Established supply-chain vendors are upgrading existing products with Web capabilities and extending their sales efforts to midsize companies, while new competitors are offering their own products and services. Last week, Hewlett-Packard struck a deal with i2 Technologies Inc., the leading supply-chain management vendor, to create a supply-chain Web portal for electronics companies. J.D. Edwards & Co. unveiled plans to integrate its Internet supply-chain software, called xtra@, with IBM's servers, networking, and security products. And enterprise resource planning vendor Lawson Software Inc. entered into the supply-chain market via a development and marketing pact with Prescient Systems.

Earlier this month, Logility Inc. added collaboration capabilities to its supply-chain package, making it possible for businesses to create online communities with partners. Logility also plans to offer its applications as a hosted service. And Manugistics Inc. revealed plans to upgrade its business-planning and collaboration tools to help companies that do business on the Web personalize ordering, build to order, and speed delivery.

As more companies buy and sell online, they face increased pressure to compete on price and service because their customers have access to more information and choices. Analysts say that will drive demand for technology that lets companies configure products to order, track orders, and respond rapidly to market changes. "Supply-chain management is having a 'relevance revival' with the advent of E-commerce," says Joshua Greenbaum, an analyst with Enterprise Applications Consulting.

Much of the activity involves software and services for creating online communities. Ingersoll Rand in Charlotte, N.C., is using component-management software from Aspect Development Inc.-one of many specialized supply-chain applications-to help support an online community for its suppliers. The industrial goods manufacturer is increasingly using advanced electronics components in its automobile parts and other goods. "We want to be a 'bright-idea' factory, where ideas can be taken to full production in record time," says Jim Bacchus, Ingersoll Rand's director of business processes. "That can only be achieved if we have next-generation supply chains."

Lawson customer American Floral Services has 300 retail trading partners, including wholesalers and other suppliers to the retail floral market. The company is creating its own supply-chain communities because, until recently, such offerings weren't available from supply-chain vendors, says Terry Byers, American Floral's CIO. The need for such communities is "undeniable," says Byers.

New supply-chain products and services are designed to better meet the needs of midsize companies and those in different industries. For example, HP and i2's portal is aimed at the electronics industry, the largest user of supply-chain software (see chart). It's scheduled to be online early next year and is aimed primarily at midsize companies that may have shied from supply-chain systems in the past because of high installation and maintenance costs.

Electronics manufacturers, distributors, and suppliers will pay subscription fees to access the HP-i2 portal, where they can exchange information and execute purchase orders and other transactions. The portal is based on HP servers and i2's Rhythm supply-chain planning software and Rhythm Exchange Services, software introduced last month for building trading communities.

J.D. Edwards will offer its integrated supply-chain package by October. Customers of J.D. Edwards' ERP applications will be able to use the system to share data between those apps and xtra@. For example, a company could link order-forecasting data from its supply-chain applications with financial data from its ERP applications. J.D. Edwards acquired xtra@ last year along with supply-chain vendor Numetrix Ltd.

Also new are hybrid applications that combine supply-chain functions with the capability to buy and track nonproduction goods. Supply-chain and procurement apps generally deal with different goods and require approvals from different parts of a business (see related story, p. 20). This week, Oracle will introduce Oracle Exchange, a hosted application that manages both processes.

Honeywell Inc. is testing Oracle Exchange, which lets suppliers and buyers, regardless of their existing software, connect to a virtual marketplace via the Extensible Markup Language. The service, due next quarter, will provide tools to upload and access online catalogs and manage bidding from multiple vendors.

Deb Stanton, manager of global systems for corporate supply management at Honeywell Inc. in Minneapolis, says the service could help Honeywell control product sourcing, replacing legacy applications that now handle the function. "What the environment creates is a very managed supply base," she says. "It puts boundaries around buying." Honeywell is testing Oracle Exchange to bolster an internal supply-chain and procurement service called the Honeywell Mall.

Supply-Chain Community
Aspect, a vendor with roots in the procurement software market, is working to form a procurement and supply-chain community, a strategy the company is expected to outline next week. Aspect officials wouldn't discuss details, but analysts say the service will include a Web-hosted version of Aspect's products, and a portal or exchange that will give businesses a place to buy goods.

Aspect has experience with such a model. Its software supports the ChipCenter.com exchange used by high-tech manufacturers. (CMP Media, the publisher of InformationWeek, is an investor in ChipCenter.com.) Chris Mortenson, a financial analyst at investment bank Deutche Bank Alex. Brown, says the new exchange will be broader. Such exchanges, he says, can make it easier for companies not only to buy goods, but to share information about demand and production.

For vendors, the prospects of growth in the supply-chain market are high. Last week, i2 reported revenue of $131 million for the second quarter, a 57% increase over the same period a year ago. The company's stock, however, tumbled 24% when some analysts realized that i2's recent acquisition of Smart Technologies would have a greater impact on earnings than anticipated.

Despite the great promise of supply-chain management software, IT managers say the applications can be complex to deploy and manage. "i2 is notoriously complex and is harder to install than they tell you," says Craig Hull, senior VP of supply chain at Oxidental Chemical Corp., a chemicals manufacturer in Dallas. Hull says its rollout of i2 applications, which began two years ago, has been tougher than expected. "The bottom line is that it's worth it, but they have to learn to make it easier and faster to implement."