Making business sense out of e-business

ISA's e-Business Implementation Guidelines offer various tools and advice for members making their way through the Internet and e-business universe

By Paula Giovannetti, Director of e-Business, ISA -- Industrial Distribution, 5/1/2007

Do you sometimes think we've had e-nough of e-everything? What is e-business and how is it different then real business?

That's certainly a reasonable question. One of your jobs as a business manager or owner is to distinguish between fads and facts when it comes to business practices.

Electronic business is simply using computers to exchange and manage business transactions. When configured correctly, it eliminates manual data entry and performs perfectly the routine jobs that can bore humans into making mistakes.

The Industrial Supply Assn. has published its e-Business Implementation Guidelines which explain best practices for exchanging business documents, using bar codes and creating globally unique identification numbers for items, assets and locations.

The first time I heard the phrase “The data is now more important than the product,” I thought it was cute, but silly.

Of course it's the product that is the most important thing. It is what we buy and sell to each other. It is why our companies exist.

But let's think about it. Select the most valuable item your company makes and put several in a box. Work hard to get that big order from your customer and ship them the carton. It is sitting on their receiving dock.

However, the item identification on the outside is missing or incorrect. The packing list is nowhere to be found. The invoice has incorrect data on it. The information your customer has about that item is different than the part number, item description, unit of measure, weight and price in your system.

That carton is not an asset to anyone—in fact, at this point it's a liability and an expense. There are lost opportunity costs involved with someone spending time on this carton when they could be unloading product for which they have good data.

In this case, the data is more important than the product. What can we do to make sure we have accurate and timely data synchronized between you and your customer?

One of the building blocks of a quality data system is creating an item identification number that will be globally unique in the open supply chain.

If you run a company where the items are made in the back room and sold at a counter in the front of the building, then this is probably not a big concern for you.

But if your supply chain includes transportation carriers, third party warehouses, outsourcing, manufacturers, suppliers, distributors, or Customs and Border Patrol, then you will need to track and trace your product.

The system created by GS1, previously the Uniform Code Council (UCC), provides each company with its own company prefix number (Global Trade Item Number), which when used with the part number the manufacturer assigns to an item, guarantees that no one else in the world will assign that same GTIN to a different product.

Manufacturers control the part numbers assigned to their products so they can't be confused with products from other companies. Now that we can all call it the same thing, without “yours, mine and ours” part number cross reference files, we have accomplished the first step in exchanging good data about our products.

Assigning GTINs to our standard products will provide the same benefit to industrial supplies that it has to mass merchant retail and grocery.

But it is estimated that 40 percent of the items manufactured in MROP are custom, made-to-order items. If we assign GTINs to all of those items, we will run out of numbers.

So the ISA has worked with GS1 to create a new Custom Industrial Supply Number specifically for our industry. The ISA e-Business Implementation Guidelines cover this in more detail, but basically it is a GTIN which identifies a custom item in general, followed by a Variation Number which distinguishes this particular version of a custom item.

The combination of the two—a Custom Industrial Supply Number—can be represented in a bar code on the carton, which can be used for shipping, receiving and inventory management.

Of course, the GTIN and the CISN are also used in electronic purchase orders, PO acknowledgements and invoices. The ISA e-Business Implementation Guidelines provide additional information on how to get started. There is also a change-request process so the users of these guidelines can provide feedback and ask for changes and additional functionality.

The most important component to the guide will be your input as you deploy these e-business tools. The ISA is proud that the guidelines have been written for your industry, and by your industry.