An Interview with Manugistics'' Greg Owens: The Heart of Supply Chain Applications
Q: When we worked with you on ASCET Volume 1, your stock was at $4.50 a
share and n
ow
your stock is currently demonstrating growth of almost 400%. What steps did
you take as CEO to bring about this type of growth?
A: One thing we did was focus on developing the innovative business solutions that our clients need. Manugistics is differentiating itself by defining and dominating Enterprise Profit Optimization (EPO) - an emerging enterprise management discipline made possible through the combination of the proven cost-reduction power of supply chain management (SCM) solutions and the breakthrough revenue-generating capacity of pricing and revenue optimization (PRO).
We are committed to the flawless delivery of our Enterprise Profit Optimization (EPO) and eMarketplace solutions, which are designed to help companies lower operating costs, enhance profitability, and accelerate growth by optimizing the supply-demand network from design and procurement through pricing and delivery.
I am confident that our success in taking market share, strengthening our market position, and achieving profitability stems from our dedication to flawless execution and delivery on our promises and commitments to our clients.
Q: How will Manugistics play in the collaborative supply chain space?
A: Manugistics was an early innovator in trading partner collaboration, with our first Internet-ready solutions commercially available in 1997. We will continue to play a very significant role in both private and public eMarketplaces. Our technology initiatives continue to focus on the changing needs of the companies we serve, as well as on the continually evolving requirements of the eBusiness economy.
Many collaborative eMarketplaces began by facilitating e-procurement of indirect materials, because those materials - like paper, desks, and materials for maintenance, repair and operations (MRO) - are not germane to an enterprise's core business. Enterprises will become even more focused on supply chain optimization applications for direct materials procurement, because about 75% of a company's total procurement spend is on raw materials.
I think we will continue to see significant adoption of public and private eMarketplaces.
Q: What do you foresee as far as netsourcing with the Manugistics products?
A: We have Web-enabled our Manugistics NetWORKS family of solutions through our proprietary Manugistics WebWORKS architecture and have provided advanced integration to disparate systems through our WebConnect integration platform. Through Manugistics NetWORKS Marketplace, our eMarketplace infrastructure, we are addressing the eBusiness processes enabled by the Internet, such as auctions, dynamic pricing, procurement, track and trace, and order and pipeline visibility.
What you'll continue to see is that the supply chain optimization applications will be core to the procurement of components that comprise the bill of lading, the direct materials, the component supplier planning, and scheduling. In the past, most companies compartmentalized these functions, but now the Internet has enabled companies to optimize throughout their entire value chain.
Optimized supply chain applications for direct materials procurement is proving to be what brings real value to these eMarketplaces.
Q: How has having EPO in your arsenal improved your deliverables?
A: EPO is the next important wave for efficient and effective enterprise management, just as supply chain management, customer relationship management, or enterprise resource planning have been waves.
Traditionally, companies have not done very well at bringing decision support, or a science, to pricing and profit optimization. A lot of companies still don't have the visibility necessary to understand where their margin or profitability come from - they understand where their revenues come from, but they don't necessarily understand where they are making money. Manugistics has been focused on helping companies deliver a product at the right place at the right time. But now, with EPO, we can also help a company focus on delivering a product at the right price which actually helps alter demand.
EPO is a solution that drives profitable growth through the simultaneous optimization of the supply-side and demand-side functions - both within a company and throughout its trading network. EPO combines the proven power of cost reduction solutions with the revolutionary breakthroughs of emerging pricing and revenue optimization tools. EPO integrates disparate parts of the value chain into a powerful engine of efficiency and profit enhancement.
Q: Manugistics has already established a reputation for what it can do as a manufacturing solution. What kind of vertical enterprises will your solutions be best suited for?
A: We think we've got to focus on all industry verticals, and we are clearly developing solutions that help address industry-specific challenges. You look at the discrete manufacturers - for example, manufacturers in the electronics industry. Electronics manufacturers are much more interested in solutions that focus on shorter product life cycle or constraint-based manufacturing. But when you go into the retail and consumer side, you'll see that they are much more interested in the collaborative, demand planning, and fulfillment areas. So we're going to focus on all industry verticals, and we'll focus on developing the solutions and the build-out of those solutions by industry verticals.
You will also see Manugistics gaining market traction in electronics and high-technology, automotive, chemical, oil and gas, life sciences, consumer products/retail, and transportation as we move forward.
Q: With all of the discussion about aggregation in the software industry, do you foresee a TSP - a Total Solution Provider - in the future?
A: I believe that we will continue to see aggregation within some areas. For instance, you'll continue to see consolidation in the software industry. What I don't envision is that there will be a single software company that offers everything; I don't think you can be good at databases, ERP, supply chain management, customer relationship management, and e-procurement. I just don't see one-stop-shopping for software - that would be too many battles on too many different fronts. I think what we will see is an environment where the supply chain will broaden out and divergent pieces will consolidate within the industry.
Q: Most people know that you were previously managing partner of the Supply Chain Practice at Andersen Consulting. How would you describe the consultant's evolving role in the e-economy?
A: Consultants have a number of roles. They have a diverse group of long-term relationships in the marketplace. They become trusted business advisors to a lot of their clients. Once they become familiar with an organization, they add value by bringing a different perspective, understanding and expertise that allows the consultants to help the company determine its focus. With time-to-market as critical as it is today, consultants can help companies implement software and projects much faster than they did in the past in order to achieve a competitive advantage. Consultants bring a great amount of accumulated knowledge and resources to the table to enable faster time-to-market. I believe these are the key roles consultants will continue to play.
Q: What are some of the key points senior executives must understand in making these critical adoption-related decisions?
A: Most importantly, senior executives must assess every decision based upon greater efficiency. As we see even greater pressure for delivering margin contribution, we will continue to see efficiencies and pricing capabilities driving the marketplace. Once a product is brought to market, it is at its highest price point. If you are producing efficiently, but you're not pricing your products competitively in the marketplace, then your competitors will win out.
I also believe strongly in the value of optimization software, because it is software that actually thinks - it makes intelligent business decisions given the rules and parameters you set. The supply chain drives intense globalization of the marketplace, increasing price pressures from both ends. The efficiencies derived from an optimized supply chain used to be a "nice-to-have," but now I believe it is a business imperative. For all of these reasons, I feel that senior-level executives will adopt more optimization-related software.
