Getting in Tune

Getting in Tune

Copyright 2003, Traffic World, Inc.

Supply-chain standards used to simplify everything from product identification to electronic commerce are becoming more widely adopted by companies around the globe, according to organizations that develop such standards. Greater adoption of standards makes supply-chain collaboration easier and can reduce costs considerably, these groups claim. But standards still may vary widely from industry to industry, and smaller companies have been slow to adopt them. Competition, however, is driving them in that direction, analysts and industry sources said.

As compared with two or three years ago, "there is quite a bit more collaboration going on, not only with retailers but also with the standards organizations. We are moving toward true global standards," said Steve Arens, senior director, market development, Uniform Code Council.

"We certainly feel there are lots of deployments" of RosettaNet's standards globally, particularly with large companies, said Mary Schoonmaker, RosettaNet's vice president of industry development.

Several organizations are involved in establishing international supply-chain standards, including the UCC, dedicated to standards development in the United States, and EAN International, based in Europe. UCC has two subsidiaries, UCCnet and RosettaNet, which merged with UCC last year. UCC also co-manages its EAN*UCC System, founded in 1997, with EAN International.

As an example of how supply-chain standards have grown in the past few years, Schoonmaker cited RosettaNet's growth into new geographic markets since it merged with UCC last August. The group added Malaysia and the Philippines and plans to add China in about a month. RosettaNet expanded its presence in Europe as well by adding a new position, vice president of Europe.

RosettaNet, based in Santa Ana, Calif., has a worldwide membership of over 450 companies in the high-technology industries, including electronic components, information technology and semiconductor manufacturing. That membership continues to grow and expand its use of standards, said Schoonmaker.

"The fact that companies that are competing with each other can come together and deploy (our standards) into the hundreds in a fairly quick time shows promise. The challenge is getting the standards so they can take the next step, so that small businesses can deploy it in a day and integrate easily," said Schoonmaker.

Many standards consortia are working on getting standards down to the small-business level, said Schoonmaker, who anticipates small to midsize firms being able soon to use RosettaNet's standards easily. "The next 24 months it is getting to the stage when it can be done very, very easily for small to medium firms," she said.

RosettaNet is working to create standards across industries with the Organization for the Advancement of Structured Information Standards, a technology security and e-business standards organization, and UCC, said Schoonmaker. Other standards organizations that RosettaNet is working with include silicon design integration standards organization Si2, based in Austin, Texas, and the International Organization for Standardization in Europe. By the end of this year or the beginning of next year RosettaNet and UCC formally will announce how the two groups will be working together, she said. RosettaNet currently has no plans to work with the Voluntary Interindustry Commerce Standards Association, also part of UCC.

Arens said several global standards initiatives are well under way at UCC. One is Global Commerce Initiative. Retailers and manufacturers are undertaking GCI to develop and promote the use of global standards, particularly in the area of data synchronization and promotion of new supply-chain technologies, he said.

A large number of companies are involved with GCI, a development which began two to three years ago, said Arens. He anticipates global standardization of data synchronization to occur "in the next year or so."

UCC represents approximately 280,000 member companies in 25 industries in North America. The group pioneered the development of the Universal Product Code. The organization is focused on standards for product identification and related electronic communication. It was formed in 1972 as the Uniform Grocery Product Code Council. It is based in Lawrenceville, N.J.

UCC estimates that in the medium term, retailers and manufacturers can reduce supply-chain costs by 1 to 3 percent and save 10 to 15 percent on their bottom lines by adopting global standards.

A second area on which UCC is focused is Global Trade Item Numbers standards, said Arens. "Hundreds if not thousands" of companies currently are using GTIN standards developed by UCC, he said.

And a third focus area for UCC is Global Location Numbers, a standard reference number for certain well-known areas around the globe. By typing in the reference number, a person can receive a variety of information about a business, such as address and hours of operation, without having that information directly in a document, said Arens.

"It's been used in Europe more than it has been used in the United States," said Arens. One large U.S. retailer using GLNs is Wal-Mart, which has been asking its community partners to provide GLNs since last year, he said.

UCC works with ISO, the American National Standards Institute and industry organizations, said Arens. "ANSI provides accreditation for standards organizations and they also manage standards for EDI. We tailor some of their standards for the specific industries we work with. For ISO we make sure standards development is compliant with ISO requirements," he said. VICS and UCC also work very closely together, he said.

Why are global standards being more widely adopted? "Senior executives at global firms recognize the needs and benefits of global standards," said Arens.

Graham Avory, communications manager at EAN International, an international standards group based in Europe, said global standards "have been around for a long time. We just keep adding more and more countries." The United States and Canada, for example, have joined EAN, he said.

Today just under 1 million companies around the world are using EAN standards in their supply-chain activities, said Avory. Once a company adopts these standards, it can trade with any other company that also uses EAN standards, he said.

EAN will continue recruiting more industries to adopt EAN standards, said Avory. The group has a much broader range of companies than when it first started, when it was in the grocery and fast-moving products industries. Today EAN is also in defense, health care and apparel, for example, he said.

How the standards are being adopted depends not only on the industry but where geographically the industry is located and on the technology, said Avory. Currently automatic identification and XML are hot standards areas, he said. The most important part of standards development is involving the users in the process, he said.

Bob Parker, vice president, industry strategist and an analyst at AMR Research, said, "The nice thing about standards is that there are so many to choose from."

The problem with standards is that everyone underestimates the difficulty in getting a variety of groups to agree on standards, said Parker. For example, with purchase order definitions, "even in the UCC world, things still break down around issues of color and container sizes and things like that," he said.

Because of the difficulty in coming to a consensus, "there is a feeling of technology duct tape and (standards) usually manage to come short of expectations," said Parker. However, these shortcomings don't mean that standards aren't good and can't benefit companies, he said.

RosettaNet's standards, which it calls Partner Interface Processes, "are a step in the right direction," said Parker. "RosettaNet, UCC" and the chemicals industry "have done a pretty good job" developing standards and getting companies to use these standards, said Parker. Retail, consumer package goods and the high-tech industries have a stronger incentive, perhaps, in using standards to improve their supply chains and improve information flow, he said. "Certainly retailers want to close the product gap with Wal-Mart," he said.

Whether the various standards organizations are working together, shippers may need to be concerned about or at least keep an eye on these different standards, said Parker. "There will be multiple industry standards because there are unique industry requirements," he said. "In automotive, chemicals, they want to do things a little differently."

There will be global standards across industries, said Parker. The electronics and technology markets are moving toward "a fairly unified standard," while other markets may not be moving to such standards as quickly, he said.

In an alert on RosettaNet, Parker said that "RosettaNet has reached the point where anyone of any size in electronics ... should be able to use the framework in collaboration efforts."