2B integration is fundamentally about coordinating information among businesses and their information systems. Although there is confusion between the B2B and B2C integration paradigms, there are differences that go much deeper than the differences between retail and wholesale purchasing.
In today's world with companies operating in a global business environment, B2B integration is a pre-requisite for them to remain competitive. They need to come out of their shell and interact with their suppliers, partners, and customers distributed throughout the world. B2B integration enables a company to focus on its core competencies and offload other services to partners to gain efficiency and reduce cost.
After a decade of spending on expensive ERP systems, Customer Relationship Management, and e-Commerce applications in a departmental manner, companies are turning their attention to integrating these information. However, if this integration is done on a point-to-point basis, these companies end up spending up to 35% of their software maintenance budgets on simply maintaining these connections. Simply connecting applications on a point-to-point basis is not enough. Without a thoroughly integrated internal infrastructure, B2B initiatives are sure to provide little value in the best-case scenario, or no value in the worst.
The development and manufacturing of products has become increasingly complex in today's global economy. Typically, multiple communities of suppliers are involved in product design and development, and these communities are geographically dispersed. Without a central location or an integrated system of communication, it can be difficult for people, from executives to floor supervisors, to identify problems in the production line or respond quickly to a change in customer demand.
To work effectively together, manufacturing partners must have tools for communicating with each other and managing inventory across the supply chain. With a closely-managed inventory, the delivery of products can be automated based on predicted rates of end-customer sales and achieve greater efficiency and profitability.
Manufacturers can reduce time to market, decrease costs, and manage inventory turns through supply-chain integration.
Total asset visibility - Microsoft technologies support important industry standard technologies like radio frequency identification (RFID). Supply-chain partners employ the Microsoft platform to create a visibility portal. Using RFID, individual products can be uniquely identified during the manufacturing process, creating an audit trail that includes information on the product's creation, storage, transportation, and maintenance. This enables manufacturers and suppliers to gain immediate inventory metrics for supply chain management.
Enhanced system integration - Integration between manufacturing, trading, and third-party logistics partnering in a supply chain is a critical success factor in a changing environment.
Effective collaboration - The critical process of planning, forecasting, and replenishing inventory along the supply chain is built on a foundation of collaboration between supply chain partners. Our solutions enable partners to easily communicate and access the data they need, so that they can make critical and timely adjustments to inventory production and distribution.
Successful SCM requires a change from managing individual functions to integrating activities into key supply chain processes.
An example scenario: the purchasing department places orders as requirements become appropriate. Marketing, responding to customer demand, communicates with several distributors and retailers, and attempts to satisfy this demand. Shared information between supply chain partners can only be fully leveraged through process integration.
Supply chain business process integration involves collaborative work between buyers and suppliers, joint product development, common systems and shared information. Operating an integrated supply chain requires continuous information flows, which in turn assist to achieve the best product flows. However, in many companies, management has reached the conclusion that optimizing the product flows cannot be accomplished without implementing a process approach to the business. The key supply chain processes are:
One could suggest other key critical supply business processes combining these processes such as:
Customer service management process :
Customer Relationship Management concerns the relationship between the organization and its customers. Customer service provides the source of customer information. It also provides the customer with real-time information on promising dates and product availability through interfaces with the company's production and distribution operations. Successful organizations use following steps to build customer relationships:
Procurement process
Strategic plans are developed with suppliers to support the manufacturing flow, management process and development of new products. In firms where operations extend globally, sourcing should be managed on a global basis. The desired outcome is a win-win relationship, where both the parties benefit, and reduction times in the design cycle and product development are achieved. Also, the purchasing function develops rapid communication systems, such as Electronic Data Interchange (EDI) and Internet linkages to transfer possible requirements more rapidly. Activities related to obtaining products and materials from outside suppliers requires performing resource planning, supply sourcing, negotiation, order placement, inbound transportation, storage, handling and quality assurance, many of which include the responsibility to coordinate with suppliers in scheduling, supply continuity, hedging, and research into new sources or programs.
Product development and commercialization
Here, customers and suppliers must be united into the product development process, thus to reduce time to market. As product life cycles shorten, the appropriate products must be developed and successfully launched in ever shorter time-schedules to remain competitive. The managers of the product development and commercialization process must:
Manufacturing flow management process
The manufacturing process is produced and supplies products to the distribution channels based on past forecasts. Manufacturing processes must be flexible to respond to market changes, and must accommodate mass customization. Orders are processes operating on a just-in-time (JIT) basis in minimum lot sizes. Also, changes in the manufacturing flow process lead to shorter cycle times, meaning improved responsiveness and efficiency of demand to customers. Activities related to planning, scheduling and supporting manufacturing operations such as work-in-process storage, handling, transportation, time phasing of components, inventory at manufacturing sites, maximum flexibility in the coordination of geographic and final assemblies postponement of physical distribution operations.
Physical distribution
This concerns movement of a finished product/service to customers. In physical distribution, the customer is the final destination of a marketing channel, and the availability of the product/service is a vital part of each channel participant's marketing effort. It is also through the physical distribution process that the time and space of customer service become an integral part of marketing, thus it links a marketing channel with its customers (e.g. links manufacturers, wholesalers, retailers).
Outsourcing/partnerships
This is not just outsourcing the procurement of materials and components, but also outsourcing of services that traditionally have been provided in-house. The logic of this trend is that the company will increasingly focus on those activities in the value chain where it has a distinctive advantage and everything else it will outsource. This movement has been particularly evident in logistics where the provision of transport, warehousing and inventory control is increasingly subcontracted to specialists or logistics partners. Also, to manage and control this network of partners and suppliers requires a blend of both central and local involvement. Hence, strategic decisions need to be taken centrally with the monitoring and control of supplier performance and day-to-day liaison with logistics partners being best managed at a local level.
Performance measurement
Experts found a strong relationship from the largest arcs of supplier and customer integration to market share and profitability. By taking advantage of supplier capabilities and emphasizing a long-term supply chain perspective in customer relationships can be both correlated with firm performance. As logistics competency becomes a more critical factor in creating and maintaining competitive advantage, logistics measurement becomes increasingly important because the difference between profitable and unprofitable operations becomes narrower.