EDI and the Internet at Texas Instruments

Global Presence and World-Wide Strategies

Texas Instruments is a high-tech corporation with headquarters in Dallas, Texas. It has marketing centers throughout the world in over 30 countries, more than 40 production facilities in 18 countries, and a world-wide payroll of about 56,000 employees. TI develops, manufactures and markets semiconductors, software, and products for consumer electronics, together with industrial control components and metallurgical materials. In 1996, total revenues were 9.9 Billion US Dollars.

EDI has had a long tradition at Texas Instruments. Since the first beginnings in North America back in the year 1969, a global presence has evolved which is organized in four regions (America, Japan, Asia and Europe), and which has direct support in each country.

Technical support - for example, when introducing new transaction sets - is available on a regional basis, and guarantees the realization of new programs within the shortest possible time. Thus, a new EDI partnership can usually be set up in a period of only a few days.

EDI projects which are specific to a country are consolidated at the regional level, classified and ranked according to the issues which are involved, and transferred to the technical EDI team for processing.

Regional steering teams coordinate strategies and programs. Here, it has been found that the use of world-wide video conferencing equipment and the global E-mail system can do much to facilitate harmonization and agreement on common activities.

This world-wide engagement gives rise to specific requirements with respect to:

  • The optimization of resources: The processing of EDI data for all regions is performed centrally in Lewisville, Texas.

  • Availability: Round-the-clock technical EDI support is available, 24 hours a day and seven days a week.

  • Access: EDI transactions are supported by Value Adding Networks (VANs), by Point-to-Point connections, by means of dial-up lines, or via the Internet.

  • Standards: EDIFACT has been chosen as the world-wide standard. However, as a result of the historical evolution of this concept, additional regional message definitions (for example, ANSI X12 in North America) are also supported.

Employees of Texas Instruments are active in the corresponding EDI committees, such as those in the organizations EDIFICE, EIDX and EIAJ, and the working teams which belong to them.

The following figure gives an idea of the volume of traffic which is regularly processed by this system:


Figure 1: Global B2B Indices

Texas Instruments provides all EDI messages in the standards which have been chosen, and is working continually in a close partnership with its customers, to develop special programs based on EDI solutions, which will increase effectiveness and efficiency.

TI is recognized in the semiconductor industry as the leader in the evolution of integrated logistic concepts and innovative EDI developments. To illustrate this, two examples will now be described: one is the EDI logistical integration of "Just in Time" (JIT), the other being Internet EDI - a pioneer program in the semiconductor industry.

JIT LOGISTICS

One of the most significant further developments in EDI at TI has been the integration of the EDI Delfor (Delivery Forecast) message into all planning and production systems. This program has been in existence for the last five years, and has meanwhile been implemented on a world-wide basis. The goal has been to fulfill the essential requirements demanded by customers from a modern and effective material management system, namely:

  • the reduction of warehousing costs, by keeping inventory levels at an absolute minimum;
  • the automated acceptance and processing of changes in demand;
  • the guarantee that delivery dates will be met; and
  • the elimination of all redundant (i.e. not value-adding) transactions and processes.

These goals are completely fulfilled by the JIT Program. The relationship between TI and its JIT partners is similar to that of an alliance, in which information (in this case, production data) is exchanged and processed. The term 'Extended Enterprise' can here be seen in operation: TI effectively becomes the 'Front End' of the customer’s production process.

The demand forecast, transmitted by the customer by means of an EDI/Delfor message, is incorporated without change (assuming quantities are within predefined limits) into TI’s planning and production system. The definition of permissible quantity fluctuations is made at the product level in consultation with the customer, and varies depending on the desired delivery date. As a result of the regular transmission of this demand data (usually, once a week), TI receives figures which are continually brought up to date and can manufacture 'Just in Time' - whereby the quantities actually manufactured are always in accordance with the latest figures. TI thus operates as a 'virtual extension' of the customer’s production facilities. On the part of the customer, a participation in this program assumes that a reliable Production Planning Systems (PPS) is in place, and that the transmitted demand forecast is not liable to excessive fluctuations in demand. It is therefore necessary to agree on realistic time periods for the forecast: that is to say, times which are largely in line with the average material procurement time. In practice, planning windows between 12 and 18 weeks have been found to be satisfactory.

The formation of this kind of partnership begins with the determination of the JIT products involved. The time period windows for the demand forecast are then agreed. Bandwidths are allocated to the forecast, within which the transmitted quantities may vary without requiring manual intervention.

The following Figure should explain this process:


Figure 2: JIT Flow

The concept outlined here ensures that delivery dates are met, whilst also guaranteeing the flexibility required by TI’s customer.

This first example should give an impression of the close cooperation existing between TI and its JIT partners when handling and processing data within the framework of a partnership alliance: such an alliance has a significance extending far beyond that of a traditional customer/supplier relationship.

The second example of an innovative EDI solution is concerned not with the actual data which is transmitted, but instead presents for discussion a new medium for commercial EDI.

Internet EDI

In recent years the use of the Internet has become firmly established as a new and permanent dimension in the area of 'Electronic Commerce', particularly with respect to E-mail. It was therefore almost inevitable that the possibility of using the "Web" for EDI transactions should come up for discussion.

In fact, the Internet really does offer a number of advantages when compared with previously used concepts. The most important of these include:

  • Almost 'Real Time' EDI. The 'Store and Forward' concept of VAN and Mail Boxes is no longer applicable; the data exchanged between the EDI partners is available within minutes, procurement processes are accelerated, and data becomes even more up-to-date. Precisely this is seen at Texas Instruments as one of the most significant advantages which accrue from the Internet. As Thomas St. Peter, World-Wide EDI Manager at TI, puts it: "Internet EDI has clearly demonstrated significant progress in bringing us much closer to real-time transmission." This is of enormous significance when seen in the context of implementing 'Just in Time' concepts, where the tightening up of all process steps which are involved is essential. The data transmission via EDI used for this purpose plays a key role here, together with the immediate subsequent further processing. Current examples from everyday EDI / Internet operation have demonstrate transmission times of about seven to ten minutes - and this includes the time for acknowledgment by the recipient.

  • Horizontal Integration: Many smaller and middle-sized companies are afraid of the costs of a VAN connection, or do not have the technical capacity within their organizations to operate a connection of this kind. However, an Internet connection will often exist already; if not, it can be quickly installed.

  • Vertical Integration: Internet EDI allows the operation of new fields of application, such as the transmission of technical drawings, presentations, graphics, and even video. In other words, 'non character' data can be transmitted, this being possible only over a digital (TCP/IP) network.

  • Costs: VAN providers usually charge based on the volume of data transmitted. With Internet this no longer applies; instead, the user only incurs charges from the Internet Service Provider. The interface software which is used between the in-house application and the Internet is free of charge, as is also the use of the network itself, however much data is transmitted. According to calculations made internally at TI, savings of up to a factor of 3 (in comparison with VANs) can be realized. Almost all network providers are aware of this, and recognize the potential of these kind of connections. Thomas St. Peter is convinced that "this concept is going to force VANs to rethink and redefine the value they are offering to their customers. VANs are going to have to exert themselves to find their place in the market, if this technology becomes widespread".


Figure 3: The advantages of Internet EDI

TI goes Internet - the status at Texas Instruments

TI's first experience with Internet EDI began in the USA in the middle of 1996, when a common project with AVEX Electronics (Huntsville, Alabama) was defined. TEMPLAR, a product from the company Premenos, was chosen as the interface software. The first data transmitted consisted of invoices from TI to AVEX, followed by orders to TI. Today, about 1,300 documents per month are processed; the total transmission time (from transmission by the sender, receipt, with an acknowledgment sent back to the sender) is usually in the range of five to seven minutes.

The architecture constructed for this process is shown on the next page.


Figure 4: Internet EDI Architecture

In contrast to conventional VAN solutions, in which the data transmission takes place direct from the EDI Translator via a Gateway to the VAN, in this case a BDT (Bulk Data Transfer) step was incorporated, which passes the EDI data to a computer isolated from other applications. The TEMPLAR software is also resident on this computer. At this point, data is encoded by choosing from a variety of encryption systems, provided with control parameters such as date, time and file size, and passed through a 'Firewall' server to the Internet.

The outgoing data is of course registered several times - namely, in the EDI translator, in the Gateway, and also within the Templar software.

One of the most significant (and absolutely indispensable) elements in the complete process is the acknowledgment, by the receiving system, of the nature and quantity of the data which has been received. This allows automatic file reconciliation, and ensures that the data has been received both in its entirety and also unmanipulated. The Figure on the following page illustrates this 'Handshaking' procedure.


Figure 5: Internet EDI Data Flow

Intensive work is in process to extend this program, both by the addition of further EDI messages, and by the acceptance of new trading partners. First discussions with those customers in Europe who have shown interest are now taking place, and start-up plans for the second quarter of 1997 already exist. Internet EDI is seen at Texas Instruments as an extension of the EDI service which it offers to its customers. There is no doubt that it represents a genuine alternative to the traditional world of transmission based on VANs. The extent to which Internet EDI becomes established in the market will also depend largely on the creativity of the VAN operators, with respect to their closeness to customers, the improvements in service they provide, and their pricing policy. Here there is certainly considerable scope for improvement. Only the future will show the extent to which the challenges of utilizing the Internet for commercial purposes can be met.

If you would like to know more about Texas Instruments, just pay us a visit on the Internet:

http://www.ti.com TI’s Home Page

http://www.ti.com/sc/docs/scedi/ TI’s EDI Information

Templar is a registered trademark of Premenos Incorporated.

A note about the author:

Arthur Larres has been responsible since 1979 at Texas Instruments for the implementation of various projects in Germany and elsewhere, such as the installation of complex production systems in all European manufacturing plants. At present he is looking after TI’s EDI activities as Program Manager for Central Europe, and shares responsibility for the definition of the complete system infrastructure of the European semiconductor marketing organization, which has its headquarters in Freising, Germany.