Several years ago, Philip Condit, chairman and CEO of Boeing Co., asked how much business the company did with major suppliers.

"To find out, each unit at Boeing had to ask bunches of people who, in turn, had to ask other groups, because we have about 18 different procurement systems reaching out to our supplier network," recalls Kristina M. Erickson, director of venture relations at eBuy@Boeing, the Seattle-based company's portion of Exostar, the aerospace industry's business-to-business exchange. "It was quite a process."

Despite an apparent reluctance by some companies to jump on the XML bandwagon, Erickson showed me how an XML-based middleware tool can make it easier to do business and monitor supplier relationships.

Using a gateway broker -- an application that sits behind Boeing's firewall and acts as a common interface for the company's 18 procurement systems and Exostar Inc. -- Boeing hopes to reduce the number of its procurement systems to four or five.

Boeing's four major businesses have over the years built multiple procurement systems and standards using software from different vendors. Indeed, the chart Erickson used to illustrate how Boeing's business units connect to various suppliers is a spaghettilike tangle of lines. But rather than ripping out each system and replacing it unilaterally, Boeing embarked on a measured plan to connect to Exostar using XML-based standards. Exostar is open to any supplier with a browser, Internet connection and security password. This has several advantages for Boeing and its suppliers.

For Boeing, it provides links to legacy systems, making it easier to cut the number of procurement systems. It also permits strategic evaluation of supplier data, using a supplier profile database. A single-source database offers Boeing data-mining opportunities and means easier connections to suppliers' enterprisewide systems.

And because Exostar uses XML rather than complicated electronic data interchange (EDI) formats, more suppliers can access the exchange at lower cost. Using Exostar and XML, different units of Boeing can use the same interface to connect to suppliers. Accounting, inventory, shipping and racking systems all benefit.

For suppliers, XML is an alternative to EDI systems, "which are expensive," Erickson says. "Suppliers had to put their own money into the batch EDI system. With Exostar, all they need is a browser."

XML should allow different business-to-business exchanges to develop common software tools for purchase orders and tracking. Also, Exostar could facilitate communication with other XML-based exchanges.

XML is more than just an attempt to settle on standards for e-commerce. It's a viable component for re-engineering the procurement process. XML-based exchanges can broaden sales channels, simplify procurement and cut the costs of doing business.

Companies should get out of their holding patterns and let XML take off.

» posted by ITworld staff

Computerworld

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