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April 3, 2000

Supply Chains Go Global
RosettaNet Helps Companies Speak The Same Language

Illustration by Kitty Meeks ike a 21st-century Rosetta Stone--the ancient Egyptian tablet that helped scholars decipher hieroglyphics--RosettaNet is helping companies speak the same language when transacting business in the global IT supply chain. Unlike the Rosetta Stone, which was discovered nearly 2,000 years after its creation, RosettaNet is moving at breakneck Internet speed. Formed in May 1998 to develop standards for the computer and electronics components industries, RosettaNet is a consortium of more than 200 companies. The group implemented its initial 10 specifications, known as Partner Interface Processes, earlier this year. In all, 85 new PIPs should be implemented within the next six months.

PIPs are Extensible Markup Language exchanges that let manufacturers, distributors, resellers, carriers, and customers along the supply chain carry out business processes in a standard way, rather than employing custom-developed procedures. PIPs determine how IT supply-chain partners interact with one another as they execute day-to-day business activities in areas such as partner-product review, product information, order management, inventory management, marketing information management, and service and support.

"By providing real-time information flowing back and forth among business partners, RosettaNet helps us determine what's the smallest amount of inventory we can have in the supply chain at any given time," says David Westmoreland, CIO of electronics distributor Arrow Electronics Inc. in Melville, N.Y.

In February, Arrow implemented a PIP with Intel to speed change orders for a high-valued chipset. Previously, Arrow would accumulate change orders throughout the day in its legacy inventory-management system, then submit them overnight through an EDI transmission. The next day, Intel would check its sales order-entry system to see if the chipsets were available and then respond that night with an EDI message to Arrow. Such a process could take 36 to 48 hours to complete. By using a PIP, the purchase-order change occurs immediately.

Though no one predicts the demise of EDI will happen any time soon, RosettaNet standards could eventually replace it as the main communications technology among business partners. A basic difference between EDI and RosettaNet standards is that EDI exchanges documents such as purchase orders, while RosettaNet defines business processes such as purchase-order management. EDI is mostly batch-oriented; RosettaNet offers real-time exchanges. EDI is a one-to-one connection; PIPs allow for multipartner relationships. EDI is usually transmitted over a value-added network; RosettaNet exchanges can occur over the Internet.

"A lot of process work is required to make EDI happen," says David Lafferty, VP of E-commerce at Tech Data Corp., an $11.5 billion computer hardware and software distributor in Clearwater, Fla. EDI requires both partners to devote staff resources to map data and integrate their systems. With RosettaNet, there's a significant time investment by members to help develop standards, which pays off when they implement PIPs.

RosettaNet members see the PIP adoption rate picking up dramatically by next year. Says Westmoreland: "Once you get the basics done, it will be easier to re-leverage those with the next partner."

Illustration by Kitty Meeks

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