Austin, Texas-based supply chain software firm E2open has agreed to acquire ocean freight schedule and booking platform INTTRA.
Financial terms of the deal were not disclosed, but the companies say the transaction is expected to close by the end of the year, pending relevant regulatory approvals.
The move is one of many recent transactions aimed at bringing more of the entire end-to-end supply chain process — from sourcing of raw materials through production and transportation — under one roof. The combined company aims to create a “unified global logistics and supply chain network” that will “strengthen the connections and streamline the information flow between manufacturers, suppliers, shipping service providers, ocean carriers and all the participants in global trade.”
Although they were unable to discuss specific integration strategies and how those might affect things like personnel and fixed assets like office facilities due to an ongoing HSR regulatory review, company officials told American Shipper the two firms have a lot more in common than meets the eye.
For starters, both were formed by consortia of competitors — E2open by some of the world’s largest manufacturers and INTTRA by the largest ocean carriers — looking to solve some of the most basic and pressing problems in their respective industries. Realizing the value of communication and collaboration even among bitter rivals, both firms eventually pivoted to become completely neutral, open networks for facilitating supply chain operations.
In the case of E2open, a group of high-tech manufacturers got together in the year 2000 — also around the time INTTRA was being formed — to look for ways to gain more control of complex manufacturing and logistics processes that had been almost entirely outsourced to third parties in the form of contract manufacturers. The result was a network platform connecting suppliers, contract manufacturers and inland distribution providers with brand owners.
“The tools that were built essentially allow these companies to run a very complex manufacturing process as if it was all internal,” said Michael Farlekas, chief executive officer of E2open. “Everybody could see what was happening in real time across a very large multitiered manufacturing process.
“Since that time we’ve built that network out. Today, where it sits, we have some 70,000 connections on the platform. We help customers from understanding the sell-through at demand side to retailers and resellers, all the way the back through to the manufacturing process.”
Today, E2open helps some of the largest manufacturers in the world — Procter & Gamble, Dell, Cisco and Boeing, to name a few — with traditional sales and operations planning and demand forecasting, but it was still missing a sizable piece of the supply chain puzzle, the actual ocean transportation leg.
“If you look at our heritage, E2open started in the procurement and manufacturing side of the world,” said Pawan Joshi, senior vice president of products and strategy at E2open. “The problem we were trying to solve was how can you get procurement and manufacturing that is outsourced streamlined so that you can, as a brand owner, be confident about the orders that you’re booking and when they’ll get shipped.
“We have a lot of expertise and experience built in, making sure there’s continuity of supply and enough capacity to manufacture stuff. But we typically stop once the stuff is manufactured and the logistics part of it is handled on some other network. As the material reaches the destination, we pick it up again because we have then built up capabilities to support distribution across multiple tiers of network on the other side.”
Looking at it from that perspective, INTTRA’s platform, which connects a vast network of ocean carriers, non-vessel operators and beneficial cargo owners, dovetails nicely with E2open’s offerings.
“The gap that sits in the middle, where E2open stops once the product is manufactured, is picked up by INTTRA,” said Joshi. “INTTRA is really making sure that those products get put in a container, the container gets put on a boat and everything gets tracked correctly, all the way to the destination port where the ship is docked and the containers are unloaded. INTTRA customers will see it the whole time.
“And where INTTRA stops [once the cargo reaches the destination port], E2open picks up and manages the distribution of the materials. As a result, the overlap between our two networks is actually very minimal. It’s very unique in that sense.”
According to Joshi, even the areas in which the two networks do overlap are “more synergistic than disruptive.”
“We don’t orchestrate the process of container booking, but we do have logistics functions around visibility,” he said. “So the network that we built is focused primarily on landside transportation, but it’s also more of an extension to traditional TMS (transportation management system) functions like planning and optimization as opposed to the booking functions that INNTRA has.
“Moreover, the visibility function that we have is less about figuring out where my cargo is and more about figuring out what is the impact of where this stuff is. For example, we track the ETA of a shipment, even if it’s moving via ocean, but what is of more interest to us is how the latest ETA time will impact inventory at its destination. What is the inventory impact of a particular container not leaving on time or a particular vessel getting delayed, and does that cause disruption on the other side?
“If you think about it from that perspective, INTTRA’s capabilities fit very neatly in between the E2open bookends.”
Both companies also profess a passion for innovation and, perhaps more importantly, for providing as much value as possible to as many stakeholders as possible. It’s something that comes through in the way they talk about the work each does and the potential for this acquisition to create something greater than the sum of its parts.
“E2open and INTTRA have a similar consortium heritage and culture; both were born to solve similar problems for their respective ecosystems, to improve efficiencies, overcome data exchange constraints and reduce the friction associated with doing business,” said INTTRA CEO John Fay. “In joining forces with E2open, a company that shares our values and understands the benefits of global business networks, we envision a single platform with accelerated innovation to connect, streamline and operate all aspects of global manufacturing, logistics and distribution, resulting in immediate benefits for all stakeholders.”
According to the companies, ocean carriers will benefit from a “stable, unified operating platform with direct access to large global shippers,” while cargo owners and third-party logistics providers benefit from access to a larger combined network and new end-to-end solutions that “improve operational efficiency, reduce inventories and deliver efficient logistics operations.”
In addition, officials say that by officially merging the two companies, as opposed to entering a partnership agreement, all stakeholders stand to benefit from an acceleration in research and innovation and the deployment of new products that will further leverage the strength of the combined network.
“Partnering is great if you are totally hands-off,” said Farlekas. “That takes us to a certain level, but we felt that there was a greater ability for us to co-innovate by having so much of that data natively within one set of applications. The rationale is that we can add more value if we put our networks together natively, if we really became intimately aware of the data and how it can be used by all three constituents, the place-holding community, the branding itself and the carrying community.
“In other words, we thought we could go further faster if we were together.”
Inna Kuznetsova, INTTRA’s president and chief operating officer, said the integration will help both companies get closer to the ultimate goal of a truly intelligent end-to-end supply chain.
“If you want to build an intelligent supply chain, you start with digitalizing all your processes,” she said. “The next step is to start connecting the data sources and applying machine learning to this joined set of data to extract valuable insights.
“That requires joined developmental tools. It requires certain standards in data access. And doing this under the umbrella of one company allows us to move much faster to deliver a higher level of value to all customer segments.
“Shippers and carriers would both like to see better forecasting coming from the digital world, which would allow them not only to plan their utilization better, but also to reduce the number of no-shows and reduce the number of rollovers to improve the customer service. But it’s all predicated from having access to a variety of data in the supply chain management network and logistics network. This is what the unique combination of INTTRA and E2open will be able to deliver as a single company.”
Company officials also were unable to share any projected earnings synergies, but noted that the combined entity is expected to bring in roughly $265 million in annual revenues.
“Bottom line, E2open is a profitable company, and so is INTTRA,” said Farlekas. “So we will remain profitable as we go forward.”