Page 132 - DMGT523_LOGISTICS_AND_SUPPLY_CHAIN_MANAGEMENT

Unit 6: Information Technology Framework

and shipment tracking. The Ohio State University survey predicts the Internet will carry 20 Notes
percent of customer orders by the year 2010.
The increasing availability of the Internet has also enabled the development of the exchange
portal, a communication medium that has significant supply chain implications. An exchange
portal is an infomediary that facilitates horizontal and vertical information exchange between
supply chain partners. An exchange portal of a firm designed to facilitate communication between
the firm’s customers and suppliers. The firm can provide information regarding raw material
requirements, product availability, or price changes and allow the marketplace to react by
placing bids or orders based on the most timely information. It is projected that 60 percent of
Fortune 500 firms will have exchange portals by 2003 to facilitate communication with key
customers and suppliers. While a single firm site might provide good Internet advertising, it
does increase complexity, as all the partners have to contend with multiple, unique interfaces
resulting in high transaction cost.

A second type of exchange portal is industry-based. It facilitates communication between all
supply chain partners within an industry and can substantially reduce transaction costs. While
the information can be made available to all interested parties, it is also possible to restrict
information availability. There is increasing fear that industry portal collaborations might
increase the potential of monopolistic practices and trade restraints. The Federal Trade
Commission (FTC) can be expected to play an increasing role in the evolution of the exchange
portals, particularly for B2B activities.
The Internet and the exchange portal have advanced supply chain communication from one-to-
one or limited capability to a one-to-many environment capable of being extended to a many-
to-many capability. The result is that extended Internet communication is a reality that offers
substantial challenge in terms of exploiting widely available information.

One of the major challenges to the wide adoption of exchange portals is the definition and
acceptance of online catalogues. Much like the paper version, an online catalogue contains a
listing of the products and services offered along with their descriptions and specifications.
A catalogue that is consistent across participating firms is critical to facilitate effective comparison
of products and services across firms.

Example: A firm desiring to purchase a simple T-shirt from a portal would like all the
T-shirt suppliers on that portal to have a similarly formatted entry describing the shirt, its
colouring, its contents, as well as other minute details so that the customer can make an effective
comparison.
While customers prefer consistent catalogues, suppliers prefer to use a catalogue as a differentiator
and are thus reluctant to deviate from their proprietary format. To facilitate information sharing
and exchange, the Voluntary Interindustry Commerce Standards (VICS) and Collaborative
Planning, Forecasting, and Replenishment (CPFR) are actively promoting common and consistent
catalogue definitions and standards.

6.5.3 Extensible Markup Language

Extensible Markup Language (XML) is a flexible computer language that facilitates information
transfer between a wide range of applications and is readily interpretable by humans. It was
published in 1998 by the World Wide Web Consortium to facilitate information transfer between
systems, databases, and Web browsers. Since EDI is very structured, the setup cost and required
expertise are relatively high, limiting applications to situations involving high transaction
volumes. XML is emerging as the information transfer medium between firms and service

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