It’s all about the platform

Last June, I wrote a column about the emergence of cloud-based supply chain software platforms, especially coming from the startup community.

A number of very savvy and very talented entrepreneurs, many with prior experience as either practitioners or solution providers, took notice of the number of legacy systems out there that don’t meet the demands of today’s supply chain operations, but would be way too expensive and time consuming to rip and replace.

Some of the platforms are essentially best-of-breed solutions that draw data from your legacy application – everything from an ERP to a WMS – analyze that data in the Cloud to solve a problem and suggest a solution. Still others are integration platforms; they can bring together the control systems from automation systems, such as say one supplier’s robotic operating system and another supplier’s conveyor system, to creating a unique solution much faster than you could do it on your own.

In some respects, platforms aren’t new. I remember when DMLogic, now part of Korber Supply Chain, was formed by some software veterans to develop new functionality for one of their former clients running an ancient WMS.

I was reminded of the platform issue a couple of weeks ago when I learned that E2open was going public, and had a chance to talk to the company’s CEO, Michael Farlekas ([url=http://www.e2open.com/executive-team/]http://www.e2open.com/executive-team/[/url]). While the recent public offering was the catalyst for the call, most of what we spoke about was the direction of the supply chain software market.

First, a little background on E2open. The company, which is now some 20 years old, was founded in 2000 as a joint project of 8 major companies in the high tech industry: Hitachi, IBM, LG Electronics, Matsushita, Nortel, Seagate, Solectron, and Toshiba. Essentially, it was a control tower for manufacturers before we really spoke about control towers, providing supply chain visibility before we talked about visibility across the supply chain as we discuss it today.

Over the years, the company has grown both organically and through acquisition, including the acquisitions of Steelwedge in 2017 and Amber Road in 2019. The first beefed up E2open’s planning capabilities and the latter it’s global trade management and compliance chops. The company is currently Number 6 on Gartner’s list of the top supply chain management software providers, with 2019 revenues of $287.2 million.

Today, E2open helps “the world’s biggest supply chains manage and orchestrate their very complex supply chains, from bringing in raw materials, converting them to finished goods, and managing the distribution of those goods to the markets they serve,” is the way Farlekas, who joined the firm in 2015, describes the company. He added that it is “an end-to-end operating platform that allows our customers to see what’s changing across their networks throughout the day.”

There’s that platform word. And, he noted that when he joined the firm in 2015, it’s functionality was focused on high tech manufacturing. “High tech knew us, but the P&G’s of the world did not,” he said. “Now, we have product families across industries, and offers solutions that span the supply chain, including TMS, visibility, global trade management, a full planning suite and channel shaping solutions.” 

We began by talking about what going public means to the future of the company. “It gives us a permanent capital base,” he said. “And, I think it will accelerate some of our growth plans.” Those plans will include more acquisitions, like Amber Road, that complement and build on what the company already does. “Our acquisition criteria is predicated on two things,” he said. “One is mission criticality for our customers and the other is that it is functionality we can integrate into our platform. We don’t want to be a rollup; we want an operating platform.”

What’s driving his customers’ supply chains, and supply chain plans? Farlekas is hearing three themes. “One is agility, or the ability to adapt and react and change based on their changing circumstances,” he said. “Think about companies that have to figure out how to go from 2% online sales to 10% online sales. That’s a big change, and most supply chains weren’t built for that.” The second, he added, “is how do I understand my demand, communicate to my supply network and then have them respond back in real time.” The third is the challenge of how to achieve digital transformation. “When you think about digital transformation, it’s clear that you need data, and you have to bring it together with your applications,” he said. “The challenge is that the data you need isn’t in the four walls of the brand owner. It’s in the systems of your partners. The challenge is to connect all of those systems together.”

That, of course, is the role that supply chain platforms are playing, and will play in the future.