New wave?

XML may represent the way of the future for exchanging supply chain messages over the Internet. Yet the absence of common standards could hobble its deployment.

By James Aaron Cooke -- Logistics Management, 1/1/2000

Lucent Technologies Inc. of Murray Hill, N.J., has taken the lead when it comes to supply chain messaging. Since September 1999, the technology giant's service provider business unit has been exchanging business messages with trading partners over the Internet using an advanced method of coding known as Extensible Markup Language (XML).

If XML lives up to its promise, other businesses around the world will soon join Lucent in sending purchase orders, bills of lading, and advance shipment notices to their trading partners on the Internet. In the meantime, a host of industry associations are trying to agree upon standard definitions to foster the adoption of XML as the language of e-commerce.

XML could pose a serious challenge to EDI (electronic data interchange), whose use has been limited so far to big companies willing to invest in the requisite computer services and hardware. In theory, a small company with access to the Internet and a Web browser could use this new technology to communicate with its suppliers and customers. "XML will revolutionize the way people exchange information between trading partners the same way HTML [HyperText Markup Language] revolutionized the way people published information," predicts Marcus Schmidt, an industry manager for software giant Microsoft Corp. in Redmond, Wash. "XML will be the technology that makes the supply chain more friction free."

HTML, of course, has long been the text coding system of choice on the World Wide Web. But because it was designed for displaying graphics and text, HTML is of limited use in business-to-business commerce. "HTML presents information," explains Schmidt. "HTML doesn't describe a [purchase order] or medical record. It describes the display of its contents."

XML, on the other hand, allows for the use of special tags to identify various types of messages. As a result, a browser could recognize that a sequence of numbers--say, 1,2,3--referred to a purchase order or advance shipment notice and then direct the appropriate computer application to act upon that information. "XML brings together the data and its meaning," Schmidt explains.

So-called process tags that could trigger a software application at a receiving company to launch an activity such as order fulfillment or shipment loading could also be included in an XML document. "It allows you to program the Web and integrate Web sites at the programmatic level," Schmidt notes.

But for XML to provide that level of data integration, trading partners would have to agree on definitions for the various types of documents as well as on standard ways of doing business. Although some companies such as Lucent are forging ahead and working with their trading partners, most experts believe that it would make more sense to wait for industry groups to reach some accord.

The Quest for Standards

A number of groups this past year have announced initiatives to provide XML standards. One of the best-known pioneers in this area is a computer-industry consortium known as RosettaNet. Launched in June 1998, RosettaNet today boasts a membership of more than 60 companies. The consortium has begun developing common definitions for business practices and products as well as standards for using XML to transmit that information through the supply chain. "RosettaNet is trying to develop standards that can be leveraged to make business-to-business e-commerce more efficient," says Tony Grzesik, vice president of Aspect Development, a software firm based in Nashua, N.H., and a member of the RosettaNet consortium.

To communicate with one another, supply chain participants must use a common vocabulary. To this end, RosettaNet has been working to develop a dictionary of terms. "RosettaNet is trying to address how to share product information between supplier and customer," explains Grzesik. "There needs to be a way to characterize a product. For example, we all have to agree that a memory chip is called a 'dram.'"

The dictionary provides the basis for the group to devise a standard XML framework for messages. "Once you have a commonly accepted definition, then supply chain partners do queries and product updates through software means," says Grzesik. "Once the definitions are completed, they'll be reflected in the form of XML [messages]."

Along with the definitions, RosettaNet is developing a plan to ensure the secure exchange of data between computer servers. It's also developing "partner interface processes" (PIPs) that specify how trading partners conduct their business processes with one another. "A PIP shows in a clear flow diagram what is expected of the partners and what kind of data to expect in a transaction," says Ken Ouchi, who serves as both vice president of contract manufacturer Solectron and as Solectron's representative on RosettaNet's information-technology board.

To date, RosettaNet has focused on procurement, establishing a standardized product identification system and PIPs to cover purchase orders. The consortium has agreed to use the Dun & Bradstreet D-U-N-S number to identify the trading partner and the Global Trade Item Number (GTIN) for product identification. [The 14-digit GTIN is a new international designation that encompasses the more familiar U.S. Universal Product Code (UPC) as well as the overseas EAN symbol for the identification of retail products.]

RosettaNet has initiated PIP pilots in which trading partners use XML messages to obtain access to electronic product catalogs and place orders. It hopes to roll out these supply chain standards on Feb. 2, a day it's dubbed "Econcert Readiness Day."

Other groups are also racing to develop XML-based messages. The Open Application Group (OAG), an association of enterprise resource planning (ERP) software vendors and users, has published more than 120 XML definitions for purchasing, shipping, and receiving communiqués. The group's definition of "advance shipment notice" is in the works. Lucent, for one, is already using OAG's definitions for its XML messages.

OAG's chief technology officer, David Connelly, notes that his group has been a leader in the development of XML messages. "This XML-related work at OAG has been going on for years," he says. "But we don't have the marketing machine of a RosettaNet."

The Uniform Code Council Inc. (UCC), which helped set bar-code standards in the grocery and retail industry, has also been actively involved in the development of XML standards for the supply chain. In addition to its work on XML, the UCC has backed the creation of UCCnet, an open-standards-based Internet trading community for the grocery industry. UCCnet is taking a hard look at XML technology as a means of communication within that supply chain community.

In fact, XML development work is being done in some unlikely places. The Automotive Industry Action Group, a nonprofit trade association of 1,400 automobile parts and components manufacturers and suppliers that has long promoted the use of EDI in the auto industry, has formed a working group to study the possible adoption of XML. "We have a working group that's coming in and its purpose is to take a more in-depth look at how XML can be used," confirms Dave Vannord, director of advanced development at CMI, an ERP concern that's a member of the AIAG.

Even the group that originally developed standards for electronic data interchange--the Accredited Standards Committee (ASC) X12--has begun looking at ways to translate standard EDI messages into an XML format. "ASC X12 is working to provide a means to represent the current EDI message format in an XML language context so Web browsers can understand the content of traditional messages," says Bob Miller, an independent consultant who chairs the X12 subcommittee on communications and controls.

Miller says a convergence of current EDI and XML approaches to data exchange poses a challenge for developers. EDI uses a syntactical approach--in other words, the placement of data in a defined order within the information stream determines its meaning. By contrast, XML takes a semantic approach to information exchange--it uses labels or tags to imbue data with meaning. "In EDI, the segment ID gives you some hint as to what the information refers to," Miller explains. "XML puts the meaning in the [tag] name."

The ASC X12 committee, in the meantime, plans to work on this issue with another international group, the Electronic Business XML (ebXML) initiative. The ebXML group was formed last fall by two organizations, OASIS and UN/CEFACT, to standardize XML business specifications worldwide. OASIS is a nonprofit consortium of international businesses, while UN/CEFACT is a United Nations-sanctioned body based in Geneva that oversees worldwide policy for trade facilitation and electronic business. "EbXML is focusing on the foundation-level transactions that are necessary for digital commerce," says OASIS executive director Laura Walker. "We look to industry communities [such as shippers] to supplement the baseline standard with domain-specific standards." Walker reports that the group plans to develop some XML-based specifications over the next year.

XML Babel?

Although all of the groups mentioned above are working on uniform standards, the end result may be the exact opposite--a fragmentation that results in a virtual XML Tower of Babel. "There are a dozen industry initiatives going on," notes CMI's Vannord. "[Their efforts] could result in a proliferation of standards. The supplier could potentially have a different standard for each customer."

In fact, some experts even foresee supply chain communities embracing their own XML standards rather than adopting a universal set of definitions. Bob Parker, the service director for electronic commerce at AMR Research in Boston, says he expects to see "hub" companies--which he defines as "people with sway in an industry"--define their own XML standards for the trading partners in a specific supply chain community. A gigantic retailer or manufacturer, for instance, might dictate the XML standards that its trading partners would employ to communicate with one another.

At least one XML expert believes that diversity in standards could actually be an advantage because various industry supply chains could address their unique business communication needs on their own and not require the blessing of a standards organization. "XML is really enabling innovation to occur independently so you have many more vertical standards," says Charles Allen, a vice president with the Fairfax, Va.-based software vendor webMethods Inc., which provides XML-based solutions for business-to-business integration. "There will never be a single überscheme, a single entity that defines all document types that can be exchanged."

Even if industry consortia resolve the issue of conflicting standards for XML-based messages, many analysts do not expect the technology to replace EDI in the short term. "Many companies--particularly logistics providers like ocean carriers and domestic trucking companies--have gone through many years of expensive development where their EDI capabilities are concerned, and the infrastructure isn't going away soon," says Dan Gilmore, an analyst with the Stamford, Conn.-based Meta Group.

In fact, some industry experts don't expect XML-based messages to become a mainstay of electronic commerce for another five years at least. "My guess is that it will be two and a half to three years before we get the first vestiges of standards that work," says consultant Bob Miller, "and five years before we see widespread use of them."