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Technology for Open International Trade Electronic Trade Scenarios

Erasmus University P.O. Box 1738 3000 DR Rotterdam, The Netherlands tel. 31 (10) 408 26 01 fax 31 (10) 453 13 21 www.euridis.fbk.eur. Ronald M. Lee rlee@euridis.fbk.eur.nl EURIDIS Erasmus University Research Institute for Decision and Information Systems.

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Technology for Open International Trade Electronic Trade Scenarios

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  1. Erasmus University P.O. Box 1738 3000 DR Rotterdam, The Netherlands tel. 31 (10) 408 26 01 fax 31 (10) 453 13 21 www.euridis.fbk.eur Ronald M. Lee rlee@euridis.fbk.eur.nl EURIDIS Erasmus University Research Institute for Decision and Information Systems Technology forOpen International TradeElectronic Trade Scenarios

  2. Motivation Vision Scenario Representation Scenario Design Tool: InterProcs Example Scenario Component Architecture Future Directions Outline

  3. Broad research scope: Analysis and Design of Inter-organizational Systems Distance Collaboration (Disco) Coordination, Harmonization Among Administrations (Charms) Models for Open Electronic Commerce (Moneco) Formal Analysis of Normative Systems (Fans)

  4. Globalization of Markets * New Opportunities * New Threats Swimming in unfamiliar waters Motivation

  5. * Red Tape Problem "red tape -- n; (so-called from the red tape formerly used to tie up legal documents in England): bureaucratic procedure, especially as characterized by mechanical adherence to regulations, needless duplication of records, and the compilation of an excessive amount of extraneous information resulting in prolonged delay or inaction" * Babel Problem An estimated 33% of business opportunities lost due to language problems (European Union) Obstacles

  6. Example transaction: seaport [bill_lading] Issuing Bank Corresponding Bank [lc] [bill_lading] [bill_lading] Import Customs Import Port Authority Export Port Authority Export Customs [lc_ [customs_ [manifest] release] [cargo_declare] [remittance_ [manifest] [lc_ request] [exp_ [discharge_permit] advice] [customs_ [stowage_ approval] declare] [exp_ plan] [eta] [bill_ declare] [manifest] [commercial_ [bill_ lading] [ship_ [bill_lading] Invoice] details] lading] Exporter (Shipper) [clearance] [manifest] Export Shipping Line Export Liner Agent Export Forwarder [manifest] Importer (Consignee) Import Forwarder Import Liner Agent Import Shipping Line [ship_ [delivery_ [despatch_ [ship_ [eta] order] ins_act] notice [stowage_ request] [arrival_ [arrival_ notify] [manifest] notify] plan] [ship_ instruct] [bill_ lading] [load_ [delivery_ [manifest] [stowage_plan] instruct] [arrival_notify] order] [manifest] [ins_contr_req] [manifest] [load_list] [goods_ [pre_arrival] [trans_ [trans_ available] [ins_contract] notify] interest] [manifest] [stowage_plan] [bill_lading] [delivery_ Import Transporter Import Stevedore Export Stevedore Export Transporter Insurance order] import export

  7. Research Goal: Red Tape to relieve the bureaucracy of international trade through advanced electronic commerce technology (and artificial intelligence) * controls better * yet, more transparent (automatic) especially for small, medium size enterprises (SME's)

  8. to provide native language interfaces to trade scenarios and associated electronic documents * native alphabets (Cyrillic, Chinese) * native writing styles (Arabic, Chinese) Research Goal: Babel

  9. Context... our focus: A2A A2B B2B Adminisrations Business Consumers

  10. further potential market: small to medium size enterprises (SME's) by enabling entry into international markets, could potentially double or triple levels of international trade. Market size ... International trade per year (1995): $ 28,000,000,000,000 transaction costs: 7% = $ 1,960,000,000,000 UN estimates potential savings @ 25% = $ 490,000,000,000 • Compare to estimates for (consumer oriented) electronic commerce by year 2000: • $ 200,000,000,000 • Thus, potential for ITT is more than twice the size • of currently envisioned electronic commerce.

  11. World trade has doubled in the last 10 years... ...increased 16 fold in the 50 years Much of this is due to the considerable progress in reducing tariffs through successive GATT rounds of multilateral trade negotiations … But as those barriers have fallen, so the significance, and in some cases the incidence -- of trade procedural barriers has risen. Estimates of the potential global benefits from trade facilitation vary, but by any standards are significant: * $300,000,000,000 = total overhead costs of world trade * = 7-10% of transaction values * = 1% of world GDP, or 2% or world trade * $100,000,000,000 = estimated cost savings of IT for trade documents * $75,000,000,000 = estimated savings by trade procedure improvement [R. Crowhurst, SITPRO News, July 2000] Why does trade facilitation matter?

  12. Vision Plug and Play Electronic Trade Scenarios

  13. need for trade procedures: easy to install trustworthy, having adequate controls efficient, keep transaction costs minimal applies: international trading locally, where procedures are complex and trade relations dynamic, e.g. within ports Open Electronic Commerce doing business over digital networks, potentially among parties where no prior trading relationship exists

  14. the mutually agreed upon set of rules and procedures that governs the activities of each party involved in a kind of business transaction. *electronic form * generic, reusable * downloadable, installable from central libraries * flexible -- has parameters for adapting to specific situations Electronic Trade Scenarios

  15. business-to-business (& government) especially, international trade transactions use of artificial intelligence: -- pattern-matching (detect fraud potentials) -- goal-directed synthesis (of trade procedures) -- heuristic navigation (messenger model) Our focus ...

  16. UN/CEFACT Centre for the Facilitation of Procedures and Practices for Administration, Commerce and Transport "The worldwide facilitation of international transactions, through the simplification and harmonization of procedures and information flows" * Business Analysis Working Group (BAWG) * Codes Working Group (CDWG) * EDIFACT Working Group (EWG) * Legal Working Group (LWG) * International Trade Procedures Working Group (ITPWG) * Techniques and Methodologies Working Group (TMWG) International Collaboration

  17. 1980: Candid, predicate logic of contracts 1983: Candid, formal semantics 1984: performative business documents 1986: illocutionary logic & telecommunications 1988: bureaucracies as deontic systems 1988: electronic contracting 1990: documentary petri nets (Case/EDI) 1992: audit daemons 1994: procedure constraint grammars 1996: messenger model 1998: InterProcs (Java) History of research ...

  18. Scenario Design: InterProcs

  19. purpose: design and prototyping of distributed electronic trade scenarios unique perspective: an artificial intelligence approach to electronic commerce key advantage: symbolic reasoning, heuristic synthesis of trade rules, procedures About InterProcs ... • main InterProcs representations: • documentary petri nets (DPN's) • audit daemons • procedure constraint grammars (PCG's) • regimes, messengers

  20. Current developments Now ... Graphical design methodolgy & tools ... * UML diagrams * XML schema * DPN design Prototype execution ... * Viewer mode * Gaming mode * Network mode In progress... AI extensions... * Audit daemons * Procedure constraint grammars * Messenger model Production implementation... * component architectures Wishful...

  21. Design methodology UseCase Diagram (UML) Sequence Diagram (UML) Activity Diagram (UML) XML Schema (SOX) Joint Procedure (DPN) Role Procedures (DPN)

  22. 1. Viewer mode: single user view, simulate all roles together executed as applet 2. Gaming mode: multiple users each sees, executes one role only executed as applets EDI documents sent via server 3. Network mode: multiple users each downloads role model as java application EDI documents sent via Internet email (POP) Modes of prototype execution

  23. Use Case Diagram

  24. Sequence Diagram

  25. Activity Diagram

  26. Joint Procedure

  27. XML Schema (Class Diagram)

  28. Role Procedures

  29. Multi-Lingual(Italian, Dutch)

  30. Multi-lingual display of EDI docs

  31. Consignee Shipper Carrier Corres Bank Issue Bank Downloading Of Scenarios ... Global Scenario Repository

  32. Example Scenario • International • Documentary • Credits

  33. Documentary Credit Operations • Payment for the goods is made: not on actual delivery of goods, • but on presentation of stipulated documents such as: • a commercial invoice • an insurance certificate • a certificate of origin • a transport document (e.g., a bill of lading or an airway bill) • The seller receives payment by presenting the stipulated documents to a bank (the advising bank) that the buyer has instructed to make payment. • Uniform Customs and Practices for Documentary Credits (ICC, 1983)

  34. Principle of "strict compliance" Studies show that half of the documents presented to satisfy letters of credit contain discrepancies that delay -- even render void -- payment because the bank is not obligated to pay if the documents are unsatisfactory.

  35. 1. SalesContract Consignee (buyer) Shipper (seller) 14. Shipping Docs 6. Shipping Docs 11. Arrival Notice 15. Release Goods 5. Dispatch Goods 2. Credit Application 4. Credit Notification 12. Payment 13. Shipping Docs 7. Shipping Docs 8. Payment Carrier 3. Credit 9. Shipping Docs Corresponding Bank 10. Payment Issuing Bank Documentary Credit Overview

  36. ComponentArchitectures

  37. UPPER CASE: InterProcs -- Design, Prototyping lower case: how to integrate trade scenarios into local application systems?

  38. Scen 1: Role A Regime: Role A Scenario: Transaction #1 Scen 1: Role B Scen 1: Role A Scen 2: Role A Scen 2: Role A Scenario: Transaction #2 Scen N: Role A Scen 2: Role C ... Regime: Role B Scen N: Role A Scen 1: Role B Scenario: Transaction #N Scen N: Role B Scen N: Role B Scen N: Role C Scenario distribution to parties...

  39. A. link to EDI document definitions * e.g. XML/EDI Schemas * e.g. formal languages for business communication (FLBC's) B. link to internal systems * e.g. database interfaces * e.g. security * e.g. concurrency control * e.g. transaction management * etc. B. A. Role Scenarios Internal Systems XML/EDI Documents What else is needed?

  40. Goal: "write once, run anywhere" "A component is a reusable software building block: a pre-built piece of encapsulated application code that can be combined with other components and with handwritten code to rapidly produce a custom application ...[thus] customized business solutions can be assembled from a set of off-the-shelf business objects" Examples: * Microsoft Transaction Server (MTS) * JavaBeans * Enterprise JavaBeans from: Anne Tomas, "Enterprise JavaBeans -- Server Component Model for Java", by Patricia Seybold Group, www.psgroup.com, December, 1997. Component architectures ...

  41. Inter-Business Component Architectures: MTS Enterprise Java Beans • Document Representations: • FLBC • XML/EDI Schemas • EDI • Scenario Representations: • DPN’s (InterProcs) • UML (UN/TMWG) • Open-EDI (ISO SC32) • Off-the-shelf Business • Applications (internal) • Baan • SAP Custom-developed Business Applications (internal) How the pieces fit together ...

  42. FutureDirections

  43. consisting of: integrated transaction model role procedures processing rules EDI documents trade scenario models delivered as an working prototype operating on the Internet/Web our primary deliverable:

  44. enabling international, business-to-business commerce, among small/medium size enterprises as easily as domestic trade making red tape transparent this could be really big ...

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