Supplier Enablement

XML 101 - Help for Business Managers

Interestingly searching XML on google turned up a number of results that talked about SOA and Web Services 2.

Me thinks – that’s not very interesting to the majority of business managers?

This blog originated from a conversation with a supplier that rejected EDI yet knew something about XML. The trouble was, something, as in not very much.

XML 101 – something worth knowing if you are not a computer whizz but need to stay on top of your game.

XML is for all sizes of business.

XML allows you to exchange documents with others; your customers, your suppliers. These are electronic documents.

What is an electronic document? It is not paper although electronic documents can always be printed in a human readable form. Electronic means that it has been constructed in such a way that it can be sent from one computer to another and the receiving computer can interpret the information in the received document and process that. The construction of the document uses XML.

How does that help? It saves having to intercept the inbound document, route it to a department or person so the information in the received document can be translated into instructions that people can act upon or input to a computer.

Many question why the received document that is nearly always computer generated has to be received as a paper document and the information re-entered into a computer? It doesn’t and that is the whole point of using electronic documents that can be used to pass information from one computer to another even if those computer systems are different.

That is the power of XML to resolve the differences between IT systems that are used around the world yet still allow them to pass information for processing.

What are these documents? Mostly Purchase Orders and Invoices although other documents types such as Advanced Shipping Notices, Credit Notes, and Debit Notes are supported. This is a fast developing area and the UK Government has specified 14 different document types that will be supported as XML documents.

Why all the interest in XML? There are costs associated with purchasing goods and services as you request quotations from suppliers, process orders and invoices for payment.

Since the activity of buying the things you need for your business is indispensable, many organizations are now looking at their costs to raise a purchase order, to process an invoice, and, alarmed at the scale of these costs are determined to find a better and lower cost alternative.

Solutions include increased use of automation and the use of the Internet to send and receive documents in preference to postal mail.

So XML is mainly to do with buying and selling? No, type XML in your Microsoft WORD help bar. There are many potential uses for XML but I am writing about how it used business to business between buyers and suppliers.

Do I need to do anything about XML? No, it is a technology and this blog is about debunking the techno speak for business managers.

Think about the transactions that you have with customers and suppliers and the business process and documents that support those transactions. Do you know the cost to process an order, process an invoice, to develop, publish and distribute a printed catalogue?

This is where others start out when looking at the business case “to change how things get done around here for the better”. That can be sparked by an increase in business, competitive pressures, a squeeze on margins, a new CFO, there all sorts of reasons.

I'm a business manager, what are the benefits? Let’s suppose you save £1.00 on the processing of an order and invoice and that you processed 10,000 orders/invoices per annum. That is a saving of £10,000. How much do you have to sell to achieve £10,000 in gross profit? If you have a gross margin of 10% you have to sell £100,000. So, if you were looking at the profitability of your business would £10,000 incremental profit be attractive?

Basic stuff but in a low inflation economy with little scope to increase prices (unless you sell energy!) then you have to look at how you can take cost out of the business without doing harm to customer service or supplier relations. Just some thoughts so you can develop this further for yourself.

When I searched in google.com for XML the 1st result shown linked me to this web site http://www.w3.org/XML/

Have a look and send me a comment if my blog has helped you.

Click here if you are a buyer

Click here if you are a supplier

posted by FrankB @ Thursday, July 27, 2006