News

Source: Industrial Distribution, August 2002

By Al Tuttle, Associate Editor

Standardizing electronic communication is one of the hottest topics in business today, according to standards experts. Transactional methods, both internal and through the Internet, and all kinds of printed and wireless standards are being debated by committees around the globe.

The Uniform Code Council, long known for its development of the now-ubiquitous barcode trading system, launched a new division this year. UCCnet is the Internet commerce standards and implementation arm of the council, created to help manufacturers and distributors use more common language for e-business transactions.

"UCCnet enables clean, accurate and up-to-date information to be communicated throughout all points of the supply chain," says Jim Petragnani, director of channel management, industrial/commercial for the UCC. He addresses supply chain management needs for the industrial, commercial and manufacturing sectors.

The division is a natural outgrowth of the standards pioneered by the council for decades: industrial/commercial EDI, the uniform communication standard, voluntary inter-industry commerce standard and others. The next frontier - universal, Web-based communication - demands language standards that attempt to link the entire supply chain.

EDI remains the industrial standard, according to the council, but it is increasingly inefficient and prone to error, causing it to become far too expensive. EDI errors cause work to flow in reverse, clogging the system and taking hours and even days to resolve. Its use is bound to diminish as ever-increasing numbers of companies demand easier, faster trading capabilities throughout the world, Petragnani says.

Electronic commerce originated with EDI and the UCC helped begin standardization of EDI in 1996, but small businesses can't afford to maintain that kind of system, Petragnani says.

"However, the emergence of the Internet as a business communications medium has created the potential for an affordable 'virtual bridge' between users and small and medium-sized companies," he says.

According to Petragnani, the UCC is working on another Internet standards program, a plan to supply small-to-midsized enterprises an out-of-the-box, XML-based infrastructure program.

The centerpiece of fast, reliable e-business transactions is eXtensible Markup Language, or XML. This Internet language uses tags, or commands, to tell data texts how to behave.

There are several important aspects to XML that will allow universal standards to be created and adopted, Petragnani says. The most important is that it is an "open source" code, and is technologically neutral. Reading it requires no special computer hardware, but it is not an end in itself. The UCC and its global counterpart, EAN International, are working together to engage XML as the hierarchical standard for Internet transactions.

"While XML and the Internet provide enormous potential for electronic commerce, this technology cannot be fully leveraged without a strong, standards-based foundation, much like the evolution of the fax machine," Petragnani says.

Fax machines needed transmission and mechanical standards before they became useful as machine-to-machine communicators. In the same way, Internet protocols need the ability to communicate universally. But standards, by their nature, defy universal acceptance. ANSI, W3C and ISO all offer or recommend standards. According to the UCC, there are 120 initiatives underway about XML alone, and over 2,100 about Internet commerce in general.

Every segment of the supply chain needs to be involved, Petragnani says. Companies that sell supply chain software and systems are a vital component because, in the end, they supply the tools with which distributors and their customers will actually buy and sell.

Partners and performance

Those companies, particularly Prophet 21, will be the catalyst for distributors to compete electronically, says Gary Buffington, executive director of the Industrial Distribution Assn., in Atlanta, Ga. Rather than discussing and strategizing about standard languages, Buffington sees distributors' roles as encouraging software systems providers to standardize, then accepting their recommendations and implementing their products.

"We wholly support standards and the UCC, but change really has to come from the manufacturing side," Buffington says. "Actually, we were in a joint committee [with ISMA] about electronic standards and it was beyond distributors' ability to accomplish anything. Most of the impact of the ability to run e-commerce comes from the software companies."

In the course of examining the issues and capabilities of its members, I.D.A. realized that a large percentage of its membership already used systems from Prophet 21 and others. So, it was best to allow those vendors to take up the cause of standardization and supply it in their products, Buffington says.

"We have long asked our members to use the systems that best connect with their customers and suppliers," he says.

Systems for e-business are necessary for small and mid-sized distributors but the cost can be overwhelming, says Jack Nevin, executive director of the Grainger Center for Supply Chain Management at the University of Wisconsin-Madison.

"E-business functions are a tool that can facilitate or disintermediate the supply chain for distributors," Nevin says. "Naturally, the more standard the nomenclature, the better transactions will flow and the lower the cost. In most cases, distributors will be pushed by suppliers and customers into electronic commerce."

Standards in language, like XML, and product coding will take costs out of the supply chain, and that is top priority today, he says. But there is a disconnect in that distributors want easier electronic abilities but lack the money and personnel to be able to become involved in great depth.

"What we all want, and it is still quite far away, is one system through which we can talk to all our customers and suppliers," Nevin adds. "However, the only way to pay for systems is to expand business in some way. Reducing costs and adding service for the same price are strategies to do that."

Attacking the problems

Petragnani notes four main arenas in which industrial distribution standards need work: standard and special product coding (also known as universal product code, or UPC); Internet/e-business language and rules; internal distribution infrastructure for standardized IT processes; and worldwide, all-encompassing standards, the final frontier. Within the industrial distribution realm, product codes need to become standardized throughout the industry.

Working from the perspective of manufacturers, the Industrial Supply Manufacturers Assn.'s Electronic Commerce Committee is spearheading development of the manufacturer's role in the operation, according to ISMA executive director Chuck Stockinger. ISMA and UCC industrial/commercial committees are attacking the first three arenas. Their efforts hopefully will do no less than ease the exchange of goods and services for every company, Petragnani says.

"Commonality would provide an opportunity for interoperability and better communications," he adds. "And, most importantly, standards remove supply chain roadblocks and bottlenecks and allow companies to reduce the cost of doing business."

The concept - that everyone speaking one business language makes business easier - is an easy sell. Development and acceptance are other matters entirely, he adds.

Here are some of the goals and solutions that UCC is working on this year:

• Helping small/midsized enterprises (SMEs) compete with larger corporations
• A Global Standards Management Process; a consensus-based approach that brings together users in various industries and countries
• SMEs can participate in Business Requirements Groups that discuss development
• Developing XML templates to help SMEs compete
• U Connect Conferences dedicated to UCC members, who determine their content.

According to Stockinger, ISMA endorses the efforts of the UCC in their standards efforts. ISMA's Internet Commerce Committee, led by Scott Olson of 3M Co., is at the forefront of helping manufacturers understand and implement international standards, with the help of the UCC, he says.

Industrial supply manufacturers and their distributors will cut costs from the supply chain when they can finally adopt one set of universal standards. However, doing so will ultimately be their own responsibility.

"The difficult issue in recent years has been getting UCC to focus attention on industrial/commercial standards. Traditionally, their focus had been on channels like grocery and retail, but now we have their attention in a big way," Stockinger said. "That done, it will be our channel's responsibility to educate and help implement a program effectively."

UCC has put substantial resources into the creation of Internet business standards for industry, but the proliferation of varying standard sets can kill progress, Stockinger says.

"We must actively pursue standards acceptance, access and adoption," he says. "Having many different standards, and organizations that cannot interpret each of them, would be confusing and counterproductive, especially in light of the need to take costs out of the channel."

On the horizon

Despite Buffington's view of the distributor's role in establishing standards, Petragnani and Stockinger say distributors should get involved with the standards development process of the industry group. Stockinger encourages distributors to get involved through their trade associations' bar code initiatives and e-commerce committees, for example. Petragnani agrees, and is convinced that distributors have some incorrect ideas about standards and their development.

"Many distributors do not get involved in the development of standards for the industry because they believe this is a technical effort. That couldn't be further from the truth," Petragnani says.

Standards development is driven by business needs, not vice versa, he says.

"It's all about reducing costs and solving business problems. The industry must understand the business process and then develop ... requirements that create the technical solution. The technology effort doesn't come into focus until the industry has determined the business need," he says.

In that vein, Stockinger also urges distributors, particularly the SMEs, to become as involved as possible in the process and, in the end, adopt a more standard infrastructure into their businesses.

"Our challenge [at ISMA] is to educate our members and their distributors, and get them to realize why their input is important to what we are doing," he said.

The enactment of standards and the moving forward of business are inexorably linked and standards acceptance is becoming more urgent, Stockinger adds.

"UCC understands that and their role in industrial/commercial has risen to the top," he says. "There is a major push now in which they have put some significant staffing and funding into place."

Petragnani warns that there are no easy fixes in the world of standards nomenclature and acceptance, especially worldwide.

"We will need some translation, whatever the technological advances. [UCC] is focused on the manufacturer/distributor relationship right now, but the process is the same from distributor to end user," he says. "The customer is going to drive the change because he is always calling the shots. However, everyone will find that adopting standard rules are always better than modifying to accept special ones."

E-commerce summit offers solutions

The Industrial Supply Manufacturers Assn. will sponsor a two-day Summit on Electronic Commerce Collaboration in the MROP Industrial Channel in Cleveland, Aug. 20-21, by invitation. The summit will be held at the Weatherhead School of Management, Case Western Reserve University.

According to Chuck Stockinger, executive director of ISMA, the summit offers invited leaders of MROP distributor associations and heads of their manufacturer councils the opportunity to bring this information back to their memberships.

Jim Petragnani, director, channel management industrial/commercial for the Uniform Code Council, will offer UCC. EAN's views on the benefits of standardization and collaboration.

"E-commerce standards and implementation pose a problem that is often perceived as too expensive, too complicated and just involves too much stuff," Stockinger says. "That isn't correct. Distributor organizations can create a subset of standards for their corner of the world. We are now a little behind the wave on a project that is a 'must-do'."

Also on the agenda for industry leaders at the summit are: E-commerce Business Process Enablers and Supply Chain Integration; Software Integration and the Elimination of Supply Chain Costs and Redundancies; The Role of the Manufacturer; and E-commerce Trends Study Review.

Speakers on those topics include David Deeds, Ph. D., assistant professor of management policy and entrepreneurship, Weatherhead School of Management; Chuck Boyle, president, Prophet 21, Yardley, Pa.; and Brian Reynolds, associate director of the Thomas and Joan Read Center for Distribution Research and Education, Texas A&M University.

Back to Top