Smart Trade: Cisco Is Helping Revolutionize Legacy Trade Practices Around the World
Trade (also known as “commerce,” “financial transaction,” and “barter,” among other terms) involves the transfer of ownership for goods and services from one person or entity to another by receiving something in exchange from the buyer. A network that allows trade is called a market.
Trade originated with the start of communication in prehistoric times. Trading was the main facility of prehistoric people, who bartered goods and services long before the introduction of modern-day currency. Peter Watson traces the history of long-distance commerce to 150,000 years ago (source: The Mediterranean in History, David Abulafia, Getty Publications, 2011).
Practices in modern cross-boundary/country trade have remained relatively static for the past 150 years. The only widespread implementation of technology to facilitate trade has been the advent of phone, fax, and (since 2002) EDI – Electronic Data Interchange (source: “Integration of Electronic Data Interchange (EDI): A Review,” Gengeswari, K. and Abu Bakar Abdul Hamid). More recently, widespread use of email has augmented phone- and fax-based communications.
As global economies have matured, key “centers of excellence” have emerged worldwide. For example, China is now recognized as the “shop floor of the world,” while India has become a hub for software development. Routinely, companies around the world outsource parts of their operations to reduce costs and cycle times, creating a competitive advantage. With increased outsourcing however, value chains (prototype, design, order, sourcing, manufacturing, delivery, payments, and after-sales support) continue to become increasingly complex, with a global footprint. The World Trade Organization (WTO) estimated the total value of global exports at $28 trillion in 2011 (source: WTO release, “World Trade 2011”).
“Smart Trade” Initiative at Cisco
Cisco—in partnership with EPC Global, three of the world’s largest retailers and its largest freight shipper, three ports of entry in two countries, two service providers, four major universities, and with backing from governments and central banks—created a consortium to study how global value chain management processes could be enabled by technology—potentially including the Internet of Everything—to increase innovation and speed to market, reduce costs/cycle time, cut waste, and increase trade. A secondary goal was to create transparency in the value chain—from buyers to suppliers and suppliers’ suppliers—to provide end-to-end visibility into operations, at any stage of the process.
The consortium has been working for the past year and a half to develop the software needed to integrate ordering processes, payment systems, transportation systems, and port clearance processes, using several of the components of Cisco’s Unified Communications (UC) suite. The project is on track for pilot implementations in two trading countries, two associated ports, three customers, one shipping line, one bank, and one service provider by the year end.
Potential Implications for Cisco
If successful, “Smart Trade” has the potential to revolutionize global commerce. It also has significant implications for Cisco as various delivery mechanisms—such as software as a service (SaaS) and other cloud services—become more widespread.
Already, word is getting around — Cisco has been approached by companies in four additional countries to explore their participation in the pilot installation. In addition, “Smart Trade” has the potential to seamlessly augment other Cisco Services “Platform” initiatives (such as Smart+Connected Communities), as depicted in the diagram below: