RosettaNet Seen Key to China's Supply Chain Future

Standards body will be critical as manufacturing boom drives adoption of e-supply chains, Avnet CIO says

Standards body will be critical as manufacturing boom drives adoption of e-supply chains, Avnet CIO says

Phoenix — July 29, 2004 — The boom in manufacturing is driving the implementation of e-supply chains in China, and RosettaNet will be the key to maximizing supply chain management efficiency in that country, according to Ed Kamins, chief information offer at electronic components distributor Avnet Inc.

In his address this week at the China e-Supply Chain Information Summit in Weihai, a city in northeast China, Kamins also warned that partners must recognize that it takes time to deploy a supply chain based on RosettaNet, which is a consortium devoted to standardizing interfaces for electronic commerce between supply chain partners.

"It can take weeks, even months to create each partner interface in the supply chain," Kamins said. "RosettaNet is all about standardizing and streamlining processes."

A non-profit organization that seeks to implement standards for supply-chain transactions on the Internet, RosettaNet was created in 1998. The group includes companies like American Express, Microsoft and IBM, and it is working to standardize labels for elements such as product descriptions, part numbers, pricing data and inventory status.

Avnet has been a RosettaNet convert since the late 1990s, according to Louis Lam, vice president of Avnet Electronics Marketing's Asia Pacific operations and co-presenter at the Weihai event. "In 2000, we became the first organization in the electronics industry to deploy order management using RosettaNet, and a year later Price Waterhouse validated RosettaNet's viability based on our implementation," Lam said.

In 2003 Avnet became the first organization in the industry to deploy a RosettaNet Design Win, and in the same year, the company integrated its Asia Pacific business into the global RosettaNet infrastructure. Earlier this month, Avnet announced that, together with B2B connectivity specialist GXS, it had become the first to deploy a RosettaNet/e-Hub order management solution in Asia, supporting FiberHome Telecommunication Technologies, a provider of telecommunications equipment in China.

"Over the course of the past 12 business quarters, RosettaNet transactional volumes have shifted gear, changing from linear to exponential growth," said Kamins. "What's more, over the same period, we have seen a dramatic intersection as decreasing EDI transaction volumes have been overtaken by increasing RosettaNet volumes."

Lam added that RosettaNet opens up the possibility for considerable savings in the order cycle, in both time and effort, over traditional processes. "If you take all of the processes — from the initial quote through ordering, purchase order creation and placement — we believe that cycle times, using RosettaNet, can be reduced in most cases from eight to 10 hours to 20 minutes."

According to Gartner, the technology research firm, China, fuelled by its booming manufacturing sector, will be among the fastest growing markets for supply chain management software in the region, registering a compound annual growth rate of 10 percent through 2007.

"Over the past several years, substantial foreign and domestic investment has been made in China's manufacturing sector," said Dion Wiggins, vice president and research director at Gartner. "China's manufacturing and logistics sectors are part of the global and regional supply chains and are potentially big users of supply chain management software."

Given the diversity of the marketplace, Wiggins said that vendors must enter into partnerships to extend coverage of sales, service and support. "Being close to customers, partners can make or break a vendor's business," Wiggins noted. "Managing partners so that they are both profitable and service-oriented is critical."

In addition, Wiggins pointed out that economies in the Asia-Pacific region are highly trade intensive. "Manufactured goods, especially electronics and semiconductors, constitute the region's major export," the analyst said. "In an increasingly competitive global market, margins are always under downward pressure, and manufacturers are increasingly adopting SCM strategies to make businesses more efficient."