Hosted supply chains challenge B-to-B exchanges
Hosted supply-chain solutions are giving business-to-business trading exchanges a new challenge by offering suppliers an environment that for the moment may have more appeal than the buyer-meets-seller services of exchanges, according to analysts and vendors.
Recent events have underscored the often industry-specific and compelling role that hosted supply-chain ASPs (application service providers) could play.
Late last month, Bidcom Inc. and Cephren Inc. merged to create Citadon, a San Francisco-based ASP of collaboration and commerce services for the buyers and sellers who join forces on construction projects.
In a similar vein, Aqueduct Inc., formerly BuyNow, in Aliso Viejo, Calif., which provides outsourced e-commerce services for retail hardware, software, and consumer electronics manufacturers, announced last week that it has completed a second round of venture capital funding. Aqueduct aims to streamline the distribution and communication channels between retail suppliers and its customers using a platform with modules for online store planning, design, and management; a hosting infrastructure; order processing; payment processing; and risk management, among other services.
In response to changing conditions, Commerx, after the resignations of its co-founders and the naming of an interim CEO late last month, has solidified its new role as an ASP that offers an integrated suite of online e-procurement and collaborative supply-chain applications.
The company is no longer a creator of public e-marketplaces, Commerx officials said in a prepared statement. The company withdrew its IPO and cut staff in response to Wall Street's shrinking support of b-to-b and related e-commerce efforts, officials added. The Commerx PlasticsNet marketplace that it fostered will become an informational site, said a spokeswoman for the Chicago-based company.
Established players such as i2 Technologies and Manugistics have also begun to offer hosted options.
The backers of these hosted supply-chain options see themselves as providing suppliers with strong branding and business-to-business relationships -- two major advantages over what they see as the flawed and limited meet-and-transact services of exchanges.
"We think the exchanges are kind of the antithesis of what we're really building our business on," said Corey Hutchison, CEO of Aqueduct. "[But] the exchanges certainly have to be something that we offer our customers a chance to hook into." Those extensions, however, will not be a major driver for Aqueduct. "I look at exchanges the way I look at e-tailers, as just one additional channel that customers might want to be involved in," Hutchison said.
Some hosted supply-chain providers such as Citadon also tout their abilities to provide complicated design, collaboration, and procurement services in addition to complex workflow management in a secure environment. Robert Majteles, chairman of Citadon, said that these value-added extras also take the waste out of engineering, procurement, and construction industry processes.
The hosted supply chain is "a competitive challenge" to the trading exchange option, said Randy Covill, an analyst at AMR Research Inc., in Boston. "The pressure is really on trading exchanges to do things that go beyond the Golden Rolodex," Covill said.
To catch up to and surpass their private counterparts, the public exchanges are going to have to offer views about inventory availability, pricing information, collaborative forecasting, planning and product design, and business-to-business transaction monitoring, Covill continued.