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i2 Developing Solution to Help Companies ``Go Green''; Solution Intended to Help Manufacturers Deal with Environmental Regulation Compliance.

Business Editors/High-Tech Writers

DALLAS--(BUSINESS WIRE)--April 27, 2004

i2 Technologies, Inc. (OTC:ITWO), a leading provider of closed-loop supply chain management solutions, today announced that it is developing i2 Hazardous Materials Management (HMM), a technology-enabled solution intended to help companies deal with emerging environmental regulations and related manufacturing requirements affecting those industries whose products contain electronic components.

The Challenge

The restrictions being placed on the usage of certain hazardous materials are driving significant change in the way products are being designed and manufactured. Key regulations such as the European Union's Directive 2002/95/EC, Restriction of Hazardous Substances (RoHS), will go into effect starting July 1, 2006. Companies that do not comply risk forfeiting revenue and market share in those markets covered by the regulations. The entire electronics ecosystem and supply chain stands to be impacted - from component manufacturers and distributors, to the OEMs and contract manufacturers.

The move to lead-free manufacturing is having a wide-ranging impact, thereby creating new requirements for "green" design, procurement and manufacturing. According to a March 26, 2003 AMR Research Report, "The WEEE (Waste Electrical and Electronic Equipment) and RoHS directives affect core business processes and over half of a manufacturer's existing enterprise applications." The report goes on to say, "The WEEE and RoHS directives will have a similar rippling effect on IT systems that we saw with Y2K and euro preparation."

Traditionally, enterprise software applications have been available to manage the environmental health and safety aspects of conforming to regulations from agencies such as the Occupational Safety & Health Administration (OSHA), Food & Drug Administration (FDA), Environmental Protection Agency (EPA) and the Nuclear Regulatory Commission (NRC). However, these applications do not address the front-end supply chain technology requirements of engineering, procurement, quality and supply management which are needed to enable RoHS compliance and the transition to lead-free manufacturing.

In his April 1, 2004 Research Alert, AMR Research's Kevin O'Marah writes, "Reactive environmental compliance will be too costly for many manufacturers to survive. Design-for-environment strategies must anticipate worst-case scenarios and the tools to help them should be chosen accordingly."

O'Marah goes on to write that two technology vendors are prepared to help their customers in this situation. About i2, he writes, "i2 Technologies, with its well-established component supplier management system, is familiar to high-tech manufacturers. It emphasizes part selection application functionality and product content management."

"Compliance to regulatory standards like HAZMAT will have an unprecedented impact across the entire supply chain. It will transform the way we interact with our suppliers, our customers, and partners," notes Greg Frazier, executive vice president of Avnet, a leading electronic components distributor. "Our customers face a potentially daunting task of migrating millions of items from non-compliant bills of materials. Across more than 125,000 clients, Avnet must aggressively apply processes to assist in this transition. It is imperative that we avoid any disruption in our client's supply chain."

Jeffrey Davis, director of Supply Chain Engineering for Lucent Technologies, is the corporate leader for his company's RoHS and WEEE implementation. In explaining the true gravity of the impact of these regulatory changes he notes that the issues may have far greater ramifications than earlier estimated. Davies states, "The road to compliance will be measured in billions of dollars of revenue and expense. We may see a true shift in competitive balance as companies hurry to become compliant within manufacturing, distribution, sales, etc. The European compliance deadline of July 2006 will force wide-spread changes in the way companies go to market with their products. This shift is already having significant world-wide impact as geo-specific regulations are implemented."

The Solution

A comprehensive approach to addressing the environmental requirements must encompass a combination of content, application software, and business process. The solution begins with content, which provides the information core for the hazardous materials management environment. Without content, there is no solution and content might often result in being one of the highest critical paths of any solution or deployment. Content common requirements include material and substance data, manufacturability data, and the core information requirements for item, supplier, product data, in addition to unique client requirements.

The application software is then used for information management and product decision support. i2's HMM solution is being developed with capabilities for content management, component and supplier management, design for environment, product analysis (e.g., obsolescence, supply, and cost), and reporting. The solution will be designed to optionally extend to include strategic sourcing and supplier management.

According to Peter Lachapelle, i2 vice president, Content, "These new regulations force companies to review items included in all bills of materials for both existing and new products. To truly 'go green,' the industry is going to need detailed information on millions of items from thousands of suppliers. Many clients are underestimating the time or effort required to create standardized HAZMAT information for each item."

Lachapelle says i2 will apply more than a decade of content standardization expertise to meet the challenges of HAZMAT information requirements. He notes, "The i2 Content solution has an ISO certified production model and is a market leader in content capture, aggregation and standardization. We are collaborating with key OEMs and component distributors today to deliver all required 'green' product information well in advance of the 2006 deadlines."

"The clock is ticking, with less than 27 months remaining until the RoHS regulations take effect. Companies that are not already well down the path to being ready will find it difficult to accomplish the myriad, time-consuming tasks required to achieve compliance," says Tony Grzesik, i2 vice president, SRM.

The impact on Information Technology (IT) is perhaps as great as any other part of the company, continued Grzesik, but generally speaking, IT has been slow to react. This is partly due to the economic realities of the past few years, wherein IT budgets have been significantly reduced from prior levels. Another contributing factor is a lack of education on the topic.

"Companies are now scrambling to make up for lost time, and they need third party help," said Grzesik. "Most companies don't have the luxury of resources, time or expertise to do this on their own. i2's ability to address this problem makes sense, given our rich content and sourcing solution heritage. Many of the world's largest electronics manufacturers are already customers, so this is a natural extension for us. We are building the solution based on our technology and best-practices experience in the areas of content, product sourcing, and supply management, which should allow us to offer customers shorter time-to-compliance and lower total cost of ownership."

Grzesik concludes, "The next two years will be challenging times for product development, supply management, manufacturing operations and IT. They will need to deal with product re-designs, supply shortages, manufacturing line changes, regulatory compliance reporting, and new information management requirements."

About i2

A leading provider of closed-loop supply chain management solutions, i2 designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. i2's global customer base consists of some of the world's market leaders - including seven of the Fortune global top 10. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at

i2 is a registered trademark of i2 Technologies US, Inc. and i2 Technologies, Inc.

i2 Cautionary Language

This press release may contain forward-looking statements that involve risks and uncertainties, including forward-looking statements regarding i2's continuing development of i2 HMM and the future of environmental regulatory compliance, the customer's ability to implement or integrate i2 solutions successfully and in a timely fashion or receive expected functionality and performance, or achieve benefits attributable to i2 solutions. These forward-looking statements involve risks and uncertainties that may cause actual results to differ from those projected. For a discussion of factors which could impact i2's financial results and cause actual results to differ materially from those in forward-looking statements, please refer to i2's recent filings with the SEC, particularly the Annual Report on Form 10-K/A filed on March 17, 2004. i2 assumes no obligation to update the forward-looking information contained in this news release.
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Publication:Business Wire
Date:Apr 27, 2004
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