Supplier Semantics—Collaboration and Integration
This is Not a Standard Tom-AY-to and Tom-AH-to Comparison
By Clay Thomas, Principal ArganoSCMO2
In an environment where supply chain links are ever shortening, and volatility in both geographical disparity and total volumes are increasing, you may wonder about the difference between collaboration and integration. To me, their uses with respect to supplier interaction is significant – this is not a standard tom-AY-to and tom-AH-to comparison.
Where this distinction matters is in the application of today’s planning tools to today’s network replenishment challenges.
In my definitions, “collaboration” has a soft or loose process connotation, while “integration” implies solid structure and firmer flexibility in process flows. In either case, understanding what the tool is doing determines the value to your organization’s objectives.
Smaller companies and surprisingly, some larger ones too, include phone calls, e-mails or at least periodic Excel file updates as the primary means for exchanging information with even their most critical suppliers. While this “collaboration” may be fruitful, there is still a significant amount of manual effort happening in your planning tool which may not be followed consistently, and can be prone to entry errors as well.
Today’s powerful supply chain tools, like SAP Integrated Business Planning (IBP), allow for much more robust “collaboration” by easily standardizing a file input format. But more importantly, it opens windows into your planning process directly by providing the ability to record volume changes, leave comments and expose related metrics to facilitate this supplier interaction. Exploiting these capabilities provides the means to respond faster and more effectively in volatile market dynamics. The business value from this investment (if you still think SAP is too big and expensive for your company, you should think again) is just obvious.
Other customers have approached the supplier interaction more at an execution level, which lends itself to “integration” between partners. This interaction is highlighted more by EDI and XML messaging that may include ASNs, current stock levels and forecast information. With the advent of this direct procurement function inside of SAP’s Ariba Network, there is an even better means of integrating key accounts and others that will positively impact your ability to work in today’s frequently changing market conditions.
But what is really significant in SAP’s move here is that while you can certainly enable this “integration” directly with your ERP/Execution system, there is even more synergy when including SAP IBP into the mix. Together, these three systems greatly improve both “collaboration” and “integration” by expanding the information flowing through the integration channel and tying direct inputs more tightly into the planning process. IBP’s ability to do rapid scenario planning exposes exception messages and metrics, helping you speed your response to market events and avoid service disruption to your customers.
So tom-AY-to tom-AH-to, collaboration integration…SAP’s solutions for suppliers will impact your ability to react to critical business events, and improve your day to day performance. It ties it all together nicely—whichever word you choose to define it!
