The bud of a great idea is often concealed within casual conversation at a bar. That's exactly how Edge Dynamics Inc. got its start.
The company, headquartered in Redwood City, CA, with an office in Philadelphia, was founded in 2002 by John McGrory and Henry Olson, both of whom were working at the time at a company called RedKlay, an enterprise software and service firm delivering e-business applications to manufacturing companies. As the two wondered about the future of B2B, it became clear that there was a gray area in e-commerce that is often caused by excess inventory in the channel and unexpected fluctuations in order patterns.
"The genesis of the company was around thinking about and investing in the next generation of B2B commerce," says John McGrory, president and CEO. "We thought a lot about whether companies are equipped for the next stage. The initial stage is getting the infrastructure and some degree of basic automation. But what about the future? Are companies equipped to get there? Our hypothesis was that they are not."
What manufacturers lacked was intelligent automation of commerce transactions. "If you can process transactions coming into the enterprise before they are [moved into] traditional systems such as ERP, and apply intelligence to them in-flight and even take corrective action, you can substantially improve the overall business performance," McGrory says.
After investigating a number of vertical industries, the newly established Edge Dynamics created a focus around life sciences. It is an industry, McGrory says, that has a lot of problems related to channel inventory management, adherence to contracts with trading partners and compliance with government regulations.
The company spent a lot of time early on designing a modular application stack. When the product, Edge 2.0, was released last December, it delivered a scalable data model for transactions, real-time visibility, a robust transaction processing engine with in-line analytics, domain-specific applications including business policy logic and computational algorithms, and a console for exception review as well as reports to track events, patterns and trends.
In a nutshell, the live transaction order stream coming through EDI, or even a Web-services B2B network, is captured en route, analyzed for exceptions against channel agreements and forecast-to-order discrepancies are detected. The transaction is even documented for continuous channel partner scorecarding.
According to company officials, about a dozen life science companies, mostly pharmaceuticals, use Edge 2.0. It processes and optimizes 100% of customer orders and over 25% of the wholesale orders in the entire U.S. pharmaceutical channel. "The overall U.S. pharmaceutical market is a $200 billion market, and more than a quarter of that is processed by our product," says McGrory.
Industry observers say a way to automate and analyze B2B commerce will take a significant amount of cost out of the supply chain as well as maintain price integrity of products. "By using advanced technology to analyze order and transaction flow data, manufacturers gain the ability to reward superior wholesaler performance and penalize performance below requirements," says Adam J. Fein, president of healthcare consulting firm Pembroke Consulting (Philadelphia).
Edge Dynamics will continue to expand within the life sciences industry and eventually branch out to other verticals, with likely targets being consumer goods, technology products and other manufacturing sectors. In five years, "I see us as being a large, profitable, multi-industry leading software company," McGrory says.
That's probably a safe prediction given the fact that "they provide a solution with a real-world business impact, which is an important factor going forward in their continued growth," says Fein.