Going through growing pains

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Make no mistake: Collaborative manufacturing is not yet all it is cracked up to be.

The term, ushered in about six years ago with the birth of the Internet, describes companies with reactive, outward-looking supply chains. The ideal is that companies would link to all their business partners and shoot information back and forth for faster product development, reduced operating costs and reduced inventory costs.

What’s really happening is a lot more secular, experts said.

Powerful corporations are buying stand-alone applications that they distribute to hundreds or even thousands of suppliers. And they aren’t necessarily the ultralimber enterprises that boosters originally envisioned. More often, today’s systems make product development for a single entity that much faster or provide services to one corporation’s customer base, experts said.

No hand-holding

"People mistakenly thought collaborative manufacturing would have this ‘Kumbayah’ effect, with everyone holding hands and working together in peace and harmony," said David Taylor, senior VP of the consultancy Operon Partners Inc., Stamford, Conn. "So far, these installations have largely been about getting content in a standard format for one big company, and [making it] receivable through a Web browser."

Jack Maynard, research director-enterprise business applications at Aberdeen Group Inc., Boston, compared current Internet collaborative manufacturer applications with efforts by shipping companies, automobile manufacturers and others to give away computers to customers and partners in the 1980s. Back then, the free technology ensured data sent and received was secure and of a common format. Maynard doubted the staying power of b-to-b exchanges.

"Manufacturers are going to use the exchanges for finding new partners or to read about the latest products available, but the practical side of the equation tells me that companies are going to go private when it comes to data they want to control," Maynard said.

Drawing interest

Sales of collaborative commerce applications will reach $1 billion by 2004, according to Meta Group Inc. The predictions has drawn interest from transaction-based exchanges.

This month Ariba Inc. committed $2.55 billion in stock to acquire collaborative commerce specialist Agile Software Corp. The potential for collaboration puts vendors PTC, MatrixOne Inc., Tecnomatix Technologies Ltd., SDRC, Alventive Inc., E3 Corp., Agilera Inc. and Exterprise Inc. in good stead, Maynard said.

Exterprise, based in Austin, is trumpeting its work with John Deere Special Technologies Group’s 23-year-old Agris Corp. as a key proof point for its technology. How advanced is it? The system, scheduled to go live in March, accesses multiple partners to present farmers with financial information.

"Our first step is to provide a collaborative application that provides the same level of financial services that one might get from an online bank," said Kari Payne, director-corporate marketing. "No one is providing that level of technology to an agribusiness tool."

Exterprise President-CEO Manoj Saxena said collaborative systems will become more complex as years pass. Systems can quickly deliver a financial benefit because much of the information collected previously was hand-coded on paper. A typical customer might pay as much as $1 million for a system, which allows them to license software on behalf of the business partners they plan on linking up, Saxena said.

Dell Computer Corp. is using Agile Software’s collaborative manufacturing software to increase the number of new products it can bring to market each year, said Agile’s electronic industry director Mark Angelo. Today, Dell uses the system to synchronize product information from about 1,700 companies in a common format.

"In the past, people have tried to speed up new-product development through advanced-planning systems [which forecast supply availability and customer demand through analysis tools]," Angelo said. "The problem with that approach is that all of the partners are planning against numbers that aren’t real. Internet systems allow you to plan new products against real data."

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