European Commission - Growth

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Helping SMEs to profit from global digital supply chains Arna fhoilsiú an : 19/12/2012, Nuashonrú is déanaí: 10/09/2015

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Small and medium-sized enterprises (SMEs) need to be better integrated into automated electronic data interchange (EDI) to be successful in global markets. EDI allows companies to exchange data between their own ICT systems and the systems of customers and suppliers. In recent years EDI has greatly benefited large companies, whilst SMEs could not fully participate due to the high costs of such systems. Pilot projects supported by the European Commission demonstrate that common ICT systems for the supply chain of the automotive industry (auto-gration) as well as for the transport and logistics sector (DiSCwise) enable SMEs to profit from global digital supply chains.

Common language for supply chain of car industry

The European automotive industry accounts for more than 12 million jobs and has net exports of more than €50 billion. While growth in Europe is slowing, companies must be ready to take advantage of opportunities in the global marketplace, particularly those in emerging economies.

But different EDI standards, different software or different B2B service providers can hamper the data exchange among trading partners. To overcome these problems, the auto-gration project provides a common language for the supply chain of the automotive industry and, as a result, a common, state-of-the-art information and communications technology (ICT) architecture that avoids compatibility problems. The new language was developed by a consortium of players from every level of the European automotive supply chain and was supported by the European Commission.

Auto-gration offers SMEs a lifeline

Auto-gration is low-cost, easy to install and fast to deploy – cutting overheads, increasing business agility, improving customer satisfaction and ensuring faster deliveries. Auto-gration links different players in the supply chain and integrates supplier and customer data into ordering, dispatching and invoicing systems. In fact, the benefits already reported include a 30% increase in staff productivity, 50% reduction in the costs associated with translation between different systems, fewer transcription errors and high service levels. Moreover, telephone and fax inquiries for stock availability were reduced by 60 to 80%, as immediate information on products helps to select best suppliers and quickly respond to customer needs.

Logistics: SMEs become international business partners

The project DiSCwise allows the various technological systems in the European transport and logistics sectors to work together and to better plan ahead. This benefits in particular SMEs, which represent 99% of operators in both sectors. Via a Web interface or low-cost integrated system, transport service providers using DiSCwise can provide customers with a choice of transport alternatives. Consequently shippers and forwarders can make more informed choices regarding the planning and execution of transport and logistics services.

The system makes it possible for SMEs to carry out door-to-door transport chains in which multiple services are combined. DiSCwise enables SMEs to connect to larger enterprises on fair terms and become fully integrated international business partners.

Increased load factor and reduced transport costs

With the help of DiSCwise, a new Common Framework to improve SME access in transport and logistics services was piloted in an industrial context. The Framework allows the systems of different stakeholders to be integrated within the supply chain so that they can easily communicate and exchange data based on pre-arranged structure and content – including publishing or ordering. For example, a Polish pilot programme that employed a business model for vertical and horizontal cooperation between logistics services clients (consignees, consignors) and logistics services providers (SMEs) both increased load factor and reduced transport costs . The programme also pointed a way forward to reduce overreliance on road transport by exploiting the co-modality concept – i.e. by using different modes of transport on their own and in combination in order to obtain an optimal and sustainable use of resources. Other pilot projects in Belgium, Spain and Portugal have also underscored the value of using smart ICT solutions and the potential of the Common Framework.

More than 75% of the value added created by the Internet is in traditional industries

Both the auto-gration and DiSCwise initiatives form part of the EU’s drive to integrate SMEs into global digital supply chains through the use of ICT. Daniel Calleja Crespo, Director General for Enterprise and Industry, stated that this drive was underpinned by two significant facts: More than 75% of the value added created by the Internet is in traditional industries, and 85% of all new jobs created in the EU come from SMEs. The commercial value of the EU’s initiatives is already apparent and further standardisation efforts are ongoing.

Three more major demonstration actions have started in support of the fashion industry, the tourism industry, and the agro-food supply chain.

The broader tangible and intangible benefits of the projects are:

  • For SMEs:
    • facilitating the entry into the market of new, dynamic players;
    • strengthening business relations between SMEs and big companies;
    • helping SMEs become fully integrated international business partners;
    • streamlining business processes;
    • increasing returns on investments in ICT;
    • improving business transactions;
    • reducing administrative overheads or errors.
  • For larger companies:
    • increasing their innovation capacity by partnering with other innovative SMEs;
    • enhancing customer satisfaction through more flexible, personalised services;
    • shorter time-to-market.
  • For the economy and society:
    • promoting a more dynamic and competitive economy;
    • facilitating the market entry of new players, on fair terms.