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by Erin Callaway, Contributing Editor Posted on Friday, November 03, 2006 3:10:08 PM   | Abstract: | i2 Technologies is facing off with its biggest competitors to create an all-inclusive e-biz platform by merging supply chain management tools with software for design, procurement, and other multicompany functions. The biggest challenge may be convincing manufacturers that an über-SCM e-business solution makes sense. |
 In 1997, few manufacturers could have guessed that just four years later application vendors would be in a big scuffle over supply chain management (SCM). Supply chain was surely important. At the very least, sourcing, buying, and managing the flow of materials in and out of the plant was a multimillion dollar headache. Forward-thinking companies considered SCM mission-critical. But most manufacturers weren't looking for SCM software. They were consumed with implementing enterprise resource planning (ERP). They were already bracing for Y2K. They were just too busy making stuff. And, the pace of business was slower, so there was less pressure for the supply chain to move at lightning speed. As a result, the market for SCM tools was a veritable pipsqueak, amounting to barely $2 billion-and the prospects for getting any bigger didn't look good. Fast-forward to March 2001. The total market for supply chain planning (SCP) and execution (SCE) software is still relatively small-about $8 billion, according to AMR Research Inc. (Boston, MA). Fewer than 20% of large manufacturers and less than 15% of small and mid-size manufacturers use even basic packaged planning tools, according to AMR. But SCM has become the focal point of an all-out war between enterprise application providers to create the definitive, de facto e-business technology platform. Managing interactions between supply chain partners, the vendors say, is finally what e-business is all about. And they don't mean just supply chain planning. They mean all the processes that take place between supply chain partners, including many that never used to be considered part of supply chain management such as designing product, sourcing parts and materials, negotiating contracts, selling, and buying. Yes, planning is in there, too, but that's just one piece of the great big SCM pie. But technology providers like Oracle Corp. (Redwood Shores, CA), partners SAP America (Walldorf, Germany) and Commerce One Inc. (Pleasanton, CA), and leading SCP software vendor i2 Technologies Inc. (Irving, TX) have their eyes on something much bigger than selling one-off planning systems to individual companies. Each of them wants to become the leading provider of what Ms. Petere Miner, director of logistics for Converge Inc. (Cupertino, CA), the consortium-based high-tech marketplace, calls an "industry operating system." Ã la Microsoft, they are each hoping to corner the market for a core technology platform through which all supply chain transactions and interactions in a given supply chain will flow. [Click to continue] |