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PeopleSoft to revamp supply chain software

The software maker is planning to unveil a new set of supply chain applications, a bid to gain market share from struggling rivals.

PeopleSoft is planning to unveil a new set of supply chain applications, a bid to gain market share from struggling rivals.

The Pleasanton, Calif.-based software firm expects in May to introduce a revamped version of its supply chain planning software at its Leadership Summit conference in Las Vegas, according to JMP Securities analyst Patrick Walravens.

A PeopleSoft representative declined to comment on the introduction of any new products at the conference.

The new application represents "a significant potential growth area for PeopleSoft, which has very little presence in supply chain planning today," Walravens said. And it's central to PeopleSoft's goal of becoming the No. 2 company in the multibillion-dollar supply chain niche, behind SAP, according to Walravens. SAP reported fourth-quarter software revenue of $200 million from its supply chain applications.

PeopleSoft's new supply chain planning product is based on technology from Red Pepper, which the company acquired in 1996 for $225 million in stock. So far, PeopleSoft has failed to really capitalize on the acquisition, according to Walravens, because Red Pepper's software was difficult to use. PeopleSoft also hadn't done enough, until recently, to make the product interoperable with a broader set of PeopleSoft business applications for human resources, accounting and manufacturing, he added.

PeopleSoft plans to fix the interoperability problem in the new version, Walravens said, by rewriting the applications in its proprietary development environment, called PeopleSoft Tools. The new set of programs is also supposed to include special features for companies that outsource much of their manufacturing and tie directly into PeopleSoft's data warehouse applications.

Supply chain planning software is generally designed to help manufacturers run their factories more efficiently and reduce excess inventory. Companies that develop the software include SAP, Oracle, JD Edwards, i2 Technologies and Manugistics. With the exception of JD Edwards, all have reported declining sales of their supply chain products recently. One reason for the decline, according to analysts, is that companies are generally spending less on information technology.

Another reason may be that supply chain applications are very complex and several major companies have reported problems getting them to work.

The software typically uses mathematical algorithms that analyze historical data along with input from customers and partners to create a "demand forecast," which becomes the basis for a production plan. The software can also create a production schedule, taking into account the capacity of various plants and potential bottlenecks. In the event of a disruption to the schedule, such as such as a late delivery from a supplier or an equipment outage, the system can send alerts and suggest another plan.