E-business solutions support business and government processes that are automated and integrated using information and communication technology (ICT). This involves the electronic exchange of documents and data that are transported to and processed by disparate systems as part of a supply chain. In order to ensure their inter-operability, the use of available and widely recognised standards and tools is essential.
Relevance for Trade Facilitation
A cross-border flow of goods is accompanied by a cross-border flow of information for purchase, shipping and payment. This information must be submitted to and processed by various governmental agencies and commercial stakeholders. The management of this information has long been paper based. Nowadays, paper-based systems are increasingly transformed into electronic systems because of the power of the internet and the fact that many organizations are adopting automated information exchange. Many companies now manage their global supply chains using ICT for purchasing, exchange of information on goods and the means of transport, tracking and monitoring of goods, and preparation and submission of trade documents to governmental authorities. Governments are increasingly using automated information processing because of the mandatory submission of trade documents and data before goods are shipped and arrive at their destination. E-business solutions are vital in integrating and automating trade formalities between the various stakeholders for trade facilitation, and their application is a key step in the establishment of Single Window facilities.
Automating the exchange of trade documents and data has considerable well-documented benefits. It eliminates redundancies and duplication in the submission of necessary information, which saves time and reduces costs of trade transactions. Research by the School of Management, Politechnico di Milano (*), indicates that the more a supply chain is automated, the higher the savings. These can amount to over 60 per invoice, particularly for cross-border trade involving transport payments and transactions with several government authorities. The OECD (*) estimates that the streamlining and automation of trade formalities can lead to costs savings of about 8%.
Consideration for implementation
The first step for implementing e-business solutions is a business process analysis. This helps to capture existing processes and information flows, and formulate the requirements and design of simplified integrated processes. The next step is migrating paper to electronic documents by document simplification and data harmonization, and the standardization of data exchange. These steps involve the adoption of existing standards and tools, where available, or the development of new ones.
Data harmonization and standardization
Since the '70s many organizations have tried to simplify the documentary process by developing standards and aligning documents. This simplification reduces re-keying errors in manual systems and also supports the automation of trade data interchange. Ensuring that trade data can be processed and transmitted without difficulty between various partners and their different technology, requires the use of standards, procedures and other essential elements of data handling. This involves the use of agreed standards for the representation of data at the semantic level through the process of data harmonization, and the use of agreed message syntax, through standardization of messages.
Data harmonization ensures that the data is referred to in a cohesive and consistent manner and that it can be transmitted without re-transcriptions and communication errors. As the data is harmonized and put into context, a registry is required to store the meta data for later comparison and reuse. This is calls for the development of data models, which provide a hierarchical framework for the data. They use technical specifications to provide a consistent way to standardize storage and ensure that they are reusable.
Organizing data exchange and access to information
Once data has been harmonized and standardized, it must be sent from one system to another. E-mail is probably the most used means of sending electronic data, but there are many ways to interchange or expose data to other systems. Best practice should involve the security, scalability and reliability of data transfer. This is important whether the system is simply sending the data in a discrete manner or is involved in a more sophisticated process such as in a service-oriented architecture, which additionally involves some web method or operation.
Examples of trade data interchange initiatives
There are a number of ongoing initiatives for electronic trade data interchange , funded by major organizations such as the EU. These initiatives respond to regulatory changes and lead to the development of e-business solutions.
(*) Irish National Parliament, "Written Answers- Electronic Invoicing", 17 November 2011, Available from http://debates.oireachtas.ie/dail/2011/11/17/00085.asp (accessed May 2012)
(*) Moïsé, E., T. Orliac and P. Minor, “Trade Facilitation Indicators: The Impact on Trade Costs”, OECD Trade Policy Working Papers, No. 118, (OECD Publishing 2011). Available from http://dx.doi.org/10.1787/5kg6nk654hmr-en