Home Depot Inc. and Procter & Gamble Co. are among a group of worldwide manufacturing and retail companies currently testing the first global standards for business-to-business (B2B) e-commerce in the consumer goods industry.
The newly created Global Commerce Internet Protocol sets basic rules for data access and security, message content and the flow of information between trading partners around the world.
The protocol was recently approved in Paris – just three months after it was first proposed – by 40 large corporations and eight trade associations representing approximately 850,000 companies.
“This is the equivalent of getting EDI [electronic data interchange] in place all over again,” says Ron Griffin, CIO of the Atlanta-based Home Depot Inc. and a board member of the Global Commerce Initiative, which adopted the new standards.
With buyers and sellers using the same formats to describe products, send and receive electronic purchase orders and transact business over the Internet, Griffin said he expects to shave product lead times by as much as one week. “That means less total inventory in the supply chain,” which should help companies slash overall costs, he says.
The Global Commerce Initiative, set up last October, comprises some of the world’s biggest manufacturers and retailers: U.S. members include The Coca-Cola Co., Kraft Foods and Wal-Mart Stores Inc., while London-based Marks & Spencer PLC and Britain-based Tesco PLC are among its European members.
“In recommending preliminary global data and communications standards, this move eliminates one of the biggest obstacles to effective Internet trading,” says Luc Vandevelde, co-chairman of the Global Commerce Initiative (“GCI”) and chairman of Marks & Spencer PLC. “Now, with this recommendation on data languages, the Internet can begin to realize its extraordinary potential as a commercial tool.”
The consumer goods industry’s largest Internet marketplaces – Transora, WorldWide Retail Exchange, CPGmarket.com and GlobalNetXchange – will also adhere to the new standards.
The Global Commerce Initiative’s main goal isn’t to set formal policies for worldwide Internet-based marketplaces, says Peter Jordan, project leader for the new protocol and also director of systems at Kraft Foods Europe.
“Exchanges are independent ventures,” Jordan said in a statement. “It is not [our] job…to influence the speed and scope of their development.”
Rather, the group’s intention is to facilitate instantaneous communication of clear and accurate information.
That’s something EDI has never truly accomplished in more than two decades of use at Procter & Gamble Co., said Ralph Drayer, senior vice president of efficient consumer response at the Cincinnati-based consumer goods manufacturer.
“EDI has been around for 20 years, but there’s 14 different EDI standards that P&G has [to follow],” Drayer said. “It requires different processing.”
With all buyers and sellers using a single global standard for purchasing a product like P&G’s Pringles potato chips, it will be much easier and faster for P&G – and other suppliers – to figure its total sales at a particular worldwide retailer, such as Wal-Mart.
The Global Commerce Initiative said its work will extend beyond the Internet to include other technologies, such as a worldwide bar-code standard.
In order to develop the Global Commerce Internet Protocol, working groups have been set up to address three key areas: data access and security, basic data content and basic information flow in B2B communications. A fourth group has been established to make recommendations on the overall process of managing changes to standards.