Emptoris Inc., provider of procurement strategic supply and contract management technology today announced that it had acquired Xcitec, a Munich based provider of strategic supplier management software.  Financial details were not disclosed and the transaction has recently been completed. This acquisition comes on the heels of a previous acquisition of Rivermine in January.

The announcement makes note that this new combination promises to provide a single offering that manages all of the business processes associated with supplier on-boarding, qualification, risk assessment, performance management and rationalization.  That may well prove to be significant as the competitive landscape of procurement and strategic supplier management continue to heat-up.  This is all good news for technology buyers.

Supply Chain Matters was briefed by Emptoris senior management regarding the acquisition, and it is our view that this acquisition will both broaden Emptoris’s capabilities in larger scale supplier lifecycle management deployment needs as well as provide broader appeal to the SAP Procurement and SRM customer base.  Emptoris has had its eye on the supplier management space for over two years, and it was the influence of joint Emptoris/Xcitec customers that brought these parties together. The acquisition further strengthens Emptoris’s influence in Europe, along with its abilities to support multinational and multilingual process needs. We would also anticipate that this acquisition will strengthen Emporis’s penetration in manufacturing related industry, where strategic supplier management is a very big deal, and where in-house management of suppliers is viewed as more strategic.

The timing of this acquisition could not be better for two distinct reasons.  The recent series of industry supply chain crisis brought about by the recent earthquake and tsunami in Japan has brought keener awareness to the overall importance of supplier lifecycle management and risk assessment.  Second, competitors to Emptoris including Ariba and SAP have each been very active of late in enhancing supplier management process support capabilities. B2B network providers such as GXS have also become more active in augmenting supplier management and collaboration capabilities. SAP has especially been active in trumping supplier management activities through network capabilities provided by network providers Hubwoo and Crossgate.

Xcitec’s market visibility has been primarily in the European region where it has targeted and assumed 36 percent of DAX-listed companies.  This provider has garnered recognizable manufacturing and services customers such as BASF,  Deutsche Telekom, Deutsche Post DHL, EADS, ThyssonKrup, Siemens and Vodafone, among others, many of which share a large global  supplier base with over 100,000 users. These customers also share a strong SAP installed base and integration presence.  Xcitec technology can be deployed in either an on-premise or SaaS model, but the current majority of installations are on-premise deployments.   Xcitec’s technology platform is SOA and web-services based, and boast of integration with SAP ERP backbones via both supplier and purchasing portals or through the SAP Enterprise Portal.  Xcitec has also achieved Powered by SAP NetWeaver certification.

Xcitec’s existing team is now a part of Emptoris and  co-founders Martin Berr-Sorokin and Uwe Krieger will also join the Emptoris executive team. Berr-Sorokin is designated to be SVP and GM of Supplier Management and Krieger will assume VP of Development and Operations for Supplier Management. Emptoris also plans to continue to offer Xcitec’s strategic supplier management technology on a standalone basis, or as part of the Emptoris applications suite.

Customers with needs in strategic supplier management continue to gain more options and this recent Emptoris acquisition will certainly add more competitive dynamics to this sector. Emptoris customers should view this acquisition as yet another positive step in deploying a broader set of sourcing, contract management and now procurement intelligence and supplier management capabilities.  We would not be surprised at all to be commenting on further Emptoris acquisitions in the coming months.

Bob Ferrari

Last week I had the opportunity to be the master of ceremonies for the 2011 OpsInsight Leadership Forum, which was produced by Halcyon Business Advisors.  The conference provided a great line-up of speakers including AT&T, Aberdeen Group, Accenture, Cardinal Logistics, CCI, IBM, The Shingo Prize, McDonalds’s Corporation, Vecco International and Wal-Mart.  The executive level attendees represented a diverse group of industries with many different challenges.

In my conference opening, I observed that the continual challenges facing productions and operations management, namely more demanding customers, complex, globally stretched supply chains, rising labor costs and dramatic increases in disruption and risk events can each significantly impact the ability of any organization to compete.  My challenge to the attendees was to reflect on the fact that now more than ever before, capabilities for flexibility, agility and transformation are no longer optional for operations management, yet each brings its own unique challenges.

Many of the conference speakers reflected on these challenges and what was really interesting was that many speakers reinforced that technology and tools are not the real challenge but rather changing business and organizational culture tend to be most difficult for many operational focused teams.  The reasons are many.  Operations teams sometimes do not get the visibility or sensitivity that other business functions may garner.  Leadership and business structure also plays an important factor.

Some takeaways I noted from our speakers were:

• Operational excellence must be baked into the fabric of corporate culture and that begins with the leadership of top management.
• Supply chain and operational leaders need to be able to balance many different aspects of business process capability that include being adept at operational results linked to business strategy, standardization, consistency and tools.
• Little things can make a big difference.
• Leaders must see and acknowledge reality.

I attended one think tank session that brought home many if not all of these concepts.  The session was facilitated by Thomas M. Feeney, the President and CEO of SafeliteGroup with headquarters in Columbus Ohio.  For readers unfamiliar, Safelite Auto Glass is one of the leading providers of automobile glass repair and replacement in the U.S. with over 4 million customers.

It is not often that this author encounters what I would describe as a dynamic and inspirational CEO, and Mr. Feeney certainly filled those requirements in his beliefs, communication and articulation of leadership principles. How many CEO’s are you aware of who can sit down with a total group of strangers, without a script, and completely articulate the fabric and culture of the company, and field all questions related to that culture?

First and foremost, Feeney reinforced that changing culture starts at the top, and that any organization needs to motivate change from the basis of how people are hired and rewarded in their day-to-day jobs.  Safelite’s philosophy is to hire for social skills first, by seeking out people who are empathetic and helpful by nature.  Safelite’s people are measured on how they go the extra mile to resolve customer needs and Mr. Feeney personally contacts and praises employees when they go to extraordinary means to satisfy customers.  Safelite further believes that customers want to speak to real people, and thus all customer center calls are automated but rather answered by a live person in an average response time of 11 seconds. How refreshing is that! An Executive Services group, an elite team of 40 employees was also formed to proactively resolve more challenging service issues.

Safelite teams also embrace business social media techniques as a means for further reach out with customers, including the leveraged use of Facebook and Twitter, with proactive two-way communication with potential dis-satisfied customers. Feeney noted that he himself has contacted disgruntled or praising customers by use of his own social media accounts, and has fostered a culture that embraces these tools while including appropriate safeguards. He characterized social media as another means of customer reach and opportunity to effect a more positive customer engagement, even with a potential non-conforming service experience.

The results for Safelite have been extraordinary with customer loyalty metrics that outpace many well-known brands.  The company constantly measures its Net Promoter Score (NPS) and how that score impacts increased revenue and customer referrals.  Employees are constantly made aware of the NPS score and how their individual contributions affect the score.  As a result, in the last two years, Safelite’s revenues have increased 27 percent along with corresponding profits.

Safelite provided a great story and a superior demonstration of how corporate culture can impact operations excellence and how a CEO can be proud to speak and celebrate this excellence.

Today’s business world moves at a much higher cadence of change, with higher stakes.  It is often operations management that provides the means to delight customers, respond to ever changing product demand or overcome extraordinary events.  Now more than ever, operations has a broader role to play, beyond any four walls of a production or service facility.  Operations is the business, and must have the capabilities of agility, flexibility and transformation.

What is your view?

Are operational teams valued for the contribution they provide?

Are metrics and performance criteria designed to reinforce the traits described?

Bob Ferrari