Extensible Markup Language

Pricing and availability calls represent one third to one half of all supplier phone calls. Imagine not having to make (or receive) them.

By Scott Ehrnschwender

One of the primary goals of GAWDA's technology effort is to recognize solutions that will enhance member productivity. Often the most beneficial technology to an industry, yet the most difficult to implement, is collaborative technology, also known as supply channel technology. This technology requires trading partners to exchange data based on established standards normally designed at the industry level.

GAWDA is recognizing an Internet technology called XML which has taken root in many of the country's higher growth industries, albeit at the high end of the spectrum of companies. Technology experts view XML as having a greater productivity potential for supply channel collaboration than any of its predecessors, including EDI, the current powerhouse in supply channel technology.

Need for Collaboration
The need for trading partner collaboration is pervasive. Frank Lynn & Associates estimates that 30 to 35 percent of the retail price of an industrial product consists of redundant costs, including duplicate data input, warehousing and handling costs by multiple supply partners. In today's typical welding supply hardgoods distribution, the end-user, distributor, wholesaler and manufacturer generally act as independent islands of information, often maintaining different part numbers and units of measure for the same item, and seldom communicating demand, orders, invoices or status information electronically.

While many GAWDA members have been cushioned from the full impact of the economic downturn due to increases in gas prices, our hardgoods manufacturers and industrial suppliers in general have been extremely hard hit. The Industrial Distribution Association (I.D.A) reported in its 2001 Profit Report that average member sales decreased 5.2 percent, gross margins shrank 1.6 percentage points, and return on net worth fell 5.6 percentage points.

Partially as a result of these challenges, the I.D.A. convened a technology summit of its major players to discuss supply chain collaboration and the removal of redundant costs from the industry. One concept that the industry agreed on was the need to support XML technologies.

XML
XML, which stands for “extensible markup language,” is a new programming language designed for data transfer between computer systems via the Internet. XML was designed to provide a standard way to mark up data so as to become human readable, flexible to change and simple to administer. Further technical information about XML can be found at www.xml.org.

What Can XML Do For GAWDA Members?
Susie works in customer sales at a major multi-chain welding distributor. She receives an inquiry about a brand name welding machine, which is not in her stock. Instead of calling the manufacturer or logging on to its website, Susie simply keys the item into her order entry software and within seconds the custom pricing and availability display on her screen.

This scenario is happening today in our industry by one large distributor and a group of manufacturers and brings several benefits. The distributor gains pricing and availability knowledge from the manufacturer in real time, 24x7, without a phone call or website log-on. The manufacturer significantly reduces the labor and phone time/cost required to staff 33 to 50 percent of its phone volume.

Other Applications
Because of XML's inherent flexibility, it can be adopted to any transaction type, both conventional and unconventional. For example, traditional orders, invoices and acknowledgements can be sent via XML, replacing EDI transactions and their customary VAN charges. XML can also be used for less traditional partner exchanges, such as:

• Distributors requesting real time order status information from manufacturers,
• Distributors providing daily sales demand and forecast information to manufacturers in return for shorter and more accurate reordering cycles,
• Manufacturers supplying catalogue data, including product images, to distributors assembling an e-commerce site or updating their own catalogues,
• Manufacturers sending MSDS data to distributors and end-users.

In fact, XML can be used for any type of recurring data request between two trading partners. However, both firms must be capable of receiving and transmitting XML data from their legacy systems according to the same rules. Both must also agree upon the XML tags that identify product, descriptions, prices, etc., and the instructions or requests for sending/receiving data, such as a “price lookup request” or “send invoice” request.

Technical Requirements
Industry standards are the first technical requirement. Similar to EDI, XML has different versions and protocol options. To prohibit future duplication of effort and incompatible standards, GAWDA must research the industrial supply channel and develop a standard which will both meet the needs of its members and provide compatibility among related industries. The GAWDA MI Committee has established an XML task force to design a standard.

Once a standard is declared, the industry must define the tags which create the industry's XML vocabulary, or schema. This vocabulary can be as simple as = price, and = item number to a more detailed description such as = welding machine amperage, or = wire diameter. This task will eventually involve manufacturer members who must agree to the vocabulary that specifically defines the attributes of the products. (Note: Most XML transaction tags are generic across industries. Purchase orders and invoices use common data definitions. Only when transactions involve industry-specific information is special vocabulary required.) Once the standards and industry vocabulary are established, member firms will have a definable path in which to transmit trading partner data.

Concerning member technical requirements, distributors will generally rely on their software provider to provide the XML translation, either a purchased XML translator package or an internally developed one. Manufacturers must also purchase or create a translator package. In addition, members must integrate the information requests that travel through the XML translator into their main operating software. For all trading partners, an “always on” Internet connection to the Internet is a prerequisite.

While XML has several of the “standards” and “integration” complications similar to EDI, XML offers a lot more potential. XML is real time, based on Internet architecture, and allows an infinite number of trading partner exchanges. These realities are fueling the XML explosion as the next major supply channel phenomenon.