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ACTA U N IV ER SITA TIS LO D ZIEN SIS FOLIA OECONOM ICA 157, 2002

X avier Alcala Navarro Ana Isabel Fernandez Fraga

A ndres del Rio Rodriguez A ntonio Obenza Fernandez

AN IDEAL MODEL OF DATA INTERCHANGE

BASED ON A REAL MODEL

There are industrial sectors that have been working with traditional EDI systems during the last decades. One o f these is car manufacturing. The traditional EDI legacy systems mainly link hub companies and first tier suppliers. During the last years new technologies and techniques have been developed that introduce vital changes in B2B: the Internet, the web and XML Legacy systems mean costly investments and still work satisfactorily; but 42H has to include all the supply chain companies, and all production sectors. This document tries to introduce an ideal model that, taking into account legacy systems, shows the way towards a fu ll integration fo r enterprises o f all sizes and kind o f activity. This model is a projection o f a real model already developed and working: ComprasAuto, developed by the Centre fo r Innovation and Services o f Galicia (Spain) as an order from CEAGA, a cluster o f first and second tier Galician companies in the supply chain o f Citroen production plant in Vigo (Galicia).

Introduction

Several technological advances and different needs have caused changes in business relationships during last years.

C om panies have looked for m eans of increasing profitability, reducing production costs and improving response time. D ifferent technologies have been used to achieve this.

Production chain autom ation and system connections in supply chain are exam ples of how to m inim ize costs.

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Procedure hom ogenization am ong com panies could be thought of, but investm ent in internal system s has been very high and not every com pany can afford replacing them for a new one.

There are different m ethods to connect m achines and softw are applications. Translators or a com m on globally accepted language are ways to obtain it.

A neutral way o f electronic data interchange accepted by every participant should be searched for. Some solutions have been im plem ented am ong significant partners but they were not able to be extended am ong small participants. Lack of application to horizontal m arkets and high costs have been the main problem s o f these kind of solutions. Exclusive system s cannot connect each other.

Internet has given the opportunity to create new interconnection techniques, som e o f which have satisfied the needs o f small com panies in vertical m arkets but none o f them has been able to reach a global solution.

A data interchange technology that can be turned into the facto standard has been developed over the last few years. It is called X M L (e x te n sib le M arkup Language). D ifferent im plem entations have been created but they do not cover global but particular needs. C om panies are gathering round som e developm ents in order to approach a neutral universal solution.

An im portant decision to be considered in new solutions is to force or not the disappearance of old data interchange methods. Great investm ents that were m ade to im plem ent traditional m ethods and their correct w orking can be reasons for not changing them.

An ideal model should reduce the third party intervention avoiding the third party to control relationships am ong participants. This party m ust be considered as a partner or a participant, but it cannot be allow ed to check all the operations.

Transactions security has to be im plem ented to assure suitable trust levels that do not lim it participant relationships.

The ideal model

The proposed model is based on existing technologies, taking into account that some o f them are still being developed and supported by main enterprises and institutions.

In a global environm ent, standard usage reduces the third party intervention and the specific interm ediate m odules that carry on unification tasks.

A new model should allow to exchange inform ation by electronic m edia and m inim ize human activity.

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Internet has been chosen as the transm ission m edia and X M L as the exchange standard in the ideal model.

N ow adays alm ost every com pany is connected to Internet. Scalability, neutrality and global coverage are offered by this network. T hese are som e of the reasons why it has been chosen as the transm ission media.

X M L is a suitable way o f exchanging data betw een any different application and system.

In a real fram ework, participants have different technological capacities. Some com panies have installed very expensive system s that work properly. O ther com panies own sim ple system s.

The ideal model should avoid organisations to have to change their im plem ented systems. A bridge am ong the old system s and the proposal model is needed. An integration between traditional EDI and the new model is also required. This last requirem ent means that there must be a connection point am ong Internet and the networks where traditional EDI is executed.

EDI syntax must be converted into XM L syntax using som e kind of translation and only elem ent references. ED1-XML m essages can be treated as a standard that is understood by partner system.

ANSI and ED IFA C T have recently created repositories to allow partners expand their business to new potential clients.

P articipants that use EDI will check that a new X M L-based model can offer more services and give new advantages.

It is more convenient to create a com m on ju nction to process translations instead o f installing an EDI translator in each com pany. G athering every com m unication o f each organisation in one single point is m ore effective than assigning a com m unication channel for each relationship with their partners.

T he E xchange language

A global standard must be defined to resolve needs o f different com panies. D ifferent im plem entations o f XM L can be incom patible with each other. Experience has shown that it is not recom m endable to create a standard that covers all the business characteristics o f the com panies because it may be converted into a m assive inflexible tool like traditional EDI.

A way to m ake easier autom ated processes m ust be offered in order to find new participants.

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Small com panies have different needs to big ones. A big enterprise usually ow ns databases with many tables and fields. A docum ent generated by a database will probably be too com plex to introduce into a small com p any ’s com puter system.

One solution is to define com m on business relationships item s in a global X M L standard that covers acquisitions in an horizontal m arket. V ertical m arket participants can adjust this specification to their sector particularities, trying to cover all supply chain aspects.

Vertical market participants will be integrated with other partners through a unique, appropriated standard for their business.

There are num erous structures that are com m on in every business relationship, but various names are used in different industries. Only neutral identifiers will make it easy to link standards from different m arkets.

An only reference model solves the problem o f using different local languages, to define personalised exchange standards that identify elem ent nam es o f each com pany.

Business processes and data flow betw een participants should be studied to develop a standard that will be used in a vertical market. A fter that, an XM L standard will be defined according to those processes and several X M L schem as will be created. They should be small in size and independent to im prove their reuse.

Standard schem as m ust be accessible for any participant in business. They will be stored in a repository.

Technology suite

The proposed model needs participants to be connected to Internet. Bill Sm ith, a Sun M icrosystem s m em ber, has represented it as a layer suite.

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V e r t i c a l Standard V ertical Stan d ard V ertical S tan d ard Vertical S tan d ard W ch S e rv ic e s <ud d i. w s d usoapi

H orizo n tal X M L stan d a rd (cbXML)

X M L fu n ctio n s

X M L , X SLT, S ch em as

Internet P ro to co l rravtP , http, d n si

Fig. I Suite proposed by Bill Smith

The low er layer is made up o f Internet and its standarized protocols. XM L, X SLT and the schem as are in the next layer. Com m on com ponents of horizontal relationships are defined by functions o f the set o f X M L technologies in third tier (ebX M L as an exam ple). Web services allow to find new partners (e.g. UDDI), describe offered services (e.g. W SDL) and how to interact with them. Finally, defined vertical standards for different industrial sectors are placed in the upper layer.

T hird m obile phone generation appearance should be taken into account due to expectation about m-com m erce.

In XM L, data and docum ent structure are in different files. If different form ats of a sam e docum ent can be created, new devices as m obile phones will be easy to integrate into the model adding different structures for them.

Structure o f the new model

Som e advantages to install a concentration point can be obtained. Bridge functions am ong different system s would be established at this point. Som e value-added services, as dynam ic data exchanges or auctions, can be offered. D iscoordination problem s can also be solved.

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A universal general m eeting place is not effective. Thus, different partners are gathered in appropriate concentration points according to their business.

Not only vertical relationships should be covered. Horizontal relations that are com m on in some com panies from different sectors m ust be gathered making use o f a general horizontal standard previously m entioned.

T here are tw o types of concentration model: vertical (referred to different industrial sectors) and horizontal (com m on process-oriented).

The proposed model defines these groups as vertical m arketplaces that can be extended horizontally or vertically. The final result model is a m arketplace grid.

Specific needs of each crossing point are resolved in different portals. Success depends on getting a great num ber o f participants.

Horizontal Relationship 1 Í A l ! : b i : i . . — i ! c i !L ___1 r ГМ ;a2! t . . i i.B 2 i L. - - 1\ C 2 \ 3 :а з: L. - - 1 : B 3! U - _ 1 : C 3 : L .___1 1 . j XML Sector

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Global XML Vertical Marketplace Fig. 2 Sturcture

Demand and supply are aggregated in m arketplaces. T his fact adds value reducing transaction costs and inform ation search.

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A m any-to-m any relationship model is obtained with this onel. C om panies will be able to connect to the proper m arketplace in accordance with their kind o f business. Every participant system would exchange data using the XM L standard.

A vertical m arketplace includes portals that are part o f an horizontal m arkeplace having vertical market characteristics and offering a better response to com panies needs.

M arketplaces are neutral and do not favour buyers or suppliers. N obody sees them as a threat and everybody benefits from their advantages. They are a m eeting point between potential partners and a interconnection path am ong different technological systems. Great investm ent is not needed to establish a relationship. Not only a big organisation can access to it but also a small one. They must allow different connection types and actions within them.

Fig. 3 Neutral Marketplace

EDI in the new model

Big com panies have exchange system s that use traditional EDI. T hey wish to go on using them. C osts are reduced by using a m arketplace connection through Internet and avoiding any V alue-added network.

The portal should offer EDI into its internal system. T he m ost suitable solution is a repository usage that offer m appings between X I 2 or ED IFA C T into a com m on X M L standard.

H ub c o m p a n y Hub company Supp li er B u y e r B u ye r Marketplace Su pp li er Supp li er

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N ow adays there are tools that mutually transform m essages written with traditional EDI and XM L syntaxis. They use data dictionaries to convert EDI m essage into an XM L docum ent. These dictionaries are stored in the repository.

Sm all com panies and final users

One o f the objectives of the ideal model is to allow sm all com panies to exchange inform ation with other enterprises when having weak resources within their organisation.

A com puter connected to Internet is needed to exchange data. Client softw are has to be installed in this m achine. This softw are is in charge of understanding XM L m essages and sending answ ers in standard format.

If a small com pany doesn’t own an internal system , it can use a hosting model from a third party that integrates its data into the m arketplace. It allows access to applications using a W eb system. The ideal model can offer these services to small partners.

Final users will be able to enter consum er-oriented portals. Purchase orders can be sent using a W eb brow ser and confirm ations can be received.

The model will integrate the internal system s o f the m ost im portant participants by means o f XM L. New partner search will be easy, since participants are grouped in portals according to their needs.

T he traditional scheme o f supply chain is m odified by the suggested model. Every participant will belong to a m arketplace. All the m arketplaces are connected so that any com pany will be able to make business in any o f them.

M arketplaces own portals where horizontal acquisitions would be able to be done. General needs of organisations that work in a vertical m arket are covered in specific portals. Portals are the junctions between different m arketplaces.

If an acquisition cannot be solved in a m arketplace, a requirem ent will be sent to find potential partners to resolve it. The addressee m arketplaces will add it and process the m essage if they are able to do it.

Occasional purchases in other sectors can be benefited from offer or dem and aggregation, that are presented by m arketplaces.

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Fig. 4 UDD1 Relationship and marketplaces

Security

T ransm ission m edia must guarantee transaction security. There are different techniques to im plem ent it.

Every point should be covered with secure modes: transm itter, the channel established between transm itter and m arketplace or receiver and m arketplace.

IPsec is a netw ork protocol. It could be used but it is inefficient due to its com plexity.

Firewalls and SO A P transm ission protocol can also be used. Only critical data must be encoded.

Netw ork model facilitates the usage o f certificates. T his is a requirem ent to operate through m arketplaces. Every participant has to certify.

Smart cards could be included as a security m ethod. U ser profile is stored into it. It does not m atter w herever a user is. To enter the system the user has to

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type a PIN. People trust smart cards because their technology is sim ilar to credit card technology.

Term inals connected to each access point check smart card validity.

Digital signature guarantees authentication, data integrity and no repudiation.

C onclusions o f the ideal model

The proposal model requires third party intervention in relationships. Internet access providers are needed to connect participants to Internet.

M arketplaces are the base o f the ideal model. Neutrality m ust be offered. C onsortium s am ong partners of different sectors should be prom oted. M arketplace success will depend on the am ount of participants.

If EDI is integrated into m arketplaces, big com panies will participate in the global system. W hen most partners adopt the new model and after checking the way it works, more participants will be willing to collaborate and benefit from it.

Standard adoption is a critical point. Success depends on the exchange standard based on XML. Vertical standards may not constitute a conflict and could be expanded rapidly. Horizontal standard definition that keep up all com m on processes in business and make easy the integration o f small com panies could require great effort.

Last D ecem ber UBL initiative was presented in Interoperability XM L. This initiative is looking for a universal language for business. T his language will be based on ebX M L specifications and xCM L vocabulary which will be m odified to adapt the other standards, too (ED I, RossaNet, O A G IS ...).

Every business relationship requires agreem ents. R elations by telem atics media will not elim inate this need.

The proposed model is a harm onised model that tries to offer a secure fram ew ork in which any kind o f participants can have access.

Future research lines

The ideal model is based on different technologies. Before im plem enting it, several problem s will appear because som e technologies are still being tested.

Research about XM L exchange standards must be carried out. Experience in com panies could show how to im prove them.

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Several softw are tools have to be adapted so that they will be able to interact with XM L easily.

It is im portant to analyse m ethods of XML. docum ent storage and retrieval. An efficient m anagem ent model m ust be searched for.

The developm ent o f security initiatives in this field must go on (X M L Encryption, S A M L ,... )

A reality - C om prasA uto project

EDI has been working am ong the main autom obile m anufacturing com panies and their first tier suppliers for two decades through V A N s and clearing centres.

The sector's second tier com panies are usually SM Es not connected with first tier partners by m eans o f EDI.

C om prasAuto is a project developed in G alicia (Spain) after a field study on

com panies from the supply chain o f Citröen.

Decision was taken to create a new e-com m erce vertical m arket system to overcom e the lim itations o f the present m odel, satisfying the needs o f the second tier com panies while w orking with legacy EDI system s.

It helps to retrieve inform ation about products (catalogues), to acquire productive and non-productive goods (logistic circuit and general purchasing circuit) and to access the relevant inform ation for the autom otive sector (new s, standards, ev e n ts,...).

It w orks in a hybrid way, com bining EDI (O D ETTE) m essages transm itted by first tier com panies with data displaying and business negotiation in web mode.

X M L is the technology chosen for interfacing betw een com pany m anagem ent system s and the portal.

A converter tool was developed to easily create XM L docum ents. Users can dow nload from C om prasAuto and install it in their equipm ent.

In the near future integration work will continue, based on XM L,

- translating all traditional EDI m essages necessary for the autom otive industry docum ent purchase cycle,

- installing ED I-X M L translators into first tier com panies' system s for dual operation,

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162 X. A, Navarro. A. I, F. Fraga, A. d. Rio Rodrigue. A. О. Fernande/

- com pleting the docum ent purchase cycle on the portal, w hile off-portal ebX M L m essage exchange grows into the sector.

C om prasA uto is a clear exam ple o f a portal as a crosspoint for a vertical m arketplace (m ade up of autom otive industry portals) and an horizontal m arketplace (w here portals of different vertical m arketplaces coincide in interests like, for instance, softw are or any other present-day industrial com m odity).

T he C entre f o r Innovation and Services o j G alicia is in charge of developing C om prasA uto. It has been w orking in projects related to e-business for several years.

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