Companies are investing in direct-connect software to streamline supply chains, according to The Yankee Group
Boston — July 14, 2003 — A new Yankee Group report, "Electronic Supply Chain Cost of Ownership," finds that companies are investing in supply chain integration solutions to improve customer interaction and reduce inventory costs.
Companies are investing in direct-connect (AS2 and EDIINT), RosettaNet, collaborative forecasting, and UCCnet technology to streamline supply chains.
"Despite ongoing economic difficulties, companies are investing to automate their supply chains," said Jon Derome, Yankee Group Business Applications & Commerce program manager. "Technology mandates from industry powerhouses such as Intel and Wal-Mart are responsible for a share of the spending increase. Improving customer service and streamlining supply flow are even more powerful investment drivers."
Direct-connect software is beginning to deliver on Internet promises made in the late 1990s, according to the analyst firm. The software hardens the Internet, enabling companies to move data securely and reliably across the public network.
Among the 50 large North American companies interviewed for this report, more than half use direct-connect software. Companies that combined this software with value-added networks reduced electronic supply chain total cost of ownership (TCO) by 15 percent.
Although TCO advantages are important, Yankee Group predicted long-term direct-connect benefits would outweigh near-term TCO advantages. The companies interviewed for this report forecasted a reduction in IT operating expenses by a cumulative $5.7 million over three years.
But the ability to leverage new technologies and the Internet to power information exchange with key business partners will distinguish corporate successes from business laggards, according to Yankee.