Oracle aims for vertical markets
Oracle signs a bundling deal to use Manugistics' supply chain management software in its offering to the consumer packaged goods industry.
While Oracle is a giant in the database and software applications spaces, Manugistics, a smaller yet well-regarded developer, makes global tracking software that is better tailored to detail-sensitive operations like making, distributing, and selling packaged consumer items such as the perishables that line supermarket shelves, according to Judy Hodges, an analyst with International Data Corporation.
In addition to the Manugistics' offering, the deal combines Oracle's software for forecasting supply and demand, scheduling manufacturing, and managing distribution runs. Oracle has also signed with Industri-Matematik International to bring additional features to its consumer goods packages. While the companies are working with Oracle to integrate the pieces into a single product, it will be Oracle that markets, sells, and supports the resulting product.
"It will help Oracle move into this [specialized] space much more adeptly," Hodges said. Heightened competition among consumer goods makers is driving investments in information technology, she added, and that in turn has helped invigorate applications developers looking for an entree to vertical industries.
The software bundle will let companies computerize their supply chains, from scouting and acquisition of raw materials to tracking sales and charting demand trends. It is a particularly complex business for consumer packaged goods makers, especially those who make food products that have limited shelf life, intensifying the need to accurately track products from the production line to the shopper's basket, Hodges said.
"It will enable manufacturers to have a much greater understanding of where their products are at any given moment," Hodges noted. "It is Oracle's counter to PeopleSoft's association with Red Pepper Software," referring to PeopleSoft's acquisition of the global tracking software maker last fall.
Indeed, competitors SAP and PeopleSoft have not lagged in developing their own integrated packages for an increasingly wide variety of industries. The software makers count among the virtues of the integrated supply chain tools the ability to better track consumer buying patterns and tailor production and distribution based on "real-time" data. Such up-to-the-minute views into warehouse and store inventory levels can cut costs by reducing stockpiles and the danger of loading up inventory with unpopular products, they maintain.
SAP said its effort to carve out offerings for some 18 vertical markets contributed to booming sales last year. Last week, the company reported that its revenues grew by 38 percent to $2.39 billion for the year ended December 31. For the same period, net profit grew fourfold to $365 million, and per share earnings reached $3.52, a 37 percent hike. The company was one of the first to seek out new customers beyond the traditional bastions of the financial and heavy manufacturing industries.
In other business applications news, Richter Systems has signed up the clothing maker Esprit de Corp to use its supply chain software RAMS 2000. The San Francisco, Calif.-based apparel maker and retailer will use the software to track worldwide sourcing, manufacturing, distribution, and retailing operations. Esprit also plans to use the company's SEWN 2000 systems when it becomes commercially available later this year. The Richter Systems software integrates with Oracle's database, Web server, and merchant server software, the company said.