By Gisle Åsberg - Byggstand

Summary

• Benefits of digitalization: Digitalization of order confirmations provides better overview of deliveries, automatic price matching, and increased traceability and verifiability, which simplifies and streamlines logistics in construction and civil engineering projects.
• Standardization and efficiency: Peppol Ordering Agreement standardizes the format for order confirmations, enabling automated validation, feedback on errors, and simplified onboarding of new suppliers, in contrast to traditional EDI solutions that are often costly and inflexible. 

• Implementation in practice: Veidekke in Norway and NCC in Sweden are among the first to adopt the Peppol Ordering Agreement, which has simplified testing processes and requirements for new suppliers, and reduced the need for extensive testing phases and implementation costs.

Background

For over 20 years, the construction and civil engineering industry has been working to digitalize the flow of trading documents. Although significant progress has been made in communication between trade partners and suppliers, statistics from Byggstand indicate that the implementation of digital order processes has not advanced as much as many previously believed.

The Peppol BIS Ordering Agreement has been developed to address a specific challenge: what to do when a digital order does not exist. Many large contractors in Norway and Sweden have not implemented systems for digital orders, so order confirmations are often sent as PDFs via email. This creates difficulties for traceability, delivery control, and invoice approval.

The Peppol Ordering Agreement functions as the digital contract for transactions, providing a structured and standardized solution for companies that have not yet implemented digital order processes.

Benefits of digitalizing order confirmations:

The contractors, such as larger companies in Norway and Sweden, are currently unable to send digital orders due to the lack of business processes supported by systems. Several attempts have been made to implement this, but adopting a large procurement system is complex and costly, and its use by on-site workers is very limited. Instead, site managers primarily use Excel for project follow-up, as it appears to be the most efficient option for them.

To simplify and streamline logistics in construction projects, it is important to have control over procurement and deliveries. Today, order confirmations are often received by a third party without those who actually ordered having insight into the process. This can lead to:

• Uncertainties regarding who placed the order and whether the goods have actually been received.
• Lack of information about the expected delivery date.
• Pricing errors that are not detected until the invoice is received.

By digitalizing order confirmations, these challenges can be addressed in a more efficient way:

• Better overview of deliveries – A digital delivery calendar can be created so that construction sites know what is coming and when.
• Automatic price matching – The system can verify that prices match the agreements before the invoice is sent.
• Traceability and verifiability – All involved parties have access to the same data, reducing the risk of errors and misunderstandings.

Standardization increases efficiency

Traditionally, digitalization of order confirmations has been handled through one-to-one EDI integrations between trading partners. This involves each buyer setting specific requirements for their suppliers, often with the help of an EDI VAN provider that creates mappings between the sender's and receiver's formats.

This approach has several disadvantages:

• High costs – Each new integration requires extensive testing and development.
• Lack of validation – Rules for the content of an order confirmation are rarely implemented, resulting in significant variation in data quality.
• Limited flexibility – Every time a supplier updates their system, a new testing phase must be conducted.
• Responsibility allocation – Without validation of the format being sent and received, it becomes the recipient's responsibility to determine whether the supplier has actually sent information that meets the specified requirements. 

With Peppol Ordering Agreement, this format is standardized, which provides:

• Automated validation – The format includes built-in validation requirements that ensure all necessary data are included.
• Feedback on errors – If the document does not arrive or contains errors, the process is halted, and a message is sent back to the sender indicating what is wrong.
• Simplified onboarding of new suppliers – A common format allows new trading partners to connect quickly without extensive testing phases.

The Peppol standard is continuously developed by OpenPeppol, a European organization with broad international participation. This ensures that the solution remains relevant, up-to-date, and aligned with modern technological requirements.

Peppol vs. Traditional EDI 

The Peppol BIS Ordering Agreement simplifies access to a broad network of trading partners by providing a single integration. Unlike traditional EDI, which often requires separate customizations for each trading partner, Peppol enables process standardization, reducing implementation costs, maintenance, and complexity.

By building on a global standard, Peppol ensures high interoperability across sectors and national borders. Traditional EDI solutions, on the other hand, often require extensive customization to meet the requirements of each partner, which can make systems less flexible and more resource-intensive.

Another important aspect is maintenance and updates. Peppol is continuously developed by OpenPeppol, an organization working to ensure that the solution remains up-to-date and aligned with modern requirements. Traditional EDI solutions, however, are often dependent on vendor-specific updates or internal development processes, which can make it more challenging to keep systems current.

In addition, Peppol provides a scalable solution that can be easily used by various trading partners without the need for individual agreements or extensive adaptations. This is in stark contrast to EDI, where new partners often require their own integration processes, potentially creating extra work and delays in implementation.

Implementation today

Some of the first to have adopted Peppol Ordering Agreement in practice are Veidekke in Norway and NCC in Sweden. 

For Veidekke, one of the main reasons for implementing this format was the desire to simplify the testing process and requirements for new suppliers. 

Veidekke has across the group 22,000 suppliers. Managing one-to-one EDI setups with supplier meetings, requirements, testing, and follow-up would be an impossible task resource-wise.  

By standardizing the order confirmation, those who already use this format can immediately start sending documents without the need for extensive testing phases or implementation costs.