When I2 was slam dunked by Nike

In 2001, I2’s share plunged by 22.4% as the markets reacted sharply when the reason given by Nike for its expected third- quarter earnings dip was flawed software from I2.The then CEO of Nike Philip Knight thundered in a conference call :” This is what we get for our $400 million?”
I understand that all SCM best-of-breed softwares are complex. But technology and support was never a problem for I2 though their software is pretty complex (as normally every other vendors SCM software is). The problem lies in how it is implemented. Nike had a complex problem of mapping and tracking every shoe-model manufactured by it. I2 enhanced its software for this feature and it took longer than expected. With issues cropping up during go-live and Nike’s earnings dipping, Nike squarely deflected the blame on I2.
What would have happened if Nike had chosen a big ERP player (though they had limited role in SCM during that period)? Would they have been able to put the blame on these big ERP players. The answer is always yes. The inspiration to write this article was because of the below piece of news I read at the start of this year.
Source: http://www.networkworld.com/news/2008/013008-ibm-american-lafrance-bankruptcy.html
IBM probably won't be asking American LaFrance for product endorsements anytime soon.
American LaFrance, an emergency vehicle and equipment company in South Carolina, has faulted, at least in part, IBM's software implementation for its recent bankruptcy in court documents filed at the US District Bankruptcy Court of Delaware this week.
According to the documents, American LaFrance began using unnamed ERP purchasing, inventory, production, payroll and finance services with the help of IBM and IBM software after the company was spun off from Freightliner in 2005.
However, the company said it began experiencing a "plethora of problems" with the components of its ERP software from its inception. Among the "serious deficiencies" that American LaFrance claimed had a "crippling impact" on its operations were "incorrect or incomplete" inventory data on the system; missing financial information that included inaccurate accounts payable, accounts receivable and general ledger balances; and the inability to transfer data from the Freightliner system onto the new system. As a result of these problems, the company says it was unable to reliably maintain its inventory, thus hindering the company's ability to deliver vehicles and equipment to customers. This "had an immediate impact on [American LaFrance's] cash flow and created a liquidity crisis," the company claimed.
Later in the documents, the company said it was "analyzing potential causes of action against IBM in connection with the problem-riddled transition to the ERP system."
An IBM spokesman confirmed to The Register that American LaFrance had used its systems, but declined to elaborate, stating that the company was "reviewing the documents filed with the court and have no further comment to make at this time." IBM bills its ERP system as "a comprehensive solution for managing business processes, including financials, human resources and operations and corporate services.

This leads us to the raging issue of best-of-breed vs ERP systems. Watch out for my next post.

I2 Tech to get $83.3 million SAP settlement

SAP is going to pay I2 Tech $83.3 million to settle a two-year old patent-infringement lawsuit. I2 had accused SAP of infringing on seven of I2’s software patents.
By paying up all of it in cash,SAP has been able to get the patents cross-licensed. Now each party will receive license to certain patents. Read the below Associated Press article in businessweek for details.
I2 Technologies Inc. said it will receive a cash payment of $83.3 million under terms of a patent litigation settlement with German business software maker SAP AG.
I2 makes software that helps companies coordinate deliveries from suppliers with their production schedule, and manage inventory.
The companies have agree to cross license certain patents, and dismiss all existing legal action with prejudice.
Further terms weren't disclosed.
I2 expects to receive the cash payment in the third quarter. The company also said that since the settlement will boost financial performance, second-quarter results are no longer expected to be flat with the first quarter.
Shares rose 37 cents, or nearly 3 percent, to $13.09 in afternoon trading on an overall down day for the markets.
Source: http://investing.businessweek.com/research/stocks/news/article.asp?docKey=600-200806260839APDIGITLFINANCE__i2_Technologies_SAP_S-6AJ23A7BOO94R6D9VMCTEHU7DQ×tamp=06/26/2008%208:39%20AM%20ET&headline=I2%20Tech%20to%20get%20%2483.3%20million%20SAP%20settlement&docSource=AP%20Digital&provider=ACQUIREMEDIA&realtedsyms=|US%3BITWO|US%3BSAP&symbol=SAPG.DE

“I2 makes software that helps companies coordinate deliveries from suppliers with their production schedule, and manage inventory.” Reading this line from the AP article makes me wonder how I2 has been relegated to the role of an inventory management solutions provider. Wasn’t it delivering a suite of products in almost all functional areas of Supply Chain? Maybe , its time to discuss why I2,which was one of the leaders in the best-of-breed SCM software providers, declined. This would lead to the wider debate of best-of-breed vs ERP.

Supply Chain Management: How to introduce the subject to the uninitiated?

The oft-consulted Wikipedia gives the definition of Supply Chain Management as “Supply chain management (SCM) is the process of planning, implementing and controlling the operations of the supply chain as efficiently as possible. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point-of-origin to point-of-consumption.”

What do you do when a fresh intern asks you what is supply chain and supply chain management? Well, I go about like this.

Three things make a Supply Chain, namely Customers, Producers and Suppliers. One can extend the Supply Chain to include the customers’ customers and the suppliers’ suppliers. Supply Chain Management is an approach to manage the troika of PPF which stands for Purchasing, Production and Fulfillment, in order.
Purchasing- I/P from supplier
Production- Converting I/P to finished product(O/P)
Fulfillment- Delivering O/P to customer.

Major decisions that are taken before setting up a Supply Chain in place can again be summed up in a triad as where to, how to and from which.
a)Where to locate the DC(Distribution Centre)
b)How to transport goods among the DCs
c)From which places to procure the goods.

Things you need to take into account when buying supply chain management software

a)Understand what functions are required by your business before you buy any SCM product. How the product integrates with the other IT systems in place now or in future in your business should play a major role in determining the buy. Let’s straightaway start with a generic example. If you are planning to buy a Merchandising Software from one software vendor and already have a different Warehouse Management Software, make sure that the merchandise software can be integrated with the Warehouse Management Sofware. Another decision making criteria is whether the SCM software you are going to buy can integrate with the ERP system in place.

b)Most often than not, best-of-breed SCM software providers keep adding newer functionality to their base products by constantly taking the best custom features asked by the customers. These may suit your business needs which keep on changing and while fine-tuning your supply chain, you may need a new functionality which is already there in the software but has been switched-off at the time of delivery because it wasn’t asked for.

c)Keep in mind that an SCM product which suits a big player like WalMart may not suit everyone else.Just because WalMart has bought a certain product from an SCM software provider doesn’t mean that the product would be suitable for your business. Walmart is able to invest huge amounts of money in getting the product customized to suit its business. The customized product may more often than not nowhere resemble the base product sold by the SCM software provider. So never go by reputations. Your SCM problem could be unique and if you have luck on your side, a niche player could very well solve your business needs.