The Hindu Business Line : Don't forget the small guy

CONTRARY to what success stories may suggest, the adoption of fully automated and integrated supply chains is still not widespread. Even successful players have managed to achieve integration only with a small number of their trading partners. For instance, while Intel says 1,000 suppliers-customers could benefit from automated information exchange, only 20 had implemented it till a few months ago. Most of the remaining were expected to interact with Intel only through a Web-based user interface or EDI.

Forrester reports that Bristol-Myers Squibb has taken over two years to implement automation with only 10 suppliers!

The failure of GE to meet its goals for automating its supply chain is probably one of the most highly visible ones. Jack Welch, the high-profile Chief Executive Officer of GE at that time, publicly announced his grand goal of earning 100 per cent of the revenue online. Against an initial target of 30 per cent, GE had realised only less than 5 per cent of its revenue online, thus prompting it to roll back its plan targets.

This is because of the very high cost of implementing supply chain integration. Also, since automation of the interactions with each trading partner requires custom implementations, the cost with additional trading partners is not significantly lower than the cost of implementation with the first partner. Hence, businesses are able to automate their information exchanges only with a handful of large business partners, thus denying its benefits to the smaller partners. This poses a serious threat to the small and medium enterprises and to enterprises in developing nations.

The way to mass adoption

As with most other fields, standards are required to avoid expensive custom implementations.One can understand the need for technical and business standards to implement SCM over the Internet using the evolution of the telephone as an analogy.

SCM using EDI could be compared with communication using telex - it required dedicated networks, hardware and used a highly cryptic language for communication that required skilled encoders and decoders. On the other hand, the situation with SCM using the Internet thus far could be compared with the early days of the telephone — the Bell, Western Union, and Western Electric systems were incompatible and not connected. Hence, in the early days, you could communicate with only those that were connected to the same system as you were. Unification of the disparate networks connected everyone.

The evolution of Internet technologies for SCM bears a lot of similarity. Till very recently, businesses had to use proprietary communication and data formats, and tools to exchange information. In the past two years, standards have been emerging to ensure infrastructural compatibility between businesses - your business applications running on your computers can talk to another business' applications running on their computer using the Internet without worrying "whether the other company is on the Bell system or not." These technical or infrastructural standards are collectively referred to commonly as Web Service standards and include standards for describing online services (e.g., describing a stock trading service or a service to buy steel), publishing and discovering these services, communicating with these services and for describing how business processes could be orchestrated by combining these services. Web service standards are being enriched to enhance reliability, robustness, security and other capabilities now; some of these richer capabilities have not been standardised yet, but are expected to be soon. The standardisation of the telephone network and making the telephone easy to use are essential, but not sufficient for the telephone to emerge as a universal medium for communication. Two people talking to each other should either speak the same language or should talk through an interpreter who understands the languages spoken by both. Even when they speak the same language, they also need to share the same terminology. For example, if a New Yorker refers to an icebox, a Texan may not realise he is referring to a refrigerator. .

One more prerequisite is a universal agreement on a protocol for communication. For example, the receiver of a phone call greets the caller as soon as he picks up the phone and may optionally identify himself. The caller returns the greeting and identifies himself and asks for the person he wishes to talk to if it is not the receiver of the phone call. When business applications running on computers talk to each other, we will face similar requirements. The requirements will be a lot more stringent as the computers lack the `smarts' of the humans to handle ambiguity and failures in the communication devices. Business standards are emerging to address these needs. Standards for the vocabularies (e.g., tracking number and product ID) and business processes (e.g., stock trading and obtaining order status) in a particular industry as well as across industries are being developed by industry consortia.

Key technical standards

The World Wide Web Consortium (W3C, http://www.w3.org), the Organisation for Advancement of Structured Information Standards (OASIS, http://www.oasis-open.org) and the United Nations Centre for Trade Facilitation and Electronic Business (UN/CEFACT, http://www.unece.org/cefact/) are the key consortia where the leading technology companies get together to develop the standards required for building SCM solutions. For most part, these three consortia work on complementary capabilities. However, in some areas, their works overlap. The good news is that they are proactively working on resolving most overlaps or conflicts.

The eXtensible Markup Language (XML) has gained widespread adoption as the self-describing format for representing data. XML could be automatically generated and processed by computers. From the largest ERP applications to the simplest personal productivity tools such as spreadsheets, almost all applications are capable of providing and accepting data in XML format.

Simple Object Access Protocol is used for computers to exchange business messages over the Internet. It is supported by almost all key software vendors as well as by the open software community. OASIS is proposing a standard by name Electronic Business XML Messaging Service (ebXML MS) which is a richer specification, but does not enjoy the same level of widespread tool offerings as SOAP. ebXML MS has decided to provide it additional capabilities in a way that is compatible with the SOAP framework, thus assuring basic interoperability.

The Web Service Description Language (WSDL) provides a description of an online service (e.g., providing stock quotes) in terms of the request (e.g., stock symbol) and response (e.g., stock price) and the physical location of the service (e.g., www.businesslinequotes.com) .

A computer can process these descriptions and automatically generate the application to access the service.

The registry or the discovery service allows businesses to publish the online services they offer, discover the services offered by other businesses and start calling these services automatically. It is key for the rapid growth of Web services. Universal Description, Discovery and Integration is a registry standard that has been developed with input from a broad range of technology companies, including Ariba, HP, IBM, Intel, Microsoft, and SAP. There are a number of commercial as well as free tools available for registering a service and finding a service from UDDI.

There are five public UDDI registries hosted by HP, IBM, Microsoft, NTT and SAP. Any business can register its services in these registries through the Web sites provided by these companies. Anyone can look up these services either through the Web sites or using programs written in a number of languages including C++, C#, Java, Perl, and Visual Basic. The process of searching the registry for a business and its services is similar to using a search engine such as Yahoo that provides both a hierarchical categorisation and keyword-based search. UDDI allows businesses and their services to be described and discovered using keywords as well as through assigning them to a category based on their business activity and their geographical location. If publishing and searching must be restricted to selected businesses, they need to host a "private UDDI registry" that is accessible only to themselves. In fact, the use of such private registries is expected to grow faster than that of the public registries.

To facilitate easy and accurate description and identification of businesses, UDDI allows businesses to be classified using multiple taxonomies. Though the UDDI specification does not mandate the use of any specific taxonomy, the current public registries facilitate the use of certain taxonomies. Some of these taxonomies may not be suitable for international use. For example, the ISO 3166 Geographic Taxonomy does not allow me to specify the state or city where a business is located in most countries - I can only specify the country. The GeoWeb classification scheme that allows me to specify the location of a business at a city level in most countries unfortunately is not supported by all the public UDDI registries.

UDDI allows assigning unique identifiers to businesses. Again, while the UDDI specification does not call for the use of any specific identifier, the UDDI Public registries most commonly facilitate the use of the Dun & Bradstreet (DUNS) or Thomas identifier. Truly global registries and the registries for specific countries other than the US need to add built-in support for other identifiers (e.g., Department of Company Affairs assigned Corporate Identity Number in India).

Though UDDI has received widespread support, it faces competition from OASIS's ebXML Registry/Repository standard. Though it does not enjoy support from as many leading technology vendors as UDDI, it has been selected by some key end-user groups as well as by some government initiatives such as those by the South Korean and the Finnish governments and the Hong Kong University.

The author manages Web services activities in the Intel Labs and can be reached at krishnamurthy.srinivasan@intel.com.

Send this article to Friends by E-Mail

Stories in this Section
Two and two don't add up

Hamara apna doodhwallah

Stuck for options

Try gene traps on bacteria

Penguin going places

In step is en vogue

Don't forget the small guy

Growing on safety

Clean up your disk

Indian delights