Bringing powerful connections to your supply chain pays—and it’s not as complicated as you might think. Reach out to an Elemica consultant and see how you can start transforming your supply chain today.
By: Arun Samuga, Chief Technology Officer
While 2020 has been a challenge for many manufacturers, there’s never been a better time for manufacturing operations to create new efficiencies through connection. Plugging into suppliers, service providers, customers, regulatory bodies and other supply chain participants takes less time and is less resource intensive than at any other time in history. One major reason? Application Programming Interfaces (APIs).
Contemporary system integration dates back to the 1960s. Early initiatives aimed at sharing electronic data between partners were known as Electronic Data Interchange (EDI), a term coined when the U.S. transportation industry began exchanging documents electronically using standardized formats. The first EDI was actually a shipping line sharing manifests. The idea caught on, making its way to the manufacturing sector in the 1980s when companies such as Ford began insisting suppliers connect via EDI.
EDI was a major step in the development of inter-enterprise connectivity. It set the precedent for stakeholders to come together to pioneer supply chain automation, proving out massive savings over paper-based processes along the way.
EDI was, however, expensive and inflexible and also presented somewhat asymmetrical returns on investment. If Ford demanded that a tire manufacturer, for example, tie into its EDI system, the tire manufacturer spent a lot of money making it happen since it had no choice. By the early 1990s, around 12,000 businesses were using EDI. That meant the need for EDIs tying that tire manufacturer to each major customer’s EDI. Was this massive outlay really worth it for every customer?
The EDI model provided new possibilities for supply chain integration but for decades these lumbering systems became a significant cost center for manufacturers.
The development of APIs, along with a number of complementary technologies in the 2000s, changed everything. An API is a piece of code that lets disparate systems, networks, technologies, assets and facilities communicate. Rather than attempting to standardize document and data formats across trading partners, an API serves as a simplified interface between specific systems. Developers create APIs for sale on the open market, for free as open-source code, or for use exclusively within a specific enterprise. Supply chain participants can connect by deploying these third-party APIs off the shelf, without having to invest in massive in-house development initiatives. Simple, practical, prolific and economical, APIs have become an economy unto themselves.
So consider our tire manufacturer from earlier. Rather than a massive systems integration for each major buyer, they could develop and implement one or more lightweight APIs without dependencies on complex middleware systems to connect with Ford—and other buyers—in a much faster, more economical way.
Today APIs help optimize practically every aspect of manufacturing, from order and delivery of raw materials to inventory management, quality control and regulatory compliance. Manufacturers utilize them to see into the enterprise using mobile apps, help optimize system design, manage inventory levels, automate the plant floor, allowing workstations to communicate, get real-time insights through IoT-enabled assets, help make operational decisions on the fly and thousands of other things. Enabling these types of capabilities via API lets you:
The possibilities are truly limitless: onboarded manufacturers creating an additional channel through a mobile application can publish their product specifications in an easy, plug-and-play way leading to sales accretion. APIs could help initiate stop-work procedures during potentially dangerous conditions. And decision quality can be improved through the analysis of countless API-enabled metrics.
According to a MarketsandMarkets report, the global API market is expected to reach $5.1B by 2023. While other data exchange protocols continue to exist, API use as a way to increase supply chain interoperability is the way of the future. But with any new system implementation, it’s important to follow best practices:
Employ both outside-in and inside-out approaches to identify an API strategy that maximizes outcomes. From an implementation standpoint, research and test issues such as response times, uptime, user feedback, affordability and other performance points. Keep the end consumer in mind – it could be another system within your enterprise, your customer’s system or a third party’s system.
It’s important to plan, organize and carefully control the APIs you’ve deployed. That means creating a management infrastructure that includes an interface catalog, gateway, developer portal, etc. to keep everything sorted. Plan on investing in an API manager i.e. solutions like Apigee, Kong, etc. that provide end-to-end API management capabilities.
Check API metrics regularly, reviewing customer usage, downtime incidents, contribution to revenues, etc. This includes reviewing the API’s contract and terms. Automate activities as much as possible for operational efficiency.
Ask questions about security protocols, processes, standards, authorization, authentication, etc. Understand and document the risks to your enterprise and customers. In general, there are easy-to-implement security mechanisms already available.
New players are making APIs all the time. Be open to the prospect of bringing on a superior product and extending your API strategy to stay competitive. Accelerate your own API strategy so as to automate key aspects of your functionality.
Paired with the maturation of machine learning, artificial intelligence, 5G, 3D printing and a variety of Industry 4.0 technologies—APIs are positioned to deliver more value than ever to the manufacturing sector. The only limitations are our ability to envision next-generation environments in which we can truly use them to their fullest potential.