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February 14, 2000

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Managing The Supply Chain: Customers Come First
Vendors respond to E-business shift with online marketplace tools

By Elisabeth Goodridge

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One Vendor, One Solution

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s they place new emphasis on the customer, companies are reassessing their supply-chain processes. For companies to succeed, today's supply chains must be nimble enough to respond to customer demands, and supply-chain management vendors are reinventing themselves to meet these new needs.

i2 Technologies
The leading supply-chain management vendor, i2 Technologies Inc., experienced tremendous growth in 1999, exceeding expectations. Profits increased 134%, from $12.8 million in 1998 to $30.1 million in 1999; for the fourth quarter, profits rose to $17.1 million from $4.1 million a year ago. Annual revenue rose 55% from the previous year to $571.1 million.

The company recently unveiled a suite of E-business products for supply-chain management. The suite, called Business Process Optimization, integrates software from multiple enterprise resource planning vendors with front-end Web applications. In October, i2 introduced TradeMatrix. com, an online marketplace that offers collaboration, procurement, trading, order fulfillment, logistics, buying, and selling capabilities. General Motors Corp. said in January that it will incorporate i2's Rhythm and TradeMatrix technologies for GMTradeXchange, an online global marketplace for its 30,000 suppliers.

As a result of its E-business push, says Kash Rengan, a research analyst at BancBoston Robert Stephens, "i2's position has never been stronger."

Photo by Steve McAllister However, i2 has no intentions of abandoning its core business. "We'll continue to see the majority of revenue flow from our supply-chain solutions and licensing fees," says VP of marketing Jim Wilson.

Manugistics Group
Manugistics Group Inc. has struggled the past two years while it rapidly diversified and revamped its products. Acquisitions resulted in a net loss in 1998, and Manugistics fared no better last year. Citing poor sales, the company experienced a massive restructuring, laying off 30% of its workforce, closing newly opened locations, and replacing the CEO and other top executives.

Manugistics saw some improvement in third-quarter earnings, released in November. Though revenue was down to $35.8 million, compared with $43 million the previous year, the net loss was narrowed to $4.8 million from $10.4 million. Investors also reacted favorably to the report of a 35% increase in revenue from licensing fees: On Feb. 7, shares were up more than 200% since November.

As part of its strategy to shift its supply-chain offerings from client-server to the Web, Manugistics in December introduced the NetWorks suite, a business-to-business exchange using XML that offers transporta-tion, procurement, demand planning, scheduling, and collaboration with ERP products. In January, NetWorks was chosen to power the FreightWise Inc. online trade exchange.

Analysts are optimistic. "This is a huge market, with demand for more than just one vendor," says Thomas Harwick, Giga Information Group's research director of supply-chain management. "Manugistics will be able to overcome the transition and begin to grow again."

Photo by Steve McAllister

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