Industry-led trading exchange Converge Inc. today confirmed it will shut down its supply chain collaboration operations.
In a prepared statement, Converge confirmed that because of the weak economic climate and slower than expected adoption rates, it will discontinue any further development of its supply chain management suite and focus all its resources on the continued build-out of its trading exchange.
"Converge is currently restructuring operations in accordance with its new strategy," according to the statement. "Information will be forthcoming."
In an e-mail letter to customers, Converge said its founding members support the decision and "recently reaffirmed their commitment to Converge as both customers and investors."
Robert Schwartz, an analyst with Thomas Weisel Partners LLC, New York, said in a report issued today that Converge's supply chain planning and logistics operations would be closed, and that lay-offs in its California offices were underway.
According to the Thomas Weisel report, the move affects the ConvergePlan and ConvergeMove services, which were introduced earlier this year. ConvergePlan provides an alert and report feature that allows buyers to manage supply chain operations, track inventory, and coordinate demand forecasts and suppliers' shipment dates. ConvergeMove offers electronic booking of freight services and visibility into transportation activities.
Customers using the ConvergeMove services, including Agilent Technologies Inc. and another unnamed founding member, are likely to be directed to Converge's software vendor, Celarix Inc., Cambridge, Mass., for continued support, said Nathan Pieri, Celarix's vice president of marketing and product management. Converge announced in March that it would use Celarix tools to provide real-time logistics monitoring.
"We heard from Converge today [Friday] that they are discontinuing their collaborative services," Pieri said. "We are working with Converge, and are in the process of transitioning customers. Our strength is that we work on an ASP [application service provider] model, and we don't expect customers to see any disruption in service."
Thomas Weisel's Schwartz said the former NECX exchange, which Converge acquired early this year from software vendor VerticalNet, is unaffected and will remain as the platform for the company's online and offline trading activities.
Converge was founded in 2000 by 16 high-tech players, including Advanced Micro Devices, Agilent, Compaq Computer, Hewlett-Packard, SCI Systems, and Solectron. The Peabody, Mass.-based exchange offers other services focused on design and order management and operates a parts reference database. The status of those services was not immediately known.