Supply-chain redesign
The CTO of Prime Advantage helped his company survive by focusing on customer needs
The sector has seen ambitious plans to create revolutionary Internet-based buying and selling models instead lead only to bankruptcy for many companies. But Prime Advantage, a Chicago-based buying consortium for the industrial equipment marketplace, has weathered three rounds of layoffs and is looking for acquisitions to improve its position. The company now has 203 member affiliates in its consortium and another 85 registered suppliers.
Looking back on the past three years, Neuhaus says, “It has been a challenge; but most CTOs want to build something, and this job has been about building something.”
When it began in the fall of 1999, Prime Advantage attempted to mimic large-scale, pure b-to-b e-marketplaces, which many said would soon dominate the business world.
That business model never took off, and Prime Advantage also experienced hard times and underwent cost-cutting measures and layoffs.
In response to customers, Neuhaus redesigned much of Prime Advantage’s technology model to make it more viable in the changing marketplace.
“We started out with Ariba’s e-marketplace software, but we saw that companies were not absorbing rapid change [contemplated by pure b-to-b marketplaces],” Neuhaus says. “That’s why e-business marketplaces didn’t work.
“What worked was bringing e-commerce to companies without changing their internal processes,” Neuhaus says. He led in-house development of PrimeNetworx, Primate Advantage’s platform for connecting a user’s systems together behind the user’s interface with minimal impact on existing processes, he says.
Neuhaus used JavaBeans, Java applications, WebLogic and Tomcat application servers, and an XML-based interface to build a process that reduced the amount of code necessary to create a Web application that includes support for Oracle, Microsoft SQL, Solaris, and Linux. The platform was designed so that companies could use it with ease.
“All our work is behind the user interface,” Neuhaus says. “For example, if you have the MRP [material requirements planning] user interface, there would be no change. We integrate with systems on the back end.”
The company now boasts a list of suppliers that includes giant Granger Industrial Supply — one of the larger maintenance, repair, and operations distributors in the country — and members such as American Foodservice, a food-service equipment manufacturer. Prime Advantage’s and Neuhaus’ ability to see the changing conditions for business marketplaces and react accordingly has distinguished the e-marketplace provider from many that didn’t survive, one analyst says.
“We know that the technology by itself doesn’t change business processes,” says Thilo Koslowski, an analyst at Gartner in San Jose, Calif. “What needs to happen is business processes look at technology to create changes within the company.”
For Prime Advantage, the burn rate has stopped, and the company has now righted itself, Neuhaus says. Much of the recent success derives from offering supply information to small businesses. The company has found strong demand for its services from small companies making daily ordering and shipping decisions.
“We have seen a huge upswing in less-than-truckload, third-party logistics for companies that don’t have regular trucking needs. We’ve been doing well by aggregating members’ trucking needs,” Neuhaus says. “We are going to survive.”
