Sixth Dispatch From Synergy

On a moment's notice last week, Bill Angeloni, a FreeMarkets' alum and President and CEO of Exostar, flew into town for the final keynote address at Synergy 2006. The theme of his talk was working outside of the four walls of the organization. Bill started his talk by giving a plug for Exostar as one of the surviving marketplaces. Founded in 2000, Exostar currently has 115 employees, and is one of two --- the other being Aeroxchange -- A&D marketplaces still in operations. During the B2B boom, there were initially 10 A&D exchanges. Today, Exostar focuses on security-enabled applications that cover procurement, sourcing, supply chain management, and collaboration. Exostar created much of their own security and eProcurement infrastructure, but customized applications from best of breed providers Emptoris, e2Open, and PTC in various solution areas.

The rest of Bill's talk focused on the "inside / outside" challenge organizations face today. The case of Boeing's first twenty first century commercial platform, the 787, illustrates this point. Boeing will only make a single assemble for this new airplane internally (the vertical fin in the back). Suppliers will provide the rest of the components and parts for the 787. They will arrive in Seattle in a just-in-time environment, allowing Boeing to assemble a single plane in 3 days. Think about the Spend Management implications of a production process like this. In outsourcing the manufacturing and procurement for virtually the entire aircraft to suppliers, Boeing, in the truest possible industry sense, is really acting as just a systems integrator. But at the same time, they're taking on tremendous supply risk because a single commodity shortage or supplier disruption could shut down the entire production line for the plane.

To overcome this risk and bring the platform to market in a rapid manner, Boeing has focused extensively on enabling its external enterprise, the place that exists between its internal operations and its supply community (consisting of tier 1, tier 2, and tier 3 providers). For example, Boeing is purchasing key commodities such as titanium for its suppliers, given that plane will consume an estimated 30-50% of the world's supply throughout its production run. Boeing has also provided collaborative design, sourcing and supply chain applications to its partners to create visibility throughout all tiers of this extended network.

Fascinating stuff. But perhaps the title of his talk should have been "The external world: going where ERP has never ventured before".

Jason Busch

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