E2open: Acquisitive Integrator of Supply Chain Applications on an End-to-end Networked Platform
on Nov 9, 2021
Here we assess E2open, the largest pure cloud supply chain solution provider. E2open has acquired many ADSA-relevant best-of-breed applications such as multi-tier supplier and outsourced manufacturing management, transportation and logistics, global trade management, demand sensing, S&OP/business planning, and multi-tier channel management.
BluJay (June 2021)—Major transportation (TMS, parcel, dropship, mobile operations, LSP and forwarder platforms) and global trade compliance (declarations and filings) suite with its own network.
E2open is one of the largest pure cloud1 supply chain solution providers in the world, with the broadest suite of supply chain applications of any of the providers profiled in this report. It was founded in 2000 by eight of the largest high-tech companies at the time—Hitachi, IBM, LG Electronics, Matsushita, Nortel, Seagate, Solectron, and Toshiba—to provide a shared marketplace connecting their overlapping base of suppliers. It fairly quickly evolved into a networked supply chain application platform. E2open’s strategy has been to methodically build out a continually more comprehensive, end-to-end, integrated suite of supply chain planning, execution, and channel management solutions, on top of their interconnected, multi-party network.
Over the past decade, E2open has grown through a steady stream of acquisitions (see sidebar). Recently E2open went public via a merger with the SPAC CC Neuberger Principal Holdings I, providing it with additional capital for further acquisitions. E2open excels at rapidly integrating the companies they acquire, maintaining and enhancing the best-of-breed applications, even as they integrate them into the platform. Most customers thereby will start with a single application, to solve a specific problem, but with the understanding that they can do much more down the road. That vision is compelling to many companies, even if they are not ready to implement a broader end-to-end suite immediately.
Most of E2open’s clients are large (multi-billion $) companies. With the acquisition of Cloud Logistics two years ago, a number of smaller companies were brought into their customer base. However, most of E2open’s application suite is still aimed at large complex supply chains and companies.2
E2open is most suitable to companies who have a long-term vision for a holistic integrated end-to-end supply chain and are currently seeking a best-of-breed supply chain solution with needs and characteristics such as:
Importer/Exporters--companies that import or export a lot, especially high value goods with critical lead times.
FMCGs and others needing Demand Sensing--large fast-moving consumer goods (FMCG) firms looking to improve forecast accuracy and get a better picture of end demand/POS data.
Multi-tier Supplier / Outsourced Mfg.--companies in industries such as high tech, automotive, aerospace, and industrial that need to manage an extensive multi-tiered network of suppliers, outsourced manufacturing, and challenging inbound flows.
Multi-tier channels--companies with complex multi-tier distribution channels seeking channel data/intelligence, channel marketing automation, and demand shaping/channel partner marketing capabilities.
Logistics and Transportation Providers--organizations that historically move goods but are expanding beyond logistics to offer a wider range of services.
Pharmaceutical/Life Sciences: Biogen, Novus, GE Healthcare
Auto/Industrial: Bosch, Schneider Electric, Johnson Controls
Logistics Service Providers: Maersk, MSC, Hapag-Lloyd
Retail: Gap, Walgreens Boots
Aerospace & Defense: Boeing, Embraer, Air France
Because of E2open’s origins in high tech/electronics, that is an industry where they have lots of customers and industry-specific capabilities. Other industries they have a strong presence in and industry-specific functionality include: CPG, Automotive/Industrial, Aerospace & Defense, Pharmaceutical, Retail (mostly hard goods), and Logistics Service Providers (see sidebar for example customers). Note that some of these customers and industries are focused around specific acquisitions and capabilities. However, E2open’s primary strategy for growth is to expand the footprint of use of these customers beyond their initial entry point. Thereby, E2open has a strong incentive to make various parts of the suite applicable across the industries they serve. E2open also pursues a net-new logos strategy.
E2open is used by a broad array of supply chain professionals, both internally within E2open’s customers’ organizations and externally within the ecosystem/trading partner’s organizations. This includes roles such as:
Demand planners and forecasters
Sourcing and procurement professionals
Logistics and transportation planners and managers
Customer service reps
Supply chain risk professionals
Through their acquisition and integration of best-of-breed applications on a single platform, E2open has assembled a broad integrated suite of applications including:
Transportation and Logistics—Multi-mode capabilities including the largest ocean shipment network;3 ground transportation; transportation forecasting; freight audit and settlement; container management; and various global trade capabilities.
Demand Sensing—Demand sensing, demand data aggregation and normalization, forecast, sales order and inventory collaboration, with proven record of substantial increases to inventory accuracy.
S&OP/Business Planning—Best-of-breed S&OP, Supply and Distribution Planning, Allocation and Order Promising, MEIO.4
Multi-tier channel management—Channel data/intelligence, channel marketing automation, incentives and rebates, and demand shaping/channel partner marketing capabilities, as well as a large network of distributors.
Control Tower Knits Together Deep Application Functionality
E2open’s control tower functionality is one of the strongest amongst those we reviewed. They excel in providing a network-wide view, leveraging sizable networks of pre-connected suppliers and outsourced manufacturers (especially in their core industries mentioned above), logistics carriers and 3PLs, and channel partners/distributors. With this end-to-end view, they can peg specific customer orders back to specific inbound shipments, supplier inventory, and purchase orders. The end-to-end view helps provide early visibility into detecting and predicting demand deviations from plan, manufacturing and quality issues, and international and domestic logistics delays. with various partners to resolve those issues. The operating platform can gauge the impact of issues, help prioritize them, and provide ways to correct those issues including the actual execution of the resolution.
It is important to note that E2open does not have a separate control tower product per se. Rather, E2open’s control tower capabilities are realized by a combination of their multi-enterprise network, E2open applications, and Harmony® analytics. The set of E2open applications that need to be acquired to achieve control tower functionality can be significant, depending on the objectives for the implementation.
Most control tower use cases start with two to three applications and can grow from there depending on the breadth of functionality required. For example, a company may start by focusing on better management of purchase orders. For that they may start with PO Collaboration, In Transit Visibility, and perhaps Manufacturing Visibility. Keep in mind that each of these applications provides a lot more than just control tower functionality. For example, the PO Collaboration application provides a lot more than just visibility into PO status. It provides a full set of procure-to-pay functionality,5 and leverages E2open’s existing network of suppliers.6
As part of an open platform, external non-E2open applications the user’s organization might be running can also be incorporated, but of course these will require an integration project to connect those external applications (just as all the other control towers also require such an effort when integrating external applications). E2open’s approach has the advantage of leveraging the very powerful set of applications they possess.7 However, the user interface and task flow is not quite as straightforward or intuitive as some of the other organically created purpose-built control towers we reviewed. Below we drill into some of the areas where E2open provides exceptional functionality.
E2open provides a multi-enterprise view across demand, supply, logistics/transportation, and global trade that reflects and tracks POs, manufacturing orders and status, shipment status,8 invoices and payment, and more. They provide AI/ML-driven predictive ETA factoring in weather, port congestion, and historical data to predict late shipments. They provide downstream visibility into inventory and demand across multiple tiers of distribution, with consolidated and normalized view of retail POS demand; something only one other provider in this review offers.
Visibility into Downstream Demand
E2open’s Demand Signal Management application automates daily collection and harmonization of data (from multiple retailers’ POS data and from syndicated data) and creates a single demand data repository for use by all enterprise applications. Their Demand Sensing application leverages the comprehensive data captured to generate daily SKU-level automated forecasts using AI/ML. Retail analytics provide execution visibility down to the store level, proactively identifying issues to respond to and prevent stock-outs. Its Channel Management solutions provide somewhat analogous capabilities for distributor and reseller channels, with the addition of channel-specific applications such as rebate incentives and marketing development fund management.
Predicting and Resolving Demand-Supply Imbalances
E2open’s predictive analytics uses machine learning on data from various sources across the network to provide forward-looking exception alerts, such as predictive ETA or stockouts. Mismatches in supply and demand are displayed in a rolling time-phase view into future periods, showing where the problems are going to be. Planning and execution applications9 are used to understand the impact of delays, early arrivals, and demand fluctuations on production and fulfillment plans and identify the corrective action that should be taken such as diverting or expediting loads. Overall inventory, revenue, and other impacts of a deviation and its resolutions are assessed to prioritize resolutions. E2open’s business rules framework lets users prioritize customers, products, DCs or any combination of supply chain business objects in the impact analysis.
To help prioritize the use of available inventory and inbound materials, E2open supports end-to-end pegging (as well as traceability) at all stages of the supply chain. An OEM or brand owner can allocate units that are in finished goods inventory, in transit, in production, or on order. These can be allocated to specific customer orders and/or replenishment orders (e.g., for replenishing stores, DCs, factories). They can see how many unallocated units there are in each stage of the pipeline. As soon as units get allocated to an outbound order, those units are no longer available for a different customer (unless due the priority of the new order, you reallocate them and 'take them away' from the first customer).
Once a resolution has been identified, it can be socialized within the application between the appropriate role(s), whether internal (logistics) or external (supplier), to collaborate on decision-making as needed. Resolutions can then be executed in the E2open applications. The E2open network collects data from these execution actions, which can be used subsequently for machine learning algorithms. The system observes and learns, to help automate responses in the future.
Origin Management, Logistics
E2open is one of the stronger providers in Origin Management, with very capable supplier portal, quality control, origin booking by supplier, and shipment approval workflow capabilities. They have very capable CFS10 management (consolidation/deconsolidation), which provides added flexibility to do in-transit changes to destination when demand-supply imbalances are not discovered until after a shipment has left the factory.
Global Trade Management
E2open is the only provider in this review that has their own full Global Trade Management system and data team (the others rely on partners) and their GTM is one of the best in the market. E2open automates regulatory export and import compliance and transactional functions, including country controls, restricted party screening, trade agreement applications, license determination and tracking, document generation and filing.11
E2open is quite strong in supplier management, including good sourcing and procurement tools, supplier discovery, exceptional SKU and product information management, and good new product introduction support. These provide options and resources to resolve issues that may involve finding new suppliers, understanding component interdependencies and provenance, and managing supply and demand mismatches during product launches.
Master Data Management
Comprehensive master data attributes for existing and new products are captured and stored centrally within the E2open data model. E2open’s multi-enterprise MDM reconciles master data between ecosystems and enterprises. Supervised machine learning algorithms cleanse12 masses of input data and then dynamically update E2open’s Integrated Data Model.
Pricing, ROI, Time-to-Value
In July 2020, E2open announced that they are eliminating user, data volume, and annual connection fees from their pricing model. Their new pricing model is based on scaling factors such as revenue, spend, and freight under management.
The size of the scaling factor (i.e., $ cost of monthly subscription fee per dollar of revenue or spend) depends on which of the applications within each of these product families are used. The new pricing model encourages increased usage across the enterprise.
Since E2open offers such a wide variety of capabilities, so too the ROI and payback period vary depending on what is being implemented and the starting point of the implementing company. Similarly, the ROI is driven by many different factors, depending on implementation. For example, the ocean shipment booking and tendering capabilities can provide ROI through benefits by reducing the time and labor cost of managing container shipments, reducing shipping costs by better visibility into spot rates, and provide better visibility into container and shipment status. Similarly, each of the other applications provides ROI in different ways. Demand sensing can provide benefits by increasing forecast accuracy, reducing out-of-stocks, and improving promotional uplift. Global Trade Management can speed up customs filing and clearing, reduce misclassifications and filing errors (and thereby reduce fines), and help compliantly reduce duties and tariffs.
The time-to-value for E2open implementations also varies greatly, depending on factors such as which modules and functionality are being implemented, how much integration with external systems is required, how many new trading partners (not already on the E2open network) must be onboarded, and the breadth of the initial rollout across an organization.
Who E2open is a Good Fit For
E2open has acquired many ADSA-relevant best-of-breed applications that have previously succeeded well in the market on their own standalone merits, such as multi-tier supplier and outsourced manufacturing management, transportation and logistics, global trade management, demand sensing, S&OP/business planning, and multi-tier channel management. Thus, those wishing to start an ADSA effort by focusing on one of the areas supported by E2open and then expanding to a more end-to-end capability should find E2open attractive for their purpose. E2open is especially well suited for companies that are committed to implement comprehensive end-to-end demand-supply alignment capabilities, particularly larger companies with more complex supply chains in one of E2open’s target industries—high tech, CPG, automotive/industrial, aerospace & defense, pharmaceutical, hard goods retail, or logistics service providers.
1 There are larger supply chain solution providers, such as Blue Yonder, Manhattan, SAP, and Oracle, but a significant part of their supply chain revenue comes from non-cloud (on-premise or hosted) applications. -- Return to article text above 2 We have observed it is very difficult for one software company to successfully span very small to very large companies. They require essentially different sales tactics, support structures, approaches to customization, etc. It remains to be seen how successfully E2open can serve such a broad range of company sizes effectively with their entire suite. -- Return to article text above 3 Via E2open’s acquisition of INTTRA. 22% of global ocean container bookings are initiated on the INTTRA platform, according to Crunchbase. A 2018 DVZ article states that E2open/INTTRA tracks 40% of all ocean container shipments and that 50% of all electronically booked containers are initiated on their network. -- Return to article text above 4 MEIO = Multi Echelon Inventory Management -- Return to article text above 5 E2open PO Collaboration provides automation of procure-to-pay (P2P) processes, centralized governance of all PO processes (including shipping instructions) for all suppliers, automated handling of MRP requests, management of individual POs, blanket POS, scheduling agreements, shipments, receipts, and invoices with automated matching, configurable order management workflows, and more. -- Return to article text above 6 Furthermore, using E2open’s pre-integrated applications and platform saves time and effort that would otherwise be required to build and maintain integrations of data from numerous other systems. As well, the data from E2open’s applications will be more timely and accurate, compared to integrating data from external sources. -- Return to article text above 7 Their ‘Harmony’ layer unifies the user interfaces of the various applications and their E2Net layer integrates the data and messages between the applications. -- Return to article text above 8 Real-time status and location of shipments can be displayed in a map or table view, using data from logistics service providers on the network (carriers, 3PLs, port authorities, gov. agencies, etc.) as well as integrations with tracking networks and other sources (Project44, SMC3, Locus Traxx, DAT, Truckstop.com, Breakthrough Fuel, PC Miler, Rand McNally, and Uber Freight. -- Return to article text above 9 Depending on the exception, business users may leverage a combination of ‘intelligent engines’ within the E2open applications including Transportation Management, Supply Planning & Response, Inventory Collaboration, and Manufacturing Visibility. Many of these applications have quite mature AI/ML optimization and algorithmic supply chain planning, in some cases developed over the past decade or more. -- Return to article text above 10 CFS = Container Freight Station -- Return to article text above
11 Their GTM system validates every line of a sales order against the regulations of the countries involved. E2open’s Global Knowledgebase covers trade regulations for more than 180 countries. They interface with government systems—US AES, US ACE, US ISF, US FTZ, DE ATLAS Export, BE PLDA Import & Export, CN GAC (CTM)—are all supported. All source data is consolidated in the platform. The system can automatically generate audit-grade compliance documents. -- Return to article text above
12 A typical example is cleansing of partner entity names, e.g., "Foxconn", "FXN", "FX Shanghai", etc. may all refer to the same or related entities. These are automatically reconciled by machine learning algorithms and mapped to a common entity or parent as per the business use case. -- Return to article text above
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