Introduction

Since 2020, we’ve all seen how the COVID-19 pandemic disrupted global supply chains and caused months of product shortages worldwide. But not all of those disruptions were solely caused by COVID-19. In many cases, the weak spots already existed, and the pandemic simply revealed or exacerbated them.

The worst of the COVID-19 disruptions are behind us, but the weak spots persist. Many businesses are investing in new strategies and technologies to strengthen their operational networks and bolster the resiliency of the supply chains that keep them afloat.

And it’s working.

According to Cleo’s 2023 Global Supply Chain Executive Survey, 49% of top executives reported that making proactive investments in supply chain integration technology increased their business agility to the tune of over $1 million in additional revenue in 2022.

So, how does “integration technology” lead to money in the bank? Let’s break it down.

What is supply chain integration?

To understand supply chain integration, we have to understand the supply chain: what it is, how it works, and how it’s evolving.

A supply chain is the network or system(s) involved with getting a product to a customer. The chain covers every step of that process: sourcing raw materials, manufacturing the product, storing it, transporting it to fulfillment/distribution centers and retailers, and so on. The chain starts with raw material production and ends when the finished product reaches a customer.

A small, localized supply chain might only have 4 or 5 links:

But most supply chains are not that simple.

Today, most supply chains are global—and a global supply chain is exponentially more complicated. Rather than a straightforward “chain,” today’s businesses often rely on a network of thousands of people representing dozens of companies across multiple continents.

Supply chain management is difficult on a good day. Even when nothing goes wrong, it still involves coordination on a massive scale. And there’s rarely a day when nothing goes wrong.

Supply chain integration is the process of interconnecting all the links in the supply chain: producers, suppliers, manufacturers, distributors, retailers, etc., plus storage/warehousing, freight transport, and all other logistics and fulfillment operations involved in getting the product to a customer.

You might be thinking: “But it’s a chain—the links are already connected.” That’s true, but in a typical supply chain, each link is only connected to the links they deal with directly—not the chain as a whole.

To illustrate this, let’s say there’s a delay in manufacturing your product. In a typical supply chain, the manufacturer calls the warehouse and says, “The next inventory shipment will be 2 weeks late.” Then, someone has to repeat that information to everyone else affected down the chain: warehouse workers, transport drivers, retail distributors, etc., until everyone’s on the same page. Those communications happen independently of each other, via various channels, without any automatic, centralized sharing of information.

Think that sounds inefficient? You’re spot on.

Integration means connecting each link to every other link, interconnecting all members of a supply chain: suppliers, manufacturers, distributors, logistics and fulfillment operations, and so on. That way, everyone can share and access critical information in real-time, without making a million separate calls. A (very, very) simplified version might look like this:

Here, the arrows represent the flow of digital data–not the physical transportation of goods.

In an integrated supply chain, everyone shares data with the system in real-time. So, everyone has access to the same up-to-date information.

But how do you actually do that? Especially across countries, continents, and oceans?

Through the use of integration technology.

What is supply chain integration technology?

First, when we say “integration,” we mean digital/electronic data integration. More accurately, data integration and synchronization. The two concepts are similar, but not exactly the same.

Data integration	Data synchronization
The process of combining data from various sources into one unified view or data set.	The process of keeping data consistent across sources/systems.
Gives you a “bird’s eye view” of your data so it’s easier to analyze, manage, and use for making decisions.	Helps you maintain accurate, consistent records by ensuring all systems are working off the same up-to-date information.
Might happen in real-time or as needed, depending on the data, usages, etc.	Happens in real-time (or near real-time)–one system updates and the other systems follow.

Integration technology broadlyrefers to the use of a centralized platform that connects members of a digital ecosystem, allowing them to communicate and share data.

A digital ecosystem is a network of platforms, touchpoints, tools, databases, etc. that interact.

So, if you apply integration technology to your digital ecosystem, you basically turn it into a digital “solar system”: a network organized around a central hub or database that pulls everything together.

That central hub is the key component. It’s what allows for both integration and synchronization of data. Supply chain integration technology uses a centralized platform to connect all members of a supply chain, allowing them to share and access real-time data.

The ideal supply chain integration system allows people/users to communicate and collaborate in real-time, while automating processes whenever possible to maximize efficiency. It must be flexible, able to quickly adapt to changes in the supply chain—planned or unplanned.

Supply chain integration by the numbers

A Gartner survey of over 500 global supply chain leaders reported that 38% were improving their supply chain technologies in 2022. On average, the respondents planned to allocate 73% of their 2023 tech budgets to supply chain growth and performance enhancement tools, such as integration services and cloud-based platforms and infrastructure.

According to Cleo’s 2023 Executive Survey, 85% of respondents planned to proactively invest $100k or more in supply chain technology in 2023. Of the investments, 35% were allocated toward ecommerce platforms and 33% toward integration solutions, with a focus on increasing supply chain resiliency and data visibility.

Finally, a McKinsey survey of global supply chain leaders found that, in almost every sector, more than 90% of respondents reported investing in digital supply chain technologies in 2022, with 67% implementing digital dashboards to increase end-to-end visibility. Those companies were 2x as likely to report no challenges caused by disruptions in 2022.

Benefits of supply chain integration

Why are global leaders and top executives investing in supply chain integration technology?

Increased visibility and information access

When everyone has access to the same up-to-date information, and everyone is able to communicate and share real-time data with everyone else, it means increased visibility and transparency throughout the whole supply chain. Information sharing at every stage makes communication faster and more efficient, and mitigates the risk of supply chain members working off outdated or inaccurate information.

If there’s an issue, there’s no need to independently contact everyone who will be affected via their preferred communication channels. There’s one central platform that everyone can access.

McKinsey’s 2022 survey revealed a 3-pronged “formula” for supply chain resilience: Visibility, Scenarios, and Data. As stated above, the 67% of respondents who implemented digital dashboards to improve end-to-end visibility were 2x as likely to report no challenges caused by supply chain disruptions in 2022. Respondents with high-quality data (comprehensive, accurate) were 1.5x as likely to report no challenges.

Proactive risk management and decreased disruptions

Natural disasters. Geopolitical conflicts. Supply shortages. Pandemics. The list of events that can disrupt the supply chain is endless, and though worst-case-scenario planning can definitely be helpful, you simply cannot predict and prepare for every disruption. What you can do is work proactively to strengthen the systems your business relies upon.

66% of Executive Survey respondents characterized their investments in supply chain technology as proactive: made in advance of expected future disruptions. That’s up from 40% “proactive” in 2021. That increase represents a clear desire to implement structural changes before disaster strikes, rather than after.

Cleo ranked supply chain disruption as #3 in the top threats faced by businesses in 2023. Companies reported tackling the challenge in 3 ways:

• Investing in data management tools such as CRM (Customer Relationship Management), WMS (Warehouse Management System), TMS (Transport Management System), etc.
• Establishing new partnerships (vendors, suppliers, logistics and fulfillment) 
• Investing in and implementing integration technology

Increased agility and continuity

Agility is a company’s ability to compete in today’s fast-paced global marketplace by quickly responding to market changes, emerging opportunities, and challenges or disruptions. 

Continuity is a company’s ability to maintain critical functions during and after a disruption.

76% of Executive Survey respondents reported that supply chain technology investments improved their business agility in 2022. The benefits of increased agility were: increased continuity, scalability, adaptability, and profits. Because their digital ecosystems were streamlined and interconnected, they were able to pivot and adapt to changes faster, scale with demand, and overall improve their bottom lines.

Increased revenue

Of Cleo respondents who invested in supply chain technology in 2022, 97% gained over $50k in revenue as a result of increased business agility due to digital integration, 49% gained over $1M, and 18% gained over $3M.

The results are clear: agility drives revenue. Being able to pivot at a moment’s notice—with your digital ecosystem integrated, synchronized, and ready to pivot with you—is critical in a globalized marketplace.

In general, integration technology allows a business to optimize their operations for speed and efficiency, implement KPIs (Key Performance Indicators) along the supply chain to standardize procedures and performance metrics (especially in time-sensitive areas), communicate more accurately and reliably (with supply chain partners and with customers), and reduce the risk of lost profits due to disruptions. All of these changes add up to boost your bottom line.

Conclusion

As the globe becomes more connected, global networks become more complex. It can be incredibly challenging to implement structural changes to your current supply chain management system without expert help—at the very least, integration requires a centralized platform that connects to each point in your digital ecosystem, each link in your supply chain. That’s a big ask.

Digital connectivity is the only way forward—the only way to future-proof your business. Implementing data integration technology (and practices such as omnichannel strategy) is your best chance at not just surviving, but thriving long-term.

What we’re seeing from reports like the ones published by Cleo, Gartner, and McKinsey is an ongoing shift away from “point solutions” that address singular problems and toward integrated technology platforms that offer end-to-end visibility of a business’s entire operational network. Investing in such platforms and practices now, on a structural level, can have huge benefits in the long run (and even the not-so-long run).

It’s a challenge—but one you can overcome with the help of an experienced partner.

Ready to future-proof? Request your free 15-minute consultation to receive:

• A rundown of our fulfillment and digital integration services
• Pricing options and a free quote
• Referrals to other services if we’re not the right fit

Still have questions about supply chain integration technology? Connect with an EcomHalo Guardian—we’re here to help.