Components of a B2B Integration Solution

So what components make a B2B Integration solution? In short B2B Integration must facilitate successful and cost effective electronic exchange of business data and the integration of external business processes. Any B2B Integration solution must comprise of the following components:

  • Electronic Data Exchange– the automation of key business documents (e.g. Purchase Orders, Shipping Notices, Invoices etc). Essentially replacing key shared paper documents with real time exchange of electronic files
  • Business Process Management – the use of rules and profiles to improve and cleanse the quality of key business documents (e.g. matching delivery quantities provided in an invoice to the goods received or shipping notice). Helping companies improve the accuracy of information for back office processing
  • Business Activity Monitoring – applications, typically delivered online, that monitor the real time status of B2B Integration operations and report performance over a given time period (e.g. alert me when I receive a Purchase Order over £10,000 in value). Alerts help companies improve real time process breakdowns and reports offer the chance to strategically improve performance over time
  • Global Partner Enablement and Management – tools that allow companies to effectively automate connections from their global partners (e.g. Customers, Suppliers, Logistics Providers, Financial Institutions). This critical component of a B2B Integration solution is fundamental to the success of every B2B Integration solution

B2B Integration is the logical extension of internal business integration projects, ensuring that internal investments made for process automation are extended to customers and suppliers. In recent years the proliferation of technology and deployment models have resulted in increasing complexity. The overwhelming factor in choosing B2B Integration solutions is to select scalable, flexible, feature rich solutions that deliver a return on investment whilst also ensuring tomorrows requirements can be supported.

Before learning more about a B2B Integration solution, it is important to look at an example that highlights some of the key differences between traditional paper document transactions and B2B Integration. One of the first places where many companies implement B2B Integration is in the exchange of a purchase order (PO). In the traditional method of processing a purchase order, a buyer or purchasing agent will go through a fairly standard procedure to create a purchase order, consisting of the following steps:

  • A buyer reviews data from an inventory or planning system
  • The buyer enters data into a screen in the purchasing system to create a PO
  • The buyer waits for the PO to be printed, usually on a special form
  • After the PO is printed, the buyer mails it to the vendor
  • The vendor receives the PO and posts it in their order entry system
  • The buyer calls the vendor periodically to determine if the PO has been received and processed

When you add up the internal processing time required by the sender and receiver, and then add a couple of days in the mail, this process normally takes between three and five days. This assumes first that both the sender and receiver handled the PO quickly and that at every point along the way there were no errors in transcribing data from a form to a system.

B2B Definition – Why B2B?

Now consider the same document exchange when a company places its purchase orders electronically using B2B Integration:

  • The buyer reviews the data and creates the PO, but does not print it
  • B2B Integration solution creates an electronic version of the PO and transmits it automatically to the sender within minutes
  • The vendor’s order entry system receives the PO and updates the system immediately upon receipt

What took up to five days with paper and the postal system has just taken less than one hour. By eliminating the paper handling from most of the stages of the process, B2B Integration has the potential to transform a traditional paper based process.

B2B Integration Dynamics

Before discussing the potential B2B Integration solutions, it’s important to review three key principles that make B2B Integration unique.

  1. The role of standards. Much work has been completed in multiple industries to foster supply chain integration and create business standards which accelerates and eases the deployment of B2B Integration technology. While we cannot underestimate the important work of these standards bodies we must also appreciate the fact that companies will continue to sub-optimise their supply chains, meaning that no two organisations will implement the standard in the same way. For example grocery retailers in Europe are likely to leverage the EDIFACT standards for purchase order and invoice automation. However, because each grocery retailers process may very subtlety in nature, they may implement the standards in different ways, using making one conditional field mandatory where others may choose to leave it conditional. This sub-optimisation of supply chain processes means that the standards will continue to be implemented differently. A B2B Integration solution must have the configuration and flexibility to support such sub-optimisation of industry standards.
  2. Technology Proliferation. Again because B2B Integration can yield true competitive advantage, recent technology innovations such as XML standards or direct connectivity standards such as AS2 will continue to evolve. When XML was first announced a few years back, the common understanding what that it would replace traditional document exchange formats such as EDI. However, as you would expect companies continue to leverage EDI and automate new business processes with XML. Such proliferation will continue and the implication for B2B Integration solutions is that they must be future-proofed to offer companies the ability to add new data or connectivity standards.
  3. Trading Partner Diversity. B2B Integration projects differ from internal integration projects due to the number of parties that require cooperation in order to implement the solution. For example, a new replenishment project that aims to reduce the stockpile or buffer inventory in the supply chain must rely on the successful cooperation of each constituent part of the supply chain – the buyer, the supplier, the freight forwarder, the shipper or the financial institution. As supply chains continue to globalise, diversity will continue. A B2B Integration solution must therefore offer enough flexibility to ensure that all constituent parts are able to engage in the solution, maximising the potential return. A supply chain after all, is only as good as it’s weakest link.

These unique features of B2B Integration projects must be top of mind when considering the deployment of B2B Integration solutions. To be blunt, professionals considering to implement B2B Integration solutions must plan their projects for rampant diversity and limited control of external parties. Ignoring these unique features and treating B2B Integration projects like internal integration or automation projects will almost certainly deliver lower results or at the worst guarantee a failed project.

The major benefits of implementing B2B Integration within your business are discussed in more detail in the Benefits section of this Microsite but in summary B2B Integration can help improve speed and accuracy of business transactions, reduce costs and increase business performance.