The paper was presented at the International Logistics Conference “Logistics 2002 – Flexible supply chains – concepts, experiences, challenges”. Poznań, May 14-15, 2002.
Central technical EDI infrastructure
In the face of increasing market competition, the costs of delivering a product to the market are an extremely important element of optimization within a company. Procter & Gamble, fully appreciating the benefits that can be achieved through the use of electronic data interchange, has made this area one of its strategic priorities. Consequently, a centralized technical infrastructure dedicated to EDI was created.
P&G fully utilizes the possibilities brought by the “disappearance of distance between computers” by grouping various system components in specific locations and connecting them via the corporate Intranet.
A special P&G computer center (one of the most modern in Europe) located in Brussels houses Mainframe computers with software for mapping and translating messages between the EDIFACT format and the internal P&G format. These computers are connected to the VAN (Value Added Network) of several of the largest providers of such services. This ensures high system security and reliability.
A group of specialists supporting the technical side of all EDI-related processes is located in Schwalbach (Germany). This group is responsible for daily monitoring of the system’s correct operation, modifications to EDI document specifications, and the development of new messages according to business needs. In individual countries, P&G customer service employees process orders that automatically enter the OSB (Order Shipping Billing) system. This approach frees the company from investing in hardware and software, as well as hiring and training specialists to handle the technical side of the system in individual countries. The costs of one group supporting the servers in Brussels and one supporting the system itself are shared among all European countries using EDI. Additionally, alongside the central infrastructure, some countries use small-scale local solutions for specific requirements. Such a solution exists in Poland (on a PC) for receiving EDIFACT messages from the VAN network and mapping them to the internal format for inventory report (INVRPT) messages.
P&G and EDI in Poland
Drawing on experience from other European countries as well as the American market, Procter & Gamble was a pioneer in Poland in using EDI for cooperation between manufacturers and large retail chains and distributors. Possessing a powerful base of specialists and an extensive, reliable infrastructure, while also keeping in mind the security and flexibility of communication, the company decided to use a corporate solution and adopt the EANCOM standard document specifications, which are widespread and generally accepted in the West. An additional argument for adopting the specifications used in countries such as Germany, Belgium, or France was the lack of specifications adopted or used on the Polish market (in trade between manufacturers and distributors or retail chains).
P&G was the first on the Polish market to introduce a fully automated order placement system (ORDER) within its network of distributors. It was also relatively quick to expand cooperation in this field to large retail chains. The first order in EDIFACT format reached P&G Polska as early as 1996. Subsequent years were marked by the development of electronic data interchange and the promotion of business benefits flowing from expanded and scalable solutions. The company reached a critical mass relatively quickly, allowing for large-scale benefits – Figure 2 shows the percentage share of sales realized for orders sent via EDI in 2001 and the plan for 2003.
It should be added here that in the case of an order, there are no legal regulations requiring the exchange of paper documents, which, with full EDI implementation, allows parties to completely replace them with electronic equivalents.
The second document implemented by P&G after the order was the invoice (INVOIC). The company’s partners, seeing the benefits of expanding EDI systems, were interested in receiving electronic invoices. The first projects in this field were started in 1999. Here, unlike with the order, one cannot afford to eliminate the sending of paper documents; however, there is nothing to prevent the reading of invoice items from being done from the electronic version. Additionally, taking into account global trends and the first steps of Polish legislators (the Electronic Signature Act), it should be expected in the near future that it will also be possible to abandon the printing and sending of paper documents when exchanging invoices.
The next document that P&G exchanges with its partners is the inventory report (INVRPT). While in the case of the two previous documents we were dealing with replacing a paper version, in the case of the inventory report, we are dealing with something new, which can be the basis for a completely new profile of cooperation between a manufacturer and a large retail chain. Such projects are only possible with partners whose structures are balanced in terms of function, where departments such as logistics or IT have a significant influence on business directions and are able to see and exploit the benefits of VMI (Vendor Managed Inventory) solutions, where the manufacturer takes responsibility for the product throughout the entire supply chain, starting from the factory, through the seller’s distribution center, and ending with the consumer.
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