When EDI (paperless transactions) hit the marketplace, Daniel J. Biby wrote a book entitled E-D-I or D-I-E. At that time no one could have known how right he would be. Nor could anyone have known just how soon EDI would, itself, become obsolete because of the sizable integration expense.
The problem
EDI, based on rigid architectures, imposes limitations on both the buyer and supplier. Only pre-determined types of information can be easily transferred between business partners. This transfer of information comes cloaked in mostly undecipherable code while toting quite a high price tag. Because of this, many buyers have fallen far short of their original goals in terms of integrating their business operations with the majority of their suppliers. They go on paying $60 to $130 or more to process a single paper-based transaction, and compliance penalties mount as suppliers are unable to keep up with buyer�s requirements. It�s not surprising, then, that one of the leading analysts of the new wave of integration was recently quoted as saying that EDI was comparable to a �dead man walking.�
Current buyers fall into two camps. The first group has invested heavily in dedicated EDI technology. Over the past 10 years, it has established electronic links with some of its key suppliers, yet continues to allow many other suppliers (usually smaller companies with fewer resources) to remain paper-based, faxing or snail-mailing orders, order acknowledgements, inventories, price lists, advance ship notices, invoices and the like. To date, this group has for the most part tried to hang on to its existing communication links � fearing the cost of replacing the systems it has spent so much on up to this point � and has tried, mostly unsuccessfully, to add functionality to existing EDI structures. By relying on EDI, however, it has put itself at a terrible disadvantage � both economically and technically. This group recognizes the importance of exchange of electronic data. It has not yet made the decision to take advantage of newer, more cost-effective integration technologies.
The second group of buyers has either not invested heavily in or has become dissatisfied with EDI (e.g. Ford and General Motors) and is adding newer technologies. Some within this group are now spending from $1.5 million to $15 million to develop basic to sophisticated Web-based sites for their own industries and expect to spend an additional $700,000 to $4 million per year to maintain these sites (Forrester Group, 1999). These companies are actively pursuing this alternate communication method, seeking both improved compliance from a broader range of current and potential suppliers and an improved ability to anticipate the arrival of shipments from their neighborhood of suppliers to better coordinate production schedules.
Emerging integration solutions
There are two unique flavors to the new integration solutions: e-commerce and ASPs.
Moving information from point to point:
The heart of e-commerce is the dependable delivery of business information from point to point within the buyer�s network. Bringing this information together, in real time, in a less costly manner, is the challenge. Business rules reside in legacy systems � order information is transmitted to suppliers in a variety of ways. Shipping and routing information reside at each distribution center; inventory and pricing information reside in ODBC-compliant databases. XML (eXtensible Mark-up Language) is one of the keys to doing this. Whereas HTML would allow buyers to view price lists and inventory levels online, it wasn�t suitable for computer-to-computer transactions. XML was designed to meet this need.
XML has been described as a metalanguage (a language for describing other languages). It allows you to define your own customized mark-up language for different classes of documents. Based on SGML (Standard Generalized Markup Language), XML enables generic SGML to be served, received and processed on the Web in ways not possible using conventional HTML. In addition, XML provides much more powerful integration than provided in HTML. It provides bi-directional and multi-way links to implement scripting languages such as Java and ActiveX applications benefiting you by allowing cross-platform integration.
A critical portion of the supplier-buyer chain begins with the supplier receiving-shipping and ends with receiving-shipping at the buyer. Newly introduced products such as e-VIEW and e-MANIFEST take advantage of these capabilities, allowing both suppliers and buyers a high degree of viewability of order and shipment information throughout the supply chain.
Application software utilized by most firms includes receiving, warehouse management, vendor compliance labeling, pack verification and multi-carrier shipping. Customers can choose any or all of the application software since each is in a separate module. e-VIEW and e-MANIFEST provide the necessary translation tools which permit diverse systems to communicate with each other � seamlessly and in real time. Thus, the new way to transact business is to scan received raw goods or parts, manufacture or assemble the product utilizing WMS software (with batch or RF scanners), pick and then pack verify (correct item, correct box, correct consignee) and apply a vendor- and carrier-compliant label at shipping. Both supplier and buyer know the status of the order every step of the way.
Detangling the software jungle:
The newest way to handle applications shared by many users at different locations (e.g. shipping) is via an ASP (Application Service Provider), which means your application software (in this example, your shipping software including all updates and rate changes) is on an off-site server. You gain these benefits:
� Centralized Administration of Apps (which can now run in a browser), which allows installation with a minimum of IT involvement.
� Total cost of ownership goes down and the integrator does not have to visit each workstation to install the specific software apps such as shipping and pack verification.
Using integration skills and software tools, the integrator can easily interface the specialized solution applications with existing legacy (older host software) systems so all the data is stored on a centralized server. This enables you to track all packages shipped over the Net or to access shipping costs at any terminal, helping customer service, sales, order entry, etc.
Tying it all together
If you are getting my drift, I believe there will be two kinds of companies in the near future � the ones who integrate and the ones who die. No kidding. The costs to run a company and/or the cost a non-compliant company imposes on its customers/suppliers will lead to financial death. But you should also now understand, there are proven, powerful tools out there to help you avoid that fate. Please remember the acronyms X-M-L and A-S-P. Invest in your future or D-I-E.
Patrick Evans is the president of EVCOR Systems, Inc. and founder of the EVCOR Network. EVCOR provides integrated e-commerce, integrated warehouse management and integrated multi-carrier shipping solutions. For more information about how you can integrate your operations, visit www.evcor.com or call 800-US-EVCOR.
