JD Edwards makes big SCM profit despite poor predictions

Enterprise resource planning (ERP) specialist JD Edwards made 45% of its income from supply chain management (SCM) software in...

Enterprise resource planning (ERP) specialist JD Edwards made 45% of its income from supply chain management (SCM) software in its last financial quarter.

The shift into SCM enabled the company to meet its financial targets for the three months until 31 January – targets that had been revised downwards at the beginning of last month.

Richard Allen, chief financial officer at JD Edwards, said, “We are continuing to expand our focus on the supply chain. The benefit to us is that these are high-dollar, high-margin sales.”

He added, “The good news is we have an opportunity to sell into our installed base. We’ve not really had the focus on that in the past. We have well over 6,000 customers to leverage and this is one of the areas we see where we’re going to have a quick win to drive some quick revenue.”

Revenue for the company’s first quarter was $217.7m compared to $231.7m for the same period last year. Net income was $191,000 compared to a loss of $31,000. In February, JD Edwards reported that it would be lowering its financial expectations and expected to post revenues of between $208m and $218m.

JD Edwards’ announcement that its sales of SCM software are growing follows reports of two high-profile SCM implementation disasters.

Nike has blamed problems with its SCM software, supplied by i2 Technologies, for having to lower profit forecasts, and UK-based distribution company Grocery Logistics is suing Manugistics for more than £7m in damages in a dispute over a supply chain package.

Gartner Group analysts and industry vendors are predicting that many companies will begin to experience problems implementing SCM software since the technology is immature and most companies fail to understand the reality of supply chain planning implementations.

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