March 5, 2021 - Updated June 18, 2021
e-Commerce Sales with Outsource Manufacturing and Third-Party Logistics (3PL) Simplified with Microsoft Dynamics 365 Supply Chain ERP and EDI Integration
Even before the online shopping demand explosion caused by the pandemic, e-commerce has experienced a continuous boom. Whether for the convenience, great deals, or ability to peruse from the couch, online shopping perks are indisputable. A few clicks, the sale is done and dropped at the customer's front door in short order. But, if you are on the seller side, you understand what goes on behind the scenes can be a bit more complex.
If your company sells a product online, you might handle it all. You take orders, manufacture the product, pack it and ship it from your warehouse. The whole sales lifecycle is controlled by you. A trusted ERP like Microsoft Dynamics 365 Supply Chain Management helps you manage resources and inventory, resolve any product issues quickly, mitigate delays and ultimately accelerate your time to market. Dynamics 365 Supply Chain Management features robust capabilities that allow you to optimize inventory, warehousing, fulfillment, material sourcing, and supply chain logistics.
But as e-commerce demand has gone up so too have the number of sellers that outsource parts of the supply chain including manufacturing, as well as delivery and distribution via a Third-Party Logistics (“3PL”) partner. With so many business processes and systems to account for with your partners, it can become a challenge to maintain an agile supply chain — everything from managing communications to accessing streaming analytics. Dynamics 365 Supply Chain Management unifies your data, but if you work with multiple supply chain partners such as manufacturers or 3PLs, you must also create secure connections to the third-party systems. That requires managing multiple connections individually.
To make life easier, you may choose to integrate an Electronic Data Interchange (“EDI”) solution to broker all the additional connections to your partners to enhance visibility and real-time data access across the entire supply chain.
Let’s explore how Dynamics 365 Supply Chain Management can integrate with EDIs for process improvement to simplify logistics, supply chain management (“SCM”) and ensure compliance.
A NEW E-COMMERCE SUPPLY CHAIN MANAGEMENT MODEL EMERGES
There is an emerging trend of an internet-enabled business model that involves these three key players:
E-Commerce: You, the seller, outsource sales. You use one or multiple web-stores on the internet to sell your product, such as an e-commerce site like Amazon, eBay, or Etsy or an e-commerce platform like Shopify or WooCommerce. You may not even touch your product at any point during the sale, but you own the intellectual property.
Outsource Manufacturing: You outsource manufacturing onshore or offshore. The demand comes in to you, but you have your manufacturing partner produce it.
Third-Party Logistics (“3PL”): Next is delivery. In the e-commerce outsource model, you may work with a 3PL to deliver the order straight to your customer, or ship it to a distributor that ships to a retailer.
As you can see, there is a lot of trading hands. And even though this business model is quickly becoming the new norm, there are several overlapping challenges.
THE CHALLENGE: UNIFYING DATA, AND MULTIPLE CONNECTIONS TO MANAGE
If you sell a manufactured good that you create, you probably have a factory, a sales department, and a warehouse. The demand is visible, and the process transparent and controlled. Supply Chain Management, Logistics Management, and Business Process Management, i.e., the entire flow of work to fulfill customer expectations, is typically managed by ONE core system like Microsoft Dynamics 365 Supply Chain Management.
When multiple partners get involved, this can lead to multiple processes and systems to manage. Here are some of the overlapping challenges you may face.
Synchronizing data. You may have never talked to your customer or touched your own product. Your buyers came through the internet and you need to keep track of all data surrounding the sale. This needs to be communicated to the manufacturer to get the product produced, and to the 3PL to get it distributed to the right place. Issues like shrinkage and lost orders need to be easily communicated as well.
Tracking data analytics – inventory, financial and more. You may lack visibility to your inventory, but buyers will want to know what you have in stock. The manufacturer has all your raw materials and maybe some finished goods, as well as the 3PL and you need to somehow track quantities and location accurately in real-time. How do you tie together invoicing and properly categorize all the costs through inventory and costs of goods sold to various sales channels? How are classic financial data such as sales territory, regions, product types sold captured? Are you even getting the business impact analytics you need to support your own internal analysis?
Managing multiple data connections. You as the seller must communicate with multiple providers in the supply chain electronically. For the sake of example, let’s say you sell on four online stores, so your sales come in from four different sources. Let’s also say you also work with a manufacturer and three 3PLs. A standard data integration from an ERP system would have to go to eight different partners involved in the supply chain.
THE SOLUTION? INTEGRATE DYNAMICS 365 ERP AND EDI
It is key to use ERP solutions like Microsoft Dynamics 365 Supply Chain Management as a centralized management point to stay connected and streamline your operations, build agile processes, and optimize resources to consistently deliver your products on time. If you work with multiple partners, instead of creating multiple connections, you can work with an EDI partner that provides one simplified, centralized place to manage and broker all the traffic and transactions back and forth between Dynamics 365 and your various suppliers. Dynamics 365 Supply Chain Management then talks to just one system, which tracks all your transactions, integrates EDI, inventory management, and fulfillment.
That EDI partner already has the connections and transactions established with all the common trade partners in the supply chain. They work with all the online e-commerce sites and common 3PLs and can easily build a new connector as you need. Some partners don’t just provide EDI connections. They have portal service for vendors and customers.
GET STARTED WITH JOURNEYTEAM
We have heard from many companies looking for a flexible, scalable solution to address their challenges with the e-commerce outsource business model. We at JourneyTEAM have created a reusable methodology that can be used in whole or part as a standard approach with Dynamics 365. The approach is flexible to work for companies of all sizes.
As an award-winning Microsoft partner, JourneyTEAM has a proven track record with successful Microsoft technology implementations. Let us help evaluate your supply chain management and see how we can help standardize your business processes and increase efficiencies with our one-solution best practices and methodology. Contact JourneyTEAM today!
For any additional questions, please contact Journeyteam at (801) 565-9199