Supply Chain Data Integration: Top 3 Challenges and Solutions

Let’s see if any of these supply chain data integration challenges sounds familiar:

• Your warehouse updates inventory, but the sales and dispatch teams can’t access it in real-time. Someone confirms an order, only to find out it’s out of stock.
• Your carrier sends shipping updates in one format, but your system uses another, forcing your team to manually re-enter the info. A simple typo, like the wrong tracking number, sends shipments to the wrong place, causing delays.
• Your supplier sends important data, but your system flags it due to non-compliant security protocols, like mismatched encryption. Now your team has to manually verify everything, causing delays and security risks.

The root cause? Too many systems and formats, but no proper integration to bring it all together.

This is what drives many companies to turn to custom software development for logistics.

In this post, we’ll explore the most common supply chain data integration challenges and solutions.

At Digiteum, we understand that fragmented logistics software systems can be a real headache. They don’t always “talk” with each other, and that’s a problem.

Think about your supply chain for a moment. From sourcing to distribution, hundreds of players are involved – each using their own software. When these systems can’t communicate, it leads to delays and plenty of frustration.

Imagine this: Your transportation management system (TMS) runs on Oracle’s OTM. Your carrier, on the other hand, is using SAP, while your warehouse management system relies on Blue Yonder. Each of these systems processes data in different formats. As a result, your carrier sends delivery updates that may just not match your WMS format, so you can’t track shipments in real time.

The only solution to supply chain software integration challenges is to break down those silos. To achieve this, you need to connect various software types and allow them to translate data into formats that other systems accept.

When it comes to choosing the right method, your specific situation will dictate the best approach. Here are some popular strategies your IT vendor might consider:

• API (Application Programming Interface). APIs are perfect if you have tech support for integration with existing software. Once in place, they enable direct communication between internal and external systems. For example, integrating a shipping carrier API like UPS or FedEx automates label generation from your order management system, cutting down on manual entry and errors.
• Third-party solutions with ready-made integrations. If you have limited IT resources and need a quick setup, third-party solutions with ready-made integrations are a great choice. As an example, a logistics system may have built-in integrations with eCommerce platforms like Shopify and WooCommerce. Once set up, it connects with these platforms and streamlines operations for small businesses.
• Integration Platform as a Service (iPaaS). Cloud-based iPaaS solutions are suitable for global operations. They connect multiple systems and applications and help manage a lot of data and processes in real-time. For example, iPaaS platforms like MuleSoft or Zapier can integrate Salesforce with Mailchimp, automating marketing campaigns based on customer interactions.
• EDI (Electronic Data Interchange). EDI is a proven method for businesses that exchange a lot of standardized documents, like purchase orders and invoices, with their partners. Yet, it can be inflexible because it relies on strict data formats that both partners must follow closely. If one partner changes their format or doesn’t comply, the systems won’t understand each other.
• Data pipelines. Data pipelines work for businesses that want to process and analyze a lot of data from different sources. They automate how data flows between systems, making it easy to collect, store, and analyze. Let’s say, a retail company sets up a data pipeline to pull sales data from 100+ stores. This data then feeds into a dashboard and helps prevent stockouts.
• Custom and ready-made portals. Portals provide a centralized hub for businesses to manage operations. They consolidate data from different systems and make it easy to take action. For example, you can track shipments, manage orders, and print labels all in one place. Off-the-shelf solutions come with ready-to-use integrations, while custom portals give you the flexibility to design your own architecture.

Sage Appliances, an Australian kitchen brand, operates across 50 countries, including the UK. But post-Brexit complexities posed significant operational challenges.

Sage relied on a third-party logistics provider for the UK market until new shipping regulations complicated matters. With their central European hub in Prague, they faced a lack of integration between their systems and the UK carriers, making order tracking difficult.

Sage could have built their own solution for the UK market. But that would have been costly and time-consuming.

Instead, they joined the DHL Fulfillment Network (DFN). DFN’s APIs allowed for immediate integration with trusted UK carriers. As a result, Sage maintained their operations in Prague while adapting to the UK market’s demands. (Source: dhl.com)

• Quick setup. With tools like APIs, logistics players can easily connect to the systems they need without having to build their own.
• Greater flexibility. When logistics systems work well together, businesses can quickly adapt to market changes and scale up without disruptions.
• Faster decision-making. APIs provide real-time access to standardized data. This means you can respond quickly to changes.

The main cybersecurity rule is simple: your solution is as secure as its weakest link.

Now, let’s consider global supply chains.

Dozens of companies neglect to update security patches, leaving their systems wide open to cyberattacks.

Hundreds of employees often share the same password and ignore basic security protocols, putting sensitive data at risk.

Thousands of devices connect to databases, and if even one device misses an update or security review, it creates an opportunity for hackers.

In the end, you could invest millions in your security, but what’s the point if a local carrier doesn’t even use MFA on their phone?

Remember the Target breach in 2013? Target invested over $100 million in a security system. But a vendor’s oversight allowed hackers to access PoS systems, compromising millions of customer card details. This cost Target $162M and damaged their reputation.

What can you do with the challenges and solutions in supply chain data integration in this case?

• Make sure your own security measures are strong. Implement a zero-trust security model from the start. Set up encrypted data networks, use firewalls, and deploy intrusion detection systems. But remember, each situation is unique, just like your relationships with logistics partners. This is where the expertise of your IT advisor comes into play.
• Follow regional regulations like GDPR in Europe and CCPA in the U.S. Supply chain partners need to stick to these rules, but many don’t take the necessary security measures. This can cost a lot. For example, companies that don’t comply with GDPR can face fines of up to 20 million euros.
• Achieve visibility. There’s another saying in the cybersecurity world: You can only manage what you can see. And end-to-end supply chain visibility is crucial for this. Otherwise, data is siloed across fragmented systems. As a result, you can’t fully monitor transactions for suspicious activity and respond quickly if anything happens. Of course, attackers are always eager to take advantage of any vulnerabilities.

Evonik is a leading German chemicals group. They operate production plants in 27 countries worldwide, all connected by carriers, distribution centers, and warehouses. As Evonik acknowledges on their website, they are a prime target for cybercriminals. This makes security one of the main supply chain data challenges to overcome.

Their cybersecurity strategy combines technical methods with a strong cultural approach, as highlighted in their Online Sustainability Report 2023.

• Ongoing security reviews. Evonik regularly evaluates its security protocols to prevent third-party attacks. They invest in both technical and organizational strategies to detect and counter threats.
• Employee classification. They have a Cyberattack Protection (CAP) program that classifies employees based on their risk levels. Higher-risk roles receive stricter security measures, especially for sensitive information.
• Regular security assessments. The company conducts penetration tests and IT security audits frequently. This helps identify weaknesses and improve system security.
• Protection of sensitive information. Evonik focuses on safeguarding critical data that impacts its competitiveness. Access to essential IT infrastructure is tightly controlled.

• Better protection against cyberattacks. With a strategic security policy, your segment of the supply chain stays secure even during an attack.
• Improved security culture minimizes risk. Security is about more than just tools; it’s about the people using them. Educate your employees on the basics of cybersecurity to reduce risks effectively.
• Avoid costly fines. When your data is secure, you’re more likely to comply with strict regulations and minimize the risk of expensive penalties.

High costs are a common hurdle in logistics digitalization. Many people see initial implementation expenses as the biggest challenge.

But here’s the irony: If you don’t invest in better implementation and data exchange, you won’t get the full value of your solutions.

That’s why it’s crucial to factor in ongoing costs for integration and maintenance in your budget. Katherine Lazarevich, Digiteum’s co-founder and senior IT business analyst, always emphasizes this on our blog. She highlights how planning for future expenses can lead to smoother operations down the line.

In 2022, a maritime intelligence company with offices in the US and UK faced a growing workload. To keep up, they needed to expand their tech teams quickly. The company sought reliable engineers to work on a platform designed to optimize vessel performance for major clients such as TotalEnergies and Shell.

Turning to Digiteum for IT staff augmentation proved to be the solution. Within weeks, Digiteum integrated five senior tech specialists into the client’s teams. This swift addition helped the company manage its workload more efficiently without inflating costs.

The collaboration led to major improvements in supply chain data integration. Digiteum’s engineers worked on key elements of the client’s cloud-based maritime analytics platform. They developed a React-based portal and set up data processing pipelines to create actionable insights from various sources. This partnership not only tackled the talent shortage but also improved operations and prepared the company for future growth.

• Handling growing workload without inflating costs. Instead of dealing with constant turnover from hiring in-house, Digiteum’s experts helped them meet deadlines and achieve their goals efficiently.
• Managing multisource data. Our engineers integrated data from vessel sensors, control systems, reports, and navigational charts by building data pipelines. They also set up scalable cloud infrastructure and created dashboards for better visibility and data-driven decisions.
• Handling complex project management. We assigned a delivery manager to lead the project. This helped them adapt to changing requirements and stay on track with their goals.

In supply chain data management and integration, it’s not as simple as plugging in a device and pressing a few buttons. To ensure your software works seamlessly within a dynamic and complex ecosystem – without missing any data – you need a proven IT expert for data integration.

Here’s why you can trust Digiteum’s supply chain software development services:

• Regulatory expertise. Our portfolio includes projects compliant with GDPR, PCI, and PIPEDA. We have been working with these regulations and make sure every requirement is met to keep your data safe.
• Proven experience. Since 2010, we’ve been engaged in complex data integration projects, from connecting hundreds of labs to a single data platform for precision medicine to building applications for machine production and performance monitoring.
• Security-first approach. We prioritize security by using reliable architecture, rigorous testing, and proven data management practices when designing and building applications.

• In 2024, rarely anyone uses one-stop shops in logistics. On the contrary, everyone is trending towards using some best-of-breed products and making them work together.
• Yet, this integration doesn’t come simple. You need to put extra effort into making systems communicate with each other without leaving any data out. Besides, you need to do this securely and cost-effectively.
• If you feel stuck with your current challenges of supply chain data integration, contact Digiteum. We have the expertise needed to make everything work smoothly for you in your contacts with carriers, suppliers, and vendors.