B2B Automation Across the Manufacturing Industry

B2B automation can mean different things to different companies. For example some companies will say that they have automated B2B processes but very few have applied B2B solutions across every business process that may be operating across a manufacturing operation.

It is one thing being able to automate internal business processes, for example providing improved integration to an ERP system but it is another trying to automate B2B communications with a diverse range of global trading partners. Now when I say diverse I am referring to the fact that many manufacturing companies today are utilizing suppliers or contract manufacturers in low cost regions such as the BRIC (Brazil, Russia, India and China) countries. They probably will not speak any English and if you are trying to automate the way in which they exchange business documents with you then you will need to ensure that they have the necessary local support to be able to not only implement a B2B solution but also maintain on an ongoing basis. To get around this problem many manufacturing companies have deployed simple web form based B2B solutions across their trading partner community. So what are the current trends in B2B automation across the manufacturing sector and are there any other ways to deploy simple to use B2B tools?

To try and understand more about how today’s manufacturing companies are automating their business processes, GXS recently co-sponsored a study which was conducted by Forrester Research, entitled “Joint Industry EDI/B2B Survey”, the study was conducted by Ken Vollmer in February 2010. The study itself covered a number of industry sectors and for the purpose of this blog I will cover some of the manufacturing related results (making up 38% of the survey respondents) and provide a comparison to the other industry sectors that were surveyed.

One of the interesting issues that the survey highlighted was the amount of B2B automation which exists across the manufacturing industry today. The chart below highlights the fact that only 10% of the manufacturing respondents said that between 81-100% of their trading partners were able to exchange EDI/B2B documents. This figure was very similar to the average across all the respondents across the other industry sectors. The highlight on this chart for me is that nearly a third of the manufacturing respondents said that they were exchanging B2B documents with between 21-40% of trading partners. I had a meeting with a manufacturing company in January, they highlighted that for their particular operation, manufacturing trains and power generation equipment, where there were relatively few suppliers, they did not see a requirement for B2B automation. The company had a fairly blinkered view in terms of where B2B automation could be applied and we were able to identify several areas where B2B automation could improve their manufacturing operations. In summary the following chart shows that in general, B2B automation is relatively low across the manufacturing industry despite the fact that there are simple to use and low cost tools on the market that could help automate business processes.

The next area of the study that I wanted to focus on is the regional variations in terms of the countries that the survey respondents need to trade with. The manufacturing sector is probably the most global in nature of all the industries surveyed and many manufacturing companies have either established new plants in low cost regions such as China and India or they are on-boarding more suppliers in these regions. Trading partners in these particular countries need simple to use and quick to deploy B2B tools. It is expected that the manufacturing sector across the BRIC countries is likely to increase over the next few years, so this will see an increasing importance on exchanging business documents electronically in order to support global manufacturing operations.

The next area of interest for me is the volume of transactions being exchanged. From a manufacturing perspective you can see below that 11% of the survey respondents said that they were exchanging more than 100,000 documents on a monthly basis. So if you are only able to exchange B2B documents electronically with say 40% of your trading partners that means that there is a high probability that you will have to rework the paper based transactions for the remaining 60% of trading partners that you will be working with. Manufacturing companies, due to the need to run production lines 24/7, exchange a relatively high number of B2B transactions, ASNs for example are probably the most important B2B document used by many manufacturing companies today. If these ASNs are not sent electronically and there is a delay with the shipment of parts to a plant, then there is a chance that production lines could shut down.

The most interesting part of the study for me was seeing how many manufacturing companies rely on the simple exchange of Microsoft Excel Spreadsheets or other text documents. For some reason many companies do not have a problem with attaching a spreadsheet to an email and then sending to a trading partner. Not exactly the most secure way of exchanging information and there is always the chance that emails can get side tracked elsewhere, ie by entering an incorrect email address. Everyone talks about SAP, Oracle etc as being at the centre of manufacturing operations, but in China the most important business tool in use today is the simple spreadsheet. Many companies somehow manage to run their entire business in China via a spreadsheet. Many manufacturers will be using spreadsheets for sales reporting, spend analysis, cash flow forecasting and for creating invoices, purchase orders and shipping documents. Suppliers in China are not going to change the way they use their basic IT tools over night so it is expected that the simple spreadsheet will be used for many years to come.

Now given that spreadsheets are one of the most popular ways to run a small business, what about if you could send Excel based information as an EDI document to a potential customer or trading partner? GXS Trading Grid® for Excel enables companies with no formal B2B infrastructure to use Microsoft Excel 2007 to exchange spreadsheet based transactions with their trading partners
in an automated fashion.

Through a customized menu bar in Excel the trading partners are able to exchange spreadsheets with GXS electronically and the spreadsheet is automatically translated into electronic data interchange (EDI) or the trading partner’s document standard of choice. The simple to use interface with Microsoft Excel 2007 and 2010 makes it the ideal platform to allow a manufacturer to be able to exchange business documents with trading partners located anywhere in the World, in an electronic and more importantly secure, safe environment.

To get a better understanding of how Trading Grid for Excel could benefit your company, take a look at a new demonstration that was recently uploaded to our website, please Click Here >>>

For further information on the Joint Industry EDI/B2B Survey conducted by Ken Vollmer at Forrester Research, please Click Here >>>