Exchanges have the potential to achieve real breakthroughs in demand and supply side management says Spencer Marlow Many suppliers embraced the early private extranets of companies like Tesco and Wal-Mart and were looking forward to the promised greater data sharing, collaborative forecasting and joint management of processes. Extranets meant previously unavailable data on sales, stock and supply chain performance were suddenly accessible in real time, enabling suppliers to pinpoint issues and drive performance to higher levels: cutting inventory, growing sales and slashing costs. However, they also found they had to deal with an ever increasing number of different extranet systems just to get a full picture across all retailers. The big hope as suppliers watched exchange development was that we would come to see the development of a single, standard set of tools and interfaces for all collaborative processes. Standard basic tools such as the sharing of store details may well emerge. However, once retailers need higher value tools such as forecasting, new product development and promotions, they will inevitably look for solutions tailored to their individual preferences and reflecting their own ways of doing business. After all, the processes involved are, for many, a major source of competitive advantage and differentiation. Who will want to throw out years of development work and give up competitive edge just to conform to a group, common denominator standard? Exchanges are, therefore, likely to become platforms for hosting the various private extranets of the different founding members. There may be shared, community applications starting with procurement, but over time these will probably handle the minority share of exchange activity. Retailers will want to pursue their own agenda in accordance with their own priorities. In many cases the exchange will not be able to meet those needs, particularly when seeking to develop the more complex process management tools such as new product introduction or range planning. In these cases, the exchange members will turn to third party providers ­ such as consultants, development houses and service providers ­ who can assist them in developing the applications they require and even operate them externally. Links between the exchange and these external applications will ensure that the experience remains seamless from the suppliers' point of view, with the exchange serving as the portal for the external applications ­ or vice versa. Healthy exchanges will encourage, rather than try to curb, this development. At the same time,they will fiercely promote data standards that will make the sharing of information between trading partners easy and cost effective. The major retail exchanges have the potential to achieve a breakthrough in both demand and supply side management, not through convincing all retailers to share the same tools and interfaces but by, at last, driving the true standardisation of data, as well as, to a lesser extent, processes. Exchanges will not spell the end of the growing trend towards stronger, more cooperative relationships between trading partners within the supply chain. On the contrary, by enabling industry-wide agreement on data standards, exchanges should provide fresh impetus to collaborative business practices. This should be great news for suppliers. For the larger suppliers, true data standards will make it far easier to directly download data from the exchanges to their own back office systems. Over time, they will use the online tools on the exchange less and less ­ all the processing and analysis will be done inhouse using legacy systems. The results of this work will be fed back directly to the appropriate trading partner(s), again conforming to the prevalent data standards of the exchange. Small and medium suppliers will go through a phase when they still have to deal with the online tools provided by each retailer within their extranet environments hosted on the exchange. Lacking the large, integrated systems of the bigger suppliers, they will get limited benefit out of the data download capabilities. Longer term, they will be able to "timeshare" on fully developed back office systems that will be available for hire online and that will be ready to fully exploit the data provided by the exchanges. These Application Service Provider (ASP) solutions will enable these smaller players to also enjoy the full benefits of systems integration. The successful exchanges will provide robust and scalable transaction management and integration services. These will ensure all participants can easily and quickly share data and documents with any other trading partners within the exchange ­ irrespective of the tools used at either end of the transaction. This capability will be the lifeblood of the exchange. And powerful, flexible any-to-any translation capabilities will be particularly important in the early years while a raft of different data format requirements still prevails across the tens of thousands of trading partners in the global exchange community. n Spencer Marlow is marketing manager, retail supply chain, EMEA, GE Global eXchange Services. {{FEATURES }}