Inpart one of this series那I introduced元素(who by the way is not a client of ours, nor is Flextronics, not that it would matter to us anyway), its background, its products, and some initial perceptions based on the firm briefing me. I have yet to talk to its customers and will report back once there is more progress on that front. Still, there are many interesting implications stemming from this venture that are worth exploring – and there is a lot to explore here. Here we go…
In Part 1, I started asking some questions regarding the wisdom of such a foray by Flextronics. Too often, brick-and-mortar firms have delusions of grandeur regarding their ability to develop and commercially externalize various supply-side services. This could be forming a group purchasing entity, forming an industry marketplace (which have最近私下私下，再次成为De Rigeurin the era of private/hybrid clouds), setting up an international trading group, commercializing an advanced capability such as price risk management (this is an HP example), developing an online marketplace for trade payments (banking example), creating an industrial BPO offering, or any other of myriad services that can often be combined – as we wrote abouthere．It’s not to say that these aren't valuable, but it turns out that they often aren't really core to the business, and eventually get brought back in-house or shut down completely.
Big Supply Management and Why This Makes Sense
仍然有一个优点。对于一些主要的供应链参与者，实际上是核心......如果他们可以执行。它有点像供应管理组织的“魔术象限”（见herefor more) in that you can have a great vision, but it means nothing without the能够执行．Note that when I say “Supply Management,” I mean “Big Supply Management” (i.e., continually optimizing the supply side of supply networks through re-configuration and better management) rather than re-badging the purchasing department. I wrote about this topic and the 11 key capabilities for creating synergy between direct procurement and the rest of the supply chainhere（这是我所做的一份报告主义thatE2openhelped sponsor – and I think it’s pretty good… humbly submitted of course).
Anyway, let’s first place ourselves in the shoes of Flextronics and see why this venture makes sense (before tackling the implementation challenges).
First off, Flextronics is in a cutthroat, low-margin business, and its revenues are declining. It currently trades at about 20% of its trailing revenues. So, revenue uplift and brand multiplier uplift are both needed. It is a non-investment grade rated company in comparison to Hon Hai and Jabil (which can borrow more cheaply).
其次，为了提高收入来竞争洪海（Foxconn）并提升估值倍数，以更像丛，它必须专注于多个方面的创新。所以，考虑Flextronics'Lab IXincubator firm that funds “early stage disruptive technology companies incorporating hardware and software innovation.” Elementum clearly falls into the latter category. Of course, you might say that it’s a business application rather than embedded software in a product, but I would argue that the line between product, embedded software, supply chain telemetry beyond the product, and SCM/business software will increasingly blur (“Internet of Things,” “Smarter Supply Chains,” “Big Data,” etc.) – so you better design the last one to incorporate the former, right?
More practically, Flextronics doesn’t just want to just be a tactical contract manufacturer, but a strategic end-to-end supply chain services and software provider. That’s right, software provider. See the tagline on their全球服务和软件商业。作为旁白，采购未被列为核心竞争力，但有一些可能的原因：不要提高OEM的艾尔斯;不要列出“秘密酱”;不要出售尚未准备好外部化的东西。
创造Flexi电源链
Anyway, to be strategic and innovative, they need to bring in external innovation like P&G did with its连接和发展计划和旋转这些能力将与经典的竞争性区分能力（软件或服务）退出IBM.“我们在我们自己的供应链中做得很好的剧本，我们也会为你做这件事。”因此，这种风险投资显然不仅仅是国库券扮演VC的作用，也是一种建立和嵌入广泛的供应链DNA池进入公司的方式，然后将其制造出来的方式。例如，考虑在其供应网络设计软件（和服务）的Flextronics所有权SIMFLEX.subsidiary.
也与前一点相关，考虑Flextronics Milpitas校园只是won an Industry Week award．它不仅仅是作为高科技的原型制作和制造中心，而且还是作为Flextronics的创新中心之一 - 以及卓越的卓越中心，可以改善客户加速等过程等内部流程。这同样适用于供应方的创新。例如，Flextronics Milpitas是一个早期的采用者重新纳and used it during the spring 2011 Thailand flooding to quickly identify and mitigate flood-related risks at key suppliers. This is well documented in the following MIT case studywrite-up．Flextronics was so impressed and found the capability so strategic (to its customers and therefore to it) that it essentially decided to “replicate” the functionality in a more captive solution via the Elementum接触product. To quote Tom Linton, Flextronics’ head of supply chain (and one of the founders ofE2open）从去年的采访中，“直到我们在每位供应商处的每个产品的每个产品的整个部件的整个地图上，我都不会完全满意。”
This means more than 600,000 active part numbers and 30,000 suppliers at over 120 factories around the world.This capability is coreand Flextronics is being smart by not relegating it to a third party service providers or public cloud based supplier network that can use such network derived supply chain intelligence to monetize for itself (i.e. it isapplying strategic sourcing principles properly to its own SCM/Procurement software spending）。This is why we’re not overly keen on something likeSAP’s阿里巴网络in the supply chain where itjointly拥有买方和供应商之间的商业数据。这只是一我们的Procurement Cloud Technology Bill of Rights那which we actually did a whole webcast on (you can view a free version of ithere）。有类似的数据机密性问题，可以在SAP中固有的多层供应网络智能收集Supplier InfoNetorProduct Stewardship Network，但进入这里太长了。
Of course, this also begs the question of whether a buyer like an OEM should look to one of its major suppliers like Flextronics to provide supplier-facing software that serves Flextronics’ competitors? Do you think Jabil or Celestica are going to happily load up all their multi-tier data to a Flextronics-incubated solution – and take comfort that there will hopefully be a “business firewall” in place?
Building Amazon or Force.com for B2B Won't be Easy
Expontum将发现它需要多于一些强大的架构和一些移动应用程序，成为10B美元的供应链SaaS提供商。此外，我们认为，供应链和采购服务的真正机会位于BPAAS和PAAS层（我们看起来比简单的租赁应用程序开发和部署环境更广泛），以允许支持基于标准的“OpenStack”的服务平台“OpenStack-喜欢“在私有/混合服务部署模型中提供的混合和匹配异构服务集。没有真正的Force.comequivalent in the procurement and supply chain world, althoughAmazon显然是一个黑马运动员，我们会看到一个玩家的位置Elemica.might fit as a true supply chain platform player (orIvalua在源代价或Nipendoor贸易in Purchase-to-Pay). We did a whole网络广播云上采购趋势recently if you want to learn more about this topic.
Still, don't get us wrong, there is definitely value in building internal capabilities and “business services” in a multi-tenant cloud-enabled way that can be externalized and commercialized. This is because such services help improve internal operations to better manage the internal supply chain (and in the case of Flextronics, it’s a landscape of systems such as SAP SNC, hundred of instances of Baan ERP, custom systems, etc.) across the hundreds of interleaved customer-specific supply chains. Such enterprise level systems like this type of simple supply chain control tower are also important for providing customers with their own custom views into their subset of the broader Flex supply network – like the ElementumPerspective应用程序旨在做。作为一个类比，想想为什么Maersk这样的供应链球员将使用解决方案提供商喜欢Combinenet.— can you saymassivelogistics network optimization?
这是这种内部外部功能的第二个主要益处。它提高了客户服务，赢得率，design-for-supply modeling那and account profitability via higher valued-added services.
Finally, it hopes to bestow a higher valuation multiple. It’s not about being a big profit center in its own right. Just to provide some perspective, even ifLab IXand investments like those in Elementum only improve a revenue multiple improvement from 0.2X to 0.3X of revenues (keep in mind that E2open is trading at about 8X of revenues), that is $3 billion of value created on, say, $100 milion of investment. The numbers are not exact here, but you get the point.
那么,如何总结呢?显然,有more to this story than just a new player offering mobile SCM visibility applications. To get the deeper meanings and deeper value, you have scratch under the surface. You also have to work with better partners who’ll push your thinking and make you better. For supply chain and procurement organizations, this means pushing yourself to be a better service provider (and trusted advisor and provider of predictive market intelligence), especially in this emerging age ofbusiness services industrialization．It also means extending that philosophy out to the third parties that you work with to help you assemble your service portfolio based on budget, timeline, and stakeholder needs.
It’s a wild and woolymega marketjust for procurement services (which includes application services), and there’s a great deal ofconvergence and volatility right now．所以你需要开始放置你的赌注（无所作为可能不是最好的一个）。
If you want to get into the right game and improve your odds, and if you like what you read here and want to go a little deeper, we’d very much appreciate your support by becoming a subscriber in ourSpend Matters PLUS service or a member of our Spend Matters PRO community．对于我们的专业成员,我们将覆盖辊筒y competitive implications of new entrants like Elementum in the supply chain market, but also how practitioners can similarly be strategic in crafting their internal service portfolios, doing the make vs. buy (especially relative to other internal groups like IT and shared services/ ‘global business services’), making smart choices, considering externalization, broadening into newer finance-centric areas like tax efficient supply chains and supply chain finance programs, and then engaging the providers properly and finally implementing well. Obviously it’ll be a multi-part series! As always, stay tuned, and don’t hesitate to contact me with any questions or comments.
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