Will there be a second gen?
Strange twists in supply chain planning saga—and at i2 Technologies—may be opportunity for Adexa
By Kevin Parker, editorial director -- Manufacturing Business Technology, 9/1/2002 12:00:00 AM
Turmoil at market leader i2 Technologies, Dallas—as well as questions about supply chain planning's relevance in a "real-time" world—have led some to doubt whether advanced planning & scheduling ever will be as important a technology as many believed it would be just a few years ago.
Already, many seminal supply chain planning applications have been absorbed—via vendor acquisition—into enterprise suites. However, a tier below still-independent i2 Technologies and Rockville, Md.-based Manugistics reside several other independent supply chain planning vendors, including Adexa, webplan, Ortems, and Prescient Systems. Managers at these companies hope the current turmoil—rather than being a symptom of supply chain planning's decline and eventual fall—is the signal that it's their turn to show just how vital supply chain planning remains.
Los Angeles-based Adexa's management in particular contends that the current debacle doesn't invalidate the efficacy of supply chain planning, but rather that the market leaders sowed the seeds of their own dismay through a precipitous rush to grab market share.
Says K. Cyrus Hadavi, president and CEO of Adexa, "Our competitors went out and made 15 or 20 acquisitions. They ended up with disparate data models and systems, and a lack of scalability and depth, so that every account is a customization. That's what comes of trying to be all things to all people."
If this analysis is correct, then the long-term damage caused by the focus on short-term gains at i2 is considerable and growing.
Significant cuts to i2's workforce were needed because revenues at i2 for the last three months fell to $120 million, less than half of those a year earlier. Software license sales fell to $26 million from $106 million a year earlier. Wire stories on the layoffs cite recent complaints from large customers as one reason for the company's malaise.
You probably won't see a rush of new companies looking to fill the gaps left by a weakened i2, says Hadavi. "Unlike areas such as supply chain event management, there are significant barriers to easy entry into the supply chain planning market, including proprietary algorithms and heuristics that take a long time to get right. That's why the enterprise vendors haven't been successful here," he says.
Hadavi admits that the raison d'être for supply chain planning has changed due to increasing visibility of supply chain information. With so much more real-time information available, use of a planning model—being a form of latency in and of itself—as a basis for all decision-making is increasingly untenable.
In other words, with APS, manufacturing and supply chain plans are generated using an in-memory model, which means that once the data has been loaded into memory, the program does not have to waste time fetching data from the database.
Says John Webb, a vice president for supply chain management with Pleasanton, Calif.-based PeopleSoft, "For a while, people thought that the speed of advanced planning and scheduling systems would mean that every time a planner hit a bump in the road the system would re-optimize. But the truth is that by the time you gather all the relevant information, do the optimization run, and spit the new answer back out, many problems already are behind you."
Hadavi sees the future as a blend of real-time event management strategies combined with supply chain planning that plays to its traditional strengths in better inventory and capacity management. "Distributed intelligence and collaboration capabilities will get supply chain planning past this idea of a big, chunky piece of software. Available-to-promise and procurement can go forward without running the model. The engine need be run only once or twice a day, while agents respond to exogenous inquiries."
The current makeup of Adexa's solutions portfolio reflects this new mix of event, analytic, collaborative, and planning capabilities applied within plants, across supply chains, with customers and suppliers, and even to product life-cycle management.
Finally, by combining distributed intelligence with a single data model, Adexa believes it solves many of the integration and latency challenges that all the supply chain planning vendors have struggled with—bringing order to an environment where ad hoc was too often the rule of the day.
Supply chain planning never really was as simple as it was made to seem. Planning solutions integrated with enterprise transaction systems are typically layered. High-level strategic, mid-level tactical, and detailed execution schedules often come from separate systems and have distinct integration points with the enterprise resources planning system. Once generated, each plan might have to be reconciled with others before publishing back to the transaction system.
A white paper published in June of this year by Boston-based Aberdeen Group describes the architectural advantage that Adexa believes it enjoys, and that addresses these problems as "an early example of a solution that can... provide an architectural framework and establish a single 'system-of-record' repository for an enterprise's entire supply chain. The repository is provisioned to present multiple layers of abstraction of UI and data access separate from the business logic and tools. This abstraction promotes easier integration; flexibility of configuration (now and later); and nonbusiness-logic-disruptive modification to data sources and user presentation themes."
