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The Role of Global Information Standards inElectronic Commerce
•Whirlpool Corporation is the world's leading manufacturer and marketer of major home appliances
•1998 Sales of $10.3 billion
•Marketed in 170 countries worldwide
The Role of Global Information Standards inElectronic Commerce
•Production versus MRO
•Global versus U.S. only
•Internet versus VAN versus “Extranet”
•Integrated Supplier Management (ISM)
“EZ-ISM”
Update
manufacturing
schedule
Receive
and update
MRP/OM
Build
to
schedule
Receive, scan
and match to
ship notice,
process ERS
Drivers• Total system cost reduction.• Continuous daily production requirements.• Suppliers as an extension of Whirlpool.• Just-in-Time material delivery.
Drivers• Total system cost reduction.• Continuous daily production requirements.• Suppliers as an extension of Whirlpool.• Just-in-Time material delivery.
Predicted benefits:
• Reduce inventory-raw & inprocess (suppliers).• Simplify receiving.• Reduce manual releasing.• Reduce obsolescence.
Predicted benefits:
• Reduce inventory-raw & inprocess (suppliers).• Simplify receiving.• Reduce manual releasing.• Reduce obsolescence.
Whirlpool Supplier
Integrated Supplier Management Process
J I T
Schedule
Material
Releases
Ship material
Shipment
notification
Consignment
Receiving
Advice
Process
accounts
receivable
Integrated Supplier ManagementIntegrated Supplier Management
Rollout Strategy
Follow through
Supplier Conferences (ECRC)
Team with Manufacturing and Procurement
EC Infrastructure Improvements
Supplier “WEB Page” (Internet) “EZ-ISM”
The Role of Global Information Standards inElectronic Commerce
EC at Whirlpool: Transaction Sets in Use
ANSI X.12Type
EDIFACTType
Name Description
830 DELFOR Material Release (PlanningSchedule w/ Release Capability
Created by buyer from MRP II system to order supplies;specifies required date & quantity, and past receipt information.
856 DESADV Advance Ship Notice (ShipNotice / Manifest)
Sent from trade partner with complete shipping data to facilitate receiving process. Can reference many packing slips and barcodes.
861 RECADV Receiving Advice Created by buyer MRP II system to acknowledge material transfer ofownership.
862 DELJIT JIT Info (Shipping Schedule) Schedule from buyer to trade partner covering hourly quantities required at each assembly line for next three days.
864 GENRAL Text Message Sent by buyer to: 1) broadcast message to all trade partners;2) describes errors with an 856 message;3) report discrepancies between received materials & 856 message.
997 Functional Acknowledgement Sent to confirm that message was received by trade partner.
New EC Infrastructure
Existing EC Infrastructure
New EC Infrastructure
New Application Architecture
SAP
Existing Application Architecture
Varies
Existing EDI ArchitectureMainframe
EDI Network
VAN
New EC Server
Whirlpool ECIntranet / Extranet
Whirlpool EC Intranet
InternetExtranetse.g. ANX
EC Business - Supply Chain- Selling & Marketing- Buying- Order Fulfillment- Logistics- Many more
EC Partners- Trade Partners- Suppliers- Commerce Partners- Internal Partners
This New EC Infrastructure Provides:- Many-to-Many paths to the existing and new applications infrastructure- Leverages the current EDI infrastructure and provides the EC partners and Whirlpool a migration path- A lower cost to support and implement new EC partners (esp. low volume partners)- The ability to supply the applications real-time EC processing- Many types of documents (EDI, HTML forms, e:mail, excel sheets, fax)
Archive
Bin
Whirlpool.XX
Draft
Read
Sent
Unread
Unsent
During registration, the following file structure is created on the supplier’s pc. All programs necessary to run the application are stored in the Bin directory.
The Role of Global Information Standards inElectronic Commerce
Trends in establishing the global supply chain Move towards “global” suppliers
Automotive Whirlpool
Many large companies using EC with globalpartners
Reduce inventory Improve market share Faster revenue collections Speed timing on exchange of business
documents EDI/EC initiatives
The Role of Global Information Standards inElectronic Commerce
Trends in establishing the global supply chain Technology issues
Methods VANs Forms-based over the Internet FTP Could easily be outsourced
Different levels of infrastructure
The Role of Global Information Standards inElectronic Commerce
Trends in establishing the global supply chain Business issues (most important): need top
management support Different languages
Same words have different meanings indifferent cultures
Non-Americans may know English, butdon’t understand nuances
Different cultures and time zones Not just holidays, vacations and dress What does “No problem” mean? Good to have local people as initial point
of contact Different legal requirements
Whirlpool Evaluated Receipts Settlements(ERS) won’t work in Mexico becauseinvoice legally required.
Stereotype of the “Ugly American”
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem External
ANSI versus EDIFACT
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
VANs versus Internet versus ANX What is ANX?
A multi-provider, virtual private network;formed by Automotive Industry ActionGroup (AIAG)
Providers compete for customers, butdeliver same service quality, e.g.performance, security
All customers share same physicalinfrastructureof ANX certified providers, but eachelectronic conversation occurs via secure,private connection between customers
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
VANs versus Internet versus ANX Public Internet versus ANX
Public Internet “Best Effort” performance Decentralized administration Inconsistent security Unpredictable
ANX Service
Guaranteed performance Centralized administration (via ANX
Overseer: Bellcore) Standards-based, network-level security Reliable
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
VANs versus Internet versus ANX ANX geographic direction
ANX Release 1 - North America Initially United States, Canada
(September 1, 1998) Eventually Mexico
ANX Release 2 - Europe Memorandum Of Understanding (MOU) ANX pilot projects - Germany, France,
England Timetable - no earlier than Q3/Q4 1999
Discussions Underway/Expected Japan: Japanese Automotive
Manufacturers Association (JAMA) Australia: Federal Chamber of
Automotive Industries (FCAI) South America
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
Automotive industry strategy (1998 “AutoTech”Conference) GM - Electronic Commerce Strategies
Electronic Data Interchange (EDI) Require EDI for QS9000 certification Migrate from X12 to EDIFACT
International standard Explore use of ANX for EDI Encourage small suppliers to use EDI,
Web-based forms over the Internet / ANX,or Third party provide
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
Automotive industry strategy (1998 “AutoTech”Conference) Ford - Electronic Commerce Strategies
Common Global Supplier ElectronicComm.
Electronic Data Interchange (EDI) Direct Data Link (DDL)
Explore use of browser- basedtechnology
Use TCP/ IP technology Use ANX
CADCAM Data Exchange (CDX) Ford Supplier Network (FSN) Supplier E- Mail Automotive Network eXchange (ANX)
Vision
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
Automotive industry strategy (1998“AutoTech” Conference)
Vision Chrysler - Electronic Commerce
Strategies EDIFACT - after 2000, maybe 1998 EDI over the web Electronic Funds Transfer
Part of overall Supplier ECRequirements
Payment Terms plus 3 days Final nail into paperless vision
Paper No Longer an Option
The Role of Global Information Standards inElectronic Commerce
Implementing global sourcing Paul Dittman, Whirlpool’s VP of Global Logistics,
commented on some global implementationissues in the March 1999 issue of PM Network You don’t commute to China
30 hour trip At least three weeks at a time
There are translators and there are translators Can fit only so many granola bars in a suitcase
Is language a barrier? Logistics
The Role of Global Information Standards inElectronic Commerce
Specific considerations for designing a globalnetwork management
EC documents; specifically ASN’s Other than Europe and North America
The Role of Global Information Standards inElectronic Commerce
Integrating regional policies into the globalsystem
VANs versus Internet versus ANX Principles of the ANX vision
User-centric Consolidated network services Lower-than-legacy costs Higher service quality levels Managed evolution Continuous improvement Standards-based technologies
The Role of Global Information Standards inElectronic Commerce
Implementing global sourcing Ways to reduce inventory (Purchasing
professionals surveyed by Supplier Selection &Management Report in February 1999) Shifting the inventory to the suppliers (supplier
takes responsibility for inventory reduction) Building a stronger supply chain Shortening leadtimes (better information flow) Reduce storage space requirements Improving the cash flow situation (JIT, EFT) Establishing a consignment inventory protocol
Leadtime reduced to zero Inventory carrying costs reduced to zero. Lost production time waiting for incoming
quality approval is eliminated. Lower pricing negotiated in exchange for the
long term supply agreement
The Role of Global Information Standards inElectronic Commerce
Implementing global sourcing Implementing EDI/Electronic Commerce Electronic commerce activity — specifically on
the Internet — has exceeded the expectationsof business analysts, but its true potential torevolutionize the procurement process remainsa distant goal. Department of Commerce: April 1996; 1998
Internet-based purchases $200 million in1995 to an estimated $5 billion
Cambridge, Massachusetts-based ForresterResearch's latest estimate is even higher:$3.2 trillion in sales over the Internet by 2003with 85 percent of that being business-tobusiness buying.
The Role of Global Information Standards inElectronic Commerce
Internet-based electronic commerce procurement stillnot reaching its potential
First target will be maintenance, repair,and operating (MRO) expenses, anindustry worth an estimated $1.3 trillionannually in the United States. But MROprocurement is just the tip of the iceberg.
Purchase of direct materials will reallycatch on in the next millennium. Othernoteworthy trends include theestablishment of interconnected supplygrids versus vertical supply chains, andthe relatively new concepts of "transactive"e-catalog content, and "reintermediation,"or new-age intermediaries.
The Role of Global Information Standards inElectronic Commerce
The Internet will become a critical medium foraccessing critical information and by the wayinformation can be transferred between supply chainmembers.
The Role of Global Information Standards inElectronic Commerce
Using better forecasting tools Reducing the supplier base (“global” suppliers)
The Role of Global Information Standards inElectronic Commerce
What business problems can the new technologiessolve for small companies?
Some OEM’s are thinking about ‘Push’ asopposed to the current ‘Pull’ model. PROBLEM: Many SME’s don’t operate 24
X 7 Technologies to guarantee delivery are just
being developed Will SME’s be able to afford permanent ANX
connections?
The Role of Global Information Standards inElectronic Commerce
Emerging trends EDI over Web and/ or HTTP
Currently a replacement for Rip & Read EDI No integration of data into SME’s internal
systems HTTP based technologies still being
developed Problem with guaranteed delivery
The Role of Global Information Standards inElectronic Commerce
Emerging trends E- mail based EDI
Possibility of Store and Forward Could solve the ‘lights out’ condition for
many SME’s Timeliness could be a problem Guaranteed Delivery solutions are being
developed Storing material at point-of-use Focusing on “A”, “B” and “C” inventory Introducing vendor managed inventory