One of the biggest challenges facing anyone in supply-chain optimization is balancing complexity and resilience.
The prevalence of digital connectivity in manufacturing means that getting a product assembled and shipped to the customer requires something that looks more like a network than a “chain.” A well-interconnected digital network can streamline manufacturing processes and lower inventory requirements, to ensure that companies meet their service-level agreements while running optimally to ensure maximum profitability.
The currency of the interconnected supply-chain network is data. It needs to flow across the borders of every stakeholder involved in the network. Suppliers are distributed globally, and the days of interacting between spreadsheets and faxes are no longer adequate to help companies make real-time decisions, as they brace to meet changing market demands. As manufacturing evolves from chains to networks, they encounter more potential points of failure. In this scenario, service-level agreements become the holy grail for customer experience.
Meanwhile, information processing is also becoming more complex. High-tech manufacturing is undergoing a transformation due to Industry 4.0. New innovations in artificial intelligence, blockchain, cloud computing, data mining and the Internet of Things, to name a few, hold the promise of lowering cost, increasing efficiency, and enabling faster innovation. However, this also introduces more complexity, due to the need to connect to more systems and endpoints. Traditional integration methods can’t keep pace with the speed and scale of Industry 4.0, much less the changes in technology.
Despite the limitations of data integration in manufacturing, a recent survey found that 87 percent of manufacturing CIOs have plans to take advantage of data exchanges between Industry 4.0-technologies and other technologies used by companies to interact with their supply chain. The strategic answer to making a supply-chain network more resilient is to make connections more flexible by using application programming interfaces (APIs). This ensures that:
APIs allow manufacturers to build cutting-edge apps that cross a complex landscpe of partners and suppliers, many of which use different applications and systems that weren’t built to talk to each other.
An API is a set of rules that clearly defines the method of communication with an application. Without getting too deep into the technology, it’s a call with predefined procedures, protocols and data structures. From a technical perspective, APIs serve the same purpose that standardized railroad gauges once served. Usually, they’re implemented in the form of software libraries. The API itself is a written standard that specifies the expected behavior of the call, while the library stores the actual code that enforces the rules.
Technically, APIs have many advantages. A programmer can write a call to an API to pass and receive data without having to know the inner workings of the other application, and without having any contact with the original developers. The separation of APIs from applications allow programs written in one language to use an application written in another language. APIs also make it possible to develop new systems in a framework that consists of nothing more than a series of calls that pass information from one application to another.
APIs are also becoming popular for business reasons. Some of the most successful companies in software sell applications in the cloud, and the only way to access them programmatically is through APIs. Among these ranks are some of the best-known names in technology, including NetSuite, Epicor, Salesforce, SAP and Autodesk. Some of the most popular apps such as Slack, WordPress, SurveyMonkey and MailChimp are also hosted in the cloud.
With so many technical and business advantages, it should come as no surprise that the API market is predicted to grow from $1.2bn in 2018 to $5.1bn by 2023, at a compound annual growth rate (CAGR) of 32.9 percent.
Companies are looking to use technology to deliver the best possible customer experience. Integration through APIs is the way to get the most information across securely and in the shortest amount of time.
Take getting shipments to e-commerce suppliers. Integration could involve connecting APIs to communicate information between warehouses, distribution centers, enterprise resource planning systems and the retailer itself. During a holiday sale, there might be increased demand for a specific item, but the level of demand can vary by geographic region. Suppliers need a way to fulfill their needs specific to each region across various channels, be it through the retailer’s physical stores or via online delivery.
API integration between the retailer and its suppliers provides a higher level of responsiveness and agility. For example, transactions could be triggered when a retailer’s inventory has slipped below 20 percent due to an unforeseen surge in demand. The suppliers are notified, and processing the batch of that particular item can be accelerated to fulfill the increased demand.
This type of integration needs to ensure that, along the way, each party involved is notified in real time. In trucking and shipping, for example, weather might play a major role in whether a shipment makes it to its destination on time. If it’s snowing in a particular region of the country, businesses need to anticipate this, so they can communicate with Google Weather and Google Maps and automatically factor the hours of weather-related delay into the journey. In this example, a weather API could get pulled in and fed into Google Maps, which could then help businesses determine how much additional lead time needs to be factored to ensure that the shipment meets service-level agreements with customers. For items without much lead time built into production, timely alerts or notification due to weather disruption could help the production shop floor to get prepared to deliver the item ahead of time, by changing the number of resources allocated to the production shift.
All of this information can be organized for the shift supervisors in an easy-to-read dashboard, so that they can prepare for the next production run. In this case, if they have access to systems such as HR and ERP, they can pull in the right resources for the shift and ensure that the surge in demand is met. They can even alert the shipping provider to make arrangements to fulfill the additional quantities in a timely manner.
The work of streamlining the supply chain is never fully finished. To be resilient in the face of disruption, you need to know what’s going on in your facilities and what data is flowing between them. You’ll need to facilitate a rapid flow of information across systems and stakeholders that need real-time access to information. You need to be able to coordinate a vast and decentralized web of interconnected suppliers, or risk failing to meet customers’ expectations.
You can’t plan for the unknown, but you can tackle uncertainty ever more boldly thanks to API integration. APIs empower companies to achieve the best balance between today’s complexity and the resilience that supply-chain networks must provide.
Shekar Hariharan is Vice President of Product Marketing at Jitterbit.
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