The "Upstream Integration Model"  A foundation for global upstream supply chain improvements. 

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Introduction and Acknowledgements

This is a report from an informal group of global manufacturers committed to drivingimprovements in upstream supply chain performance between manufacturers andsuppliers in the consumer packaged goods industry.

Acknowledgements for contributions to the document

Final Version, September 2003, all rights reserved.

ManufacturersWorking PartyColgate Palmolive S. RasmussenDanone B. GillesHenkel F. JimenezNestle N. ComiottoUnilever F. Kempkes

Material SuppliersKappa-Neuss C. PerdersenPechiney J.M. SabathierRoyal Sens J.P.KlijnSCA Packaging P. SchmutzlerDSM J. SchuurmansKarl Höll P. SchackCrown Cork andSeal

T. Koene

Huhtamaki G. RiedCoexpan/Emsur E. Royuela

EAN International M. MiticR. Kramer

Third PartiesChain ReactionConsulting

G. Hodge

Ryder Strategies P. ProffitG. Standaert

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Table of Contents

1. Executive Summary…………………………………….….……………...4

2. Creating the Upstream Integration Model…....………………….…....7

2.1 Business Rationale for the model…..……………………………..7

2.2 Benefits of a standards based integration model…...….……...7

2.3 Case for using existing EAN.UCC item and location codingstandards……………………………………………………………....8

2.4 Approach taken by the working group……………………….......9

3. Overall Structure of the Upstream Integration Model ...................10

4. Description of the building blocks..…………………………....….....13

4.1 Integration agreement………….……………..…………………...13

4.2 Master data alignment……………………………………………..15

4.3 Purchase………….………………………………………………….17

4.4 Demand Signals…………………………………………………….18

4.5 Incoming Goods…………………………………….......………….19

4.6 Financial Accounting………………………………………………20

5. Data Interchanges…………………………………………………........21

6. Recommendations of the working group……………………......…28

Referenced Documents……………......……………………...…........29

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1. Executive Summary

Over the last few months a group of global Consumer Packaged Goods (CPG)manufacturers have been meeting to discuss upstream supply chain integration. Theglobal companies involved are Colgate Palmolive, Danone, Heineken, Nestlé andUnilever. This informal group who called themselves a "Manufacturers Supply SideForum” has been identifying areas where collaboration amongst manufacturerswould provide benefits to supply chains operated “upstream” with their suppliers.

The main project initiated was focused on gaining benefits from electroniccommunications with suppliers of direct materials (e.g. ingredients, raw materials andpackaging) on a global basis. In this space the forum believes that the industry cangain effectiveness and reduce cost in every link in their upstream supply chains.Industry reports exist defining the potential savings (e.g. ECR Europe report on"Integrated Suppliers"). These identify that savings and improvements inperformance are possible for both manufacturers and suppliers and joint effortsshould aim to create benefits for both parties within an agreed framework.

A number of the forum members have already seen significant benefits, to boththemselves and their suppliers, by implementing information technology solutions toshare information and documents and to use this improved information flow tooperate more effective supply chains. It is these proven results that drives themomentum for change within the forum.

However these same companies know that industry wide benefits can only beobtained by having a scale of global manufacturers and suppliers working in acommon way. The forum therefore examined the various activities that would beneeded to break through this scaling barrier and decided that a critical foundationelement needed was a framework and set of standards that all parties could use intheir solutions.

Upstream Supply Chain the scaling barrier

Time

BusinessBenefits

Current 1:1 programmes (varying from pilots to integration with many suppliers)

SCALE

BARRIER Complexity & Uncertainty

Suppliers faced with different Approaches

Cost No sharing of experience

Un co-ordinated actionsNo widely adopted standards ..divergence

Global Benefits

across the industryIndustry wide standards

are the foundation to

break

through the scaling

barrier

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The forum therefore initiated a working party on this topic in collaboration with EANInternational. This working party was made up or representatives of Colgate, Nestle,Danone and Unilever. In addition Henkel was invited given their involvement in ECRand their current implementation experience. This booklet documents the findings ofthis working group.

The main thrust of their findings is a need for a “common language” for electronicbusiness interactions between trading partners covering businesses processes inaddition to data exchange standards. The “Upstream Integration Model “ (UIM) wasdeveloped to meet this need.

The scope of the UIM covers master data about materials and locations, theexchange of demand signals and receipt of goods, to invoicing and payment, withinan overall integration agreement made between the manufacturer and supplier.

The UIM standardises the business processes and data interchanges upstreambetween manufacturers and suppliers for use in electronic communications andcovers needs in the following business areas:

� Procurement

� Material forecasting

� Inventory management

� Despatches & Receipts of Materials

� Invoicing

By adopting this model manufacturers and suppliers will have a common languagefor the processes and data interchanges within their electronic integrationrelationships.

Adopting the model allows companies initially to maintain their existing internalprocesses and translate them into a common “language” that all other parties will beusing for electronic commerce. Over time there may also be benefits in migratingtheir internal processes and systems to make use of the UIM.

Although the focus of the work has been between manufacturers and their suppliersit is anticipated that suppliers can gain benefits by following the UIM approach, withtheir suppliers and logistics service providers.

The working party has leveraged previous work carried out by ECR, EAN, etc.

This booklet will be submitted within a “Change Request” to the EAN.UCC GlobalStandards Management Process (GSMP). The result should be new developmentsof electronic data interchanges standards and eventually process definitionstandards. The use of the GSMP process and support of EAN.UCC should also helpprovide industry wide momentum for adoption.

With such a standards based model in place the forum believes other actions will beneeded to drive major improvements across the supply chain including topics suchas:

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a) The creation of an upstream supply initiative similar to the efforts of theGlobal Commerce Initiative (GCI), which has been mainly focusseddownstream to retailers. Potentially this initiative could also own the UIMModel and its’ evolution. This body should have representatives of suppliersand manufacturers.

b) Creating real momentum by establishing forum’s for committedmanufacturers and suppliers to drive implementation, share experience, buildawareness of the real benefits that can be obtained and explain how to startpractical programmes using the UIM.

c) Working with service providers to create solutions based on the standards.

This booklet does not cover these topics but the companies involved in the forum arecommitted to supporting the industry as it creates the required standards and drivesincreased benefits from the supply chain.

The initial group in the forum see their role as helping seed an industry wide process.The group made an initial decision, to gain speed, to limit the number of companiesinvolved whilst investigative and draft documentation phases were occurring.However they are committed to open and broad collaboration within industry bodyframeworks. They therefore look forward to working with a broad array ofmanufacturers, suppliers, industry bodies and service providers to build on standardsand drive major productivity increases for all parties.

Suppliers

Customer

Planning

M aterials Handling

Supply M anufacturing G CIG lobalUpstreamSupplyIn itiative(G USI)

Deliver

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2. Creating the Upstream Integration Model

2.1 Business Rationale

The current situation in the upstream supply chain of the CPG industry is that allmanufacturers and suppliers are faced with different business processes and datainterchanges when they move into more integrated relationships. Different businessprocesses and approaches create a barrier to the scalability of integration effortswhilst also imposing many costs: the time and money spent making transactions; thedelays caused by the need for corrections; plus inevitable information gaps andmisunderstandings.

Both parties should attain benefits in planning reduced inventory and reduction in re-work and waste. One example is that suppliers should have better visibility offorecasted production and can improve their reaction to changes.

Today, to access these benefits, each programme, between manufacturer andsupplier, has to establish it’s own framework for process definitions, item andlocation coding and in many cases message content. This is both a wasteful processand in itself presents a significant barrier for scaled adoption. For example a supplieris often faced with multiple manufacturers wanting to run programmes with eachhaving it’s own definition of the above factors.

2.2 Benefits of a standards based model

The existence of a industry standards based framework would overcome the abovesituation and would:

a) Create a common definition of the business processes involved in upstreamintegration and how they link together. This creates a “common language” thatcan be used in all electronic communications by all parties. It also goesbeyond the existing standards that are mainly focused on data interchangedefinitions.

b) Provide a foundation to enable business programmes to be implemented in acommon way:

1) Reduce complexity

2) Reduce implementation costs (including IT costs)

3) Accelerate adoption and implementation

c) Enable solution providers to build solutions that can be used by all parties

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2.3 Case for using existing EAN.UCC item and location coding standards

A significant change proposed is that suppliers should adopt the EAN.UCCstandards for item and location coding to create a common coding systems acrossthe supply chain. It is felt that the time is right for this move given:

a) There is strong manufacturer commitment to the EAN.UCC standards.

b) There is an increased manufacturer momentum to build automated solutionsthat will scale (as witnessed by the forum’s activities)

c) There is increasing supplier awareness of the inefficiencies of the existingmethods

d) There are new technologies, expected over the next few years that will bebased on existing EAN.UCC standards. By adopting the existing standardssuppliers will be able to migrate to these new technologies.An example is the emerging use of Radio Frequency Identification (RFID). Touse RFID companies will need to adopt new EAN.UCC Electronic ProductCode (EPC) Network being developed. The EPC will provide a codingstructure for radio frequency tags enabling individual items or groups ofproducts to be tracked across the supply chain. The existing EAN.UCC item-coding standards are embedded in the new EPC structure so starting withthese is a good stepping-stone to the new RFID based solutions.

The main EAN.UCC standards that suppliers and manufacturers should use are the:

� “Global Trade Item Number “ (GTIN): Generally, a unique andinternational EAN�UCC number is assigned to each trade item or to astandard grouping of trade items. This number is known as the GTIN(Global Trade Item Number). Each GTIN data structure is representedby a bar code symbol. This allow for the identification numbers to bescanned for automated data capture and electronic data processing.

� Global Location Number (GLN). Location numbers are a key concept insupply chain management. A location number is a numeric code thatidentifies any legal, functional or physical entity within a business ororganisation. The identification of locations is required to enable anefficient flow of goods and information between trading partnersthrough electronic messages to identify the parties involved in atransaction (e.g. buyer, supplier, place of delivery, place of departure)

(for further details on GTIN and GLIN see the EAN�UCC report‘Supply Chain Management Tools For The Packaging Industry’,February 2000, page 18 to 24).

In addition to improved integration with the manufacturer, the GTIN/GLN (and infuture the Electronic Product Code) should also enable suppliers to work moreefficiently with their own suppliers and logistics service providers.

2.4 Approach taken by the working group

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The aim was the development of a global Upstream Integration Model (UIM) basedon common business processes and data interchanges established on e-commercestandards. The UIM seeks to support all upstream supply processes used in theCPG industry between manufactures and their suppliers of direct materials (e.g.ingredients, raw materials and packaging). The scope therefore covers fromexchanging of master data about new materials and location, through to theexchange of demand signals and the receipt of goods, to invoicing and payment; allwithin an overall integration agreement agreed between manufacturer and supplier.

For this initiative the ‘Manufacturer Forum’ has worked closely with EAN�UCC. Themission of EAN�UCC is to establishing global multi-industry systems for identificationand communication of products, services and locations based on internationallyaccepted and business led standards.

The working group has taken into account existing standards and work undertakenby previous projects. In particular it has built on work sponsored by ECR Europe.(The concepts of “Integrated Suppliers” of Ingredients, Raw Materials and Packagingreport as published in March 2002 by ECR Europe and Fraunhofer ApplicationsCentre for Transport Logistics and Communications Technology.)

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

“Integrated Suppliers is a concept for improving the part ofthe supply chain between manufacturers and the tiers ofsuppliers of ingredients, raw materials and packaging. Bysharing information both parties are able to exercisejudgment on costs, quantities and timing of deliveries andproduction in order to stream line the production flow and tomove to a collaborative relationship.”

Where the ECR report was about the ‘supplier driven’ continuous replenishmentprocesses, (supplier recommends the order to the manufacturer) it did not include‘manufacturer driven’ ordering processes (where the purchase order is initiated bythe manufacturer and sent to the supplier). The UIM covers both aspects and coversmore elements that can be improved in the manufacturer/ supplier relationship forexample next generation electronic data exchange based on exceptionmanagement.

Although work on the UIM has been done in Europe with the involvement of theEuropean material suppliers the focus has been building a model that had globalapplicability.

The model has been reviewed by a number of material suppliers.

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3. Overall Structure of the Upstream Integration Model (UIM)

Concepts

The UIM standardises the business processes and data interchanges betweenmanufacturers and suppliers for use in electronic communications.

It has been designed to meet the major electronic communication needs in thefollowing business areas:

� Procurement

� Material forecasting

� Inventory management

� Despatches & Receipts of Materials

� Invoicing

By adopting this model manufacturers and suppliers will have a common languagefor the processes and data interchanges within their electronic integrationrelationships.

To achieve this the model contains very specific definitions of process terms, dataexchanges and their content. Adopting the model allows companies to translate theirinternal processes and approaches into a common language that all other parties willbe using.

For example the model has defined two key terms of “Integration Agreement” and“Purchase”. These two building blocks of the model bring together the informationthat often currently exists in documents such as high level generic purchasecontracts/ umbrella agreements, replenishment and other supply managementagreements and specific contracts that relate to the contractual terms for a particularquantity and price. Unfortunately the terms used for such agreements and the datathey contain varies dramatically across the industry; hence the need for a “standarddefinition” for use within electronic communication across the industry.

The UIM structure creates a common set of definitions that all parties can use, whilststill allowing them to use their own internal definitions and processes and thenrequires them to translate their internal information into the standard structure of theUIM.

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The concept of the model is based on six building blocks, structured as follows:

� Integration Agreement

� Master Data Alignment

� Purchase

� Demand Signals

� Incoming Goods

� Financial Accounting.

The UIM is effective for both supplier and manufacturer initiated ordering processesand addresses these two major supply practices and any variant of them.

The “manufacturer driven” scenario is relevant when purchase orders are initiated bythe manufacturer and sent to the supplier. The “supplier driven” scenario is onewhere the supplier recommends or establishes the order to the manufacturer basedon the manufacturer inventory data and material forecast. This last one is widelyknown as ‘replenishment’.

The UIM implementation sequence starts with the “ Integration agreement” and theideal sequence is the one described above.

The UIM can be used by trading partners starting from scratch or by those who havecompleted some of the building blocks in the past. In the last scenario, thecompanies will have to accommodate any differences that arise within each businessbuilding block.

The concept of flexibility is also included in the detailed set up of the datainterchanges where they can be aligned with the actual manufacturer and supplierdriven scenarios.

Although the implementation of the UIM is outside of this report, it is important tospecify that the size of the implementation costs of the UIM will vary widely from onecompany to another, depending on factors as its current IT landscape, its currentusage of standards and the ambition level of the implementation.

The data interchanges are based upon EAN.UCC e-commerce standards thatenable communications between companies worldwide. Each individual companyERP output may be different, so by converting these outputs to EAN.UCC standardsthe individual companies can then integrate with partners easily.

The diagram on the next page provides an overview of the UIM.

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Building Blocks

The UIM consists of six building blocks, groupings of business processes, as shownin the diagram below. The UIM establishes clear links between each group ofbusiness processes and the interchange of the relevant data for these processes.

the Upstream Integration Model (UIM)

Manufacturer Process Supplier Process

Location Master Data

PurchaseCondition

Integration Agreement

Remittance Advice

IntegrationAgreement

Master DataAlignment

Purchase

Demand Signals

IncomingGoods

FinancialAccounting

Data Exchanged Physical Delivery

Item Master Data

Inventory

Material Requirements

Despatch Notification

Goods Delivery

Receipt Notification

Self-billing or ElectronicInvoice

Agree on Business Rules Agree on Business Rules

Maintain Master Data Maintain Master Data

Check MaterialRequirements and SpecifyPurchase

Check Production Capacity

Report Inventory

Create Production Forecast

Business Data Interchange

Delivery Confirmation

Picked and Packed

ShipmentQuality Check

Create Goods Receipt

Invoice based on GoodsReceipt and Consumption

Invoice based on GoodsShipped

Order Payment

Plan Production

Await Shipment

Building Block

Report Inventory

Purchase Order

Payment Notification

Trigger invoicing

Planned Supply

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4. Description of the Building Blocks

Building Block 1: Integration Agreement

Scope

The "Integration Agreement" is expected to be the first block of the UIMimplemented. Its’ scope is agreement of the operational and tactical elements of e-supply chain integration between manufacturers and suppliers.

It contains the following components for which the business rules have to bedefined: planning & stock management, delivery, payment, claims, performancemeasurements, systems security, confidentiality/non-disclosure agreement, qualityrules. It also defines the technical, clerical and computing methods by whichintegration between supplier and manufacturer will occur including performanceexpectations, ERP software and versions used and data privacy etc.

Description

The trading partners will define approaches to demand planning and logisticsstrategies and they must agree jointly the expected order volume, order timelinesand delivery requirements, transportation modes and carrier list/alignment. Theagreement could also state how quotations will be structured and communicated tothe manufacturer by the supplier. In its simplest form it would address lead-time /delivery / ordering process / service levels.

Integration Agreements cover the tactical operational rules for inventory targetsetting, data visibility, acceptable levels of demand variability and the appropriatesupply responses, delivery options, planning buckets and supplier lead-times,supplier production authorisation (e.g. how many weeks of requirements may beproduced by the supplier), the schedule for sending planning and stock reports,agreements on planning horizon etc.

The basic model for creating Integration Agreements is that the two trading partnersreview the supply chain and agree who carries out which elements when and how.The purpose of the review is to maximize overall supply chain efficiency and ensuresavings accrue to both partners to justify the collaborative effort. This initial stage isvital to the success of the programme between manufacturer and supplier.

There are many individual decisions that will be made within such an IntegrationAgreement but there are three decisions that make significant difference to how thesupply chain is run:

1. Who initiates and manages the purchase process? Two basic models areManufacturer driven and Supplier driven.

2. Who initiates invoicing? Today this would normally be the supplier. In somecases the manufacturer would take on a self billing process. Here the supplierdoes not raise invoices on the manufacturer but rather, based on agreedcriteria, the manufacturer “raises invoices on themselves” and makes paymentaccordingly.

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3. Which elements are automated through technology and how?

The implications of forming these new types of partnership between supplier andmanufacturer are far reaching as they change the traditional way of doing business.

To fully leverage benefits of UIM, the two partners have to be knowledgeable in theuse of supply chain processes such as defining and reading bar codes, e-commercestandards, and the IT systems that will be used to track and monitor goods in thesupply chains.

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Building Block 2: Master Data Alignment

Scope

The "Master Data Alignment" building block has three elements

1) Identifying and clarifying, between the two parties, the coding for itemsand locations.

2) Agreeing on the attributes to be shared about each item or location.e.g. such as specifications, logistical handling information, packagingformat etc.

Ongoing alignment and synchronization of the item, location andattribute data so that suppliers and manufacturers are working off acommon and current understanding of this important base information. One challenge facing all trading relationships is maintaining accuracyand distribution of base item and location data given the rapid changesto specifications and logistics information that can arise.

Description

Downstream, with retailers, there is significant industry momentum behindimplementing these three elements using EAN.UCC standards. The UIM supportsthis overall approach upstream. The three areas of EAN.UCC standards being useddownstream are :

� Global Trade Identification Number “GTIN” and the Global LocationIdentification Number “GLN” definitions (The rationale for using this within theUIM is described in section 2.3 above). The UIM promotes that item andlocation coding should be aggressively implemented using these standards.

� The Global Data Dictionary (GDD) provides a globally agreed definition of thecore attributes to be aligned. This approach should be reviewed by suppliersand manufacturers and copied where appropriate upstream.

� Global Data Synchronization (GDS). This comprehensive standard processpromoted by GCI and EAN.UCC allows a manufacturer to synchronize on aglobal basis to all interested or subscribing retailers, through an integratedsystem made up of data pools, global registry etc. Although the dynamics ofdata synchronization needed are different upstream the UIM supportsinvestigating the GDS approach and creating a version that is tuned toupstream needs.

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Data accuracy and data base maintenance is a collective job concerning all themembers of the Integrated Partnership (suppliers, buyer, and sometimes the logisticservice providers). Moving to Master Data Alignment will typically require asubstantial effort in data cleansing on the manufacturer’s and supplier’s part.Synchronising bad data on items and their attributes will not lead to realimprovement.

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Building Block 3: Purchase

Scope

The "Purchase" building block has two purposes:

1. It expresses the official commitment between supplier and manufacturer thatcertain quantities are to be delivered over a given period and at the statedprice. In doing so it sets the contractual conditions for the ordering anddelivering of the goods and so details specific terms and conditions that applyfor a given period.

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

These arrangements, the Purchase Condition, will normally be established by amanufacturer and be a subset of an overall purchase contract. (Note in some rarecases the supplier can be given this responsibility according to business rules andauthorization rules laid down by the manufacturer).

Description

Separate conditions should be used for consignment and non-consignment stock asthe ownership and other activities vary.

There are likely to be very many Purchase Conditions within each IntegrationAgreement and these rely on the information and data established within theIntegration Agreement and Master Data Alignment steps.

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Building Block 4: Demand Signals

Scope

The "Demand Signals” building block is where specific delivery quantities and timingsare established based on the material requirements of a manufacturer.

Description

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

There are two basic ways this occurs:

Manufacturer Driven :

The demand signal for the manufacturer driven scenario, would take the formof a Purchase Order sent by the manufacturer to the supplier

In this scenario the manufacturer undertakes internal calculations of need andplaces a Purchase Order on the supplier with specific quantities and timings.The supplier would let the manufacturer know of the Planned Supply againstthis Purchase Order and hence highlight any exceptions.

Optionally the manufacturer may provide background information to thesupplier (e.g. Inventory and Material Requirements (usage plans)) to aid thesupplier in meeting the manufacturers needs and reducing the need forexceptions. Based on this information the supplier might also suggestchanges to the Purchase Order to better meet the needs of the manufacturerand reduce overall supply chain costs.

Supplier driven:

In this scenario the supplier is committed to calculating the order size andplanned delivery timings, using the information on Inventory and MaterialRequirements (usage plans) received from the manufacturer together withinformation from his own operations. These responsibilities are laid down inthe Integration Agreement where other items such as minimum and maximumstock holdings are defined.

To do this the supplier must receive the relevant data to enable him to workout the stock equation. Inventory information would include stock in transit,stock at the manufacturer and stock in their own warehouse and any otherinventory in the supply chain.

The supplier then combines this, with the material forecast from themanufacturer to calculate the actual demand of components or materials andbased on his own internal production etc. the dates when they will bedelivered. The resulting information is provided to the manufacturer.

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Building Block 5: Incoming Goods

Scope

This building block covers the execution of product shipment and productacceptance. "Incoming Goods" covers the despatch and transport to themanufacturer’s site where the goods will be received and put away.

Description

Having received notification of the goods being despatched, the IT system at themanufacturer’s site will be ready to receive the goods and the reading of the SerialShipping Container Code (SSCC) on the logistic unit will confirm that these goodshave arrived

The despatch time period will be agreed between the trading partners, as will theclaims process for damages received. Both will form part of the IntegrationAgreement.

Good receipts are based on the highest level of packaging for which a EAN.UCCcode is available. The packaging unit is as identified in the Despatching note andmust be labelled according to EAN.UCC logistics label standards (see EANInternational report, Supply Chain Management Tools For The Packaging Industry,published in February 2000, pages 18 – 24).

Receipt notification can add effectiveness to the supply chain e.g. when the supplierdriven process is used, when lot traceability is needed, and to support self-billing.

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Building Block 6: Financial Accounting

Scope

The "Financial Accounting" building block takes the process from where the goodsdelivered are owned by the manufacturer to the Remittance Advice.

Description

At some stage in the process, the manufacturer will take ownership of the deliveredgoods. This is defined in the Integration Agreement. This could be at goods received,or in the case of consignment stock for instance, when goods are issued toproduction.

In some cases, and agreed in the Integration agreement, the manufacturer wouldtake on a self billing process. Here the supplier does not raise invoices on themanufacturer but rather, based on agreed criteria, the manufacturer raises invoiceson themselves and makes payment accordingly. In some cases such a self billingprocess is made based on assumed usage during production rather than physicalgoods acceptance.

An underlying problem that still arises in all the above scenarios is invoicesdiscrepancies versus other data sources. The sharing of data, electronically withinthe UIM, should alleviate this problem but will not totally eradicate it. Self-billing willalso result in improvements in invoice discrepancies.

The Remittance Advice goes beyond the information the supplier can obtain from thebank, as it will contain line item data etc.

Local country, European and other trade block rules may apply in this area and needto be followed.

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5. Data Interchanges

This chapter describes the minimum required data elements per data interchangebased on EANCOM or XML. Specific details on the semantics are not included asthey are not part of the scope of this report.

More than EANCOM (based on Edifact), XML (the EAN�UCC XML standard basedon ebXML) offers the opportunity to become the one single global standard forbusiness process data interchange. XML is also a move to next generation datainterchange that is characterised by:

� The move to more real time exchange of data instead of the batch orientedexchanges of the past

� The focus on exceptions rather than sending and confirming whole batches ofdata, e.g. receipt note exceptions.

� The tight link to the actual business process and integrated data interchangese.g. one data interchange for the Replenishment Request including materialforecast and inventory data per item instead of two separate ones for materialforecast and inventory.

The following sections describe the minimum content of data to support the UIM:

Integration Agreement

This is a document or set of documents that is put together by the manufacturer andthe supplier. The essential information is stored in the transaction systems of thecompanies. No electronic interchange is foreseen within the standard UIM model.

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Master Data Alignment

The data interchange for Master Data Alignment includes item and location (or party)information as two separate interchanges.

Item information

Item information includes the required data elements to align and synchronizeitem information between trading partners. The data elements describe theprimary item identification number ( the GTIN) and other attributes to aid itemidentification and item description.

Location Information

Location (or party) information includes the required data elements betweentrading partners. The data elements describe the primary identificationnumber, the GLN, and other location identification and description, such asrelationship roles.

Location InformationHeader Comments

Location information idIssue date and timeSender id GLN to be usedReceiver id GLN to be usedSender nameSender addressSender financial detailsSender legal detailsSender fiscal details

Detail CommentsLocation id GLN to be usedRelationship roleNameAddress

Item InformationHeader Comments

Item information idIssue date and timeSupplier id GLN to be usedBuyer id GLN to be used

Detail CommentsItem id GTIN to be usedItem descriptionItem classificationUnit of Measurement (UoM)Alternative units of measureList priceItem specification

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Purchase Condition

This data interchange provides the contractual conditions for the ordering anddelivering of the goods. The details of the contract will have been previouslynegotiated and accepted. This data interchange only contains the information thatcan be used to automatically approve the transmission of an order or the correctnessof an invoice. It is not intended to contain the totality of the contractual information.

Purchase ConditionHeader Comments

Purchase Condition idIssue date and timeIntegration agreement referenceValidity start and end dateBuyer GLN to be usedSupplier GLN to be usedShip to GLN to be usedShip from GLN to be usedPayment TermsDelivery Terms

Detail (Location Grouped) CommentsLine sequence numberItem number GTIN to be usedItem specificationQuantityValidity start and end dateUnit priceUnit price base UoMChargeCharge price base quantity

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Demand Signals

The demand signals for the ‘manufacturer driven’ scenario, would take the form of aPurchase Order sent by the manufacturer to the supplier as below,

In addition the manufacturer may want to provide background information onmaterial usage forecasts and inventory to aid the supplier in meeting their needs.

Purchase OrderHeader Comments

Purchase order idIssue data and timePurchase agreement referenceBuyer's Internal Number GLN to be usedSupplier GLN to be usedShip to GLN to be used

Storage location GLN to be used

Detail CommentsLine sequence numberItem number GTIN to be usedShip to GLN to be usedStorage location GLN to be usedValidity start end dates for deliveryOrder quantity

Material RequirementsHeader Comments

Material requirements idIssue date and timeBuyer GLN to be usedSupplier GLN to be usedShip to GLN to be used

Detail CommentsLine sequence numberItem number GTIN to be usedShip to GLN to be usedValidity start and end dates for informationQuantityValidity start and end dates for productionQuantityValidity start and end dates for deliveryQuantity

InventoryHeader Comments

Inventory idIssue date and timeBuyer GLN to be usedSupplier GLN to be usedShip to GLN to be usedStorage location

Detail CommentsLine sequence numberItem number GTIN to be usedStorage location GLN to be usedAvailable stock quantity

GLN to be used

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The Demand Signals for the ‘supplier driven’ scenario is build up of an Inventory dataand Material Forecast data interchange using the same data interchanges describedabove.

In a more advance data interchange generation system, the inventory and materialforecast can be combined in a single Replenishment Request data interchange asillustrated hereunder:

In both the manufacturer and supplier driven order process the final feedback is the“Planned Supply”.

Replenishment RequestHeader Comments

Replenishment request idIssue date and timeBuyer SupplierStorage location GLN to be usedShip to GLN to be used

Detail CommentsLine sequence numberItem number GTIN to be usedShip to GLN to be usedValidity start and end dates for informationQuantityValidity start and end dates for productionQuantityValidity start and end dates for deliveryQuantityStorage location GLN to be usedAvailable stock quantity

Planned SupplyHeader Comments

Planned Supply idIssue date and timeBuyer GLN to be usedSupplier GLN to be usedShip to GLN to be usedDelivery date and time

Detail CommentsLine sequence numberItem number GTIN to be usedShip to GLN to be usedDelivery date and timeQuantityPurchase agreement reference

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Incoming Goods

The Receipt Notification confirms the receipt of goods. In conjunction with theDespatch Notification, it is also used to identify possible discrepancies following thereceipt of goods versus the contents of the dispatch notification

In more advanced scenarios Receipt Notifications only include data on exceptionsbetween the despatched and received items (e.g. quantities or other related itemdata like batch codes). In this no message is assumed to be confirmation thatdespatch and receipt matched.

The Despatch and Receipt Notification data interchanges are shown hereunder:

Receipt NotificationHeader Comments

Receipt notification idIssue date and timeBuyer GLN to be usedSupplier GLN to be usedShip to GLN to be usedShip from GLN to be usedReceipt date and timeDespatch notification referenceNotification type (all-in or exceptions)

Detail CommentsLine sequence numberItem number GTIN to be usedReceived quantityAccepted quantity

Despatch NotificationHeader Comments

Despatch Notification idIssue date and timeBuyer GLN to be usedSupplier GLN to be usedShip to GLN to be usedShip from GLN to be usedShipper GLN to be usedDelivery date and time

Detail CommentsLine sequence numberSSCC (Serial Shipment Container Code)Item number GTIN to be usedShip to GLN to be usedDelivery date and timeQuantityPurchase agreement referenceProduction dateBest before dateBatch code

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Financial Accounting

The Financial Accounting includes the data interchanges from the financial outcomesof the goods delivery. The actual invoice is either generated by the supplier or by aself-billing invoice issued by the manufacturer

Finally, a Remittance Advice to notify the details of the payment that will be made ispart of the final data interchange.

Invoice/Self billing InvoiceHeader Comments

Invoice idIssue date and timeReference NumberBuyer GLN to be usedSupplier GLN to be usedBuyer VAT/tax numberSupplier VAT/tax numberCurrency of invoice

Detail CommentsLine sequence numberItem number GTIN to usedInvoice quantityUnit priceUnit price base UoMChargeCharge price base quantityNet amountTax Amount

Total CommentsTotal net amountTotal tax amount

Remittance AdviceHeader Comments

Remittance Advice idIssue date and timeBuyer GLN to be usedSupplier GLN to be usedSupplier bank accountSupplier bank id

Detail CommentsBuyer GLN to be usedInvoice numberTotal invoice amount

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6. Recommendations of the working group

All members of the Manufacturer Forum as well as a selection of material suppliersagree that there is commonality between their business processes and thatdevelopment of a common Upstream Integration Model (UIM) applicable to the CPGindustry can benefit both manufacturers and suppliers.

As a result of the work that has been done, the working group makes the followingrecommendations for the CPG industry:

1. The UIM needs to be developed through the EAN�UCC Global StandardsManagement Process (GSMP). This includes detailed descriptions of thedata elements as well of the semantics of the data flows. GSMP isdeveloped by EAN�UCC to provide companies with global systems foridentification, tracking and tracing of products across the supply chain.GSMP is a user-driven process. This enables user involvement in themanagement of the EAN�UCC systems.

2. An industry body should be identified (or created) to own the overall UIMmodel and drive enhancements to it. This body should haverepresentatives of suppliers and manufacturers.

3. The Manufacturer Supply Side Forum will have to actively seek theinvolvement of more manufacturers and material suppliers for thedevelopment and implementation of the UIM.

4. The Forum will have to work with EAN�UCC and other global bodies togain support for this upstream supply chain approach. The objective is notonly to develop standards but even more importantly, to implement these.

5. Companies have to recognise that they have to become member of thenational EAN�UCC organisations to be allowed to use the EAN�UCCstandards.

6. Companies should note the importance of master data alignment and theproposal to adopt EAN.UCC coding structures for items and locations(explained in more detail in section 2.3). This is major change in thecurrent practice where internal manufacturer codes are used for items. Inthe EAN�UCC model items are identified by Global Trade Item Numbers(GTINs) issued by material suppliers. This will have impact formanufacturers as well as material suppliers in the way they code items andin their ERP systems.

Referenced Documents

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“Integrated Suppliers, ECR is also for suppliers of ingredients, rawmaterials and packaging” , March 2000by ECR Europe and Fraunhoffer Applications Center for Transport andLogistics and Communications Technology. (available from ECR Europe , www.ecrnet.org.)

“Supply chain management tools for the Packaging Industry, Current BestPractice of EAN.UCC System Application in the Packaging Supply Chain”,February 2000by EAN International ( available at EAN International , www.ean-int.org.)