While e-marketplaces provide electronic functions
and may replace back-office functions within each of the individual trading
partners, the data remain on the servers at the e-marketplace. For certain
functions it is ideal if the various parties in the supply chain have access to
these centralized data. However, certain types of data need to be held in the
databases of the participants themselves, for reasons of corporate security or
enterprise resource planning (ERP): production scheduling, accounting, contract
and position management systems and so on, that are outside the scope of an
e-marketplace. Such data need to be transferred between the different
players.
In paperless trade this is done not through physical
transfers of documents or rekeying the data, but rather through electronic
messaging of the data, between participants or via the e-marketplace.
If the electronic data are in a standard format,
which can be recognized by participating systems, information can be transferred
directly from computer to computer. This is also known as straight through processing (STP). This means
the data do not have to be intercepted by users for verification and subsequent
re-entry in the system (retyping or rekeying*) but can be integrated directly
into the individual user's application or database.
When combined with the central functions provided by
the e-marketplaces, STP allows for efficiencies and cost savings at all
functional levels of the supply chain. Administrative tasks are reduced, and
supply chain visibility and efficiency between trade chain partners is
increased.
* A McKinsey
study (2000) found that the error rate in rekeying may be as high as 50% for
some documents - that is half of all the documents circulating contain at least
one error.