Global Logistics and Supply Chain Strategies - March 2008 - (Page 52)

and Suzuki Motor Corp., along with a host of Tier 1 suppliers. While automotive makes up most of the business, Covisint provides its on-demand collaboration software to companies in the healthcare and financial sectors as well. The provider stresses data security, a sticking point in the early days of trading exchanges. Rival companies balked at the idea of running their data through a common system, even one with secure firewalls. The new venture’s heightened security mechanism “is one of the reasons that we’ve been able to grow from a revenue standpoint,” says Mike Minelli, vice president of automotive marketing and sales. “Fierce competitors need a trusted third-party if they’re going to use an ondemand service to federate applications or users across their community.” One big advantage of Covisint, says delays in the chain, while ensuring that critical documents are conveyed to customs in a timely manner. The Boeing Experiment Other portals have experienced similar growing pains. Herndon, Va.-based Exostar LLC specializes in software and collaboration hubs for the aerospace and defense sector. It is owned by The Boeing Co., BAE Systems, Lockheed Martin Corp., Raytheon Co. and Rolls-Royce. More than 34,000 trading partners communicate on the system. Most significantly, Exostar acts as the hub for communications between Boeing and its suppliers on the 787 “Dreamliner” project. The project is a radical step for Boeing, which is relying on suppliers to build large sections of the new aircraft, which are then assembled at Boeing’s facility in Everett, Wash. The expanded havoc with a system that is designed with little margin of error. In fact, supplier portals like Exostar are being asked to carry out far more complex tasks than their prototypes of 10 years ago. Scott says the ventures were quickly forced to depart from a transaction-based model in favor of addressing the true complexities of global supply chains. Meanwhile, technology advanced to the point where portals could support a “network-centric business model” involving the two-way transfer of information among a universe of partners. In a sense, Scott says, the exchanges became a business-oriented precursor to the social networking sites that exploded in popularity shortly thereafter. E2open, based in Redwood City, Calif., provides the software that underlies the Exostar platform. Senior vice president Lorenzo Martinelli says it took a while for “The leaders were hopeful that they could set up a toll booth along the information highway and collect. As a result, you saw companies come out with ill-founded business models.” — David Hope-Ross of Oracle Minelli, is its “single sign-on” design. A supplier can log on to the portal once, then access the individual portals of its various customers in one session. Yet sensitive information never moves between competing companies. Suppliers, once suspicious of the portal concept, have embraced the new version of Covisint, Minelli says. The portal currently hosts some 45,000 trading partners and supports around 2 million linkups, or “federations,” per month. They include smaller suppliers with access to nothing more than a telephone or dial-up internet connection. Participants use the network for exchanging information related to inventory management, ordering, invoicing, production and other key supply chain activities. A global logistics application lets carriers, freight forwarders and logistics service providers feed in data about the status of shipments. Manufacturers can obtain real-time information about role for suppliers puts additional responsibility on the shoulders of Exostar, which ensures that thousands of partners involved in construction of the 787 are tightly linked each step of the way. Recently, however, that plan hit a snag, when Boeing announced that delivery of the aircraft would be delayed due to problems in coordinating global suppliers. Originally scheduled to debut in the summer of 2008, the Dreamliner has been pushed back to the middle of 2009 at the earliest. Peter Scott, vice president of marketing and corporate development with Exostar, says the principals realized that they needed even more visibility into the supply chain than they had envisioned. “We need to deploy deeper and faster,” he says. Boeing and its suppliers on multiple tiers require quick information so that they can react to schedule changes without disrupting the entire chain. The manufacturer had found itself coping with parts shortages and out-of-sequence deliveries, which can play his company to find its footing in the marketplace. Created in 2000, E2open originally offered auction capability, but that turned out to be less popular than elements of the “procure-to-pay” lifecycle: collaborative forecasting, inventory replenishment, vendor-managed inventory, logistics. E2open’s niche turned out to be the execution of key supply chain activities, including end-to-end tracking of orders. Glitches that arose in the 787's supply chain actually showcased the value of the Exostar venture, Martinelli believes. It’s all a matter of deciding which suppliers and parts need the highest degree of monitoring, and adjusting priorities when problems arise. “No matter what you do, you always run into issues,” he says. “The fact that there is a platform in place means you can correct it in a matter of weeks, instead of taking months to figure it out.” From the start, many businesses underestimated the technology that would be required to create true supplier-buyer col- 52 MARCH 2008

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Global Logistics and Supply Chain Strategies - March 2008 Editorial GL & SCS Exclusive FastForward Up Front The Green in Green Think Inside the Box Have a Second Look Can't Happen Here Opinion: Stay in the Black as Your Workforce Fades to Gray Opinion: Four Critical Steps to Managing Change in the Supply Chain Industry Voices

Global Logistics and Supply Chain Strategies - March 2008

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