The Future of EDI. Trends in electronic communication - understanding the future technological needs of suppliers, manufacturers and retailers

Transcription

1 A Datamonitor report The Future of EDI Trends in electronic communication - understanding the future technological needs of suppliers, manufacturers and retailers Published: Dec-03 Product Code: Providing you with: 192 primary interviews with the 5 leading retailers, 22 manufacturers and 170 suppliers of the UK FMCG sector Extensive coverage of the UK retail sector, including market segmentation, investment trend analysis, standards usage and profiling Use this report to... Understand the key business and technology issues impacting on the use of B2B standards from the viewpoint of retailers, manufacturers and suppliers Drivers and inhibitors impacting the current and future usage of B2B standards and electronic communication mechanisms Analysis of early stage compounds and devices, identifying the most promising candidates through SWOT analysis Strategic and tactical recommendations for solutions providers and the trading community suppliers, manufacturers and retailers

2 The Future of EDI - Trends in electronic communication - understanding the future technological needs of suppliers, manufacturers and retailers Introduction Previously, there has been no mechanism to accurately record the current trends or usage of technology, standards or B2B communication methods in the UK FMCG sector. This report provides accurate end-user survey information, focusing on the trends and readiness of standards and technologies of a cross-section of the supply chain - retail/manufacturing hubs and suppliers. In conjunction with e.centre, Datamonitor presents key analysis of the business and technical issues impacting on standards adoption and electronic trading abilities is provided, while highlighting the business drivers for change in the UK FMCG sector. Examination of respondents readiness for adoption / outlook on technologies such as integration, process management and Web services. The report highlights the level of influence manufacturers and retailers have on future business and technology strategies of the supplier base. Also provides an indication of the current / future investment strategies, broken down by company profile. Key findings and highlights Reasons to buy Supplier VAN usage is set to double over the next months and the fall in broadband prices is driving the use of always-on Internet increasing browserto-portal and point-to-point technologies such as AS2. 29% of suppliers have integration solutions planned, but show an apprehension to new standards, such as XML. Global Data Synchronization (GDS) drive as retailers (and manufacturers) strive for efficiency and consistency of product data throughout the supply chain. Education is essential to ensure collaboration from the whole supply chain. Experimentation and (some) deployment of Web services and use of Web-EDI will also increase over time, as retailers and manufacturers devise alternative ways to incorporate the supply base into operational processes at lower costs. Increased support of RFID technologies is planned by both retail and manufacturing hubs. Understand the key business and technology issues impacting on the use of B2B standards from the viewpoint of retailers, manufacturers and suppliers Analyze the likely technology and B2B standards investment and improve your product positioning Realign your solution offering and distribution strategy using the findings from Datamonitor s end-user survey of the UK FMCG sector For more information... From Europe: tel: fax: tcsales@datamonitor.com From the US: tel: fax: ustcmarketing@datamonitor.com

3 Sample pages from the report Survey participants profile Figure 5: Retailers and manufacturers trade sectors 100% 90% 80% Industries that Retailers trade with 100% 90% 80% Industries that Manufacturers trade with 70% 70% Supplier analysis 10% 10% 0% Figure 0% 17: EDI message use Retail Food & Beverages Pharma Retail Food & Beverages Pharma Manufacturing Healthcare Manufacturing Healthcare Increase usage/support (NO Rank) Source: e.centre D A T A M O N I T O R Increase usage/support (Rank 2) Increase usage/support (Rank 1) Figure 5 indicates the diversity of most organisations within the UK FMCG Manufacturer sector Decrease and usage/support and retailer (NO Rank) analysis highlights the fact that the manufacturers not only trade with retailers, but have close Decrease usage/support (Rank 2) business relationships and operations that cut across a significant number of supply Decrease usage/support (Rank 1) chains, with the foodservice industry being a good example. Traditionally, only large organisations with sufficient IT resources have embraced Both retailers and manufacturers demonstrate strong acceptance electronic communication. This is further confirmed by the results in Figure of EAN.UCC 6, identifiers illustrating that many large companies are able to communicate with over 80% of all trading partners electronically. As would be expected, the percentage of electronic Figure 26: Retailers indicate maintained usage of GLN and GTIN with an communications declines with annual revenues / 10% size of organisation. increasing utilisation of SSCC identifiers However, there are still a significant number who are obviously still dogged by 100% 0% manual processes. Though many would expect the retailers to have electronic 90% TRADACOMS EANCOM XML communications with the majority of their suppliers, there are a number of factors that 80% Rank 1: Highest priority could have influenced this data. These include a large number of occasional or 70% Source: e.centre D A T A M O N I T O R seasonal suppliers who are not e-enabled, and the inability of the retailers with lower turnovers to force e-business solutions on to their smaller suppliers. Customers influence and dictate 70% of messaging support 10% It is clear from Figure 18 the importance that the customer plays in the adoption of 0% standards. Over 70% of respondents cited customer Global influence Global as the Global key business Global Serial Serial Global Global Location Location Trade Item Trade Item Shipping Shipping Returnable Returnable reason for supporting messaging standards. Generally, the suppliers have to follow Container Container Asset Asset the directions of their major customers, or face the loss (Now) of a valuable (18-24 revenue (Now) stream. (18-24 Code Code (18-24 Identifier Identifier The future of EDI trends in electronic communication (Now) (Now) (18-24 Datamonitor (Published 12/2003) Page 29 Fortunately however, customers in general have learned from past mistakes of This report is a licensed product and is not to be photocopied forcing business partners to adopt particular Source: e.centre initiatives and they are far more D A T A M O N I T O R sympathetic to the needs of the suppliers. Like the suppliers, retailers and manufacturers reinforce the fact that the use of EAN.UCC identifiers, especially the GTIN (global trade item number), is an essential component for conducting business. The use of the GTIN is a prerequisite for trading with the larger retailers. Increased use of the GLN (global location number) and SSCC (serial shipping container code) identifiers is expected, as well as increased levels of expenditure in order and product tracking initiatives. Approximately 80% of retailing and 59% of manufacturing respondents express an understanding of the The future of EDI trends in electronic communication benefits associated with the EAN.UCC numbering system. Datamonitor (Published 12/2003) Page 45 This report is a licensed product and is not to be photocopied The future of EDI trends in electronic communication Datamonitor (Published 12/2003) Page 56 This report is a licensed product and is not to be photocopied Request more sample pages...for FREE! From Europe: tel: fax: tcsales@datamonitor.com From the US: tel: fax: ustcmarketing@datamonitor.com

4 The Future of EDI - Trends in electronic communication - understanding the future technological needs of suppliers, manufacturers and retailers Table of contents EXECUTIVE SUMMARY Introduction Conclusions - Preamble - Manufacturers and retailers believe business benefits of standards outweigh their complexity - Industry support for the EAN.UCC system but further adoption expected - Divergent strategies threaten supply chain efficiency and performance for the SME - Integration: the age old problem - Upstream adoption is the weakest link in the supply chain - Collaboration is the way forward Survey respondents overview Key issues affecting suppliers' participation in the UK FMCG supply chain - Business issues / strategies - Technical issues / strategies - Standards adoption Key issues impacting manufacturers' and retailers' adoption of standards in the UK FMCG supply chain - Business issues / strategies - Technical issues / strategies - Standards adoption INTRODUCTION Background Objectives Scope Survey methodology How to use this report Acknowledgments SURVEY PARTICIPANTS' PROFILE Introduction Suppliers - industry sector profile Retailers and manufacturers - industry sector profile SUPPLIER ANALYSIS Business issues Business strategies - Growing revenues and eliminating cost centres remain high priority for the forseeable future - Stock control and GDS will drive future IT usage and investment - Product bar coding still dominates usage of EAN.UCC identifiers - Increased education on EAN.UCC identifiers required - Suppliers' business strategy summary Technical strategy - Greater levels of electronic communication with customers, but generally low penetration - Paper based messages and processes still dominate the suppliers' operations - IT investment levels set to increase as suppliers embrace a variety of technologies to enhance electronic capabilities - and fax remain the preferred methods for electronic communication - Integration will remain an issue - Growth in VAN, extranet and continued use of Web-EDI technology architectures expected to enable information exchange - Suppliers technical strategy summary Standards adoption / strategy - Increased support for standards, with TRADACOMS dominating - Customers influence and dictate 70% of messaging support - Low penetration of messaging sets restricts visibility throughout the supply chain - Too many standards, but suppliers follow market demand and customer requirements - Although costs are manageable, most suppliers have no way of measuring the benefits of standards adoption - Suppliers' standards strategy summary MANUFACTURER AND RETAILER ANALYSIS Business issues Business strategies - Growing revenues and reducing costs are key challenges, with a growing demand for integrating business partners - Continued investment in traditional application sets, with a focus on GDS - Both retailers and manufacturers demonstrate strong acceptance of EAN.UCC identifiers - Retailers and manufacturers business strategy summary Technical strategy - TRADACOMS and paper formats dominate the send and receive messaging processes of the retailers - Significant growth in Web-EDI and RFID technologies expected in the next months - Traditional middleware and in-house integration facilitate the linking of trading partners with internal systems - VANs will carry the lion's share of messages - Over 70% of manufacturers plan to use the AS2 protocol for communicating electronically over the internet - Retailers' and manufacturers' technical strategy summary Standards adoption/strategy - Increasing support for TRADACOMS, EANCOM and various XML standards - Adoption of standards aims to reduce error rates and associated costs - Low message use restricts process visibility and efficiency - Business benefits of standards outweigh the sheer number and...van messaging is still a long-term bet for both hubs and spokes. However, retailers and manufacturers must look to leverage less expensive Internet-based technologies to enable the participation of additional spokes in an automated supply chain... Tony Hart - Datamonitor Analyst

5 complexity of those currently on the market - Retailer and manufacturer standards adoption/strategy summary CONCLUSIONS Preamble Manufacturers and retailers believe business benefits of standards outweigh their complexity Industry support for the EAN.UCC system but further adoption expected Divergent strategies threaten supply chain efficiency and performance for the SME Integration: the age old problem Upstream adoption is the weakest link in the supply chain Collaboration is the way forward Moving forward APPENDIX 1: GLOSSARY APPENDIX 2: SUPPORTING COMMENTS FROM MANUFACTURERS AND RETAILERS - Multiple technology combinations supported without detrimental affect to business operations - Various information sources utilised to develop and maintain e- business strategies and initiatives - e-business strategies must consider each element of the equation to ensure balance and success - Matching the needs of the customers with the capabilities of the suppliers - Key objectives to ensure business success in a collaborative working environment APPENDIX 3: DATAMONITOR FUTURE READINGS - Reports - Briefs SPP writing team List of Tables List of Figures Figure 1: The supply chain in the UK FMCG sector Figure 2: Suppliers - number of employees and annual revenues Figure 3: Suppliers - industry sector profile Figure 4: Retailers and manufacturers - employees and annual revenues Figure 5: Retailers' and manufacturers' trade sectors Figure 6: Electronic communication with trading partners Figure 7: Business challenges facing suppliers Figure 8: IT usage and investment Figure 9: Use of EAN.UCC identifiers for electronic trading Figure 10: Supplier understanding of the business benefits associated with EAN.UCC identifiers Figure 11: Use of standards with trade partners Figure 12: of messages processes/ generated per day Figure 13: Technological capabilities and levels of investment Figure 14: Electronic communication channels Figure 15: Integration will remain an issue Figure 16: Suppliers' communication channels for commercial transactions Figure 17: EDI message use Figure 18: Reasons for implementing message standards Figure 19: Use of message sets Figure 20: Use of message standards Figure 21: Suppliers' view of business to business communications Figure 22: Business challenges facing retailers Figure 23: Business challenges facing manufacturers Figure 24: Retailers' application priorities Figure 25: Manufacturers' application priorities Figure 26: Retailers indicate maintained usage of GLN and GTIN with an increasing utilisation of SSCC identifiers Figure 27: Manufacturers aim to increase the usage of GLN and SSCC identifiers in the next months Figure 28: Send and receive messages by format by retailers Figure 29: Message formats between manufacturers and customers Figure 30: Message formats between manufacturers and their suppliers Figure 31: Retailers' technological capabilities Figure 32: Manufacturers' technological capabilities Figure 33: Retailers' integration technologies Figure 34: Manufacturers' integration technologies Figure 35: Retailers' communication channels for commercial transactions Figure 36: Manufacturers' communication channels for commercial transactions Figure 37: Retailers' internet use Figure 38: Manufacturers' internet use Figure 39: Retailers' message standard use Figure 41: Retailers' justification for standards use Figure 42: Manufacturers' justification for standards use Figure 43: Messages used by retailers and manufacturers Figure 44: Retailers' view of business to business communications Figure 45: Manufacturers' view of business to business communications adoption...the (retail and manufacturing) hubs must take the lead in any standards initiatives, whilst being realistic of the limitations of its key spokes, and thus be willing to share information of longer term positioning and strategies where necessary... Tony Hart - Datamonitor Analyst

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