| Wednesday,
June 12, 2002
Pierre Mitchell
A funny thing happened to some trading exchanges on
their way to becoming successful forums for conducting
trade. Some of the ones that attempted to perform not
just transaction processing and information sharing
but also collaboration and integration ended up developing
a new generation of application designed for a many-to-many
trading model that transcends a single-tier trading
community and moves toward the n-tier supply chain that
typifies the modern large corporation. These supply
chains are not just multi-tier, but they are also increasingly
unbundling the information flows and financial flows
that sit alongside the physical material flows. The
result has been that many Independent Trading Exchanges
(ITXs) and Consortium Trading Exchanges (CTXs) have
become hosted Private Trading Exchanges (PTXs), hosting
these next-generation corporate applications.
One of the best examples of public exchanges making
a successful trend to a PTX provider is Newview (previously
E-Steel). Newview is releasing its SN3 application suite,
which mainly coordinates and gives visibility to purchasing
and materials management processes. Ford Motor Company
has an interesting deployment of Newview to manage a
sophisticated buying program used to purchase more than
$1B annually in raw materials. Ford acts like a distributor
by drop-shipping steel from steel mills to its stamping
suppliers, and then keeps the difference between the
price that the stamper can get from the mill versus
the price that Ford can command. The implementation
coordinates more than 170 business processes-from material
sourcing to delivery and claims resolution-with more
than 400 supplier sites and 1,000 users. In addition
to coordinating these day-to-day business interactions
for supplying materials, the Newview system provides
performance measurement and purchasing visibility for
senior management.
So why is a new class of application needed for a multi-tier,
“unbundled” supply chain? Why not just use
Enterprise Resource Planning (ERP)? As one company remarked,
“ERP systems are the most flexible business systems
in the world-until you implement them.” In other
words, once you set the switches and populate the data,
it’s hard to modify. The bigger issue though is
that ERP systems (and some supply chain systems) use
these organizational parameters and a one-to-many data
model to derive business logic. As soon as you start
going multi-tier, that’s when the problems occur.
Newview has also been working with BHP Billiton to provide
this multi-tier capability for order management. Firms
like Newview are helping to bring in the next generation
of applications that support multi-tier, unbundled supply
networks. Even if a company is not the size of Ford
or BHP, corporations that need to support supply chain
interactions-from orders to visibility to collaboration-all
within a multi-tier supply network, should definitely
take a look at Newview and its latest SN3 product.
For more information on this report and AMR Research,
please visit www.amrresearch.com.
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