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NEW LIFE FOR EDI

We are starting to see companies that are focusing on "integrating the processes of Web-based vendors with their suppliers."4 These compa­nies believe that EDI is expensive and inflexible. They also believe that extensible markup language (XML) will become an economical, reliable alternative to EDI. "XML standardizes Web content formats so that data shared by multiple companies can be easily and automati­cally updated." The focus of this software is to allow companies "to query their suppliers' enterprise resource planning databases through Web browsers or from thin-client terminals. As a result, WebMethods can support queries in EDI, (and the) user can move away from EDI gradually." For more information on XML you can go to the Web at www. unc. edu/~jvacca/whatis. htm.

THE FUTURE

The needs of supply chain communication have obviously changed. Not five years ago hardly anything was purchased on the Internet. The bulk of E-commerce was B2B using EDI. Today B2C sales have become a driving force on the Internet. Some experts expect sales to reach more than $250 billion by 2003. Once businesses realize that purchases on the Internet can reduce costs, B2B sales on the Internet will start to expand even more quickly. As a result, I expect there will be a more rapid shift from B2C to B2B. The direct cost of completing a sale will drop from dollars per call to pennies for sales on the Internet.5 E-commerce will become an effective way to reduce the time required to place an order. The old model of the supply chain was very narrow, with only three major links: customer, producer, and vendor. See figure 1. The small links represent communication methods: telephone, Internet, or EDI.

With the functionality that we have by using the Internet, it is now possible for suppliers far up the chain to be aware of changes in de­mand patterns. As I was quoted in an article in APICSThe Perfor­mance Advantage on E-commerce versus EDI, "...the Internet opens the possibility of redefining the traditional supply chain. Rather than a straight line relationship between manufacturer and its suppliers and customers..."6 The new model of the supply chain is now very broad. Because of improved communication technology, the supply chain ex­tends from the primary vendors through a series of producers, who are at one time both customers and vendors (C/V) to the ultimate custom­ers. Supply chain management must now be considered to represent the "ashes to ashes, dust to dust" concept. It is now possible for ven­dors all along the supply chain to receive point-of-sale information. With this information, they can start the replenishment process much earlier, increasing the throughput of the supply chain and reducing the inventory within the supply chain. (See figure 2.)

THE FUTURE IS TODAY

Shipments can be tracked. Recently on a flight from Denver to Wash­ington, D.C., I was able to track the exact position of the aircraft on an LCD panel in the back of the seat in front of me. With the modern global positioning system, as you ride comfortably in your seat on the Boeing 777, you can see exactly where you are. If you can do that, why not track your material that way?

Today, there is a rail-tracking company that tracks locations of rail cars. By receiving status messages every 10 minutes it can display the data on a Web site. As an additional service, the company predicts when a car will arrive at a given location. If railcars are delayed, the company will revise its estimated time of arrival (ETA) and send the new ETA information to the shipper or receiver via e-mail. This is also an example of where the Internet outshines EDI. Traditional EDI is not flexible enough to provide the necessary information linkages. The Internet and e-mail are more than capable of handling this issue. "The greater value of the Internet is that it makes information available to large masses of trading communities.. .the Internet will facilitate ship­per-carrier cooperation and the universal participation required by the Great Database."

 

FUNCTIONALITY THAT THE WEB CAN PROVIDE

Web sites can be used to generate EDI bills of lading. "... some carri­ers are using sites to turn the data around automatically. Once the ship­ment has been picked up, the carrier updates the Web site status of the shipment as it moves through the carrier 'pipeline' and inserts freight charges as applicable. The shipper can then log on and view shipment-status information and retrieve freight invoices."8

Have you ever wanted to check the specifications of a part you were purchasing? What if you could review the drawings online? The Internet can allow you direct access to product data management in­formation.

The Internet may signal the end of consultants, as we know them. Yes, I said "the end of consultants as we know them." What is to pre­vent you from contacting a consultant online, talking to them through the Internet? Look at cost sayings. No more travel expenses, no more hotel and meal expenses. You pay for only the time you need. Several companies are moving that way even as we speak.9

"... Web-based, human-readable document screens need to be stan­dardized by industry. And to minimize the potential for human error, the Web sites need built-in editing capabilities and compliance param­eters for such things as commodity codes and business rules."10

"International Data Corp. says consumers and businesses will spend $26 billion over the Internet this year and these online buyers will spend more than $250 billion in Internet transactions by year 2002

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 11


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