The system, SupplyWorks Max, is designed to eliminate manual processing of purchase orders with suppliers that aren't connected to electronic data interchange networks. SupplyWorks Max, which sits outside the user's firewall and is hosted by SupplyWorks, generates orders based on data it pulls from the buyer's enterprise resource planning systems, including store production plans and material requirement data. The system, accessible via Web browsers by both buyers and suppliers, transmits orders to suppliers in a variety of formats, including EDI, Extensible Markup Language, E-mail, and fax.

While SupplyWorks provides batch-file integration with manufacturing and accounting systems from Baan, J.D. Edwards, Oracle, PeopleSoft, and SAP, integration could be the biggest snag for SupplyWorks' foray into production procurement, say analysts. "This is a big integration challenge," AMR Research analyst Pierre Mitchell says. "Direct procurement is tightly coupled to ERP systems, so you have to be able to integrate with these systems."

Another challenge for the young company is that it has only half a dozen customers and has yet to establish a reputation. "They've not generated market traction," Mitchell says. "They've spent a lot of time at the white board and not enough time translating technology smarts to business and sales."