Selling and sourcing
Staff -- Manufacturing Business Technology, 7/1/2001 6:00:00 AM
It's said that 90 percent of a product's cost is strategically sourced during its design. In an era when inter-company transactions cost less than ever, OEMs are becoming design and branding houses. Manufacturing is being outsourced. But that doesn't mean "make or buy" decisions are easy. Outsourcing means trusting suppliers and sets up a host of accountability issues. Collaborative product commerce, strategic sourcing, and e-procurement are just some of the tools that software application vendors are introducing to support relationships between buyers and sellers.
8 PTC
Innovation thy name is Internet
When it first dawned on people that Internet technologies were going to have a huge impact on enterprise computing, no one said too much about product-related data.
Who knew?
In any event, it's clear there is no other area where the possibilities of inexpensive, ad hoc integration via the Internet has had as profound an effect.
According to the Progressive Policy Institute, an estimated 50,000 new products are announced every year in the U.S., up from only a few thousand in 1970. A new category of business application, based on Internet technologies made commonly available only in the last several years, lets executives focus on the product life cycle, disseminating design information to all interested parties on an as-needed basis.
Collaborative product commerce, so-called CPC, collapses the time it takes to turn intellectual property into deliverable products. The same tools allow manufacturers to work more closely with suppliers and others. Of course, design for manufacturability issues also can be addressed.
Needham, Mass.-based PTC, formerly known as Parametric Technology Corp., is both a market leader and a thought leader for CPC. While many people are familiar with PTC's leading role as an innovator in computer-aided design—most especially the introduction of parametric modeling into design automation—less well known is the role PTC is playing in defining this new category of business application.
PTC says its CPC product, Windchill, is based on a federated model that enables users to find electronically stored information, regardless of its source or location; organize it into collaborative business processes; and use it across multiple functional and geographic boundaries. Another more recently introduced PTC product, Windchill ProjectLink, is a secure portal run on a project basis for conducting business and group collaboration. A Web-based workspace advances the ability of geographically and organizationally dispersed project teams to work on highly iterative design projects. Portals support creation of dynamic, opportunistic project teams, creating a common virtual workspace that promotes visualization of information from CAD authoring tools, automated process management of key supply chain processes, and change management.
"Windchill ProjectLink capitalizes on the abundant opportunities in the B2B and enterprise markets, helping manufacturers achieve higher levels of innovation, aggressive product development schedules, and higher profitability," says Jim Heppelmann, executive vice president and general manager, Windchill Solutions.
Most recently, PTC announced that TRW, one of the world's largest independent automotive suppliers, had selected PTC's Windchill to implement within it automotive business. The two companies also announced a strategic alliance to jointly offer collaborative product commerce solutions. Under the agreement, Windchill will be a cornerstone in TRW's Enterprise Collaboration Solutions practice.
12 Dassault Systemes
Product collaboration and digital manufacturing software
Dassault Systemes is a Paris-based global software developer of CAD, manufacturing, engineering, and product life-cycle management applications. Through its subsidiaries, the company offers manufacturers a range of solutions, from product design and management tools, to software that defines and simulates manufacturing process flows.
Among the company's offerings are CAD software offered under its CATIA brand and SolidWorks subsidiary, and product data management (PDM) solutions under its ENOVIA brand and Smart Solutions subsidiary.
"For manufacturers, we provide vision," says Philippe Forestier, CEO of Dassault Systemes of America. "We have comprehensive solutions to create and optimize products. We also have digital solutions to create and control all the manufacturing processes with our DELMIA suite of products for life-cycle management."
DELMIA, a Dassault subsidiary based in Troy, Mich., was formed in June 2000 by bringing together multiple companies Dassault had acquired, including Deneb.
DELMIA applications reportedly help customers optimize production capacity as well as support reuse, derivations, and carry-over of process engineering and production resources. The software also reduces time-to-market and manufacturing costs by examining the design elements in advance of production.
Based in Israel, Smart Solutions, which was majority-acquired by
Dassault Systemes in 1999, offers Web-centric collaborative product development and automated change management tools under the SmarTeam brand. SmarTeam also is the name of Smart Solutions' Americas subsidiary, based in Beverly, Mass.
SmarTeam products exchange, track, and manage design information related to product development, from concept to production. The products employ Web technologies, including portals and an eXtensible markup language-based data exchange tool. Because the tools are meant for medium-sized manufacturers, they are designed to be affordable and easy to use.
Smart Solutions has developed affiliations with CAD/CAM and enterprise resources planning system vendors to ensure its products can be easily integrated into customers' existing systems. The company also recently struck an alliance with Access Commerce, to integrate Access Commerce's Web-enabled product configurator with SmarTeam's portfolio of CPC offerings.
"We will continue to dramatically enhance our solutions," says Forestier. "We'll support e-Business strategies via collaborative tools to help companies work with both their suppliers and customers."
15 UGS
What's in a name?
The name UGS is barely six months old, but the company that bears the name has a long history of providing technology that enhances the product development process.
It started in the 1970s, with the release of a computer-aided design and manufacturing (CAD/CAM) package called Unigraphics that was a hit with aerospace and automotive engineers. Today, the company formerly known as Unigraphics Solutions has a comprehensive portfolio of products that support the emerging business discipline known as collaborative product commerce.
This new discipline, which some industry analysts refer to as product life-cycle management, is focused on finding ways to freely share product-related data throughout a supply chain.
UGS has divided its products into two categories, which it calls solutions and platforms. The solutions category includes software for functions that UGS refers to as product development, virtual manufacturing, and fulfillment. They include the Unigraphics CAD/CAM application; a virtual manufacturing product that enables building computer-based models of both products and production facilities; and an application for electronic publishing of product-related data.
The platform category includes a collaboration platform that takes data from various systems and translates it to a universal format so it can be read by all parties within a given work group. There also is a life-cycle management platform that companies can use to create formal procedures for passing data around the enterprise. The final piece is an interoperability platform, which contains technology that enables the transfer of product-related data to enterprise systems.
EDS, the Dallas-based systems integration and consulting firm, owns 84 percent of UGS, with the rest of the company's stock publicly traded. In late May, EDS announced plans to buy back all outstanding UGS shares. At the same time, EDS announced plans to purchase SDRC, Milford, Ohio, which competes with UGS in the collaborative commerce space.
Once the merger and stock buy-back are complete, UGS and SDRC will form a new EDS business unit under the UGS name. SDRC is expected to give UGS a stronger mix of products, and EDS gives it more resources to support customers in implementing the products.
16 Ariba
A reflection of the market
Few companies reflect the recent highs and lows of the business-to-business (B2B) e-commerce software market more than Ariba.
The Mountain View, Calif.-based company was at the forefront of the B2B movement when it introduced an e-procurement package called ORMS—Operating Resource Management System—in 1997. In June 1999, Ariba went public, and less than six months later, it had ridden the e-commerce wave to a market capitalization of better than $10 billion.
At that point, Ariba embarked on a strategy to expand its product line beyond ORMS, which primarily managed the procurement of indirect goods such as office supplies. The goal was to assemble a platform for building and operating Internet-based trading exchanges.
Ariba's management team decided to acquire other companies that had the technology to fill out an exchange platform because it believed the market was moving too fast for Ariba to build all this technology itself. To that end, Ariba made its first major acquisition in December 1999, using $1.86 billion of its highly valued stock to purchase Tradex Technologies, an e-marketplace technology vendor.
As users' interest began shifting from the large public e-marketplaces that Tradex—and later Ariba—was building, Ariba's fortunes shifted as well. This past spring, with the B2B software market softening and its stock price falling, Ariba abandoned a planned $2.5-billion purchase of Agile Software, a San Jose, Calif.-based company that sells technology for sharing product-related data between supply chain partners.
Since then, Ariba, with its market capitalization hovering near $1.4 billion, appears to have regrouped. It has cut its workforce by a third, and company co-founder Keith Krach has relinquished the role of CEO, turning the that job over to Larry Mueller, who had been Ariba's chief operating officer. Krach is still chairman of Ariba's board, and company officials say Ariba remains focused on the same priorities that were established when Krach was both chairman and CEO. "From a strictly external perspective, some things have changed," says John Raguin, vice president and general manager of Ariba's Sourcing Solutions Division, "but internally we are consistently focused on our three main drivers." Raguin lists those drivers as delivering return-on-investment (ROI) to customers, listening to customer input on the design of new products, and creating solutions for specific vertical markets.
Raguin says the ROI is built into Ariba's three main products: Ariba Buyer, Ariba Sourcing, and the Ariba Commerce Services Network. Ariba Buyer is the company's flagship e-procurement application. Ariba Sourcing supports the development of request for quotes and other processes related to the purchase of direct materials. The Ariba Commerce Services Network is a Web-based platform that offers access to product catalogs and other related information.
17 SDRC
Full-force into collaborative product management
Even before the news of May 24 that it would be acquired by EDS as part of EDS's move to form a product life-cycle management (PLM) software leader, SDRC was focused on providing collaborative solutions for the product life cycle. The Cincinnati-based company already had launched a collaborative product management software strategy, integrated two key applications via its new I-DEAS Enterprise product, and acquired Inovie Software, a vendor of collaborative project management software.
Under the pending (as of press time) $950-million deal for SDRC, Plano, Texas-based EDS, a major global services company, planned to combine SDRC with UGS, its Cypress, Calif.-based PLM software subsidiary. The companies would be joined under the UGS name to form a $1-billion provider of PLM and collaborative product commerce (CPC) solutions.
While there are shades of differences between the two terms, both PLM and CPC solutions use Web technology to support collaborative product development and life-cycle processes. "The collaborative product commerce strategy means products can be developed faster and more efficiently, and also in conjunction with suppliers and customers," says Bill Carrelli, an SDRC vice president. "It is a technology that allows a company to develop products, and communicate and collaborate throughout the entire enterprise and supply chain—and with customers. It's a framework that allows people to interact with the product throughout its life cycle."
Announced in February, I-DEAS Enterprise provides a smooth integration between SDRC's mechanical CAD and product data management (PDM) software packages. Essentially, it enables users to manage product data from the time it is originated in the PDM application, thus ensuring data will always be up-to-date and more easily shared both during and after the product design process.
The acquisition of Inovie reflects the company's pursuit of Web-native, collaborative product management functionality. Inovie provides Web-based, peer-to-peer collaborative project management software. SDRC will couple Inovie's project management software with its collaborative product management solutions.
SDRC also pays attention to vertical industry needs. Metaphase Express Aerospace and Defense (A&D) Solution was developed in partnership with Logicon, part of Los Angeles-based Northrop Grumman.
19 Commerce One
Eyes private exchange opportunity
Commerce One rose to prominence as a provider of e-procurement and public, Internet-based trade exchange solutions, but increasingly, it's becoming known for software that powers private trading exchanges. The Pleasanton, Calif.-based company sees private exchanges as the wave of the future, and hopes its alliance with SAP, a major e-Business and enterprise system vendor, will help it ride this wave.
Announced in June 2000, the alliance with SAP pairs Commerce One's e-marketplace infrastructure software with SAP's e-Business and supply chain management applications, addressing, for instance, functionality such as direct materials procurement. The alliance also coincided with a $250-million equity investment by SAP into Commerce One.
Rob Rachwald, a Commerce One senior solutions manager, contends that private e-marketplaces "enable companies to pull all their trading partners together, so they have a parallel supply chain, not a serial one," he says. A private e-marketplace, Rachwald adds, may require sophisticated capabilities like demand planning. "They're not just for procurement and sourcing," he says.
Approximately 50 percent of Commerce One's e-commerce software is "ready to go right out of the box," while the remainder is customized according to user needs.
Commerce One's products, strategies, and partnerships have allowed it to capitalize on the business-to-business (B2B) e-commerce trend. For 2000, the company posted revenue of $401.8 million—a whopping 1,097-percent increase over 1999's $33.6 million in revenue. While the company revised its first quarter 2001 sales estimate downward in early April, citing the economic slowdown and cautious spending on information technology, when the quarter did close later in April, the company still managed a hefty 386-percent revenue increase compared to the same period in 2000.
In April, Commerce One and SAPMarkets—SAP's trade exchange solutions subsidiary—announced the next release of their joint exchange solutions: MarketSet 2.0 and Enterprise Buyer 2.0.
44 Matrix One
A real vision
Matrix One, Chelmsford, Mass., has set out to show the full impact that collaborative product commerce (CPC) technology can have on a business. It has created a set of products—which it calls a Value Chain Portfolio—that enable the free exchange of product-related information throughout a supply chain.
This data can be shared by individuals in different functional areas within a single enterprise, by individuals in two or more separate enterprises, or by multiple members of a public or private Internet-based marketplace. "We first laid out this vision last year," says Paul Gilmartin, a company vice president. "This year, we have been executing that vision."
The execution, as mentioned earlier, involved unveiling the Value Chain Portfolio. It also included a major upgrade of the technology framework that supports all of Matrix One's applications.
The new framework is compatible with the Sun Microsystems Java 2 Enterprise Edition product development environment. "That makes it a pure Web framework," Gilmartin says. "A user with any device that supports the Microsoft Explorer or Netscape Navigator browsers can get product-related information over the Internet. The Java-based framework also adds flexibility from an information technology perspective, because it means our applications can run in any environment."
While building a framework to enable ubiquitous information sharing, Gilmartin says Matrix One also concentrated on building applications that empower specific individuals to get the maximum value from that information. "We have customer-facing applications and supplier-facing applications," Gilmartin says, "along with applications that help an enterprise link functional areas within their organization."
The customer-facing applications are called Configurator Central and Request Central. The former allows customers to log onto a Web site and configure custom products; the latter gives customer an automated method of submitting requests for quotes.
Supplier Central is Matrix One's supplier-facing application. It gives suppliers the same access to product data as a company's employees. It enhances the product development process by allowing suppliers to collaborate with product developers from the concept stage through the design approval process.
Gilmartin says the customers that Matrix One has attracted this year—including General Electric, Schlumberger, Agilent Technologies, and Applied Materials—prove the value of these applications. Matrix One also was selected to provide technology for e2Open, an exchange that serves the high-tech electronics industry; and TranspoLink, a marketplace for the highway construction industry.
49 FreeMarkets
Offers e-sourcing, pursues Adexa alliance
It's not about the auction technology; it's about knowing the supplier community. That's been the battle cry of FreeMarkets, the Pittsburgh-based business-to-business (B2B) auctioning and e-sourcing vendor. With so many companies offering reverse auctions, FreeMarkets differentiates itself as a source for identifying suppliers worldwide.
Unlike most B2B e-marketplaces that concentrate on procurement of indirect materials such as office or facilities supplies, FreeMarkets staked its claim right in the heart of procurement—direct materials that go into manufactured goods. And although Freemarkets' deal to acquire Adexa, a Los Angeles-based supply chain planning software vendor, was called off in June, the two vendors will work together as allies. A joint solution from the vendors would pair FreeMarkets' e-sourcing functions with Adexa's operational collaboration and planning capabilities.
FreeMarkets' solution helps manufacturers find potential suppliers. Once these suppliers are identified and approved by a client, FreeMarkets creates a reverse auction, pitting suppliers on price and other valued factors. The client sets the specifications of the needed materials, then the qualified suppliers propose prices. When the dust settles, the auction event delivers an average of 16-percent savings for the client.
"We are the world's largest e-marketplace," says Jim Zuffoletti, a FreeMarkets vice president and general manager of diversified manufacturing. "We bring e-market tools to global 1000 companies. We just closed out our first quarter [of 2001] and we've done $16.6 billion in auctions. The savings we've identified through the auctions is $2.3 billion."
Founded in 1995, FreeMarkets has conducted more than 11,500 reverse auctions. The company maintains a database of 150,000 suppliers in 175 vertical supply markets, and has created a pool of domain experts who study the supplier market and travel globally with clients to perform site inspections. The company maintains offices around the globe and conducts business in 30 languages.
The current economic downturn has been a boon to FreeMarkets. The big allure of its sourcing and reverse-auction services is the savings on the cost of direct materials. "One of the things we've found from talking to our customers is there's a strong desire to identify opportunities for quick cost reductions," says Zuffoletti. "Identifying those savings is our hallmark. We've find that companies are showing much more scrutiny when making buying decisions this year."
FreeMarkets works with a range of large manufacturers. "In discrete manufacturing, we may help a buyer source metal stampings," says Zuffoletti. "We have to understand who the best-in-class stampers are. We must also determine what the buyer needs to know about potential suppliers. It's all built around domain expertise."
FreeMarkets has introduced new products this year that tap into the growing interest in private trading networks. QuickSource lets companies utilize FreeMarkets auction technology with its existing supply base in a private marketplace. The company also launched FullSource, which allows the client to tap into the FreeMarkets supply base. "QuickSource is for simple spend with a company's well-known supply base," adds Zuffoletti. "If you have complex spend for an assembly or complex part, you can go to FullSource to tap into our full collection of suppliers in 64 countries."
53 CoCreate Software
Real-time design collaboration
CoCreate Software, a Fort Collins, Colo.-based provider of collaborative product development software, offers solutions that facilitate collaboration across internal and extended product development teams. "Our focus is on collaboration around products in design," states Dr. Tilman Schad, CoCreate's president and CEO. "When the BOM [bill of material] is put together, that's the end of our process."
Founded in 1984 as a division of Hewlett-Packard, today CoCreate is a privately held company that has evolved from its roots in CAD and product data management software toward its current collaboration focus. CoCreate's software is available in 10 languages and is installed on more than 150,000 systems in design, engineering, and manufacturing organizations worldwide.
OneSpace is CoCreate's collaborative product development solution. OneSpace allows all players in the design process to join in a session to evaluate, compare, modify, and resolve issues pertaining to 3D design in a highly secure environment with a variety of CAD data. "With this solution, you don't have to explain what needs to be done—you can show it," says Schad. "A number of people get to build on each others' ideas. You get immediate buy-in, so you don't have someone later on saying, 'Hey this doesn't work for me.'"
CoCreate landed a major win for its OneSpace solution early this year when it announced GE Plastics would use OneSpace as the basis for collaborative design capabilities at GE Plastics' gepolymerland.com and geplastics.com Web sites.
"We have customers who say automated collaboration allows them to get products to market 30-percent faster," says Schad. The time savings reportedly comes from the ability to work in real time.
"In the past, people looked over the shoulder of the designer at the drafting board," says Schad. "Now people can watch the drawing board over the Internet. It's also a completely accurate way of seeing the product."
60 Agile Software
Rides collaborative manufacturing commerce wave
The merger of San Jose, Calif.-based Agile Software with Ariba, a Mountain View, Calif.-based provider of e-procurement and e-marketplace software, was supposed to have been the collaborative commerce vendor pairing of the year. But as the industry now knows, that merger collapsed in April in the wake of weaker-than-expected sales for Ariba, and its plunging stock price.
According to Agile, the aborted deal did not weaken market need for its software, which Agile refers to as collaborative manufacturing commerce solutions. These Web-based applications support collaboration around product content during new product introductions and into engineering change processes.
Carol Schrader, an Agile vice president, says the company is providing what companies want today: software that is "quick to implement, has real value, provides cost savings, and give customers a better way to do things with fewer people." The solutions manage product-related content as well as the communication, collaboration, and commerce transactions among OEMs, electronic manufacturing service providers, suppliers, and customers.
Essentially, Agile's products facilitate partnerships among value chain participants, Schrader says. This year, Agile released version 7.0 of its flagship Agile Anywhere suite, which is said to allow supply chain partners to share and collaborate on product content and changes in real time via the Internet. Agile also released a new version of Agile Buyer, its direct materials procurement management solution; and Agile Integration Server, an eXtensible markup language-based integration solution that makes product content in Agile Anywhere available to other applications.
Agile focuses on high-tech, semiconductor, electronic, and the medical device arenas, and expects to include the industrial equipment, apparel, and automotive markets. The company is adding functionality "in and around collaborative processes that enterprises need for a virtual manufacturing model," says Schrader. "Companies want to do more collaborative product development, or more collaborative demand—or they want to add collaborative capabilities on the service end of the business."
73 Optio Software
Focus on e-Business infrastructure
There's nothing half-hearted about Optio Software's investments in an e-Business future. The Atlanta-based provider of e-Business infrastructure solutions has beefed up its product line, restocked its management team, and expanded its reseller relationships.
"My job is to get the company energized and moving forward aggressively," says Warren Neuburger, the company's new president and chief operating officer. "We recently brought in four senior officers with backgrounds in e-Business and wireless. Together, they have the expertise to take us to the next plateau."
Optio's challenge is to transition from a provider of document management solutions to a provider of e-Business infrastructure solutions. "This is no Internet start-up," Neuburger says. "We have a 20-year track record and 4,000 customers. We're building off an installed base of customers in the document customization space and progressing down the path through EAI [enterprise application integration], business-to-business [B2B] integration, and wireless connectivity.
"What we offer is the ability to deal with 100 percent of your trading partners and systems," he continues. "When dealing with smaller suppliers, you may be working with paper-based systems. With big suppliers, there may be some paper, some electronic data interchange, and some XML [eXtensible Markup Language]. We can deal with all this in a hybrid environment."
In March 2000, the company introduced the Optio e.ComEngine. "This is our high-end flagship product in the B2B space," Neuburger says. "It is a production-proven messaging and integration broker offering extremely high transaction rate capabilities. That allow customers to translate, route, and manage data in a real-time environment."
In quick succession, Optio then announced e.ComPayments, a business payment management solution for both electronic and paper-based payments; and e.ComIntegrate, a tool to create, transform, and exchange XML documents.
Not everything at Optio is changing. The company's focus on establishing long-term partnerships with major enterprise resources planning (ERP) vendors remains in place. "Partnering with companies like Oracle, Baan, and J.D. Edwards reduces the risk for our customers," Neuburger says. The company also recently signed another reseller agreement with ERP vendor MAPICS, Optio's next-door neighbor in North Atlanta.
