By acquiring Serus, E2open will enhance the supply management and multitier visibility capabilities of its collaboration hub. But the timing could pose integration challenges, given E2open's recent icon-scm purchase.
On 4 June 2014, E2open, a provider of collaborative supply chain planning and execution offerings, announced it acquired Serus, a supply chain visibility vendor, for $18.5 million in cash and E2open stock. Serus has about 30 customers in high-tech and semiconductor industries.
Serus’ offerings include manufacturing visibility (including work-in-process movements, yield status and nonconformance management), contract compliance and design for manufacturing (DFM). These will broaden E2open’s business network further upstream into contract manufacturing and semiconductor production, while expanding its supply chain visibility capabilities deeper into product design and production.
Gartner anticipates that the DFM offering will provide the most immediate impact and value for E2open and its customers. It coordinates product configuration and bill of materials (BOM) changes between OEMs and contract manufacturers, shortening cycle times for implementing product changes without compromising product data. The Serus visibility and intelligence modules provide visibility into production data, which can help customers better understand upstream quality and plan and enhance supplier risk profiles. They also provide information on work-in-process movements and inventory status, which can be used to help assess and manage BOM changes. This systematic approach to managing changes to multiple BOMs across tiers of the supply network fits Gartner’s manufacturing process management (MPM) framework (see "Innovation Insight: Manufacturers Need MPM and MBM to Innovate Digitally Enabled Design Through Production" ).
E2open plans to position the Serus functionality as a manufacturing collaboration capability in the process management layer of the E2open stack. Over time — with integration of Serus and another recent E2open acquisition, icon-scm — a platform may emerge that can link “true” production data with demand to enhance available-to-promise (ATP) and order promising. For many customers, though, visibility into production and control of design changes from their supply chain visibility vendor will be more than beneficial.
The timing of this deal may pose a challenge for E2open, however, given that it's also integrating its icon-scm acquisition (see "E2open's Buy of Icon-scm Creates a Differentiated SCM Capability" ). Icon-scm brought in enhanced planning capabilities, which Serus will now round out with enhanced supply management and a push into multitier supply chain visibility. But absorption of both Serus and icon-scm will likely stretch E2open's system integration capabilities. E2open must integrate both companies’ applications, which should be accomplished in the next year for a robust product stack to emerge.
Examine how Serus can enhance upstream manufacturing visibility and quality compliance, including supplier-to-supplier data transfer.
Explore Serus' contract compliance functionality, but understand that more than a module will be needed. How best to reshape supplier service-level agreements and metrics is a key consideration.
If your company competes outside the high-tech and semiconductor sectors, monitor how the acquired capabilities are adapted to your business. Companies with complex products, BOMs and upstream supply networks requiring near-real-time visibility are likely to get most from E2open’s integration of Serus.
Investigate how the E2open products can help increase visibility and DFM to better manage your business.
Consider E2open's plan to move Serus into a more secure, larger data center/infrastructure — and its claim that it plans no disruptions to Serus pricing — to be positive developments.