Electronic trade data interchange projects

communications

Electronictrade data interchangeprojects Two major approaches by ALFRED0

SARICH

Europe without barriers and frontiers has been the dream of both Robert Schuman, the grandfather of European unity, and, now, 30 years later, of the newly elected President of the Commission of the European Community, Jacques Delors. Now this dream looks like being realised, at least in the use of computers in trade. The first-ever Computer Aided Trade Conference (COMPAT 85) was recently held in London under the auspices of the Commission of the European Community and the national trade facilitation organizations of Europe. Delegates talked of a Europe without trading barriers, where the supplier can communicate instantly with other

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Abstract: Electronic trade data interchange is finally getting off theground, at a national and international level. Two major projects have overcome some of the difficulties of international computer communications, and the problems of standards. Many projects use a ‘clearing house’ conceptfor users. Keywords: data processing, computer communications, Electronic Trade Data Interchange, networks. Alfred0 Sarich is a Director Euromatica Ltd.

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traders or agencies anywhere in the world, where paperwork at customs posts and in the office is nearly wiped out, where errors and delays are no longer caused by costly bureaucratic hiccoughs, where invoices are transferred electronically for pennies. Computerization is now knocking at the door of one of the oldest and most conservative activities of mankind, trade, bringing about increased discipline and standardization, fewer problems, less paperwork and increased profit. The conference was only a beginning; COMPAT 86 already promises to be a landmark in the evaluation and solution of some of the most urgent national and international problems of trading, through the application of commonly agreed standards, direct computer-to-computer communications, preformatted orders, invoices, packing lists, bank instructions, etc. and most of all, by the increased political support for effective action to further alleviate the trader of its burden of unnecessary paperwork. Estimates have indicated that the cost of all the unnecessary paperwork, the errors, the duplications introduced, the delay in the office, in the factory, at custom posts, the excessive stocks, to mention but a few, all add

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has been developing

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com,munications between trading partners at either national or international level

up to a hefty 10% of the cost of the finished exported product; and this against a background of total world trade of some $3500B in 1983. What country or consumer or company would not like to see its standard of living cut by this amount in any one year? So, Electronic Trade Data Interchange (ETDI), is good for politics, good for businesses, good for the citizen and good for our pockets. No wonder the biggest hardware providers are lining up to march into this exploding market.

ETDI

etc...

for many

years. Companies and groupings teamed up in the 1960s to try to transmit standardized data to each other; with worldwide commerce increasing rapidly, the incentive was enormous. But most of these attempts were doomed to failure or to be limited in their effectiveness, as no common international standard on the mechanics of transmitting data had been agreed and mainframes were not really built to communicate with each other. Nor, in most cases, are they now. Ports and airports, as poles of attraction for national and international trade, were particularly affected, and it is no surprise that some of the first attempts to standardize and communicate information on goods were made here. The early

1970s saw the LACES project at Heathrow, trying to speed up the discharge of cargo, and the French SOFI trying to encourage the direct communication ports, between customs and traders. Other parts of Europe, and the USA, followed suit. Major activities were launched in the port of Bremen, then in Hamburg, then in Charleston, USA. LACES was reappraised; the banking system SWIFT was launched, then the Tradanet system supported by ICL, the American Cardis, the European Mercator, and so on. All this against a background of increased computerization, increased trade and commerce and increased communication, but still without an agreement on a trade data interchange

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The technology behind ETDI: two major approaches Trade data interchange, strictly speaking, refers to direct computerto-computer communication between a number of trading partners (see Figure 1) at either national or international level. Under the present state of technological affairs and, in spite of the valiant efforts of the IS0 to render effective the 7-layer model structure, this is a difficult obstacle to surmount, to put it mildly. However, two major international projects were launched in the 1980s to demonstrate the feasibility of direct communicacomputer-to-computer tions. The first, the .Mercator project, which I had the honour to manage on behalf of the Commission of the European Communities, was an attempt to establish communication between five heterogeneous databases (IBM, ICL, Univac, Burroughs and Honeywell) and to maintain an exchange based on different message types*. The project was completed in late 1984 and succeeded in transferring valid trade messages between 12 organizations (transporters, banks, customs, car manufacturers, standardization bodies) and across three European countries (UK, Belgium and West Germany). The second, the Dedist project, was developed by forwarders, import/ export organizations and transporters in four Nordic states (Norway, Sweden, Finland and Denmark) and was similar in character to Mercator, although the methodology applied was different. An interesting lesson was learnt

*Messages exchanged: foreign exchange data, data for parallel check with exchange of control data, export and customs documents, export manifest listing), air waybill, commercial data, imports, invoice data and delivery data.

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It was more difficult to establish communication between the two IBM machines . . . than between the IBMs and the other mainframes

from Mercator: it was more difficult to establish communication between the two IBM machines used in the exercise, than between the IBMs and the other mainframes. The second approach looked at the problem of ETDI from a different angle. It is much more business-orientated, with a ‘clearing house’ to capture incoming messages, translate them and post them down the communication lines in the right standardized format now becoming established and drawing attention from all of the major world network providers (and others). The clearing house and postbox concepts are based on the knowledge that users will not necessarily want to change their entire computer system or establish new inhouse practices, just because the ‘trade revolution’ is knocking. So these systems are built around the requirements of the users, to ensure that they get the advantages without necessarily paying the high price. Most of the current commercial developments use this clearing centre concept. Examples are the Tradanet system run in the UK by ICL and envisaged as being used by 100000 firms well before the end of this decade, the ED1 run by McDonnell Douglas and expected to give a return of some $3B in 1990 against a turnover of $3M in 1982 and the up-

coming Geisco system, expected to be the first to be able to allow ‘direct’ computer-to-computer trade data communication across the Atlantic. One can deduce from the above, that competition is stiffening; the objective being a good slice of the newly-created market, a market with a business potential of hundreds of billions of dollars. How good this will be for the IS0 7-layer model, for direct computer-to-computer communication or even for the trader himself, is hard to judge.

It is well known that standardization meetings have a Deculiaritvof the6 own and may last for ever The breakthrough The transmission of trade documents by electronic means requires standardization solutions on three fronts:

computer-to-computer communication (i.e. IS0 I-/-layer), creation of a set of standard data elements, standardization of data interchange protocols.

The Dedist approach suggested a stopgap measure by providing a ‘temporary’ commercial solution to the first problem. This left the other two problems. It is well-known that standardization meetings have a peculiarity of their own and may last forever; when the problems are discussed in a worldwide forum all difficulties are com-

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pounded exponentially and inconclusiveness is, in some cases, the order of day. Discussions on the trade data elements directory, held at Geneva for many years under the auspices of the United Nations Economic Commission for Europe, were no different from any other, and it was only through very skilful and patient chairmanship that finally, in March 1985, agreement on a European standard for trade data elements was finally reached. The implications of this breakthrough, although not apparent to the public at large, are vast. Perhaps for the first time in the history of standardization, agreement on a particular approach was reached before separate divergent methodologies could be applied on a large scale. Second, Europe was now the leading driver in this effort and had managed, this time, to put forward a very powerful joint recommendation. (One must consider, in this context, that Europe is more inclined to resolve matters pertaining to external trade, given that about 60% of all that it produces is exported.) Third, and perhaps more important for the destiny of the European Cornmunity and for the creation of a true Common Market, a really major obstacle in free trade was finally overcome. Trade data interchange of data elements

directory

The basis for any trade data interchange is an agreed directory of data elements, uniquely named, tagged and defined, and with the entry of data specified both with respect to expressions and syntax. From the directory, data elements required to fulfil specific documentary functions are selected to form messages for transmission Data elements can be translated in discrete forms (one-byone) or in sets, systematically arranged according to agreed rules. A transmission of trade data is then

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composed of one or more messages containing segments, which in turn are made up of data elements. Segments are themselves split into data segments and data elements. It will then clearly appear that any trader can, if desired, initiate a full computer-to-computer exchange of trade information with any other trader who uses the same standard, after agreeing on the ‘signature’ of the data transmitted. The software The increasing number of software/ hardware providers attracted by the various aspects of trade data interchange, whether by sea, air or road, further demonstrates the ebullience of this newly created market. Now that agreement has been reached in Europe on a standard, more powerful packages may be expected to be implemented rapidly. Some of the work produced by, or with the assistante of, the national trade facilitation organizations of the European Communities or by the US National Council on International Trade Documentation, has already advanced the stateof-the-art substantially. Examples worth noting are the Interbridge package developed by the Simplincation of Trade Procedures Board (SITPRO) in the UK and used in the Mercator experience, which is now available in a ‘mini’ version. The French Setradex software runs on micros, the German Intertex is partitularly suited to capture users in the upcoming teletex market. The US Cardis encompasses some of the most advanced features of electronic computer communications (interfaces between the Cardis concept and Interbridge are under development). Most of the software will require customization to adapt it to the requirements of the organizations. Its cost will depend on the application to which it is directed, but it can be assumed that it will be contained between the few hundred dollars for

the micro version up to the $4-6000 for the most sophisticated versions. Clearly competition will keep prices down on this front. The future There is no doubt that the next ten years will see the take off in the implementation of trade data interchange systems; this increase is bound to gather momentum with the launch of powerful multiuser minis and micros, with the spread of computerization to small and medium enterprises, and with increased standardization. The political pressure for liberalization of exchanges will also heavily influence the early adoption of the new techniques. The efforts in the communication and information technology, such as Community packages leading to greater integration of the PTTs such as Research in Advanced Communications Technologies for Europe (RACE), extended public purchasing, common research and development programmes such as ESPRIT, will continue to facilitate the transborder transfer of data and to make it possible even for the smaller trader to link with others by means of computers. As a consequence, it can be expected that more use will be made of new means and instruments such as teletex, multiuser micros, together with packet-switching networks. So, the next step in the evolution of trade data interchange will be a confrontation (or integration) of the two emerging approaches but that will take quite a few years. Futiher informati.n The HOW-TO Guide to the i~~~e~~ion of E~e~~roni~ Trade Data Inter~~~e, to be published in September 1985, will concentrate on the technical developments and advise on full implementation of computerized trading systems. Details on the guide and COMPAT 86 are available from the author cl

Euromatica Ltd, 96 Rue Brussels, Belgium.

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Eglises,

data processing