1. Commitment to EDI Standardization
Factory automation/computer-integrated manufacturing (FA/CIM) gained momentum in the early 1980’s in the electronic device, and semiconductor/electronic component industry. To establish FA/CIM, computerized and paperless communication interchange between the materials department and trading partners, each company began directing material orders to electronic data interchange (EDI). However, when the respective companies placing orders develop EDI using their own systems, a multi-terminal phenomenon occurs in which the sales contact of a company receiving the orders must install a terminal for each company placing the orders. To prevent this multi-terminal phenomenon and promote efficient EDI, EDI standardization activities began within Japan Electronics and Information Technology Association (JEITA) (formerly Electronic Industries Association of Japan [EIAJ]) in 1987.
JEITA is made up of electronic device-related and electronic component/semiconductor-related companies. Both order-placing companies and order-receiving companies belong to the organization. Serious discussions were continued to determine standards that would take advantage of this characteristic and allow a win-win relationship between both sides, without force from the order-placing parties. As a result, first, EDI standards for order information, delivery direction information, etc, which are basic information related to continuous transactions, were established and put into practical use in 1989. In the initial phase of the practical application of the EDI standards, major order-placing companies and major order-receiving companies capable of developing the system formed the nucleus of EDI. The order-placing companies were able to establish EDI with about 30 trading partners over the course of one year. However, subsequent dissemination speed dropped because the target gradually shifted to small and midsized trading partners. To overcome this dissemination-inhibiting factor, application service providers (ASP) (value-added network [VAN] companies at the time) and software vendors began providing services and packages geared toward small and midsized trading partners. As a result, EDI dissemination regained its speed.
JEITA was the first in the Japanese manufacturing industry to approach EDI standardization, promote its practical use, and achieve results. Therefore, EIAJ standards (EDI standard established by JEITA) became the base for CII standards, which are the Japanese EDI standards. Business transactions in the manufacturing industry are not limited to a single industry. Inter-industry transactions account for a majority of transactions. Therefore, the Japanese Ministry of Economy (formerly the Ministry of International Trade and Industry) set forth guidelines for cooperation to the four electrical industries (electrical machinery, electronics, electrical power, and electric cables) having particularly strong business ties, in order to develop EDI between different industries as well. As a result, inter-industry EDI implementing CII standards were developed.
The start of EDI was prompted by the development of FA/CIM in the manufacturing industry. However, the effect of merely computerizing business documents exchanged between companies is minimal. It is vital that the data computerized between companies is organically linked to in-house systems. Effects achieved through the collaboration of inter-company data and in-house systems have been reported. For example, the lead time has been shortened from 45 days to 23 days at a certain mass-production plant, and a significant amount of labor-saving in checking operations has been achieved through automatic matching of accounts receivable and accounts payable posting data in an order-receiving company.
EDI standardization began with basic information, such as orders and delivery instructions. However, information types have progressively expanded to include business plans, accounts payable, accounts receivable, supply schedules, and claim payment. In the process, there grew a great need for streamlining delivery operations. Two issues arose. One issue was that because a distribution company intervenes when the order-receiving company makes a delivery to the order-placing company, the effectiveness of EDI is reduced by half unless EDI is also implemented between the distribution company. The other issue was that a designated invoice must be attached and delivered for each ordering company, which was very cumbersome.
Regarding the first issue, information on shipping requests, assembly schedules, etc, was standardized in coordination with the distribution industry, and inter-industry EDI was put into practical use through empirical experiments. The second issue involves the standardization of invoices. Attempts to solve this challenge have been made many times within the industry, to no avail. However, the feasibility of the standardization of invoices is increasing as a result of the establishment of an environment in which basic information is converted by EDI. A standard invoice has been completed through the use of bar codes and EDI information. As a result, the matching of information and articles during delivery has been simplified and shipping labor placed on the order-receiving party has been significantly reduced.
The implementation of EDI for distribution information, as well as business transaction information, and the standardization of invoices have been actualized. As a result, the dissemination of EDI has increased dramatically. By July 2006, over 13,000 JEITA-related companies (22,000 companies nation-wide) had registered for universal company codes used to perform transactions using the CII standards. Japan Information Processing Development Corporation (JIPDEC), which manages the CII company codes, presented JEITA with a testimonial in September 2004 for JEITA’s contribution to the dissemination of EDI in Japan.
2. “ECALGA”, New EC Standards for actualizing Business-to-Business Collaboration
The business process targeted by the EDI promoted by JEITA is part of an order placement and receipt, related to basic transactions on a mass-production level. This was merely a digitalization of a part of a business process. There is a business process, such as that shown in the diagram, between the electronic device manufacturer, which is the order-placing company, and the electronic component/semiconductor manufacturer, which is the order-receiving company. JEITA’s goal is to computerize all inter-company business processes in the engineering chain including upstream steps in the business process and the supply chain including downstream steps, seamlessly connect the business processes, and enhance corporate management efficiency. At JEITA, new EC standards were systemized as “ECALGA” in 2003 to globally and seamlessly connect these inter-company business processes.
Electronic Commerce ALliance for Global Business Activity (ECALGA) is “a business standard that overcomes all barriers, globally and seamlessly connects all business processes, and enables a dynamic business development”.
In ECALGA, first, standardization and computerization was promoted with focus on provision and retrieval of component information between the electronic device manufacturers and the electronic component/semiconductor manufacturers on the “engineering chain” axis. A dictionary for creating catalogue information was standardized as an ECALS dictionary, and standards were developed for component information distribution and exchange.
After a component is selected from the catalogue information, various additional information, such as specific technical information defining specifications and quality information, individual estimate information, and sample information are required. Such information is exchanged one-to-one, between the electronic device manufacturer and the electronic component/semiconductor manufacturer. A high-volume order can be placed after this procedure. At the same time, various information is exchanged during the stages of sales termination and manufacturing termination after the completion of mass-production. In ECALGA, such information is standardized as models defining delivery (purchase) specifications and models for exchanging information on discontinued products.
On the “supply chain” axis, speed is an important element of corporate competitiveness. A trend can be seen in which the electronic device manufacturers and the electronic component/semiconductor manufacturers mutually aiming to maximizing sales opportunities and minimizing inventories share information, such as product information, and road maps, sales reports, production schedules, production progress reports, and inventory information related to the products, allowing the companies to make decisions more quickly and in a more timely manner. Until now, such information was considered classified information within the company and was not easily shared. Unlike the conventional EDI, this model aims to automate operations between companies and enhance collaboration. In ECALGA, models utilizing requirements and reservations, and third-party warehouse escrow models are being standardized.