Interoperability: What is it, and why is it important for supply chain organizations?

nteroperability refers to the seamless flow of information between a series of connected organizations along a supply chain, and it's emerging as a key concept in recent discussions about the sustainability and stability of the global supply chain of the future.

Developing interoperability in supply chain ecosystems is mission-critical to the development of agile, resilient and efficient supply chain systems. By integrating independent, dispersed data networks and systems so that information flows freely between them with full end-to-end visibility, supply chain stakeholders can build trust, maximize efficiencies, pre-empt disruptions and collaborate more closely and effectively to deliver better services to customers.?

But for supply chain organizations lagging on digital transformation, achieving true interoperability and accessing the benefits it delivers requires a renewed focus on improving data management architectures for higher accuracy and more seamless data sharing between stakeholders. Here’s why.

What is interoperability?

Interoperability refers to the ability of independent organizations in a supply chain ecosystem to collaborate, cooperate and share information through a network of compatible, integrated data systems and processes. Data interoperability in particular is defined as “the ability to achieve quick, seamless, secure, and reliable data and information exchange” between disparate stakeholders, according to one academic paper.?

Interoperability delivers increased speed, efficiency and resilience in supply chain systems. According to McKinsey, increased transparency through data sharing is one of the most powerful ways to keep supply chains operating efficiently in the wake of recent disruptions. According to Deloitte, supply chain agility can be measured and built according to four main areas of focus: demand sensing, collaborative relationships, process integration and information integration. Interoperability touches on all four of these focus areas. In an interoperable supply chain system, all stakeholders have end-to-end visibility throughout the product or shipping lifecycle, thanks to highly integrated processes and information systems.?

The benefits of interoperability for supply chain organizations

Interoperability delivers a host of transformative benefits for supply chain ecosystems.?

Increased visibility and transparency

Through standardized data-sharing protocols and systems, independent organizations have greater visibility into the lifecycle of a product or shipment, regardless of how far up or down the chain it happens to be at any given moment. This allows for better forecasting, early detection of problems and disruptions, and increased responsiveness to issues ahead of time. Increase visibility and transparency is also important for certain ESG goals, including GHG emission reduction, hot spot identification, and carbon-optimized planning to reduce Scope 3 emissions deeper in the chain.

Increased operational efficiency

Increasing the speed and ease with which information is shared between disparate organizations along the supply chain allows for more informed data-driven decision-making, operational refinement and fewer errors. For example, if three organizations are sending product to the same company in L.A, is there an opportunity to merge the load at some point and send one truck instead of three? Interoperability gives all three organizations the visibility they need to know this is an option, and all three gain efficiencies through this kind of collaboration.

Enhanced collaboration and partnership

Interoperability works to break data silos between organizations, enabling closer collaboration and deeper trust. When stakeholders have a view into the inner workings of their counterparts through the data flowing freely between them, the possibility of conflict or disputes is lowered, and trust is deepened. The transparency afforded by a single source of truth across multiple organizations leads to closer alignment, the possibility of shared demand planning and forecasting efforts, and more effective progress toward common goals.

Enhanced adaptability

With the visibility interoperability delivers, supply chain organizations can easily pre-empt and quickly adapt to accommodate potential disruptions, adjusting accordingly before the impacts ripple down the chain and become a business issue.

Interoperability starts with better data management

Interoperability is mission-critical for supply chain organizations as the industry works to build the agile, sustainable and resilient supply chain of the future. But at the heart of true interoperability is solid data.?

In order to deliver on its promise of visibility, transparency and efficiency, the interoperable supply chain needs data management systems that can harness the tremendous volume of data generated by supply chain activities daily and put them to work to optimize operations at every level.

Stargo’s StarDox data management and automation system is one such solution. Using advanced AI and ML modeling, StarDox can extract, cleanse and enrich data from any data format, structuring it for use in wider systems throughout your organization, and beyond.

Find out how Stargo can help your supply chain ecosystem achieve true interoperability today by trying a free demo.