Driving B2B 2013 Mark Morley

Driving B2B 2013 Page 1

Review of 2013 Blogs

@markmorley


What was Driving B2B in 2013? – Top Ten Most Popular Blog Posts

As we reach the end of 2013 I thought it would be a good time to review the top ten most popular blogs

from Driving B2B for the year. My colleague Patty Hines posted her top ten list yesterday and as an industry

marketing team here at GXS, our blogs help to develop thought leadership on key industry trends. The Top Ten

list below was derived using results from Google Analytics and for the purposes of this blog looks at which

posts, from all my blog entries over the years, were most visited during 2013.

1. Why is India’s Automotive Industry Growing so Quickly? ‐ Even though I posted

this blog in March 2012, this has been the most reviewed blog on Driving B2B for

2013. I think it helps to highlight that there is continued interest in setting up

automotive operations in India. Growing consumer wealth, an interest in premium

level cars and low cost labour are all contributing towards continued inward

investment in the country from the world’s automotive industry. Interest in Jaguar Land Rover,recently

discussed in this blog, who are owned by India’s TATA Motors has also helped to fuel the growth of the

automotive industry in India.

2. How will Cloud Computing Benefit the Manufacturing Industry? – This blog was

originally posted in February 2011 and each year proves to be one of the most popular

blogs read on Driving B2B. Cloud computing has transformed the way in which

business can operate. The manufacturing sector is truly global in nature and this blog

described how the industry could benefit from deploying cloud based infrastructures

to manage the direct materials supply to their production operations. Today’s manufacturers need to quickly

enter new markets to remain competitive and cloud B2B infrastructures provide the scalability and flexibility

to achieve this.

3. Top Ten Trends That Will Impact High Tech Supply Chains in 2014 ‐ This blog was

posted in August 2013 and has been the most popular in terms of those that have

been posted on Driving B2B during 2013. The high tech industry is currently going

through an exciting period with the wide spread adoption of tablet devices, wearable

devices and the ‘Internet of Things’. The adoption of these three tech trends alone

has transformed the high tech industry over the past 12 months and is likely to continue driving consumer

interest in 2014. This blog describes the top ten tech trends that are likely to impact high tech supply chains in

2014.

4. How the ‘Internet of Things’ will Impact B2B and Global Supply Chains ‐ This blog

was only posted in October this year, however this post has been the most popular as

it has received a lot of reviews in just a two month time frame. It is not surprising as

the Internet of Things has been one of the most popular tech trends for 2013. This

year companies have been learning about IoT but I think in 2014 we will see more

companies actually start to deploy more machine to machine connectivity environments. I will continue to

keep a close eye on this emerging sector as we go through 2014 as it will help to drive convergence between

the physical and digital supply chains.


5. How the Brazilian Government Plans to Stimulate Growth Across Their

Automotive Industry ‐ This blog post was originally posted in July 2012 and has

continued to prove popular amongst visitors to Driving B2B. As with India, Brazil is also

seeing exponential growth in its automotive industry. Imported automotive parts or

vehicles are subject to high taxes and as a way of boosting their domestic automotive

industry the Brazilian government introduced the INOVAR directive in 2012. This has proved very successful as

many of the global car manufacturers have now invested billions of dollars in setting new plants in the

country.

6. Build to Order or Build to Stock? – This is one of my oldest blogs to appear in the

Top Ten list for 2013, however it helps to demonstrate that there is a continued

interest in the automotive industry to reduce inventory levels by adopting build to

order production processes. Changing consumer demand, combined with exponential

growth in premium car sales in the emerging markets has led many vehicle

manufacturers to implement build to order production. This in turn led to increased adoption of Just‐In‐Time

production techniques which helped to considerably reduce the volume of parts flowing across automotive

supply chains.

7. Arriba, Arriba, The Automotive Industry Speeds Up its Investments in Mexico –

This blog post was originally posted in 2012 and continues the theme shown in this

Top Ten list regarding continued interest in the emerging markets. Over the last two

years Mexico has emerged as one of the most important automotive manufacturing

hubs in the world. Many Far Eastern and European vehicle manufacturers have

established a presence in the country as it provides the ideal stepping stone to export vehicles into the

lucrative North American market.

8. Why Eastern Europe Could Benefit from the ‘Perfect Storm’ Currently Brewing in

the High Tech Industry ‐ This blog was originally posted in October 2012 and discusses

how Eastern Europe has become a magnet for inward investment from the high tech

industry. Restructuring across the industry and a continued interest from Far Eastern

companies to enter the Western European market has led to significant inward

investment in the region. Close proximity to Germany for example and access to a highly skilled, low cost

workforce has made this one of the fastest high tech investment regions in the world.

9. How Cloud B2B Integration Enables Michelin’s International Operations ‐ This blog

was posted in September this year and promoted our recent joint webinar with

Michelin. This has become one of the most popular manufacturing related webinars

that we have produced this year. Michelin is one of the world’s leading manufacturers

and distributors of tyres and this blog discusses how the company uses Cloud based

B2B integration to connect with their extensive trading partner community around the world.

10. German Automotive Industry to Move From VDA to Global EDIFACT Messages ‐

This blog was posted in June this year and discussed the German automotive

industry’s move towards using Global EDIFACT messages rather than VDA

messages. German automotive companies such as VW have globalised their

operations in recent years and they found the VDA message set to be too restrictive in

terms of managing global logistics flows. The introduction of the Global Message set aims to standardise the

way in which the German automotive industry exchanges messages with its global trading partner community.


Santa Deploys the ‘Internet of Things’ Across his North Pole Operations

Over the past five years I have been providing updates on one of our more secretive customers based out of a

large factory in the North Pole. Nearly all of our B2B solutions have been implemented across the supply chain

and distribution network of the big man himself, Santa Claus. I have listed five years of worth of project

updates below, simply click on the web links to learn how cloud B2B integration helps Santa with his

operations.

2008 – GXS Managed Services chosen to support Santa’s new B2B hub, GXS Intelligent Web Forms deployed

to create SantaNet

2009 – Santa completes deployment of GXS Managed Services and begins to embrace social media tools

2010 – Santa evaluates how cloud computing and mobile devices could improve North Pole operations

2011 ‐ GXS Active Community (formerly RollStream) gets rolled out across Santa’s trading partner community

to improve day to day collaboration across his Present Delivery Network and he also gets nominated for B2B

Hero award by GXS

2012 – Santa begins to evaluate the information flowing across SantaNet and implements a Big Data strategy

Five years on from the initial discussions with Santa’s IT team I have just returned from a three day trip to the

North Pole. Getting an audience with Santa has always been difficult, especially this time of year, and it was

whilst I was returning from a business trip to Amsterdam that I received a email from one of his many

assistants.

“Please can you come up to Santa’s factory in the North Pole as he would like to update you on how we have

expanded our Present Delivery Network Hub during 2013. A seat has been reserved for you on ELF001 which

will be leaving from Schipol Airport at 21:00hrs”

I cancelled my flight home and boarded ELF001, a 747 ‘DreamLifter’ up to the North Pole International Airport.

I showed a picture of one of these aircraft in last year’s update and it always amazes me how much you can fit

into one of these aircraft, Santa leases several of these aircraft each year to help with the distribution of over

520million presents to his global network of Present Distribution Hubs.


When I arrived at Santa HQ I was whisked through the

fast track security channel, (security is normally

tighter here than any TSA check point found at North

American airports) I was taken straight to the ‘Project

Dasher’ war room where the global deployment of

GXS Managed Services was initially masterminded

from. In the corner of the room was Santa, sitting by

the fire reading a copy of our new EDI Basics book

(download a copy HERE). One thing you quickly learn

about Santa, probably due to the nature of his job, is

that he knows most of the IT and technology trends

that have made news in recent years. Santa always

looks for ways to continuously improve his operations

and during 2013 he has been implementing a new

project relating to the ‘Internet of Things’. The Internet of Things basically relies on machine to machine

connectivity via the internet to exchange real time information from one device to another.

‘The Internet of Santa’s Things’ (IoST) has now been deployed across his entire operation. Santa already had

good visibility across his operations but the connected nature of the Internet of Things has meant that he has

been able to take enterprise wide visibility to an entirely new level. Santa already had his trading partners

connected to his Present Delivery Network Hub and last year he spent a lot of time implementing a Big Data

strategy to analyse information flowing across this platform. Santa quickly realised that if he could somehow

connect his digital and physical supply chains together then he would obtain even greater operational

efficiencies. However there was one major stumbling block to deploying IoST, he had to connect every

machine or piece of equipment to the internet. Santa decided to extend this still further by connecting every

employee and reindeer to IoST as well, but more on this later.


Santa had to sign partnership agreements with numerous network and industrial automation providers as well

as one of the world’s largest mobile network companies to allow all aspects of his operation to connect with

IoST. Every piece of equipment that needed to be connected to IoST had to have a WiFi card connected to the

machine or equipment’s main control board. The extended real time connectivity that IoST now provides

allows Santa to obtain some interesting insights into his operation. Here are just a few examples of how IoST is

beginning to help Santa’s operation.

1. Every piece of warehouse and logistics equipment within Santa’s global network of Present

Distribution Hubs is now connected to the Internet. Increased connectivity across his distribution

network has helped to remove traditional blind spots where inventory levels had previously been

difficult to monitor. Every stock movement via ‘internet connected’ machines such as fork lift trucks

and pallet movers can now be accounted for and this provides a more accurate view of inventory

levels. Given the tight schedule that Santa has over the Christmas period, every second saved through

improved visibility helps to improve the overall service to his customers, the children of the world.

2. Closed loop processes were implemented to allow the automatic ordering of toy parts. As soon as

the level of parts inventory fell below a certain level, sensors in the storage bins sent a message to the

order management system and electronic orders for new parts would be sent directly to the supplier

with no elf intervention at all. This closed loop ordering process has helped to significantly reduce

buffer stocks of toy parts which are now ordered on demand, as they are required.

3. Santa’s army of warehouse associates, elves, work in warehouses ten times the size of Amazon’s

largest warehouse in the world. To improve elf productivity it is important for presents to be located

quickly in their respective storage locations within the warehouse. In order to maximise

efficiency, each elf has been issued with Google Glass which helps to locate specific presents in the

warehouse and provide instant access to product information. The extensive network of sensors and

other connected devices transmit a constant stream of information across the warehouse and factory

locations. Google Glass provides one of many visual ‘entry points’ into information flowing across

Santa’s Present Distribution Network.

4. The North Pole Union of Elves (NPUE) has been keeping a close eye on the working environment of

Santa’s elves in recent years. The elves work tirelessly during the Christmas period to fulfil ‘orders’

from the little children of the world and to protect the health of the elves, they have been issued

with a slightly modified Jawbone device which they can wear on their wrists during the working day.

The Jawbone device helps to monitor the work, health and sleep patterns of each elf. As each elf

clocks out at the end of each day, information from their Jawbone device is uploaded to a central

database and the health of each elf is analysed overnight to ensure they are working within the

union’s guidelines. So as well as machines being connected to IoST, every one of the 10,567 elves are

connected to IoST as well.

5. Santa started to implement a Big Data strategy in late 2012 but now with every machine and elf

connected to IoST, Santa has a huge amount of data available to him which helps to make improved

and better informed management decisions. Santa heard from one of the leading industry analysts

that Big Data Analytics was going to become a more important area in coming years and this is why

Santa has now decided to sponsor a degree at a local Elf University which will help elves analyse these

rich data sets and essentially become world leading information scientists.

6. The scale of Santa’s operation is huge and so are his energy bills to run his numerous factories and

distribution facilities. Santa’s business is at the heart of an area often depicted in news reports

relating to global warming and for this reason Santa has an added interest in preserving the

environment. The Internet of Things presented Santa with an opportunity to monitor energy levels


across his facilities and take corrective action to improve the energy efficiency of these operations.

Over the past year Santa has built up a global network of technology partners, one example was

Google discussed earlier and another is NEST, a producer of leading edge thermostats and smoke

detection systems. These devices are installed in every major work area of Santa’s operation and each

device is connected to IoST. They allow Santa to remotely monitor and control the temperature to

ensure his elves have an optimum environment to work in. Santa also worked with local water supply

and electricity companies to find ways of monitoring energy usage. Power for his factories and

warehouses can be supplied from either water based power generation equipment located under the

Arctic ice flows or the giant solar panels and wind turbines that have been installed across the North

Pole.

7. Santa takes great pride in the operational efficiency of his elves on the production lines as they are

assembling toys. To improve his levels of factory automation, Santa has also worked with leading

industrial automation companies to install automatic assembly and packaging machines. Needless to

say these pieces of production equipment have also been connected to IoST. In fact since connecting

to IoST the production line has experienced virtually zero downtime. This is due to the ‘predictive

maintenance’ processes that have been put in place. In the old days Santa’s maintenance elves

would carry out preventative maintenance on production equipment but with the introduction of

IoST, Santa decided to implement a predictive maintenance process that would harness the

information being transmitted from each machine and allow them to make decisions on whether

parts needed replacing. This process has been so successful that even Santa’s contract manufacturers

have connected their production equipment to IoST so that they can leverage the benefits of

predictive maintenance.

8. Some people think that Santa’s reindeer have some form of nuclear power source as they are able to

go around the world in a matter of hours. In fact following the elves adoption of Jawbone devices,

Santa thought it was only fair to ensure the well‐being of the other key members of his extended staff,

his herd of reindeer. Santa had read in a recent edition of Wired magazine that some scientists had

experimented with health monitoring chips embedded under the skin to monitor key functions of the

body. Santa worked with one of the world’s leading universities conducting research into

improving animal health, to see if a chip could be embedded under the skin of a reindeer. This

would allow the reindeer’s health to be monitored remotely 24/7. The chip monitors nearly a dozen

key body functions and this information is transmitted back to Santa HQ via IoST every minute so that

if necessary Santa can replace a reindeer as and when required and thus ensure that the herd of

reindeers are working to their optimal performance.

9. Santa’s sleigh contains nearly as many sensors as a Formula One race car. The 150 sensors placed at

strategic points on the sleigh monitor everything from speed, sleigh distortion, temperature, weight

and on board inventory levels. The information from ‘Sleigh Force One’ is transmitted to Santa HQ

via IoST. The burst of information, nearly 2Gb worth of data, is transmitted every five minutes and

is archived on a bank of storage devices within Santa’s newly upgraded data centre. Remember

those barges mysteriously floating off the California coast recently? Google said that they were going

to become facilities for show casing new products. In fact one of the barges is actually a new data

centre that was recently towed up to the Arctic Circle. This data centre is at the hub of Santa’s IoST

infrastructure. A team of elves located in the Mission Control facility at Santa’s HQ are constantly

monitoring the sleigh to make sure it is perfectly balanced and optimised during its journey through

some of the harshest weather conditions around the world. Santa’s sleigh also contains a

temperature controlled locker and sensors placed on presents stored in this locker ensure that the

temperature is maintained to a specific level.

10. The one other area where IoST has been applied is with the presents themselves. Whilst on the

sleigh, sensors monitor the condition and temperature of the presents. However when they are

dropped down a chimney the sensors switch mode and start transmitting information about its

condition after being delivered. As presents are sent out from Santa HQ, two identifying labels are

automatically applied to each present. One label has an embedded RFID device which is directly


linked up to IoST and the second label is essentially a QR code. This QR code is applied for the

purposes of the children’s parents. The QR code once scanned, takes you to a website which not only

shows what the present is, but includes downloadable instructions etc, more importantly it describes

how the packaging should be recycled or disposed of. This initiative alone has helped boost Santa’s

green credentials and as the information is transmitted across IoST it has helped Santa achieve REACH

and RoHS compliance to ensure materials are disposed of safely.

Following the implementation of IoST, Santa also upgraded SantaPAD, a mobile app that was developed last

year to help him keep track of his operations whilst he was delivering presents around the world. SantaPAD

v2.1 now provides details of every device connected to IoST, through a machine to machine equivalent of

Facebook, and this means that Santa can effectively monitor the ‘pulse’ of his operations from anywhere in

the world by simply using his iPad app.

So it has been quite a year for Santa, each time I visit he manages to extend the functionality of his IT

infrastructure in a different way. Santa’s Internet of Things strategy has been his most ambitious project to

date and it seems to have stretched into every area of his operations. I think it certainly provides a great case

study in terms of how other companies could deploy the Internet of Things across their own production and

logistics operations and I am sure Santa will be open to showing companies around his new and fully

connected operation. 2014 will see many companies start to embrace the Internet of Things and Santa’s big

bang approach to rolling out IoST across his operations has worked out well but not every company will want

to take this approach. Providing an update on Santa’s B2B platform traditionally means that this is one of my

last blogs of the year and so with this in mind I just wanted to offer season’s greetings and best wishes for

2014, See you next year !


Top Ten Trends that will Impact Automotive Supply Chains in 2014

I recently published my thoughts on some of the key high tech related industry trends for 2014, so now I

thought I would follow up this blog with my predictions on what could happen across the automotive industry

in 2014. The industry is going through an exciting period of change with significant global expansion,

introduction of new technologies and a global desire to introduce greener vehicles.

So let me now outline some of the key supply chain and B2B related trends that are likely to impact the global

automotive industry in 2014:

1. Increased adoption of global vehicle platforms will simplify and consolidate supply chains –

companies such as VW Group have proven that if implemented correctly, global car platforms can

bring significant benefits to an automotive manufacturer. Despite the initial high investment,

consolidated suppliers/parts/sub systems, simplified production systems and logistics flows all

contribute to justify the investment. With the trend for global expansion growing, especially by Far

Eastern automotive companies at the moment, I would expect more automotive manufacturers to

start rolling out global car platforms or vehicle architectures during 2014.

2. ‘Internet of Automotive Things’ becomes more deeply embedded within both vehicle and

production environments – 2013 saw the‘Internet of Things’ go mainstream. 2014 will see all

participants in the automotive supply chain working to get their ‘machines’ connected to the internet.

Production equipment, logistics networks, and aftermarket service infrastructures will become

connected to a common enterprise platform to allow information flows to be analysed and acted

upon. Every car manufacturer will begin to offer a ‘connected car’ within their respective range of

vehicles.

3. Automotive OEMs follow Tesla and BMWs lead by developing dedicated electric vehicle brands –

exponential growth in sales of Tesla and BMW i‐Series electric vehicles in 2014 will see many other

vehicle manufacturers introduce dedicated platforms and sub brands for their electric vehicles. So far

many car manufacturers have decided to enter the electric vehicle market by ‘electrifying’ existing

vehicle platforms. From a packaging point of view many of these vehicles are not suitable for housing

large battery packs or electric motors. To be successful in 2014, vehicle manufacturers will have to

follow Tesla and BMW’s lead by developing dedicated, lightweight and ‘connected’ vehicle platforms

4. China accelerates global expansion plans with acquisition of key suppliers and struggling western

OEMs – China has so far failed to set the world alight with some of their own car brands. Lack of

quality, limited brand awareness and having to compete against strong western brands has all

contributed towards China’s limited global expansion of its domestic automotive industry. Increasing

wealth in China will see a continued stream of western companies being acquired by Chinese

manufacturers, the acquisition of Volvo Cars by Geely has shown how successful this can be. What if

Chinese domestic OEMs could sign agreements in 2014 to use under‐utilised production facilities in

Europe and North America? This would serve to increase production levels globally, China would get a

foothold in other markets and the whole supply base becomes rejuvenated.

5. Adoption of Cloud B2B platforms accelerates due to continued consolidation of global ERP and

legacy B2B environments – The continued globalisation of the automotive industry in 2014 will see

stronger efforts to upgrade old legacy B2B environments. Continued expansion into the ’2nd wave’ of

emerging markets in 2014 will require an extension of IT infrastructures into North Africa, Vietnam

and Thailand. Limited IT skills in these countries will see cloud based solution being deployed to allow


all suppliers to be connected to a centralised B2B hub. The introduction of ‘connected plants’ to

support strategies relating to the Internet of Things will see increased levels of consolidation amongst

ERP instances to provide a single view of ERP information across multiple automotive plants.

6. Automotive OEMs form alliance to lobby regional governments to invest in electric charging

infrastructures – range anxiety is the number one barrier to electric vehicle adoption and the

automotive industry is going to need the help of regional governments if they are to overcome this

barrier. Cities such as Amsterdam have successfully implemented charging networks and even

manufacturers such as Tesla have decided to fund the development of their own charging

infrastructure to help drive electric vehicle adoption in the market. However if automotive companies

are going to meet stringent government set emissions targets by 2020 then the government should

be investing in regional charging infrastructure investment policies to provide an incentive for

consumers to make the switch to electric vehicles.

7. 3D printing technology matures and moves from conceptual design applications to limited use in

production environments – this technology has been around for more than twenty years but in 2013

it was introduced to the general consumer. Automotive companies have been using 3D printing

technologies for rapid prototyping at the concept design stage of a vehicle’s development for many

years. Increased awareness of this technology will now see it begin to be deployed in certain

production and aftermarket service situations where parts can be manufactured at a production or

service centre location. Production of castings and housings will be one of the initial beneficiaries of

this particular technology in 2014.

8. More countries adopt global B2B communication and message standards to support international

operations – increased globalisation of production has complicated logistics flows and supplier on‐

boarding initiatives. We are already seeing ERP and B2B platforms being consolidated to support

these global operations. In 2014 we will see an increased interest in adopting global standards such

as OFTP2 for communications and the soon to be introduced global message set being developed by

the German automotive industry. In 2014 I would expect to see more regions follow Germany’s lead

in using global standards. I would also expect regional industry associations such as AIAG in North

America and JAMA in Japan to take a close look at the EDIFACT based global message set (which is

being developed by manufacturers such as VW Group, BMW, Hella and Bosch) to see how they can be

applied in their own countries.

9. Strategic partnerships announced between high tech and automotive OEMs – Over the past few

years we have seen a number of strategic partnerships being announced between for example

Panasonic and Toyota, Ford and Microsoft. In 2014 I would expect to see a new generation of

partnerships emerging thanks to the increased interest from consumers to connect their electronic

devices to in‐car entertainment systems. To date we have seen traditional consumer

electronics vendors form partnerships with the automotive industry, moving forwards I would expect

to see Google, Apple and other consumer centric high tech brands develop stronger relationships

with the automotive industry. Will downloadable apps become common place in 2014?, will wearable

devices interact with vehicles?, will Google’s Android and Apple’s IOS platform form the basis of

future in car software platforms?

10. Europe and other regions follow North America in rolling out regulations to minimise use of conflict

minerals – North America is one of the first countries to try and significantly reduce the amount of

conflict minerals flowing across supply chains. New regulations being introduced in 2014 by the

Securities and Exchange Commission (SEC) in North America will require companies to demonstrate

that they are not using conflict minerals as part of their supply chain operations. In 2014 I would

expect Europe, Japan and other key industrialised regions to begin evaluating the implementation of

their own conflict minerals reporting laws. AIAG in North America has already been working

extensively with the automotive industry in North America, I would expect them to work closely with

other industry associations such as Odette in Europe and JAMA in Japan to share key learnings and

best practices. This will help to develop a unified approach to the removal of conflict minerals from

global automotive supply chains during 2014.


EDI will Support Japan’s Implementation of the WCO SAFE Framework for

Imported Goods

In June 2005 the World Customs Organisation (WCO) council adopted the SAFE Framework. This is a globally

agreed set of standards to secure and facilitate global trade that acts as a deterrent to international terrorism,

secures revenue collections and promotes trade facilitation worldwide. The facilitation of trade has been

highlighted by many industry analysts as one of the key benefits as the framework provides a much higher

level of visibility into activities across a global supply chain.

Many countries have introduced their own variant of the SAFE

framework, in the European Union, the European Summary

Declaration (ENS) was introduced by the 27 member countries for all

modes of transport. Mexico, Australia and Brazil have their own rules

in place to support the framework and China is currently working on

their own version of the rule. North America was one of the first to

implement the ruling, partly to help minimise terror related activities

and in early 2010 it extended the rule by introducing the ‘10+2’

compliance initiative. Under the 10+2 compliance ruling, before

merchandise arrives in the United States, importers, customs brokers

or freight forwarders must submit certain information, 10 data

elements, namely the first eight no later than 24 hours before the

cargo is loaded on its U.S bound vessel and then submit the last two no later than 24 hours prior to the ship’s

arrival at a U.S port. Logistics Carriers must also submit two pieces of information, hence the name 10+2.

In March 2014, Japan will become the latest country to adopt the SAFE Framework with the introduction of

their Advanced Filing Requirement (AFR). The AFR goes into effect on 1st March 2014 and the penalty phase

will apply ten days later on 10th March 2014. The Japan AFR requires all logistics companies to submit

electronic shipping details 24 hours prior to the vessel’s departure for all Bill of Lading covering any goods that

are intended to land in Japan. Japan will be getting tough on companies that do not submit information

electronically with a potential $5,000 fine or a year in jail. A more serious option could be the Japanese

Customs Agency refusing to issue a permit to discharge the cargo.

To ensure compliance many companies have been collaborating with Nippon Automated Cargo and Port

Consolidated System (NACCS), the private sector IT division of Japan Customs. NACCS has been working

tirelessly over the past 12 months to try and educate the market on what is required to be sent to Japan

Customs ahead of the shipment leaving its port of origin. NACCS requires nearly thirty pieces of information to

be submitted and the exact data fields required can be found HERE

The introduction of the WCO SAFE Framework has helped global customs and border control agencies to

significantly improve the way in which they process inbound shipments and remove significant paperwork

from their processes. It has also allowed Customs to modernise their IT infrastructures to support global

carriers in a more efficient way. Improved visibility of information relating to inbound shipments has not only

helped to minimise terror related activities but has also contributed towards a reduction in the amount of

counterfeit goods or parts entering today’s global supply chains.

As with other countries, Japan has decided that information to support AFR should be sent electronically via

EDI, which is the global ‘language’ of today’s B2B activities across trading partner communities. Businesses

today face an increasing amount of regulatory compliance and EDI adoption is helping companies adhere to

these new regulations and ensure that the wheels of global trade continue turning.


How Does the Automotive Industry Plan to Embrace the New Dodd‐Frank

Conflict Minerals Law?

In an earlier blog entry I discussed how a new ruling being introduced in North America is likely to impact

manufacturing supply chains around the world. The ruling will essentially make companies more accountable

for where they source certain materials that go into their products. The Dodd‐Frank Law relating to conflict

minerals usage has been introduced to try and kerb the funding of rebel groups in the Democratic Republic of

Congo and its immediate neighbouring countries.

There are four key minerals, Tin, Tungsten, Tantalum and Gold, (collectively known as

the 3TG minerals) that will be impacted by this ruling. For a more general introduction

to 3TG minerals and how the Dodd‐Frank law will impact their sourcing, please see my

previous blog on this subject area, Click Here.

The manufacturing industry is probably going to be the hardest hit by this new ruling as

every manufacturer must be able to demonstrate what minerals are in their products,

and more importantly where they were sourced from. The high tech and automotive

industries are going to be severely affected by this ruling and in my previous blog I

discussed what steps the high tech industry was taking to address this issue. This blog will briefly review how

this new ruling will impact the automotive industry.

The image below shows just a small selection of parts within a vehicle that are likely to use 3TG minerals in

some shape or form. Tantalum is probably the more widely used mineral and is used in many different areas of

a vehicle. Given a car may contain over three thousand individual components you can just imagine the huge

task facing the OEMs to try and identify not just which components are using 3TG minerals, but the likely

quantity as well. It has been estimated that just adhering to this new law will cost the automotive industry

between $3 billion to $4 billion.

With the reporting period underway already in North America and reports due to the Securities and Exchange

Commission (SEC) by 31stMay 2014, there is a growing sense of urgency amongst automotive companies to

introduce compliance procedures for their supply chains. In April 2011, six manufacturers, Chrysler, Ford,

General Motors, Honda, Nissan and Toyota issued a joint letter to their respective suppliers informing them of

the new reporting requirements and requesting their cooperation in terms of identifying which parts may

contain 3TG minerals. The six companies outlined three basic steps:


Determine which parts/assemblies incorporate one or more of the identified conflict minerals or their

derivatives

Assess the supply chains associated with those parts/assemblies

Engage with suppliers to identify the smelters used in a supply chain to process the conflict minerals

or validate the origin of the conflict minerals as recycled/scrap

In August 2012, the SEC finalised the rule for complying with conflict minerals provision of the Dodd‐Frank Law.

These rules, especially given the global nature of the automotive industry, have major implications for nearly

every automotive company, not just in North America. Even companies headquartered outside of the US and

those which do not report to the SEC, may be subjected to conflict minerals requests from customers who do

report to the SEC or are in the supply chain of these companies or their tier suppliers.

One of the key ways that companies make sure they achieve compliance is by ensuring that the internal

organisation is aligned and the purchasing department will typically take the lead on this initiative. After all,

the purchasing department is responsible for the day to day communications with the supply chain and they

manage all communications and interactions.

When you consider that there are over 190,000 automotive manufacturers

and suppliers in the industry that are potentially involved, the route to

compliance could potentially be a long and complex one. It will require

significant resources to ensure compliance and make sure that filings are

submitted to the SEC on time. The Automotive Industry Action Group (AIAG) has been working tirelessly

to educate the industry over the last couple of years, on what they need to do to ensure compliance. They

have taken the Electronic Industry Citizenship Coalition (EICC) conflict minerals reporting template and

created their own web based version of the reporting tool to help companies survey their trading partner

communities. A recent study by the analyst firm PwC, referenced in the chart below, highlighted some of the

key challenges faced by the automotive industry with ensuring compliance across their supply chains. The

biggest challenge highlighted by respondents to the survey said that getting accurate and complete

information from relevant suppliers was going to be their biggest challenge. In fact 31% of respondents

agreed that this would be the greatest challenge in terms of the conflict minerals compliance process.

Being able to identify which companies across the automotive supply chain may be unknowingly supplying

parts containing 3TG minerals is one challenge but then being able to reach out to them efficiently is another

challenge altogether. One of the key challenges faced by many companies today is that contact information is

potentially held within many different back end business systems and ensuring this data is up to date is an

ongoing challenge.


GXS Active Community is an enterprise wide collaboration platform that could potentially help to address this

particular issue. By providing a web based collaboration platform that allows suppliers to update their own

contact information as and when required helps to ensure that you can reach out to your supplier community

in a more efficient manner. At the end of the day if a supplier wishes to do business with a prospective

customer then it is in their own interest to at least make sure they are contactable. Active Community not only

allows companies to keep up to date information about each and every supplier, it also provides a platform to

send out regular communication to a trading partner community. Ensuring that suppliers adhere to various

compliance procedures is becoming a key part of the trading partner management process today and Active

Community can provide various tools to allow regular assessments to be sent out for completion by a supply

base. For example the EICC reporting template could easily be replicated within Active Community, an

example of which is shown below, and a supplier community would be able to use this platform to ensure that

they meet the compliance requirements of the conflict minerals reporting law.

As discussed earlier, it is not just companies in North America that will need to submit evidence to the SEC that

their supply chains do not contain conflict minerals. The European Union completed a public consultation in

June 2013 and a recommendation on necessary steps to be taken by European member countries will be

announced by the end of 2013. The European Commissioner for Trade recently gave a speech on responsible

sourcing of conflict minerals and his speech can be read here

It is widely expected that the European Union will embrace the OECD

framework highlighted in my earlier blog on this subject and it is expected

that other regions will also embrace the framework moving forwards.

Given that three Japanese OEMs were involved with the initial

communication to their supply base in North America it is expected that

Japan’s government will be taking a closer look at this initiative in the near

future as well. The automotive industry is fortunate to have a proactive

group of industry bodies, namely AIAG in North America, Odette in Europe and JAMA in Japan that are/will

be willing to work closely with the regional suppliers to ensure that they meet the various compliance

initiatives. Odette and JAMA will hopefully be able to utilise much of the initial work undertaken by AIAG to

support their own conflict minerals reporting initiatives. I recently recorded a webinar relating to the area of

conflict minerals and how GXS Active Community could be used as a potential reporting platform. GXS will

make this webinar available shortly, so please feel free to register to learn more about the new conflict

minerals law and how GXS can help ensure compliance across your supply chain.


How GXS Managed Services has Contributed Towards the Growth of JLR in

Recent Years

Over the last few years the global automotive industry has seen extensive consolidation and restructuring

across the entire automotive supply chain. The premium or luxury end of the automotive market has been

partially shielded from the downturn experienced by many countries around the world. This is partly due to

the fact that consumer wealth in emerging markets such as China has increased significantly and car

manufacturers such as Jaguar Land Rover (JLR) have quickly expanded sales operations into these growth

markets. As a result, JLR has seen unprecedented growth in its business since it was divested from Ford in 2008.

Following divestiture from Ford, JLR had to establish their B2B platform as quickly as possible. As key B2B

personnel remained within the Ford organisation, JLR had to find a way of establishing their own B2B platform.

JLR had to move off of the Ford network infrastructure within an 18 month timeframe. This was quite a

challenge for JLR, especially as they had to use a ‘clone and go’ process to move key business systems into

JLR’s own data centre infrastructure. From a B2B system perspective, GXS Managed Services was chosen to

support JLR’s direct materials supply chain operations from the moment they were divested.

Following the global economic downturn in 2009, JLR began to recover more quickly than many of its

competitors. This was mainly thanks to significant investment from its new parent company Tata Motors, a

leading vehicle manufacturer from India and growing sales in the emerging markets. Let me just highlight

some of the key revenue statistics from their last financial year.

It is hard to believe that only four years ago JLR was desperately in need of a £500 million loan to keep the

company upright following the credit crunch. Tata secured the required loan from a network of private

banks. The year after receiving the loan, JLR revenues were £6.53 billion and for the latest financial year JLR

took £15.78 billion in revenue, an increase of 140% in four years. For their latest financial year JLR earned £2.4

billion profit, again going against an industry trend of slow growth. JLR sold 357,773 vehicles in their last

financial year and with their expected growth trajectories they could be selling 750,000 vehicles in the medium

term. Quite an achievement when you consider that overall vehicle production in the UK in 2012 was nearly

1.6 million vehicles.


To achieve this growth, JLR has invested heavily in a number of different areas:

Consolidated all vehicles onto just three key vehicle platforms, this has helped standardise production

processes as well as simplify/consolidate various parts and sub‐systems used across the different

vehicles

In order to reduce the weight of their vehicles and hence improve overall CO2 figures for their range

of vehicles, JLR started to introduce aluminium body in white and exterior body panels. This involved

introducing new production processes as aluminium is different to work with than the more

traditional steel body panels

Invested in a new engine plant, until recently they had been heavily reliant on Ford based engines for

both their Jaguar and Land Rover vehicles. They will now be introducing their own engines to their

extensive range of JLR vehicles

They have invested heavily in a new range of vehicles and established new production facilities, for

example establishing a plant in India, a joint venture project in China with Cherry and more recently

they are looking to build a $500million plant in Brazil. Increased consumer wealth in these countries is

leading to a desire from consumers to buy luxury vehicles and Jaguar/Range Rover vehicles are now

highly in demand in these countries

JLR has invested heavily in R&D over the years and the fruits of this are now being exploited, they

partnered with Warwick Manufacturing Group in the UK to explore new production processes and

look at new areas such as hybrid and electric vehicle design

The investment in JLR over the past four years has certainly paid off and I

would expect JLR to expand production into other countries over the next

few years. Most notably Mexico which is seeing a very high level of inward

investment at the moment due to its low cost workforce and close proximity

to the lucrative North American markets.

Following JLR’s sale from Ford in 2008, it had to work quickly to establish its

own IT infrastructure. You have to remember that at this point the

automotive industry was spiralling downwards at a fast rate and it was

therefore important that JLR could focus on vehicle production and maintain

the continuity of their business whilst trying to move across to their own IT environment. By moving across to

a GXS Managed Services environment, JLR could focus on implementing their ERP and other production

critical IT business systems. In fact due to the complexity of ‘untangling’ JLR from Ford’s back end systems,


Jeremy Vincent, JLR’s CIO was adamant that they should not have to go through this level of business

disruption again and for this reason he said “The strategy will be one of simplification, standardisation and

modernisation. Where I can deem services and technology as being commodity I will seek to externalise,

outsource or place them in the cloud”.

GXS Managed Services is one of a number of cloud based solutions that JLR has now deployed across its

business and the GXS platform essentially manages the electronic transactions to support the supply of direct

materials to its plants. Over the past four years GXS Managed Services has:

1. Provided scalability and flexibility to allow JLR to rapidly expand their production footprint into key

automotive markets around the world. For example with nearly 200 GXS employees in Brazil, GXS is

now well positioned to support the on‐boarding of new trading partners to any future JLR plant built

in the country

2. Offered global interoperability so that trading partners can connect using any communications

protocol or via any automotive network (ie ANX, ENX or JNX) and provided translation and mapping

services to allow JLR to exchange any type of EDI document, irrespective of the regional EDI format

being used

3. Assisted with the on‐boarding of over 1000 suppliers, providing JLR’s external trading partner

community with a single connection point into JLR’s business. During the initial on‐boarding process it

was found that around 40% of their supply base was already connected to GXS Trading Grid, the

World’s largest cloud B2B integration platform, this simplified the on‐boarding process considerably

4. Provided the necessary program and implementation resources to support their diverse B2B

requirements

5. Allowed JLR to move to a future proof cloud based B2B integration environment that is used by 90%

of the Top 20 car manufacturers and 84% of the Top 100 global suppliers in the world

JLR now has most of the key building blocks in

place to support the expected growth of their

business over the next few years. One of the

key building blocks that has been put in place

has been the adoption of cloud based services

across their extended enterprise. Some industry

analysts are already saying that JLR should

become the most successful company in the history of the home‐grown British Car industry. A dramatic

change from the 1980s when the then Rover Group was suffering from a lack of product innovation and quality

issues. On a personal note my grandfather had three Rover cars during his driving career and I was fortunate

to have his last one whilst I was at University, so I guess you could say that I will always have a high regard for

what JLR has achieved over the years and every employee of the company can now look forward to an exciting

and prosperous future.


The Rise of the Machine Connected Supply Chain

Two weeks ago I was fortunate to get an invite from Cisco to attend their ‘Internet of Things’ World Forum in

Barcelona. As I discussed in an earlier blog entry, the Internet of Things is going to herald the introduction of

the fourth industrial revolution and Cisco, SAP, Oracle, GE and many other tech and industrial companies want

to be part of this new and exciting sector. The presentations from the forum are freely available via

the www.iotwf.comwebsite and I would encourage you to download some of them as they provide some

great insights into what is coming in the near future. Some of the subjects being discussed at the forum,

especially in healthcare, would not have looked out of place in the 2003 Terminator 3 film, ‘The Rise of the

Machines’, hence the title for this particular blog entry!

I personally found the event to be one of the best conferences that I have attended in recent years and there

were a lot of conceptual ideas discussed which gave plenty of food for thought. There were some great videos

shown at the event and here is one example describing Oracle’s vision for an Internet of Things platform.

One such idea, which for some reason I have not been able to forget since the conference, is the thought that

any type of machine could potentially have its own avatar or Facebook style profile page. To put another way,

in your personal life you may have an online profile such as Facebook or LinkedIn to keep in touch with both

friends and work colleagues.

What about if every machine connected to the

internet had its own avatar or online profile as

well? I thought this was quite an interesting

concept, but what would it look like and how would

it work? I like challenges such as this so I had to try

and come up with a concept, using Facebook as a

basic template as you will see below.

The other reason that I am interested in this is from

a B2B and supply chain point of view. Here at GXS

we offer a collaboration or rather community

management platform called Active

Community which allows companies to maintain a

centralised database of contacts for all trading partners across a supply chain. If machines were somehow able

to interact directly with the supply chain, either up or downstream then it could potentially help introduce a

new set of operational benefits and efficiencies. The Internet of Things offers the potential to connect the

physical and digital supply chains in a way that has not been possible before. But what if individual machines

could somehow interact with users or vice versa, could a Facebook type of ‘asset management’ environment

provide a neat way of managing the machine to machine communications across a supply chain? Even though

the concept of the machine based avatar was discussed at the Forum, there was relatively little information

offered as to how this could work. I am sure there are some conceptual ideas out there already, but I thought I

would offer my own vision of how this could work.


One of the discussion panels at the forum included a speaker from Caterpillar who said that every machine

that leaves their factory includes a WiFi module so that it can be connected to the internet and information

can be analysed and exchanged remotely when it is out in the field. So using this as an example I constructed

the following mock‐up of what a machine avatar and associated profile page could look like for a piece of

Caterpillar equipment, in this case an excavator. Just remember that every machine connected to the internet

would potentially have its own profile page such as the one shown below.

So let me briefly describe the two key sections of the machine’s profile page and what they would do. At the

top of the page you can see a few menu options including the number of users, along with internal and

external machines that the excavator is connected to. A ‘user’ could be an operator of the excavator or it

could be a service engineer for example, basically any person with an interest in the operation of the excavator

would connect this way. As with Facebook they would effectively ‘friend’ the machine to allow them to post

status updates to the page. In addition, within the excavator there will be other machines such as the engine,

pumps, electric motors, filtration systems etc and each of these could potentially have their own machine

profile page as well. So as you click on the ‘Internal Machines’ link below it would list all the internal machines

that have some form of information or profile page associated with it. Likewise the ‘External Machines’ link

will list all the other pieces of Caterpillar equipment that the excavator is associated to, this could either be

excavators of the same type, dumper trucks or other pieces of equipment that could be located on a particular

construction site, eg cranes, lift systems etc. The media library may contain site photos or maintenance videos

relating to the excavator.


The Internet of Things will lead to a massive increase in data flowing across the internet and the area of Big

Data is likely to be an important beneficiary of this. The ‘Health Check’ button shown above would basically

take you to a performance/systems dashboard where you would be able to monitor the performance of the

excavator and make any changes to the sub‐systems, remotely of course, in order to make sure that the

excavator is always performing well. Caterpillar themselves would also have access to this information so that

they could monitor the performance of every excavator of this type that has ever been sold. This would

certainly help alleviate any potential repair situations because ‘predictive maintenance’ would ensure that the

down time of these excavators is kept to a minimum.

In the area of the profile page shown below, we can see that the operator of the excavator has posted an

update about the status of a construction project, just a small example to show that there could still be human

updates applied to the profile page!

In addition just below you can see that the engine has

provided an update too. From a supply chain perspective,

this is where it starts to get interesting. The status update

provided by the engine and posted to the timeline of the

excavator’s web page could be one of say 25 pre‐

configured status updates that can be automatically sent

out by a machine within the excavator. So in this example

there is a problem with the air filter and one of the

suppliers to this particular engine has been tagged in the

post. Donaldson (a leading supplier of filtration solutions),

as an example, would pick up this status via their own

supplier page and they could take the necessary steps to ship a replacement filter to the construction site.

So just to clarify, the engine has found a problem, it has located the source of the issue, posted an update to

its profile page and automatically contacted a supplier for a replacement part. OK an extreme example, but I

am willing to bet that in the next few years we will see this become a reality.

Now as with Facebook, this website which for the purposes of this blog I have simply called

M2MConnections.net, could even carry banner adverts from various suppliers to this particular excavator or

indeed the construction vehicle industry as a whole. I have used Donaldson and Bosch as just two examples

here, but hopefully you get the idea. As you can see a lot more effort needs to be put into flushing out what

this type of machine based social network could look like.

We are just entering the fourth industrial revolution and the focus so far has been on the subject of just

getting machines connected to the internet. The next step is working out how to interact with the machines

and what I have described via this blog starts to describe this and this then leads us to the area of Big Data and

how the information can be utilised across both the enterprise and the associated supply chains. I have really

only scraped the surface of this particular subject area and every aspect of the operation of today’s supply

chains is likely to be impacted in some way by the Internet of Things, from logistics networks, warehouse and

distribution centres through to improved monitoring of inventory levels in factories and retail stores. I think

we are heading for exciting times!

If you would like to obtain a high resolution version of the excavator profile page discussed in this blog, then

please download from my Internet of Things board over on my Pinterest profile. If you don’t have time to

download the presentations from the IoTWF website then take a look at the media page on my Twitter

profile where you will find a large selection of key slides from the presentations at the forum.

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Page 24

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l offer ‘visibilit

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ility is limited

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nies to have tw

n. For exampl

Page 25

home, at

rtant to

dea of

mpanies

hipments

eb‐

tured and

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ew, all

lessly

benefits

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to an

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ty

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required

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centres k

B 2013

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across the ret

consumers ca

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cal service cen

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especially whe

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of parts in se

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blem and at th

tion where th

e and emails th

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to replenish

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replenish the

ding machine

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stock signals f

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.

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n of the cooli

s ECU sends

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hey get their v

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cally so that s

Page 26

rrives at

challenge

hat

tional

stocks

ng

ny

y gets to

stock as

detects

be

from a

s have

o check

w the IoT

quipment

r a

xample

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ng

places an

vehicle

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ted to

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rolling by

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the infor

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on the In

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platform

global ec

governm

B 2013

l three of thes

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ent and service

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mation being

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doption of the

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ity and comm

chnical level a

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velop an IoT r

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Page 27

nies will

evices,

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rous

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World Forum i

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ry, I will expa

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k from this co

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will allow the

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Page 28

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How Cloud B2B Integration Enables Michelin’s International Operations

Michelin is one of the largest tyre manufacturers in the world, in fact much of their €21billion revenue comes

from the aftermarket retail sector rather than direct sales to OEMs.

With Sales Operations in 117 countries, 69 production facilities in 18 countries and 115 000 employees,

Michelin is a truly global operation. To support their operations, Michelin has had to stretch their ICT and B2B

infrastructure into many different countries around the world and it is becoming difficult to manage their B2B

environment on a day to day basis.

Today’s automotive industry is expanding into new

emerging markets such as Vietnam and Thailand and

this will put further pressure on companies such as

Michelin to manage the expansion of their B2B platform

so that they can support their customers in these

regions.

For the past two years Michelin has been migrating

their European B2B platform to a GXS Managed Services

environment. This provides Michelin with a cloud based

B2B platform that will be able to support their global

operations. GXS recently produced an on demand

webinar which looks at how cloud B2B integration

supports Michelin’s international operations.

This webinar was recorded in partnership with Jean‐Luc

Faye, IS Functional Domain Manager at Michelin and

myself. Jean‐Luc is tasked with managing Michelin’s

global EDI strategy. This webinar also highlights the key

components of GXS Managed Services and the benefits

that it brings to Michelin’s operations.

I would like to thank Jean‐Luc and Michelin for their kind co‐operation with producing this on demand webinar.

To view the webinar, please CLICK HERE


5 Ways Cloud B2B Integration Makes Procurement’s Life Easier

In my previous procurement related blog I discussed some of the significant challenges facing today’s global

procurement teams. I highlighted a couple of reports, one written by Cap Gemini that focused on how

consumer based technologies are likely to impact the procurement organisation moving forwards.

The report highlighted that 40% of procurement organisations are involved in

augmenting their practices with ‘digital tools’. Digital procurement, or more

simply using B2B tools to automate manual based processes, is an area that is

going to become more popular across procurement departments in the future. To

be honest I would expect the figure of 40% to be much higher today as cloud

based B2B technologies can streamline the operation of a procurement team as

well as contribute towards the bottom line. In my earlier blog entry I highlighted a

number of issues faced by today’s procurement teams and how cloud B2B integration could help address some

of these challenges. This blog will look at the five ways in which cloud B2B integration can make

procurement’s life easier.

1. The cloud enables procurement teams to do business with any trading partner, anywhere in the

world. Comprehensive on‐boarding services allow a procurement team to reach out to potentially

100% of their trading partner community and ensure that they can exchange business documents

electronically with them. Using acomprehensive on‐boarding service, such as the one offered by GXS,

makes it easier and quicker to work with trading partners located in emerging markets such as China,

India and Brazil. Trading Partner ramping times can be significantly decreased and costs associated

with connectivity testing etc can be significantly reduced as well.

2. Cloud collaboration platforms enable all of your supplier contact information to be held in a central

repository, so that you can communicate more accurately, more often and hence foster greater

collaboration across your trading partner community. Procurement teams have traditionally held

supplier information across multiple business systems, spread sheets and databases. This information

can potentially become out of date very quickly, for example a key contact at a supplier may leave the

business but none of the procurement systems have been updated to reflect this change. How much

time and effort would it take to enter a new contact name or update an address across multiple

procurement systems? Would it not be easier to push the responsibility of maintaining up to date

contact information back on to the supplier concerned and may be make it

part of their contract to update their own details as soon as any changes are

required to their contact information? Cloud based community

management platforms can not only maintain up to date contact

information, they help to improve day to day communications and provide

traceability of all outbound communications with a trading partner

community as well. All of this can be achieved through one centralised

contact database which if necessary can be integrated to other business

systems, such as ERP platforms so that contact details are up to date and consistent across your

entire business.

3. Regardless of the size of your trading partners, or their technical capabilities, there are B2B

enablement tools in the cloud that ensure that no trading partner is left behind. Whether connecting

with suppliers, customers, banks or logistics providers, cloud based B2B tools simplify the process of

exchanging information between these trading partners and your procurement organisation. As part

of the on boarding process it is possible to quickly determine the technical and connectivity

capabilities of each and every trading partner and then assign a B2B enablement tool to help with the

exchange of electronic information. The cloud provides a single point of entry into your procurement

department, whether through a web form based environment or one that utilises a Microsoft Excel


based platform to exchange B2B information, the cloud offers a single integration platform that

anyone across your extended enterprise can use.

4. The cloud offers procurement departments a wide range of hosted applications that require minimal

IT infrastructure involvement so that you can automate more business processes and remove

extensive amounts of paper. You can deploy these hosted applications either ‘off the shelf’ or with

some form of customisation, for example integrating with other back office business systems or

tailoring the web forms to incorporate company speci9fic branding such as logos. Either way, hosted

applications provide a convenient way for your trading partners to be integrated more tightly with

your procurement processes. For example being able to track the progress of an order or implement

full traceability of all interactions with each and every trading partner. The light weight nature of

hosted applications means that your trading partners, in most cases, will simply need an internet

connection to get access to your cloud based applications.

5. Once you have on‐boarded your new trading partners, captured their contact details, deployed B2B

enablement tools and given them access to your suite of hosted applications, the final area that

procurement teams should be considering is support. Working with a global community of trading

partners requires a follow the sun, multi‐lingual support service to allow supply chain issues to be

resolved proactively before they impact your procurement processes and ultimately your business.

Establishing a multi‐lingual helpdesk is beyond the reach of many companies and this is a key area

where a vendor such as GXS can bring real value to the management of your trading partner

community.

B2B outsourcing, via a cloud integration platform such as GXS Trading Grid, provides procurement teams with

a ‘one stop shop’ in terms of enabling and managing a community of trading partners. Many companies take a

step by step approach to deploying cloud based services and this can be achieved with the five areas described

above. Cloud B2B environments offer procurement teams a significant step change in how they enable and

manage their trading partner communities. Using a cloud based approach to community enablement and

management takes away the day to day concerns of looking after a potentially global, diverse group of trading

partners.

For more information on how GXS can help move your procurement processes to the cloud, please

visit www.gxs.com.

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Page 36

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Page 37

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Page 38

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6. New regulations being introduced in 2014, for example Dodd Frank, will make high tech companies

and their suppliers more accountable to ensure they do not use any conflict minerals in their

electronic components. Every company submitting a filing to the SEC in North America in May 2014

will have to prove they do not have conflict minerals in their supply chains. This means that

companies will have to improve the way in which they assess their supply chains and improve day to

day management of key contacts at every company across a high tech supply chain. This will become

increasingly important as we move into 2014.

7. As production costs start to rise in China, more high tech companies will continue to look at

alternative manufacturing locations. Taiwan, Vietnam and Thailand are expected to grow their

respective high tech industries considerably as they attempt to attract inward investment from the

world’s leading high tech companies.

8. The Japanese high tech industry has primarily been built upon home grown software based ICT

infrastructures. Recent natural disasters have led many Japanese companies to rethink their ICT and

supply chain strategies. Moving into 2014 it is expected that more Japanese high tech companies will

look to upgrade older legacy ICT platforms and it is very likely that more companies will adopt cloud

based services in order to support their rapidly expanding global operations.

9. The PC industry is expected to contract still further with consolidation and merger and acquisition

activity expected to rise significantly. Whereas the software companies are diversifying into the

hardware space via their contract manufacturers, traditional PC manufacturers such as HP and Dell

are expected to adopt/acquire more service based solutions to help maintain or better still increase

revenues.

10. China is expected to continue globalising their own high tech operations by acquiring distressed assets in other markets. Lenovo is a good example of a Chinese manufacturer acquiring an established

business and this trend is likely to continue as we head into 2014. Whereas many western

manufacturers have expanded their operations into China over the past two decades it is expected

that Chinese companies will now continue the globalisation trend as they look to acquire recognised

high tech brands in other markets.

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I Have Seen the Future of the Car and I Think it Might be Electric!

Last week I had a rare business trip to Silicon Valley, California, regarded for many years as the heart of the

global high tech industry. Silicon Valley has seen three key innovation waves over the past few decades, the

first wave being driven by the semi‐conductor industry, a key component inside today’s computers and

consumer electronic devices. The second wave saw companies such as HP, Sun Microsystems, Cisco and Oracle

establish their operations in the region and today the third wave is led by Facebook, Google and

Salesforce.com. I guess one of the key reasons this region has been so successful is down to the highly skilled

workforce that is available in the region and universities such as Stanford drip feeding high calibre graduates

into a region regarded as a melting pot of technical innovation.

Over the past two years consumers have been driving the convergence

of the high tech and automotive industries which is why many car

manufacturers today are dependent on the technological developments

coming out of Silicon Valley. Consumers are driving the demand for the

connected car and this is why many car manufacturers are now

establishing strategic partnerships with high tech companies in the

region. Even though some car manufacturers have styling and design

studios on the West Coast of the US, very few car companies have

manufacturing facilities in this part of the United States, mainly due to

the fact that most of the supply base is centred around Detroit and the South Eastern states.

However there is one very large car manufacturing

plant in Fremont, about 50 miles south of San Francisco,

the plant was originally opened by GM in 1960 and in

1984 Toyota partnered with GM to re‐launch the plant

which was to become known as NUMMI (New United

Motor Manufacturing Inc.) The partnership worked

well as GM could learn about Toyota’s lean

manufacturing techniques and Toyota could open their

first plant in North America. However due to uncertain economic conditions the plant closed in 2010. On 10th

May 2010 a small car company announced that they had bought part of the NUMMI plant to manufacture a

new electric car, that company was Tesla Motors. Working in partnership with Toyota, who had invested

millions in the plant over the years, Tesla managed to eventually buy the freehold of the entire NUMMI plant

and like a phoenix rising from the ashes, the Fremont plant was once again producing cars.

At its peak the NUMMI plant was producing 400,000 vehicles but Tesla’s initial aspirations would see only

20,000 vehicles being built. I had a guided tour of the plant and it was quite breath‐taking. It was quite easy to

see which areas of the plant Tesla were using as they were painted white, amounting to around 20% of the

entire plant. The other 80% of the plant remained in darkness but will eventually be brought back to life as

and when Tesla expands their vehicle line up over the next few years. The assembly halls were cavernous, and

Tesla had spent a small fortune bringing some of the largest stamping machines in North America back to life

and they have been completely refurbished to stamp out the aluminium body panels that make up the body of

the Model S, Tesla’s latest premium level electric car. The Model S has been a major success story not just for

Tesla but the whole electric car industry and Tesla is currently producing 500 of these vehicles per week. This

success has been reflected in the exponential growth in their share price shown below. In fact the rise in the

share price in early May co‐incided with Tesla receiving an award from Motor Trends for Car of the Year

2013 after receiving glowing reports from consumers in the first quarter of 2013.


Tesla was formed in 2003 and its first electric vehicle was based on a Lotus Elise. Tesla swapped out the petrol

engine and associated powertrain and fitted an in house designed electric motor, powertrain and associated

lithium ion battery packs. This was one of the first desirable electric cars to hit the market and more

importantly one of the first to have a range greater than 200 miles. Some would say that that it was a very

clever move by Tesla to take a lightweight sports car and swap the powertrain for an electric variant. Then

again Tesla has a reputation for doing things differently as it is headed up by Elon Musk the founder of Paypal

and a serial entrepreneur. Musk also started up another business from scratch, namely Space X to offer

commercial space services to none other than NASA. So you could say that Musk has form, taking on

impossible business challenges and making a success of them. In June 2012 I wrote an extensive blog on

Tesla so it was good to be able to look behind the scenes of Tesla on this particular business trip. Even last year

I predicted the Model S would be a sales success and I have been proven correct!

Today, Tesla is building the foundation for their future business

through the exponential sales of their Model S sedan, an

innovative and very desirable premium level electric car which is

currently taking North America by storm. The reason for its

success?, well how about a 300 mile range, 0‐60mph time of 4.5

seconds and a luxury car that will not look out of place in a car

park full of Audis, Mercedes and BMWs. The Model S is made

more or less entirely of aluminium, with a high powered, Tesla

developed electric powertrain driving the rear wheels and

numerous Japanese sourced lithium ion batteries placed in a flat

compartment running underneath the car. When I had a tour of the plant I was amazed by the minimalistic

nature of the Model S, which from a production and supply chain point of view makes things a lot easier to

manage than a traditional car manufacturer.

The simplicity in design combined with the standardised number of

parts and extensive use of technology to control every aspect of the car

makes the Model S a force to be reckoned with. How many cars do you

know where all controls for the vehicle are managed through a central

17inch touch screen set into the centre console of the car, a touch

screen powered by the equivalent of three Apple Macbook Pro

computers. From a systems management point of view this is a serious

amount of computing power to manage the driver’s interaction with

nearly every aspect of the car. In addition there are computers to manage the powertrain, battery

management system and of course the vehicle telematics system so that any potential problems can be

relayed instantaneously back to the factory for review by Tesla’s army of boffins.

Not only is the Tesla Model S a text book example of how to design the ideal electric vehicle, its modular

design helps to simplify production processes and at the same time minimise the number of suppliers involved

with its production. In an earlier blog entry I discussed global car platforms and how they were changing the

automotive industry. The ‘chassis’ of the Model S is potentially highly scalable in nature, either shortening to

produce a smaller car or lengthening to develop a long wheel base car for markets such as China where

consumers prefer to be driven rather than drive themselves. The flat bottom nature of the car and the location

of the batteries also makes it perfect for introducing battery swap technology, an area perfected

by BetterPlace before they went out of business earlier in 2013. Tesla is currently introducing their own

charging infrastructure on the US West Coast and if they can introduce the battery swap technology as well

then I think the Tesla stock price will continue skywards. There is no doubt that Tesla is the hottest

automotive company at the moment and every car manufacturer around the world including GM, VW and

Toyota are taking notice of their accomplishments in such a short space of time.


Even though many other car manufacturers have tried to introduce electric vehicles, GM’s Chevrolet Volt and

Nissan’s LEAF being the most notable, Tesla’s Model S offers a premium level car with the best real world

compromise between performance versus available range on a full charge of batteries. So there are ten

reasons why I believe Tesla is here to stay:

The Model S has been designed from the ground up to be an electric car rather than merely

converted from an existing design, as in the case of the Tesla Roadster where the donor car was a

Lotus Elise.

The modular nature of the Model S allows the design to be scaled up or down with ease, for example

to produce longer or shorter wheel base vehicles

Relatively simple design and lower number of parts compared to a normal car means that their supply

chain is simplified with far fewer suppliers to manage on a day to day basis

Tesla has successfully consolidated all car functions and controls on to a single 17 inch touchscreen

display, simplifying the automotive electronics within the car and in my mind provides the benchmark

for the ‘connected car’

The range of the battery pack is unmatched in the industry and Tesla is exploring new battery swap

technologies to help encourage electric car adoption across a broader group of consumers

Performance of the Model S is on par with some of the premium brands such as Audi

Tesla is investing in their own charging infrastructure to help encourage consumer adoption of

electric vehicles and remove the biggest barrier to electric car adoption, namely ‘range anxiety’

Tesla is investing in their own dealer infrastructure, thus allowing consistent levels of customer

service to be adopted across their network

The Fremont plant is only running at 20% capacity so plenty of opportunity to expand as new model

ranges are introduced.

The company is backed by a visionary leader in Elon Musk, who has:

o removed the stigma of paying for goods across the internet via his former Paypal company,

in the early days consumers were reluctant to exchange payment information across the

internet

o proved that a privately funded commercial business can be established around the space

industry

o successfully brought an electric car to market which is practical, desirable and has strong

performance figures when compared to other premium sector cars on the market

I feel fortunate to have been able to visit Tesla Motors at a stage when they are growing their business and at

a time when consumers are just starting to take an interest in electric vehicles. In a future blog I will discuss

the infrastructure side of the electric vehicle industry and how the ‘Internet of Things’ is likely to impact the

industry moving forwards.

In closing, if you would like to see some of the features of the Model S, check out this review conducted

through Google Glass !


Why Every Chief Procurement Officer Should Modernize Their B2B

Infrastructure

Today’s Chief Procurement Officer (CPO) faces a number of challenges relating to the improvement

of procurement processes across manufacturing, retail or service operations. A recent report from A.T

Kearney identifies four primary challenges on a CPO’s agenda, measuring performance, increasing influence,

becoming more strategic and attracting and developing talent.

The procurement department is typically responsible for selecting, on‐boarding and managing suppliers on an

on‐going basis whilst at the same time ensuring they meet cost reduction targets, achieve high quality

standards and offer high levels of customer satisfaction. But quite often, outside influences such as supply

chain disruptions, changing macro‐economic market conditions combined with fluctuating consumer demand

levels means that the process becomes one of the most complicated aspects of running a business. Today’s

CPO is typically given a number of board level objectives, three of the most important being to:

Reduce costs across the supply chain in order to boost top and bottom line growth

Maintain high levels of Corporate Social Responsibility (CSR)

Increase levels of green and ethical sourcing

The IT infrastructure required to support today’s procurement

operations has been built up over many years, primarily with

behind the firewall software which has been heavily

configured to work with complex internal business processes

and systems such as ERP platforms. The increasing need to

build flexibility in to today’s supply chains has presented a

unique challenge for IT departments around the world, namely

how to expand B2B infrastructures to support globally

dispersed operations and diverse groups of trading partners

whilst at the same time provide the flexibility to scale up or

scale down the infrastructure as the business need dictates.

Cap Gemini recently conducted a study on the CPO which highlighted how many consumer based

technologies are likely to impact the procurement organisation moving forwards. In fact the study highlighted

that 40% of procurement organisations are involved in augmenting their practices with digital tools to:

Broaden and expedite communication with partners and suppliers

Automate and integrate procurement tasks and procedures

Enable procurement professional to work anywhere, anytime


The survey highlighted that many companies have restructured since the most recent economic downturn and

procurement organizations have got into a routine of trying to do more with less. Cost reduction continues to

be a key focus of purchasing organizations with 75% of survey respondents highlighting it as a focus area.

Interestingly, 30% of respondents highlighted that innovation will be a future focus and finally environmental

and supplier issues remain top of mind with 33% of respondents indicating that ‘green’ procurement initiatives

are also a key focus area.

So how can ‘Digital Procurement’ (using B2B tools and services)

help improve the management of today’s procurement processes?

Survey respondents said that forward looking CPOs believe that

innovative based capabilities such as predictive analytics, mobile

solutions and virtual procurement technologies (such as cloud

computing platforms) will not only deliver incremental value to

their organization but will also become a core requirement to

drive a competitive edge in a changing and demanding business

climate. In fact 47% of respondents are turning to advanced

technologies to stay ahead of globally intensifying competition.

With the emergence of innovative solutions, leading companies must do more than automate their purchasing

transactions to remain competitive. They need to arm their decision makers at all levels with accessible and

actionable data and insights and enable collaboration unhindered by geography. Finally the study highlighted

that 26% of respondents are boosting their virtual procurement capabilities by integrating social media and

cloud based technologies with in‐house resources.

The study also highlights that companies are looking more

positively towards cloud and on‐demand solutions to accelerate

time to value in their procurement organisations. Software as a

Service (SaaS) and on‐demand solution options can be deployed

more quickly, they are scalable, secure and help to promote

common practices across the organization while saving on

traditional on‐premise hardware and run‐time licenses. It is

expected that more companies will adopt virtual procurement

capabilities, moving away from proprietary and on‐premise

solutions as they strive for a lean and flexible operating model. In short, by combining mobile, social, Big Data

and cloud based capabilities, companies can empower their employees and improve collaboration and

visibility to better serve their client base. In order to adopt these new technologies, Cap Gemini recommends

taking a three phased approach for implementation:

Develop a roadmap for digital procurement outlining how each emerging technology aligns with their

company’s organisational structure and enterprise goals

Deploy through a thorough change management framework to address the impact of new technology

on their organization and workforce and how best to use it.

Establish an innovative culture and environment for procurement

The increased use of B2B solutions and services presents a major opportunity for CPOs to enhance strategic

decision making and workforce efficiency, while elevating procurement’s internal profile within the

enterprise. The global nature of today’s procurement organization, for example sourcing from the emerging

markets, presents a unique set of business challenges which can be broken down as follows:

How does an IT department extend support for these new trading partners?

How do you ensure that you can exchange business documents in a timely manner?

How do you offer local language on‐boarding and on‐going support?


How do you integrate remote trading partners into your ERP platform?

How do you manage trading partner related contact information?

How do you maintain business continuity during a period of supply chain disruption?

How do you manage risk, compliance or corporate social responsibility (CSR)?

How do you ensure that goods can be delivered on time and to the correct location?

How can customer satisfaction levels be improved where the ‘customer’ in this case is the CPO’s own

manufacturing department, retail outlet or service centre?

Cloud B2B solutions and services can help to address many of the afore‐mentioned

issues and they will become a central part of Digital Procurement platforms moving

forwards. The term cloud computing has been in use since 2010 and many CIOs

around the world thought that it would be another IT trend that would diminish

over time. Three years later however and the cloud is becoming an integral part of

today’s business environments. Many companies have found that the cloud offers

significant benefits over behind the fire wall software, however they have taken a

step by step approach to implementing their first cloud based platform. In many

cases, companies have implemented ‘hybrid’ IT environments which means they still get to use and retain the

investment they have placed in their behind the fire wall software environment but where required they also

get access to a highly flexible and scalable platform that cloud solutions and services can provide. Today’s IT

and B2B environments are in a state of transition, moving from older manual or behind the fire wall processes

to automated, globally accessible infrastructures. Modernizing procurement processes and moving towards a

more automated business environment will allow today’s CPO to achieve their corporate objectives, namely:

Introduce a greener more sustainable supply chain through the removal of manual, paper based

business processes

Increase customer satisfaction levels by being able to get the right information to the right place at

the right time

Improve internal business processes through the use of a single, globally available B2B platform that

helps to foster collaboration across the extended enterprise

Reduce costs and improve the efficiency of the procure to pay lifecycle and offer a platform which can

scale according to the growth of the business or the macro‐economic conditions of the market

Ensure that more accurate information is flowing through back end business systems such as ERP

platforms

GXS has an extensive suite of B2B solutions and services that will help a CPO modernize their procurement

processes and achieve their corporate objectives. GXS can help companies address many B2B challenges, but

here are the five key ways in which we can help modernize a procurement process, namely offering:

1. Comprehensive on‐boarding services to ensure that you can trade electronically, anywhere in the

world

2. A range of B2B enablement tools to ensure that no trading partner is left behind and you can trade

electronically with any supplier around the world, irrespective of their technical capability

3. Offering a collaboration platform that allows all supplier contact information to be held in a central

repository and more regular supplier communications and fostering greater collaboration

4. A range of hosted applications that allows business documents to be exchanged electronically with

minimal IT infrastructure and hence removing extensive amounts of paper from the supply chain

5. Follow the sun, multi‐lingual support services to allow any supply chain issues to be resolved

proactively before they impact your procurement operations

This blog entry has introduced some of the challenges faced by today’s CPO and in subsequent blog entries I

will expand on the five areas listed above to provide more information on how GXS can provide a seamless,

fully scalable B2B platform that allows a CPO to work with any trading partner around the world.


German Automotive Industry to Move From VDA to Global EDIFACT

Messages

The global automotive industry has grown around a collection of regional B2B standards, primarily covering

documents and communication protocols. The key automotive regions even had dedicated networks built to

service the automotive companies within these locations. The regional networks; ANX in North America, ENX

in Europe and JNX in Japan have been operating for many years, providing connectivity for both car

manufacturers and their suppliers. At GXS we support all the major regional standards and we also provide an

interconnection between these regional network infrastructures. But, technology moves on and the internet

has started to change the dynamics of how companies work with each other.

Over the last decade the automotive industry has globalised their

operations into every major economy around the world and

hence more and more trading partner related work is undertaken

outside of a car manufacturer’s home market or region. This has

meant that automotive companies have had to build increased

flexibility into their IT infrastructures to support operations in

these new countries. As these companies worked more globally, so there became a need to try and use

common standards across the various regions. This simplifies the trading partner on‐boarding process and

helps to remove complexity from an automotive manufacturer’s B2B infrastructure and associated supply

chain.

The German automotive industry has been the most proactive in terms of

globalising their car manufacturers and suppliers, with China being the

key market to expand into. As these companies globalised their

operations over the past decade they found that the traditional VDA

message set was too restrictive in terms of supporting truly global

logistics flows and hence why the German automotive industry is

collaborating on a project to introduce a new Global EDIFACT Message set

that will simplify global trade. In earlier blog entries I highlighted

how OFTP2 is likely to become the global standard for B2B

communications across the automotive industry and how the Global

Transport Label was introduced to simplify the shipment of goods across

country borders. In a similar manner I believe that the new Global

EDIFACT Messages are going to help simplify and standardise the cross‐

region exchange of business documents to support global production operations.

I first heard about the Global EDIFACT Message initiative in December 2012 when I attended theODETTE

conference in Berlin. VW, BMW, Hella and Bosch jointly presented a session at the conference on how they

were working together and in partnership with VDA to offer support for the Global Message Set. The new

messages are based on the JAIF Global Message Guidelines for the Automotive industry, developed and

published jointly by AIAG (USA), ODETTE (Europe) and JAMA/JAPIA (Japan).

Work on this initiative started a couple of years ago and the first three messages have been released and are

starting to be implemented. VDA4938 is probably the most recognised of the new message formats as it

relates to Global Invoicing, an initiative to remove paper based invoices from the supply chain and at the same

time help introduce faster payments to suppliers. The key reasons for implementing these new messages are

to:


Enable support for the current, complex processes while maintaining support for the legacy processes,

where possible

Use future proof message formats

Enable global facilitation of VDA recommendations

Reduce effort for development, maintenance and support

Reduce complexity, increase stability and avoid errors

The messages that have been developed so far and those still under development are listed as follows:

Even though there is a VDA number associated with each message, this merely helps to identify as a VDA

recommendation for implementing each Global Message and there is extensive documentation available from

the VDA website to describe each message. The intention is that these messages will be used across both large

and small companies and to support the latter group of companies, these messages will also be included

within the auto‐gration initiative being driven by ODETTE in Europe. I will expand more on what auto‐gration

actually is in a future blog entry.

So in summary it is hoped that these new Global EDIFACT Messages will help to reduce the technical

complexity of working with global trading partners and provide a platform to develop more standardised

business processes to support manufacturing and logistics operations in any region around the world.

GXS already offers support for all key messages being used across the automotive industry today and we will

be looking to offer support for these new messages as well. We will also look to establish a simple VDA to

Global Message Migration Service to help companies make the switch to the new messages. I will provide

more information on this initiative at a later date. In the meantime GXS plans to host a webinar on the Global

Message Set, more of an educational event, to provide more detailed information on this particular project

and provide the latest status updates for each message. I will publish further details of this webinar in the near

future.


How B2B Solutions Provide the ‘Cornerstone’ to Improved Supply Chain

Resilience

In my previous blog entry I discussed how Supply Chain Directors need to focus more on improving resilience

across their supply chain and logistics networks. According to a report from Accenture the correct and

increased deployment of ICT infrastructures can contribute significantly towards improved supply chain

resilience. GXS offers B2B solutions and services that can provide the flexibility and scalability that Supply

Chain Directors need to minimise disruptions across their supply chains. In fact, cloud based B2B integration

solutions can provide a key ‘cornerstone’ towards developing a highly resilient end to end supply chain.

In terms of helping to build increased supply chain resilience across a supply chain, B2B solutions can help in

three very distinctive ways:

Provides Flexibility – one of the challenges faced by companies during a

period of disruption is ensuring that business related transactions supporting

production or other processes continue to flow across the extended enterprise.

If disruption occurs then an alternative path may have to be identified quickly

to allow transactions to flow uninterrupted to their intended destination. In

terms of a B2B infrastructure, companies should ensure that if disruption

occurs and data centre resources become impacted they can instantly fail over

to an alternative data centre location. If no other data centre is available then

some form or disaster recovery process should be in place to ensure that

transactions can be recovered as and when the data centre comes back online.

GXS Managed Services, GXS’ outsourced B2B environment, utilises a highly

available, dual continent data centre infrastructure that provides immediate failover and back up to an

alternative data centre, should supply chain disruption occur. Using state of the art storage devices and

network routers GXS can ensure that your business critical transactions can get from A to B with no

interruption or delay. In addition, the GXS Managed Services environment is highly scalable and flexible

allowing your B2B infrastructure to expand or contract as your business requirements change. Many

companies are beginning to spread their production risk by manufacturing goods in more than one country, so

that if one plant gets impacted then production can be quickly ramped up at the other locations. In a similar

manner, GXS Managed Services provides an environment to spread your B2B risk so that you can continue

working with your trading partner community during a period of disruption. Companies managing their own

B2B environments via software based solutions will not enjoy this level of flexibility or reliability.


Enhances Visibility – The manufacturing sector is probably the most global in

nature when compared to other industries and having true end to end

visibility across a supply chain is an important requirement to ensure

production lines do not get disrupted. Whether sourcing parts from suppliers

in China, Brazil or India, having end to end visibility of all shipments can make

a big difference to the smooth operation of today’s production lines. In fact in

the automotive sector, Just‐In‐Time production techniques depend on the

timely delivery of parts and any delay with delivery can result in severe

penalties for those suppliers concerned. So when an unexpected earthquake

or flood occurs, having visibility of what is happening across your supply chain

becomes more important than even before. You may need to identify

alternative sources of inventory, quickly identify goods in transit so that they

can be re‐routed to an alternative location or you may need visibility into

cross border related shipments.

GXS Active Logistics provides a single, cloud based, platform to monitor all global shipments irrespective of the

logistics carrier or the form of transport being used for the shipment. Being able to monitor shipments across

multi‐modal transport networks anywhere in the world and keep track of shipments as they pass through busy

container ports such as Dubai or Singapore can have a major impact on your supply chain operations. GXS

Active Logistics also allows key performance indicators (KPIs) to be monitored across your 3PL providers and

hence you have the ability to identify points of weakness across your supply chain. Many companies have

established control towers across their operations to monitor supply chain shipments and GXS Active Logistics

forms a strong foundation for such an environment. With so many disruptions occurring across today’s supply

chains, these visibility control towers are doubling up as crisis management centres and they become the go to

point of contact during a period of disruption.

Improves Communications – One of the key areas where B2B tools can help

minimise supply chain disruption is in supplier management, otherwise

referred to as community management. After all when some form of

disruption strikes you need to make sure you can remain in contact with your

trading partner community or identify alternative sources for production

materials very quickly. Community management tools increase resilience in

two key ways. Firstly they can help establish what can best be described as a

centralised B2B contact directory, typically a self‐serving environment where

all contact information for a particular supplier can be held. As a condition of

doing business with some companies, suppliers will be forced to enrol through

a workflow driven registration process to ensure that they provide all the

relevant contact information.

Secondly, community management tools help to improve command and control processes across the supply

chain. They also allow you to quickly assess the state of your supply chain in terms of identifying which

suppliers have been impacted following a period of significant disruption. As suppliers provided their contact

information during the registration process, community management tools allow companies to send out mass

communications to a trading partner community with ease. You could also ask suppliers to complete online

assessments to allow you to monitor the state of your supply chain. If one supplier gets impacted in some way

then alternative suppliers can be identified quickly due to having an up to date contact database. Dual

sourcing of key components is becoming a popular method of combatting supply chain disruption and

community management tools help to orchestrate the selection of alternative suppliers with ease.

Community management tools help to minimise risk across a supply chain. Companies deploy Microsoft office

for creating business documents, they implement ERP systems for managing production and business


processes. Community management tools help to establish a dedicated IT infrastructure to help assess,

manage and mitigate supply chain risk. When was the last time your company undertook a risk assessment of

your supply chain? how long did it take to complete? did every supplier participate in the assessment? The

ability to assess the state of your supply chain via simple to use community management tools helps to bring a

significant competitive advantage during a period of supply chain disruption.

GXS Active Community is a community management tool that can help to

build greater resilience to future supply chain disruptions. GXS Trading Grid®,

the world’s largest cloud integration platform, has traditionally focused on

moving data from one location to another. GXS Active Community on the

other hand has been designed from the ground up to manage the people‐

based interactions across a supply chain, an area that many companies tend

to forget when extending or restructuring their supply chains.

From establishing a centralised contact database for your trading partner

community, through to deploying some form of assessment or survey, GXS

Active Community improves the way in which you engage with your

suppliers on a daily basis. Whether working with contract manufacturers in

China, distributors in Eastern Europe or third party logistics providers in

South America, GXS Active Community provides a single global platform that can help improve the flow of

information across an extended enterprise.

It is one thing being able to deploy these B2B tools to help build increased

resilience but when disruption strikes a supply chain there needs to be a co‐

ordinated approach to resolving any potential issues that arise. One

increasing trend that I have noticed on professional networking web sites

such as LinkedIn or Xing has been the emergence or rise of the business

continuity manager role. This person becomes the go‐to employee during a

period of disruption, they become the central person who is responsible for

steering a company through a period of supply chain disruption. Sometimes

referred to as the ‘Masters of Disaster’, these people are key to making

today’s supply chains operate efficiently and seamlessly.

The ability to proactively monitor supply chains and almost sense when

disruption is likely to occur has become a key competitive weapon that companies have been keen to

implement. Increasing regulatory compliance has also made the business continuity manager more visible in

today’s extended enterprise. In the same way that a conductor controls an orchestra, the Master of Disaster

will use the B2B tools at their disposal to monitor global supply chains and take appropriate action before

major disruption can impact the business. Have you appointed a Master of Disaster yet?

In summary, in order to build increased resilience across a supply chain, companies need to address both the

physical and digital supply chain issues. They need a B2B platform that is scalable, flexible, secure and

available 24x7x365 days per year. If B2B solutions are deployed correctly and in a proactive manner then they

can offer your business a significant competitive advantage, being unprepared or responding to disruptions as

they occur is generally bad for business.

If you would like further information on why companies should be thinking about building further resilience

into their supply chains, then please review THIS WEBINAR, which discusses some of the topics covered in this

and my previous blog entry in more detail.


Why Increasing Resilience Has Become a Top Priority for Supply Chain

Directors

Global supply chains and transport networks form the backbone of the global economy, fuelling trade,

consumption and economic growth. When these supply chains get disrupted in some way it can potentially

have major repercussions for companies and more importantly the global economy. Disruption to supply

chains can prove very costly, as highlighted recently by significant flooding in Europe. According to research

conducted by Accenture, significant supply chain disruptions have been found to cut the share price of

impacted companies by as much as 7% on average.

What these disruptions have highlighted is that Supply Chain Directors need to basically shift their focus from

reactive to proactive risk management. The global economy has been severely impacted by numerous natural

disasters in recent years. Over the past 24 months there has been a significant shift in the type of disruption

which has impacted global supply chains with extreme weather now the number two most common type of

supply chain disruption.


There have been a number of examples of significant natural disasters and extreme weather to hit global

supply chains over the past couple of years.

European Floods – 2013 – Significant rainfall in Eastern Europe had a major impact on manufacturing

companies. For example Porsche had to temporarily close their factory in Leipzig, Germany after

floods in the Czech Republic halted the supply of Cayenne bodies which are built in the VW plant in

Bratislava.

Hurricane Sandy – 2012 – This hurricane was the most powerful and deadliest to hit the North

Eastern Coast of the United States causing over $68Billion in damage to buildings and infrastructure

across 24 states. Hurricane Sandy prompted the worst fuel shortages in North America since the

1970s

Japanese Earthquake/Tsunami – 2011 – The earthquake brought severe devastation to utility

infrastructures and the resulting Tsunami brought longer term disruption to global supply chains due

to many factories being flooded causing production to be suspended

Thailand Floods – 2011 –High tech supply chains were severely impacted by the floods in Thailand

which resulted in the disruption in the supply of key components such as hard disk drives to the

computer industry. The impact of the floods persisted into early 2012 with more than 1000 factories

being impacted and subsequent insurance claims reaching $20Billion. As a direct result of the floods,

Thai GDP growth projections decreased from 2.6% to 1%. Flooding will continue to be a common

theme as 25% of Thailand’s provinces were affected by flooding in 2012.

As many global economies start to recover from a major economic downturn it is in each country’s interest to

ensure that it is business as usual when disaster strikes. Increasing supply chain resilience was one of the key

themes of the annual meeting of leading countries belonging to the World Economic Forum in January

2013. Building extra resilience into a supply chain should be on every CEO’s agenda, especially if they operate

a truly global supply chain across manufacturing hubs located in Japan, Europe, North America, South America

and China. But what exactly is resilience?, one quote taken from Accenture’s recent report from the 2013

World Economic Forum states that “Resilience is the ability of a global supply chain to reorganize and deliver

its core function continually, despite the impact of external and or internal shocks to the system”. Another

more succinct quote ‐ ”The ability of a system to return to its original or desired state after being disturbed”.

Minimising supply chain risk through increased resilience has become one of the top priorities for Supply Chain

Directors around the world. Many operational based changes have been implemented to try and remove the

potential for risk impacting a global supply chain, for example:

Near shoring – sometimes referred to as reverse globalization, initially started to happen in 2009 as a

way of shortening logistics networks. Increased wage rises in China followed by the recent natural

disasters caused many companies to think about relocating manufacturing capacity back to their

home market. For example Caterpillar moving production of their small bobcat excavator from Japan

back to North America

Establish a global plant floor – this is a term coined by the analyst firm IDC, and describes how

manufacturers are spreading their production capacity to other plants located in different parts of the

world. This is so that if disaster strikes again and one manufacturing plant is taken offline they can

switch to an alternative plant to maintain production capacity.

Dual sourcing strategies – constant disruption over the past couple of years combined with a need to

source from the Far East has led to many companies thinking about implementing dual sourcing

strategies. So if disruption occurs across a supply chain then the manufacturing company can quickly

switch to an alternative provider of components/parts.

Over the past 12 months concerns have remained about external threats to supply chains and systematic

vulnerabilities such as oil dependencies and information fragmentation. Additionally, growing concern around

cyber risk, rising insurance and trade finance costs are leading supply chain experts to explore new mitigation


options. There has been so much disruption across global supply chains in recent years that Accenture

research indicates that more than 80% of companies are now concerned about supply chain resilience. Risk

management must be an explicit but integral part of supply chain governance and to achieve this Accenture

made the following recommendations:

Institutionalise a multi‐stakeholder supply chain risk assessment process rooted in a broad based and

neutral international body

Mobilise international standards bodies to further develop, harmonize and encourage the adoption of

resilience standards

Incentivise organisations to follow agile, adaptable strategies to improve common resilience

Expand the use of data sharing platforms for risk identification and responses

So far we have only covered risk management across

the physical supply chain but as more traditional

supply chains evolve into digital supply chains then

risk management will need to be applied to this area

as well. For example the increasing growth in eBook

sales and the use of 3D printing techniques promises

to shorten at least some of the linkages in the

physical supply chain. With more information being

transmitted digitally, there is a greater chance of

cyber risks hitting global supply chains and

participants across a digital supply chain will have to

demonstrate that they can master digital resilience as

well as physical resilience. Given the exponential

growth in non‐physical supply chain flows, their

inherent cyber risks must be understood and

incorporated into overall resilience approaches.

In addition to introducing operational based changes,

supply chain directors should be looking to improve

their ICT based infrastructures as well. According to Accenture, if configured correctly then, ICT infrastructures

can provide significant resilience gains through four main channels, analytics, data and information sharing,

scenario modelling and pre‐programmed responses. The corner stone of IT based resilience is data and

information sharing. Business continuity is enabled through access to real time data followed by rapid

dissemination of data driven supply chain fixes. However information sharing infrastructures depend on a

resilient core network, appropriate communication tools and an element of redundancy. Combined, this

requires an ICT infrastructure that is flexible, scalable, secure and re‐routable.

In my next blog entry I will describe how the implementation of B2B tools and services can help provide the

afore‐mentioned cornerstone to improved resilience against future supply chain disruptions.


Model Railway Industry Begins to Run Out of Steam in the Far East

When I was growing up I had no end of boy’s toys, Meccano for testing my engineering skills, Airfix kits for

testing my patience with assembling intricate model aircraft and ships, Scalextric to hone my racing skills and

then there was my Hornby model railway layout. I somehow persuaded my grandfather to convert the loft

space in his house into a huge model railway layout with trains running everywhere and with the inevitable

derailment taking place on a regular basis!

Due to some supply chain related issues in the Far East, Hornby has

recently made some changes to their global supply chain. Hornby has

been enjoying a revival in recent years, seeing their traditional toys

competing with games consoles such as Sony’s PS3 and Microsoft’s

XBOX. Encouraged by their parents, today’s generation of children

have been taking an interest in Hornby’s range of products. Hornby

recently announced their financial results for the 12 months to 31st

March, with a loss before tax of £3.4m on turnover of

£57.4m. Compared to the previous year, pre‐tax profit was down 96%

while turnover was down 10%. Last year Hornby invested a considerable amount of money in producing

Olympics related memorabilia which sold in relatively low numbers and was hampered by supply chain related

issues in the Far East. So these two factors alone would have had a major impact on Hornby’s profits for the

year.

Over the years Hornby has acquired many businesses, including Airfix to supplement their existing Scalextric

and model train related products. In addition Hornby also acquired Humbrol paints, a key requirement for

painting Airfix model kits and finally Corgi. Hornby has grown very quickly in recent years and inevitably they

now face a challenge of reducing operational costs in order to boost profitability. I use to live less than ten

miles away from the Hornby factory located in Ramsgate in the UK, and when I went past with my parents I

always wondered what it would be like inside their factory. I think at that time it was every school boy’s dream

to be shown around the Hornby factory, unfortunately I never had that privilege. Like a child going into Willy

Wonka’s Chocolate Factory, I never had a golden ticket to go inside!

I am sure the inside of Hornby’s factory today looks

very different to thirty years ago, especially as Hornby

have moved much of their production to

China. Initially enticed by very low labour costs,

Hornby looked to boost their operational profits so

that they could go on to acquire other leading

companies in the toy industry, as highlighted earlier.

For many years this strategy worked, until unrest

started to spread across the Chinese worker

population. This has been a major problem for many

companies looking to reduce their manufacturing

costs by moving production to China. Strikes and a

15% increase in wages in China have hampered supply chains around the world and in the case of Hornby it

was also severely affecting the quality of their products. In fact Hornby were so disappointed with the quality

of the ‘Quickbuild’ Airfix Kits being manufactured in China that they have decided to move production back to

the UK. All future Quickbuild Airfix kits will now be made at a factory in the South of England and their glue

based kits will continue to be manufactured in India, for now.

Many western companies have spent the last ten years moving production to the Far East however today

near‐shoring of production has become a growing theme across the global manufacturing industry, with


companies moving production back to their home markets or other key manufacturing hubs such as Brazil and

Mexico. I think it says something when it has been recently reported that some Chinese manufacturers have

moved production out of their own country and established a manufacturing operation in Thailand or Vietnam

for example. Some would argue that western expansion into China is about to run out of steam and I

personally believe that it will be China that continues the global expansion of the manufacturing industry into

other emerging markets, assuming they can resolve some of their quality related production issues. Due to the

unrest in some of the Chinese based supply chains, we are now seeing unprecedented investment in Brazil and

Mexico and Ferrari said that Mexico is likely to become the ‘new China’ from an automotive industry

perspective.

When entering new markets many companies will have tunnel vision in terms of spending too much time

focussing on the new manufacturing plant and not enough time thinking about how they will on board new

trading partners. In addition they will need to think about how they will extend their B2B platform into the

new country as well, what B2B standards will they need to support?, what will the communications

infrastructure be like? and can they scale the B2B platform to match the demand of their production lines? It is

one thing getting the green light to enter a new market but it is another to remember about looking after the

needs of your trading partner community. Many companies hit the buffers when trying to work out how to

scale their B2B platform effectively when they should be focused on the main job in hand, in Hornby’s case

looking after their manufacturing processes so as not to disrupt production. Hornby is certainly taking the right

steps to help minimise any future disruptions across their supply chain.

GXS Managed Services is an approach that many companies have used to manage international expansion. It

also offers the flexibility and scalability to fine tune your B2B platform according to the demands of the

business. Whether expanding into new markets or moving production back to your home country, GXS can

help keep your business on track. In the same way that a rail network connects remote train stations, a B2B

network such as GXS Trading Grid helps to connect with remote trading partners. To learn more about GXS in

manufacturing take a look at the slideshare presentation below. If you would like to avoid your supply chain

looking like a train wreck then please look out for a new webinar that I will be releasing in the next few weeks

relating to how cloud B2B integration helps with international expansion projects.


OK Glass, How Can You Help Improve Supply Chain Visibility?

Unless you have been living under a rock or staying with the Flintstones over the past few weeks you may not

have heard about the next big consumer electronics device called Google Glass. For years Apple has

dominated the spending power of today’s tech savvy consumers, but is the tide about to change in favour of

Google and their new piece of ‘wearable’ kit?

Google Glass has only been out for a few weeks in the US and

they have not even released the developer kit yet to allow new

apps to be created but already many industry analysts are

speculating that this could potentially be a game changer in the

competitive consumer electronics industry and provide an

edge for Google over their arch rival Apple. Time will tell I

guess, but YouTube is beginning to get flooded with videos of

how these glasses work. Given there are so many videos

available I won’t go into too much detail in this blog post except to say that the most important aspect of these

glasses is the tiny screen that allows the user to view different types of information.

So it got me thinking, how could something like this work in the context of

the supply chain?, could it make our lives easier in terms of how we interact

and work with a trading partner community or access B2B

related information?, analyse Big Data?, will it compliment the many

business apps that are now being released for tablet devices? or will it

herald the introduction of a new generation of apps? I guess we have

become so use to how we interact with today’s mobile apps on phones and tablets, Google Glass provides a

way to do things very differently.

Given the wearable nature of this device, even though they currently cost around $1500, I think they would be

ideal for the transportation or logistics industry. Tesco has just opened one of their largest distribution centres

in the UK, similar in size to twelve football pitches and having twelve miles of racking. I am sure Glass could

help to speed up the location of specific goods in the warehouse and even use projected satellite navigation

images to guide the ‘pickers’ to a specific storage bin or pallet. Perhaps combining augmented reality with the

image seen in Glass would allow goods to be ‘visually marked’ so that they can be found immediately.

What about if you are expecting a delivery of new products?, the image below shows a view from within Glass,

selecting Trace Shipment would let you know exactly where a shipment is whilst moving across a supply

chain. Locate Part in Warehouse would guide the picker to the localtion of the goods. Any delays and a video

conference could be setup with the 3PL provider to discuss the progress of a shipment.


Once the package has been tracked down you may

want to Scan Bar Code to view further details on the

shipment. You may want to run a quick inventory check

or you may want to query when the next shipment is

due.

From a retail store perspective, Glass could be used to

examine specific products, may be placing a request to

get empty shelves filled up by instructing Glass to Scan

QR code. If stock levels are getting low and the primary

supplier has run out of stock then you could search the

procurement platform to Locate Alternative

Supplier and place an order directly with them instead.

Now there is a bit of work to do behind the scenes to

get something like this up and running, developing a

suitable logistics related app, integrating the API with

your back end business systems, through web

services. But I wouldn’t be surprised if something like

this appears at some point in the future, who knows

may be the augmented reality solution that I discussed

in an earlier blog would compliment Glass in some

way ? I will be discussing further supply chain related

applications for Google Glass in future blog entries.


Why SAP Consolidation Projects Should be on Every CIO’s Agenda

Last week SAP hosted their Sapphirenow conference in Orlando, a conference that I was fortunate to visit this

time last year. It was quite clear last year that SAP were making a very big push towards promoting their cloud,

mobile and data analytics based services. Then just after the show they announced that they would be

acquiring Ariba. One of the highlights of the show for me was seeing what HANA could do. Now this is not a

name of a robot out of a 1950s sci‐fi film, it is actually the name of SAP’s in memory database. HANA is

expected to be at the core of SAP’s product offerings in years to come and the intention is to move customers

onto a common ERP platform that will allow their customers to ‘fully’ take advantage of the power of HANA.

Perhaps SAP’s new direction provided a distraction to many CIOs

over the past year especially as a recent report by the Indian

service provider HCL, shows quite clearly that many companies still

have a significant way to go in terms of getting onto a single

instance of an SAP ERP platform. Their report contains some

interesting statistics from a survey of 225 global CIOs. For example

only 6% of those CIOs surveyed use a single SAP instance and 90%

of the CIOs expect HANA to play a big role moving forwards. On

average it was found that survey respondents had five separate

instances of SAP and increasing complexity still further, some 39%

stated that they were running more than six instances.

There are many benefits of running a single SAP instance but the most important one is cost, it was estimated

that on average up to 25% could be saved.

So with this in mind, why should GXS have an interest in this potential opportunity for SAP instance

consolidation? Well put simply we believe that B2B helps to complete ERP as it provides secure and highly

reliable connectivity to an external trading partner community. When a company is thinking about SAP

consolidation, this will also provide the best opportunity for integrating to a B2B platform. SAP environments

are incredibly complex and the last thing you want to do after upgrading users to the latest version of SAP is to

then interrupt business and production processes once again.

Implementing an outsourced approach to managing the integration between SAP and your B2B platform will

help to ensure that your business realises even greater levels of return on your investment. Cloud, mobile and

HANA may provide a good incentive to upgrade and consolidate SAP instances but integrating seamlessly to a

trading partner community should also be high on a CIO’s agenda.

Here at GXS, our B2B outsourcing environment has been

implemented across many companies from a variety of different

industry sectors. We have undertaken many SAP integration projects

in recent years and in fact we recently renewed our SAP Netweaver

certification which will provide peace of mind when companies are

looking to upgrade their SAP platform. GXS supports version 4.2 and

version 6.0 of SAP.

So now that every CIO across the world has seen that a single instance can save considerable amount of time

and money, I expect we will see a mad rush of SAP consolidation projects taking place. After all, they are keen


to simplify the user experience, make SAP more widely available via the cloud and accessible via mobile

devices and more importantly undertake data analytics.

But when a CIO diverts resources to undertake a SAP upgrade or consolidation project, it means that the B2B

platform could be exposed. For example who would undertake the on‐boarding of new trading partners? Who

would create any required document maps or who would undertake any trading partner connectivity that may

be required to support an important customer project on the other side of the world?

Well help is at hand. To learn how GXS Managed Services can help your business then please click here to

review our on‐demand webinar – “How B2B Completes ERP” or alternatively visit GXS’s SAP integration web

page for further information.


How Connected Cars Could Drive Real Time Aftermarket Supply Chains of the

Future

My colleague Steve Keifer recently posted a blog entry about the connected car and I just wanted to take a

few moments to extend his thinking a bit further. The connected car will completely change the way in which

both the consumer connects with their car and the car connects with its surroundings. The so called ‘internet

of things’ is starting to paint a picture of what life will be like when connected devices can interact with each

other but what about if they could also interact with a supply chain and hence potentially form a closed loop

parts ordering system for rectifying potential faults that may arise in a vehicle?

So imagine the following scenario for a few moments……

A vehicle’s on board computer, or ECU, detects a significant change in

flow rates across a water pump. The low flow rate has reached a

certain level that could lead to failure. In fact what has happened is

that the O‐ring seal has a very small split causing water to leak slowly

from the cooling system. To compound the issue still further the low

level coolant bulb has blown in the instrument cluster so the driver

has no way of knowing that the water pump is about to fail. So how

can the connected car help?

The flow rate information is sent, via the car’s internet connection, to a central service centre where a

database compares the flow rate information received with known failed water pumps from the same

manufacturer. The service centre confirms that the O‐Ring is about to fail within the next 200 miles and they

decide to order a new seal from their supplier and it will be delivered to the nearest repair centre to where the

car owner lives. The central service centre also checks the online maintenance schedule of the repair centre

and identifies a slot when the seal could potentially be replaced. Once the part has been ordered and the

repair slot reserved, the service centre sends the repair information directly to the car owner, either as an

email or directly to the car’s infotainment system. The owner is then made aware that the pump is about to

fail, a new seal has been ordered and a repair slot has been reserved at their nearest service centre.

For the car owner concerned they are not worried about how the replacement part was automatically ordered

but for me this brings together the physical and information supply chains.

In North America, the ‘OnStar’ service has been used for many years to connect cars to a central service centre

to help diagnose problems or call for assistance. A cloud based telematics and service environment can

potentially change how manufacturers repair and service vehicles. It could also revolutionise the way in which

car manufacturers conduct vehicle recalls, such as the airbag recall experienced by four of the Japanese car


manufacturers recently. Therefore service centres will be informed of a problem with a vehicle before the

driver becomes aware.

The RAC, a leading vehicle recovery service in the

UK, recently announced that they would be offering a

service that would connect a ‘black box’ to a car’s ECU

so that if a problem occurs, the RAC can proactively

inform the driver of an impending problem. The RAC

clearly realises that the cloud telematics market is

potentially large and by offering this service they can

retrofit into older cars that may not have any form of

internet connection.

At GXS we are seeing some demand now to integrate

with Dealer Management Systems, essentially the back

office platform that a car dealer uses to manage their inventory and order spare parts. (This integration

process provides the ideal opportunity to link the physical and information supply chains together). So with

more and more cars being launched with internet connectivity, is there an opportunity to integrate to a back

end B2B platform to take care of the parts ordering process via traditional EDI transactions?, well of course

there is!

Companies have been automating their ordering processes via the exchange of EDI or electronic business

documents for many years. The cloud based telematics system potentially allows the consumer to be

integrated with an automated ordering process and hence aftermarket supply chain. This in turn helps to

improve efficiencies, reduce repair/spare part inventory levels at a dealer but more importantly improves

customer loyalty and brand loyalty. In closing, I guess in the perfect world the next step would be to have an

autonomous car drive itself to a service centre whenever a problem was detected, but I will leave that thought

right there for the moment! I will continue the discussion about the future internet of things in future blog

posts.


How Manufacturers Can Support e‐Invoicing in Europe, Latin America and

Mexico – On Demand Webinar

The global manufacturing industry has been on a roller coaster ride over the past few years and following

significant investment in new plants in the Far East, attention is now turning to establishing new plants in Latin

America and Mexico. Brazil and Mexico are receiving a high proportion of inward investment at the moment,

particularly from manufacturers in the automotive and high tech industry sectors.

In addition to establishing new production lines, on‐boarding new trading

partners and extending ICT infrastructures to support the new operations,

manufacturers need to adhere to local business rules and compliance

processes. One such process is e‐Invoicing, an initiative which aims to

remove paper from today’s supply chains and at the same time automate

the order to cash process to allow suppliers to be able to get paid more

quickly.

For example a North American manufacturer may be looking to set up

operations in the European Union, a region with 27 different VAT rules, 27

digital signature rules and 27 different archiving rules. Every EU country

processes e‐Invoices in a different way and any company looking to establish a presence in any one of the 27

member countries needs to address this issue before they can exchange e‐Invoices seamlessly with their

trading partners. The situation is the same for a European or Japanese company looking to setup a presence in

Brazil or Mexico, they will need to adhere to recently introduced, government backed, e‐Invoicing regulations

before they can exchange invoices with trading partners in the region.

For many companies, implementing an e‐Invoicing strategy can appear to be a daunting challenge but it needs

to be addressed. It is all very well establishing a cloud based B2B platform to manage day to day interactions

with trading partners but unless the e‐Invoicing process is embraced then full automation of a supply chain will

never be achieved. Each e‐Invoicing implementation will have to cater for a diverse range of users, for example

IT staff, admin payments/accounting staff and of course tax auditors.

Each group of users will have varying levels of IT understanding and so it is important that users are shielded

from the complexities of using such systems. For this reason many e‐Invoicing solutions in Europe are

delivered as a service to ensure that the system is deployed quickly and smoothly so that tangible benefits can

be realised in a short space of time.

So how do manufacturers go about implementing an e‐Invoicing solution whilst at the

same time remaining focused on their core competency which of course is

manufacturing goods or products?

How do manufacturers adhere to the various e‐invoicing regulations established by

regional governments in Europe, Latin America and Mexico?


To try and address these questions, I worked with a colleague, Nigel Taylor, Director of Marketing and Head of

e‐Invoicing Solutions at GXS to prepare an ‘On Demand’ webinar which answers many of the above

questions. To view the webinar simply click HERE.

GXS has also set up a dedicated website to answer any potential questions you may have on e‐

Invoicing. Please visithttp://www.einvoicingbasics.co.uk for further information. Alternatively if you would

like to learn more about GXS e‐Invoicing solutions then please click HERE


Taking the ‘Bitcoin’ Approach to Global EDI Standardisation

Bitcoin and EDI, is there really any form of comparison between one of the newest and one of the oldest

technologies being used today? To start with Bitcoin is an attempt to get every consumer to use digital

currency. For example a mobile phone would become your digital wallet, via a downloadable app, that could

store Bitcoins and NFC based technology would be used to then pay for goods or services. Digital currency is

not new however Bitcoin seems to have grabbed the fair share of the limelight in recent weeks for one reason

or another.

Simply put, Bitcoin removes the complexity of making payments anywhere in the world, no longer worrying

about exchange rates or even having physical money to buy goods etc. It is a decentralized, digital‐only

currency with no central monetary authority. Bitcoin uses a peer to peer computer network to maintain

transactions and ‘creates’ Bitcoins through a process called mining. Users and their transactions are

anonymous and there are no international exchange rates to worry about. Transactions are conducted through

a Bitcoin wallet, put simply an app that users download and install on their computers of smart phones.

Purchasers and sellers are identified only by their digital wallet address. Identical in

a way I suppose to the information contained in an EDI message header which has

information about trading partner related mail boxes.

I don’t want to spend too much time discussing Bitcoin other than to say that it is a

great attempt to simplify, standardise and speedup the exchange of currency

between a seller and a buyer. Yes it has its problems

but it is helping to remove the barriers that have

always existed due to global exchange rates etc. Banks

have started issuing debit cards with NFC payment

capabilities and smartphone manufacturers are

starting to embed NFC chips into their phones. So the infrastructure to support

digital currencies is starting to emerge.

Many companies are undertaking international expansion projects and they are

desperately trying to remove the complexity of trading electronically in any

country worldwide. I thought it would be worthwhile highlighting three initiatives that are being undertaken in

the automotive industry to simplify today to standardise and speed up the global shipment of parts between

suppliers and vehicle manufacturers.

Global Messaging Standard

The German automotive industry is currently seeing exponential sales growth in

the emerging markets such as China and for years the VDA message set has

been the standard that all German automotive companies have used to

exchange EDI messages. However many German companies found that the

traditional VDA message set was too restrictive and the limited number of fields

that the VDA messages contained was actually hindering the exchange of B2B

transactions with trading partners in other regions of the world. To get around

this problem the industry has decided to make a fundamental shift towards

using a Global Message set based on EDIFACT. I will stress that this is not a new

message set but is merely a recommendation of how to implement the standard EDIFACT message set to

support global trade.


The aim of this initiative is to provide the European automotive industry with a core set of messages to allow

them to work with trading partners anywhere in the world. VW, BMW, Bosch and Hella are the joint driving

force behind developing these implementation recommendations and the complete message set is expected

to be finished next year. One of the first messages to be made available under this initiative was VDA4938, a

global recommendation on how to implement the GLOBAL INVOIC standard. Given the number of cross

border shipments that take place each year, simplifying the e‐Invoicing process is a great example of how a

standardised approach can significantly help to reduce complexity across the automotive supply chain.

Global Communications Standard

AS2 was one of the first internet based communication protocols to be adopted

by businesses, primarily in the retail sector. The internet provides a global

platform to allow companies to virtually connect to their trading partners

anywhere in the world. Many companies have developed their own web based

portals and web service environments over the years and the internet has

provided the flexibility to exchange information anywhere in the world. However

in the automotive sector, internet based communications have seen slow

adoption because of the lack of security associated with internet based

transactions.

To overcome this issue the Odette organisation released, OFTP2, an update to their long serving OFTP

communications protocol that is widely used across the European automotive industry. OFTP2 has many

benefits over other communication standards in that it is web based, offers three levels of security to both the

transactions being exchanged and the transmission tunnel and it offers check point restart to allow large multi‐

gigabyte files to be exchanged with ease. The successful roll out of this particular protocol has led to a global

initiative by the Joint Automotive Industry Forum (AIAG in North America, Odette in Europe and JAMA in

Japan)to see if a similar communications protocol can be developed for use anywhere in the world, across the

internet. OTFTP2 would be more than suitable to become the global communications standard of choice.

Further information on OFTP2 can be found HERE.

Global Transport Label Standard

Delivering parts to vehicle manufacturers around the world means that today’s automotive suppliers often

have to follow widely differing container labelling requirements, depending on the location of their customer’s

operations. The length of today’s automotive supply chains led to an initiative to develop a global standard

that would allow one label to be applied to a shipment irrespective of which country the shipment was passing

through. The Global Transport Label (GTL) was the very first product of the collaboration that was established

between Odette, AIAG and JAMA to produce global standards and recommendations.

Now that parts procurement has become a worldwide operation, global

standardisation is not only desirable, but essential and vehicle manufacturers are

responding to the challenge. Transport labels are a vital part of the supply chain

management and build‐to‐order processes. The standardisation of transport

labels is therefore warmly welcomed by suppliers and logistics operations have

been significantly improved by the standardisation activities of each region.

By introducing a single global labelling standard, such as the GTL, all parties in the

supply chain can enjoy substantial benefits by communicating in a common language, cutting shipping errors,

delays and losses. More importantly the GTL helps to reduce the vast number of different labels in the global

supply chain. Recent studies show that unnecessary variations in this basic business process, multiplied by the


millions of parts transported every day, can cost millions of Euros in added supply chain costs every year. This

new label template has been developed from experiences with existing label standards, the Odette Transport

Label, the AIAG’s B‐10 Trading Partners Labels Implementation Guideline and the input from JAMA and JAPIA.

These are just three examples where the need to work globally is driving B2B standardisation and if the

barriers can be removed it will reduce the complexity of working with global trading partners and help to

increase adoption of B2B across the end to end supply chain. Needless to say GXS supports all of these

initiatives today and I will discuss these in more detail in an upcoming webinar related to international

expansion. More details on this will be made available in the very near future.

So in closing, the one common theme between Bitcoin and the three global EDI standardisation efforts

discussed above is to remove the complexity of doing business on a global basis. I guess the bigger question is

whether one day suppliers will be paid by Bitcoins? or will manufacturers offer supply chain finance through

Bitcoins?, we are certainly at the early stages of this payment technology and nothing can be discounted at the

moment, watch this space!


Smart Grids and Collaborative Supply Chains Show Their Form at the 119th

EDIFICE Conference

It has been a busy month for one reason or another and as a result I am slightly late reporting on the most

recent EDIFICE conference in early March. My colleague Matthew Walker provided his own review of the

119th EDIFICE Conference in Munich but I just wanted to offer some of my own thoughts as global expansion

and supply chain collaboration are key themes for GXS during 2013.

This particular EDIFICE session was held at Infineon’s HQ in Munich, an enormous technology campus which

certainly makes an impression when you first arrive. Infineon has been a GXS customer for many years, so we

know them very well, but this was the first opportunity for me to visit their HQ. Based on my previous

experience, I thought Infineon was a provider of semi‐conductors to the consumer electronics and automotive

markets, well they do but they offer a lot more. Their solutions are used across the full end to end ‘power

supply chain’, from where the electricity is initially generated, for example via a wind turbine, through to

distribution of the power to the end consumer. At each stage of the electricity transmission process,

Infineon’s technology is used to modulate, regulate and transmit electricity from one end of the power supply

chain to the other.

Infineon label their products as ‘Smart Grid Semiconductor Solutions’, and it then dawned on me that they are

a key provider in the ‘Internet of Things’, ie a provider of the core infrastructure to support this new emerging

‘technology’. Infineon essentially puts the consumer in control, allowing them to ultimately choose, if they so

wish, the exact source of their electricity supply. So in theory if you want your power to come from wind, sea,

sun or from a more traditional power station then no problem, you simply select your power source. Have to

say I do find it amazing how many industries have become consumer driven in recent years, even the utility

providers, who can now embrace technology such as that offered by Infineon. The aim of Infineon’s Smart Grid

technology is to ultimately reduce CO2 emissions, provide a better balance between supply and demand and

provide greater grid stability and security.


Interesting concept because GXS has invested millions of dollars in recent years to achieve a similar set of goals

with our own Grid, Trading Grid®,offering much higher availability and allowing trading partners to remove

paper based transactions from their respective supply chains. Actually it is interesting drawing comparisons

with Infineon’s Smart Grid and our own Trading Grid. Trading Grid connects suppliers, 3PL providers and

financial institutions to their customers allowing all business transactions to be conducted electronically.

Whether monitoring inventory levels, reviewing in transit shipments, making payments or proactively checking

the quality of data passing across our network, GXS Trading Grid helps to enable the ‘connected supplier’.

My colleague Steve Keifer eloquently highlighted three examples of

how the ‘Internet of Things’ is likely to change the way we do things

in the future, you can read one of those articles here. Whether you

are operating a Smart Grid based on power, procurement or simply

connected consumer devices, providing interoperability between all

these different ‘grids or networks’ will be key to the success of

tomorrow’s business networks.

Collaboration and interoperability was the main theme of this

particular EDIFICE conference, not just across the high tech supply chain but with the automotive supply chain

as well. I have to say this was one of the most interesting EDIFICE sessions that I have attended in recent

years.

The high tech industry, in particular the semi‐conductor manufacturers such as Infineon, work in a highly

cyclical industry sector where the end consumer is driving the purchasing decisions across the entire supply

chain. The automotive industry is also becoming consumer driven now, so much so that a vehicle

manufacturer may provide Continental with two weeks notice of a forecast requirement for incar electronic

systems. Continental must then inform their partner Infineon of their own semiconductor requirements and

Infineon must then inform their own suppliers. So what turned out as a two week forecast will likely turn into a

16 week forecast further down Infineon’s supply chain.

To achieve this level of integration across their supply chain, Continental had to implement VMI (Vendor

Managed Inventory) to allow their suppliers, in this case Infineon, to manage their semiconductor related

inventory levels. This allows Continental to focus on working with their customers whilst Infineon looks after

their semiconductor inventory levels. As Continental’s stock levels decline it then becomes Infineon’s


responsibility to monitor Continental’s stock levels and then replenish as required. Bosch presented an

identical VMI scenario with their semiconductor partner Analog Devices. No doubt Delphi and NXP

Semiconductors (both GXS customers) will also undertake a similar type of project on the back of their recent

announcement to work more closely together. Cross industry supply chain integration projects will only

increase in number in the next few years, especially in the automotive sector as more and more electronics

based systems find their way into cars.

The ‘connected consumer’ is now driving demand for the ‘connected car’, not just providing internet

connectivity but car to car connectivity as well. Cars will also become fully integrated to smart grid

infrastructures in the very near future. Some would argue that this is happening already with the electric car

charging infrastructures but it has a long way to go yet to obtain much broader adoption levels.

I think the word ‘connected’ is starting to become very commoditised with consumers and they now expect to

be connected to the internet 24/7. In the same way, companies will just expect their suppliers to be connected

together, both vertically and horizontally across different industry specific networks, and across different

regions around the world. I truly believe we are entering an exciting period with the Internet of Things offering

the holy grail where everything is connected to everything else! This will certainly be a topic that I will cover in

a future blog entry but in the meantime if you would like to read some further insights into this particular

EDIFICE conference then please take a look at Matthew Walker’s recent blog entry. If you are a high tech

company and you would like further information on the EDIFICE association, please CLICK HERE>>>


GXS Announces Plans to Develop Active℠ Track 3D – Augmented Reality

Based Track and Trace Service

The bar code has been used for many years to identify parts and provide traceability of goods sent through a

logistics network. Over time this has evolved into 2D or QR codes however both methods of identification are

relatively easy to replicate allowing potential counterfeit goods to enter the supply chain.

RFID tag based identification provides a more secure method of part or

shipment tracking however the limited coverage and relatively high cost of

establishing an RFID reader network has prevented the introduction of a

truly global RFID based network.

GXS plans to introduce Active℠ Track 3D , a new augmented reality based

track and trace service that aims to bring down the traditional barriers of being able to monitor shipments

anywhere in the world. A special foil based material is used to store information as a 3D ‘holographic’ type

representation of a cube. Details of the shipment, which can cover six different pages ( ie each side of the

cube) are entered into a cloud based service via the GXS Active Track 3D app. The information is then encoded

and printed onto the foil label using a special ink which bonds with the molecules of the foil material.

The bonding of the ink to the foil uses a special quirk of light known as the ‘LIRPA effect’ to encode the foil

with a 3D representation of the cube which stores the shipment information. As the information is stored in a

dedicated cloud based service it is accessible anywhere in the world, all that is required is a copy of the Active

Track 3D app on a mobile device. Given the pervasive nature of mobile devices today, there is effectively a

‘ready made’ global network that can be used to track shipments anywhere in the world.

Using the Active Track 3D app, which is similar in nature to

the existing QR code reader apps, customs agencies and 3PL

providers can simply use any mobile device with the Active

Track 3D app installed to scan the foil label and the 3D

representation of the cube and associated information can

be displayed on the mobile device. Each side of the cube

contains different information such as sender and receiver

information, quantity of goods being shipped and so on. The

user can spin the cube or zoom in and out by simply using

standard pinch and swipe type finger movements across the screen of the mobile device. The amount of

information that can be stored on the foil label is virtually limitless when compared to a barcode or QR code.

Each time the label is scanned, its GPS co‐ordinates are automatically uploaded to the cloud service via the

Active Track 3D app allowing the shipment to be tracked using a plugin for Google Earth.

The LIRPA effect was discovered by Professor Loof, a leading expert in 3D augmented reality displays and

material based encoding.

Mark Morley, Industry Marketing Director at GXS said, “The proliferation of mobile devices and cloud based

services now means that global track and trace capabilities are available for a fraction of the cost of setting up

a traditional RFID based tracking solution. The LIRPA effect discovered by Professor Loof has the potential to

change the global logistics industry forever. Realising the potential of the LIRPA effect, GXS has signed a sole

distribution rights agreement for the technology and it will be initially offered via our Active Track 3D service”

Further details can be obtained from our dedicated website (launched today, 1st April

2013) www.lirpaloof.com CLICK HERE


New Stanford University Study Confirms Importance of B2B Managed

Services for Supporting International Expansion Projects

Over the past few years GXS has sponsored a number of research studies conducted by prominent analyst and

educational establishments. Our first study with Stanford University’s Global Supply Chain Management

Forum was launched in 2007 and since then GXS has released studies discussing Total Cost of Ownership

(TCO), ERP/B2B Integration and Customer Centric Supply Chains. The latest study from Stanford University

discusses key trends in relation to how B2B Managed Services is being adopted by global companies today. For

the purpose of this particular blog I will review some of the key study findings in relation to how B2B Managed

Services supports global expansion projects across the manufacturing industry.

The previous Stanford Study was conducted just before the global economic depression established

itself during 2008/2009. At that time companies were just starting to evaluate outsourcing their B2B projects

but they were unsure of the exact return that could be obtained from using such an approach. Over the next

couple of years the global manufacturing industry experienced significant restructuring, cost reduction and

more significantly increased global expansion into the emerging markets such as China and India. Then in 2012,

wage rises and strikes started to occur in China causing concern for many manufacturers that had established

operations in the country. This in turn led to the near shoring of some production back to home markets. Now

that Chinese companies have become more confident with the products/parts they are manufacturing, and

they are of higher quality, they are now continuing the globalisation trend that was started by North American

and European companies.

Therefore all of this restructuring and relocation of production plants led to a need to offer a flexible, scalable

and extremely agile IT and B2B infrastructure to support such expansion activities. Over the past couple of

years in particular, with increased disruption caused by numerous natural disasters in the Far East, some

manufacturing companies have completely changed the way in which they have managed their B2B

infrastructures. Most notably in Japan where for years, home grown software based B2B platforms and

private network infrastructures have been dominant. Now, global manufacturing companies of all sizes are

evaluating Cloud or Managed Services based B2B platforms and the latest study from Stanford confirms this

new trend. So let me just spend a few minutes providing an overview of some of the key results from the new

study, especially with respect to supporting global manufacturing operations.


Overall, the study concluded that 96 percent of all companies surveyed felt that Managed Services had

added significant value to their overall B2B integration programs. Due to the increased flexibility that a

Managed Services platform can provide, 74% felt that they had received significant value from shifting up‐

front capital expenditure on software licenses and hardware to monthly operating expenditures for

Managed Services. In total, 51% of respondents of the study were from the manufacturing sector which is a

strong representation for the overall study. One of the highest ranking business drivers from the respondents

as to why they would adopt a Managed Service is to improve customer experience. This is a critical area for

many manufacturing companies, especially suppliers, who are challenged to follow their customers into new

markets and they are constantly trying to support their expanded business processes as much as possible.

For example which EDI document is being used in the new region?, which communication protocol is most

prevalent? and how easy is it to onboard new suppliers who may have a low speed internet connection? Using

a Managed Service approach provides the flexibility to expand or contract a B2B platform in order to support a

customer’s global expansion projects. In fact 59% of respondents said that Managed Services helped to


navigate their way through the changing requirements often imposed on them by their customers. This

could be something as simple as supporting a different communication protocol such as OFTP2 or AS2, but the

company concerned has no experience of implementing these particular protocols. A Managed Service can

help implement or mediate between any EDI document or communication protocol.

68% of respondents said that a Managed Service approach helped with onboarding new customers. This can

be a critical requirement especially for the CIO who may be more focused on ensuring that a new ERP project

does not fall behind schedule or miss a go live date. Managed Services offers a number of onboarding tools to

help remove the complexity of connecting with both new customers and of course suppliers that may be

located in other regions around the world, for example in the emerging markets.

Once you have expanded your operation into a new country then you need to ensure that you have the

appropriate support to address any potential issues as they may arise. Being able to offer support in the local

language and even understanding any local customs or cultural issues can certainly help to get any issues

resolved as quickly as possible. 49% of respondents said that local support was a key reason for choosing a

Managed Service.


The availability of onboarding expertise and local in country support are two of the most important challenges

facing many of the world’s manufacturing companies today. Given that global expansion projects are likely to

increase in number rather than decrease, a Managed Service approach can provide a significant competitive

and first mover advantage when entering a new market for the first time.

I have only scratched the surface in terms of the findings from the study but if you would like to download

your own copy of our new Stanford University B2B Managed Services study then please CLICK HERE. I will be

hosting a webinar in mid‐May with a theme around International Expansion and I will be co‐presenting with a

company that is constantly challenged with expanding into new markets. I will provide more details on this

exciting webinar over the next few weeks. For further information on GXS Managed Services, CLICK HERE.


Three Similarities Between Cloud B2B Integration and Global Vehicle

Platforms

The global nature of the automotive industry has led to some car manufacturers investing in global vehicle

platforms. These new platforms help to consolidate multiple vehicles onto a single platform which in turn

helps to rationalise suppliers and standardise on components and other sub‐systems used in the manufacture

of the vehicles. Consolidating vehicle platforms naturally provides an opportunity to consolidate internal IT,

business and associated production systems as well.

In order to move into new markets such as China, India or Brazil and gain market share as quickly as possible,

car manufacturers need to setup production facilities and on‐board trading partners in a relatively short period

of time. Having a standard vehicle platform that can be used across multiple markets provides the most cost

efficient way of undertaking international expansion projects. However rapid expansion into new markets

presents a challenge for supply chain, logistics and IT infrastructure professionals who are then required to

support these new facilities.

Over the past few years VW has led the market in terms of how many vehicles they could obtain off of a single

platform. VW owns more car brands than any other car manufacturer so you would expect a certain level of

commonality across their vehicle platforms and parts whilst at the same time retaining the individual identity

of each car brand. The image below highlights VW’s next generation MQB platform, which will provide a

significant competitive advantage in the market. Some industry analysts are predicting that the new MQB

platform will be as significant for the industry as Henry Ford’s production line and Toyota’s Just‐In‐Time

production system. Even though it has taken six years and $70B to develop the platform it is expected to see a

$19B saving by 2019.

Cloud based B2B integration can certainly provide the flexibility and agility to support expansion into new

markets but are there any similarities between the move towards global vehicle platforms and a global, cloud

based, B2B integration platform?

Significant Consolidation – common vehicle platforms allow a company to consolidate multiple car brands on

to one platform. For example VW has made many acquisitions over the years, with Audi, Skoda, Bentley, Seat

and most recently Porsche being added to their portfolio of car brands. Developing a common architecture to

support these different brands is critical for reducing costs and simplifying design and production processes.


The same thing goes for a B2B platform. Normally a company will have multiple B2B hubs to support different

manufacturing locations around the world and this gets more complicated as further merger and acquisition

projects take place. Consolidating on to a single, cloud based B2B platform such as GXS Trading Grid, can bring

significant competitive advantages, not least providing increased flexibility and agility to support an existing

manufacturing operation or indeed to support the expansion into a new market such as China or Brazil. In fact

B2B consolidation or modernization has been a key driver for the adoption of GXS Managed Services over the

past few years. To learn more about B2B Managed Services, why not take a look at our new Stanford

University research report. Click here to download.

Increased Standardisation – common vehicle platforms allow

manufacturers to consolidate parts and hence rationalise suppliers.

This in turn helps to reduce inventory levels but more importantly

simplify global supply chains. The only downside with introducing

more standard parts across multiple car brands is that it significantly

increases the chance of more vehicle recalls if a part fails for any

reason. So this in turn places more pressure on the Tier 1 suppliers to

increase the quality of the parts they supply to their customers.

Introducing a cloud based B2B platform helps to standardise the way

in which a car manufacturer engages with their suppliers. For example

a centrally hosted suite of Software‐as‐a‐Service (SaaS) applications

can be deployed very quickly across an existing trading partner

community and they also help to onboard new suppliers in remote

locations as well. Deploying a cloud based platform can provide a significant competitive advantage when

entering a new market. Companies can also standardise in other areas as well, such as using communication

protocols such as OFTP2 or even a standard message set. The German automotive industry is currently

working towards standardising on a new global message set based on EDIFACT as they find the traditional VDA

message set too restrictive when supporting their global operations. I will discuss these new global messages

in a future blog entry.

Reduced Complexity – common vehicle platforms allow vehicle sub‐systems to be used across multiple

vehicles, which helps to simplify the production process. The production environment itself can also be

significantly simplified allowing new production lines to be established in new regions around the world in a

relatively short period of time. For example Just In Time production has been used for many years, but

common vehicle platforms will encourage more ‘Supply In Line Sequence’ (SILS) production to take place, ie

different vehicles being assembled on the same production line. Further information on the different

production environments can be found in one of my earlier blog entries. Cloud B2B platforms help to remove

the complexity of managing today’s supply chains. From simplifying the management of trading partners to

improving end to end visibility of global shipments, Cloud B2B platforms offer many advantages over more

traditional behind the fire wall B2B software environments. From mediating between different

communication protocols, document standards or even integrating with a back end ERP platform such as SAP,

Cloud B2B platforms help to shield users from the complexities of both deploying and managing a global B2B

platform.

VW is not the only brand to explore the benefits of using global vehicle architectures. PSA Peugeot Citroen

recently announced that they would beintroducing a common vehicle architecture, called EMP2, across their

two car brands. This will help to significantly simplify their global vehicle projects, especially their joint venture

operations currently running in China.


So in summary, future automotive production and cloud B2B environments will share many characteristics,

consolidation, standardisation and reduced complexity. Cloud B2B allows vehicle manufacturers to scale their

B2B requirements to meet the needs of their global production environments and associated supply chain

network. I certainly believe that increased adoption of common vehicle platforms will help to drive further

wide spread adoption of cloud based B2B platforms over the next few years.


OFTP2, the ‘Fort Knox’ of B2B Communication Protocols?

Fort Knox has featured in many movies over the years, often labelled as the most secure bank vault in the

world. I just happened to watch the James Bond film ‘Gold Finger’ a month ago and it was interesting to see

how the villains attempted and succeeded to get inside Fort Knox. OK, so the red laser mounted on the back

of a truck simply sliced through the back door but none the less in the real world there is no place safer on

earth to store your gold bullion!

I have posted a number of blogs over the past couple of years on

OFTP2, a web based internet communications protocol designed from

the ground up to transfer large files securely. ‘Securely’ being the

operative word in this case as OFTP2 offers no less than three ways to

secure a transaction or file as it is sent from A to B.

One of the reasons why car

manufactures have been reluctant

to exchange sensitive design

information across the internet has been due to concerns of what would

happen to their design data if it was somehow intercepted whilst being exchanged across the internet. OFTP2

has almost single handedly changed the perception of using the internet for secure transmission of design or

other sensitive information. AS2 has seen widespread adoption in the retail space and it was hoped that AS3

would see traction in the market but for one reason or another it has struggled. Meanwhile OFTP2 has slowly

been gaining traction, particularly in the automotive sector and it has almost become the standard across the

European automotive industry for the exchange of large files between remote design centres across the world.

OFTP2 offers three levels of security but what are they and how do they offer a ‘Fort Knox level of security’ for

exchanging files securely across the internet, well let’s find out.

Firstly the transmission tunnel is secured between the sender and receiver to offer authentication and session

encryption. The secured session relies on the utilisation of Transport Layer Security (TLS) encrypted TCP/IP

comms links. In addition the sender and receiver are authenticated by cryptographic keys (X509 certificates)


Secondly the data can be encrypted asymmetrically.

Thirdly, if the business process or legal environment requires signed documents, OFTP2 provides the ability to

attach digital signatures to business documents.

In addition to the three levels of security, each company will need to secure an ID from Odette’s OSCAR

system. OSCAR (Odette System for Coding And Registration) simply provides a way to identify a company and

it allows the identifications of entities in all physical and information exchanges. OSCAR was designed

specifically for the automotive industry as many companies today are using either their own organisation

codes or codes provided by external third parties such as Dun and Bradstreet or GS1.

Finally, as well as an OSCAR ID, users will also need to acquire an Odette Certificate, this merely ensures that

data received by a user comes from a trusted source. The Odette organisation has setup a dedicated Odette

Certification Authority website, where these certificates can be acquired. These certificates are required for

all OFTP2 related data exchanges, document and email signing & encryption for general internet application

protection. Certificates issued by the Odette CA are recognised by the Odette Trust Service and ensure security

and inteoperability with business partners across the automotive industry.

Not every car manufacturer will implement all three levels of OFTP2 security,

it will depend on their file exchange requirements and the level of expertise

they have internally to manage such an environment. What companies may

opt to do is implement level 1 security and then introduce level 2 and 3 over

time as customer demand dictates. The key thing here is that the company has the choice of how to deploy

OFTP2.

With more and more companies evaluating cloud based services, it is important that the communication lines

to these cloud platforms are as secure as possible and OFTP2 provides the security to ensure

that files/transactions remain safe as they travel across the public internet.


What is JIC, a New Kitchen Degreaser or a Production Process?

When I was growing up there was always a bottle of JIF cleaner to be found under our kitchen sink. In 2000,

Unilever decided that they wanted to take the JIF brand global but they found that buyers in other countries

were struggling to say JIF, so they decided to undertake a major re‐branding exercise and call it CIF instead. A

£2Million exercise to change one letter on their bottle!

So it was with great surprise last week that I heard a new term being discussed

across various websites, JIC. I immediately thought that Unilever were releasing

yet another new cleaning product, but I was wrong!. In fact JIC is a new

logistics/production process that is starting to be adopted by some

manufacturers. JIC stands for Just‐In‐Case a slightly modified version of the more

familiar Just‐In‐Time production process.

The Just‐In‐Time process

was initially introduced by

Ford in the 1970s to help improve the management of

inventory levels and has fundamentally changed the way

in which car manufacturers work with their

suppliers. TheAdvance Ship Notice (ASN) has become

the most important EDI message to enable JIT processes

to operate smoothly. Toyota improved the JIT process

still further by introducing their Kanban process, this is

essentially a continuous improvement method to ensure

that the exact number of parts are delivered to each part

of the production line as and when they are required.

As consumer tastes have changed over the years and build to stock production starts to be introduced it

means that the car manufacturers have needed to adapt the JIT process and new production variations started

to be introduced. Just‐In‐Sequence (JIS) was introduced to allow different vehicles to be assembled on the

same production line. JIS has allowed car manufacturers to build flexibility into their production

environments. Another variation on this is SILS, Sequence‐In‐Line‐Supply, a process that allows certain parts to

be assembled near to where they will be fitted to the vehicle as it is moving along the production line. JIT, JIS

and SILS are summarized in the diagram below


JIC on the other hand has been introduced to add even further flexibility to the logistics/production

process. There are a couple of scenarios where JIC has significant benefits and could therefore become a

popular process for car manufacturers to adopt. In order to support the above production processes, suppliers

will traditionally deliver parts or components direct to the factory. The ASN provides notification of when

goods are to be delivered to the factory and hence the factory can make arrangements to receive and

temporarily store the goods until they are needed on the production line. The difference with JIC is that goods

are stored in a storage facility or warehouse located between the supplier and the final production location.

The storage location would be located very close to the factory so that inventory can be pulled in as and when

required. I guess you could regard this as a partial re‐introduction of buffer stocks.

Over the years JIT has allowed car manufacture to remove most in‐house storage facilities and if there is a

need to increase production levels for any reason then they have no ‘buffer stocks’ in place to meet the

revised production demand. JIC allows the car manufacturers to get access to an offsite storage location, very

quickly.

There are two scenarios where JIC has major benefits for the vehicle manufacturer:

Firstly if consumer demand for a particular vehicle increases then the car manufacturers can get

access to more components without putting ‘immediate’ pressure on key suppliers. A good example

of this is at Jaguar Land Rover where they have recently introduced a third shift so that they can run

24 hour production to meet exponential demand for their new Range Rover Evoque vehicle.

The second scenario is when a supply chain is disrupted for some reason, eg a natural disaster such as

an Earthquake which could impact a key supplier in the Far East and there are parts shortages which

could bring a production line to a halt. By having access to a local storage facility, production can be

maintained for a few days until normal supply resumes.

B2B is crucial to supporting the increased flexibility demanded by JIC based production environments,

increased levels of supply chain visibility, for example tracking both EDI documents (such as ASNs) and logistics

movements to ensure that parts deliveries are maintained. In fact it is interesting that EDI has been around

since the very first JIT production lines were introduced by manufacturers such as Toyota in Japan and B2B

communications have evolved to meet the ever changing requirements of JIS,SILS and now JIC.


How the ‘Made in England’ Label is Driving Growth Across the Premium

Vehicle Sector

Today’s automotive industry can be broadly split into three categories of vehicle – budget, volume and

premium. ‘Build to stock’ production for the volume car producers has been the mainstay of the industry for

many years. However flat growth in Europe combined with increased consumer wealth in emerging markets is

changing the face of global vehicle production. At one end of the market and with decreasing sales in France,

Renault is heavily pushing their budget brand Dacia, Nissan recently announced they would be re‐introducing

their Datsun brand and Daimler is increasing investment in their Smart car Brand. At the other end of the

market, namely the premium or luxury car sector, companies such as Jaguar Land Rover (JLR) cannot produce

cars fast enough to meet demand.

In fact JLR (a GXS Managed Services customer) has helped to put

the UK back on the map as far as being the leading producer of

luxury cars. The UK has slowly switched from being a volume

producer of cars to being a global hub for premium car production.

Rolls Royce, Bentley, McLaren (shown left), Aston Martin and of

course JLR to name but a few have not only turned around the

fortunes of UK Plc, they have also helped to reinvigorated the whole UK automotive supply chain as well.

Increased consumer wealth in China combined with a shift to ‘build to order’ production has helped to drive

this turnaround for the UK’s auto industry, so much so that the UK is expected to produce more cars than

Germany in a couple of years’ time.

Chinese consumers like quality products, especially

those with a ‘Made in England’ label. Car

manufacturers have been quick to exploit this by

opening new dealerships and design centres across

China to pamper to the needs of the Chinese

consumer. In an earlier article I hypothesised that

consumerisation was having a sweeping impact on the

automotive industry, the Chinese effect on the UK

automotive industry is a great example of this. At the

end of January, China’s Geely announced they would

be acquiring LTI, manufacturers of the iconic London taxi. This is another trend that will help to strengthen

automotive supply chains around the world, namely Chinese companies globalising their operations by

acquiring distressed assets, whilst at the same time retaining the character and history of the companies they

are acquiring. For example, Geely improved the safety perception of their cars by acquiring Volvo from Ford a

couple of years ago, however one thing you cannot buy is ‘heritage’.

The UK now has the greatest concentration of premium car manufacturers of any other country around the

world, quite a turnaround from the 1980′s when many UK manufacturers had a reputation of producing

unreliable, low quality cars. I guess the only challenge now for the UK auto industry is to obtain greater profits

on the cars produced, whilst at the same time maintaining quality.

Needless to say JLR takes the lead once again by announcing they are to build a new plant in Saudi Arabia. This

is to not only get closer to one of their key markets but primarily leverage cost savings associated with the

purchase of sheet aluminium from a new aluminium plant which is also being built close to JLR’s new plant.

Smart thinking indeed and this will further strengthen JLR’s position in the market and contribute to the UK’s

position as the world’s leading premium automotive manufacturing hub. Only last week, key industry

analysts were predicting that car manufacturers would be using more aluminium in future car designs.


It’s ironic that Ford restructured their business in 1999 to place their luxury brands such as Lincoln, JLR, Aston

Martin and Volvo within their Premier Automotive Group (PAG). Many of the products emerging from

companies such as Aston Martin were tainted by cheap switch gear from the Ford parts bucket and many of

the brands were suffering from lack of investment at the time. Ford decided to disband the group in 2006

when the economic depression hit and ironically each of those brands, most notably JLR have completely

turned around their business under new ownership.

So you could say that Ford actually did UK Plc a big favour when they decided to disband their premium car

business, UK premium car production levels have never been so large. I wonder how Lincoln would have faired

under new ownership?


Struggling to Find Timely Industry News?, GXS has an App for That!

Over the past couple of years Twitter has almost dominated the social media space in terms of delivering real

time news from all around the world. I have been a keen user of Twitter since it was first launched and I find it

invaluable for finding news items regarding the industry sectors that I look after at GXS, namely automotive,

high tech and manufacturing. However I think Twitter has been a victim of its own success as there is so much

information being posted now that it is difficult to fight through a continuous stream of tweets to find the

information that you are interested in.

There are many applications out there that have used Twitter as the

basis of establishing another business, Hootsuite and Tweetdeck come

to mind which allows users to improve the way in which they manage

their tweets and group feeds into relevant topics such as automotive,

consumer electronics or aerospace related tweets. Other companies

have developed magazine type apps which take Twitter feeds and then

display them in a more presentable magazine format. Applications such

as Flipboard have transformed the way in which users consume social

media information. No longer do you have to scroll through a list of 140

character tweets full of hash tag symbols etc.

However these applications still display

content from entire Twitter feeds. What

about if an application existed which allowed predefined tweets to be displayed in a

magazine style app, providing more focused and timely content than some other

apps provide today.

So this need to provide more focused content was one of the key reasons why GXS decided to develop its own

news based social media app called @GXS. Now this has been a pet project of mine for a few months now and

I have been working with an outside app development company called Locassa based in London. Now I was

fairly new to app development but I have a keen eye for detail, I knew exactly how I wanted the app to both

look and operate and so I was able to work fairly closely with Locassa to develop the final app.

Our @GXS app has just been made available in

Apple’s app store and the initial version is

available on the iPad only. As this was our first

app we decided to test the water with the iPad

first and due to the nature of the app, ie having a

strong focus on the presentation and readability

of the content. The home screen of the app

allows you to access industry based content relating to Automotive, High Tech, Manufacturing, Retail, CPG and

Financial Services and a second page of content allows you to get access to B2B and our corporate blogs as

well. The B2B box essentially allows you to review information relating to supply chain, logistics, cloud

computing and general B2B/EDI topics. The reason GXS chose to focus on these industry sectors is because

they are the key verticals that we support on a global basis and where possible we wanted to highlight industry

trends or news about our customers in an informative and engaging way.


The news articles that appear in the app are

selected by GXS industry experts as this team

typically knows where to find relevant and

interesting news items from the various industry

focused websites that are available on the

internet. You will need an internet connection to

get access to the content and this content is made

available for about seven days. Keeping the

content to seven days helps to improve the

performance of the app and more importantly the

limit helps to keep the content relatively fresh so

to speak.

In terms of other key features of the app:‐

After you enter each industry section you can

either swipe across the screen, right to left, to

turn to the next page of content or you can use

the arrows at the top of the screen instead

Once you find an article you are interested in

reading, via the icons in the top right of the

article page you can either open a link to the

original article on the internet, you can share

the article via your own Twitter or Facebook

account or you can simply email the article to a

work colleague

If for any reason you have any questions about

the app or GXS, then a contact form allows you

to send your message to GXS

If you don’t have time to review all the content, the ‘Top Stories’ box on the home page will present the top

three tweets from each industry section in a single consolidated feed.

Finally, a powerful search tool will look through all the content within the app to highlight news articles around

a particular key word or search term.

We will be porting the app to the iPhone shortly and we have some exciting plans to extend the functionality

of the app in the future. So watch this space !, to download a copy of the app simply go to the app store and

search for ‘GXS’.


How the ‘Omnichannel’ Effect Placed a Curse on UK Consumer Electronics

Retailers

Over the past two months the so called ‘Omnichannel’ effect has been tightening its grip on the UK retail

industry. The consumer electronics retail sector seems to have come off worst and as I have a keen interest in

the High Tech sector here at GXS I thought it would be worth taking a few minutes to find out what has been

going on.

There has been a bit of a revolution in retail spending over the

past thirty years. When I was a young boy, I remember cycling

into town to do some lengthy window shopping at the numerous

small consumer electronics shops that were around at that time.

These small shops expanded over the years into large out of

town stores, normally within big retail parks. The final level of

expansion saw online stores being set up to allow consumers to

browse goods via websites. In recent years online related

product browsing has expanded across PCs, tablets and of course

smart phones. So the Omnichannel effect is exactly that,

providing companies with multiple ways to promote their

goods to the consumer and the consumer has multiple ways to

view or review the products concerned, eg online or in a

traditional bricks and mortar store.

So here is an example of how my buying pattern has changed

over the years. Thirty years ago I enjoyed going into Dixons, a

major consumer electronics retailer in the UK, to see the latest

gadgets, I liked to see how they worked and mentally trying to

work out what they would look like in my bedroom at home! Tell

me who didn’t go in to a store to play music, change TV channels

or play the Atari console based games at the time? Ten years ago,

as my career got progressively busy, I had less time to actually

visit the stores so I would review the different products online,

choose my top 3 products and then go to the store, select and

then buy in the ‘physical’ store. At that time buying online was

not really the thing to do as the internet could not be trusted to

process your payments.

Then coming right up to date, today I look at the goods online,

review other purchasers comments, compare prices across

other websites before paying online and the goods get

delivered to my house and I haven’t even left the comfort of

my chair at home! Apple has been one of the main companies

fuelling the growth in online technology purchases. Apple

products are renowned for being high quality, so there is no

real need to go into the store as they are a ‘trusted brand’ ie

you know what you are getting. So why do Apple need physical

stores?, well it is brand recognition in the eyes of the consumer

and quite cleverly they hold in store workshops where you can go in and learn about a specific device or how

to use a piece of software or app. In fact last week Apple announced that they have patented the way in

which they layout their stores to prevent other companies from copying it! So Apple has indirectly fuelled the


growth in online consumer electronics shopping which has then given consumers the confidence to pay for

other goods online. This effectively created a snowball effect over the years especially retailers in the high tech

space, as consumers shifted their buying power to the internet, it made physical stores pretty much

redundant. But this has only affected one or two stores right?, wrong, it has completely changed the look of

high streets and retail parks, especially in the UK. I am sure other national retailers in other countries have

suffered the same problem. Online stores certainly offer consumers the choice of where to spend their hard

earned money and this shift in retail spend has contributed to many bricks and mortar stores to become

purely online stores instead. For a new start‐up retail operation, particularly in the high tech space, an online

retail presence is certainly the way to go as setup costs are minimal and more profitable.

So here are four high street brands that have recently gone into administration, each being a household name

in the UK for many years:‐

Blockbusters – Leading DVD rental store – 4190 employees, 528 stores. Increased competition from

online stores, streaming films over the internet as well as rentals through the post. Appointed

administrators on 16th January 2012

HMV – Leading retailer of DVDs/Consoles & Games – 4350 employees, 239 stores. Sales of CDs and

DVDs undermimed by competition from supermarkets, online retailers and online downloads.

Announced on 15th January that they would be entering administration

Jessops – Leading retailer of digital cameras and associated accessories – 1534 employees, 187 stores.

Hit by increasing competition from supermarkets and internet retailers. Improved quality of smart

phone based cameras means people think less about buying a dedicated camera. Went into

administration on 9th January, all stores ceased trading with most jobs lost on 11th January. UK

Dragon’s Den star, Peter Jones, has now agreed to buy the brand and remaining stock which is likely

to help create a new online retailer to continue the Jessops name

Comet – Leading retailer of consumer electronics and white goods/appliances – 6611 employees

across 236 stores. Economic downturn led to many consumers put off purchases of big ticket items

such as TVs and large appliances. Sales of these types of items, the ‘bread and butter sales at Comet’

have increasingly moved online. Administrators were appointed on 2nd November after suppliers

refused to provide credit in the run up to Christmas. Last remaining stores closed on 18th December.

In fact Comet’s main competitor is Curry’s/PC World and they are, for the moment at least, still in business. If

they close down as well then the whole consumer electronics sector of the UK retail industry will have been

more or less wiped out. These particular four high street brands have very high brand value with UK

consumers and it is this brand recognition which is leading some entrepreneurs to buy the brand name so that

they can develop the equivalent online brand and the bricks and mortar stores will in most cases simply close

down.

The move to online platforms is driving a requirement for tighter integration between consumer focused

ecommerce sites and back end order management systems. From a B2C perspective, consumers need to be

able to conduct real time queries of stock levels for certain products. This means that synchronous based

communication methods are going to become more and more important over the coming years. Traditionally

business related EDI based systems have been asynchronous based, ie they receive and process transactions at

specific times. Synchronous communication undertakes a query via a web based service that is directly

integrated to a back end order management system.

So in summary, will the Omnichannel effect drive further investment in web based services and synchronous

communications?, only time will tell but it is certainly heading in that direction at this moment in time.

Synchronous communications will be a subject for a future blog as real time inventory queries are becoming a

key requirement across many manufacturing based companies as well.


Decentralisation of Manufacturing Related Design Departments will Drive

Significant Growth in MFT Solutions in 2013

The manufacturing industry is truly global in nature and many companies have expanded their production

footprint to take advantage of low cost labour in countries such as China and India. However recent strikes and

wage rises in China have led many manufacturers to look for alternative manufacturing locations. Foxconn, the

high tech industry’s leading contract manufacturer, for example continues to look for new production

locations around the world with Brazil emerging as a strong alternative production location. Even Chinese

domestic car manufacturers are looking at Brazil as a place to invest and establish new factories. In parallel,

recent supply chain disruptions caused by earthquakes, tsunamis and other natural disasters caused many

manufacturers, especially those in Japan, to rethink their manufacturing strategy. They are now looking

to spread their production risk by producing more of their vehicles and consumer electronic devices in

different locations around the world.

Take Honda for example, they have had a manufacturing presence

in North America for many years now but last year they took a

dramatic shift by announcing that their new NSX supercar, shown

oppposite at the Detroit motorshow this week, would be both

designed and manufactured in North America. Volvo Cars was

acquired by the Chinese domestic manufacturer Geely a couple of

years ago and they have established a plant and regional design

centre in China. BMW has followed suit and also established a

design centre in China as well to support their own manufacturing operations. However it is not just about

supporting their operations it is so that they can be closer to their end consumer and ensure that their vehicles

are designed from the outset to appeal to in this case to the Chinese consumer. It is widely believed in China

that people prefer to be driven rather than drive themselves hence why Volvo, BMW and others are designing

longer wheel base cars to cater to their needs. So in short, many manufacturers today are thinking global but

having to design local in order to pamper to the needs of today’s fastidious consumer. Audi and Nissan are

other examples of manufacturers globalizing their operations, by setting up new plants in Mexico. These car

manufacturers will no doubt be supported by regional design centres in the future.

So in part, the consumer is now indirectly in control, dictating where new plants should be built and what cars

should look and drive like. Decentralisation of both production and design centres will become a common

requirement moving forwards and businesses must be able to exchange information 24/7 across both internal

and external users across the extended enterprise. Decentralisation will continue to be a key theme during

2013 and I would expect to see more design departments being established closer to their key production

hubs or rather end markets around the world. This decentralisation allows manufacturers to react more

quickly to local market demand and tailor products more finely to local consumer needs. With this

decentralisation brings a need to transfer engineering related information from one location to another with

ease.


Managed File Transfer (MFT) solutions are key to the exchange of large files between two different companies

or locations and the increased adoption of communication protocols such as OFTP2 in the automotive industry

is helping to drive faster adoption of Computer Aided Design based MFT solutions. Manufacturers now have to

build highly responsive supply chain infrastructures in order to move production around the world as the

numerous markets demand and this will continue during 2013.

This increased need to build flexibility and agility means that B2B and engineering related information such as

CAD files must be able to be exchanged electronically anywhere in the world. To achieve this, very large files

such as CAD files need to be exchanged quickly and securely, no matter where the manufacturing hub is

located.

For this reason and to support truly global design and manufacturing operations, I believe we are likely to

see significant growth in the MFT solutions market during 2013.


High Tech and Automotive Supply Chains Converge at CES 2013

This week is an important week for the high tech industry as global companies descend on Las Vegas for the

annual Consumer Electronics Show. This is one of the largest shows of its type in the world and not only

highlights what consumers will be able to buy in the stores within the next twelve months but also highlights

the increasing interdependence of the automotive and high tech supply chains. In addition the show helps to

highlight some of the key trends across the automotive and high tech sectors and I will discuss some of these a

bit later. Unfortunately I was unable to attend this show which is just as well as I probably would have had to

get a second mortgage on my house to be able to afford to buy some of the technology on display.

Three years ago I started to post some blogs

suggesting that the automotive and high tech

supply chains would eventually converge with

each other due to economic pressures and the

high tech sector in particular looking to

diversify itself into new markets. Three years

ago the automotive industry had a relatively

small representation at CES, however today

some of the more important press

announcements being sent out from the show

are coming from the world’s leading car

manufacturers. Why is this happening I hear

you ask? Well there has actually been a two

way battle occurring and like two storm fronts meeting each other, a certain amount of disruption is now

starting to take effect across the automotive and high tech supply chains.

Firstly, as I just mentioned, the high tech industry is looking for new business opportunities and companies

such as Qualcomm and Infineon who normally have a very cyclical business are now finding themselves

developing more and more semi‐conductors specifically for automotive applications. This helps to smooth out

the peaks and troughs of selling semi‐conductors into the high tech sector as they can start to increase their

supplies in to the automotive sector as well. Secondly, from an automotive point of view, car manufacturers

are being forced to pamper to the needs of the consumer. In fact ‘Consumerisation of the automotive industry’

was the theme of one of my recent articles over on automotiveworld.com. Take a look at the article as you

will see that the ‘connected’ consumer is starting to expect certain types of high tech communications within

their cars now. This expectation is also changing car production processes because consumers want to tailor

their own cars and hence build‐to‐order production is starting to become as strategic to some car

manufacturers as build‐to‐stock. Again this is a subject I have discussed before via an earlier blog entry which

you can read here. In fact from an automotive perspective the build to order versus build to stock blog has

been one of my most popular articles since it was originally posted in 2009.

Now what has this convergence got to do with B2B I hear you ask, well for automotive and high tech supply

chains to work together, they need to support each other’s business and production processes. For example

the automotive industry is built around the just‐in‐time production technique introduced years ago by Toyota,

high tech companies will need to embrace this production technique and ensure that component or system

deliveries can be achieved within specific production windows. Many of the high tech companies are based in

the Far East so if they are to win more contracts with European based automotive companies, will they need to

setup plants in the region?, will they know how to onboard trading partners in the region?, will they know how

to embrace regional and even country specific B2B standards such as e‐Invoicing for example?. Well this is

where GXS is here to help. In addition I believe we will see closer collaboration between industry associations,

such as EDIFICE in the high tech sector and Odette in the automotive sector, as companies look to simplify B2B

processes and standards across their respective industries. So it is interesting to think that this standardization


process is not being driven by the companies in the industry but actually indirectly by the end consumer as this

is where the convergence demand is ultimately coming from.

Now I have been following some of the developments at CES 2013 via various websites and I just wanted to

highlight my top five technologies that I think will help to drive this convergence process over the next few

years. There is clearly a lot of technology on display at the show and I clearly cannot cover everything via this

blog entry but here is just a taster of what the future holds for the connected consumer of tomorrow.

Downloadable Open Source Apps for Infotainment Systems–

Ford and GM both announced developer kits that would allow

software houses to develop apps that could be downloaded within

their vehicles. Over the past couple of years there have been

efforts to showcase how consumer friendly the car manufacturers

are by allowing drivers to download apps from a standard library.

Now Ford and GM have raised the game further by allowing

developers to essentially create apps for an in car app store type

environment. We have heard the term enterprise app store being

introduced over the past twelve months, well I guess it is inevitable

that in car app stores will be available soon allowing drivers to download a selection of apps to make their

driving experience more enjoyable. Toyota partnered with Salesforce.com two years ago to integrate their

social networking application called Chatter to Toyota’s in car infotainment system called Entune. Apps and

Social Networks are the two areas fuelling the mobile device industry at the moment and for this reason the

car manufacturers cannot ignore this.

Hand Gesture Based Control Systems – Continental demonstrated

some interesting technology that is hoped will help reduce driver

distraction within the car. Interacting with the many buttons contained

in today’s infotainment systems can be a major safety hazard, so what

if you could use a simple swipe of the hand to interact with the system

instead. This is exactly what Continental is demonstrating on their

stand at the show.

Even though they show one specific application of the technology,

what if you could use this approach to interact with a small head up display on the windscreen, hence being

able to keep your eyes on the road at all times? In fact some manufacturer’s are evaluating Apple’s Siri voice

assistant for integration into future infotainment systems.

Vehicle Diagnostics Enters the Cloud – Delphi, a long term Managed

Services customer of GXS, demonstrated some industry leading

technology at CES. One piece of technology allowed drivers or perhaps

fleet managers, to connect a Verizon data card enabled dongle to a

port inside the car that allows all vehicle telematics data to be

uploaded to the cloud and then viewed on a tablet device such as an

Apple iPad. So you can find out the true health of the systems of your

car remotely, or secure your car in the event of it being stolen for

example.

Another piece of technology that Delphi showed was wireless charging. The automotive industry spends

billions of dollars developing high tech car interiors, but our mobile phones still require a lead to be plugged

into the cigarette lighter to charge. Delphi demonstrated a wireless charging unit that totally does away with

cables, again a great example of pampering to the needs of the consumer.


4G LTE In‐Car Connectivity – BMW and Audi have had in‐car

internet connectivity for a couple of years now and at CES Audi

showed off their A3 based 4G connected car which uses a

Qualcomm chipset. The connected car is a natural progression

for the connected consumer allowing them to get access to the

internet via an in car WiFi hotspot.

Audi’s example allows you to connect up to eight different

devices to the hotspot, which I guess would be useful to keep

the kids quiet in the back of the car as they use their iPads or

the travelling businessman who needs to join a remote webex conference. More car manufacturers will start

to offer in car internet connectivity as we go through 2013, not just the premium end of the market, but the

high volume market as well.

Autonomous Driving – So I thought I would save the most

interesting until last!, what could be better than picking up your

mobile phone and asking your car to come and collect

you. Fantasy right?, wrong, bothLexus and Audi demonstrated

autonomous cars at CES. Google has been trialing autonomous

cars for a couple of years but these two are good examples of

mainstream manufacturers getting involved. The example from

Lexus had a range of externally mounted sensors and cameras in

order to understand its environment. Using a range of motors

and hydraulic units to control the subsystems of the cars they are

able to navigate themselves from one destination to another.

Clearly this technology will only succeed if governments around the world embrace the technology and this is

the one stumbling block at the moment, but the technology that goes into making this work is mind

boggling. Take the Audi example below which shows a driver able to park their A7 using a parking app on their

Apple iPhone. Just to make it more difficult the A7 is parked in a dimly lit underground car park and in

between two other cars.

Documents

Driving B2B 2013 Mark Morley