Home Depot and Procter & Gamble are among a worldwide group of manufacturing and retail companies that will soon begin testing new global standards for business-to-business e-commerce in the consumer goods industry.
Approved earlier this week in Paris by 40 large corporations and eight trade associations representing an additional 850,000 companies, the new Global Commerce Internet Protocol sets basic rules of the road for data access and security, message content and the flow of information between different trading partners around the world.
"This is the equivalent of getting [electronic data interchange] in place all over again," said Ron Griffin, CIO at Home Depot and a board member of the year-old Global Commerce Initiative group that 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, for one, said he expects to shave product lead times by as much as a week. "That means less total inventory in the supply chain," which should help companies slash overall costs, he said.
The Global Commerce Initiative is comprised of some of the world's biggest manufacturers and retailers. Besides Home Depot and Procter & Gamble, U.S. members include The Coca-Cola Co., Kodak Corp. and Wal-Mart Stores Inc. Other companies taking part include Marks & Spencer and Tesco, a pair of U.K.-based retailing giants.
The group's main goal is setting standards, not setting formal policies for worldwide Internet-based marketplaces, according to Peter Jordan, project leader for the new protocol and 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 Global Commerce Initiative's aim is to facilitate the "instantaneous communication of information that is accurate and understood," according to the group's press release. That's something EDI has never truly accomplished in more than two decades of use at Procter & Gamble, 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. "When we get an EDI order in France, we get an EDI purchase order that's completely different than an EDI purchase order we get in the U.S. It requires different processing."
With all buyers and sellers using a single global standard for purchasing a product such as Pringles brand potato chips, Drayer added, it should be much easier and faster for P&G to calculate the total sales of the product by a retailer such as Wal-Mart.
Draft versions of the Global Commerce Internet Protocol are being made available to all interested companies for use in proof-of-concept applications.
Going forward, the Global Commerce Initiative group said its work will extend beyond the Internet to include other technologies, such as a worldwide bar-code standard.