The ERP and The Issue of Third Party SCM Data Integration
Many companies that use SAP as their ERP also use SAP SCM/TM to manage logistics processes. For supply chain managers in these companies, SAP is the application they use daily to manage the information they need for sourcing, purchasing, logistics, and transport.
All relevant master and transactional data are kept in this system. SAP modules are comprehensive and detailed, containing all the information on transactions with partners at the time of creation.
A major challenge arises as data in SAP is either updated manually or through an electronic message. The ERP system contains internal information, but to receive updates from external partners, managers must integrate them or copy and paste data manually.
When a logistics department or manufacturing needs to understand where the order and cargo are, they need to ask for the information from a third party. In reality, supply chain managers have established processes with their partners for receiving weekly updates. The relevant information is usually sent via spreadsheets in emails, with the information written in the email or attached as a PDF.
Therefore, supply chain managers find it challenging to effectively achieve visibility into their supply chain. In this blog post, we will discuss the effects this issue has on companies and how they can solve it with limbiq.
The Limits of Electronic Data Interchange (EDI) in SCM
The most common option for companies is direct integration with a third party (EDI) or platform integration. However, this may not be feasible for all partners, especially smaller ones. Additionally, this approach has the downside of being heavily invested in a partner without the ability to change.
EDI requires adequate technical infrastructure, which companies can either build on-premises or use a cloud solution. However, in either case, it is a significant investment. Furthermore, the company needs to invest in personnel to manage the infrastructure and data exchange partners.
Each dedicated EDI project with a partner is a project in itself. While agreeing on a general standard is part of the solution, companies still need to define on a field level the required information.
As a result, companies typically only establish a limited number of direct connections with partners that have the technical ability and relevance to the business. If business relationships change and partners are replaced in a critical process, a new project needs to start.
The Effects of Invisibility in Transport and Logistics
Managing supply chain data in the ERP system reflects the internal view. The next transaction booking after the purchase order has left the system is often the goods receipt. In between, several steps occur to get the shipment on its journey. Suppliers pack the goods and prepare the cargo, which is then picked up by forwarders and transported to the nearest port, railway hub, or cargo airport. From there, it arrives at the POD and is picked up for delivery at the final destination. Typically, the next update of the internal system of records in the form of a goods receipt occurs only then.
Updates between these two steps are provided in the form of spreadsheets and emails. The supplier sends a packing list, and the forwarder sends a cargo list. Quick updates are typed in an email. Once a container is loaded on a vessel, the supply chain manager uses one of the various tracking sites to check if the ETA remains the same.
Prioritization
Working in this manner makes it challenging to keep track of important shipments. If a replenishment order is delayed and stock levels are still sufficient, there is no problem. However, what if it is a critical project for one of the biggest customers, with a penalty attached? How can the transport manager ensure that any deviation is caught early enough to react?
SKUs and Partial Shipments
Managing orders becomes even more complex when they are delivered in different shipments, cargoes, or only partially shipped. In such cases, the supply chain manager must collect information from various sources and track the shipment in a complex spreadsheet to ensure accuracy.
Unplanned Costs
Poor visibility in supply chain management can lead to high costs for an organization. When issues arise, companies tend to opt for faster shipping methods, such as airfreight or express shipping, which come at a higher cost. This can also result in additional costs such as demurrage and detention fees, as well as higher storage costs at the point of destination before the goods are picked up.
Updating Internal Stakeholder
A supply chain manager must keep other stakeholders informed of ETAs and other relevant information. This is particularly important during times of disruptions or delays, when communication needs are heightened. In addition to managing all external stakeholders, the supply chain manager is also responsible for receiving many internal phone calls and emails requesting updates from departments such as sales, warehouse, finance, and manufacturing or production. Often, the supply chain manager cannot answer all of these questions.
How limbiq Helps SAP SCM Customers Achieve Visibility And Resilience
limbiq is a FreightTech startup with the ambition to create the most efficient supply chain workflow solution and revolutionize communication in international logistics.
SAP SCM systems can easily connect to the platform and manage all shipments with all partners in one central location. By replicating orders from the SAP system and enhancing the information over time with data from partners such as suppliers, manufacturers, forwarders, carriers, and other service providers, visibility is improved.
Connecting all Supply Chain Partners With All Formats
limbiq offers an effortless way of integrating information from partners. Its advanced API and import layers can read any spreadsheet or PDF, thus allowing the supply chain manager to incorporate data from partners. Moreover, limbiq provides APIs and standard integrations to carriers and forwarders, meaning that implementing limbiq can be done without 1:1 integrations with partners and the associated costs.
Document Management
On the limbiq platform, customers can manage all related shipment documents directly. Additionally, limbiq highlights any missing documents for shipments.
Alerts in limbiq
In case of any deviation from the expected, limbiq customers will receive alerts from the platform in order to react promptly and take appropriate measures.
Partner Communication
limbiq offers in-line chat to clarify issues with the partner directly. All communication is written in a log for later use.
SKU Visibility and SKU Management
By replicating the orders from the SAP system including the order-lines, limbiq customers achieve SKU-level visibility and can manage on that level. Full transparency how orders are shipped or partially shipped. This includes references to the cargo, the mode of transportation with associated tracking of the shipments.
Conclusion
SAP customers who seek full transparency in their supply chain must consider the most effective way to integrate and collaborate with their supply chain partners based on the data in their SAP system. They require a quick time-to-value and cannot continue operating manually or planning extensive EDI projects. Given the volatility of today's supply chains, a robust digital foundation is necessary to be resilient and able to act quickly. Modern platforms like limbiq help SAP SCM customers maximize their investment and build the basis for a digital, transparent, and resilient supply chain.
To learn more about limbiq, download our latest e-paper on supply chain visibility here.
