Raymond Teh, US-based i2 Technologies' president for Asia-Pacific, says that the software system his company designed for Legend is capable of providing real-time information on orders, production and inventory to management. "Money is saved when management has the capability to respond instantly to changing market demand," he says. To do this, management has to know what the customers want and to gear its production to meet that need, he adds.

Such a fast-moving business strategy is of particular importance to the computer industry where products can become obsolete in a few months after hitting the shelves, Teh says. This, of course, also applies to the garment industry and retail which must slavishly follow the fast-changing fashion trends, he adds.

The business people in Hong Kong have long been well-known for their nimbleness and agility in adapting to market changes. But in the past, they were involved mainly in relatively lower cost manufacturing activities in which labour cost far outweighed that of material and other costs. What's more, the majority of the factories in Hong Kong then were small and the manufacturing process was simple. It was easy for management to make changes.

Not anymore. Most of the production process has by now been moved to the mainland. Competition from other low-cost manufacturing centres around the world has required Hong Kong exporters to widen their sourcing network to meet consumers' demand for more sophisticated products of greater complexity. Supply-chain management by person alone is no longer adequate to survive in this highly competitive marketplace, Teh says. Management will have to rely on computers to provide it with quick and reliable information to adapt, he says.

Take Legend, for example. "The marketing division of the group has to decide what computers to build and sell and the manufacturing division will than have to decide what components to buy and where from," Teh says. "The production people have to ensure the reliable and timely supply of parts and components to keep the production lines in operation while trying to avoid inventory buildup," he says.

This is the simple part, he says. The difficult part is the notoriously fickle nature of the computer market where consumer demands are driven by rapidly-advancing technology and fads. This means that producers like Legend will have to keep adjusting their product lines to meet changing market demands.

Any change in product specifications will require a thorough readjustment in the supply of parts and components from many different suppliers in many different countries, Teh says. A PC is made up of more than 1,000 components and parts which are sourced from hundreds of suppliers who are required to follow a strict delivery schedule. To catch up with the rapid changes in market demand, a manufacturer will need to keep changing its products. As a result, the components and parts it requires will be changing constantly. "What you order in the beginning of the month may not be what you need at the end of that same month," he says.

The traditional way is to make no provision for variables because management has given up any hope of catching up with the changes, Teh says. In this case, the solution is to "produce more of every type of product" hoping that the extra sales of the popular products can cover the shortfalls of others, he says.

"But in our view, any excess inventory is a waste," Teh says. Furthermore, the traditional approach is becoming less and less workable because of the shrinking shelf life of many products, he says. "The inventory can become obsolete in two months," he adds. There is no point holding onto a large inventory because the demand is not going to materialize, he says.

Teh says that i2 software has "lots of different logarithm combinations" to address every conceivable change in market conditions and to suggest the most "optimal" solutions at "every level" of the operation. The system seeks to ensure "the most efficient use of resources" available to a business, he says. "It maximizes what you already have and assist you in the efficient fulfillment of orders," he adds.

i2 was established in Asia seven years ago. Since then, the company's Asia operations have grown from a one-person office to 13 offices employing more than 300 professionals in IT and management. Total turnover last year in Asia outside Japan amounted to US$85 million, or 10 per cent of the company's total worldwide.

Teh says that his company considers China and South Korea as the two markets in Asia with the most potential for further expansion. Other than Legend, its mainland customers include Huawei, a major producer of mobile phone sets, and Digital China, a major information technology company.

On the mainland, i2 has established an office in Beijing, which is being geared to service the north China market, Teh says. The Hong Kong office will continue to service the south China market, he says. "It is very convenient for us to service our clients in Guangdong, especially the Pearl River Delta area, from Hong Kong," he says.

Other than manufacturers, many of i2 clients in Asia are retailers. They include the Lotte group of South Korea and Esprit of Hong Kong.

i2's software is particularly effective in merchandise planning in deciding what to buy and determining the time and means of delivery. In addition, it has a special function in assisting management in choosing the most cost-effective ways to move unsold inventories. This "mark down" function advises the retail client of the "most optimal way to get rid of its unsold merchandise at the shortest possible time," he says.

Teh says that the merchandise planning software developed for Esprit has helped the company save up to 20 per cent in annual costs. "What it does is to provide better and most updated information based on which the management of the company can make better decisions," he says. "These are the sort of decisions that can make or break a retailer," he says.

| frontpage | nation | business | HK\Taiwan | snapshots | focus |
| governmentinfo | economic insights | campus life | Shanghai today | metropolitan |