An enhanced i2 application goes beyond the four walls
By Thomas A. Foster, Editor-in-Chief, Global Logistics and Supply Chain Strategies, April 2002
New functions have been added to i2's Five.Two software to provide real-time visibility into orders, shipments and inventory across the value chain.
Today's supply chains exist primarily outside the four walls of any manufacturer or retail. Dallas-based i2 Technologies has brought this point home with the addition of new inventory visibility and exception management capabilities to its i2 Five.Two collaboration solution. The i2 collaboration and inventory visibility solution differs from most enterprise resource planning (ERP) and advanced planning and scheduling (APS) applications that are limited to operating within an enterprise or a division. i2's solutions offer multi-enterprise, multi-tier collaboration and inventory visibility designed to allow companies to reduce inventory-carrying costs, while improving customer satisfaction.
It provides customers with faster and more accurate order, inventory and shipment information across the value chain. The i2 solution also enables companies to quickly act on the information leading to improved responsiveness and rapid decision-making.
"The i2 solution spans demand-supply planning and integrates multiple tiers of suppliers."
--Steve Banker, ARC Advisory Group
According to Andy De, i2's director of solutions marketing, supply chain, the visibility and collaboration application adds a "holistic" planning horizon between suppliers and the enterprise that starts as much as 12 months out. As the time frame for execution narrows to days and hours, the same solution provides real-time visibility, so exceptions can be anticipated and dealt with before they become a problem. In many ways, the solution is a form of collaborative planning, forecasting and replenishment (CPFR), but with greater capabilities.
There are four levels of collaboration in the new i2 solution:
1. Capacity collaboration: Months in advance, a company can learn from suppliers if they have the capacity to meet projected demands. If not, there is time to do something different, maybe with a different supplier.
2. Forecast collaboration: A manufacturer or retailer provides its forecast over the next few weeks to its suppliers to see if they can meet an upside demand that may come along. Suppliers can say yes or no.
3. Order collaboration: When the order is about to be placed, an enterprise collaborates with its suppliers on discrete orders at the SKU level. Supplier will look at the PO and confirm that they will deliver or not on every item in the specified quantities.
4. Inventory visibility and execution collaboration: Collaborating around inventory may be the most difficult task of all because every trading partner believes it needs its own buffer. While everyone knows there is buffer stock, no one really knows how much or exactly where it is. Is it at the customer warehouse, a vendor-managed location, intransit or at the supplier? Unless this information is made visible, there is no way of knowing how much is in the channel.
This inventory level is the area where i2 has added the greatest enhancements. The visibility and collaboration solution provides a window to anywhere in the supply chain. If a problem exists, if delays are imminent, the solution triggers exceptions. Based on the specific events and the rules established, it proactively alerts all parties involved so a problem can be avoided.
The alerting function is a rules-based supply-chain event management tool that constantly watches pre-established milestones that have to be met. The milestone may be to maintain an inventory of so many units. It may be that a shipment must be dispatched within so many days of an expected promotion or production need. The exception is triggered whenever the rules are violated. Violations are ranked into degrees of criticality. The first alert may just be a message to a planner. If another milestone is missed, the exception gets elevated to alert more people, and so on.
The visibility and collaboration solution follows the best practices philosophy of going back into the supply chain as many tiers as possible. For example, HP, Dell, Hyundai and other high-tech companies have contract manufacturers like Solectron as their first tier. But to operate in the extremely tight inventory levels that make these companies so successful, they must use the visibility and collaboration capabilities of the i2 solution to reach the second or third tier. Only by collaborating at this level, is it possible to make sure the components and sub-components are going to be on the production line when needed for final assembly. The i2 solution provides not just the collaborative capabilities, but also the intelligence to look at the whole bill of materials and expose it to the right suppliers.
"We are combining our supply-chain management capabilities with collaborative capabilities to create a hub where multiple tiers can act on the BOM and get responses," says De.
Other selling points of the new application include:
"i2 has been a visionary and leader in collaboration and pioneered a form of collaborative planning that starts with a collaborative forecast and by stages turns into allocated orders," says Steve Banker, director of Supply Chain Solutions at the ARC Advisory Group. "The i2 Collaboration and Inventory Visibility Solution spans demand-supply planning to execution and integrates multiple tiers of suppliers into a synchronized and efficient collaborative network."
According to i2, its customers have already quantified hard-dollar savings and benefits from its solution, including:
Hewlett-Packard is one of the early adopters of the new visibility and collaboration solution because it needs to understand inventory status from order to final delivery for its own operations and those of its trading partners. According to Jeff McKibben, director of worldwide e-procurement for Hewlett-Packard, the i2's Collaboration and Inventory Visibility Solution will be used in its KeyChain private supply chain hub. "It will take us to the next level, providing key trading partners, such as contract and component manufacturers and logistics service providers with real-time visibility to forecasts, orders, shipments and inventory," says McKibben. "As a result, we can further increase the speed of our value chain, reduce inventory levels for all players and improve our customer responsiveness."
The basis for competition is rapidly shifting from company versus company to value chain versus value chain. "The rules of competition are changing. Excess or inadequate inventory results from a lack of visibility and an inability to respond rapidly to changes in demand," says Steve Robinson, i2 executive vice president solutions marketing. "i2's collaboration and inventory solution provides visibility from order to delivery for our customers, and offers them the ability to plan and execute with their trading partners. We have designed solutions to enable both sides to meet their customers' needs in the most cost-effective way with the lowest inventory and maximum profitability, at the lowest total cost of ownership."