Inside the Hosted Supply Chain: A Case Study
In 2001, Agere was made an offer it couldn't refuse. One of its biggest customers, disk-drive maker Seagate Technologies, strongly suggested that Agere sign on to E2open because Seagate, IBM and others in the high-tech industry thought E2open's services represented the supply chain future. (E2open had morphed from its beginnings as a dotcom-era online exchange into a vendor of hosted supply chain software.)
By June 2005, Agere had dutifully switched its supply chain front end over to E2open and with it brought along 80 of its primary component suppliers. In a fashion similar to the way Seagate "suggested" that Agere begin using E2open, Agere, according to Morris, "persuaded" its suppliers and customers to use E2open's services by showing them the value it could return to both parties. ("Of course, some of our suppliers are a lot bigger than us," Morris points out, meaning that he couldn't simply force a partner to sign on.)
Through E2open's single, Web-enabled connection, Agere (and those of its trading partners that have signed on to use E2open's hub) now has a more accurate, timely view of demand and order management data than it did previously, when it depended largely on manual processes, including fax, e-mail and phone calls. For example, the buyers in Agere's procurement group are now able to quickly adjust order amounts to match new (and more accurate) forecasts and then modify supplier shipment data before it becomes a problem (an incorrect amount) in the back-office Oracle 11i system. On the back end, the purchasing group, which tracks the ebb and flow of purchase orders worldwide, is now able to send and receive purchase orders that are now both more up to date and accurate. And many of those manual processes are becoming a memory as supplier data is now able to flow automatically into Agere's Oracle ERP applications through E2open's hub. From a business process perspective - as well as from the IT side of the house - the savings are immense.
"With one single integration point, E2open shields us from doing the actual integration work ourselves," Morris says. "We don't see any of those problems any more. Now [integration work] is E2open's headache."
Currently, Agere uses E2open's hosted services for forecasting, generating orders, demand and supply synchronization, and logistics visibility. Of Agere's 80 primary component suppliers hooked into E2open, four are "fully integrated", Morris says. That means that supply chain data "flows directly from their systems through E2open's and to ours without anybody touching it at all". Agere's Oracle 11i ERP system, based in its Allentown, Pennsylvania, headquarters, receives all the inventory and forecasting updates automatically. If they choose, Agere employees can go into the E2open site to see metrics on how their suppliers' goods are tracking or to look at forecasts.
Those 76 Agere suppliers not yet fully integrated still are able to input their data into an E2open-hosted customized Web page, where they can view all transactions, orders and status. But even when those suppliers add supply chain data to the site manually, Agere's side of the equation stays electronic, with the data flowing automatically into Agere's Oracle system. From Morris's point of view, even if all his suppliers never get to the full integration stage, it's been worth it already because of the efficiencies gained from working with real-time data, the savings that come with reducing manual-entry errors and the greater systems integration achieved by Agere's suppliers and customers.
Implementing E2open's package only took Agere nine months, which is one of the big selling points of the outsourced, supply chain service providers: faster implementation times with measurable returns on investment.
Ron Vance's investment in E2open was "very modest". "It's not like we put a couple of million dollars into this thing," the CIO of Tyco Electronics says. "It's more like a couple of hundred thousand."
Ranga Jayaraman, CIO of Hitachi Global Storage Technologies, says that going with E2open's system versus going with a home-grown one provided his company with a 33 percent reduction in onetime costs.
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