Electronic connectivity for improving supply chain efficiency

This week, the University of Tennessee's Global Supply Chain Institute released new research findings that showed an growing number of businesses are using B2Bi, or business to business electronic integration, to reduce costs and enhance workflow production.

Many supply chains have faced increasing pressure to make investments in IT-related innovations to elevate efficiency, streamline processes and improve operations. And while some have seen favorable results after doing so, others have suffered some setbacks due, in many cases, to ill preparation and insufficient testing of the technology before implementing it.

However, according to UT, the recent survey indicates that the benefits of electronic connectivity outweigh the costs of investment. In the press release, Global Supply Chain Institute Executive Director Paul Dittmann said that, although there are many factors that contribute to successful collaboration between trading partners, technology does and will continue to play a pivotal role.

Survey findings
More than 200 companies were surveyed, with respondents spanning a multitude of industries. The survey showed that the majority, or 68 percent, of organizations said that utilizing electronic and cloud-based managed services made doing business easier for their customers.

Furthermore, although nearly all, or 96 percent, of the professionals have some digital line of connection with a business partner, in general companies dedicate only about 5 percent of their respective budgets to electronic-based communication channels. The source also added that over the next few years, 69 percent of respondents plan to trade electronically with more customers, with a forecast of a 20 percent increase in the amount of electronic connections.

In the announcement, UT noted that some of the supply chain benefits businesses have seen from digital collaboration include reduced lead times, improvements in stock/fill operations and increased accuracy.

Demand for digital supply chains
The above survey coincides with other industry research that has highlighted the growing need for supply chains to incorporate technology in their processes. B2B E-Commerce World recently reported that a study conducted by GT Nexus found that the majority of retailers and manufacturers believe Web-based software and online data are going to become increasingly essential for supply chains.

And while 70 percent of the participants said they have already started incorporating such digital innovations into their supply chains, according to the source, nearly half continue to "rely mostly on phone, fax and email for communicating with raw materials suppliers, logistics providers, distributors, retailers and other businesses."

The outdated approach puts supply chains at risk because it can can lead to mistakes in the entry of shipping and product data.

Findings from both of the aforementioned studies indicate a disconnect between the willingness of companies to implement digital technologies into their supply chains and the ability to use them most effectively. By failing to adopt and leverage electronic connectivity to enhance supplier relationships and operational efficiency, organizations are putting themselves at a disadvantage and becoming more susceptible to disruptions.

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