SCT Corporation Means (e)Business For Process Manufacturing

Event Summary

In anticipation of its annual SCT Summit user conference April 8-11, SCT (NASDAQ: SCTC), whose Process Manufacturing and Distribution Solutions Division is a prominent provider of business solutions for the process industries, orchestrated a press release blitz during March.

On March 6, SCT announced an expansion of its vision for its process manufacturing and distribution solutions business. This vision, called "Collaboration in Process," is based on recognition that process manufacturers and distributors will increasingly go to market as members of competing commerce networks. Namely, with the advent of increasing collaboration in supply chains, competition in the manufacturing environment is becoming less about competing products and increasingly more about competing supply chains.

SCT claims its vision extends beyond the traditional supply chain, which is defined by the physical flow of goods, to include the participants who do not directly handle the product but rather handle information, such as exchanges, markets, brokers, and other service providers. This complex relationship network, together with the traditional supply chain network, defines the new paradigm of business - the commerce network. A significant piece of the expansion of iProcess.sct features a relationship network modeling, allowing enterprises to capitalize and collaborate when relationship events occur within or across the commerce network.

To meet its expanded vision, SCT has announced additional products and features that focus on Supply Chain Planning and Optimization, Internet Commerce, and Relationship Management. To that end, on March 20, SCT announced the newest components of the iProcess.sct solution, delivering additional e-CRM capabilities.

The iProcess.sct suite includes advanced planning, demand planning, and advanced scheduling, and with planned expansion to include transportation planning and replenishment planning with support for Collaborative Planning, Forecasting and Replenishment (CPFR) and vendor-managed inventory (VMI). SCT's iProcess.sct also includes sell-side e-commerce and eCRM solutions, with planned expansion to include interactive customer service capability, and access to e-commerce applications via wireless technology.

Central to SCT's product announcements are Interactive Customer Assistance components of iProcess.sct. These will enable real-time customer interaction through SCT's sell-side Internet commerce solution. Using these solutions, SCT claims that enterprises can extend Internet commerce applications with live on-line communications and call-center capabilities. Functionality includes instant messaging, live chat, e-mail, and real-time "follow-me browsing," which enable a customer service representative to remotely guide a customer through the on-line sales process. Trading partners can choose how and when they will do business with each other, whether it be through a website, over the phone, or a handheld or personal digital assistant (PDA). Wireless business activities include placing or checking orders, inquiring on goods available, and looking up quality specifications on newly arriving shipments.

On March 19, SCT also announced a partnership with IBM that combines the iProcess.sct solution with IBM e-business solutions. As part of the relationship, SCT will offer iProcess.sct with IBM's financing, hardware, software and service solutions. With the relationship, SCT embraces key IBM technologies, such as IBM WebSphere* software, MQSeries,* and the DB2* Universal Database. SCT also embraces multiple leading IBM platforms, including the new IBM eServer* pSeries and xSeries systems.

While the new vision focuses primarily on expansion in the aforementioned areas, SCT will continue to offer its Supply Chain Execution/ERP products to the market along with continued upgrades and additional applications for warehouse management and trade funds.

Market Impact

With these announcements, SCT raises the ante for e-commerce within the process manufacturing space. The expanded vision addresses the marketplace realities of its process manufacturing segment. Most of these markets live with the reality of very slim margins. To compete, these companies must continue to reduce their cost while increasing the level of service to their customers. The time-to-market for these companies is often constrained by the idiosyncrasies of handling natural resources (e.g., seasonality and perishability). For these companies, however, the speed of communications promised by the Internet has evolved into a new era of competitiveness that is not that typical within the discrete manufacturing sector.

As industry expert Bill Friend, ex-VP of IT and Logistics for Simplot states, "Competition within the process industries can no longer be based upon price and quality, these are givens. Competition must move to increased levels of service. Process companies must wrap their products in information to better serve the total needs of their trading partners."

Incumbent process manufacturing vendors will have to assess their offerings relative to iProcess.sct to counteract the impact of this expansion in functionality. Since most of them are currently in a tight spot with dwindling resources, this need may only rub salt into their wounds. Vendors that have a broader focus than the pure process manufacturing but that also compete in the space need to more deeply grasp the inherent process market peculiarities versus the advantages of offering perhaps broader but less focused solutions.

While the above strategic moves are a step in the right direction, SCT has yet to adequately address the buy side of its e-business applications, namely, the area of e-procurement. While SCT has formed a partnership with, a leading food ingredient exchange, as part of their buy side e-business efforts, it has not yet provided similar offerings for the remaining segments of its focus (e.g., chemical, life sciences, etc.). Some competitors like Infinium, can tout both vertically focused e-procurement and integrated CRM solutions. Look for SCT's remedial actions in that regard.

User Recommendations

Existing SCT customers should consider these announcements as central to their e-commerce plans, although informing themselves about other vendors' offerings would be beneficial. Process manufacturing enterprises from the above mentioned industries that are looking for e-commerce or other enterprise solutions should place SCT on their initial list of prospective vendors. Potential and existing users should be aware of the fact that it is a long journey from vision to execution. Therefore, prod SCT executives about firmer product availability dates and bear in mind typical issues associated with immature product releases.

More general recommendations for both current and potential SCT users can be found in SCT Corporation: The Last Viable Process Manufacturing Vendor Standing?

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