$100 Million Funding for an Online Marketplace Leads to Converge
Fifteen of the world's leading high technology companies and global supply chain participants collaborated to form Converge - an independent online marketplace based in the US.
With the sale of high-tech components via online exchanges expected to reach a staggering $600 billion in a few years, Converge turned to Capgemini as partner to help manage the Project Office and set up an ERP backbone and systems. Speed was a vital success factor.
ERP systems were demonstrably sorted in 8 weeks to allow Converge to launch its marketplace in 90 days.
Client Profile
Converge represents the largest online trading community for 180 global high-technology product families, with the logistics and operations capability to buy, sell and move products. In excess of 20,000 trading partners can access more than 10 billion items valued at over $30 billion via Converge.
Envisioning a world in which inventory is consigned to history, founder members had a simple vision for Converge: “by the industry, for the industry”
Business Issues
High technology is among the world’s most global sectors - only initiatives that match that scale can succeed. Converge was potentially one of the world’s largest B2B (Business to Business) marketplaces, and the vision for Converge was for:
- Buyers to transact and collaborate with suppliers and reduce inventory
- Suppliers to reach new customers and markets and reduce cost
- Brokers, Dealers and Distributors to enter a high-velocity, high-liquidity, global market with minimum investment.
Starting from a full suite of online auction tools, Converge was committed to Open standards so that its service offerings could be easily extended for:
- trading services for online procurement
- order collaboration for integrated fulfilment
- supply chain planning for enhanced inventory visibility
- transport and logistics for aggregated, allocated and managed shipping
- design collaboration to support the entire cycle
- financial and member services for online invoicing, secure transmission, credit control and payment solutions.
The solutions that management sought demanded a number of partners, suppliers and vendors working closely with Converge to turn vision to reality.
Capgemini was selected as preferred supplier to manage the Project Office, develop and deploy back-office systems on an ERP platform that was integrated with front-office systems for trading services, transport and logistics, design collaboration and financial services.
Solution
Capgemini leveraged its market-leading position on B2B’s, experience with large global systems integration programmes, supply chain best practice and technology consulting capabilities. Added to these were strong partnerships with vendors selected by Converge. As a result, business requirements were rapidly translated to world-beating solutions paying particular attention to speed, a critical success factor.
Apart from an ERP platform, other key packages selected by Converge for solutions under Capgemini’s remit included applications for auctions, trading services, transport and logistics and financial services. Various packages were evaluated to support exchange services for design collaboration.
Capgemini deployed its tried and tested approach to understand requirements for back-office systems, and its knowledge and experience on ERP packages was instrumental in the rapid design, testing and training phases of the programme.
The specific ERP modules selected included one supporting logistics management in a supply chain. The entire solution was deployed in 8 weeks to form a platform for Converge.
Management of the Project Office was a critical success factor. Capgemini applied strong skills and expertise to ensure that the Office facilitated good support to Converge. In particular, relationships with other parties were managed effectively, expectations clearly understood and milestones agreed.
The Office provided a key central role leading to the exchange being launched 90 days after founder members provided the funding.
Benefits
Many individual successes underpin the launch of the exchange for Converge. The rapid deployment of the B2B, subsequent ASP (Application Service Provision) of e-Invoicing to members, and inaugural systems for Converge being notable firsts.
Management attributes the success, especially effective management of the Project Office, to the partnership with Capgemini.
Manufacturers and suppliers can now buy, sell and auction components, thus achieving efficiency to exchange information, radically. This leads to an effective supply chain, with lower cost, lower inventories and improved business practice a natural consequence.
Each founder member intends to drive significant volumes through Converge, so the benefit will grow exponentially.
Converge will follow global trading and shipping patterns in the sector; members can leverage this for their own businesses.
At the initial launch of Converge, a senior member of the management team said:
“This new exchange will fundamentally alter the way high-tech businesses think about the procurement process, moving it from a complicated necessity to a strategic opportunity.”
“Beyond just achieving cost-savings and improved relationships with partners and customers, companies that use the exchange can begin to manage their supply chain like a commodities broker manages an asset portfolio - with a view to changing conditions, and the ability to act quickly to improve one’s position.”
Written in co-operation with Converge Inc.