March 23, 2001

Pelion claims its system offers crucial supply flow solutions to manufacturing

Business Report Correspondent

BOULDER — Chris Shiver is on a double mission.

One of them will take him to Mount Everest this spring in an attempt to find the long frozen body of Andrew “Sandy” Irvine, who accompanied George Mallory on the famous 1924 expedition. Near Irvine’s body should be his camera, which could contain photographic evidence to settle once and for all the question of who first reached the peak of the world’s tallest mountain.

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Shiver’s other mission will find him at Pelion Systems Inc. in Lafayette on a search of an entirely different sort, diligently hunting for the perfect supply flow solutions for his manufacturing customers.

OK, who’s kidding who? If any of us could figure out a way to make hunting for historic corpses in the Himalayas our main enterprise, we might all have addresses in Katmandu by now. Shiver has to work for a living, too. As vice president and co-founder of Pelion, Shiver is about to see the culmination of five years of effort as the company prepares to launch its first product.

“There are a lot of companies good at flow manufacturing, and many others that are good at technology,” Shiver said as a late-winter sunset played on the Flatirons outside the windows of his third-story office. “We can do both.”

Ken Stone, Pelion’s co-founder with Shiver and its president and chief executive officer, said the company’s potential is more than just the predictable hype. “We will deliver quantifiable value in the supply chain integration,” he said. “We can show a real return on investment that’s easy for the customer to understand. We probably have some of the leading manufacturing experts on our staff.”

Privately held Pelion leases the entire 12,000-square-foot top floor of a building near the intersection of U.S. 287 and South Boulder Road in Lafayette. About a third of the company’s 21 employees work out of a Denver office, writing and programming the software that Pelion plans to launch next month.

Stone and Shiver started Pelion in 1996 with just a couple thousand dollars. They have spent the last five years attracting investors and developing the company’s core product, a suite of software applications designed to help manufacturers streamline their lead times, working capital and inventory levels.

Typically, manufacturing operations are managed by massive legacy mainframe computer systems. These mechanisms, known as a company’s Materials Resource Planning (MRP) and Enterprise Resource Planning (ERP) systems, ideally allow a manufacturer to track dispersed inventories, manage vast supply chains and control complex vendor relationships.

But Stephen Lawrence, an associate professor of operations management at the University of Colorado’s School of Business, said that instantaneous communication and economic globalization have necessitated substantial changes in the way manufacturers manage their operations.

“What we’re seeing now with supply chain management is that companies are figuring out how to move an MRP system into the supply chain so it’s not just communicating with the manufacturer, but up and down the supply chain,” he said.

Jay Vigeland, director of marketing for Efinity, a supply chain management company in California, said the time is ripe for companies in this sector. “I think there are a lot of opportunities out there. The internal business systems package you once had to manage your processes within your four walls no longer holds water,” he said. “The manufacturing picture is getting more complicated as time goes on.”

As the complexity thickens, Pelion hopes to come in with what it calls Collaborative Flow Manufacturing, a strategy that ties disparate manufacturing processes together into a cohesive whole, embracing a demand-driven supply strategy, or “pull” rather than “push” manufacturing.

The best way to think of this is in the context of fast food. When the lunch crowd starts lining up at McDonald’s, the kitchen “pushes” out a number of burgers based on past demand, inevitably creating a wasteful surplus. At Burger King, by contrast, the kitchen operates on a “pull” basis, where burgers are made to the individual order of the waiting customer.

“We will strive to balance and sync the flow of raw goods to our manufacturing customer’s line so that they only come in when they are ready to be consumed,” Stone explained. “This reduces the manufacturer’s working capital by up to 30 percent and reduces their lead times from four to eight weeks to four to five days.”

These remarkable demand-driven efficiencies are enabled primarily by the electronic and Web-based capabilities that are Pelion’s core business. “It will result in a major overhaul of a company, if that company can listen to the market real-time and online,” Shiver said. “We’re not just filling a niche, but creating a whole new one in the marketplace.”

Lawrence, after reviewing Pelion’s Web site, cautioned that Shiver’s pronouncement is a bit bold. “I don’t think it is new,” he said. “It sounds like what they are doing is more of an evolution than a revolution.”

Whether Pelion has the next breakthrough solution to supply chain management or not, it is currently talking to a series of venture capitalists to raise $10 million to $15 million. In a recent partnership with Boulder-based SmartPoint Inc., Pelion will bundle SmartPoint’s technology into its software to facilitate wireless, real-time messaging.

With 33 customers ready to sign on with the company, Stone predicts that Pelion will be profitable by the end of 2001, with $3 million to $4 million in sales. That may not be as exciting as solving the puzzle of who first went to the top of the world, but it sure is easier to breathe down here.Contact John Aguilar at (303) 440-4950 or e-mail at jaguilar@bcbr.com

Business Report Correspondent

BOULDER — Chris Shiver is on a double mission.

One of them will take him to Mount Everest this spring in an attempt to find the long frozen body of Andrew “Sandy” Irvine, who accompanied George Mallory on the famous 1924 expedition. Near Irvine’s body should be his camera, which could contain photographic evidence to settle once and for all the question of who first reached the peak of the world’s tallest mountain.

Shiver’s other mission will find him at Pelion Systems Inc. in Lafayette on a search of an entirely different sort, diligently hunting for the…

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