A scheme to develop a common electronic business language to help the IT industry trade online could save millions in purchasing costs for users.
Rosettanet, a self funded initiative launched in February with a committee comprised of major IT vendors and channel companies, is attempting to push forward electronic business by putting in place a business dictionary and set of rules to simplify the process.
By simplifying the supply chain process the scheme could really cut into the costs of products, most likely to feed directly to users.
Backing for the scheme is strong. Intel, for example, is already preparing to adopt the system worldwide, while the 12 biggest distributors in the world, which total more than $100 billion of business between them, are all firmly behind it. KPMG is acting as partner and auditor.
Microsoft will announce next week that software developers hoping to develop applications for its IT supply chain initiative will have to comply with the Rosettanet scheme.
A simple example of the problem Rosettanet is trying to solve would be a humble laptop. The product number assigned by the manufacturer is not the same as the identifying number in the inventories of its resellers. Traditionally, using the phone or paper, a convoluted identification and ordering process could take place.
"Ingram Micro gets 60,000 returns per day through misalignment of orders. This problem costs the industry between two and four per cent of top line revenue," said Fadi Chehade, electronic commerce manager at Ingram Micro on temporary posting as chief executive of Rosettanet.
However, electronically it is very expensive to develop a system to match all the numbers between a manufacturer and a reseller for every product available and to enable instant ordering and inventory tracking to take place. Nor can this system be duplicated for any other manufacturer to reseller relationship. This leaves online trading as a series of e-monologues.
Chehade explains that by setting up a common set of product code numbers and product characteristics that can then be matched to by all parties there is the potential to dramatically cut costs and complexity of electronic business.
Peter Rigby, marketing director with CHS, said that while Rosettanet's system would remove some of the differentiation between distributors, this would be offset by the enormous cost benefits.
"Consumers get confused because there are so many different product variations and descriptions. One of our biggest costs is through returns from customers with sales errors where what they got in the box was completely different to their expectations," he said.
He said so far the Rosettanet formats looked extremely comprehensive and easy to use. This could force channel suppliers to find new ways to add value to their services if the process of supplying goods accurately and cheaper were a level playing field, he noted.
Similar systems have succeeded dramatically in the retail and automotive industries. In total there will be a format for product identifier codes and 28 product interfaces - attribute lists for product categories. This week Rosettanet completed the format and the first three interfaces: for laptops, software and memory.
Rosettanet hopes to have all formats completed, tested and widely adopted within its two-year life span at a total cost of $5 million, invested by members. After that independent publishers will be left to maintain and publish product codes and attributes.
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