i2 sets out end to end supply chain vision

Under the banner of tradeMatrix.com, i2 is leading a collaborative union of vendors that operate a multi-vendor, multi-product service that attempts to optimise both supply and demand.

At i2's annual user conference in Las Vegas, a succession of senior executives laid out a strategy to move current indirect procurement and supply chain issues towards an end to end solution that places the customer at the centre of the business.

Laudable though this may be, it is clear that i2 is some distance ahead of customers' ability to adapt to the changes envisaged. What's more, the risks of such a far-reaching strategy are high for both i2 and its customers.

Moving a traditional bricks and mortar business to Internet trading takes a lot more than implementing technology.

As Stan Elbaum, MD at Benchmarking Partners pointed out, "Companies find it difficult to come to terms with the changes. They need to see a profound economic case before they will budge."

Undertaking the kind of project envisaged by tradeMatrix is complex and wide ranging. But it is a fact of life that those businesses that sign up for tradeMatrix will be early adopters.- not necessarily the most suitable trading partners.

At the same time, running complex multi-vendor demand planning, scheduling, planning, fulfilment and delivery systems will become more rather than less demanding. This is because the vision requires the co-ordination of many activities and businesses in real time, flawless network infrastructure and scaleable hardware of the type that typically costs $500,000 and above.

Larry Lipide, vice president and service director, supply chain strategies at Boston based AMR Research talked about the logistics problems of transporting perishable goods to a string of retailers:

"In this scenario, I need real time optimisation or I lose money. When I'm done at the last stop, the truck should be empty," he said.

Apart from the physical issues, implementing these systems will be extremely demanding. When asked to comment on this matter, Greg Brady, i2's president referred to past implementations of their master planning and availability to promise software that previously took two years but which was reduced to six weeks at Samsung.

But this does not answer the many problems inherent in multi-vendor, collaborative systems. To date, there is little evidence of deployed success and it is not clear what methodologies will be used to deploy in companies where existing technology may be very different.

From a customer perspective, there are two problems. First expectations are being raised in advance of deliverables at a time when customers still have basic issues to resolve. Second, despite i2's focus on value delivery, there is a real risk these complex implementations will fail.

From i2's perspective, the risks are huge. It has made a name for delivering value and each year, it uses the user conference to demonstrate audited value delivered in the last year. According to i2 executives, this is a core value but it could be irreparably damaged if implementations prove troublesome.

Comparisons between the promises made in the early 1990's by the enterprise resource planning (ERP) vendors like SAP and the lack of measurable realised gains from ERP implementations inevitably fuel a degree of cynicism.

The i2 promise is so compelling it could lead to a rush for technology that cannot be delivered in reasonable time frames.

i2 recognises the risks and plans to monitor these. Steve Weller, i2's European director of industry marketing said: "We should stick to making sure there are measurable milestones."

There is agreement that moving the business to an e-business framework requires a thorough review of business practices. This raises the spectre of extended implementations. But when the ERP vendors punted this line, they failed to take responsibility for implementation success, and fobbed problems off to systems integrators.

But i2 has made no direct statements to indicate how it will manage and measure implementation effectiveness.

i2 is trying to redefine what e-business centred procurement means. To date, it is the only company that has articulated a solutions strategy where products and services become inextricably linked and where the customer meets the supplier in a way that reflects what happens in the real procurement world.

It should be remembered that i2 is only a participant member in tradeMatrix so overall success will be dependent on the co-ordinated efforts of all involved and the quality of the combined offering. But if implementation complexities emerge, it will be i2 that feels the heat of criticism.