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Questioning exchange usefulness: What has happened to our 4-year-old dream of a networked industry? Unfortunately, most of the investment in standards and exchange utility was dead before arrival. (Future Forces).

Omnia tempus revelat: Time reveals all things

--Tertullian, Apologeticus [155 A.D.]

In parliamentary inquires, rules of discussion and debate have evolved over hundreds of years. We know them as Robert's Rules of Order. The goal, of course, is to provide common rules and procedures for deliberation and debate in order to place the whole membership on the same footing and speaking the same language.

But how does an industry begin to debate the effectiveness of our $250 million dollar investment in industry exchanges? In Robert's Rules, debate cannot begin until the chair has called for the question. So, who in our industry is willing to start the rigorous debate necessary to question our exchange investments before we spend $1 billion dollars without improving our existing EDI technical success/business failure model?

To help those of you who might like to participate in this needed debate, let me offer some history and current facts. Five years ago, most of us had never heard of the Internet, let alone B2B exchanges or networked economics. Perhaps because they came to our attention as such a surprise, we were afraid these new tools would create overnight winners and losers. Time has once again proven that new is not easy. But just how "new" was this Internet idea in our industry?

In 1998, GMA was holding manufacturer/distributor/CEO Future Forces Roundtables to develop the action strategies and key success factors necessary for the supply chain of the future. The vision included the need for the following actions:

* Development of a shared vision and language for electronic commerce

* Development of a shared framework for Internet business processes from purchase order to payment

* Development of CPFR Internet-based tools

* Creation of Internet-based standards and protocols to allow business functions to synchronize information such as consumption or scan-based trading data.

So indeed, four years ago our industry leadership saw the need to create complementary, compatible standards tied to consumption information to create significant economies of scale. What has happened to our 4-year-old dream of a networked industry? Unfortunately, most of the investment in standards and exchange utility was dead before arrival. The old supply chain business rules created fierce competition between UCCnet goals, retail and manufacturer exchanges and third-party providers, so standards and exchange functionality emerged with little input from end users and no way to change the current business rules that limit exchange utility.

In order to see the true potential of a networked industry, you must suspend belief in some long-established precepts. For example, standards do not necessarily succeed in the networked economy. Standards that support technology that is late to the marketplace with an absence of adapters and limited functionality are essentially useless. Critical mass for e-commerce is, in fact, coming from start-up companies such as viaLink that provide proprietary technology to synchronize the purchase order to payment process and build confidence among early adopters. In other words, we should focus on tools that build a network of companies that can each profit from connective technology and still realize savings from existing legacy systems.

So what then is the future of exchanges such as Transora or WWRE? According to a recent Forrester brief, unless the two public exchanges stop trying to woo the others' members with limited services, both will crash and burn. The turf battles for item catalogues, subscription rates and registries have left most companies unsure where to invest, with little assurance that any investment will have a full life cycle.

The best course of action might well be in finding those start-up companies that are creating new tools that in turn create new rules. Develop a better understanding internally on just what business rules you must change to take advantage of a networked industry.

Finally, add your voice to an industry call for more fact-based debate on B2B priorities, time-line and exchange functionality.

Patrick Kiernan is president of Day/Kiernan & Associates; senior counselor for the Grocery Manufacturers of America; and is affiliated with The Center for Food Marketing at St. Joseph's University, Philadelphia, Pa., and the Institute for the Future in Menlo Park, Calif.
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Author:Kiernan, Patrick
Publication:Grocery Headquarters
Date:Jan 1, 2002
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