With $10.8 billion in sales in fiscal 2001, a client list that is 835-strong (including big names such as British Petroleum, Hewlett-Packard, Amazon, UPS, and Cisco), and an additional 3500 customers implementing its latest 11i application, Oracle stands among the top 5 supply-chain software producers, fighting for elbow room with i2 Technologies, Manugistics, JD Edwards, and SAP. The company grew 14.7 percent from 1999 to 2000, and 7.2 percent from 2000 to 2001. (Oracle does not break out revenue figures for supply-chain software, saying that many of its users combine supply-chain software with other applications.)

Customers want help in five key areas of managing their supply chain, says Sean Rollings, Oracle's senior director of supply-chain-management marketing: Developing a product or design, planning or forecasting sales, procuring, manufacturing, and fulfilling orders. "What is a supply chain?" he asks. "Everyone's answer is a little bit different."

"The B2B wave has slowed down the past six months," says Laura Horvath, Oracle's director of supply-chain-management marketing. "Procurement was hot. People focused on it first because it's something everybody does. Now people are really focused on lowering their overall costs, within and without the company." In response, Oracle's most recent supply-chain release is Inventory Optimization, launched in October 2001. The product aims at manufacturing or distribution companies, particularly those with a high seasonal sales cycle and concerns about inventory levels.

One customer using the new system, an aerospace manufacturer, saw a 46 percent improvement in its customer-service level and a 27 percent drop in costs, Rollings says. Thirty companies have already bought the new product. With disruptions in transportation following the terrorist attacks of September 11, interest in the new offering has been higher than anticipated, Rollings adds.

Yet some analysts sound a note of caution. "That process [of acceptance] is still underway," says Bob Ferrari, research director for AMR Research. "The 11i was a messy release and loaded with bugs. That caused a lot of anguish in the user community. You've still got customers out there who are smarting from it. The residual remains, and a lot of customers are sitting on the fence."

The market for supply-chain software has also weakened somewhat, Ferrari adds. "Up until the economy started to turn down, supply chain was a very, very robust area, with 42 percent growth in 2000 and more than 50 percent in 1999." Yet as the economy softened, AMR reduced its projections for supply-chain-software sales growth for 2001, from 28 percent to 10 to 15 percent.

"The interest in the products is still there," Ferrari says. "Many companies, especially those in certain industries, have extended supply chains that reach to the Far East, to Europe. They're now asking 'Do we need a contingency plan?' Anything can happen. I think this climate will only help sales for certain kinds of supply-chain software."

Ferrari applauds both the timing and the intention of Inventory Optimization. "Their timing, again, is impeccable," he says. "The interest in that segment is getting very high right now."

Agere, a $4.7 billion provider of communications components, began working with Oracle in 1995 and currently uses a suite of Oracle 10.7 (manufacturing, financial, inventory, and others). Thousands of users in numerous countries run the system. "From their perspective, the cost savings and efficiency improvements are clear," says a recent CreditSuisse FirstBoston (CSFB) report. "Before implementing Oracle, Agere's legacy systems took 17 hours to run a production plan. With Oracle's help, that has been reduced to three hours and continues to fall."

Rockford, the largest US maker of aftermarket high-end mobile audio equipment, has a supply-chain network of 2300 independent retail stores and sales in 60 countries. The company chose Oracle and "expects to significantly increase its responsiveness to market demand by decreasing the time required to fully recalibrate the supply chain, from forecast to ship," according to the CSFB report. The company also plans to use Oracle's supply-chain software to communicate directly with suppliers and dealers and to minimize dependency on forecasting, according to the report.

In February 2001, Lean Chain, a European firm, selected Oracle Exchange Marketplace and Oracle Supply Chain Exchange to create a supply chain, claiming that its customers in the automotive aftermarket supply chain could realize annual savings of 30 to 50 percent in stocking costs by using its online, real-time information flow and stock-management product.

"Lean Chain is focusing on the automotive aftermarket for spare parts in Europe, targeting all levels, from raw-material supplier and manufacturer to distributors and repair shops," says Lean Chain's CEO, John van Daalen. "Oracle offered the most effective solution to meet our needs. We see ourselves as an intelligence broker and virtual manager for the supply chain. We're bringing together lean practice with industry expertise and real-time information flow driven by customer demand."

Based on Oracle's exchange technology software, Lean Chain uses a unique Web-enabled transaction platform, linked to a supply-chain exchange model that is driven by end-user "pull" rather than manufacturer "push." Its core offering delivers optimized inventory management by cutting stockholding costs, reducing overhead costs, minimizing obsolete stock, and improving cash flow.