ecotton's Electronic Warehouse Receipt Providership System Intelligent Decisions Inc. / Intelligent Storage Services, Inc. 3200 Glen Royal Rd., Suite 112 Raleigh, NC 27612 (800)571-4434
ecotton's Electronic Warehouse Receipt Providership Overview An electronic warehouse receipt provider maintains electronic records regarding the ownership and status of bales of cotton stored in warehouses. This electronic record keeping replaces paper warehouse receipts (cards) which were bearer instruments representing ownership. Instead, an electronic warehouse receipt (EWR) is created for each cotton bale receipted into a warehouse. An EWR is simply a record in a database that resides in a secure central computer. A provider is to bales of cotton what a bank's central office is to money. A user's account on the provider system is like a person's checking account, but contains warehouse receipts instead of money. The effect of EWRs on the industry In the past, a warehouse had to print a paper warehouse receipt for every bale of cotton it received. The warehouse then had to deliver these paper receipts to the owners (or their representative) of the bales. A producer who warehoused 100 bales had 100 paper warehouse receipts to carry around and keep track of, just as a person might carry all his cash around with him rather than deposit it into a checking account. With EWRs, the warehouse ("creator") simply makes an electronic deposit of bales into the producer's account (or designated agent's account) with the provider, just like direct deposit of a paycheck. This records the producer as the "holder" of the EWRs. The "holder" has the same exclusive rights and privileges as the bearer of a paper warehouse receipt. Previously, when the producer sold his cotton to a buyer, he had to send or hand the paper receipts over to the buyer, and the buyer would send or hand the producer a check. Now, with EWRs, the producer makes an electronic transfer from his provider account to the buyer's provider account. This is analogous to a wire transfer of money at a bank. When the producer initiates the transfer, the buyer initiates transfer of money to the producer. The buyer is now recorded as the "holder" of the EWRs. If desired, this transaction can be handled by a gin, bank, or other neutral party. This electronic transfer can take place many times as a bale passes from merchant to merchant. With paper receipts, once the final merchant sells the cotton, it orders the warehouse to ship the cotton by sending the cards back to the warehouse to be canceled. With EWRs, once the merchant's provider account has received the transfer (recording the merchant as the "holder"), the merchant can order the warehouse to ship the cotton by issuing a shipping order, and transmitting an electronic release to the provider for the bales involved. This is like authorizing an electronic payment or draft from a bank account. The final step in a paper warehouse receipt's life is when the warehouse stamps the card as "canceled" and ships the bale to the mill or other destination. With no card to stamp, an EWR is canceled by an electronic message to the provider, comparable to performing the authorized electronic draft from the merchant's bank account. For every action that would be taken on a paper warehouse receipt, there is an equivalent action on an EWR. Benefits Warehouses that use EWRs will not have to print, store, deliver, receive, or stamp paper warehouse receipts. Producers and merchants will not have to store stacks of cards, use an overnight delivery service to deliver cards, carry boxes of cards to the bank vault every evening, or keypunch or use card readers to process bales through a computer. All these actions are just a phone call or mouse-click away. Each action on an EWR can be accomplished in seconds, instead of the hours or days it took with cards, and there's no risk of cards being lost or damaged in transit.
System Description Just as banks store electronic money in central computers, the ecotton EWR Providership stores electronic records of warehoused bales in a central computer system. Design of the system began in the Spring of 1994, and functional development was completed in March of 1995. The system is fail-safe and has redundant state-of-the-art components. There is even a computer to watch all the other computers, constantly monitoring their activity and ensuring continuous operation 24 hours a day, which started in May of 1995. A new company, Intelligent Storage Services, Inc. (ISS) has been formed to operate the system. ecotton provides support and other services for ISS. ecotton and ISS will continue to update the system with new features on a continuous basis. Transactions are initiated by the creator or holder of EWRs by the use of transaction files. A transaction file is basically a request to perform some action on one or more EWRs. For security and integrity reasons, no direct or interactive manipulation of the critical EWR databases is possible. Can you imagine if your bank allowed everyone to use their computers to move money around, without having to go through a teller or ATM machine? The basic flow of each transaction is as follows: A creator or holder creates a data file (also known as a text file or ASCII file), either using their existing computer software or with the assistance of a free user-friendly program supplied by ecotton called VECTOR, or both. Any cotton-industry software that can create a text file should be able to create the relatively simple files required. The text file is made into a transaction request file which contains user-specific information that will be used in a later processing step to enhance security. The file is sent via modem or via the Internet to ecotton computers located in Raleigh, North Carolina. The choice of communications software used with modems is up to each user, but ecotton supplys a shareware program named Procomm in the registration package. If Procomm is used, the entire call is automated and very quick. Before sending the file, the user must actively pass through the first security gate by entering his or her user ID and password. A second (and optional), passive security verification takes place as the user is logging in, using a telephone-line probing technique to ensure the call is originating from the user's location. Internet communications use a proprietary (and highly secure) transmission protocol called Secure IntelliSockets. After the file is received by the ecotton computer, if it passes further security tests, a series of other computers validate and process the file (checking for errors, validating the holder of each EWR against the user posting the file, and updating the EWR databases) and confirmation(s) are prepared. As the name implies, "confirmations" confirm that a transaction request file was received and, if valid, processed. The confirmations can be detailed or summary. Detailed confirmations are delivered as electronic message files (available next time the user logs on to the system). Summary confirmations are delivered via immediate fax, email, or both. The best option is where a half-page summary confirmation is immediately faxed and/or emailed to all parties involved, and the detail of the transaction is posted as an electronic message file. This summary fax is sent to the fax number we have on record for each user, providing immediate notification that a transaction has taken place. Detailed confirmations delivered via electronic message file can easily be used to import EWR data directly into a user's existing computer software. When a user requests a summary report, the report is delivered via fax and/or email. When a user requests a detailed report, the report is delivered as an electronic message file. A summary confirmation indicating that the report is ready is also delivered separately via fax and/or email. Detailed confirmations, if delivered via electronic message file, can easily be viewed, printed, converted to data, and/or stored on the user's computer using ecotton's VECTOR utility.
Providership Functions These functions are available to everyone and are accomplished while connected to the ecotton providership computer system. Post transaction file(s) The type of transactions allowed in the file are limited by the user type. See the section on "Transaction Files" below. Retrieve waiting messages These are usually electronic message confirmations, but can be notices specific to you from ecotton. The system tells you how many messages are waiting (if any). Retrieve news flashes These are notices to all users, such as a listing of new features available on the system or in an update to VECTOR. The system tells you if there are new news flashes that you haven't received yet. Change your password We recommend you do this periodically for maximum security on your account. Retrieve the latest version of VECTOR Downloads the latest version of the VECTOR utility to your computer. A version date is shown so you know if you have the latest update. A news flash should be available to describe the new features in the update. Retrieving the update is optional, but may be necessary in order to use new features of the system. Retrieve the VECTOR file specification Downloads a text file outlining the format of transaction request files. This is mainly for banks or software developers to find out how to condition transaction files without using VECTOR or to assist VECTOR by pre-creating most of the data for a transaction request file. This is a technical document, and may be updated whenever VECTOR is updated. Most users will never choose this option. Retrieve the schedule of fees The fees remain constant for an entire season (although new features may be added during a season with new fees), and the schedule is available in printed (or faxed) form to anyone considering signing up as a user of the provider system. It is also included in the user registration package. Retrieve the user list Downloads a text file listing all current users, including their company name, city, state, and user/holder ID. Some users may have multiple accounts for different purposes, so it's still a good idea to contact the holder directly to find out which holder ID to use for transfers. VECTOR can use this file to provide a selection window when asking for a holder ID. VECTOR Functions VECTOR is the interface program that is run on the user's PC. Major functions are: Prepare transaction file(s) Allows the user to initiate a transaction by specifying or creating a file. An unlimited number of transactions can be prepared before sending to the provider. Comments can be attached to each transaction, and will show up on the recipient's confirmation fax. All transactions, including reports, are initiated from this screen. Connect with provider system Starts communications with the provider system and launches a script which automates the connection, posts new transaction files and retrieves waiting messages.
Retry last call to provider Will recall the provider and attempt to send and/or receive the same files as the previous call. This function is used when a "Connect with provider system" fails for any reason, including entering the wrong password or receiving a busy signal. View files Allows the user to view, print, and/or store confirmations, news flashes, and other messages retrieved from the provider system. A "strip" function is also available which will turn a confirmation file into a data file suitable for reading into any cotton-management software with the ability to import outside data. The number of unread files is shown on the menu. Enter header layouts Different merchants or warehouses may need additional data included with transfer or shipping order transactions. They can create a header that asks for this additional information when the transaction is prepared. This function allows you to enter new header layouts as merchants request them. VECTOR has some header layouts preinstalled. Toggle guest mode A "guest mode" is available so that a grower who does not own a computer can run VECTOR on the computer at the gin, warehouse, or merchant's office without sacrificing security, just like he can use any ATM bank machine to conduct banking transactions. It can also be used to quickly change between different holder IDs for companies that have multiple accounts.
Transaction Files Some transactions can only be performed by certain types of users (warehouses, producers, merchants, and banks), and the types of transactions allowed are different for each. Following is a list of allowable transactions for each user type. Note that warehouses and banks can also be holders, but producers, gins, and merchants can only be holders. Transactions initiated by warehouses Create electronic warehouse receipts The EWR number for a bale is the same as the warehouse tag number. Complete bale information is required for each receipt, including EWR number, gin ID, gin bale number, date stored, initial holder ID (producer, producer's agent, gin, bank, cooperative, etc.), format (electronic, paper, or block), and net weight. There is also a miscellaneous area called "cargo" which records information useful to buyers and merchants, such as tare weight, crop year, compression code, tariff paid flags, and grower information. It is important that every initial holder be registered with the provider prior to having bales stored in the warehouse. Update/correct warehouse receipts A warehouse can make updates and corrections to existing EWRs, including gin ID, gin bale number, date stored, net weight, and cargo. The warehouse must be the holder of the EWR to change anything other than cargo. Void warehouse receipt numbers In certain situations, a warehouse may not want to use a certain range of EWR numbers. If a warehouse bale tag is unusable (damaged), or the warehouse is a gin/warehouse combination and a group of bales are tagged and shipped gindirect, then no EWRs will ever be issued with those numbers. Voiding these numbers reduces potential errors and fraud. Multiple sequence ranges are allowed, but must be registered with the provider prior to being used. Cancel/ship warehouse receipts Each EWR must eventually be canceled, which prevents any other action from taking place on it. The only information required is EWR number(s) (specified individually or in a range). A shipping date must be included for a group of EWRs. This process can be reversed in case a warehouse mistakenly cancels the wrong EWR, but permission must be obtained from the warehouse's licensing authority. Convert EWRs to paper warehouse receipts When EWRs were still in the process of being accepted, a holder could tell the warehouse that he or she would rather have a warehouse receipt in paper form. The warehouse would print the paper receipts using cards that are prenumbered in a range that should never conflict with actual EWR numbers. According to the USDA, the EWR number must be printed on the paper warehouse receipt. After printing the receipts, but before handing them over to the holder, the warehouse must send this transaction file to the provider and receive a confirmation that the EWRs are converted to paper and that the holder of the EWRs was the same as the person requesting the conversion. The only information required is EWR number(s) and their corresponding paper receipt numbers. The assumed holder ID must be included for a group of such conversions. Convert paper warehouse receipts back to EWRs A holder of a paper warehouse receipt may tell the warehouse that he or she doesn't want paper and would like to have the warehouse receipt converted back to electronic form. The warehouse sends this transaction file, which changes the receipt's format back to electronic. The only information required is EWR number(s) (specified individually or in a range). The new holder ID must be included for a group of such conversions. After confirmation of the transaction is received from the provider, the warehouse stamps the paper receipt "canceled" or "converted," and stores it with similar receipts. Record warehouse terms and conditions The information and fine print that usually appears on a paper warehouse receipt must be transmitted to the provider. It is kept on record for other users to retrieve.
Warehouse bale report A report can be produced for certain EWR numbers, certain storage dates, and certain gins and gin bale numbers. Shipped bales can be included. The report is made available as a detailed or summary confirmation. Transactions initiated by holders Transfer warehouse receipts to new holder When a transfer occurs, confirmations are sent to both parties within seconds. The only information required is warehouse ID and EWR number(s) (specified individually or in a range). The new holder ID must be included for a group of such transferred EWRs. Transfer warehouse receipts via bank draft This is the same as a transfer to a new holder, but it occurs through a bank. The provider system first makes the bank the holder, and sends a detailed confirmation to the buyer. When the buyer notifies the bank that the dollar amount and bale information is correct, then bank will release the draft, which makes the buyer the new holder. At the same time, the bank is responsible for transfering the money from the buyer's bank account to the seller's bank account. Release to ship warehouse bales This transaction begins the shipping process, and is basically a shipping order. Warehouse ID and EWR number(s) (specified individually or in a range) are required, and these EWRs are marked as being ordered. Once an EWR is in this state, the only remaining valid transactions are cancellation by the warehouse or revocation of the order. The confirmation that the warehouse receives is a detailed listing of the EWR numbers that should be placed on a shipping order, along with a small comment and control section for shipping instructions (supplied by the shipper). This confirmation is ideal for importing into a cotton warehouse program for automatic building of a shipping order. This process can be reversed in case a shipper mistakenly orders the wrong bales for shipment, or a bale is short-shipped. Request USDA classing The providership system will call the USDA's national classing database and retrieve the classing data for the given EWR number(s) (specified individually or in a range) by their gin ID and gin bale number (which are already on record). This classing data can also be automatically provided when EWRs are transferred to the merchant. Holder bale report A report can be produced for certain warehouse IDs, EWR numbers, and storage dates. Shipped and/or realeased bales can be included. The report is made available as a detailed or summary confirmation. Transactions initiated by banks Collateral placement Collateral placement is usually handled automatically by the provider, using a link between the holder's (buyer s or merchant s) account and the bank's account. When a holder with an automatic collateral agent link receives a transfer of EWRs, the bank becomes the holder (collateral agent status) on those EWRs. An EWR cannot be transferred or released for shipment until the collateral is released; therefore a collateral agent has control over an EWR superior the buyer or merchant. Collateral placement can, however, be initiated by the bank by specifying the warehouse ID and EWR numbers (specified individually or in a range) to be affected. The collateral agent must have previously been authorized by the holder to become collateral agent on the holder's EWRs. Collateral release by transfer reference number When a buyer or merchant (transaction initiator status) tries to transfer EWRs using a reference number and the EWRs have a collateral agent (held by a bank), the bank can release their collateral on all the EWRs in that group by specifying just the reference number and the transaction initiator s holder ID. Collateral release by shipping order number
When a buyer or merchant (transaction initiator status) tries to issue a shipping order and the EWRs have a collateral agent (held by a bank), the bank can release their collateral on all the EWRs in that order by specifying just the shipping order number and the holder ID. Bank draft release Releases a transfer via bank draft to the buyer. The bank only needs to specify the originating holder's ID and transfer reference number. Rejection of bank draft When the buyer rejects a transfer via bank draft for any reason, they notify the bank to perform this transaction. The EWRs are transfered back to the seller. The bank only needs to specify the originating holder's ID and transfer reference number. Bank bale report This report shows, for each buyer or merchant, the number of bales held in each warehouse, and any shipping orders or transfers awaiting collateral release. The report only includes bales for which the bank is the collateral agent. The report is made available as a summary or detailed confirmation.
Security Security of the providership system as well as the security, integrity, and confidentiality of the EWRs themselves is a significant issue to many in the cotton industry, including EWR providers. For this reason, ecotton has implemented several levels of security in its providership computer system. While we will not divulge the entire extent or details of each security level, we will provide some general descriptions and point out the security benefits of common features of the system. There are both external and internal security measures in effect. External security deals with people outside of ecotton attempting unauthorized access or transactions. Internal security deals with detection of would-be intruders and the procedures that ecotton personnel use when interacting with the providership computers. For example, the redundant computers in the system are separated so that physical damage to one does not affect its twin. Additionally, ecotton has long had a policy of no financial interests between ecotton and the cotton industry. The primary external security level is that no direct or interactive access is available to the EWR data. All transactions are requested by posting a transaction request file to the system. The requests are processed off-line by other computers. Secondary external security is obtained by issuing each person or company who will be accessing the system a "user ID" and "password." Both are required to access an account. The user is responsible for maintaining password secrecy, and the password can be changed at any time by the user. A third, optional level of external security can be employed to ensure that each call to the providership computer, for a given user, is originating from the user's location. The next level of external security is obtained from the rules that the EWR processing computer uses to validate and perform transactions. For example, an attempt to falsify EWR data using "guessed" EWR numbers causes an entire transaction request file to be rejected. Additionally, only the holder of an EWR can make critical changes to or queries about the EWR. There are over 100 such rules. The final external security measure is confirmations. Whenever a transaction is processed, the people or companies affected are notified of the change through a confirmation notice, which is sent directly to the user's location. The immediate fax and/or email confirmations provide confidence and peace of mind without having to call the system again to see the result of a transaction. The following section lists just a few typical security concerns and gives a general description of how such threats are eliminated. The actual list of threats eliminated by ecotton's providership system is very comprehensive. Should you have a specific security concern, please contact ecotton...we'll be glad to discuss it with you. Threat: Theft of EWRs. Only the holder of an EWR can successfully request a transfer of control of that EWR. Anyone can try, but the EWRprocessing providership computer guarantees that the user who logged onto the system via modem or the Internet is the same as the current holder of the EWR. If any one of these conditions is not absolutely certain on all bales in a given transaction request file, the file is rejected in its entirety. Moreover, whenever a holder's EWRs are transferred, both the holder and new holder receive confirmations of the transfer. Since these confirmations are delivered by fax and/or email, they serve as immediate notice that a transfer occurred. Historical records are kept should there ever be a dispute over transfers of holder status. Threat: Warehouses finding out the identity of the current holder of an EWR. No one has access to the current holder ID on a given EWR, not even the current holder. Only the EWR processing computer can actually "see" the holder ID, and it is not reported to anyone. The only exception to this is when a warehouse creates receipts. A detailed confirmation to the warehouse includes the initial holder ID, so the warehouse can ascertain that it has created the receipts correctly. Threat: Virus attack on ecotton's central EWR computer system.
A computer can only become infected with a virus if an infected program is run on that computer, or an attempt is made to boot the computer from an infected diskette. Since only valid text files are accepted into the system, a virus-infected file will be rejected as an invalid transaction file. Since such a file is never executed, the virus dies immediately. Only a few employees of ecotton can access the providership computers, and standard operating procedure dictates that no diskettes will be used on these computers. Two complete sets of EWR data backups are made each day, to further enhance data security. Threat: Hackers. A "hacker" is someone trying to gain access to a computer system who is not authorized to have access to it. Only registered users can log onto the system. Every failed login attempt is recorded, even if you just mistype your password. A would-be intruder can be detected through this log. There are several types of attempted-intruder detection in ecotton's providership computer system. The registered user will be notified immediately if we detect an attempted break-in on his or her account. Users who have called in and are connected to the providership system are not running a program on the system and they are not in control of the computer they are connected to. They are simply responding to menus or prompts displayed by our communications program. This is important because there is no way for a user to obtain control of a computer in the providership system. Example Scenarios As you have seen in the "System Description" section, most transactions are handled simply by a computer phone call or Internet connection to ecotton's providership computer system. Below we have tried to answer some "transitional" questions. If you have a particular concern that is not covered here, please feel free to call ecotton and discuss it. Question: What if a producer doesn't have a computer? How can he transfer his EWRs to his buyer? Answer: There are several ways to handle this: 1. The producer can have the warehouse create his receipts with a designated agent as the initial holder, instead of the producer. The designated agent could be the gin, the warehouse, a co-operative, a bank, or whoever the producer trusts to handle his warehouse receipts. This designated agent is then responsible for transferring the EWRs at the appropriate time. In the majority of all cases, the gin is made the initial holder of the receipts. 2. The producer could physically go to the gin's, warehouse's, or buyer's office and use their computer, entering his own user ID and password when the connection is made. This is like walking up to any convenient automatic teller machine (ATM) to make checking account transactions. Question: What is the procedure to make EWR transactions, and how long will it take? Answer: An example of the process for a warehouse creating EWRs follows: 1. As a warehouse, you use a cotton warehouse computer program to create a text file of 1000 new bales to be recorded as EWRs. This takes the place of printing paper warehouse receipts. 2. You run VECTOR, which conditions the file into a transaction request file, then automatically calls the ecotton EWR Provider System. 3. As the connection is made, you enter your password, and the automated script continues by sending the transaction request file and retrieving any waiting messages and news flashes. 4. The automated script hangs up the phone, and returns you to VECTOR, where you can view and/or print any retrieved messages.
With a current personal computer and modem, the entire process would take less than 2 minutes, and less than a minute of that would be phone time. Internet connections usually only take a few seconds. Most other transactions are even quicker than this. Question: How are "envelope" transfers handled with EWRs? Answer: An "envelope" transfer is a method for a bank to handle the simultaneous transfer of paper warehouse receipts to a buyer and transfer of money to a seller. The gin or seller sends a stack of paper warehouse receipts to the bank in an envelope. On the envelope they write the buyer's name, the amount of money expected, and any other reference information about the sale. The bank verifies the transaction with the buyer, then transfers the money to the seller's bank account and sends the paper receipts to the buyer. With EWRs, instead of physically sending paper receipts to the bank, the seller sends a "transfer to new holder via bank draft" transaction file to the EWR provider, stating that the EWRs are to be transferred to the bank. This file lists the EWR numbers of the bales to transfer, the buyer's holder ID, and the seller's bank account number and reference information. This information is the electronic "envelope." After the bank has verified the transaction with the buyer (which can be done electronically), it transfers the money to the seller's bank account and sends a "bank draft release" transaction file to the EWR provider, stating that the EWRs in the draft are to be transferred to the buyer. If the buyer does not verify the transaction, the bank sends a "rejection of bank draft" transaction, which transfers the EWRs back to the seller.