Whether you call them e-commerce platforms or “federated business models,” these interlocking circles of trading partners, and even competitors sharing electronic tools, are changing the notion of both the supply chain and the notion of work, but they bring their own host of issues to conquer.

Take the communication, legal, management and technology problems that have to be tackled for one manufacturer and one supplier to function together electronically in a seamless fashion. Then multiply them by hundreds and even thousands of participants to a platform. Those are the sorts of issues that Lorenzo Martinelli, executive vice president of E2open in Red Wood City, California, copes with daily in his role as a vendor of software that enables transactions between manufacturers, along with serving as the technology base for major platforms.

Martinelli sees three chief business models emerging among the platforms. There are collaborative platforms like Exostar, which allows aerospace/defense OEMs to collaborate on project work. Platforms like GT Nexus and INTTRA focus largely on shipping transactions for the ocean industry. And then there are what Martinelli calls “the private company platforms” that allow employees at companies like IBM, Dell and Motorola to collaborate electronically.

Ann Grackin, CEO of ChainLink Research in Cambridge, Massachusetts, believes what she calls “federated business models” can “best the market performance of their competitors, as well as provide improvements on customer service and services as they leverage a new process and technology approach. On-demand or multi-tenant solutions allow multiple enterprises to co-exist on a single platform, collaborate, and provide visibility to data elements, where appropriate, of business activities. These solutions exist in everything from financial application, EDI and data translators, to business and supply chain planning, to transportation and trade, to entertainment, healthcare, defense, and the digital home.”

Both Grackin and Martinelli watch as many types of customers struggle to function across a wide variety of business systems and practices. Martinelli notes that, “every time our system gets deployed, there’s a business process system that gets deployed, which creates complexities. It used to be the deal was between buyers and sellers, but now our customers have to define the business processes between the two in a way that’s legal. And they have to be concerned with process and data quality.”

Even with larger companies, he says it’s rare that business processes and their electronic tools are uniform. Technology deployments are forcing divisions and departments to create “some level of compliance and a structured, measured process (of information flow). It’s no longer Joe calling his buddy in purchasing for a part because procurement may be legally structured,” Martinelli explained.

When applied to global trade, the ultimate aim of any electronic platform is to promote visibility up and down the supply chain, explains Greg Johnson, vice president of marketing at GT Nexus in Alameda, California, which both provides both software solutions and a platform for global logistics. Johnson says the “chief problem” for his customer base is visibility of their shipping data, which has become compounded by the extra long supply chains needed to handle off-shoring and global outsourcing.

“Global trade exists because there are compelling benefits of going off-shore-mainly the lower the costs of goods. The problem is it’s very complex and if companies don’t do it well going global can erode savings to chaotic supply chains that cost them more money in added inventory to meet longer lead times. And they can also be hit with high fees and fines that they can’t predict in advance. Companies must rely on whole array of supply chain partners to consolidate shipments and customers to monitor shipments,” he explained.

Data quality as the pathway to visibility and accurate shipments

All these factors make it imperative to promote visibility, as in “knowing where the shipment is and the status of their orders. When you can’t connect your shipping documents with an order and shipment, you end up working in the dark. Technology can certainly solve the problem, but it won’t solve it alone,” said Johnson. “This requires good process change on the customer’s part. Customers have to work on their data and processes, pulling back the layer of the onion to get a handle of the data coming from partners. That’s the fuel driving the applications and the data has to be 99 percent accurate or better.”

Beth Enslow, senior vice president of enterprise research at Aberdeen Group, in Boston, Massachusetts, has surveyed over 500 companies around supply chain processes in the last year. She’s found that the No. 1 issue “is lack of visibility. The bigger the company the more they feel that pain. A lot has to do with extended enterprises and the fact that global processes are only 50 percent as automated as domestic processes, which means that much of the work is still being done by spreadsheets, phone calls and faxes.”

For these reasons, it’s not surprising that data quality has become the new mantra of the platforms, particularly those like GT Nexus and INTTRA that handle global trade transactions.

Explains Martinelli, “If you move beyond a closed loop to include other parties you must be very careful because if data is wrong to begin then where is the business case? You want to make sure process is self-correcting and has integrity.” But, Martinelli says no technology can cure a sloppy process. “You’re only as good as your people. They have to insert manual judgment into the process.”

Enslow says her research indicates that when trading partners first connect electronically their data quality may only be 50 percent accurate. But when they implant “people processes” that promote accuracy “they can get into the high 90s.” There are many technology approaches to promoting accuracy, including event alerts like those developed by Hewlett Packard’s Sockeye solutions that send warnings of errors, but experts like Enslow argue that “automation implanted without addressing data quality from the people and tech perspectives only gives you bad processes on steroids.”

Many companies are investing in master data management, which she calls “the root canal of data management. You go back to the source data and back to the comparisons to fix the root causes rather than automating what you have today.”

Johnson says GT Nexus has focused on data quality “over the last five or six years, enriching our platform with hundreds of industry business rules about specific partners so we can understand the idiosyncrasies of the data that individual partners are sending to the platform.”

Although GT Nexus can’t correct core data from a partner, he says they can build “rules around an intent,” alerting platform participants to repeat errors just as freight forwarders and agents have traditionally assisted their customers clean up sloppy data before transmitting their shipping documents.

According to Johnson, the GT Nexus platform “serves as a serves as a dashboard for showing partners where they are (in data quality). We help partners make changes in their internal system, so we become a continuous improvement platform.”

“There’s an incredible amount of internal evaluation, matching and checking that goes on thousands of time for every hour. We feel this is a breakthrough that improves the data and the applications.”

Johnson cites the example of Schenker, a leading provider of integrated logistics services, which connected to GT Nexus in the fall of 2006 to manage its standardized shipment status messages and booking confirmations. The first phase of the project involves containers moving on Schenker’s behalf to and from the United States and Canada.

“Visibility is a strategic differentiator in our business and data quality is the number one challenge in global logistics technology,” said Arnold da Silva, head of ocean freight product management for Schenker in the Americas. “This new capability enhances our existing technology investments and allows us to give our customers the shipment information they need to run their operations.”

“Poor global logistics data quality is too complex for any one customer to solve,” said Greg Johnson, EVP of Sales and Marketing at GT Nexus. “The solution lies in a shared platform like GT Nexus where all customers share a common set of integrations and data management processes.” Once a data quality issue has been resolved, that intelligence is applied to any customers that might encounter the same problem in the future. The data management systems get smarter and better with time.

In Marseilles, France, CMA CGM, a leading European ocean carrier, reports that it is experiencing more accurate shipments and fewer customer complaints in the tracking of goods globally after participating in INTTRA’s Process Quality Initiatives (PQI) pilot program in 2006.

INTTRA calls itself the leading e-commerce platform for ocean freight with 22 ocean carriers in its network, representing 61 percent of the ocean freight capacity among the world’s top carriers.

“Even a small process issue can send a shipment awry,” said Nicolas Manjarres, e-business operations manager for CMA CGM in a recent INTTRA press release. Noting a huge jump in the accuracy of data “moves” that relate to cargo tracking, Nicola Manjarres said participating in INTTRA’s PQI program has produced “a positive achievement for us; a real benefit for the 5,000 to 7,000 customers we serve. Improving accuracy means that more of our data is received.” And, he added that translates to accurate shipments and cost-savings for customers concerned with meeting tight, just-in-time shipping schedules.

“INTTRA works closely with all member ocean carriers to improve data quality for the shipping industry. Collective efforts have yielded standardized data quality measures and automated quality monitoring and reporting for track and trace data. Success in the area of data quality has strengthened our mutual commitment to data quality and resulted in the initiation of further projects to improve overall data and process quality for ocean carriers and their customers. The support received from our carriers has been phenomenal and our success has led us to expand our efforts to other initiatives,” said Samuel Lee, INTTRA Product Manager, based in Parsipanny, N.J.

Noted Michael Schutt Nielsen, INTTRA Senior Vice President, Global Commercial Sales, “INTTRA’s industry platform is designed to take complexity out of supply chains where relationships are always changing. You can’t just keep adding software. However, INTTRA’s portal enables customers to do business without changing systems. We’re all about reducing change and offering flexibility with minimal IT interference.”

Schutt Nielsen said INTTRA’s quality initiatives have been so successful that carriers and their customers need not fear that working through an e-commerce platform will mean reduced data accuracy that translate into missed shipments. And, he said that INTTRA will continue to make data quality a top priority in the years to come.