High Tech
EDI has been in use across the high tech industry for many years. The high tech value chain has become very complex with many high tech companies relying on external partners to help design and manufacture their products. Due to the nature of the high tech industry, the desire to exchange business transactions electronically is more prevalent than in many other industry sectors.
Many high tech companies have globalized their operations to take advantage of low cost suppliers in the emerging markets around the world. Consequently, the high tech manufacturing companies have had to ensure that they can trade electronically with suppliers in any country around the world, even those with limited ICT related skills. The provision of simple-to-use, quick-to-deploy, and easy-to-maintain EDI tools is very important for high tech companies.
The high tech industry is very consumer-driven; so, high tech supply chains have had to become flexible to adapt to changing consumer demand. For this reason, inventory visibility across retail networks and multi-modal logistics networks is important for both the high tech companies and their trading partner community. This has increased the demand for vendor managed inventory (VMI) systems. VMIs would ensure that retailers have the correct levels of inventory to support fluctuations in consumer demand caused by new product launches, seasonal activity, etc.
Supply Chain Structure
The high tech industry has the most complex supply chain structure of any industry sector. Whereas the automotive industry has a tiered and fairly logical structure, the high tech industry is matrix-structured by comparison. The industry relies on the many outsourced design consultancy and contract manufacturers, known as electronics manufacturing service (EMS) companies.
A look at Cisco provides an illustration of the prevalence of contract manufacturing within the high tech industry. Cisco, one of the world’s leading providers of networking based solutions, does not manufacture any of its own equipment. All of Cisco’s products are manufactured by outside contractors. Essentially Cisco has become a branded integrator, responsible for the design and marketing of its products with the actual manufacture handled by external EMS providers. This model is common across many high tech companies now, including one of the world’s leading high tech consumer brands, Apple.
To explain how the high tech supply chain is structured, the diagram below illustrates the key players across both the supply and demand chain. On the supply side are the fabless semiconductor manufacturers. These companies design the semiconductor chips but outsource the manufacture of the chips to a specialist chip manufacturer, such as Global Foundries. The chip manufacturers source their materials from raw material providers. Once the chips or other electronic components are manufactured, they are distributed to a number of strategically located distribution hubs. From here, the components are shipped to EMS or contract manufacturers as needed.
Meanwhile on the demand side of the chain, the OEMs such as Dell, HP, and Cisco work in partnership with contract manufacturers such as Celestica, Flextronics, and Jabil. These contract manufacturers may be responsible for designing the entire product that the OEM applies its logo to, or building a number of sub-systems that make up the final product. It is not unusual for an OEM to work with many different contract manufacturers in order to manufacture one product.
Finished products are shipped via specialist high tech distributors such as Avnet and Arrow to the OEM’s storage and distribution facilities. Finally, products are forwarded to retailers or resellers. The diagram below illustrates both inventory and information flows across the high tech value chain.
The ability to exchange business documents across a relatively complex and fast moving supply and demand chain is required to run high tech operations smoothly. The number of contract manufacturers, design partners, logistics partners, and retailers that are involved across this value chain make it critical to work with an EDI or B2B vendor that can support this complexity.
Document Standards Used
The high tech industry has had some success in developing an industry standard based around XML. At the height of the dotcom boom in the early 2000s, a number of new XML standards were developed to meet the needs of companies working across the high tech industry. RosettaNet (www.rosettanet.org) is the most popular XML standard in use today; however, it tends to be used in parallel with the more established EDI document standards such as ANSI X12 and EDIFACT.
RosettaNet developed XML standards to cover the procure-to-pay and order-to-cash process spectrum. Partner Interface Processes (PIPs) are the XML-based documents that form the basis of the RosettaNet standard. RosettaNet is a subsidiary of GS1 US and has around 500 members worldwide.
Another standard that has been successfully deployed across the high tech is the Open Applications Group Integration Specification (OAGIS). Developed by the Open Applications Group, OAGIS is an effort to provide a canonical business language for information integration. It uses XML as the common way to define business messages and identify business processes. This allows businesses and business applications to communicate with each other. OAGIS is one of the most complete sets of XML business messages currently available. It also accommodates the requirements of specific industries by partnering with various vertical industry groups.
Industry Associations
Over the past few years the high tech industry has been served by a number of industry associations. EDIFICE (www.edifice.org) is the leading high tech industry association in Europe, and it has been supporting the development of B2B standards and working practices for nearly twenty-five years. This particular association runs four plenary sessions per year in different locations throughout Europe. Each of the member companies has an opportunity to sponsor a plenary session. Leading high tech companies such as Microsoft, ST Micros, Cisco, Sun Microsystems, and Motorola are all members of EDIFICE.
The convergence of the automotive and high tech supply chains has led to the signing of a memorandum of understanding between the automotive industry’s Odette organization and EDIFICE. It is hoped that this new partnership will help to develop new B2B standards across both industries.
Following the success of EDIFICE, a sister organization was established in 2009 to serve the needs of the high tech companies in the Far East. AsiaB2B (www.asiab2b.org) serves the same purpose as EDIFICE in Europe – that is, to develop new best practices for exchanging B2B documents across high tech companies in the Asia Pacific region.
In North America, one of the most active industry associations serving the high tech industry is the Computer Technology Industry Association, COMPTIA (www.comptia.org).
