July 16, 2024 - 7 minutes read
Interconnecting the Supply Chain: The Role of Data Connectivity and Interoperability
The modern supply chain is a combination of interconnected processes that require the efficient flow of goods, information, and funds for successful operations. Yet disparate systems, incompatible data formats, and siloed information undermine efficiency, agility, and profitability. As the 2024 PwC survey illustrates, 69% of operations and supply chain leaders believe their technology investments haven’t fully delivered the expected results, often due to challenges related to integration and effective data management.
As supply chains grow in complexity, the volume and variety of logistics data sources will continue to multiply. Without seamless data connectivity and supply chain interoperability between these disparate elements, businesses risk being left behind, unable to benefit from the power of their own data. This blog will further explore the importance of unified supply chain systems, the challenges to achieving interoperability, and emerging solutions that can bridge these data gaps.
The importance of unified supply chain systems
In an ideal world, supply chains operate as a harmonious ecosystem where data flows effortlessly between systems, providing a unified view of the entire operation. Integration drives efficiency by eliminating manual processes, redundancies, and delays that plague disconnected systems. In a unified environment, all relevant systems instantly reflect changes in a customer’s order, from inventory management to transportation planning, ensuring a swift and coordinated response.
Real-time data sharing and connectivity in the supply chain empower stakeholders to make faster, more informed decisions. With up-to-the-minute access to information about new orders, shipment statuses, and potential disruptions, stakeholders can proactively respond, mitigating risks and optimizing resources. For example, the logistics team can rapidly detect a delay at a port and reroute shipments or adjust production schedules to minimize the impact.
This interconnectedness optimizes operations, improves resilience, and ensures proactive risk management. A centralized approach also ensures compliance with industry regulations and internal standards, providing a single source of truth for all supply chain data and making audits and regulatory reporting easier. By maintaining a centralized system, organizations can access comprehensive and accurate information whenever needed, facilitating audits and regulatory reporting.
The complexity and challenges of achieving interoperability
While interoperability is critically important in today’s supply chain environment, internal and external hurdles often stand in the way of achieving it. These challenges may include:
- Diverse and disparate tech stacks
Organizations typically rely on multiple supply chain management solutions within their tech stacks. These technologies may include ERP systems for core business processes, TMS for freight optimization, WMS for inventory control, and other specialized applications for demand forecasting, order management, and shipment track-and-trace. The problem is that these systems are not interoperable, each utilizing its own data formats, communication protocols, and proprietary APIs. This inevitably creates data silos, where information is trapped within individual systems, inaccessible to other parts of the organization without manual manipulation and data entry. - Legacy systems and integration difficulties
While often essential to core operations, most legacy systems are outdated, inflexible, and lack the modern APIs needed for efficient communication with newer technologies. Integrating legacy systems typically requires extensive custom development work, which is costly and time-consuming. - Lack of standardization
The absence of universally accepted data exchange and communication protocol standards means different vendors and systems transmit data in different formats or schemas. One system might use a specific code to represent a particular shipping mode, while another uses a different code, causing confusion and delays in data processing. - High costs and resource demands
Building and maintaining custom integrations between disparate systems is expensive, as it requires a significant investment in IT resources, both through personnel and infrastructure. Smaller companies with limited budgets may find this particularly challenging. - Compliance concerns
If a company relies solely on a carrier’s platform for shipment data, it loses access to that data when the carrier deletes it. By integrating data into a centralized system, a company ensures long-term access and can better maintain regulatory compliance. - Data security and ownership concerns
As data flows across multiple systems and partners, concerns about security and control arise. Organizations must ensure that sensitive information is protected throughout the supply chain and that clear data governance policies define ownership and access rights.
In a way, achieving interoperability in the supply chain is like trying to hit a moving target. Every carrier or third-party partner develops and deploys different technologies at different rates, using varying data schemas and protocols. Constant tech evolution further complicates integration and standardization efforts.
Bridging the gap: Effective solutions for data connectivity
Companies can only utilize their supply chain data effectively if they can standardize and centralize from different sources and modes. A unified approach enhances transportation efficiency and offers detailed insights. It also facilitates tracking and monitoring of logistics performance, encourages responsibility, and fosters collaboration.
Unified APIs for seamless integration
Unified APIs provide a standardized framework for data exchange, significantly reducing integration complexity. Businesses can use unified APIs to easily connect multiple data sources instead of building custom integrations for each system; this saves time and resources, facilitates real-time data sharing, enhances supply chain visibility software, and enables faster, more informed decisions.
Comprehensive visibility platforms
Visibility platforms act as aggregators, consolidating data from diverse sources across the supply chain. Their sources can include ERP, TMS, and WMS, as well as data from carriers, suppliers, and IoT devices. By combining these fragmented data sources into a unified view, visibility platforms provide a comprehensive overview of the supply chain. This allows organizations to track shipments in real time, monitor inventory levels, and identify potential bottlenecks or disruptions in advance.
Two types of visibility platforms are available today:
- Turnkey Integration Service Providers offer pre-built integrations and customized solutions tailored to specific business needs. They are often used by companies with limited IT resources or those looking for a quick and easy way to get started with visibility.
- Integration Platforms as a Service (iPaaS) provide a framework for building custom integrations, offer greater flexibility and control, and may require more technical expertise to implement and maintain.
Visibility platforms can also offer advanced features like predictive analytics and AI-powered insights for proactive risk management and the optimization of supply chain processes.
Standardized data transformation
The lack of standardization in data formats and protocols remains a significant obstacle to seamless integration. However, progress is being made towards greater standardization. Initiatives like the Digital Container Shipping Association (DCSA) are developing industry-wide standards for data exchange, aiming to create a more interoperable and efficient supply chain ecosystem.
Proactive risk management
Integrated systems play a vital role in predicting and mitigating disruptions. By aggregating data from multiple sources and analyzing it live, organizations can identify potential risks and take proactive measures to minimize their impact.
The key to proactive risk management is ensuring that the various risk assessment and mitigation tools are interconnected and can easily interact.. For instance, if a visibility platform detects a sudden increase in port congestion or a weather-related delay, it can alert the TMS to automatically explore alternative routes or transportation modes, minimizing disruptions and preventing costly delays.
Supply chains require flexible data exchange capabilities that can handle various standards and formats to achieve the above integration. While setting up the necessary application landscape and carrier network can be complex, modern visibility solutions like Agistix offer the functionality and a vast logistics connectivity network for collecting relevant real-time data. They centralize and standardize data from disparate systems, transforming raw data into actionable insights for accurate forecasting, real-time visibility, and improved decision-making.
Agistix: The solution for seamless supply chain connectivity
Agistix tackles the enormous challenge of achieving end-to-end supply chain visibility and interoperability, empowering businesses to remain competitive in the complex logistics sector.
- Agistix Visibility
Agistix Visibility offers a centralized platform that aggregates real-time data from every point of your supply chain:
- Financial visibility includes forecasting freight spend, ensuring routing guide compliance, and streamlining the order-to-cash lifecycle for cost optimization and better financial planning.
- In-transit visibility tracks shipments in real-time across all modes and carriers and sends proactive alerts for potential delays.
- Transactional visibility achieves a unified view of the order-to-cash lifecycle to uncover hidden costs and streamline operations.
- Data ownership maintains control and ensures supply chain data’s accuracy while fostering stakeholder collaboration.
- Agistix TMS
As global commerce becomes increasingly complex, a solution that combines visibility with robust transportation management and execution capabilities is essential. Agistix TMS seamlessly integrates with the Agistix Visibility platform, delivering a unified solution for managing and optimizing all aspects of transportation.
Key features include automated rate and bid management, routing guide compliance, simplified bookings, shipment consolidation, and document automation. - Agistix Microsites
Agistix Microsites are customized, browser-based applications designed for specific user groups within the supply chain. They provide stakeholders with self-service access to critical data throughout a shipment’s lifecycle, enabling them to stay informed, collaborate effectively, and contribute to a more efficient and responsive supply chain.
Empower your supply chain with Agistix
The modern supply chain demands a seamless supply chain connectivity solution and interoperability to navigate complexity, mitigate risks, and seize opportunities—Agistix offers a comprehensive solution that empowers organizations to make use of their supply chain data and build resilience.
Contact us or book a personalized demo today and see firsthand how Agistix’s unified platform can optimize your operations, boost collaboration, and ensure data-driven decision-making.
