will no longer accept support tickets or release feature updates. And once extended support ends in 2023, Microsoft will no longer release bug fixes or security patches! In this scenario, upgrading to Microsoft Dynamics 365 appears to be the best course of action for businesses that still use Dynamics AX.

How does such a change affect supply chain connectivity for your organization? Continue reading to find out how Dynamics 365 stands in comparison to Dynamics AX, and how PartnerLinQ can help your organization avoid business disruption as you transition to a modern ERP platform.

Key Advantages of Microsoft Dynamics 365

As a cloud-based platform, Microsoft Dynamics 365 offers a simpler way to access your information anywhere, from any device. With an on-premises Dynamics AX, providing global access to business information wasn’t as straightforward.

For example, users situated thousands of miles from your Dynamics AX datacenter could experience performance issues. Dynamics 365 is hosted on Microsoft Azure Cloud datacenters across the globe and isn’t affected by large distances or disparate workgroups accessing the same system.

PartnerLinQ and Microsoft Dynamics

PartnerLinQ is a robust, scalable, and complete EDI integration solution that bridges the gap between modern and traditional EDI. As a fully managed cloud solution, it operates seamlessly with Dynamics 365 to consolidate data from disparate endpoints, perform data validation, and provide error alerts in a single management console.

PartnerLinQ provides flexible, secure, and cost-effective data interchange, freeing businesses from legacy systems that suffer from multiple limitations. It also allows you to connect with multiple ERP systems right out of the box; so while transitioning from Dynamics AX to Microsoft Dynamics 365, you can connect with both during the transition.

With native support for multiple AS2, VAN, and direct-to-partner data formats and standards, prebuilt API connectivity with leading ecommerce providers, and an extensive business rule library, PartnerLinQ can reduce your partner onboarding time by as much as 75%.  It can be deployed as an on-premises or SaaS cloud solution depending on your operations, current ERP platform, and business requirements.

Working with Microsoft Dynamics, PartnerLinQ provides a single, real-time view of transaction volume, errors, and other statistics for all inbound and outbound transactions. These real-time analytics help your organization identify issues, pinpoint their root cause, and prevent chargebacks that can severely impact operating margins.

PartnerLinQ makes it easy to drill down and view details for a specific trading partner or transaction error and make corrections. It also allows users to generate custom reports using a wide range of metrics and performance indicators.

Should I Migrate from Dynamics AX to Dynamics 365 to Use PartnerLinQ?

While upgrading to Microsoft Dynamics 365 is a smart digital investment for most businesses, upgrades can take several months. But you can benefit from PartnerLinQ while you’re still using Dynamics AX.

For businesses that use either Dynamics 365 or Dynamics AX, PartnerLinQ works out of the box in most EDI integration scenarios. It can integrate simultaneously with both versions, which helps ensure continuity of EDI operations during an upgrade of your ERP system. Since you can use a single PartnerLinQ license with both Dynamics AX and Dynamics 365 at the same time, you don’t have to worry about licensing when you upgrade.

So you need not wait until after your ERP upgrade to address your supply chain connectivity needs. Start using PartnerLinQ today and then migrate to Microsoft Dynamics 365. Our solution helps you transition to your new platform seamlessly.

Conclusion

Many organizations across retail, ecommerce, wholesale, distribution, and other industries are already using PartnerLinQ, which has become a cornerstone for many operations across their modern B2B architecture. Whether you’ve already upgraded or are just beginning your transition planning, there’s no need to wait. Enhance your global partner communication capabilities today with PartnerLinQ. Get in touch with our experts to begin your journey.

The cooperative advantage of EDI integration

Following transportation and transformation, integration is the final step in the EDI process. While transportation provides a pathway for business data and transformation converts the data into a format that the recipient’s system can consume or otherwise accommodate, integration brings the transformed data into the internal or host system. The end-to-end process is always a cooperative affair. This cooperation between endpoint applications enables data transfer between them, improving relationships through seamless coordination across systems, departments, trading partners, transportation networks, and even beyond boundaries.

A good line of communication within your own business functions and with other businesses is essential for success. It brings parties together by promoting a sense of partnership and shared responsibility. When done properly, EDI integration brings about cooperative opportunities that benefit all of the parties involved.

It’s important for trading partners to understand that EDI isn’t new; in fact, it’s one of the older methods of communication between trading partners. Because of its age, it benefits from wide use and acceptance. Newer versions of EDI are far more intertwined with today’s technologies, fully embracing technology standards well beyond X12. This includes XML, JSON, SOAP, and APIs, not to mention making use of technologies such as AS2, SFTP, and innumerable partner-managed connections.

EDI implementation won’t take you head and shoulders above your competitors; rather, it serves as a sign of business maturity, advancing growth within the businesses that have chosen to implement or redeploy EDI software, solutions, and services in recent years. Where EDI was once only found in industries like apparel, grocery, and retail, interest in EDI has seen a resurgence in industries like third-party logistics, food service, wholesale trade, healthcare, and the construction of gas and water utilities.

Using EDI for transportation and supply chains across business footings leads to inventory optimization and direct-to-consumer success, driving businesses ever forward. The transportation industry, which has a historical EDI footprint, is expanding its use of EDI into the area of transportation planning. EDI integration with eCommerce gateways and shipment management tools improves supply chain efficiency, reduces time to market, and improves both visibility and customer service. The email confirmation for your recent online order didn’t show up in your email box by accident. It crossed paths across modern EDI technologies between the time that you completed your order and your phone notified you that “you’ve got mail”.

Recently, there has been a rise in traceability concerns with products – from romaine lettuce to over-the counter medications – resulting in brand impacts on well-renowned companies like Tylenol and Chipotle. A more modern approach and use of EDI technologies can have a significant impact on these areas of commerce. Responding to the ever-present threat to business success, food service and healthcare organizations are expanding their EDI use with a new emphasis on supply chain traceability. FMCG and pharmaceutical companies are now using EDI to trace food from farm to table and the chain of custody in the drug supply chain.

Many business owners assume that EDI integration requires a massively disruptive and costly overhaul of their business processes; as a result, they miss out on the cooperative benefits that EDI offers. The truth is that EDI isn’t disruptive at all and certainly not in the way a trading partner might expect. Rather, EDI complements the business process. Adopting a modern approach to EDI leads to changes that not only reduce manual effort and free up more time to automate other parts of your business. It also helps reduce time to market and improves supply chain efficiency, visibility, and customer satisfaction.

GS1 (formerly the Uniform Code Council) funded a study in 1998 that led to the creation of the General Business Model. The model, enlightening for its time and a predecessor of things to come, identified key buyer-seller relationships and (perhaps unintentionally) key EDI transactions involved in a typical buy-sell relationship. The General Business Model identified four main buyer-seller interactions:

• Information sharing (EDI 832 Transaction Set – Price/Sales Catalog)
• Ordering (EDI 850 Purchase Order)
• Delivery (EDI 856 Advance Ship Notice (ASN))
• Payment (EDI 810 Invoice Transaction)

While a strategic advantage may remain the most common reason for implementing or redeploying EDI, a more compelling case has been made by way of this discussion. So let’s look at the cooperative advantage that EDI integration provides to suppliers and buyers.

Impact on suppliers

Studies (such as of Gromley’s) show minimal to no staff reduction after EDI implementation. While this may appear counterintuitive, the results of implementation provide valuable insights into the inner workings of business.

One study conducted in 8 major companies found that none of the customer service coordinators or clerical workers received higher salaries or promotions because of their EDI experience. Interestingly, even though EDI automated many manual tasks, an equal number of tasks were added to customer service roles.

One might therefore infer that in addition to reducing manual tasks, EDI integration also helped organizations reschedule backlog work items. In other words, EDI integration helped companies make work efforts more manageable, extending beyond the backlog and in to areas such as customer service improvements and cost savings across departments. Thereby, the initial benefit was spread throughout the organization.

Impact on buyers

Simply put, EDI integration saves buyers time and money. EDI provides buyers timelier product ordering, shipment, and delivery information. This increased knowledge results in a better understanding of their suppliers’ and supply chain operations, encouraging an increased level of cooperation and trust between the buyer and its suppliers. This understanding, cooperation, and trust helps both parties to reduce inventories, improve materials management, and increase productivity gains, further improving efficiency and driving cost savings across the buying organization.

Garnering the Cooperative Advantage with EDI

Information sharing

Today, opportunities in EDI extend well beyond order, deliver, and pay. Looking for more opportunities for cooperation begins with looking for opportunity within. Whereas most initial EDI integration improves processes, encouraging teams to become more involved in the EDI process can yield even better results, particularly when redeploying an EDI strategy. Encouraging individuals across the organization now equipped with new EDI knowledge and elevating their responsibilities will increase EDI integration opportunities across the organization.

Business process improvements

EDI integration helps streamline your business operations by increasing order and invoice accuracy, reducing late or incorrect shipments, and avoiding excess inventory. EDI also offers distinct advantages when companies begin to dig deeper into their processing, forecasting, and production schedules, and presents further opportunities to grow their business with the EDI practice without expanding the workforce, becoming a strategic ally in that mission.

Increased responsiveness

Relationship responsiveness goes a long way with your customer base and should be viewed as a bread-and-butter part of the business and a necessary investment in a better business future. EDI integration, when properly managed, results in an increased business awareness among customers and stakeholders, often accompanied by increased requests from within the organization to boost those interactions. Responsiveness to these business requests, the result of a newfound understanding, relies on modern integration techniques, which puts your next EDI integration steps ahead of competitive opportunities.

When you complete your initial EDI integration or redeployment, take a moment to recognize and speak with your teams and talk about their successes and accomplishments. Only then will you begin to hear their desire to look and move forward. The right EDI partner will help you with this and ensure that you have plans for your organization’s future and its future with EDI. For expert advice on your EDI integration needs, get in touch with the PartnerLinQ team today.

“Value-added networks provide competitive advantage.”

On the surface, this statement seems to make sense of the eternal value-added network (VAN) claim that the advantage of their network is their network. While stated as fact, “the advantage of the network is the network” is only relatively true, depending on who you’re connecting with and whether the network is where you can find your trading partners (or at least some of them). What does that mean for the rest of your trading partners?

This argument for the VAN being a competitive advantage begins to unravel when you look more closely at trade among trading partners. You’ll arrive at the conclusion that a single network or VAN can’t possibly serve all of a company’s needs.

Read more: VAN independence: So, how does a trading partner break from their VAN?

Begin at the end

The advantage of EDI technologies is connecting with your trading partners… and not just some of them. The ability to connect to most or all of them offers the greatest ROI.

However, the complexity of EDI and related technologies presents compatibility challenges. There are many EDI standards, formats, and transactions. There’s X12, UN/EDIFACT, and GS1 XML trade messages. There are also non-EDI formats like JSON, flat files, text files, and proprietary XML message formats. Let’s not forget about the myriad of communication methodologies such as AS2, MFTP, FTP, SFTP and APIs, or the number of transactions and variants.

Clearly, not everyone you need to connect with will be on the same network or VAN. That’s why a VAN must have an interconnect.

What’s an interconnect?

An interconnect is a tool that VANs use to communicate with other VANs. It aids in the exchange of EDI transaction documents belonging to individual clients. All VANs use interconnects to ensure delivery of transaction documents among the participants within various VANs. This begins to demonstrate the point of a VAN: connecting with more networks provides a bigger advantage.

Why haven’t I heard about interconnects before?

The real value of interconnects to VANs was that they help keep new VANs out of the market. Discussing interconnects dispels the notion that belonging to a VAN is an advantage. That’s why VANs don’t like to talk about them. If they did, they’d also have to talk about the characteristics of EDI, which reduces VAN confusion within the consumer.

The three-part harmony

For EDI to be effective, it needs three layers: transportation, transformation, and integration. In the marketplace, these layers are typically seen bundled together as what has come to be known as the “VAN solution”. However, they should be viewed as separate solutions that work together in harmony to produce the desired results.

A classic example of this harmony can be found in your pocket: your mobile phone. One company produces your device, another delivers your cellular service, and a third provides the local and long-distance lines that you connect to when speaking with someone on a landline.

The three essential components of EDI are:

1.    Transportation

The transportation layer allows partners to talk to one another. While VANs are dominant in this space, several successful methodologies like AS2, MFTP, FTP, SFTP and APIs also exist; most have been in use for over 20 years. In fact, your VAN may use FTP to connect to your VAN mailbox; I encourage you to ask your EDI representative.

2.    Transformation

The second component is the transformation layer. This is where the translation between EDI formats takes place. X12, UN/EDIFACT, GS1 XML trade messages, JSON, flat files, text files, or proprietary XML messages are transformed into a format that your ERP system can consume.

3.    Integration

Lastly there’s the integration layer: the path into the enterprise system where the transformed message is consumed. It can be a connector (like ODBC or ODATA) or an API. The primary focus is a path for the order to take without manual intervention.

So more connections are better?

Yes! If belonging to a network is a strategic advantage, then access to multiple networks is even more of a strategic advantage. It’s actually not so much about the number of networks as it is about the availability of connections to your trading partner and choice of those connection methods. VANs typically involve monthly subscription costs and transaction fees (or kilo-character fees), whereas in most cases, methodologies like AS2, MFTP, FTP, SFTP, and APIs have no monthly costs directly associated with them.

What’s AS2?

Applicability Statement 2 (AS2) is a protocol used to transport data securely and reliably over the Internet. It provides document receipt and tracking without the need for a VAN or interconnect. In short, AS2 provides a direct connection with a trading partner.

AS2 makes use of the Internet as a payload-agnostic mechanism for delivery of EDI transaction documents, reducing potential points of failure. More importantly, it eliminates transaction-based charges that occur with the exchange of EDI transaction documents through a VAN connection.

PartnerLink and AS2

Visionet’s PartnerLink solution is different. PartnerLink isn’t a VAN; it’s a highly scalable, reliable, and configurable EDI and B2B interchange solution that integrates natively with Microsoft Dynamics 365 for Finance and Operations. It also supports integration with most other ERP systems. PartnerLink includes an AS2 solution and connects to all of the major VANs, making it the perfect tool for B2B communication with both EDI and non-EDI trading partners.

What about APIs?

PartnerLink also provides built-in support for API based eCommerce platforms like Shopify, Magento, and many others, allowing companies to shift seamlessly between EDI and API-based integrations. This makes PartnerLink a complete EDI, B2B, and API solution for frictionless partner communication.

…and nonstandard transactions?

PartnerLink enables communication with non-EDI organizations, too. It supports a wide range of EDI formats like X12, UN/EDIFACT, GS1 XML trade messages, non-EDI formats like XML and JSON, and custom formats to ensure reliable and secure communication with any trading partner organization.

What’s the lesson here?

“VANs provide competitive advantage” is only true when there’s no advantage found in access to multiple networks.

• EDI solutions should provide more than one communication channel for exchanging documents with trading partners, including VAN, AS2, SFTP, FTP, and MFT.
• EDI solutions should provide a transformation component – a mechanism for handling a range of EDI formats.
• EDI solutions should provide a clear integration path into your enterprise system that doesn’t require manual intervention or ongoing maintenance.