success story

“HP attributes a great deal of its success in

collaborative supply chain management to
webMethods. It enabled us to quickly build a
webMethods— many-to-many trading network that fosters
collaboration. Supply chain collaboration
enabling KeyChain and benefits HP, its partners and ultimately HP
customers with reduced product pricing and
extended enterprise supply timely deliveries. With webMethods, HP is
creating a true end-to-end value chain.”
chain collaboration
Paul Petersen
Manager, eProcurement
Information Technology
Hewlett-Packard Company
The rapid pace of innovation and not delivering beyond buy/sell, and that
shortened product lifecycles present new caused us to shift our focus to the private
operational risks to every company. One marketplace where HP and its strategic
risk is large inventories of direct partners – contract manufacturers, OEMs
industry
materials that bind capital and inhibit a and logistics providers – could
company’s ability to respond quickly to collaborate to jointly address supply • manufacturing
market conditions. In a large corporation chain issues.”
with multiple business units, these risks
challenges facing collaboration
threaten each unit owning its own challenges
supply chain and inventory issues, and But a collaborative supply chain
• build an IT platform that
when rolled up to the corporate level, management solution presented many
enables collaborative supply
the compound effect can erase profits obstacles. Several HP operating units
chain management to control
and shareholder value. This was the shared strategic partners, but these
inventory costs and assure
business problem facing the Hewlett- partners employed a variety of systems
timely product deliveries
Packard Company (HP): the need to and applications to communicate with
control inventory-driven costs and direct HP. Furthermore, the existing HP • integrate broadly diverse HP
material availability across its global infrastructure was highly decentralized business units and strategic
enterprise. and fragmented, supporting a diverse partners
product mix and equally diverse
• integrate broadly diverse
business management systems.
business systems and
If HP was to successfully build an applications
Internet-enabled, private trading network
to integrate HP and its partners, it would
have to be built on a highly flexible and solution
robust B2B integration platform to
• implement webMethods to
accommodate the vast assortment of
enable messaging between
business models presented. The platform
HP and partners, and
would also have to match the scalability,
integrate broadly diverse
availability and reliability of HP’s
systems and applications in
enterprise servers to meet the needs of
an extended, Internet-enabled
such a mission critical environment.
enterprise environment
webMethods led the industry
• employ HP platforms to
According to Petersen, “webMethods ensure high scalability,
presented the most viable solution. HP reliability and availability of
had used it in the past with great a global, mission critical
success, and it was first to market with solution
extended-enterprise XML integration
capabilities and several standards-based
private marketplace
Internet protocols. webMethods could results
for collaboration
easily be interfaced to legacy systems
• $32M savings in materials
After Y2K, HP focused its attention on and its adopters supported many of the
costs and inventory cost
the Internet and how it could be third-party solutions within our
reductions
leveraged to enhance business environment – SAP, Peoplesoft, Baan
operations and control costs. What HP and Oracle. As a company, • 300% improvement in
discovered was heavy investment in the webMethods was ahead of the B2B inventory recovery rates
buy/sell side of the business equation, integration curve.”
• 50% reduction in inventory
but very little back-end activity.
More importantly, however, replenishment cycle times
Specifically, limited work was being
webMethods provided an easy
done on how the Internet could be used • 30% productivity gains
migration path for HP trading partners. It
to control supply chain issues and reported by partners
could take almost any partner from
reduce inventory costs.
where they were in automated,
“Initially, we concentrated on the public standards-based communications to
marketplace as a means to source where HP needed them – wrapping EDI
materials and recover excess inventory transaction, for example, in XML
through auctioning,” said Paul Petersen, wrappers. Without partner buy-in, HP
HP manager, eProcurement information would have experienced limited success
technology. “But public exchanges were in building a collaborative supply chain
management environment.
successful proof of concept benefits of collaboration
and hp commitment
By October 2001, KeyChain had
In August 2000, HP went live with proof enabled 17 HP organizations, 400 solution highlights
of a concept that integrated HP’s UNIX users, and 120 strategic partners to
• webMethods B2B server
server business in Puerto Rico with its key conduct Internet auctioning, strategic
trading partners. Based on the success sourcing, e-procurement and direct • hp rp7400 servers
of this proving ground, in November, materials inventory management in a
• hp Surestore disk arrays xp512
Hewlett-Packard committed to building a many-to-many trading network. As a
and Oracle 8 databases
private, extended-enterprise marketplace result, HP realized a $32 million dollar
for enabling supply chain savings in material costs and inventory • hp MC/Serviceguard for
collaboration—HP KeyChain™. reductions, and a 300 percent automated fail-over and high
improvement in inventory recovery rates. availability
In three short months HP had
Internet-enabled collaboration also
demonstrated the viability of a private, • i2 TradeMatrix with BEA
reduced replenishment cycle times by as
Internet-enabled marketplace, followed WebLogic
much as 50 percent, and trading
three months later with the first corporate
partners reported productivity gains as • Polydyne Strategic Sourcing
release of KeyChain. The hub now runs
large as 30 percent.
on HP rp7400 servers with HP Surestore • SAP portals
disk arrays xp512. “HP attributes a great deal of its
• Microsoft SQL server 2000
success in collaborative supply chain
webMethods facilitated both proof and
management to webMethods,” • Netegrity Siteminder
deployment. Its ready-made adapters
summarized Petersen. “It enabled us to
seamlessly integrated backend • iPlanet LDAP server
quickly build a many-to-many trading
transactional and ERP systems, and its
network that fosters collaboration.
support for standards-based Internet
Supply chain collaboration benefits HP,
protocols enabled quick partner
its partners and ultimately HP customers
integration. webMethods quickly gave
with reduced product pricing and timely
HP an extended and global business
deliveries. With webMethods, HP is
view.
creating a true end-to-end value chain.”
KeyChain today
Since its initial release, the KeyChain
platform has grown in value with the
addition of services designed to
streamline business processes,
collaboration and analysis. i2
TradeMatrix™ supply chain
collaboration, Sockeye Solutions
collaborative application framework,
Polydyne strategic sourcing, SAP Portal
services and e-service integration with
public marketplace providers such as
Converge. KeyChain also supports
e-procurement innovations developed by
HP, including reverse auctioning, online
purchase order collaboration, automated
procurement and dynamic supplier-
managed inventory replenishment.
“KeyChain is HP IT’s contribution to
collaborative supply chain management
at HP, and webMethods is the golden
thread that pulls it together,” commented
Petersen. “Because of Keychain and
webMethods, HP analysts and strategic
partners can now jointly and securely Technical information in this document is subject
to change without notice.
manage inventory issues in an extended © Copyright Hewlett-Packard Company, 2002.
enterprise over the Internet, working at All rights reserved. Reproduction, adaptation or
translation without prior written permission is prohibited
any time from anywhere in the world.” except as allowed under the copyright laws.

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