Connected ERP is the Linchpin of B2B Commerce

A company’s threshold isn’t at the office door anymore, it’s at the path to the ERP system. Mid-sized businesses need ERP to be the repository of accurate information about the whole order-to-cash cycle, including sales orders, inventory, shipments, invoices, and payments. Information must get into and out of ERP and shared with related internal and external systems for that to be reality.

Any going concern, by definition, already has working connections to ERP. Often those connections have names—first and last names. Manual transcription is still the way mid-sized companies integrate many business functions both internally and when exchanging information with outside entities. But competition and the ever-increasing velocity of trade are forcing changes fast. Connected ERP is now a must-have.

It isn’t just direct cost. Labor-intensive processes are too slow to meet customer expectations. Business owners can no longer hire, train, and manage enough people to avoid poor scorecards and lost sales. Manual data exchanges with ERP are pinch-points that must be minimized to increase performance.

Typical Human-ERP Connections

Here are a few examples of tasks commonly performed with fingers on keyboards and non-automated communication. Depending on volume, these can vary from minor annoyances to crippling time wasters:

  • Entry of sales orders into ERP from POs received by fax, email, or webforms
  • Manual receipt and import to ERP of spreadsheets or EDI files
  • Manual cross-reference of customer item numbers and receiving address codes
  • Key entry of pick lists that are carried, emailed, or faxed to warehouse or 3PL
  • Return and key entry of carton information from marked-up lists or shipping advices
  • Key entry to inventory systems and pick/pack fulfillment systems
  • Key entry to shipping and carrier tracking systems
  • Key entry of advance shipping notices for transmission to trading partners
  • Back-fill of invoices with required fields from PO that were not stored in ERP
  • Entry onto carton labels of PO data not stored in ERP
  • Key entry of receiving information for purchased goods
  • Manual matching of receipts, POs, and invoices prior to AP entry

Why Everything Isn’t Already Integrated

Wouldn’t it be great if all applications came with complete, standardized interfaces? Perhaps, but that is not going to happen any time soon—for valid reasons. Businesses are different and innovative, for one thing. The sum of all requirements is too big to address in one solution, and will be different tomorrow anyway. Another key factor is the multiplicity of existing technologies and infrastructures that were not designed with consistent interoperability standards. Though easier now than ever, it remains challenging to design and implement efficient, durable automated connections.

ERP systems and their ecosystems of related applications each grew up with specific technical foundations. File formats, databases, programming languages, and networking capabilities differ greatly among the hundreds of mid-market vendors. No single vendor or user community has the wherewithal to be expert in all of them. Specialists in each, separate domain are required to create workable integrations.

Functional divergence is even more difficult to address than technology. Every company has its own business rules, data validation parameters, and cross reference tables. Different documents types are required depending on customer or product. Industry regulations may require special tracking or serialization. Capabilities essential for automobile parts suppliers may not apply at all to pharmaceutical companies. Grocery suppliers pay attention to details unimportant to consumer packaged goods vendors. Hard lines manufacturers do things differently from the food and beverage segment.

Are there sensible ways to streamline operations when faced with this seeming Babel of systems and details? Fortunately, yes.

How to Tackle Integration

Ideally, automated ERP connections will be in place before volumes of manual work overwhelm current resources. Occasionally, integrations may rise to “panic mode” status when business operations are critically impaired. Either way, take the time to understand the existing processes before making them electronic. Decide on workable projects and prioritize the functions most likely to provide good return.

Selecting the right outside resources to help is worth the time it takes to evaluate alternatives. Start with an ERP system seller or consultant organization that supports the product, since they are familiar with the both the technology and its world of compatible applications. Find vendors that already specialize in the needed industry or business functions. Components that are purpose-built for specific ERP environments, widely deployed with other users, and actively supported by their solution providers are much better bets than “first-time-we’ve-ever-done-this” sources. Customization should be expected at some level, but having a solid starting point is critical to timely, affordable integrations.

No single platform or technology is right for every integration circumstance. Examination of integration alternatives should be forward-looking to ensure sustainability as the landscape of premise software, cloud services, and communications evolves.

What Benefits to Expect

Visibility is always the key to improvement. Automated integrations provide the unbroken stream of data needed to solve not only day-to-day problems, but also to change and adapt for the long-term. Having fewer gaps in the cycle will make questions like, “What is the status of that order, that invoice, that ASN?” or, “Did I order, receive, ship, and pay everything I was expecting?” simpler to answer. Monitoring improvements over time such as, “How did my fulfillment speed change from last month?” or, “Where do we spend the most? – back office, warehouse, or 3PL?” may only be possible when integrations are in place to capture the metrics.

Operational efficiency from automation increases customer satisfaction at the same time costs are reduced by enabling timelier, more responsive service. Let’s not forget about labor savings. While some positions may be eliminated, most organizations redeploy employees to more productive, revenue-generating activities when hours of drudgery are avoided by automating interfaces.

Integration work has an outsized impact on order-to-cash cycle reduction—small investments unleash the efficiencies that were lurking within the current systems. Incremental changes that add as much net capacity as automation are hard to find. Stop looking and start integrating. For more detail on integration points, see the EDI Connections with ERP Systems blog post.

John Matera About John Matera

John Matera is VP of Marketing for RedTail Solutions

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