While all eyes and ears have recently been on WorldCom's bankruptcy, another insolvency under way is sending shockwaves throughout middle and lower tiers of automotive suppliers despite its insignificant financial magnitude in comparison to the WordCom's.
On July 5, the board of BRAIN International AG, a German provider automotive and industrial business solutions, filed for provisional insolvency proceedings with the Local Court of Freiburg, Germany. Included in the application are BRAIN International AG itself and both its subsidiaries BRAIN Automotive Solutions GmbH and BRAIN Industries Solutions GmbH. After carefully reviewing the business and financial situation, the board cited insolvency was looming as a result of the difficult market situation in Germany.
A substantial drop in sales especially in Germany reportedly exacerbated the situation in the second quarter. Intensive discussions with potential financial investors and strategic investors still continue with the aim of continuing the company as a going concern and of launching further restructuring measures. Business trends, particularly in the USA, nonetheless, continue to be positive for BRAIN North America, a wholly owned subsidiary of BRAIN AG.
The best example thereof would be the August 1 announcement of the release of SupplyWEB 6.0, marking the second upgrade for the product this year, with enhancements including advanced global capabilities and expanded functionality in key areas such as demand management and releases, purchasing, advanced shipping notice (ASN)/supplier shipping, and invoicing. SupplyWEB is a comprehensive, ERP independent, web-based Supply Chain Management (SCM) procurement and supplier rating solution, designed specifically to improve relationships and efficiencies between automotive manufacturers and their suppliers. It should allow automotive suppliers to deploy e-commerce strategies to reduce inventory, speed the flow of supply chain information, and increase operational efficiencies, as by deploying it manufacturers should be able to achieve 100% electronic communications with all their suppliers, even if some of their suppliers do not have EDI capability. To that end, SupplyWEB includes fully integrated machine-to-machine EDI transactions as well as web-based methods.
Futhermore, since just accessing the supply chain is not enough, through the use of 5 procurement methodologies, including SMI (Supplier Managed Inventory), and Kanban, users should be able to manage their suppliers according to their needs. For instance, SupplyWEB allows suppliers to respond quickly to the exceptions that occur, such as defective material, delivery issues, excess inventory, critical Kanban, etc. It also allows manufacturers to rate the performance of each supplier and focus on resolving and preventing the exceptions.
This would be yet another object lesson on what conundrum might result for a customer neglecting the vendor's liability. The market had already witnessed the anguish of former Baan Co. and SSA customers, which have both eventually been resolved favorably with subsequent buyouts (see ERP Belle �poque Officially Ended With the Demise of Baan and SSA).
At this stage, speculations are the most one can come up with until BRAIN AG officially announces the outcome of negotiations with creditors and investors. In its recent address to North American customers, BRAIN AG stated its commitment to existing systems and implementations, and continued selling new systems, which has likely been received only as a crumb of comfort in light of ever-sinking investors' and users' sentiment and trust in corporate rhetoric. Some writing on the wall could have already been sensed from a difficult 2000, when the company had to plead with the banks for a rescue package. Eventually, a bank in Munich stepped in, assuming around a third of the shares and the majority of the voting rights. One should wait and see whether the company can pull a similar feat in today's much-changed reticent investing climate amid scandals and business failures-ridden 2002.
BRAIN NA's parent company, headquartered in Breisach, Germany, was formed a few years ago from the merger of German ERP software developers BIW and Rembold + Holzer. BRAIN AG further gained the TRANS4M solution when it acquired a US-based CMI-Competitive Solutions in September 1999 with a view to become the leading provider of ERP and SCM solutions to the North American automotive industry. As a result, BRAIN continued to compete with its two automotive-focused ERP packages, which are Xpert Manufacturing System, which runs on IBM's iServer (formerly AS/400) platform, and TRANS4M, which runs on UNIX and Windows server platforms.
The two products differ in their fit to different types of automotive suppliers, in addition to platform support. Xpert is better suited to mixed-mode manufacturing requirements (with EDI being an integrated component of materials requirement planning � MRP), whereas TRANS4M should appeal to manufacturers with a lean/repetitive production environment (with its work-in-progress (WIP) visibility, pay-point operations, multiple backflush methods, and other industry endemic functionality).
Current BRAIN's difficulties can still largely been attributed to the fact that the company has never produced a cogent strategy to bring the two dissimilar product lines together, finally resigning to having a two-pronged product strategy. Moreover, hefty R&D expenditures in German HQ to unify the products and spread into other vertical industries will have also been the likely reasons that left the company financially vulnerable for the revenue slump.
On July 5, the board of BRAIN International AG, a German provider automotive and industrial business solutions, filed for provisional insolvency proceedings with the Local Court of Freiburg, Germany. Included in the application are BRAIN International AG itself and both its subsidiaries BRAIN Automotive Solutions GmbH and BRAIN Industries Solutions GmbH. After carefully reviewing the business and financial situation, the board cited insolvency was looming as a result of the difficult market situation in Germany.
A substantial drop in sales especially in Germany reportedly exacerbated the situation in the second quarter. Intensive discussions with potential financial investors and strategic investors still continue with the aim of continuing the company as a going concern and of launching further restructuring measures. Business trends, particularly in the USA, nonetheless, continue to be positive for BRAIN North America, a wholly owned subsidiary of BRAIN AG.
The best example thereof would be the August 1 announcement of the release of SupplyWEB 6.0, marking the second upgrade for the product this year, with enhancements including advanced global capabilities and expanded functionality in key areas such as demand management and releases, purchasing, advanced shipping notice (ASN)/supplier shipping, and invoicing. SupplyWEB is a comprehensive, ERP independent, web-based Supply Chain Management (SCM) procurement and supplier rating solution, designed specifically to improve relationships and efficiencies between automotive manufacturers and their suppliers. It should allow automotive suppliers to deploy e-commerce strategies to reduce inventory, speed the flow of supply chain information, and increase operational efficiencies, as by deploying it manufacturers should be able to achieve 100% electronic communications with all their suppliers, even if some of their suppliers do not have EDI capability. To that end, SupplyWEB includes fully integrated machine-to-machine EDI transactions as well as web-based methods.
Futhermore, since just accessing the supply chain is not enough, through the use of 5 procurement methodologies, including SMI (Supplier Managed Inventory), and Kanban, users should be able to manage their suppliers according to their needs. For instance, SupplyWEB allows suppliers to respond quickly to the exceptions that occur, such as defective material, delivery issues, excess inventory, critical Kanban, etc. It also allows manufacturers to rate the performance of each supplier and focus on resolving and preventing the exceptions.
This would be yet another object lesson on what conundrum might result for a customer neglecting the vendor's liability. The market had already witnessed the anguish of former Baan Co. and SSA customers, which have both eventually been resolved favorably with subsequent buyouts (see ERP Belle �poque Officially Ended With the Demise of Baan and SSA).
At this stage, speculations are the most one can come up with until BRAIN AG officially announces the outcome of negotiations with creditors and investors. In its recent address to North American customers, BRAIN AG stated its commitment to existing systems and implementations, and continued selling new systems, which has likely been received only as a crumb of comfort in light of ever-sinking investors' and users' sentiment and trust in corporate rhetoric. Some writing on the wall could have already been sensed from a difficult 2000, when the company had to plead with the banks for a rescue package. Eventually, a bank in Munich stepped in, assuming around a third of the shares and the majority of the voting rights. One should wait and see whether the company can pull a similar feat in today's much-changed reticent investing climate amid scandals and business failures-ridden 2002.
BRAIN NA's parent company, headquartered in Breisach, Germany, was formed a few years ago from the merger of German ERP software developers BIW and Rembold + Holzer. BRAIN AG further gained the TRANS4M solution when it acquired a US-based CMI-Competitive Solutions in September 1999 with a view to become the leading provider of ERP and SCM solutions to the North American automotive industry. As a result, BRAIN continued to compete with its two automotive-focused ERP packages, which are Xpert Manufacturing System, which runs on IBM's iServer (formerly AS/400) platform, and TRANS4M, which runs on UNIX and Windows server platforms.
The two products differ in their fit to different types of automotive suppliers, in addition to platform support. Xpert is better suited to mixed-mode manufacturing requirements (with EDI being an integrated component of materials requirement planning � MRP), whereas TRANS4M should appeal to manufacturers with a lean/repetitive production environment (with its work-in-progress (WIP) visibility, pay-point operations, multiple backflush methods, and other industry endemic functionality).
Current BRAIN's difficulties can still largely been attributed to the fact that the company has never produced a cogent strategy to bring the two dissimilar product lines together, finally resigning to having a two-pronged product strategy. Moreover, hefty R&D expenditures in German HQ to unify the products and spread into other vertical industries will have also been the likely reasons that left the company financially vulnerable for the revenue slump.
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