Feed Your Brain and Your Belly

Supply chain company to present solutions, food at industry breakfast

Santa Clara, CA  May 16, 2001  Mom always said it was the most important meal of the day, and now you can get data with your danish. Read on.

Today, few original equipment manufacturers (OEMs) and contract manufacturers (CMs) procure direct goods from suppliers online. According to a recent Hurwitz Group survey, even Fortune 500 companies interact online with just a fraction of 1 percent of their tens of thousands of suppliers. Yet OEMs and CMs win when they can engage in streamlined and Web-enabled direct procurement with their key suppliers, no matter how small. And suppliers can win with a solution that enables them to serve their customers online and more effectively manage their businesses, yet is non-intrusive, easy to implement and affordable.

eB2X, a supply chain optimization company, will present its approach to taking procurement online at a breakfast on Tuesday, May 22, 2001 at the Westin Hotel in

Santa Clara. At the breakfast, Joshua Greenbaum, principal of Enterprise Applications

Consulting, a market research firm based in Daly City, Calif., will describe why OEMs and CMs must encourage their suppliers to go online, why suppliers have resisted until now, and how to assist suppliers in meeting the online requirements of OEMs and CMs. In addition, eB2X CEO Larry Dorie will describe how the company's "right-sized" solution, composed of planning/promising engines and on and off ramps to the Internet for buyers and suppliers, provides suppliers with the incentive to go online.

"OEMs and CMs win when their suppliers move online because paperless trade means lower transaction costs, reduced error rates and more rapid response to queries," said

Greenbaum. "But suppliers need to know that they can win too. And what constitutes a win for suppliers is different than what constitutes a win for OEMs and CMs."

Today's OEMs and CMs have made significant enterprise resource planning (ERP) investments and want to expand these solutions beyond the firewall to automate and streamline direct procurement processes with their suppliers. Experience with indirect procurement has shown that automation can reduce the cost of processing a purchase order by up to 84 percent. Representing up to 75 percent of business expenditures, direct procurement can yield an even greater return. Streamlining direct procurement also promises long-term value-add to existing business relationships.

Unfortunately, suppliers have been reluctant to join online direct procurement initiatives.

Technical obstacles with existing solutions include the need for new information technology (IT) skill sets, additional IT infrastructure, ongoing support and maintenance, and significant process re-engineering  all at considerable expense. Providing buyers too much visibility into pricing and availability is an additional hazard. Finally, online supply chains end up being one more channel to manage. As a result, suppliers believe that solutions for online direct procurement confer too much risk for the perceived reward. Only the largest suppliers have ventured online.

For a solution to successfully address these challenges it must leverage the supplier's existing IT staff, skill set and IT infrastructure; and it must require minimal ongoing support and maintenance. The solution must fit the supplier's budget and control buyer visibility. And it must help suppliers automate and better manage their businesses.