Ever wondered what’s common between Apple, Google, and Facebook? Apart from being insanely popular tech giants, all of them have derived tremendous value from their ecosystems. The same holds true for many others like Amazon and Alibaba. We are now part of an economy where ecosystem integration is revolutionizing how organizations address the changing needs of their customers across the globe.
Interestingly, the ecosystem as a concept is not so difficult to understand. It serves as a one-stop shop for your customers where they get extraordinary benefits through your network of connections. The best part is that it works equally well for all sectors, including transportation and logistics.
Importance of ecosystem integration in logistics
Modern-day challenges require shippers and logistics companies to build resilience to mitigate impacts on supply chains irrespective of the circumstances. Several organizations are already pulling up their socks to protect their businesses on multiple fronts with the help of efficient crisis-management mechanisms. An efficient ecosystem is the game-changer they need to achieve all their goals and survive pandemic-like disruptions.
While it is important to create an ecosystem of collaboration and trust, ecosystem partners need to work together to address capability gaps. This can happen only when they critically evaluate the challenges they encounter on the road to building ecosystems and know the pitfalls to avoid. What they need is efficient ecosystem integration that connects critical revenue-generating business processes. The fast-paced eCommerce market also necessitates a robust ecosystem to attain supply chain interoperability and respond efficiently to market disruptions.
As Simon Bailey, senior director analyst with the Gartner Supply Chain Practice, rightly puts it, “Major disruption, such as the COVID-19 pandemic, are the ultimate test for the resiliency of a supply chain network. However, not all disruptions are unplanned. Many CEOs are planning to offer the new value proposition of their products and services, and they expect that their organizations require new capabilities to support these new products and services.”
Challenges in ecosystem integration affecting supply chains
Ecosystem integration can be a bumpy road for some unless you know the three most common mistakes to avoid. Once they are out of the way, you can attain supply chain interoperability through successful ecosystem integration. So let’s delve deeper to know how we can rectify them to be part of a thriving ecosystem.
- The digital abyss and failing to adopt an API-first approach
Around 46% of shippers and logistics companies still use legacy systems with minimal digitization. Though they are fast understanding the importance of articulating their needs through technology. While some are content with Electronic Data Interchange (EDI), others have migrated to Application Programming Interfaces (APIs) to facilitate better data exchange for profitable business outcomes.
The lack of adequate digitization in supply chains hampers both EDI and API integration. We have used APIs inadvertently in our daily transactions, be it for booking a new car online or shopping for insurance products. APIs work as intermediaries between diverse systems globally to enable communication between businesses and customers in logistics parlance.
Today, organizations need advanced technologies to improve experiences for stakeholders and customers. Likewise, they need APIs to make their systems agile to respond and interact in real-time. To successfully design and adopt APIs, you must first determine the end-user experience you wish to deliver. You need to remember that APIs drive online ecosystems, and it would be impossible to connect applications and services in their absence.
Considering that the modern architecture is API-centric, it is imperative that you take cognizance and the necessary steps to adopt it. The transportation and logistics sector uses APIs to connect their physical and digital assets to create an integrated supply chain to digitize the current supply chains and create new business models. You need to successfully adopt APIs to automate business processes and ensure ecosystem integration.
A digital ecosystem so created would comprise suppliers, third-party data service providers, and logistics providers with many advanced tools and technologies at its helm. As you embark on building it, you need to adopt the right ecosystem integration approach to connect all the revenue-producing processes with mission-critical internal applications. Luckily, it’s never too late to begin from wherever you are. All you need to do is get out of the digital abyss and accelerate digital transformation to enable exceptional customer experiences with an API-first approach.
- Failing to build trust and transparency with ecosystem integration
A multitier supply chain needs a lot more than operations teams and production teams to keep going. They require trust and transparency to overcome disruptions across supply chains. You need to assess risks to identify those that can stop or slow production lines and directly impact operations costs. You need to ensure that you are sourcing the right items at suitable locations and have a cohesive network to rely on. You may have to look for alternative suppliers to ensure government policies do not stand in the way.
You need to go beyond Tier 1 suppliers to know you have the right network. Car manufacturers, for instance, often have a network comprising multiple suppliers to cater to the unique requirements of all of their manufacturing regions. This helps them address sudden disruptions that may arise due to changes in foreign trade policies or tariffs. While this strategy works perfectly to mitigate risks, it also allows them to engage with multiple vendors to supply raw materials and stay competitive continuously.
Trust and transparency can be crippling factors necessitating partners to focus on collective goals. As we all know, lack of trust leads to friction that, in turn, may cause churn. BCG research iterated the examples of ride-hailing biggies like Uber and Lyft that lost $8.5 billion and $2.6 billion respectively due to a high driver-churn rate that propelled their marketing and promotion costs to stay afloat.
Trust-building instruments and initiatives must be deployed wherever necessary to build lasting relationships and robust supply chains. Questions should be asked to identify and respect each partner’s role within the ecosystem, and information-sharing agreements should be created to maintain transparency.
Says Simon Bailey, senior director analyst Gartner, “It’s crucial that supply chain leaders create a collaborative and trusting culture where ecosystem partners are willing to work together and share information across the network. This will only be the case when all members agree on mutual quantitative and qualitative standards.”
- Undermining the role of visibility in improving supply chain interoperability
A throbbing logistics industry requires a high level of interoperability. The global logistics market is expected to spike at a CAGR of 6.5% from 2020 to 20271 touching $12,975.64 billion by 2027. Shippers and logistics companies are tightening their grip on costs and inventory management. While doing so, they sometimes fail to sharpen their visibility into the supply chain.
Visibility usually concerns the movement of parts, components, or products in transit as they travel to their destinations. Data related to these movements need to be accessible to all stakeholders, including your customers. Only then would you be able to attain interoperability in its true sense. There are visibility platforms to ensure multichannel integration across the ecosystem. Merely having dashboards is not enough unless you know how to use the data they send out to make smarter supply chain decisions from a transportation perspective.
There could be disruptions due to natural calamities such as floods and hurricanes or labor disputes and political events that could upset the natural rhythm of supply chains. Also, data is often spread across disparate systems, and unless you have access to it, you will never be able to increase collaboration or forecast future demands.
Tom Madrecki, CBA vice president of supply chain and logistics, while emphasizing the role of visibility, says, “The greater degree that you have to what’s happening throughout the supply chain, then you’re able to better manage your costs, you’re better able to predict where are you going to have an issue ahead of time and have that more enhanced real-time visibility to everything.”
Supply chain excellence comes from data-driven decisions. It is important to have data from suppliers, forwarders, brokers, and third-party logistics companies to ensure end-to-end visibility in real-time. Mobile device integrations are now an essential aspect of ecosystem integration to facilitate data from diverse geographical locations. They allow you to identify bottlenecks and address issues in a single environment.
The right ecosystem will strengthen your supply chain capabilities and empower you to adopt best practices to foster interoperability. Due diligence and proper planning can help you tide over the many challenges and create an ecosystem for a more sustainable future.
Enable hassle-free ecosystem integrations with Trigent
Trigent, with its highly experienced team of technology experts, has been helping enterprises with frictionless data transfer integrations through EDI/API. We help reduce costs and the complexity of logistics supply chain management while optimizing loads and routes. We offer prescriptive analytics to gain customer insights and drive revenue.
We can help you build operational efficiencies, too, with hassle-free integrations.
Call us today to book a consultation.
Reference
- https://www.alliedmarketresearch.com/logistics-market
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