Supply chain standards and their implementation

Supply Chain Standards

How will setting supply chain standards improve supply chain management?

The integration points between supplier and buyers are so complex and numerous, accentuated in their complexity by the need for enabling transactions across supply chains, that many industries need supply chain standards to ensure their competitiveness. These supply chain standards look to set the foundation for ensuring efficient and accurate transfer of content between buyers, suppliers, partners, distributors and manufacturing partners throughout a supplier network. Given the myriad of supply chain interactions in these networks and taking into account the slight variations each supplier has in their approach to delivering content to buyers, the need for a consistent standard for communicating both content and completing transactions is critical. Many standards organizations look to first create taxonomies of all the content-based interactions and transactions completed in a given industry's supply chain. After having created the taxonomies, the specific content sharing processes and transactions can be crystallized into a specific set of instructions, or in the case of RosettaNet standard, a container-based technology called Partner Interface Processes (PIP), according to Askegar and Columbus (1). PIPs are designed for agility and conformance to the taxonomies created, in the case of RosettaNet, for the high tech supply chain. The role of PIPs is further strengthened in the taxonomy with the support of transactions and order management (OM) key processes. In their research, Askegar and Columbus found that the top market makers in the high-tech industry including Dell, Hewlett-Packard, IBM, Intel, and Ingram Micro could not agree on the use of PIPs for content (1) yet all could agree on the most critical PIP of all, which is order management (3). What these findings suggest is that while the RosettaNet framework is considered a suitable alternative for automating transactions including the Electronic Data Interchange (EDI) approach to batch processing, it is not seen as suitable enough for sharing content across a supply chain. The conclusion is that in the context of this specific standard, that those processes and taxonomies directly relating to inventory and order management velocity have the greatest payoff. Further, this shows that distributed order management systems specifically in the high tech industry are susceptible to substitute technologies. Further, this also shows that even with industry taxonomies in place for managing content and exchanging it across partners, buyers, and suppliers, each member of the supply chains contacted by Askegar and Columbus are reticent to interlink on these systems. It's common knowledge that many of the content management systems throughout the high tech industry are often isolated and siloed within specific departments, making them very difficult to use in the context of a PIP-based approach to data sharing. Despite the limitations around the integration of content management systems throughout a supply chain, the setting of supply chain standards is already having a significant impact on inventory turns and transaction velocities between partners and buyers. Further, standards including RosettaNet that can vary the frequency of transaction updates is a major technological advantage over the purely batched-base approach that is inherent in EDI's approach to managing transactions. While Askegar and Columbus discuss the role of PIPs with market makers in the high tech manufacturing and distribution marketplace (1, 4) Swanton (2) discusses the potential impact of RosettaNet adoption on manufacturing centers in low-wage countries and points to the efficiencies possible in Chinese manufacturing centers. Swanton sees the enablement of Chinese manufacturing via PIPs in RosettaNet as the tipping point in their ability to capitalize on their cost advantages and compete on time-to-market and supply chain synchronization, much like their western counterparts. Further, Swanton sees the emerges of the RosettaNet Automatic Enablement (RAE) program with its uses of PDFs that document process flows, as critical in the development of a pervasive RosettaNet network of manufacturing suppliers in China. Chinese distribution channels throughout high tech specifically have already worked to include content management and content automation as part of their initial RosettaNet on boarding strategies, as many of these companies are using highly manual approaches to managing their content today. As RosettaNet is now under the umbrella of the GS1 US standards organization, which is formerly known of as the Uniform Code Council (UCC), the standards body is working to drop the cost of on boarding in China to literally less than $1,000 for any manufacturer or distributor interested in participating. If they are successful the resulting inventory visibility and resulting order management velocities will be very significant and result in higher profitability for the entire high tech industry globally. The bottom line is that the setting of supply chain standards is critical for the growth of entire industries, and as the research of Askegar and Columbus has shown, that standards are most agreeable when both sides have a transaction to complete. For content integration across suppliers and buyers however there needs to be greater motivation, and in the case of Chinese manufacturers coming online, the ability to position themselves as viable suppliers using content is critical. Supply chain standards will greatly simplify the highly complex content, data and transaction processes between suppliers and buyers in supply chains. References: