Microsoft Dynamics 365 EDI Integration for Supply Chain Automation

Introduction: A Need for Customizable Unified ERP Integration

Integrating data from supply chain transactions across applications and systems is vital for most businesses. These integrations often involve an organization's enterprise resource planning (ERP) systems, such as Microsoft Dynamics 365® and its modules like Business Central, Finance & Operations, and Supply Chain Management. These systems are central to automating business processes and providing operational visibility, necessitating a unified integration strategy.

Failing to integrate ERP as part of overall system modernization puts organizations at a disadvantage in today's dynamic digital landscape. A fragmented approach hinders cost optimization, innovation, and differentiation. Many businesses opt for low-cost cloud-based solutions that do not easily integrate with their ERP, thereby hindering data sharing and business agility.

Finding the right balance between centralized control and flexibility is key to meeting day-to-day business needs while building agile internal capabilities for efficiently managing dynamic integration requirements.

Partnering with a trusted vendor with expertise in customization and offerings that include low-cost, pre-built yet customizable adapters supporting APIs, along with flexible support ranging from on-demand EDI services to full managed services, can effectively solve these challenges.

Options for Integrating Microsoft Dynamics 365

Dynamics 365 provides native integrations, including Microsoft Dataverse (Common Data Service), Power Automate, Power Apps, and Power BI, within its cloud application ecosystem. These enable seamless interoperability and sharing of common data elements. Third-party integration platform vendors also offer pre-built connectors for popular business applications on the Microsoft AppSource marketplace. However, while native and pre-built connections can offer improvements, their capabilities often fall short in real-world supply chain scenarios and may not combine technology with expert support.

Recommended Dynamics 365 EDI Integration Strategy

Many organizations find pre-built integrations insufficient for their complex and digital processes. Integrating beyond these limitations requires a modern platform and specialist expertise to handle intricate data transformations, validation, and quality control. This is particularly true for external data sources, where an "ERP firewall" is crucial to mitigating data issues originating outside the organization's control.

Beyond technology, proper integration governance is vital. Organizations relying solely on external consultants and system integrators often end up with a highly fragmented and costly integration solution portfolio. This typically involves maintaining custom code and point-to-point integrations across disparate platforms, leading to documentation challenges and business impacts beyond IT.

A solid integration strategy that enables flexible, scalable, and cost-efficient delivery across various use cases is critical. This involves leveraging Dynamics 365's native capabilities while complementing them with a solution and services that fill specific gaps without resorting to multiple tools and platforms.

Use Case: Integrating Dynamics 365 Business Central to Enable O2C Automation

Consider the automation of an organization's order-to-cash (O2C) process when using Dynamics 365 Business Central as an example of common integration flows requiring adaptation and specialist skills.

Overview

In this example, a consumer-packaged goods (CPG) company uses Dynamics 365 Business Central as its ERP system. To streamline its O2C process, the company automates inbound purchase orders and outbound sales invoices with a key retailer. Additionally, it sends warehouse shipping orders directly to a third-party logistics (3PL) provider from within Dynamics 365 Business Central.

Key Benefits

• Automatically create 500-plus shipping labels per month.
• Automate label creation based on Advance Ship Notice (ASN) data to ensure accuracy.
• Eliminate 1,000 people hours per year attributable to manual label creation.

Purchase Orders and Invoices

1. Purchase orders are received as EDI messages (e.g., ANSI X12 850 or EDIFACT ORDERS) from the retailer via an SFTP connection.
2. The integration platform translates these messages into Dynamics 365's native JSON format and passes them to the system using the Common Data Service (CDS) API.
3. Business users create invoices in Dynamics 365, triggering an integration flow that communicates the invoice data in JSON format to the platform.
4. The integration platform validates and transforms the invoice data into an EDI document (e.g., ANSI X12 810 or EDIFACT INVOIC) preferred by the retailer.
5. Finally, the integration platform delivers the EDI invoice to the retailer over the SFTP connection.

Warehouse Shipping Orders

1. Submitting a shipping order in Dynamics 365 triggers an integration flow that delivers the order data in JSON format to the integration platform using the CDS API.
2. The integration platform transforms the JSON data into an EDI message (e.g., ANSI X12 940) preferred by the 3PL provider.
3. Depending on the provider's preferences, the integration platform delivers the EDI message over AS2 or another chosen protocol.

User Interaction and Additional Considerations

User Interaction

Business users can access real-time information and process status through Dynamics 365 system dashboards and reports. An integration visibility tool embedded within the Dynamics system provides detailed information about the overall process and individual messages, offering a real-time view of data flowing through the platform.

Additional Integration Considerations

• Order-to-Cash (O2C) process automation often includes complementary data flows, such as confirmations, shipping notifications, status updates, and remittance advice, which further enhance the process.
• Managing integrations with hundreds of customers and numerous logistics providers requires a scalable and flexible integration solution.
• Dynamics 365 customers can leverage Power Automate, a built-in integration platform, or a cloud-based integration platform-as-a-service (iPaaS) solution.
• Maintaining consistent integration development practices, such as documentation and testing frameworks, and ensuring proper monitoring and error resolution processes are crucial for successful implementation.
• Access to skilled integration experts is essential. Organizations can consider leveraging strategic partners to extend their internal IT capabilities.
• Scalability is vital to avoid costly platform replacements. OpenText™ Trading Grid, a unified cloud integration platform, is designed to accommodate growth and changing business needs.

Diagram Description

Figure 1 illustrates a sample integration flow for Order-to-Cash (O2C) automation between a Consumer-Packaged Goods (CPG) company's Microsoft Dynamics 365 Business Central ERP system and external partners like a retailer and a third-party logistics (3PL) provider. The flow involves a cloud integration platform that handles communications, message routing, data transformation, validation, and orchestration. Data exchange occurs via APIs, such as the Common Data Service (CDS) API, and protocols like JSON over HTTPS. The diagram shows business users interacting with the system through an integration visibility tool. Key data exchanges include purchase orders from the retailer, invoices to the retailer, and warehouse shipping orders to the 3PL provider.

Resources

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Learn more about OpenText™ B2B Integration Foundation and OpenText™ B2B Integration Essentials for any size business.

Learn more about OpenText™ B2B Integration Enterprise for highly complex integrations.

Why OpenText is the Right Partner for Microsoft Dynamics 365 EDI Integration

OpenText provides a single, unified integration environment that allows companies of any size to seamlessly integrate with more than one million pre-connected trading partners using its network. The range of partners spans suppliers, logistics carriers, distributors, and financial institutions globally, accelerating onboarding, data exchanges, and information flows through a secure, scalable digital backbone built for growth.

All OpenText integration solutions leverage OpenText Trading Grid, a modern, unified cloud integration platform. Organizations can select the right capabilities to meet their current requirements with the option to later add capabilities and scale up data volumes without needing to migrate to a new platform. The platform also offers powerful self-service features, such as pre-packaged partner kits and EDI-to-API integration connectors for Dynamics 365 and ERPs like SAP S4/HANA®, Oracle® NetSuite, and Oracle Fusion. This functionality and tiered system allows for an optimal cost structure while future-proofing the solution for business expansion, M&A activities, or other major changes in scope and scale.

Conclusion

While Microsoft Dynamics 365, along with other ERP vendors like SAP S4/HANA, Oracle NetSuite, and Oracle Fusion, aims to facilitate seamless interoperability through pre-built integrations, these often fall short in delivering the desired process automation and data consistency across an organization's broader system. Today's ERPs typically require adaptation to integrate with traditional systems, particularly those used by ecosystem partners. Technology alone is insufficient; success requires skilled experts applying defined processes.

Both technical capabilities and integration operations need to be scaled in tandem with business growth. Focusing solely on current requirements lacks foresight; business growth objectives and their potential impact on future needs must also be considered.

A successful integration strategy enhances agility, accelerates project delivery, and lowers the total cost of ownership across integration solutions. OpenText™ Business Network Cloud and B2B integration solutions enable seamless integration with both EDI and APIs, and feature configurable EDI-to-API integration adapters for most ERPs, fast-tracking integration regardless of technology and laying the groundwork for end-to-end supply chain visibility.

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