need for standards

By John LeFors Vice President, BMG Sales Willamette Indu.stries www.wll.com

T ln most industries. including our own. e-commerce was a hot topic several months ago. Customers seemed just as anxious as suppliers to test the waters using this new technology. In fact, Willamette had several customers insisting that we define an e-commerce strategy very quickly so that they could begin moving in the same direction. Many companies thought they had to be "partnering" with technology organizations to not be left behind in the rush to revolutionize their business.

At one time in the not too distant past, there were more than 50 organizations dedicated to e-commerce for the forest products industry. But then the dot-com bubble burst. Many of those organizations are no longer in operation. Large financial investments were lost. The technology often proved to be not cost-effective. Customers dropped their requirements for suppliers to be e-enabled as a condition for receiving their orders. The promises of reduced costs gave way to the realization that there could be significant expenses associated with implementing e-commerce.

So was the e-commerce phenomenon just an illusion? Will e-commerce really revolutionize the way we do business? While acceptance of this technology may be taking longer than originally expected, I believe that e-commerce is for real. Wild enthusiasm for the new concept is being replaced with the understanding that some amount of expense and hard work will be required to obtain the anticipated benefits.

Historically, Electronic Data Interchange was the way business partners traded documents with each other electronically. Purchase orders, order acknowledgements, invoices and shipping documents are the most common types of documents exchanged in this manner. Some companies have integrated these transactions with their back office systems, while others sent and received them using a third party, often re-keying them into their internal systems. The cost of these transactions was low and the timeliness was much better than mail or even fax. Companies with a large investment in EDI have been reluctant to replace this with a more costly solution, though there are more potential benefits. Few EDI customers seem to be excited about implementing the B2B processes offered by e-commerce vendors.

Companies that did not make large investments in EDI technology seem to be the most interested in using the Internet for B2B transactions. These are usually the medium to small sized companies, although some larger companies now upgrading back office systems are also expressing interest. Although more sophisticated and costly, integrating e-commerce directly into a company's systems offers significant benefits over the EDI approach. Users can obtain information from their business partners on a real-time basis, 24 hours a day and in a format that can be consistent across multiple organizations. Human support activities (such as re-keying data, providing status updates, etc.) are minimized, thus reducing costs.

Willamette reached a major milestone this summer-we received more customer requests to set up B2B e-commerce transactions than EDI transactions. This seems to be a turning point and the trend is continuing. So while the business world seems to be moving slower than we might have thought a few months ago, it is definitely progressing.

Although the building materials industry is moving, it is unfortunately going in several different directions. There are many third-party organizations offering a variety of ecommerce solutions. Several different business models are being tested, such as vertical marketplaces, horizontal marketplaces, auctions, industry consortiums, etc. Each is evolving with different standards and cost methodologies. Further shakeout is likely to occur.

The potential benefits of e-commerce are too great to ignore. A few of the models being tried will eventually succeed. Some ofthe organizations being set up to support e-commerce will probably become financially viable. In the meantime, one of the most critical tasks facing our industry is to develop common standards to define our products so that we can communicate clearly and consistently with each other. At Willamette, we encourage our industry associations and others to focus on these developing standards as a near-terrn priority.