Business is good for Flextronics International, a high-tech contract manufacturer in Singapore. Since 1993 the company's annual sales have grown from $93 million to $10 billion in 2000.
The secret of its success is outsourcing. Original equipment manufacturers (OEMs) are closing factories and outsourcing some or all of their product manufacturing to companies like Flextronics. But outsourcing has its own problems. The continuous influx of new business has overwhelmed customer service and supply-chain management at many of the autonomous design, engineering and manufacturing facilities Flextronics operates in 27 countries.
Like other companies seeking an efficient, centralized means of disseminating information, Flextronics concluded that it needed a portal to replace its previous interchange of e-mail, faxes and weekly reports, recalls Brad Vandehey, project manager at the Flextronics facility in San Jose, Calif.
The major portal vendors fell short, according to Vandehey, because their products merely provide a front end to a company's document repositories. Sequoia Software of Columbia, Md., was able to do more by basing its product on the eXtensible Markup Language (XML) technology standard. "Sequoia's portal had a workflow engine we could use not only to automate processes and reduce paperwork, but to unite business partners and supply chains," he says.
Kathleen Hall, an industry analyst with the Giga Information Group in Cambridge, Mass., believes Sequoia's solution is unique because of its XML capabilities. "[Sequoia's solution] allows you to take XML-based messages from back-end repositories and feed them out through the portal interface and back again. This gives you an interactive gateway, not a static intranet/extranet publishing mechanism."
XML provides standardized representations of data structures so data can be processed appropriately by heterogeneous systems without case-by-case programming. This method suits e-commerce applications and supply chain systems that operate across enterprise boundaries.
The portal allows the company to communicate better with its customers, linking them in a virtual demand chain where changes in customer requirements are immediately reflected in production plans. Managers can easily access and analyze customer requests through the portal.
By linking parts suppliers into the system, Flextronics eliminates the need to send them new purchase orders. By keeping the minimum amount of inventory on hand and ordering additional parts just in time, the company has achieved significant reductions in cost. The company has also been able to minimize the paperwork required for requesting and making changes, adds Vandehey.
Although many portal tools vendors claim to be XML-compliant, says Giga's Hall, it often takes additional tools for users to embed the semantic and syntax rules within their applications. She foresees that XML will become the universal language of business technology that all portal vendors will have to embrace to stay in business.
"XML is not a differentiator, it's a given," Hall insists. "It's the mechanics behind the scenes. Organizations that enable XML today will have much greater flexibility in how they implement their B2B relationships."