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Chargebacks – The Supply Chain Version of Battleship
Aug 30th
In a post earlier this month I discussed the topic of deductions and chargebacks in the retail supply chain. Billions of dollars of waste and inefficiency are created annually from the inability to comply with retailer guidelines for carrier routing, shipment labeling, product packaging, item ticketing and EDI transmissions. With significant margin pressure on both retailers and manufacturers due to the recession you may be wondering why the industry has not been able to significantly reduce these “preventable deductions.” The answer is that enforcing compliance is a like a complex game of Battleship for suppliers, which requires them to keep pace with an average 50-150 business rules for each of their 75 to 100 retail customers. Retailers do track compliance towards similar types of performance criteria such as on-time delivery, accurate documentation and carrier routing. However, there is very little consistency between retailers on the actual metrics being tracked.
The Vendor Compliance Federation (VCF) performed a study in 2006 of the compliance guides being utilized by 30+ retailers. The most frequent deduction category was “late shipment,” which was utilized by 85% of the retailers. Consistency in measurement criteria typically simplifies processes for suppliers. However, even in the case of consistent performance measurements, differing interpretations of the results leads to further complexity. For example, there is widespread disagreement on how to measure whether a shipment is late. The Warehouse Education Research Council (WERC) conducted a study in the spring of 2005 to understand how companies measured “On Time Delivery” to warehouses and distribution centers. 42.7% believed that On Time Delivery means product delivered on the “requested” day. But the remainder of survey participants cited more specific windows:
- 16.8% stated “on time” is on or before the appointed time
- 15.9% stated “on time” is on the “agreed upon” day
- 11.2% stated “on time” is +30 minutes from the appointed time
- 9.1% stated “on time” is +1 hour from the appointed time
- 4.3% stated “on time” is +15 minutes from the appointed time
Different interpretations of “on time” by retailers complicate manufacturer’s efforts to comply. Challenges are compounded by supplier’s lack of visibility to outbound freight, most of which is transported via the retailer’s preferred carrier. In many cases, once the shipment leaves the supplier’s dock visibility is lost. The goods are in the hands of the transportation provider. Increasingly carriers are providing “electronic proof of delivery,” which can help to resolve disputes.
I first heard the comparison to Battleship in a Presentation by VCF back in 2007
Experts have likened the process to a game of Battleship in which suppliers are forced to create a grid with deduction types on the vertical axis and retailer names on the horizontal axis. The varying compliance guidelines are charted on the grid revealing a complex pattern of rules which must be followed to avoid deductions. In case you hadn’t heard Universal Studios are in the process of filming a movie called Battleship which is adopted from the popular board game. The filming is taking place in Hawaii and Baton Rouge, Louisiana with a projected launch date of May 25, 2012. No, you are not the only one who thinks it this is a bad idea.
Battleship – The Board Game
Another dimension which complicates the management of deductions is the fact that retailers make changes to the compliance guides. Some chains update the rules every 3-5 years. However, others publish changes 10-12 times per year. Some retailers will send proactive e-mail notifications to the supplier community while others will more passively post changes to a PDF on their vendor portal. In either scenario, suppliers must invest time to regularly monitor retailer communications and web sites for changes. To help ease the burden on suppliers, organizations such as VCF have established forums to discuss mechanisms for reducing deductions. One of the more innovative VCF programs is called “the Clearinghouse.” The Clearinghouse tracks compliance guides for over 140 retailers. Suppliers can subscribe to a service under which suppliers can be notified of any changes to retailer compliance guides. In the last 30 days alone there have been over 500 changes reported by VCF.
A Scene from the Upcoming Movie or an Artistic Depiction of the Effect of Deductions on Earnings?
Monitoring compliance is not only challenging for the suppliers, but for the retailers as well. Compliance guides are not effective if they are not enforced. Consequently, retailers have to staff small teams of compliance managers to track the activities of 2000-3000 suppliers for potential infractions. Retailers must monitor incoming shipments and electronic transactions for evidence of non-compliance. The tracking process is resource-intensive and time-consuming creating additional indirect labor costs associated with the deduction.
Suppliers must also form cross-functional teams to validate the authenticity of the deductions that the retailer compliance management teams are assessing. Individuals from the sales, warehousing, shipping and accounts receivable department must collaborate to review retailer deductions. In the case that a manufacturer believes a deduction is not authorized, a formal and time-consuming dispute process with the retailer will ensue. To overturn a dispute the supplier must submit digital photos, histories of PO changes and scanned copies of other documentation.
Changing ERP – Like Ripping Up Concrete
How can technology reduce the complexity of managing deductions for retail suppliers? The logical place to address deductions would be in the manufacturer’s ERP system. However, many suppliers prefer to avoid making changes to ERP applications as they liken it to “ripping up concrete.” Consequently, a number of startup vendors are introducing specialized applications specifically designed to help with chargeback avoidance and deduction management. In addition to the VCF Clearinghouse mentioned above, enterprise community management vendors such as Rollstream have specialized dispute management capabilities. One of the pioneers in the area of deduction management was Between Markets, which was acquired by Inovis (now part of GXS). There are a number of additional educational materials on this topic available on our web site.
Chargebacks and Deductions in the Retail Supply Chain
Aug 26th
Challenges to the retail supply chain have followed closely throughout the year as consumer spending is a key barometer of the broader economy. The combination of skyrocketing commodity costs and continued bargain hunting by consumers are exerting unusual price and margin pressures on retailers. Currently, everyone is eagerly anticipating the results of August sales as chains hope that back-to-school season and tax-free shopping weekends will boost same-store-sales results. But one topic that you won’t read much about is the on-going battle over chargebacks and deductions between retailers and their merchandise suppliers. Billions of dollars of waste and inefficiency exist in the retail supply chain, which impact the bottom lines of both parties. Why the secrecy?
Primarily due to the fact that manufacturers are reluctant to publicly criticize retailers, which represent their largest customers. There was one high profile case between Sega and Kmart that was highlighted in the New York Times in 2001. The dispute arose from Kmart’s refusal to pay for $2.2M worth of merchandise shipped in 1999 because of numerous credits and deductions it had issued. Sega disputed the deductions and filed a lawsuit. Tensions flared until June 2000 when Sega halted further shipments to Kmart over the unpaid amount.
One of the organizations which studied the issue of deductions extensively is the Credit Research Foundation (CRF). In 2009 CRF commissioned a study of 700 companies, which found that for companies selling into retailers, deductions represent 2% of outstanding receivables. For certain merchandise categories the Days Sales Outstanding (DSOs) are even higher. For example, the consumer electronics segment struggles with deductions representing 4% of AR. On the other extreme the toys, games and sporting goods segment only has 1/2 to 1% of AR tied up in deductions.
The Three Types of Deductions
Another leading authority on the retail chargebacks and deductions challenge is the Attain Consulting group. Attain classifies deductions into three categories – intentional, preventable and unauthorized – which correlate with the manufacturer’s view of the problem.
Intentional deductions are expected and anticipated by manufacturers. In fact, these deductions are proactively offered to retailers with the goal of increasing the revenues of the manufacturer. Examples include discounts, rebates, advertising and mark-down allowances, which provide the retailer with an extra incentive to promote their products. Brand owners might use these incentives to try to catalyze sales of a new product line. Alternatively, they might offer trade promotions to encourage the retailer to provide favorable placement of their products in high-traffic or high-visibility areas of the store. The use of these techniques has become so widespread that most manufacturers consider these incentives to be a cost of doing business. Intentional deductions represent 6% of annual sales on average.
Unauthorized deductions are not anticipated by manufacturers, but also have become a cost of doing business for many. Shortages, returns and price discrepancies are the most common examples, which in aggregate represent 2% of sales. For example, shortages might arise from a lack of finished product inventory to ship to a customer. But with more accurate forecasting and demand-driven supply chain practices, manufacturers can optimize inventory to meet customer needs. Another root cause of shortages is warehouse errors from the picking and packing process. Again, suppliers can reduce these errors through automation technology and quality assurance. However, less controllable by the supplier are incidents of shrinkage in which retailer or distributor employees may deliberately remove product from a shipment.
Not this kind of Shrinkage
Also out of manufacturer’s control are returns. No matter how tightly managed packaging and quality assurance functions are, there will inevitably be merchandise returns from retailers. For example, consumers may rip open the packaging while inspecting an item in the store. The damaged product is then returned to the shelf. Sales staff in the store may deem the opened item “un-saleable” and return it to the supplier for a credit.
Preventable deductions are the category that manufacturers have the most control over. Preventable deductions are much smaller percentage of revenue than the intentional category, but still a meaningful 2% of overall sales. These deductions are the result of a supplier failing to properly comply with a retailer’s rules for order fulfillment, carrier routing, container labeling, shipment documentation or electronic commerce. For example, a retailer might request that all in-bound shipments labeled with a serialized barcode and preceded by an advanced shipment notice to facilitate cross-docking of merchandise through their distribution center. Each individual item may need to be folded and ticketed with the manufacturer’s suggested retail price. Failure to follow any of these procedures would result in a deduction against the supplier’s invoice during the accounts payable cycle. Suppliers have a much greater degree of control over preventable deductions than unauthorized ones.
Example of a legitimate deduction
Examples of preventable deductions include:
- Late or early shipments
- No tickets on floor ready merchandise
- No advanced shipment notice (ASN) or late ASN
- No UPC barcode or unscannable barcodes
- Wrong carrier per routing guide
- Over-shipment or under-shipment
- Shipped to the wrong location
- Unauthorized substitutions
- No retail price or incorrect price
- No hangers
- No packing lists
More on deductions and chargebacks in a future post…
Health Information Exchanges – Coming to a County Near You
Aug 24th
Throughout August I have been exploring the question of which vendors have the largest and the fastest growing B2B integration networks. Certainly, a candidate for fastest growing networks (along with e-prescription networks and GDSN Data Pools) are the series of Health Information Exchanges (HIEs) popping up around the US. A recently released report from the eHealth initiative entitled the “State of the Health Information Exchange in 2010” indicates that there are over 230 active Health Information Exchanges (HIEs) operating in the US. Many of these HIEs have been recently founded using federal funds allocated through the HITECH program of the American Recovery and Reinvestment Act (ARRA).
Given the recent wave of federal funding, it should not surprise you that only 73 of the total 230 HIEs are categorized as being operational. The eHealth initiative categorizes operational HIEs as those which are actually transmitting Electronic Health Record data that is being used by health care “stakeholders.” What are the other 160 doing you might ask?
- Defining vision, goals and objectives
- Identifying funding sources
- Establishing governance structures
- Technical implementation and testing
So Many HIEs So Little Ties
One of the key issues with US HIE market is the high degree of fragmentation. There are 230 HIEs over the 50 states, DC and 5 territories. Only 17 HIEs are operating in multiple states. Most are statewide (21). However, there are even smaller geographic areas represented. For example, 11 HIEs cover a single county and 6 HIEs cover only a single city or part of a county. As a result of the abundance of local HIEs, many of the more populated states have multiple HIEs operating within their borders. Florida alone has 22, while New York (20), California (15) and North Carolina (13) are not far behind. HIEs have also been established in numerous US territories including Guam, Puerto Rico, American Samoa, Virgin Islands and the Mariana Islands.
Source: eHealth Initiative
Network of Networks
The current architecture of HIEs is a patchwork of regional, state and county level networks each operating independently. The HIEs do not interoperate today, which means that EHRs can only be shared within the confines of the geographic regions of their home network. Interoperability is not foremost on most HIE’s minds as simply getting two providers within a community to exchange data with one another is still a major milestone most have yet to achieve. Only 3 state-designated HIEs are exchanging data across state lines today. However, there is a vision and plan to connect the HIEs together into one larger National Health Information Network (NHIN). The NHIN would provide portability of EHRs across the entire nation ensuring that patients receive optimal care even when traveling to other states.
The eHealth Initiative study found that 8 state-designated HIEs were planning interstate data exchange in the next 12 months and that another 13 had similar ambitions over a 24-month period. Perhaps, a more important statistic is the number of HIEs adhering to NHIN standards and policies, a necessary pre-requisite for interoperability. 16 state-designated HIEs are reported to be following NHIN guidelines today with another 10 entities planning to do so within 12 months.
Source: eHealth Initiative
Growing, but Sustainable?
Interoperability between HIEs will help to realize the vision and benefits of E.H.R.s. However, the fragmentation of the HIE market naturally leads to concerns about the financial viability of these networks in both the long and short term. In fact, building a sustainable business model was the top concern cited by HIEs in the eHealth study. A current concern for many in the industry is the dependency of HIEs upon continued Federal or customer funding to support their operations. The ARRA funds have provided the “startup capital” for many of these organizations. In other cases, HIEs have been created by consortia of providers or payer organizations. The governance and ownership models behind these consortia HIEs are hauntingly reminiscent of the B2B e-marketplaces of the dot com era.
Source: eHealth Initiative
The good news is that there are over 100 HIEs that are not currently dependent upon Federal funds. And over 60% of surveyed HIEs stated that all of the organizations they exchange data with are independent entities (i.e. have no equity or other financial relationship). Nonetheless, operating 230 different HIEs around the US does not lead to a sustainable model in my opinion. Starting with smaller exchanges organized around local communities will catalyze growth, but likely lead to an eventual consolidation of networks.
Growing, but the Fastest?
The eHealth Initiative report includes excellent year-over-year statistics on adoption rates by transaction type, participation levels and geographic regions. In fact, I wish similar statistics were available on B2B e-Commerce in the financial services, retail or manufacturing sectors. However, the report does not provide any data on transaction volumes or revenues generated. Consequently, a direct comparison of the growth rates of HIEs as compared to other types of B2B integration networks is challenging. But there is no question that if we were to compare by the dollar values of new investment or the number of new vendors, HIEs would place #1.
ARRA – More than Just Road Signs, Electronic Health Records Too
Aug 23rd
In my last post, I discussed the benefits of migrating to an Electronic Health Records (EHR) model in the US health care system. EHR is a popular topic in 2010, because President Obama has made advancing the US health care system a top policy item for his administration. In fact, the American Recovery and Reinvestment Act (ARRA) passed in 2009 allocated federal funds to accelerate the adoption of EHR. Most people associate the ARRA with the road signs you see on secondary highways and bridges. After sitting in a 45-minute traffic jam I always pleased to see a sign that states “This Project Funded by the American Recovery and Reinvestment Act” followed by “Your Tax Dollars at Work.” Or maybe it is “Putting America to Work,” but you get the idea. But ARRA is about more than just road signs. The legislation includes a significant allocation of federal funds to build a series of regional Health Information Exchanges (HIE) which will ultimately be linked together in the National Health Information Network (NHIN). Below is some background information on the initiatives currently underway.
In addition to the $100B of funding for science and infrastructure projects, the ARRA also includes $59B for health care reform. Specifically, included with the ARRA economic stimulus package was the Health Information Technology for Economic and Clinical Health Act (HITECH Act). According to the US Health and Human Resources web site:
“The provisions of the HITECH Act are specifically designed to work together to provide the necessary assistance and technical support to providers, enable coordination and alignment within and among states, establish connectivity to the public health community in case of emergencies, and assure the workforce is properly trained and equipped to be meaningful users of EHRs.”
Incentives and Penalties
HITECH provides funding for a number of grant programs for higher education programs in Health Information Technology as well as R&D funds to invest in fortifying security and network architectures for EHR. HITECH also includes grant programs to enable states to rapidly develop HIEs within their jurisdictions. As a result, in March 2010 over $500B in State Grants were awarded to 56 different US states and territories. The leading beneficiaries were the most populated states with California ($38B); Texas ($28B); New York ($22B), Florida ($20B) and Illinois ($18B). There are also a set of financial motivators for providers in the form of incentives and penalties. Physicians can receive up to $44K of incentive payments if they achieve “meaningful use” of a certified E.H.R. Hospitals and larger provider groups are eligible for millions of dollars in incentives. After 201 5, penalties will begin to be assessed in the form of reduced Medicare payments for physicians or hospitals that have not met the requirements.
Driving EHR Adoption – The Carrot and Stick Approach
Community of Participants
A diverse and broad range of constituents in the health care community will benefit from sharing or viewing electronic health records. The largest benefits in both patient care and administrative efficiencies can be gained by providers, which might include hospitals, physician offices, specialists, public health clinics, long term care providers, behavioral/mental health, military or VA medical facilities. Additionally, tremendous efficiency gains can be obtained by connecting independent laboratories, radiology centers, retail pharmacies, pharmacy benefit managers. Although entities such as Medicare, Medicaid and commercial health plans do not provide patient care, connections to these payers is critical to the success of EHR. Payers must have accurate details on prescriptions requested, lab tests ordered, physician visits completed in order to remit payment. Consequently, payers are frequently the best source of data for historical information that can be compiled from claims history.
More than Just Road Signs
A wide variety of transaction types are being exchanged amongst the community of HIE participants. The most popular documents currently being shared include lab results, medication data, radiology results, emergency care discharge summaries and inpatient diagnoses, procedures and discharge summaries.
In a future post I will provide an update on the growth of HIEs since the passing of the ARRA legislation.
Electronic Health Records and Your Pizza Delivery Company
Aug 20th
There is a commercial running on CNBC Radio this week from United Health Care that states “Even my pizza delivery company stores my information digitally online.” What does a pizza company have to do with health insurance? United is, of course, referring to the antiquated system we have in the US for maintaining paper copies of medical records. If you have visited a new doctor lately, you are probably aware of the small mountain of paperwork that needs to be filled out before you can be seen. The forms ask for details about your demographics, family history, current medications, known allergens, surgery history and insurance carrier. And the forms are required even when your primary care physician refers you to a specialist for consultation. Equally concerning is the fact that once you actually speak to the specialist you find that they seem to know very little about your situation and medical history. The situation is not very confidence-inspiring. You might presume that the redundancy in information gathering is due to the cautious and overly inquisitive nature of physicians, but this is not necessarily the case. In today’s health care system there is very limited sharing of information between different providers. The limited data sharing that does occur is usually over the phone, fax or illegible handwritten notes, infamously known as chicken-scratch.
A 1994 study by Dr. Paul Tang found that pertinent patient information is undeliverable in 81% of cases in outpatient clinics. The statistic is not surprising when you consider that the average person’s medical records are scattered across several different physician offices, hospitals, laboratories and radiology centers. The scenario is worst for seniors on Medicare visit an average of 6.4 different providers every year. Dr. Tang’s study is sixteen years since the study, but not much has changed since 1994. Today’s fragmented and paper-based health record system is the root cause of numerous inefficiencies in the current health care system. Furthermore, the need for physicians to substitute educated guesses in the place objective data poses serious risks to the patient’s health. For some patients, missing information could lead to suboptimal care, return visits or adverse drug events. For others, incomplete medical records could lead to life-threatening misdiagnosis or even death. Consider the case of a patient being admitted unconsciously to an emergency room. The attending physician will have no information about recent lab tests, current prescriptions or medical history.
A study conducted by the Center for Information Technology Leadership (CITL) found that $77.8B in annual savings would be realized by connecting the various organizations in the US health care industry electronically. In order to achieve the savings, the health care industry would need to deploy a framework for sharing Electronic Health Records (EHR) across a National Health Information Network (NHIN). An EHR would store a comprehensive set of information about each patient including:
- Personal demographics
- Weight and health statistics
- Current and past medications
- Immunization status
- Known allergies
- Radiology images
- Laboratory test results
- Past surgeries
- Family medical history
- Discharge notes
- Appointment notes from by specialists or primacy care physician
Example – Philips Tablet PC for Managing Electronic Health Records
In addition, the EHR might contain
- Living will, advanced directives
- Privacy agreements
- Insurance coverage
Benefits of Electronic Health Records
Electronic records promise a number of high-impact benefits to improve administrative efficiency, enhance the care quality and reduce the spread of disease. Four examples of the benefits of EHR include:
- Fewer Redundant Tests – Without access to a patient’s health records, physicians are not able to view the results of recent laboratory tests or to view radiology images. As a result, many physicians order redundant tests, which unnecessarily inflate health care costs.
- Safer Prescriptions – Without access to a patient’s health records, physicians are not able to view known allergens, current or historical medications. Unknowingly, a physician may prescribe drugs which lead to adverse reactions with other medications the patient is taking.
- Researching Diseases – Pharmaceutical companies invest billions each year in research & development to identify potential cures for chronic diseases. The time required to discover new drugs could be reduced with access to large pools of de-identified E.H.R. data.
- Monitoring Pandemics – Public health agencies struggle to get real-time data about medical visits related to contagious diseases. Access to de-identified E.H.R. data could provide faster and broader access the critical health data that could identify outbreaks or pandemics.
More details on Electronic Health Records and the National Health Information Network in a future post.
What happens in Vegas….shapes apparel supply chains
Aug 19th
It is true. MAGIC Marketplace – the fashion industry’s semiannual and biggest 
trade event wraps up in Las Vegas today. Neither shaken consumer confidence, uncertain economic outlook nor the shaky job market has prevented a massive turnout at the event this week. This is where retailers go shopping and global apparel, footwear and accessory manufactures unveil products that they hope will set store shelves and fashion ramps ablaze. Same-store sales for the apparel industry saw the fourth consecutive monthly decline recently, making it crucial for retailers and brand owners to have the right product at the right price on store shelves. While significant business is conducted on the sidelines of this show, MAGIC is also a invaluable collaborative forum for retailers and manufacturers to reconfirm that their merchandising decisions are in line with prevailing trends around design, fabric and color. Retailers and brand owners make quick adjustments to orders they may have placed months ago, or initiate new contracts based on trends, labels and designs the encounter at the show - often sending manufacturing and distribution plans into a tail spin.
MAGIC by the numbers:
- Tens of thousands of buyers and merchants representing most of the 50 largest US retailers are among the 75,000 attendees at the trade show this week.
- Over 3,500 manufacturers ranging from Nike and Levi’s to boutique brands compete for retailer’s attention at the show.
- “Sourcing at MAGIC” is a section dedicated to the private label community. Over 700 contract manufacturers from more than 40 countries are at the show vie for lucrative deals from top brands.
- According to the US Trade Representative’s office, attendees at MAGIC represent over $195 billion in U.S. consumer apparel sales and Private label marketers with $35 billion in purchasing power.
High fashion meets dynamic supply chain and sourcing strategies at MAGIC marketplace. Despite this year’s record turnout, economic magic will be required for consumers to open their wallets at the store and transform the show’s glitter into profits.
Who Has the Biggest GDSN Data Pool?
Aug 18th
The GDSN has grown rapidly over the past five years since its inception. However, certain markets and data pool providers have enjoyed faster growth than others. In this post, I will explore which provider has the largest data pool and which one is growing the fastest. Unlike the debate about who has the largest B2B integration network market, the largest data pool is easy to determine. In fact, GS1 publishes monthly statistics about data pool utilization on their web site. The statistics below are based upon the August 6th, 2010 report.
There are several different ways to compare the size of data pools such as:
- Revenue generated
- Items registered
- Retailers registered
- Suppliers registered
Industry experts I work with generally use the number of registered items as the metric to compare data pools sizes. Unfortunately, most of the GS1 organizations do not publish financial results publicly. Therefore a revenue analysis is not feasible at this point. Both the number of retailers and number of suppliers registered are readily available from GS1. However, the number of companies registered is not necessarily indicative of activity. In the GDSN world, the key metric to track is items, which are referred to as GTINs or Global Trade Identification Number. A GTIN is similar to a SKU, part number or catalog number. If you have ever stopped to review the barcodes labels on any consumer product you will notice there is a number listed along with the series of black and white lines. The number in the barcode is the GTIN.
Examples of GTINs
1SYNC has the Largest Data Pool
1SYNC has the largest data pool regardless of what metric you use for comparison. According to GS1’s August 6th Registry Statistics, 1SYNC has 4.3M registered GTINs from over 200 retailers and over 8,000 suppliers. 1SYNC, which is owned by GS1 US, was formed through the merger of Transora and UCCnet. Transora was originally an electronic marketplace formed by a consortium of leading food and consumer packaged goods providers in the late 1990s. UCCnet was a commercial service of the Uniform Code Council (UCC) developed with the help of technology partners such as Commerce One and Digex. Several large US retailers (Wal-Mart, Wegmans, SuperVALU, Lowes) and suppliers (Procter & Gamble, Coca-Cola Company, Kraft Foods) have been instrumental in driving adoption with 1SYNC.
SA2 ranks Second
The second largest data pool is SA2 (not to be confused with the network protocol AS2), which also recently completed a merger to expand its operations in multiple countries. SA2 Worldwide is the product of a merger between SINFOS (Germany GS1) and Agentrics’ (formerly the Worldwide Retail Exchange) GenSync unit. With almost 400K GTINs registered from 40+ retailers and 2000+ suppliers, SA2 is a distant second compared to 1SYNC. However, SA2 has significant market influence with most of the original SINFOS and WWRE customers (e.g. Walgreens, Best Buy, Metro and Bayer Healthcare) remaining active in the data pool.
A close third is Big Hammer (owned by Edgenet), which historically enjoyed strengths in the US Do-It-Yourself and Hardlines community. Big Hammer is relatively unique, in that, it is not affiliated with a GS1 member organization or industry marketplace. Commport (formerly known as PAINT), which is the eighth largest provider, is the only other technology vendor pure play among the top 15 data pools.
The fourth largest data pool is GS1net Australiasia, which services both its Australia and New Zealand. Operated by GS1 Australia, the data pool has over 250K GTINs registered by 20+ retailers and 1700+ suppliers. Australia has been a pioneer in the data synchronization market with several innovative projects underway. For example, Australia has piloted price synchronization. Additionally, the local GS1 has also developed an extensive National Product Catalog for pharmaceuticals and medical devices sold in country.
Latin America Adoption Outpaces Western Europe
Surprisingly, Latin America makes a strong showing in the top 10 data pools. Syncfonia, operated by GS1 Mexico, is the fifth largest data pool with 166K GTINs, but all from suppliers. CABASNet, which is operated by GS1 Columbia, ranks sixth with 162K GTINs registered from 4 retailers and almost 5000 suppliers. GS1 Argentina ranks ninth with 74K GTINs from 11 retailers and 500+ suppliers. Spain, which retains strong political and economic relations with many of the Latin American countries, also placed in the top 10 at number 7. Spain’s AECOC data pool hosts 78K GTINs from 14 retailers and 300+ suppliers.
While SA2’s data pool boasts some impressive numbers, primarily from Germany and the US, many of the other Western European countries such as the UK and France lag in adoption as compared to Latin America. For example, GS1 France’s data pool, known as Parangon, only hosts roughly 7,000 registered GTINs from approximately 100 suppliers and 17 retailers. GS1 UK is has slightly fewer items than France with 6,700 GTINs, but more suppliers (500+) suppliers.
Emerging Markets Lag
Despite the fact that a high percentage of consumer products are sourced from Greater China, the data pools from Hong Kong, Taiwan and the Mainland each are in the early stages of adoption. The GS1 Hong Kong, GS1 Taiwan and ANCCNET (Mainland China) data pools each have only a few retailers and a few hundred suppliers registered thus far. Many Chinese companies are still wrestling with implementing ERP and supply chain execution applications, which are necessary pre-requisites to realizing the benefits of GSDN. Long term, I believe that GS1 Hong Kong has the greatest potential for growth as data pool. The Hong Kong GS1 sells not only in the Special Administrative Region (SAR) but also in the Pan-Pearl River Delta region of Shenzhen and Guanzhou.
Eastern Europe, Africa and the Middle East are still early in the process of building adoption. Croatia has the largest of the Eastern European data pools with 2500+ GTINs. Slovakia and Hungary also have started to build data pools, but are in the early stages of adoption. GS1 Malta, which operates the MEMA data pool covering 9 different countries, is in a similar position with only a few early adopters.
Beyond Retail and Consumer Products
Perhaps, most interesting amongst the data pools is the fast growing service of GHX (formerly known as Global Health Exchange). GHX’s Health ConneXion data pool launched only a year ago, but already has 500 GTINs registered from early adopters such as Baxter, Novation and Johnson & Johnson. GHX has extensive reach into the manufacturers and distributors of medical-surgical and medical device products. Additionally, GHX has connectivity into much of the “buy side” of the US and Canadian health care markets including Group Purchasing Organizations and hospital centers.
The Fine Print
There are a few important clarifications to be provided about the GDSN statistics to be aware of:
Although the GDSN was formally created in 2004, there were numerous pre-existing data synchronization initiatives in specific countries. 1SYNC’s UCCnet dates back to 1999. GS1 Australia, Canada, Spain and the UK for example each had active local country data pools before formally joining the GDSN. Many of the pre-existing retailers and suppliers were migrated to the new GDSN data pools. Hence adoption in certain countries has occurred over a longer time period than 2005 to the present.
There is a “GXS Data Pool” with a 2 registered GTIN tracked on the official statistics, which is not representative of the GXS footprint in GDSN. GXS offers a cloud-based Data Pool Manager Service that other GS1 organizations and technology vendors rebrand, market and sell to their end-user community. For example, GXS provides the technology behind the GS1 UK, Canada, Australia, Spain, Hong Kong, Taiwan and MEMA data pools.
A New Dawn For China’s Manufacturing Industry?
Aug 6th
I have just spent a few days updating a white paper discussing B2B adoption in China and the challenges facing western companies wanting to work with manufacturing companies in this region of the World. China has been all over the manufacturing news recently, for one reason or another, and I thought it would be a good opportunity to try and summarise what has been happening in China’s manufacturing sector over the past few years and what is likely to happen over the next decade.
The past decade has seen China dominate the global manufacturing sector. Western companies have established joint venture manufacturing operations in Greater China and purchasing departments all over the world are sourcing goods from the region. But is the exponential growth of the Chinese manufacturing sector about to implode or is a new strategy for global expansion about to secure China’s future domination of this sector?
According to the 2010 Global Manufacturing Competitiveness Index produced by Deloitte and the U.S Council of Competitiveness, the epi-centre of manufacturing is continuing to shift to the emerging markets such as India and more significantly China. The manufacturing sector in China is one of the fastest growing in the world and by 2014 is poised to overtake the United States as the World’s largest manufacturing nation. Even though many countries around the world saw their manufacturing output shrink considerably during the most recent global recession, China was able to ride out the recession due in part to the fact that they have a large pool of low cost workers who are able to manufacture goods at a fraction of the cost of western companies.
Until recently the south east coast of China has been the central hub location for many Chinese manufacturing companies, in fact southern coastal China is often referred to as the World’s Factory Floor. Many manufacturing companies have prospered along the east coast of China, thanks in part to having more reliable utilities and telecommunications infrastructure, close proximity to deep sea ports for global exports and availability of highly skilled, low cost labour. In fact the east coast of China has seen more inward investment from western companies than any other region across China.
However in 2010, China faces some tough challenges, wage rises along the east coast have increased by an average of 17% and many companies are facing strikes which are starting to impact the supply of parts to car and consumer electronics manufacturers. The higher labour costs are starting to force manufacturers to think about setting up new plants in the inland regions of China. The main advantage of this is that manufacturers will be able to once again utilize low cost labour but more importantly the spread of companies across the central and western regions of China will help to develop China’s domestic market and hence reduce overall reliance on exports.
Any move inland however will have an effect on logistics and distribution costs, if the road and rail infrastructure exists in the first place. So the manufacturers will have to think very carefully before moving plants inland. Foxconn for example is one such high tech manufacturer who is partnering with numerous PC manufacturers in Chongqing, a western city of 32 million population and where labour costs are 20 to 40 percent lower than east coast towns and cities. The plan is to establish Chongqing as one of the world’s leading high tech and automotive related manufacturing hubs.
As I highlighted earlier the main trend over the past decade has been for western manufacturing companies to establish joint venture operations in China. This trend became prevalent across the automotive industry for example where most of the world’s OEMs established a joint venture operation with a domestic Chinese car manufacturer. This arrangement has worked well over the years and has allowed western companies to get a foothold into a very lucrative market. This has also allowed Chinese companies to acquire valuable knowledge of how western companies run their plants and manage their supporting ICT/B2B infrastructures.
Today however a new trend is developing and this is thanks in part to the recent global economic downturn. The growing wealth of many Chinese domestic manufacturers has led to them wanting to expand their manufacturing operations and take their plants closer to their key markets around the world. However whereas some Chinese manufacturers, such as the telecoms device manufacturer Huawei, are building brand new plants in for example Eastern Europe, others are acquiring entire western manufacturing operations. In many ways global expansion via acquisition provides the quickest way to market as was shown by Nanjing Automobile Group’s acquisition of MG Rover and more recently Geely’s acquisition of the Volvo Cars business from Ford. Geely’s acquisition of Volvo was actually a smart move because one of the main problems facing China’s domestic automotive industry has been the quality and safety of their vehicles. Geely has now acquired the leading designer of cars built to the highest safety standards and it won’t be long before this knowledge of producing safe, high quality vehicles passes across to Geely’s engineers and hence influence the design of their own future vehicles.
Another example is the acquisition of an interiors division belonging to Jaguar Land Rover and now being acquired by the Ningbo Huaxiang Group. The luxury interiors of Jaguar Land Rover vehicles are renowned the world over, now this Chinese company will be able to acquire those skills which in time will help to see the interior quality of cars produced by Chinese domestic manufacturers increase tenfold. Perhaps one of the best investments was by the American investor Warren Buffet who invested money into the Chinese company BYD to setup a new battery plant to support the new emerging market for electric vehicles. Buffet is now helping BYD expand their operations into Russia. A shrewd investment you might say but then again Buffet hasn’t got where he is today without being clever with who he invests in.
Chinese manufacturing companies are also keen to establish a presence in Eastern Europe as this provides a stepping stone into the Western European market. With manufacturing plants being established nearer to the end consumer it also means that their logistics and transportation costs can be significantly reduced. The Chinese electronics company Huawei is a good example of this with their investment in new manufacturing plants in Hungary and Slovakia.
China is seeing an increasing appetite for western products. Many western high tech and automotive companies are seeing significant interest in their products. For example in the automotive sector, China is the fastest growing market for luxury car manufacturers such as BMW, Audi and Mercedes. The recent economic downturn saw the Chinese government pump billions of dollars into the economy thus helping to stimulate consumer spending and hence make the market extremely attractive for western based companies. In fact with the increased wealth of the Chinese middle class population, some observers are saying that China is changing from an export led manufacturing economy to one which is consumer driven.
To date the emphasis, from a B2B perspective, has been for western manufacturers to find ways of quickly on-boarding Chinese suppliers with limited B2B skills. It will be interesting to see how larger Chinese companies start to embrace the western B2B infrastructures that they inherit through their acquisition of western companies. This will be a topic that I will leave for another blog entry 
E-Prescriptions – The Fastest Growing B2B Networks?
Aug 5th
In a post earlier this month I explored the question of who has the largest B2B integration network in the world. The competition is primarily between the top vendors in the financial services, health care and supply chain segments, each of which have been using B2B technologies for over 20 years now. But another equally interesting question is who has the fastest growing B2B network? One of the candidates must surely be in the US Electronic Health Records (EHR) market. The topic of Electronic Health Records has been receiving a great deal of publicity in the past year since the American Recovery and Reinvestment Act (ARRA) was passed. ARRA stipulates that the Federal Government will provide financial incentives for health care providers which can demonstrate “meaningful use” of EHRs. EHRs can include a variety of information about a specific patient including demographics, medications, immunizations, allergies, laboratory data, radiology reports and past medical history. In my last post I described one of the fastest growing segments of EHR, the sharing of medication data between providers, pharmacies, and payers via e-prescription networks. In this post I will outline who are these e-prescription networks and how fast are they growing?
Historically, there were two dominant e-prescription networks in the US – one which represented the pharmacies and the other which represented the PBMs. Surescripts was formed in 2001 by the National Association of Chain Drug Stores and National Community Pharmacists Association as a privately held company. The second was RxHub, founded by CVS Caremark, Express Scripts and Medco. However, in 2008 Surescripts and RxHub merged. The merged company, which uses the Surescripts name, maintains a vast network of connections to pharmacies, providers and insurers for the purpose of e-prescription routing. In addition to providing an e-prescription network, Surescripts also provides services such as certification, education and standards development.
What is Meaningful Use – One of the Biggest Questions in Today’s Health Care Industry
Every year Surescripts publishes a report of the activity on their network, which serves as a gauge of the growth in adoption of e-prescription technology. The most recent report has some very interesting data about transaction volume growth of these specialized B2B integration networks:
- Benefits Requests – Doctor’s asking insurance companies or pharmacy benefit managers for a patient’s eligibility and formulary increased 284% from 2008 to 2009. Whereas only 8% of patient visits involved an electronic benefits request in 2008, over 30% were digitized in 2009.
- Prescription History – Doctor’s requesting a list of current and past medications from the patient’s pharmacy and insurance carrier increased five-fold in 2009. Only 1.7% of patient visits in 2008 involved an electronic history request. The percentage jumped to 8.2% in 2009.
- Electronic Routing – 18% of doctors were submitting prescriptions electronically to a pharmacy versus a handwritten or phone based request. Only 4% of eligible prescriptions were sent electronically in 2008. Note that certain “controlled substances” as defined by the DEA are not eligible for electronic routing.
Walgreens in North Dakota – Electronic Routing – Maybe?
Surescripts also include data about the percentage of health care providers, payers and pharmacies adopting e-prescription technology:
- Provider Adoption – By the end of 2009, there were 156,000 “prescribers” (typically providers) routing prescriptions electronically, which represents 25% of all office-based.
- Insurer Adoption – By the end of 2009, Surescripts had access to 65% of US patient’s prescription benefit and history information. There were only two states – North Dakota and Mississippi in which Surescripts had access to less than 40% of the population.
- Pharmacy Adoption – 97% of chain pharmacies such as Rite Aid, CVS and Walgreens were connected to e-prescription networks along with 6 of the largest mail-order pharmacies. Additionally, 85% of community pharmacies in the US were wired for prescription routing.
Are e-prescription services the fastest growing B2B integration networks? It would not be fair to draw conclusions without examining some of the other emerging B2B networks first. More thoughts on this topic in a future post…
E-Prescription Networks – Making Health Care Less Painful
Aug 3rd
One of the most annoying parts of the US health care system is all the paper work you have to fill out. Every time I visit a new provider, I have to fill out a whole series of paperwork answering questions about my demographics, medical history and current prescriptions. Even when you visit the same provider consistently, you are still asked a series of repetitive questions. For example, every time I visit my primary care physician, both the nurse that checks my vitals and the physician who consults me ask for a list of current medications. If I fail to list one (e.g. the Ambien Rx I requested nine months ago for an international flight), then they query me about any disconnects between their records and my answer. Why is it my responsibility as the patient to know the names and strengths of all the medications I am taking? Why doesn’t the provider track this since they are the ones recommending the medications in the first place? Surely, the process of tracking prescription medications by patients could be simplified. The good news is that there has been an effort underway for almost a decade now to digitize the exchange of prescription data throughout the health care system.
The US e-prescription initiative was originally slowed by regulatory barriers. The ability to send electronic prescriptions had to be approved state-by-state in each domicile’s legislature. However, all 50 states and DC now support e-prescriptions for most pharmaceuticals. In fact, many states have active incentive programs in place via their Medicaid or Health Department organizations to financially reward providers for e-prescription adoption. In addition to the state-sponsored incentives, numerous catalysts such as the American Recovery and Reinvestment Act (ARRA) are combining to accelerate e-prescription usage at an exponential rate. In this post, I will outline how e-prescription networks are used and the benefits to the health care system. There are three primary use case scenarios for e-prescription networks today:
In the first scenario, a doctor in a hospital or physician’s office needs to obtain information about the patient’s health insurance benefits before prescribing a new medication. The patient’s eligibility for prescription drug benefits needs to be confirmed. And in many cases, the physician needs to understand the preferred medications (or formulary) of the patient’s insurance company. Most large health insurers sign contracts with specialized firms called Pharmacy Benefits Managers (PBM) to manage their prescription drug benefit programs. PBMs negotiate discounts with pharmacies on certain brands (or generic versions) of medications, which become the basis for the formulary. As a general rule, PBMs and insurers prefer that prescriptions be for lower cost, generic drugs rather than name brand pharmaceuticals in order to reduce costs. Enabling physicians to access formularies and eligibility data before writing a prescription is a huge victory in the battle to control prescription drug costs.
Can you read this?
A similar, but secondary scenario involves obtaining a patient’s prescription drug history. With a patient’s consent a doctor can obtain a list of current and past medications. The benefits of knowing past and present medications are numerous. Physicians can avoid harmful drug-to-drug interactions; drug-age problems; drug-pregnancy issues and drug-allergy interactions. You may ask – Shouldn’t a doctor know what medications their patients are taking? A study by the Center for Information Technology Leadership (CITL) found that, on average, a primary care physician knows only 70% of their patient’s medications. Older patients or those with a chronic disease may not recall all their past medications when asked. The problem is more challenging for specialists, which typically only know 40% of the drugs used by their patients. Emergency room and urgent care providers may know 0% as they are dependent upon a patient being conscious and capable of providing the list.
Additional value for prescription history comes from the renewal process. A doctor reviewing refill requests can review timing intervals to determine if a pattern of over-use, under-use or misuse exists. The scenarios for prescription histories are expanding rapidly. For example, patients with personal health records can elect to have their prescription histories sent from pharmacies to their online records as well. Additionally, physicians supporting emergency evacuations following an earthquake, hurricane or natural disaster can access prescription histories through online portals.
ARRA – Not just a bunch of road signs
The third scenario is electronic prescription routing between a doctor and a pharmacy (mail order or retail chain). Doctors have notoriously bad handwriting. It is amazing to me that there is not a higher rate of fatalities and hospitalizations due to incorrectly interpreted prescriptions. The CITL study found that 10% of handwritten prescriptions are illegible to pharmacists resulting in a follow up call. Fortunately, not all providers use hand written prescriptions. Some 50% of physicians phone prescriptions in. While the phone calls may be less prone to error than chicken-scratch notes, the process does consume two minutes of time for a nurse or administrative staffer. Perhaps, the biggest benefit comes in the refill process. Instead of pharmacies having to fax or phone in renewal authorizations, the request can be sent from the Physician’s Practice Management System or Hospital Information Management System electronically to the Pharmacy’s Order Management System. Electronic routing eliminates the 15 minutes of a nurse and front desk staff time spent hand writing the scripts.
More on e-prescriptions in my next post…
The Chinese REE-Supply near-Monopoly
Aug 3rd
In my previous blog, I had alluded to the iPhone4 story to highlight how an outsourced supply can become a key constraint in the world of High Tech Supply Chain. With High Tech now cross-pollinating every other vertical segments such as Auto, Military, Transportation, Recreational and Green Technologies., the extended Value Chains are awaiting to face a looming crisis, the one that appears to be originating from the land of dragons and empires, China, the almost monolithic supplier of the Rare Earth Elements (REE).
REEs are a group of 17 rare elements that is a critical component of today’s High Tech particle-economy. The image below summarizes the demand-supply and the practical application of REEs.
Modern High Tech industry will almost crash without these rare earths. 97% of the global demand for rare earth minerals is fulfilled from China. Interestingly, around 60% of which is used for in-house consumption to create the down-stream products.
But with China almost being the only supplier of REE, the potential risks ahead for the High Tech OEMs are:
a) China’s export ban on REE. The intention is clear. China would be all set to consume most of its REE produce for its own progressively expanding n-tier manufacturing units. In addition, the availability of stock-buffers of REE (excess-yet-constrained supply) will pad its volatility in the market.
b) Financial hegemony. China’s is now the second-largest economy. With China holding huge USD debts, China is in a clear position of strength to dictate price on its offerings on its own terms.
c) Increasing costs of Chinese labor. The High Tech value chain has enjoyed the luxury of cheap outsourced labor for more than a decade, be it for the non-green mining of REE or the outsourced manufacturing. As the cost of manufacturing increases (for e.g. cost of labor), High Tech OEMs will be forced to sacrifice their brand-driven margins to battle the cut-throat downstream price war. Please note that the beneficiary here is not the end consumer but the Chinese economy.
d) A Long waiting game for Total Landed Cost Sourcing. While the US, Canada and Australia are beginning to beef up or refurbish their REE mines, it would take atleast 8-10 years to turn them fully operational, spelling out a decade-long market opportunity for China. Not just that, would the then-labor costs in anyway be a match to the current, cheaper, Chinese equivalent?
Bottom-line, while it is clear we need to watch out for alternative sources of REE, this is not an overnight phenomenon, and till then, the Chinese manufacturing (also read REE mining) economy will be on the rising trend.
Who has the Largest B2B Integration Network?
Aug 2nd
Since IBM’s acquisition of Sterling Commerce in May there has been a lot of discussion about the consolidation of B2B networks (and what it means for the industry). One of the topics discussed amongst B2B integration professionals is – Who has the largest B2B network? Numerous analysts and thought leaders declared GXS to be the largest following the successful acquisition of Inovis in June. However, I am not convinced that GXS really is the biggest. Amongst the traditional supply chain oriented EDI networks, GXS earns top ranking for network-based revenues, annual transaction volumes and number of companies connected. However, if you were to consider other types of similar B2B networks in adjacent industries such as financial services or health care, then the #1 position is not as clear.
For purposes of this analysis, I consider a B2B network to be a vendor providing a private cloud specifically designed for the purposes of exchanging standardized messages to automate cross-enterprise business processes. Many of these types of networks exist to support different business processes ranging from supply chain to financial services to health care. Below are five, in addition to GXS, of the largest that I am aware of:
Ariba – describes its Supplier Network as “the largest transacting network in the world.” Ariba’s network boasts over 300,000 suppliers which process over $120B in annual spend in 70 currencies across 130 countries. Buyers and suppliers leverage Ariba’s network to exchange product/service catalog data; purchase orders and commercial invoices. Over 23M purchase orders and 11.5M invoices are processed annually. Ariba supports a diverse range of standards including cXML, EDI, CIF and punchout. The company reported $339M in annual revenues for 2009. Ariba embeds its Supplier Network within its various spend management, e-procurement and e-sourcing applications making it challenging to derive what percentage of revenue comes specifically from the network.
Emdeon – is the largest player in the Health Care Revenue Lifecycle Management segment (formerly referred to as HIPAA clearinghouse). Emdeon states that its’ clearinghouse “has connections to more payers, providers and vendors than any other healthcare business in the marketplace.” Emdeon’s network connects to 340,000 health care providers; 81,000 dentists; 55,000 pharmacies; 5000 hospitals; and 1200 government or commercial payers (e.g. Medicare, Medicaid, HMOs, PPOs). One out of every two commercial health care claims delivered electronically in the US was processed by Emdeon. In total, Emdeon processed 5.3B health-care related transactions in 2009 resulting in $900M+ in revenues. The most common transactions include eligibility verifications, referral authorizations, claims submissions and remittance advices, which are typically in the HIPAA EDI standard formats.
SWIFT – is a co-operative organization that is owned by a consortium of financial institutions around the world. SWIFT has arguably the largest B2B network in both the banking and capital markets segments. Over 9000 financial institutions representing over 200 countries utilize SWIFT’s network to exchange payment instructions, account statements, letter-of-credit documents and securities holdings reports. SWIFT supports both its own set of standards (FIN/MT messages) and numerous third-party standards such as ISO 15022, ISO 20022 XML, FPML and FIX. In 2009, SWIFT processed 3.76B messages, approximately 49% of which were payment-related and 43.9% were securities-related. SWIFT generated €596M of revenue in 2009 of which €360M was from traffic.
NYSE Technologies (NYFIX) – There are a number of large FIX networks. Each of these networks operates as a product line within a much larger IT or financial services firm, which makes comparative analysis challenging. For example, NYSE Technologies acquired the largest remaining independent vendor NYFIX in 2009. Pre-acquisition, NYFIX reported over $70M from 1000 firms in 2008 revenues from FIX-related products. Sungard’s Global Network is considerably large as well, but the only information publicly available is the number of connections – 2500 financial institutions. Thomson’s TradeWeb Routing Network is another large FIX network with 2000 institutional customers trading $1.2B shares representing $280B daily. Thomson claims to process 12-15% of daily NYSE and NASDAQ volumes, but like Sungard provides no information about revenues generated from the service.
Omgeo – is a joint venture between Thomson Financial and the Depository Trust Corporation (DTC). Omgeo provides a network to facilitate securities clearing transactions (middle-office) between investment managers, broker/dealers, and custodian banks. The primary transactions exchanged include allocations, confirmations, affirmations and post-trade matching reports (see end of post for clarification). Omgeo provides services to 6000 clients representing 2400 different financial institutions. The joint venture does not report revenues publicly, but a 2006 press release stated that Omgeo generated an impressive $250M annually.
GXS – is the largest player in the traditional EDI network space. GXS focuses primarily on supply chain transactions to support the retail, automotive, high tech and manufacturing value chains. The highest volume transactions processed on the Trading Grid include purchase orders, shipment statuses, commercial invoices, payment instructions and product catalogs. While EDI remains the most popular choice amongst its customers, GXS also supports a wide range of XML and vendor-specific file formats (e.g. SAP IDOC). GXS claims 40,000 direct customers and 150,000 connected trading partners. The company maintains direct operations (employees and offices) in 20 countries throughout the world. In the most recent SEC filing, GXS reported that its 2009 revenues combined with Inovis were $487M (pro-forma, unaudited), the majority of which were from network-based services.
There are numerous other vendors in the B2B integration sector that I did not list above. In a future post, I will provide more details on the other large networks. But of those that I did list above, which do you think should earn the title the largest B2B integration network? Of course, the answer depends upon how you measure “largest.” Multiple different metrics could potentially be used such as
- Annual revenues generated
- Number of customers (or connections)
- Annual transaction volumes
- Number of countries serviced
If you were to rank based upon publicly available revenue reports then Emdeon would clearly place #1 even thought it only focuses on the US market. SWIFT, which operates around the world in multiple financial sub-verticals would rank #2. GXS, following its Inovis merger, would be #3. There would be some competition for #4 between Ariba, Sterling Commerce, Omgeo, NYSE Technologies (NYFIX) and others. That is my perspective, but comment below to let me know what you think.
Note that the securities transactions processed on FIX networks are trade-related (front office) which precede the stage of the lifecycle in which Omego is involved. And the securities transactions processed on the SWIFT network typically are later in the lifecycle (settlement or asset servicing) than Omgeo.