Prescient Eyes Scan-Based Trading for More Markets
Supermarket supply chain specialist Prescient Applied Intelligence is starting to use technology and customers gained through a ViaLink acquisition to work its way into scan-based trading, expanded vertical markets and converged online environments for retailers and product makers and distributors.
"The vision is to be able to offer a continuum of services for retailers and distributors," said Jane Hoffer, president and CEO of the combined company that was created last January through a merger between Prescient Systems and ViaLink.
Also through the deal, Prescient picked up ViaLinks Advanced Commerce hosted ASP service, along with a long list of blue-chip customers in the CPG (consumer packaged goods) space.
Right now, Prescient Applied Intelligence still faces challenges in the areas of integrating the two companies and returning to profitability, according to Hoffer, who previously headed up Prescient Systems.
"ViaLink was losing money when we bought it," Hoffer said in an interview. "But the year 2006 will be a year of growth," according to the CEO.
On the technology side, Prescient is now beta testing a converged scan-based trading environment which brings together Advanced Commerce, ViaLinks offering for CPG product distributors, with Prescients own Supply Chain Suite for grocery retailers, Hoffer said. Participants in the test include a major distributor and a major retailer.
ViaLinks key contributions to the merger included a scan-based trading service known as sbtLink, in addition to data synchronization services.
"Scan-based trading is becoming really hot," said Kara Romanow, an analyst with AMR Research, in another interview. "Retailers have always liked the idea, and now, manufacturers are getting less scared."
Meanwhile, Prescient is also applying ViaLinks more services-oriented strategy to other areas of the combined entity.
"Weve always done consulting. But now, for example, were outsourcing the entire VMI (vendor-managed inventory) operation for Sunny Delight," according to Hoffer.
Also, Prescients Supply Chain Suite, previously sold as software only, is now available to customers as an ASP service, too.
Hoffer is especially upbeat about the outlook for scan-based trading services. For distributors, advantages of scan-based trading include high quality sales information, reduction or elimination of invoice discrepancies and improved abilities around demand planning and inventory planning, Hoffer said during the interview.
Also under the scan-based approach, retailers dont need to pay distributors for goods until the items are scanned at the cash register, according to the Prescient CEO.
In the current beta test, Prescient and its two partners are using barcode scanning. But theres no reason why RFID scanning shouldnt constitute an option in the future, Hoffer said.
According to AMRs Romanow, manufacturer/distributors tended to worry in the past about the expense of moving to a scan-based system.
In addition, some product-makers werent all that comfortable with the concept of waiting until retailers actually sold items at the register to get paid.
"But at this point, more of them are starting to understand the benefits of closer collaboration with retailers," according to the AMR analyst. "Prescients [move toward an ASP model] should also help."
Beyond the grocery store and CPG markets, Prescient is also eyeing other "big box" retailers, said Hoffer, who explained that "big box" refers to the size of the retail floor space.
ViaLink, for example, carried drug store giant Rite-Aid along with it as a customer for the combined company.
Since the merger, Prescient has added Auto-Zone to its customer base. In particular, the vendor is now on the lookout for other retail customers in the automotive aftermarket, as well as for large home electronics retail chains, for example.
As Romanow sees it, an expansion of Prescients markets into other retail arenas does seem likely to boost the presence of scan-based trading. Retailers in other markets work with product distributors in areas outside CPG, such as auto parts makers, she said.
But for Prescient to succeed in scan-based trading, much will boil down to sales and marketing execution, according to the analyst.
"Prescient certainly has the [technology] and plenty of healthy and satisfied customers," Romanow said. "Now, the company needs to make sure the message gets out about the advantages of scan-based trading."
Check out eWEEK.coms for the latest news and analysis of enterprise supply chains.