Enabling Tightly Woven Partnerships

One infrastructure service for the Internet enables a tight-knit, intimate web of partnerships that can be tailored to meet specific needs.

[From iSource Business, February 2001] The telecommunications industry isn't a place for the faint-hearted. It's about transmitting data and getting products to market faster and better than the competition. It's also about time to begin diversifying from the competition. The players range from Internet providers, to broadcasters and cable operators, to phone companies, all of which see their boundaries blurring as their technologies begin to merge and intersect in the burgeoning broadband markets.

The stakes are high. The Cahners In-Stat Group estimates the worldwide dollar value of video equipment intended for use in telephone company central offices will reach $158 million in 2000, expanding to about $2.5 billion by 2005. The group also predicts that the installed base of broadband subscribers is expected to reach 49 million worldwide in 2003, and that the installed base of DSL subscribers will surpass cable modem subscribers by the end of 2001. The Telecommunications Industry Association (TIA) reports that in 1999 factory sales of U.S. manufactured telecom equipment jumped 18 percent to reach $89.6 billion, while total exports rose 11 percent to $23 billion. The TIA also reports that spending in the telecommunications industry (both equipment and services) totaled $517.6 billion in 1999, up 11.4 percent over 1998, with the industry growing more than twice as fast as the U.S. economy in recent years.

Build It And They Will Come

It's in this milieu that PairGain Technologies of Tustin, Calif., operates and manufactures a variety of telecommunications products, including DSL equipment (DSL is the hot technology that transforms ordinary, twisted copper pair wire into high-speed digital lines for very fast Internet access). As of June 2000, PairGain was acquired by ADC, a broadband company located in Minneapolis that makes products that enable the delivery of high-speed Internet, data, video and voice services. The acquisition meant that PairGain would also be making some ADC products, increasing the need for a highly seamless supply chain, making PairGain's pairing with Viquity of Sunnyvale, Calif. a prescient match indeed.

But even before the acquisitions, PairGain was challenged by limited supply chain visibility across its extended enterprise. Since 1996, the company had a virtual manufacturing network in place consisting of a totally paperless relationship with 10 partners. The supply base provided materials to the manufacturing locations on a pay-on-consumption basis, using standard EDI technology and Agile software. Director of Materials Gary Lenik characterizes the partnership as one in which the partners operated like departments in one company. "The system sounds complete, so why did I need a company like Viquity?" Lenik says.

The reason became crystal clear with a little serendipity. "I was speaking at an Agile conference," Lenik reports, "and the Viquity people stumbled on to me. We talked and I realized Viquity could provide a solution for what was a real inefficiency in the supply chain." The problem was that PairGain was missing the ability to assess the current state of material on any given day, particularly when the company was about to release a new job. "In essence, we operated on faith," says Lenik. The partners didn't transfer or commingle data; jobs were released on the basis of the electronically transmitted documents, so that production decisions were made without the actual knowledge of availability of parts. This translated into missed production starts.

Convergence of the Twain

Flash back to 1998 when a few former Oracle employees began Viquity as a privately held, venture-backed company. Viquity's mission was to allow trading partners to fully automate inter-enterprise production procurement activities. The result was the Viquity Dynamic Commerce Network (DCN) a subscription service which enables OEMs, contract manufacturers, distributors and suppliers to automate the exchange of business documents in a way that improves partner responsiveness and reduces overall procurement costs. By the time Viquity and PairGain came together, each had what the other wanted.

What sold Lenik was the tailorability of the system, which consists of the Viquity Basis, the service foundation for secure document transport, and the Viquity Nexus, the intelligent hub, for advanced collaboration management within a virtual enterprise data platform for multi-level supply chain operations. According to Sam Hickman, director of marketing at Viquity, the company is truly unique in what it is able to provide PairGain, but adds that Viquity also learned from its association with the telecom maker. "We were working on the assumption that most businesses simply transfer purchase orders, but we quickly learned that the contractual arrangements are far more complex, so we developed a custom system of stock check transactions called supply assurance. We knew we'd have to be able to adapt our technology to support the processes inherent in different vertical structures."

And so, Viquity developed the component which allows PairGain to physically "look" at supplier inventory. "We wanted better visibility into the supply chain, says Lenik. The system automatically notifies the partners if they're out of plan. "If I'm trying to release a job and you're a supplier to me and you don't have the material, you're going to get an automatic e-mail that says you need to do something and do it quickly, says Lenik."

Exponential Possibilities

An obvious benefit of PairGain's application of Viquity's DCN is the responsiveness in the supply chain. The DCN allows PairGain to lock in on the job. "The big upside is real-time visibility which has a dramatic affect on our ability to make better decisions about what to build and what to tell our customers in terms of delivery dates," says Lenik. "The DCN changes the way we communicate with the supply base," he adds, "giving us more time to be strategic with far less down-time on tactical items. We can work further up the supply chain, ahead of the curve."

As for savings, Lenik says he can't give a dollars-and-cents figure, but characterizes it as "enormous." "There's no hard core study," he explains. "We tend to think in terms of cost avoidance in any case." Lenik estimates that the supply chain is at least 25 percent more effective than it was in releasing jobs on time.

Recently, Viquity has added PairGain partner Atlas to the network, tailoring and applying Atlas' use of the RosettaNet PIP standards. Viquity will continue to tailor the DCN and plans to add PairGain partners one by one. By adding partners, and partners of partners, Hickman says, "You have the ability to build a tight, collaborative supply chain." For PairGain, a chance meeting at an industry conference has been a decided boon, allowing the company to mirror the pace, and unofficial credo, of the industry it serves  faster and better.