Betting On The Future With B2B Integrations: COVID's Lasting Impact On Supply Chains
By Tushar Patel, CMO, Cleo
About one year ago, the 2020 State of Ecosystem and Application Integration Report revealed the sense of urgency that enterprises felt surrounding the need to modernize B2B integration solutions. Today, a full year after the pandemic seized up supply chains around the world, the new, 2021 version of this Report shows how the pandemic has impacted B2B integration modernization initiatives in the past 12 months.
COVID-19 highlighted significant integration gaps in supply chain processes that impede revenue and put business continuity at risk. Below are the key findings of the 2021 Ecosystem and Application Integration Report, and what they mean for supply chain-oriented companies going forward.
COVID-19’s Impact On B2B Integration Strategy
There’s no doubt that the pandemic prompted many businesses to redefine their priorities, both for the short and long term. COVID exposed digital fault lines in the world’s supply chains, showing companies the weak points in their B2B ecosystems. These weaknesses prompted most businesses to hasten their integration modernization initiatives. However, the strategy driving this wasn’t digital transformation or technology adoption per se – it was an acknowledgment that delivering exceptional customer experiences is key to business continuity.
For example, 66% of companies increased digital business capabilities such as those for e-commerce or digital supply chains, while 34% claimed they started targeting entirely new customer audiences. In targeting new customer audiences, 32% of companies created altogether new lines of business. Thirty percent fundamentally changed their business model, with 24% focusing on direct-to-consumer (D2C) models, and 32% increasing their customer loyalty programs. The focus on consumer-facing business models and loyalty programs underscores the critical nature of companies’ customer-focused priorities throughout the pandemic.
Nearly every company surveyed (96%) has altered its business strategy for 2021 in direct response to the pandemic. The world’s appreciation for supply chains has been elevated. As a result, cloud migration and digital transformation are accelerating, which means that businesses will put more of a priority on integration technology to enable customer experience-focused business strategies.
Integration Issues Caused Revenue Losses
Because COVID shined such a bright spotlight on integration issues, the impact of B2B integration capabilities (or lack thereof) on revenue loss was far more apparent than in years past. The pandemic accelerated cloud migration and forced businesses to urgently pursue those technology initiatives that will have a noticeable impact on revenue.
When reporting how much revenue was lost in 2020 due to integration challenges, 66% said they lost up to $500,000 – a 23% increase from the previous year before COVID struck. A partial cause of this revenue loss is the impact of lost orders, which increased in 2020 compared to 2019. Over half (51%) of companies lost more orders in 2020, with 12% of those companies anticipating 150-500 lost orders throughout the year. Perhaps even more concerning is the fact that 26% of companies actually have no idea how many orders they lost in 2020. This suggests that over one in four businesses don’t have any visibility into the actual revenue impact of their B2B integration issues.
Other partial causes of revenue loss are trading and supply chain delays caused by slow partner and supplier onboarding. 2020 saw entire geographic regions constrained by trade, manufacturing slowdowns and shutdowns, and logistics obstacles caused by the dynamic nature of shifting demand throughout the pandemic. Most companies (51%) onboarded more trading partners in 2020 than in 2019. However, onboarding those partners took over one month for 36% of respondents and between one week to one month for 37%. Many companies recognize that partner onboarding takes much longer than it should, as half of the companies felt that onboarding new supply chain partners should only take 2-7 days at most.
Despite the prioritization of integration modernization brought on by the pandemic, the majority of companies remain relatively slow when it comes to onboarding new trading partners.
Achieving End-To-End Visibility For Business Planning
When a digital ecosystem is efficient, meaning all trading partner and customer relationships, cloud and on-premises applications, end-to-end business processes and vital integration points work seamlessly together, data can be orchestrated and analyzed to enable businesses to make more informed decisions. Unfortunately, most companies have a long way to go before they can truly leverage end-to-end visibility and data analysis for effective business planning. Eighty-nine percent of companies agree that having end-to-end visibility of transactions between partners, suppliers, and customers is important. However, only 55% of companies have enough visibility into their inventory systems to check statuses or predict surpluses. Further, only 52% claim they can detect manufacturing slowdowns and only 48% can identify severe shortages that might indicate the need to onboard a new supplier.
COVID-19 made businesses painfully aware of their supply chain shortcomings, and 94% of companies are working to address those issues. The highest priority amongst supply chain-oriented companies is improving supply chain flexibility, with 60% claiming this as a top priority. Close behind are implementing better business process flexibility (47%), improving response time (45%), gaining increased control over integration solutions, and using real-time data for improved decision making (both 39%).
2020 was a huge wake-up call for supply chain-oriented companies. Most companies learned the hard way that not only is integration agility – the ability to turn on a dime to support a change in business strategy – critical when dealing with unforeseen supply chain upsets such as the pandemic, but it’s also critical to maintaining competitive advantage during normal business conditions.
COVID has created a business inflection point, and the change is permanent. Companies that achieve end-to-end visibility through modernized integrations will have the opportunity to not only prevent problems in times of crisis but also to seize opportunities regardless of when and where they appear.