|Supply Chain Network + S&OP|
E2open is, at its core, a supply-demand network, having built out connectivity to a large and continually growing network of trading partners; and, on top of that, a rich set of supply chain functionality for both the supply side and the demand side. Among the major network platform providers, they are the most focused on overall supply chain capabilities and demand-supply synchronization (the others1 tend to focus more on logistics or procurement). So it was a natural fit that E2open merged with Steelwedge, one of the top providers of sales & operations planning (S&OP) functionality.
The Perpetual Struggle to Align Supply and Demand
Every company that makes or sells things has a demand side and a supply side that are both in constant flux. On the supply side, suppliers have production issues, delays in transportation, hiccups in your own factories, and myriad other causes of delay or disruption. On the demand side, consumption and trends are inherently hard to predict — ‘that new dress is flying off the rack; we need more now,’ ‘those pants are not selling; cancel all our orders,’ ‘Our biggest customer just placed an enormous rush order.’ A key goal of supply chain management therefore is to adjust and align supply with demand, since both are continually changing, making sure you’re producing (as close as possible) the right amount, at the right time, delivered to the right place, all while meeting your strategic financial goals.
The Role of S&OP
Ongoing executional adjustments are required to attempt to compensate for these continual fluctuations in supply and demand. Beyond the daily executional adjustments, companies should (but don’t always) also conduct sales & operations planning (S&OP). This is generally done on a monthly cycle, to update and align long-term2 plans — such as aligning forecasts and sales plans with production and supply plans, and product and revenue/margin plans. Without S&OP, the long-term plans drift further and further from reality over time. But more importantly, S&OP brings together the key people responsible for all sides of the supply and demand equation, so they can become mutually aware of the disconnects, and work together to create adjusted plans that are aligned, and accommodate the realities and constraints on the ground.
Many firms use spreadsheets, emails, and phone calls to execute their S&OP process. That approach has many shortcomings that slow things down, provide incomplete or inaccurate or out-of-date data during decision making, and make it harder to reach consensus. Dedicated S&OP systems like Steelwedge solve many of those problems. Steelwedge provides a broad set of planning tools, extensive data-cleansing tools, complete in-context analytics, and collaboration tools that help keep everyone in sync, all on a cloud-based platform.
Combining the External and the Internal — Execution and Planning
Combining Steelwedge’s S&OP capabilities with E2open’s supply chain network and execution capabilities makes a lot of sense. Last year E2open acquired Terra Technology and Orchestro, adding real depth on the demand side to their already strong supply side portfolio. E2open has created a global many-to-many, multi-enterprise network connecting over 40,000 trading partners, processing over a billion transactions and a quarter trillion dollars of spend per year. On top of that they have built rich multi-enterprise supply chain execution applications, as well as visibility and analytics. Steelwedge has deep IP in S&OP and IBP (Integrated Business Planning). Combining the two creates a strong portfolio of solutions for connecting, aligning, and optimizing internally and across a company’s demand and supply networks.
From S&OP to IBP to Multi-Enterprise S&OP/IBP
IBP (Integrated Business Planning) takes the S&OP process and expands it beyond the supply chain function to the entire executive team and the rest of the company. E2open told me they plan to take Steelwedge a step further, using the S&OP process integrated with E2open’s network, to collaborate beyond the four walls with channel partners and suppliers. So much of the knowledge and risk about demand exists within the channel partners, and so much of the knowledge and risk about supply is with the suppliers. So, it makes perfect sense for organizations that have already implemented S&OP internally to incrementally3 expand the process outward to incorporate trading partners into the process. It takes a networked platform like E2open to do that efficiently and effectively. Steelwedge also brings another advanced practice; the ability to do S&OP continuously rather than once a month.
A Roadmap to Supply Chain Maturity
Thus, E2open can provide a ‘roadmap to supply chain maturity’ (my phrase, not theirs) for their clients — the ability to start with a single function, at the basic level, and then move to integrate additional supply chain capabilities and more advanced practices. E2open’s recent acquisitions give them a broad and rich portfolio of best-of-breed applications, each of which are competitive on their own when someone wants or needs a single function — whether it’s supply planning, demand planning, S&OP, track and trace, or another part of their portfolio. However, the differentiation that compelled many of E2open clients to sign on was the integrated portfolio that provides this roadmap of additional, integrated capabilities, that the client can implement as their own maturity grows, even if they start with a single function.
Creating a Formidable Force Within the Supply Chain Solutions Space
E2open went public in 2012. After struggling as a public firm, E2open reached an agreement to be taken private by Insight Venture Partners two years ago. Since then they have made strong strides in revenue and exceptional progress in profitability.4 This has given Insight Venture Partners and the management team the confidence to make their recent acquisitions — Terra, Orchestro, and now Steelwedge. As a result, E2open has become a formidable player in the supply chain market, entering the elite club of the top five supply chain vendors as the only one with a true, multi-enterprise network architecture. We will watch with interest where they take their capabilities next.
1 For example, GT Nexus and Descartes are focus primarily on logistics, and Ariba Network on procurement. — Return to article text above
2 Long-term plans are generally on a rolling 18-36 month horizon. — Return to article text above
3 As with any major change to process, the expansion of S&OP to include trading partners in the process is best done in incremental steps. For example, a firm might first work with a select few channel partners to integrate them into the process, and from that learn what works and doesn’t work as they go. Building on what they have learned, they might next incorporate more channel partners, in phases. Then they might start with a couple of suppliers and grow the supply side participation from there. This agile/incremental approach helps organizations to move and generate value more quickly and learn as they go, rather than doing the big-bang, big-risk, all-or-none, boil-the-ocean project that will probably be outdated before it goes live. — Return to article text above
4 As a private firm, E2open’s financial numbers are confidential. They shared some of their top and bottom line numbers with me, and the improvements over the past two years have been impressive. — Return to article text above
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