Cinching up the Supply Chain

The collaboration server is a new breed of software that manages communication between applications that import and export data in XML formats. It makes supply chains transparent to users and helps business partners manage data exchange and merge workflow processes.

To realize the full potential of Web-based supply chain management, businesses must be able to collaborate electronically. Customers and suppliers often need to exchange electronic files for documents such as purchase orders and invoices. Companies that participate as customers in trading hubs must regularly send in requests for bids. Suppliers must transmit data to trading hubs, both to respond to buyers’ bids and to update online product catalogs. Two subsidiaries of the same corporation sometimes also need electronic links. They might have to pass financial statements back and forth for consolidation, trade data for intracompany transactions, or conduct other basic information transfers to keep accounting or inventory databases synchronized.

Increasingly, a company’s software must exchange information with the proprietary applications of the company’s trading partners. Extensible markup language (XML) is taking over from electronic data interchange (EDI) as the technology that powers this type of business-to-business collaboration. The way XML works is that programmers "mark up" a text-based document with tags that indicate what each word or group of words represents. For example, an XML rendering of an invoice would require tags such as invoice number, date, line item price, quantity, and ship to and bill to addresses. For a piece of software to understand what these tags mean, it must read another document called a schema.

The success of XML will depend largely on widespread acceptance of standard schemas that describe common business documents, such as orders, payments and financial reports. Transferring data between companies would clearly be more difficult if every business created XML invoices using its own unique schema than if every business used the same set of tags to describe invoice data. (For more information about XML, see XML Means Business in the November 1999 issue of Business Finance.)

Because of the potential XML schemas have to simplify data transfer between applications, a number of organizations are jostling for a position providing schema standards for common business documents. Two groups — RosettaNet and OASIS (the Organization for the Advancement of Structured Information Standards) — have been working for some time to promote XML schema standards. RosettaNet, which positions itself as "the lingua franca of e-business," has the support of many new-generation e-commerce software vendors, especially those in the supply chain management marketplace. And OASIS recently established the Web site www.xml.org to promote its schemas and provide information about electronic document exchange.

Microsoft Corp. is now jumping into the fray, promoting a framework for XML schemas called BizTalk. The BizTalk Framework initiative consists of a set of Microsoft-produced schemas and a Web site — www.biztalk.org — that other companies can use as a repository for storing, publishing and viewing BizTalk-compliant schemas.