I2's supply chain plans
A YEAR AGO when public exchanges and indirect procurement were the hot business-to-business technologies, supply-chain specialist i2 stuck to its guns. The Dallas-based e-business provider stayed with its strategy of building an e-business platform around supply-chain management.
Once a relatively niche application provider, i2 is in fast-growth mode -- fueled in part by acquisitions -- and finds itself taking on formidable competitors, such as SAP and Oracle. InfoWorld Executive Editor Martin LaMonica recently sat down with i2's CTO, Jim Mackay, to discuss how e-business technology addresses visibility and flexibility in supply-chain management.
InfoWorld: Why are i2 and other vendors all pursuing a soup-to-nuts e-business platform?
Mackay: One [reason] is that we're a growth-oriented company -- it's a growth model. So it was a logical decision to move into CRM [customer relationship management] as a next step.
If you look at the front end of the customer side of a [supply-chain] application, CRM is a logical feeding point, and it gives you visibility into your employee supply-chain planning solutions so that you can do a better job within your supply-chain planning.
Next comes the whole supplier side of things -- this is why we [acquired] Aspect. If you do a good job of providing supplier solutions that are integrated with your supply-chain solutions, [then] you get more visibility into your suppliers. And you can start to build solutions that are true collaborations.
By having an end-to-end solution, you can start to get more into the execution of [supply-chain management]. Think about a supply-chain execution solution that can react in real time to supplier signals or customer signals and be able to update its plans accordingly, and then be able to propagate those signals out of the [manufacturing] plan back up the chain of suppliers or service providers who are in this thing.
InfoWorld: With so many applications that are needed to do what you just described, what's the best technology approach, best-of-breed applications or a single platform?
Mackay: Although I agree with the platform concept, I completely buy in to best-of-breed. Best-of-breed needs to be available, but isn't necessarily the best solution. What you need to be able to do is to enable best-of-breed if [the customer] wants to be able to do best-of-breed.
InfoWorld: What about XML?
Mackay: XML has really helped in the sense that the hype around it has managed to give everybody something to galvanize around. People almost just assume that the technology is going to help. And they go, "Yes, yes. You got XML? Great stuff, man. I need that." So it's helped from that perspective.
And one of the important things about XML [is] if you look at a business process from order to cash, you've got stuff behind the firewall here and there. If you can [agree] on what goes across those firewalls, at least 70 percent [of it can be XML-based] and then letting the dynamics kick in for the other 30 percent, you're going to be able to have a dynamic business process.
InfoWorld: What do you mean by 'dynamic business process?'
Mackay: It's just like going to a marketplace and negotiating with somebody over melons: [It's] the dynamic aspects of the workflow that you need to put in place between a buyer and seller -- you need to be able to respect that [online]. And you can get a lot of those dynamics because XML allows you to fairly dynamically describe not only what it is you're looking for, but to be able to put some level of dynamics around the dialogue that you're going to have between the two.
InfoWorld: Do you use these processes to handle exceptions or for rules that you can build in?
Mackay: Yes. Or even to say, "I want to describe to you what my business process looks like so that you can understand it, and you can respond better to what it is that I'm trying to do." In other words, I'm going to give you visibility, for instance, into not only my end demand, but what's driving my end demand.
InfoWorld: What's the business advantage of building private exchanges around suppliers? How does that affect a company's manufacturing plans?
Mackay: I can modify my supply-chain model based on demand signals. I'm also getting real-time supply signals that I can choose to react to if I want to. In the old days, you'd pull on all this demand and you went chunk-a-chunk-a-chunk and you said, "Here's the plan." Now what you can do is pull demand in and you can say, "I think I can do this plan." Let me ask my suppliers in real time whether or not they can support this plan and react to the signals coming back.
InfoWorld: Why have public exchanges run into so much trouble?
Mackay: It comes back to asking, Where's the financial model for this thing? Is it going to survive? Just intermediating and strangling your suppliers in order to give the lowest price to your customers isn't going to work. [But] you can provide additional value as a public marketplace by putting together a whole portfolio of services. For instance, if you can take a public marketplace and say, "I know you're a buyer; I'm going to do your financial settlement; I'm going to give you insurance; I'm going to give you freight and logistics in an end-to-end package" -- then you've got something to buy for.
InfoWorld: What's next for i2 in terms of product development?
Mackay: We have a big push in the network space right now. I think that enabling some of our solutions through a business network is important, and we're putting big trust in what we call a Trade Matrix Network.
Obviously, in order to enable network solutions, there is a lot of network-oriented or Internet-oriented technology that we need to leverage in trying to solve on-ramping problems [through] either integration, or security, or authentication.