FRAMINGHAM (08/04/2000) - Home Depot Inc. and Procter & Gamble Co. are among a group of manufacturing and retail companies worldwide that later this month will begin testing the first global standards for business-to-business e-commerce in the consumer goods industry.
The new Global Commerce Internet Protocol sets basic rules for data access and security, message content and the flow of information between trading partners around the world.
The protocol was approved last week in Paris - only three months after it was first proposed - by 40 large corporations and eight trade associations representing 850,000 companies.
"This is the equivalent of getting EDI [electronic data interchange] in place all over again," said Ron Griffin, CIO at Atlanta-based The Home Depot Inc. and a board member of the Global Commerce Initiative, which adopted the new standards.
With buyers and sellers using the same formats to describe products, send and receive electronic purchase orders and transact other business over the Internet, Griffin said he expects to shave product lead times by as much as one week. "That means less total inventory in the supply chain," which should help companies slash overall costs, he said.
The Global Commerce Initiative, set up last October, comprises some of the world's biggest manufacturers and retailers, including U.S. members The Coca-Cola Co. in Atlanta and Wal-Mart Stores Inc. in Bentonville, Ark., as well as London-based Marks & Spencer PLC and Britain-based Tesco PLC.
The consumer goods industry's largest Internet marketplaces - Transora, WorldWide Retail Exchange, CPGmarket.com and GlobalNetXchange - also will adhere to the new standards.
The Global Commerce Initiative's main goal isn't to set formal policies for worldwide Internet-based marketplaces, said Peter Jordan, project leader for the new protocol and also director of systems at Kraft Foods Europe.
"Exchanges are independent ventures," Jordan said in a statement. "It is not [our] job . . . to influence the speed and scope of their development."
Rather, the group's intention is to facilitate instantaneous communication of clear and accurate information.
That's something EDI has never truly accomplished in more than two decades of use at Procter & Gamble Co., said Ralph Drayer, senior vice president of efficient consumer response at the Cincinnati-based consumer goods manufacturer.
"EDI has been around for 20 years, but there's 14 different EDI standards that P&G has [to follow]," Drayer said. "It requires different processing."
With all buyers and sellers using a single global standard for purchasing a product like P&G's Pringles potato chips, it will be much easier and faster for P&G - and other suppliers - to figure its total sales at a particular worldwide retailer, such as Wal-Mart.
The Global Commerce Initiative said its work will extend beyond the Internet to include other technologies, such as a worldwide bar-code standard.
For more information on the standards, visit www.globalcommerceinitiative.org.