EDI in the Procurement Process BOSCH EDI in the Procurement Process

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1 BOSCH EDI in the Procurement Process Page 1 of 15

2 Content 1. What is EDI EDI between BOSCH and the supplier How does EDI "work" with BOSCH? Classic EDI in procurement and logistics Transmission processes WebEDI WebEDI- light Technical requirements At BOSCH On the supplier side EDI contacts at BOSCH Index of abbreviations Page 2 of 15

3 1. What is EDI? The electronic exchange of data is extremely important for BOSCH and is a major criterion for the selection of suppliers. The increasing internationalization of commercial processes calls for the swift, standardized handling of business transactions. EDI is thus a modern tool for speeding up internal and external processes and making them more transparent. EDI stands for Electronic Data Interchange. This entails the electronic exchange of structured data between data processing application systems of two or more business partners. The electronic exchange of business data facilitates swift, error-free exchange of information between partners. This occurs without any time lag 24 hours per day, 7 days per week. Different message formats and communication methods have been standardized for this purpose. They facilitate the worldwide exchange of data across all sectors of industry. The benefits of the automatic exchange of commercial, technical and other data are as follows: - Avoidance of cost-intensive data entry activities which are prone to error - Automated exchange of data with standardized formats - Communication between computer applications - Faster flow of information (anytime, worldwide) - Improved relationships between business partners - Improved planning through improved transparency in the supply chain - Reduction in costs: EDI transaction costs are one third lower than paper-based transaction costs For the purpose of coordinating EDI in the procurement process two projects were launched in Central Logistics at BOSCH that take account of the needs of all BOSCH factories, so that any duplication of effort is avoided when introducing and commissioning EDI, either on the supplier side or at BOSCH. This is where solutions are developed that are suitable for roll-out and that can therefore be implemented quickly. This mainly involves processes for the procurement of raw materials and indirect materials. Page 3 of 15

4 2. EDI between BOSCH and the supplier BOSCH identified the aim of transmitting procurement, logistics and accounting processes to and from suppliers by electronic means and thus of introducing standardized processes. These processes are permanently optimized and replaced with new standards. The consistent flow of information between BOSCH and its partners is of key importance because not only are suppliers integrated in the BOSCH EDI process, but also a number of other partners too (e.g., logistics service providers). The following is an overview of the most frequently exchanged EDI messages between BOSCH and its suppliers. BOSCH -> SUPPLIER: DELFOR ORDERS ORDCHG SBI INVRPT_VMI DELJIT INVRPT Delivery forecast schedules Individual orders Order changes Credit advice (consignment) Stock, Movements, VMI (Vendor Managed Inventory) KANBAN Stock movement (consignment) SUPPLIER-> BOSCH: DESADV ORDRSP DELFORP INVOIC Advanced shipping notice (ASN) Order confirmation Scheduled deliveries, VMI (Vendor Managed Inventory) Invoices Page 4 of 15

5 BOSCH <--> SUPPLYON <--> SUPPLIER: VMI DELFOR DESADV ORDERS ORDCHG ORDRSP INVOIC DELFORP DELJIT Vendor Managed Inventory (VMI) Gross demand VMI Inventory VMI ASN Delivery forecast schedules Advanced shipping notice (ASN) Individual orders Order changes Order confirmation Credit advice/ invoices Planned deliveries KANBAN We use the ODETTE global EDIFACT format for new EDI connections. ODETTE (global) EDIFACT messages (mandatory for new EDI connections) Delivery forecast schedule Advanced Shipping Notification (ASN) Credit advice Planned delivery Individual order Order change Order confirmation KANBAN delivery schedule Collective KANBAN Stock report DELFOR D04A DESADV D07A INVOIC D07A (VDA4938T2) DELFOR D04A ORDERS D05B.V5R1 ORDCHG D05B.V5R1 ORDRSP D05B.V5R1 DELJIT D04B DELJIT D04B INVRPT D13A Page 5 of 15

6 In addition, the following formats can also be used for new connections if a supplier already has an EDI connection to BOSCH and a changeover to the new formats is not mandatory. EDIFACT Stock report VMI Outbound (IMO_EDIFACT) Planned delivery Transport/ delivery order Shipping and collective load message Multimodal status report INVRPT D97A DELFOR D98B (SupplyOn Guideline) DELFORP D97A (SupplyOn Guideline) IFTMIN D07A IFCSUM D07A IFTSTA D07A Information on the WWW: Page 6 of 15

7 3. How does EDI "work" with BOSCH? The cross-industry standardization of EDI makes it possible for the supplier to exchange data with other customers in the same way as with BOSCH without requiring different EDI software. In other words, they can also use this process with their other customers and suppliers. In principle, BOSCH differentiates between 2 ways to practice EDI: Classic EDI and WebEDI. In classic EDI different formats and processes are used for exchanging business data Classic EDI in procurement and logistics We understand classic EDI to mean the automatic, electronic exchange of data between computer systems via networks. Data originating in the system of the sender company is sent to an EDI converter. In short, in classic EDI the data is exchanged directly between the application systems without manual intervention. The send and receive processes run in the background without the administrator noticing them. EDI converters are actually translation programs. They translate the a company's proprietary (internal) data structures and formats into standardized data formats, such as EDIFACT, and vice versa. EDI converters have a sophisticated set of rules in the form of mappings, according to which the data can be converted without manual intervention. In some cases, partner profiles exist in addition to the mappings and contain specific regulations in relation to adaptation to particular communication partners. The EDI converters outputs an EDIstandardized file on the sender side. This is transmitted to the recipient via the network with the help of the associated communication software. The recipient converts the EDI-standardized file into the data formats required for further internal processing with the help of an EDI converter and corresponding mappings and partner profiles. Page 7 of 15

8 A variety of standards have become established for EDI. EDIFACT is the most important EDI standard. EDIFACT is increasingly replacing national and industry-specific EDI standards. In classic EDI different EDI processes and formats are used for exchanging commercial data. The industry-specific standardization of EDI makes it possible to exchange data with partners without having to use additional EDI software. This means that data can be exchanged both with BOSCH and with other suppliers and customers. *BBM = BOSCH Business sector Mobility Solutions Page 8 of 15

9 3.2. Transmission processes BOSCH supports the following transmission process to enable EDI to be used with as many suppliers as possible. Point-to-Point EDI has been used by many businesses for several years. The P-t-P process enables partners' computers to communicate with one another. The sender bears any transmission costs that may arise. Point-to-Point-EDI offers a great deal of control and security, particularly for very large organizations. The following protocols can be used within the Point to Point process: OFTP1 AS2 OFTP2 OFTP1 - the ODETTE File Transfer Protocol (OFTP) is a network protocol developed under the aegis of the ODETTE International company for direct electronic data transmission between two communication partners. Version 1 of the protocol satisfied recommendation 4914/2 of the VDA, the professional association of the German automotive industry. Most currently active OFTP1 connections are implemented with the help of ISDN as a communication channel. OFTP1 is no longer available for new connections. -> In 2017, existing OFTP1 connections will be switched to OFTP2 or AS2. AS2 - is one of the most popular processes for the safe and reliable transmission of data via the Internet. This process basically involves two computers, a client and a server, which connect directly via the Internet. AS2 produces an EDI envelope (like a letter envelope) for a message, which will then be sent securely via the Internet using digital certificates and encryption. Communication process: AS2 specifies how connections are made and messages are validated, sent and confirmed. It creates an envelope for a message, which is then saved and sent via the Internet. Page 9 of 15

10 Authorship (verified message) is assured by means of digital signatures and data security is ensured through encryption. The sender receives a digital receipt from the AS2 protocol in which the AS language is indicated as a Message Disposition Notification (MDN) and which the sender can use to verify timely delivery. OFTP2 - is tailored to the specific communication needs of the automotive industry and its interest groups and is the most frequently used protocol for the exchange of business-critical automotive data via the public Internet. It allows data to be transmitted safely and reliably between organizations that use a wide range of different communication software systems. OFTP2 ensures that confidential and sensitive information is transmitted quickly and with absolute security. The OFTP2 specifications (recognized by the Internet Engineering Task Force as RFC5024) were developed by the ODETTE OFTP2 expert group and are constantly updated. The expert group consists of telecommunication experts, well-known automobile companies and technology service providers. OFTP2 and AS2 are the transmission protocols favored by BOSCH WebEDI Companies with a low transaction volume often find that it is not worthwhile acquiring an EDI infrastructure. The development of the Internet is opening up new opportunities and it is now also possible to use EDI to connect communication partners for whom classic EDI was unsuitable. WebEDI is based on the World Wide Web (WWW) Internet service. WebEDI allows data and standardized processes to be transmitted via the Internet ( BOSCH is working on this process with provider SupplyOn. The supplier is provided with web-based forms that it can use to view, record and send EDI messages. The supplier is guided through the Web application and simply needs to enter the changeable data. Page 10 of 15

11 Data can be downloaded from the Web application and uploaded to the same application. This facilitates semi-automatic integration in the company's own systems. The Web application is available in a variety of languages. WebEDI is the ideal solution for small to medium-size enterprises. Typical business processes, such as delivery forecast schedules, delivery advice, stock movements and credit notes can be displayed and exchanged. There is no need for a fax or . Companies can conclude a WebEDI contract with SupplyOn AG. In order to use SupplyOn WebEDI, the supplier must register and pay a small usage fee. It can then use the WebEDI applications with all BOSCH factories worldwide. *BBM = BOSCH Business sector Mobility Solutions Page 11 of 15

12 3.4. WebEDI- light There is also a "simplified" form of WebEDI for suppliers. BOSCH and SupplyOn offer a service that enables suppliers to receive and confirm WebEDI messages. Depending on the type of business processes, the supplier can send ASN notices or invoices to the customer, BOSCH. This requires that the supplier should have access to an address at platform provider SupplyOn. After an EDI message has been sent from a BOSCH factory, the supplier receives an from SupplyOn. This contains a link. The supplier activates the link. After a one-off authentication procedure, it will see the EDI message sent by its customer in WebEDI format (e.g., a customer order). It can confirm this message and return an invoice or, if required, a delivery and transport advice message from the WebEDI platform to its customer. The sue of the SupplyOn Web front-end is restricted for the supplier because it is not registered with SupplyOn using the onboarding process and thus has no contract with SupplyOn. The advantage for the supplier: it can participate in the BOSCH EDI procedure for the most important standard business processes without incurring external costs. 4. Technical requirements One of the basic requirements for electronic data exchange with business partners is the consistent use of uniform standards and processes. Because in practice, a uniform EDI rule book still does not exist, it is particularly important to agree on the standards to be used before commencing EDI communication and to adhere strictly to these agreements At BOSCH BOSCH uses a central EDI system in order to consolidate EDI activities with suppliers and to establish a uniform platform for data dispatch and receipt. The EDI system receives data from the various BOSCH application systems, converts it into the partner's target format and sends it. Conversely, the EDI system receives data from the partner, converts it to the BOSCH in-house format and forwards it to the relevant BOSCH application system. These activities are largely managed in an automated round-the-clock operation. Page 12 of 15

13 4.2. On the supplier side Technical requirements in classic EDI: The supplier required EDI software (receiver and sender software) that supports internet-based communication protocols OFTP2 and AS2. In addition, for the purposes of automated further processing of the incoming message, an integrated application system should be available, as the full potential of EDI can only be exploited through the fully automated processing of electronic orders. Appropriate interfaces must be available for importing the messages into the in-house system. Ideally only one system should be used that links various applications together (ERP system). This can be used to enable end-to-end electronic processing. As well as technical equipment, employees also play a key role in the introduction, operation and maintenance of the systems. Alternatively, any EDI service provider can provide the supplier with the classic EDI connection. It is up to the supplier to arrange this. For BOSCH it makes no difference whether the supplier is connected directly or via an EDI service provider with classic EDI. However, a connection via external service providers gives rise to additional costs. Technical requirements for WebEDI SupplyOn: The supplier requires a PC with Internet connection and a current Internet browser. No special software is needed, but instead a web application provided by SupplyOn is called up. An EDI agreement is concluded between the partners in WebEDI too. Accordingly, the receipt and dispatch of paper/fax/ communications will be discontinued for the agreed transaction type. Page 13 of 15

14 5. EDI contacts at BOSCH The EDI procurement group in central BOSCH IT (CI) handles the new EDI connection/configurations for internal and external suppliers and other partners involved in the EDI process (logistics service providers) with BOSCH. We implement and test the exchange of EDI messages, develop roll-out-ready solutions and advise the participating EDI partners. We can provide advice on changing configurations from WebEDI to classic EDI and vice versa. Contact: For suppliers who do not have a previous EDI link with BOSCH it is necessary to conclude an EDI contract so as to exchange EDI messages with BOSCH. If a supplier is interested in exchanging EDI messages, it should contact its BOSCH contact factory. This will coordinate the process up to the point when the EDI contract is signed. Page 14 of 15

15 6. Index of abbreviations AS2 Applicability Statement 2 ASN Advance Shipping Notification BBM BOSCH Business Sector Mobility Solutions DELFOR Delivery Forecast DELFORP Planned Delivery DELJIT Delivery Just in Time DESADV Dispatch Advice EDI Electronic Data Interchange EDIFACT Electronic Data Interchange for Administration, Commerce and Transport EDIMANLIF/ Name of the BOSCH EDI system for procurement processes TSIM-LIF ERP Enterprise Resource Planning IDOC Intermediate Document INVOIC Invoice INVRPT Inventory Report MDN Message Disposition Notification OFTP Odette File Transfer Protocol ORDCHG Orders Change ORDRSP Orders Response SBI Self Billing Invoice VAN Value-Added Network VDA Professional association of the German automotive industry VMI Vendor Managed Inventory Page 15 of 15