The industry standard for purchasing transactions — electronic data interchange (EDI) — can be time consuming, costly, and labor-intensive for many companies in the supply chain. EDI links are most often custom connections among suppliers, distributors, and customers so that each company's system can read and process the data from other companies' systems.
The problem is almost every EDI connection is unique, so one distributor that carries 200 suppliers can conceivably have 200 EDI connections. There have been efforts to simplify this by standardizing purchasing transactions between companies — such as the RosettaNet initiative — but so far, no single solution has widely caught on.
A technology board within the National Electronics Distributors Association recently met with a company that provides such a solution to the automotive aftermarket. GCommerce is a software-as-a-service (SaaS) company that has developed a “SuperSpec” that translates the requirements of multiple trading partners into one specification, and creates standardized data definitions within the data fields. The SuperSpec allows a company to set up a connection once, and reuse that map for all trading partners. A process built on to the SuperSpec, Internet Data Exchange (IDE), automates standard purchase-order-to-payment transactions. Non-standard transactions such as drop-shipping can be handled through GCommerce's Virtual Inventory Cloud (VIC), built on Microsoft's Azure common cloud platform. Microsoft is a co-creator with GCommerce.
Most attempts to standardize purchasing transactions within the electronics industry have been driven by a single, large supplier or a “members-only” group that developed a technology for its own use. These solutions generally serve the needs of the developers (a small constituency) rather than wholesalers. GCommerce's approach is driven by the needs of wholesalers — president, CEO, and cofounder Steve Smith worked with Wal-Mart.
In the automotive aftermarket, he says, “We started with the largest people in the industry. We said we'd develop a solution for free — and once we had enough economic leverage to direct the market, we got buying groups and trade associations involved.” GCommerce's philosophy is to attract the widest possible base of users first and drive the solution back up through the supply chain (rather than top-down.) Having worked with Wal-Mart, Smith admits to being partial to the wholesale industry, so GCommerce's approach is more distribution- than supplier-oriented.
It's also aimed at being cost-effective: The SuperSpec and VIC greatly reduce the costs associated with setting up trading connections and managing transactions that fall outside the standard practices of a trading network. It's all about cost-effective data management, says Smith. Using the cloud for storing and managing data is already cheap and is more easily scalable than typical solutions. “Our belief is that to make something like this work, everybody has to pull in the same direction,” says Smith. “So we have to make the solution low-cost, and the only way to do this is make it a data-driven, rather than technology-driven, model.” GCommerce derives its revenues from flat-fee transaction charges and providing value-added services such as customization.
Market research firm Aberdeen Group says cloud-based inventory visibility, such as VIC offers, enables trading partners to indicate which parts of their inventory can be shared with other participants; provides real-time access of this shared inventory pool at the point of customer order; and provides the ability to split an order across multiple participants. “This style of cloud-based solution is something that is applicable to any reseller-oriented industry segment.”
By sheer coincidence, my colleague Laurie Sullivan wrote about SaaS and the cloud in her most recent blog: How to Keep an Aging Supply Chain Vibrant. What are your thoughts about the cloud as an alternative to EDI? We'll examine the possibilities in upcoming blogs at here on EBN.