[From iSource Business, April 2001]The ability to forecast the future is a pretty nifty trick, for anyone. In business, it's especially handy. Just take a look at Tehseen Ali, co-founder of Charlotte, N.C.-based Verian Technologies, who zeroed in on the potential for supply chain management seven years ago while attending the University of South Carolina business school. I found it was a space that faced many challenges and that current technology wasn't addressing them, he says. It was a ripe area for change.
In 1997, he and his partner founded Verian Technologies in Columbia (today they are headquartered in Charlotte). And in 1998, they introduced ProcureIT, a Web-based system to help mid-market companies cut the costs of goods, automate the workflow process and reduce and manage inventory. Like products from Ariba and Commerce One, it provides links to as many as 50 electronic marketplaces. Unlike those players, however, the $80,000 to $700,000 ProcureIT is aimed at companies with $100 million to $2 billion in revenues, the type of firm that typically faces lots of procurement headaches, but can't afford a higher price tag.
Ali won't disclose revenues, but says they have increased 100 percent a year; unlike most Internet companies, the 75-employee firm has always been profitable. This year will be an exception, thanks to the company's decision to plow revenues into growth.
For the first in a series of regular conversations iSource Business magazine will have with top executives from pure-Internet companies to brick-and-clicks, we talked to Ali about his views on the effect that technology is having on the supply chain and what the future may hold.
iSource: Tell us how your company is enabling the supply chain for your customers.
Ali: We help people plan and manage their purchasing and materials throughout an organization. Take a bank. It might have 100 branches, all of which are really small businesses with perhaps five to 10 people in each. If they all buy independently of one another, they don't get the aggregated value they would if they did their purchasing as a group. And not only do they miss that aggregated value, but they also will typically experience great inefficiencies in how they manage their purchases: They'll buy too much stuff, or run out before they know it, for example.
Our system helps individuals within organizations act as they would if they were buying for themselves, but with the power of the entire company behind them. So, for example, they can see the whole organization's purchasing and materials management patterns. They can decide whether to buy something from outside or get it from another branch. They can see what's available throughout the organization and, if it's there in-house, they can contact the right person without making unnecessary expenditures.
iSource: How do you think technology, in general, is helping companies' supply chains?
Ali: First, it helps put systems around processes that used to be done manually or informally. By institutionalizing systems, it formalizes the process and makes it much more efficient. In an informal system, the information needed to make the system work just sits in peoples' heads. With technology, you can standardize it so it's reproducible and manageable by other individuals within an organization.
You hear of supply chain managers who've been doing the job for a long time and know exactly where they buy from and how long it takes. But no one else has a clue. And if someone new comes in, he or she may be completely out of luck. Technology takes that person's brainpower and puts it into a system everyone can share.
iSource: What are the biggest challenges to implementing these systems?
Ali: Cultural adaptation and resistance to change. And, introducing the right training to remove that fear. When you have uncertainty, people get scared. It happens in any size company. The way we handle that problem is to try to make everything simple.