Building a Business Case for Using a Third Party to Implement & Manage a B2Bi Program

Technology is advancing rapidly in today's world as drones, advanced robotics, and 3D printing become commonplace. Meanwhile, technology to enable B2B integration is advancing as well. While it may not be as visible, it has the potential to notably impact the bottom line impact.

Trading partner collaboration in the supply chain environment is essential in today's hyper-competitive and technology-driven business world. Today's business reality is driven by the need for internal efficiency, trading partner compliance, and costs reductions. However, the opportunities for streamlining processes are richer than the resources to achieve it, as increased pressures on internal IT departments to meet core business objectives can lead to potential gaps in knowledge and technology.

Source: Pixabay

Source: Pixabay

The concept of using cloud-based systems is in its relative infancy, but growing in acceptance. A recent survey from DiCentral suggested that 64% of distribution centers (DCs) have a warehouse management system (WMS), but only 8% are cloud-based.

Cloud-based systems definitely make sense for small companies who don't have the resources to deploy an in-house system. But they also are a smart choice for larger organizations, as well as those that want a standardized system for multiple sites. In addition, there is a growing trend to use cloud-based applications managed by a third party.

Rather than attempt to do this in-house, many organizations use a third-party organization to implement and manage their business-to-business integration (B2Bi) program. They do this for many reasons including:

  • Faster implementation: EDI implementations can be done much faster, leveraging the benefits of a company that focuses exclusively on B2Bi. It generally takes two to three times the effort initially estimated if done internally.
  • People: Using a third party enables the organization to leverage the third party's highly experienced talent in this area. Retaining internal B2Bi experts within the organization is becoming increasingly difficult and expensive.
  • Problem resolution: The third party can actually work on problems around the clock with teams in each region. One region can pass to another around the clock.
  • Best practices: The third party will understand best practices and can apply them in your organization. You don't have to reinvent the wheel.
  • Maintenance/upgrades: With a third party that provides a cloud platform, the organization doesn't have to manage or invest in the hardware or software upgrades.
  • Resource allocation: Using a third party avoids having to expend valuable internal resources, saving them for other high priority initiatives.
  • Global expansion: The third party has international skills and expertise. Navigating the regional data protocols used around the globe is often well beyond local IT expertise.

When selecting a third party to manage your electronic transactions, there are a number of things you should keep in mind. As a starting point, identify and document your needs, as well as the largest problems you face in this area or believe you could face in the future. Next, develop a request for information (RFI) and get some basic information from two or more third parties. Ask them to document their capabilities such as: Do they have sufficient infrastructure, and can they scale to your future size?;  Do they have a robust disaster recovery capability?; Can they assure security of your transactional data?; Do they have proven experience with disparate ERPs?; Does the third party understand the various global standards for data transmission/communication?; and Does the third party have experience with your industry vertical?

After reviewing all of the RFI responses, you will hopefully be able to narrow the choice to the two strongest candidates. At this point, follow a formal selection process with the following steps:

•       Check the basics:

o Is the candidate financially stable?

o Do they show a track record of being able to retain the key B2Bi resources that you will need on your project?

o What do the references say?

•       Request a formal proposal from each candidate;

o  Hold an information sharing meeting; and,

o  Make the selection.

It's critically important to think carefully about managing change in your organization. Based on input from a wide range of sources, so here is some advice for managing your third-party B2B integration provider:

  • Internal risk assessment: Understand the risks, vulnerabilities, controls, and potential impacts to your organization with your current internal EDI group, and establish the key areas in which technological or process improvements are required;
  • Service level agreements: Establish expectations and standards around system availability, support levels, security, and maintaining supply chain continuity; and,
  • Implementation methodology: Set performance metrics and deadlines for pre-production and post-production planning. Address any differences in support levels or processes through each stage of the implementation life cycle.

Collaboration with your business partners requires many things. You'll have to collaborate with your business partners if you want to survive and thrive in the coming decade. Going it alone is not an option.

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