GUSI User Pack - GS1 Canada Cond… · GUSI is the platform for the industry partners to get together and work on a shared understanding and definition of the joint processes, on

Upstream User PackSnapshot January 2006 GCI Global Upstream Supply Initiative

Introduction

There are significant business benefits for both manufacturers and suppliers in drivingincreased integration of supply chain processes using information technology.

This document explains how some of the world’s largest manufacturers and suppliershave already been achieving benefits, and other companies are being encouraged toidentify and realise their own benefits.

However, achieving globally pervasive benefits for suppliers and manufacturers demandsthat common approaches and standards are used in implementing such projects.

Upstream Integration is about optimising the supply chain processes between manufac-turers and suppliers of ingredients, raw materials and packaging. Sharing information willprovide both parties with an increased responsiveness to the manufacturing require-ments and hence a better consumer response.

To support the industry in obtaining the above benefits the Global Commerce Initiative -created the Global Upstream Supply Initiative (GUSI).

GUSI is the platform for the industry partners to get together and work on a sharedunderstanding and definition of the joint processes, on implementing the Upstream Inte-gration Model (UIM) across the community and support the implementation by creatingimplementation guidelines and business cases.

GCI brings manufacturers and retailers together on a worldwide parity basis to simplify andenhance global commerce and improve consumer value in the overall retail supply chain.

The initiative is also supported by GS1, an organisation dedicated to improving the efficiencyand visibility of supply and demand chains, globally and across sectors, with its diversifiedportfolio of products, solutions and technologies.

GS1, worked with an industry requirements team on the development of the necessaryXML messages to enable companies to exchange information will be launched on 14 Feb-ruary 2006.

The initial deliverables of the GCI Global Upstream Supply Initiative are now ready for you to use.

This CD provides details on the tools, information and existing standards needed to:• understand the upstream opportunity• plan your own actions to achieve the business benefits • join the community of implementation and action that has been formed to leverage experi-

ence and drive scaled business results for the industry.

1.1 Driving supply chain improvementsbetween CPG Manufacturers and their suppliers of raw materials and packaging

The main deliverables of GUSI so far are :• A community of global manufacturers and suppliers committed to working together on

behalf of the industry. A community you can join.• The “Upstream Integration Model” the “UIM” a modular framework of business process-

es and terminology that can be used to drive common approaches across the industry.• Support and input to GS1 who have published global message standards to support

upstream integration.• Presentation material to help you understand the upstream space and the examples of

projects that have already occurred upstream• A committed community of service providers (including major consultancies and

exchanges) who are ready to support you• A momentum of usage in 2006 which will see over 150 implementations using the stan-

dards covering Europe, North America, South America and the first implementations in Asia.

Future deliverables will cover:• Business cases• Implementation guidelines

The companies currently forming the GUSI community are:

AJINOMOTO KIMBERLY-CLARK EUROPE

ALCAN FOOD EUROPE KRAFT FOODS

ALCAN PACKAGING MAYR-MELNHOF KARTON GMBH & CO KG

COCA-COLA NORTH AMERICA NESTLÉ

CROWN EUROPE NOVOZYMES

GROUPE DANONE PHILIPS LIGHTING BV

DOWCORNING PROCTER & GAMBLE

FIRMENICH QUEST INTERNATIONAL

GEORGIA PACIFIC CORPORATION SARA LEE/DE

GILLETTE SCA PACKAGING

GIVAUDAN SMURFIT KAPPA GROUP

H.J. HEINZ SYMRISE

HEINEKEN TETRA PAK INTERNATIONAL SA

HENKEL THE DOW CHEMICAL COMPANY

INTERNATIONAL FLAVOURS&FRAGRANCES (IFF) UNILEVER

J.M. SMUCKER COMPANY VAN GENECHTEN PACKAGING

KELLOGG'S ZENTIS

Which companies have been involved in GUSI so far?

What does this mean for you?

The investments made by the global community mean that you can:a) Understand and leverage the business benefits of upstream integration. b) Utilise a proven common approach to speed up your projects and improve your busi-

ness results.c) Tap into the experience of some of the world’s leading companiesd) Take advantage of the network of manufacturers and suppliers who are rolling out the

upstream standards and the use of the UIM in 2006. If you are a supplier it is likely thatmost of your major customers are committed to the UIM and the upstream standards.If you are a manufacturer there is a significant part of your supply base moving to GUSIand more will be added in 2006.

e) Implement projects in a common way with your trading partners f) Control costs by not investing in designing and implementing your own way of doing

things.g) Leverage business processes and single investments across multiple trading partners

Why the focus on upstream integration?

Some of the world’s largest consumer packaged goods manufacturers and their suppliershave identified significant benefits through redesigning and driving tighter electronic inte-gration of their supply chain businesses processes.

The initial focus of action has been on Traditional Order Management, Supplier ManagedInventory and electronic invoicing.

In particular, automated integration between Enterprise Resource Planning (ERP) systemsis already providing step change benefits for companies such as P&G, Nestle, Unileverand their suppliers such as Crown, Novozymes and Firmenich.

The quantified benefits identified so far cover:• Improved service levels• Reduced inventory• Lower costs (in administration, production and transportation)• Improved cash flow• Improved teamwork and a deepening of the strategic relationship between trading partnersIn some cases the companies involved have created global business cases, signed off bytheir CEOs, to drive the global roll-out of upstream integration using ERP-to-ERP integra-tion for their top tier suppliers, and portal technology for the rest of their supply base.

These examples demonstrate that there are significant benefits for both manufacturersand suppliers in driving upstream integration and all companies are encouraged tounderstand the opportunity, create their own business cases and drive local or even glob-al strategies to gain benefits.

Business cases

Why do we need a common approach and global standards?

Today, to access the benefits described above, each programme between manufacturerand supplier has, without standards, needed to establish its own framework for processdefinitions, terminology and electronic message content. This is both a wasteful processand in itself presents a significant barrier for scaled adoption.

Different business processes and approaches create a barrier to the scalability of integra-tion efforts whilst also imposing many costs: the time and money spent making transla-tions, the delays caused by the need for corrections, plus the inevitable information gapsand misunderstandings.

For example: a supplier is often faced with the challenge to integrate with multiple manu-facturers, each one with its own definition of the above factors.

The existence of a agreed shared framework, (like to Upstream Integration Model (UIM)UIM, based on GS1 industry standards) will overcome the described barriers and will:a) Create a common definition of the business processes involved in upstream integration

and how they link together. This creates a “common language” that can be used in allelectronic communications by all parties. It also goes beyond the standards that aremainly focused on data interchange definitions.

b) Support and strengthen the relationships between integrated manufacturers and sup-pliers through one common standard and reduced complexity

c) Provide a foundation to enable business programmes to be implemented in a commonway:- Reducing complexity- Reducing implementation costs (including IT costs)- Accelerating adoption and implementation - Enabling solution providers to build solutions that can be re-used- Basis for reviewing and adopting internal processes

What is the Upstream Integration Model (UIM) ?

The UIM creates a definition of the business processes and data interchanges upstreambetween manufacturers and suppliers for use in electronic communications.

It has been designed to meet the major electronic communication needs in the followingbusiness areas:• Procurement• Material forecasting• Inventory management• Demand & Supply• Dispatch, Receipt & Consumption of Materials• Financial Settlement

By adopting this model manufacturers and suppliers will have a common language forthe processes and data interchanges within their electronic integration relationships.

The concept of the model is based on six building blocks:• Integration Agreement• Master Data Alignment• Purchase Conditions• Demand & Supply Signals• Dispatch, Receipt & Consumption• Financial Settlement

The UIM applies to both supplier and manufacturer initiated ordering processes andaddresses these two major supply practices and the most common variants of them.The “manufacturer driven” scenario is relevant when orders are initiated by the manufac-turer and sent to the supplier. This scenario is also known as “Traditional Order Manage-ment (TOM)”.

In the “supplier driven” scenario the supplier recommends or establishes the order to themanufacturer based on the manufacturer inventory data and / or consumption forecast.This last one is widely known as “Supplier Managed Inventory (SMI)”.

Available GS1 standards to support upstream integration

GCI has worked with GS1 to create upstream extensions to existing downstream stan-dards widely used between manufacturers and retailers.

The benefit of involving GS1 has been:• The potential of common standards from consumer, retailer, manufacturer to suppliers• The breadth of GS1’s Member Organisations around the world (with all manufacturers

already members), enabling support in local markets.• World leading standards management capability.• Product and location identification, using the GS1 Global Trade Item Number (GTIN) and

Global Location Number (GLN). Although upstream integration could occur using inter-nal product codes, even greater benefits can be optained from using these GS1 identi-fiers. GTINs and GLNs can act as the foundation for product traceability, for example.

• After two years of effort between GCI GUSI and GS1, a comprehensive set of upstreamstandards have been designed to drive virtualy all of the key upstream processes.

• These are electronic business message standards supporting the UIM (initially XML-based, with plans for EAN-COM in 2006).- The result for you? There is no longer a need to design and build your own systems.

Use the GS1 standards!

The GS1 Global Office will be working with the GS1 Member Organisations to providelocal support for the UIM and the new upstream standards.

The growing community of usage of the UIM and the Upstream standards from GS1

The companies who are involved in GUSI are all committed to drive implementationsbased on the UIM and the respective GS1 standards.

By the end of 2005 these companies had committed over two hundred implementationprojects between plants. In addition most of the global manufacturers had created globaldeployment plans to drive GUSI adoption throughout their global operations. These plansare multi-year in their nature involving re-engineering of solutions conform to the stan-dard, migration of existing projects and start up of new projects across the globe.

In 2006, it anticipated that the community of manufacturers and suppliers committed to theUIM and GS1 standards will grow by a factor of three, moving the industry ever close to thescaled global benefits which are the goal of the GCI Global Upstream Supply Initiative.

To support the industry there is a growing community of consultants and serviceproviders committed to support GUSI, UIM and the GS1 upstream standards.A number of companies have already shown interest:

In addition the GS1 global community, through the over 100 local GS1 Member Organisa-tions, will support the Upstream standards and the UIM.

CONNECTGLOBALONE NSPYRE/TIECPGMARKET ORDINAELEMICA PIPECHAINHP SAPIBM SEEBEYONDINFLUE TANGRAM TELEOFFICEINTELLIGENT SOLUTIONS WITRONMICROSOFT

How to create value for your organisation

1. Immediately ensure that any teams in your organisation (at plant, division or corporatelevel) who are planning or doing upstream integration are aware of and commit to fol-lowing the UIM and the GS1 upstream standards. Don’t waste your money and energyon proprietary activity !!Leverage the experience of others.

2. Start some projects, maybe working with one of the manufacturers or suppliers thatare part of the GUSI user community.

3. Evaluate and, where needed, launch an organisation-wide programme to driveupstream business benefits for your entire organisation.

Lastly, if you have a high interest in upstream integration then as a manufacturer or sup-plier you are invited to join the GGI GUSI Working Group. Here you can:• Contribute to and share industry experiences• Help drive industry adoption • Explore new areas for upstream collaboration • Have an impact on the future direction of upstream functionality and standards.

How to find out more

• This CD• The GCI website www.gci-net.org• The GS1 website (for detailed information on the standards) www.gs1.org• Contacting the GCI Secretariat if you have specific questions about GUSI or getting

started upstream. Ruediger Hagedorn at [email protected] or by phone on+49 22194714444

• Contacting GS1's Standards and Solutions Team if you have specific questions- GS1 eCom (GS1 XML & EANCOM standards): Anders Grangard

[email protected] GS1 BarCodes (GS1 identification standards and bar codes): Scott Gray

[email protected] GS1 Solutions (Supply chain management and Traceability): Miodrag Mitic

[email protected]

http://www.gci-net.org

http://www.gs1.org

The Upstream Integration Model (the UIM) creates a common approach and language forthe business processes and data interchanges upstream between consumer packagedgoods manufacturers and their suppliers for use in electronic communications.

It has been designed to meet the major electronic communication needs in the followingbusiness areas:• Procurement• Material forecasting• Inventory management• Demand & Supply• Dispatch, Receipt & Consumption of Materials• Financial Settlement

By adopting this model manufacturers and suppliers will have a common language forthe processes and data interchanges within their electronic integration relationships.

To achieve this, the model contains very specific definitions of process terms, businessrequirements for data exchanges and their content.

Adopting the model allows companies to translate their internal processes and approach-es into a common language that all other parties will be using.

The UIM structure creates a common set of definitions that all parties can use, whilst stillallowing them to use their own internal definitions and processes, possibly with arequirement to translate internal information into the standard structure of the UIM.

The concept of the model is based on six building blocks, structured as follows:• Integration Agreement• Master Data Alignment• Purchase Conditions• Demand & Supply Signals• Dispatch, Receipt & Consumption

- Financial Settlement

1.2 Upstream Integration Model (UIM)Overview

www.gci-net.org

© GCI – Global Commerce Innitiative© GCI – Global Commerce Innitiative

The first three building blocks have an overall purpose to set the business context inwhich day-to-day supply chain transactions and planning will occur.

The last three blocks provide a model for these day-to-day transactions and planningactivities.

Within each of the six building blocks the UIM provides:• An exploration of the business scope • Some definitions of business scenarios• An explanation and definitions of the key processes• A High level view of business messages needed to be exchanged.

Together the six building blocks create a modular solution to assist defining and drivingupstream integration projects.

The standards created by GS1 have been built on this modular solution. This enablesmessages to be used both upstream (manufacturers and their suppliers) and downstreambetween manufacturers and retailers.

GCI GUSI and GS1 will be creating an “Upstream Implementation Guide” explaining howthe GS1 standards can be used to deliver strong implementations that are in line with theUpstream Integration Model (UIM).

It is anticipated that most companies will start projects using functionality within the lastthree building blocks of the UIM. This has therefore been the main focus for detailed workwithin GUSI and where the vast majority of implementations are occurring.

Development work on the model is being investigated in the areas of data synchroniza-tion, transportation & logistics, and contract manufacturing. A selection of enhancementswill be planned in these areas in 2006.

How can you use the UIM?

• As you plan upstream projects you can use the UIM as a reference model for theprocesses, terminology and messages needed.

• It can provide a good reference model for you to discuss projects with your trading part-ners.

• By adopting the model within your organisation or mapping your processes to the UIMyou can ensure that you align to the common approach within the industry; only deviat-ing where you have a clear business case to do so and can accept that you will not beobtaining the scaled benefits you would like and also are adding non-standard costs tothe industry.

• In addition the last three blocks of the model have been driven to a greater degree ofdepth and hence there is a deep body of knowledge and experience available to youaround these three areas.

• Importantly, particularly in the last three blocks, GS1 has created “globally standard”messages that can now be used within your projects. Take advantage of them!

• You can also use the UIM with service providers (software providers, marketplaces andconsultants). Either choose service providers who are committed to support the modelor ensure that your service providers investigate and support the model.

• Very importantly by adopting this model you can take advantage of the ongoing indus-try investments to enhance and grow the model and join the community of action thatis sharing experience at both a business and detailed technical implementation level.

High Level View of the model

Integration Agreement

Its scope is agreement on the operational and tactical elements of supply chain integra-tion between manufacturers and suppliers.

• It also defines the technical, clerical and computing methods by which integrationbetween supplier and manufacturer will occur including performance expectations, ERPsoftware and versions used and data privacy etc.

www.gci-net.org

© GCI – Global Commerce Innitiative

Master Data Alignment

This covers three basic functions:1. Identifying and clarifying, between the two parties, the coding for items and possibly

locations.2. Agreeing on the attributes to be shared about each item or location. e.g. such as specifi-

cations, logistical handling information, packaging format etc.3. Ongoing alignment and synchronization of the item, location and attribute data so that

suppliers and manufacturers are working with a common and up to date understand-ing of this important base information.

Great benefits are obtained from using the GS1 GTIN identification standards electroniccommunications, across the supply chain between trading partners. More details areavailable on this CDROM as well as on the GS1 website at http://www.gs1.org/gtinrules/

Purchase Conditions

The “Purchase Conditions” building block has two purposes:1. It expresses the official commitment between supplier and manufacturer that certain

quantities are to be delivered over a given period and at the stated price. In doing so itsets the contractual conditions for the ordering and delivering of the goods and sodetails specific terms and conditions that apply for a given period. The Purchase condi-tions can include different scenarios:- Fixed quantity and fixed period- Fixed quantity and variable period- Variable quantity and fixed period

2. It provides a valid transaction checklist that contains the basic information to ensurethat an order or invoice can be validated automatically.

Demand & Supply Signals

In the “Demand & Supply Signals” building block specific delivery quantities and timingsare established based on the material requirements of a manufacturer.

The trading partners must agree a process to ensure delivery of material by the supplierto meet the production needs of the manufacturer.

There are two basic scenarios relevant in exchanging demand & supply signals -

(i) Manufacturer Driven (Traditional Order Management - TOM)

In this scenario the manufacturer undertakes the internal calculations of his materialrequirements and communicates his requirements with specific quantities and timings tothe supplier. The manufacturer can communicate his requirements through sending a Pur-chase Order (Scenario A) or his Net Requirements (Scenario B) to the supplier.

and

(ii) Supplier driven (Supplier Managed Inventory - SMI).

In this scenario the supplier is committed to calculating the order size and planned deliv-ery timings, using the information on Inventory and Material Requirements received fromthe manufacturer together with information from his own operations. These responsibili-ties are laid down in the Integration Agreement where other items such as minimum andmaximum stock holdings are defined.

www.gci-net.org


To do this the supplier must receive the relevant data to enable him to work out the stockequation. The variables that are required for the calculation include stock in transit, stockat the manufacturer and stock in own warehouses, any other inventory in the supply chainplus the commonly agreed inventory window.

The supplier then might combine this with the material forecast from the manufacturer tocalculate the actual demand of components or materials and based on his own internalproduction etc. the dates when they will be delivered. The resulting information is provid-ed to the manufacturer, e.g. in the form of a delivery plan.

In each scenario the UIM describes the processes and also provides a business level defi-nition of the messages needed to be exchanged.

Dispatch, Receipt & Consumption of Materials

This building block covers the execution of goods dispatch at the supplier site as well asthe Receipt Notification and goods consumption at the manufacturer site.

The model explores two scenarios regarding the exchange of dispatch, receipt and con-sumption messages: 1) TOM & SMI without consignment and 2) TOM & SMI with consignment

Financial Settlement

The "Financial Settlement" building block takes the process from where the goods deliv-ered are owned by the manufacturer to the Remittance Notification. The exchange of mes-sages regarding financial settlement on Supplier and Manufacturer side, incl. Invoicing,Matching, Remittance and Payment is covered in this building block.

A significant area defined with the model is Self-billing which is an invoicing practice,where the buyer creates an invoice directed at him and sends it to the supplier. Thisinvoice is based on Receipt Notification in a non consignment scenario or on the Con-sumption Report / Manufacturer Inventory in a consignment scenario.

Self-billing allows streamlining the invoice matching process on the buyer side, as thebuyer will automatically create the invoice based on defined criteria like e.g. his own con-sumption in a consignment scenario.

In addition, on the seller side, self-billing can lead to improved cash flow, as querying and pay-ment blocking is limited to the discrepancies / differences, and not to the total invoice amount.

Summary :

The UIM Model provides a comprehensive tool that can be used to help drive businessbenefits upstream.

It is however just that … a tool. The real benefit of such a tool is that the global industryaligns behind the approaches it provides and drives increasing levels of implementationbased on the UIM and the published GS1 standards.

The UIM is therefore part of a living and action focused initiative sponsored by GCI togain upstream business benefits for supplier, manufacturers and ultimately the wholesupply chain to the consumer.

www.gci-net.org


So please explore the UIM and drive business benefits for your organisation and theindustry.

www.gci-net.org


Upstream B to B Standards

.

All contents copyright © GS1 2006 page 2 of 5

The global language of business.

Upstream B2B Standards The Current Upstream Scenario Perhaps your company, like so many others, has developed its own solutions (e.g. email, extranet access, EDI, etc) to share information with major suppliers.

Different business process scenarios Different data interchanges Different integration technology

Customized solutions usually prove to be inefficient and unsuitable to be scaled within companies and across the industry. A Better Upstream Scenario – the Upstream Integration Model The Upstream Integration Model (UIM) is a standard solution, which can be scaled. If adopted by the major companies of the industry, the Upstream Integration Model will unlock the benefits of collaboration between manufacturers and suppliers. The UIM standardises business processes and data interchanges upstream between manufacturers and suppliers for use in electronic communications. It has been designed to meet major electronic communication needs in the following business areas:

Procurement Material forecasting Inventory management Demand & Supply Dispatch, Receipt & Consumption of Materials Financial Settlement

By adopting this model, manufacturers and suppliers will have a common language for the processes and data interchanges within their electronic integration relationships.

UI M

Business Processes • Manufacturer-

Supplier Integration solution which can accommodate different business process scenarios

• Upstream SMI and

Order Management are the two most common business process scenarios used in CPG industry

Messages • Set of standard

messages supporting business process scenarios

• The move to more

real time exchange of data instead of the batch oriented exchanges of the past

• The focus on

exceptions rather than sending and confirming whole batches of data, e.g. receipt note exceptions

.



To achieve this, the model contains very specific definitions of process terms, data exchanges and their content. Adopting the model allows companies to translate their internal processes and approaches into a common language that all other parties will be using. The UIM structure creates a common set of definitions that all parties can use, whilst still allowing them to use their own internal definitions and processes (possibly with a requirement to translate internal information into the standard structure of the UIM.) The concept of the model is based on six building blocks, structured as follows:

Integration Agreement Master Data Alignment Purchase Conditions Demand & Supply Signals Dispatch, Receipt & Consumption Financial Settlement

The UIM applies to both supplier- and manufacturer-initiated ordering processes and addresses these two major supply practices and the most common variants of them. The “manufacturer-driven” scenario is relevant when orders are initiated by the manufacturer and sent to the supplier. This scenario is also known as “Traditional Order Management (TOM)”. In the “supplier-driven” scenario, the supplier recommends or establishes an order to the manufacturer based on inventory data and/or consumption forecasts. This is widely known as “Supplier Managed Inventory (SMI)” or “Replenishment” (and might also be referenced to as “VMI” – “Vendor Managed Inventory”). The implementation sequence of the UIM follows the above order and starts with the “Integration agreement”. The UIM can be used by trading partners starting from scratch, or by those who have implemented the integration of some of the building blocks in the past. In the latter case, companies might need to adjust some of the processes or information interchanges in order to accommodate differences of the UIM building blocks. Although the implementation of the UIM is outside the scope of this document, it is important to specify that the implementation costs of the UIM will vary widely from one company to another, depending on factors such as its current IT landscape, its current usage of standards and the ambitions of the implementation. The data interchanges are based upon GS1 e-commerce standards that enable communications between companies worldwide. Converting the output of each company’s ERP-system to GS1 standards will allow to limit the implementation effort to integrate with many business partners.

.



The following diagram provides an overview of the UIM.

Demand &

Supply Signals

Integration

Agreement

Data

Alignment

Purchasing

Conditions

Dispatch,

Receipt &

Consumption

Financial

Settlement

Manufacturer Process Supplier ProcessBuilding Blocks

Await shipment Pick & Pack goods

Receipt of goods Shipment

Check goods Goods Receipt Notification

Consume goods Consumption Notification

Invoice receipt Create invoice

Create Self-billing invoice Invoice receipt

Create Remittance Advice Payment Notification

Initiate Payment Payment receipt

Report Inventory Report Inventory

Gather material requirements

Integrate information

Plan production & supply

Confirm delivery

Agree on business rules Agree on business rules

Maintain Master Data Maintain Master Data

Agree Purchasing Conditions Agree Purchasing Conditions

Integration AgreementIntegration Agreement

Item Master DataItem Master Data

Purchase ConditionsPurchase Conditions

Net requirements

Purchase Order

Consumption Forecast

Purchase Order Confirmation

Delivery Plan

Dispatch Notification

Physical shipment of goods

Goods receipt

Consumption Report

Invoice

Self-billing invoice

Remittance Advice

Physical Payment

InventoryInventory

Net requirements Confirmation

Invoice confirmation Invoice confirmationInvoice confirmationInvoice confirmation

The UIM consists of six building blocks, groupings of business processes, as shown in the diagram above. The UIM establishes clear links between each group of business processes and the interchange of the relevant data for these processes. All relevant processes are illustrated above, however it is understood that the business scenario applied will drive which messages will be exchanged. The Upstream Solution consists of 15 Business Message Standards: Item Data Notification (i.e. Item Master Data) Purchase Conditions Inventory Activity Or Inventory Status Multi Shipment Order (i.e. Purchase Order) Order Response (i.e. Purchase Order Confirmation) Goods Requirements (i.e. Net Requirements) Goods Requirements Response (i.e. Net Requirements Confirmation) Replenishment Proposal Replenishment Request Despatch Advice (Dispatch Notification) Receiving Advice (i.e. Goods Receipt) Consumption Report Invoice Invoice Response (i.e. Invoice Confirmation Remittance Notification (i.e. Remittance Advice)

To download GS1 Upstream Standards, please go to www.gs1.org/upstream/

http://www.gs1.org/upstream

The ECR “Integrated Suppliers” report summarised the concept of ‘Integrated Suppliers’as follow:

“Integrated Suppliers is a concept for improving the part of the supply chainbetween manufacturers and the tiers of suppliers of ingredients, raw materials andpackaging. By sharing information both parties are able to exercise judgment oncosts, quantities and timing of deliveries and production in order to stream line theproduction flow and to move to a collaborative relationship.”

(The concepts of “Integrated Suppliers” of Ingredients, Raw Materials and Packagingreport as published in March 2002 by ECR Europe and Fraunhofer Applications Cen-tre for Transport Logistics and Communications Technology.)

Whereas the ECR report focused on the ‘supplier driven’ continuous replenishmentprocesses (supplier recommends the order to the manufacturer), it did not include ‘manu-facturer driven’ ordering processes. The UIM covers both aspects and covers more ele-ments that can be improved in the manufacturer/supplier relationship - for example nextgeneration electronic data exchange based on exception management.

With Upstream Integration, the Global Upstream Supply Initiative provides a tangible wayof unlocking potential on the supplier and manufacturer side alike.

This document aims to describe the basic rationale to be kept in mind when building abusiness case around Global Upstream Integration.

Both parties should obtain benefits from integration; among them reduced inventory, areduction in re-work and waste and more efficient use of resources by better production,warehouse and transport planning. One example is that suppliers should have better visi-bility of forecasted production and can improve their reaction to changes in manufactur-ers' demands.

To access these benefits, each programme between manufacturer and supplier has toestablish its own framework for• process definitions,• item and location coding and• in many cases message content.

This is both a wasteful process and in itself presents a significant barrier for scaled adop-tion. For example, a supplier is often faced with the challenge of integrating with multiplemanufacturers, each one with its own definition of the above factors.

3.1 Business Case Rationale (UIM in a nutshell)

www.gci-net.org


The Upstream Integration Model (UIM) is a scaleable solution containing different busi-

ness process scenarios and a set of automatically-exchanged standard messages sup-

porting the scenarios.

• Scaleable means that it can be applied in 1:n / n:n trading relationships. The higher thenumber of participants (n), the greater the potential to be unlocked.

• Supported business scenarios are traditional order management (TOM) and suppliermanaged inventory (SMI). The model describes rules and tools for SMI and TOM.

• The set of messages selected and used in the model are existing GS1 XML/EANCOM®standard messages. They require an IT infrastructure based upon automatic exchange ofdata: data contained in these messages will be extracted, loaded and transferred to anadequate (ERP) system level with a minimum of human intervention.

Different business processes and approaches create a barrier to the scalability of integra-tion efforts whilst also imposing many costs, such as:• the time and money spent making transactions;• the delays caused by the need for corrections, plus• inevitable information gaps and misunderstandings.

The main pillars of GUSI are the standardisation of processes and automation of informa-tion exchange by the use of supporting XML messages. Through this, GUSI promises todeliver greater visibility and avoid the impact of changes in delivery, production and orderplans (when doing SMI) and lower transaction costs (when doing TOM). The existence of aframework based on industry standards will overcome the described barriers and will:• Create a common definition of the business processes involved in upstream integration

and how they link together.• Support and strengthen relationships between integrated manufacturers and suppliers

through one common standard and reduced complexity.• Increased efficiency through better visibility of planning, forecasts, production: Reduced

inventory, reduced re-work and waste• Provide a foundation to enable business programmes to be implemented in a common way:

- Reduce complexity- Reduce implementation costs (including IT costs)- Accelerate adoption and implementation (by enabling the scalability)

• Enable solution providers to build solutions that can be used by all parties• Basis for reviewing and adopting internal processes – still allowing to keep the internal

processes as-is and “translating” them into the common language proposed in the UIMmodel

To conclude, here are some draft headline figures (based on a small sample of GUSI companies) of what to expect when scaling up your business with GCI GUSI:• when implementing a SMI/VMI solution trading partners benefit from:

- a reduction in stock level in the entire supply chain (10-20% for suppliers, often 50-100% for manufacturers)

- increased number of full truck loads by up to 10%- elimination of rush deliveries

• …and sharing demand plan and stock level data improves the supplier's forecast accu-racy by 15-20%

www.gci-net.org


But when implementing SMI/VMI using the GUSI model, the sample of GUSI companiesfound that implementation times were reduced dramatically. Some suppliers have seentime reductions of more than 70%, with lead times reduced from 6-12 months to between1 - 4 weeks. This finding underlines the following observations:• the "standard" SMI/VMI benefits listed above can be achieved substantially faster when

using the GUSI approach. If you are about to develop a SMI/VMI solution, follow theGUSI UIM and use the GS1 message standards

• if you already have a legacy SMI/VMI solution, seriously consider breaking the scalabili-ty barrier by migrating your solution to the GUSI UIM.

A more detailed business case is currently being prepared for the GCI GUSI group by IBM.

It is the drive for stability and an adequate level of interoperability that will lead to alignedprocesses – in a collaborative way. This is also the main requirement for a successfulGUSI implementation: a high degree of confidence and organisational adaptation to col-laborative solutions between partners.

www.gci-net.org


Global Upstream Supply Initiative … GUSI

The process of choice for upstreamintegration

Garry Haworth

Roland Dachs

GUSI 23 June 2005 Page2

Introduction of the Global UpstreamSupply Initiative (GUSI)

Suppliers and Manufacturers working together to:

Develop an industry integration solution (Upstream Integration Model) based on:

– common processes– common messages

Build momentum and usage


GCI GUSI Working Group


Introduction of the Global UpstreamSupply Initiative (GUSI)

Suppliers and Manufacturers working together to:

Develop an industry integration solution (Upstream Integration Model) based on:

– common processes– common messages

Build momentum and usage

The GUSI group started informally in January2003 and was integrated into GCI in November

2004


Upstream Integration Model (UIM)

Shared understanding and definition of:Business processes and a common set of terminologyFunctional messages needed between suppliers and manufacturers

Developed by manufacturers and suppliers withinput from service providers (exchanges) and consultants

Analysis of:Potential benefits that can be derived from upstreamintegrationExisting barriers which prevent scalability



The UIM is a modular solution which covers:

Supplier Managed Inventory

Traditional Order Management


Upstream Integration ModelIntegrationAgreement

Building Blocks Manufacturer Process Supplier Process

DataAlignment Purchasing Conditions

Demand &Supply Signals

Dispatch, Receipt & Consumption

Financial Settlement

Agree on business rules

Maintain Master Data

Agree Purchasing Conditions

Report Inventory

Gather material requirements

Integrate information

Await shipment

Receipt of goods

Check goods

Consume goods

Invoice receiptCreate Self billing invoice

Invoice confirmationCreate Remittance Advice

Initiate Payment

Integration Agreement

Item Master Data

Purchase Conditions

Inventory

(instead of Inv. and R. Forecast)

Purchase Order ConfirmationDelivery Plan

Purchase Order

Net requirements

Consumption Forecast

Replenishment Forecast

Dispatch Notification

Physical shipment of goods

Receipt Notification

Consumption Report

Invoice

Invoice confirmationSelf billing invoice

Remittance NotificationPhysical Payment

Agree on business rules

Maintain Master Data

Agree Purchasing Conditions

Report Inventory

Plan production & supply

Confirm delivery

Pick & Pack goods

Shipment

Goods Receipt Notification

Consumption Notification

Create invoiceInvoice receipt

Invoice confirmationPayment Notification

Payment receipt



More information on UIM available on the UIM reportpublished on the GCI website http://www.gci-net.org

The "Upstream Integration Model"

Version 2

A foundation for global upstream

supply chain improvements

Final version: September 8th 2004


UIM report V2

The UIM report V2 has been finalized and approved by all GUSI members (see attachment)

The UIM report V2 has been submitted to the IRT and should be used to promote the initiative and accelerate the uptake of a standard integration model

GCI will support the promotion of the UIM report V2:

UIM report V2 to be advertised on GCI website (marketing plan to be defined)

UIM report V2 to be published under the GCI label (the report has to be approved by the GCI Board)


UIM report V2


The UIM report V2 has been submitted to the IRT and was used to promote the initiative across industries and accelerate the uptake of a standard integration model

GCI will support the promotion of the UIM report V2:

UIM report V2 to be advertised on GCI website (marketing plan to be defined)



UIM report V2


The UIM report V2 has been submitted to the IRT and was used to promote the initiative across industries and accelerate the uptake of a standard integration model

GCI supports the promotion of the UIM report V2:

UIM report V2 is advertised on GCI website (marketing plan to be defined)


Documents

GUSI User Pack - GS1 Canada Cond… · GUSI is the platform for the industry partners to get together and work on a shared understanding and definition of the joint processes, on