The Role of Global Information Standards in

Electronic 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 in
Electronic Commerce

•Production versus MRO

•Global versus U.S. only

•Internet versus VAN versus “Extranet”

•Integrated Supplier Management (ISM)

“EZ-ISM”
 Integrated Supplier Management Process
Whirlpool Supplier

Material
Releases
Receive
and update
Update MRP/OM
manufacturing JIT
schedule Schedule

Build
to
Ship material schedule

Receive, scan
Shipment
and match to
notification
ship notice,
Process
process ERS
Consignment accounts
Receiving receivable
Advice

Drivers Predicted benefits:

Drivers Predicted benefits:
• Total system cost reduction. • Reduce inventory-raw & inprocess (suppliers).
• Total system cost reduction. • Reduce inventory-raw & inprocess (suppliers).
• Continuous daily production requirements. • Simplify receiving.
• Continuous daily production requirements. • Simplify receiving.
• Suppliers as an extension of Whirlpool. • Reduce manual releasing.
• Suppliers as an extension of Whirlpool. • Reduce manual releasing.
• Just-in-Time material delivery. • Reduce obsolescence.
• Just-in-Time material delivery. • Reduce obsolescence.
Integrated Supplier Management
Rollout Strategy

EC Infrastructure Improvements

Supplier “WEB Page” (Internet) “EZ-ISM”

Team with Manufacturing and

Procurement
Supplier Conferences (ECRC)

Follow through
 The Role of Global Information Standards in
Electronic Commerce

EC at Whirlpool:
Transaction Sets in Use

ANSI EDIFACT Name Description

X.12 Type
Type
830 DELFOR Material Release (Planning Created by buyer from MRP II system to order supplies;
Schedule w/ Release Capability specifies required date & quantity, and past receipt information.
856 DESADV Advance Ship Notice (Ship Sent from trade partner with complete shipping data to facilitate
Notice / Manifest) receiving process. Can reference many packing slips and barcodes.
861 RECADV Receiving Advice Created by buyer MRP II system to acknowledge material transfer of
ownership.
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.
 Existing
New EC Infrastructure
New Application
Application
Architecture
Architecture
SAP
Varies
This New EC Infrastructure Provides:
- Many-to-Many paths to the existing
Whirlpool EC and new applications infrastructure
- Leverages the current EDI infrastructure
Existing EDI
Architecture
Intranet / Extranet and provides the EC partners and Whirlpool
Mainframe
a migration path
- A lower cost to support and implement new
New EC
EC partners (esp. low volume partners)
Server
Whirlpool - The ability to supply the applications real-time
EC Intranet EC processing
- Many types of documents (EDI, HTML forms,
e:mail, excel sheets, fax)

EDI
Network Extranets Internet
e.g. ANX
VAN

Existing EC Infrastructure
EC Business EC Partners
- Supply Chain - Trade Partners New EC Infrastructure
- Selling & Marketing - Suppliers
- Buying - Commerce Partners
- Order Fulfillment - Internal Partners
- Logistics
- Many more
First Time Registration
 During registration, the following
Whirlpool.XX
file structure is created on the
Archive supplier’s pc. All programs
necessary to run the application
Bin are stored in the Bin directory.
Draft
Read
Sent
Unread
Unsent
Example of the Desktop
Click Return to go back
Click Return to go back
Print by clicking on the browser’s Print function

Click on the back function to return

Enter ASN No, Packlist No, use drop down box for Ship To Name
Load Release Data: Highlight part then import to form
Click Calculate, box information appears. Box line items may be edited.
Print Labels and click save.
Example of Barcode Label
ECRC Locations
 ECRC Core Functions

Outreach

Consultation
Education & Training

Technical Support
 The Role of Global Information Standards in
Electronic Commerce

Trends in establishing the global supply chain

 Move towards “global” suppliers
 Automotive
 Whirlpool
 Many large companies using EC with global
partners
 Reduce inventory
 Improve market share
 Faster revenue collections
 Speed timing on exchange of business
documents
 EDI/EC initiatives
 The Role of Global Information Standards in
Electronic 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 in
Electronic Commerce
Trends in establishing the global supply chain
 Business issues (most important): need top
management support
 Different languages
 Same words have different meanings in
different cultures
 Non-Americans may know English, but
don’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 because
invoice legally required.
 Stereotype of the “Ugly American”
 The Role of Global Information Standards in
Electronic Commerce

 Integrating regional policies into the global

system
 External
 ANSI versus EDIFACT
 The Role of Global Information Standards in
Electronic Commerce

Integrating regional policies into the global

system
 VANs versus Internet versus ANX
 What is ANX?
 A multi-provider, virtual private network;
formed by Automotive Industry Action
Group (AIAG)
 Providers compete for customers, but
deliver same service quality, e.g.
performance, security
 All customers share same physical
infrastructure
of ANX certified providers, but each
electronic conversation occurs via secure,
private connection between customers
 The Role of Global Information Standards in
Electronic Commerce

Integrating regional policies into the global

system
 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 in
Electronic Commerce
Integrating regional policies into the global
system
 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 in
Electronic Commerce

Integrating regional policies into the global

system
 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 in
Electronic Commerce
Integrating regional policies into the global
system
 Automotive industry strategy (1998 “AutoTech”
Conference)
 Ford - Electronic Commerce Strategies
 Common Global Supplier Electronic
Comm.
 Electronic Data Interchange (EDI)
 Direct Data Link (DDL)
 Explore use of browser- based
technology
 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 in
Electronic Commerce
Integrating regional policies into the global
system
 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 EC
Requirements
 Payment Terms plus 3 days
 Final nail into paperless vision
 Paper No Longer an Option
 The Role of Global Information Standards in
Electronic Commerce

Implementing global sourcing

 Paul Dittman, Whirlpool’s VP of Global Logistics,
commented on some global implementation
issues 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 in
Electronic Commerce

Specific considerations for designing a global

network management
 EC documents; specifically ASN’s
 Other than Europe and North America
The Role of Global Information Standards in
Electronic Commerce
Integrating regional policies into the global
system
 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 in
Electronic 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 in
Electronic Commerce

Implementing global sourcing

 Implementing EDI/Electronic Commerce
 Electronic commerce activity — specifically on
the Internet — has exceeded the expectations
of business analysts, but its true potential to
revolutionize the procurement process remains
a distant goal.
 Department of Commerce: April 1996; 1998
Internet-based purchases $200 million in
1995 to an estimated $5 billion
 Cambridge, Massachusetts-based Forrester
Research's latest estimate is even higher:
$3.2 trillion in sales over the Internet by 2003
with 85 percent of that being business-to
business buying.
 The Role of Global Information Standards in
Electronic Commerce

Internet-based electronic commerce procurement still

not reaching its potential
 First target will be maintenance, repair,
and operating (MRO) expenses, an
industry worth an estimated $1.3 trillion
annually in the United States. But MRO
procurement is just the tip of the iceberg.
 Purchase of direct materials will really
catch on in the next millennium. Other
noteworthy trends include the
establishment of interconnected supply
grids versus vertical supply chains, and
the relatively new concepts of "transactive"
e-catalog content, and "reintermediation,"
or new-age intermediaries.
 The Role of Global Information Standards in
Electronic Commerce

The Internet will become a critical medium for

accessing critical information and by the way
information can be transferred between supply chain
members.
The Role of Global Information Standards in
Electronic Commerce

 Using better forecasting tools

 Reducing the supplier base (“global” suppliers)
 The Role of Global Information Standards in
Electronic Commerce

What business problems can the new technologies

solve for small companies?
 Some OEM’s are thinking about ‘Push’ as
opposed to the current ‘Pull’ model.
 PROBLEM: Many SME’s don’t operate 24
X7
 Technologies to guarantee delivery are just
being developed
 Will SME’s be able to afford permanent ANX
connections?
 The Role of Global Information Standards in
Electronic 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 in
Electronic 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