consolidation within the warehouse management systems (WMS) and supply chain
execution (SCE) market, which has long been predicted by certain pundits who
also explain the various reasons why it has never taken place, seems to have
taken another route very recently. Namely, instead of a direct intra-market
consolidation, some tormented public SCE/WMS vendors or smaller, but profitable,
undercapitalized, and undervalued WMS/SCE vendors have found a shelter under
wealthy, more visible parents with complementary products. The example of the
first would be the recent acquisition of former EXE Technologies
by SSA Global (see SSA
GT To EXE-cute (Yet) Another Acquisition).
examples of the later would be the agreement by 3M, also known as Minnesota
Mining and Manufacturing (NYSE:MMM) to acquire HighJump Software
Inc., and the acquisition of OMI International, Inc.
by Retalix Ltd. (NASDAQ: RTLX).
January 5, 3M, a global, highly diversified technology conglomerate, announce
that it has entered into a definitive agreement to acquire HighJump Software
a privately-held provider of adaptable SCE software and solutions, that included
its related trademarks and patents. Terms of the transaction were not disclosed,
and the transaction, which was subject to customary regulatory approval and
approval by HighJump Software's shareholders, was completed on January 31.
not occurring at a breakneck rate, demand for SCE solutions is still growing
as customers across many markets face increasingly complex supply chains globally
driven by customer and regulatory requirements. To that end, besides the highly
functional WMS, HighJump provides a comprehensive suite of other SCE solutions.
Like many other peer vendors, HighJump has lately revamped its strategy to attack
the lucrative business-to-business (B2B) collaboration and visibility software
market. Therefore, since its beginnings as a mere WMS vendor, HighJump has expanded
its domain expertise into fulfillment collaboration, and consequently, it now
offers an SCE suite of applications it calls Supply Chain Advantage.
The suite includes integrated solutions for warehouse and yard management, transportation
management, supply chain visibility and event management, trading partner collaboration,
and data collection (for more details, see HighJump
Grows in a Period of Low Growth Through Adaptable, Broad Function Products).
is Part One of a three-part note.
Two will discuss the market impact.
Three will cover challenges and make user recommendations.
began life as Data Collection Systems Inc. (DCSI), a provider
of bar-code data-collection systems to track labor costs and inventories in
manufacturing plants and warehouses. The company was founded in 1983 to develop
inexpensive systems to collect, view, edit, and process shop-floor and warehouse
data for existing mainframe-based applications. Although data-collection systems
remained an important offering, in 1997, under the leadership of CEO Chris Heim,
DCSI began to more aggressively diversify and evolve into a full-fledged SCE
vendor. DCSI complemented its first SCE product, a radio frequency (RF)-based
warehouse management system (WMS) named Warehouse Advantage,
with applications that facilitate many aspects of order fulfillment. Consequently,
the approximately $36 million (USD) revenue nowadays is split into a healthy
40 percent for license fees, 50 percent for services and maintenance, and remaining
10 percent for data-collection hardware. In 2000, DCSI changed its name to HighJump.
vendor's customers include manufacturers; distributors; retailers and third-party
logistics (3PL) companies; and targets the operational needs of a wide range
of organizations from midsize to large companies and divisions of the Fortune
1000, with more than 700 customers at this stage. Sample customers include Verizon,
Honeywell, Sony, Georgia-Pacific,
Toro, Fisher-Rosemount, PepsiCo,
Starbucks Coffee Company, Circuit City, and
NASA. Moreover, several new international customers have recently
been added to HighJump's growing roster of worldwide customers. These companies
span industries including retail; telecommunications; food and beverage, consumer
packaged goods (CPG); and utilities. To support its international endeavors,
HighJump has also extended its Supply Chain Advantage suite with multilingual
applications to broaden the global deployability of the product line. In early
2002, HighJump closed a $10 million (USD) equity investment with Gemini
Investors of Wellesley, Massachusettes and St. Paul Venture
Capital of Bloomington, Minnesota (both located in the US) which have
been its primary investors.
of its suite is based on the traditional bar-code technology familiar to ordinary
shoppers and consumers, but the software can also use radio frequency identification
(RFID) technology. While radio ID tag-enabled software is still just a small
part of HighJump's revenues, more and more user companies and software vendors
are adopting this technology (see SCE
Leaders Partner To See Beyond Their Portfolios). Lately it has been on almost
everyone's lips and seems to be heading towards mainstream and boardroom priorities,
almost directly from scientific labs.
that end, in November, HighJump announced that it has RFID-enabled its broad
SCE offering, Supply Chain Advantage. With enhancements to existing solutions
and several new applications, the vendor now claims to provide a broad and flexible
collection of RFID-enabled solutions for warehouse management, visibility and
tracking, shop floor data collection, and RFID compliance. This is made possible
with HighJump's RFID Configurator, a Wizard-like application
that should empower user companies to quickly configure specific processes to
utilize RFID, bar codes or both, depending on their individual customer requirements,
and at multiple points within the supply chain through the following HighJump
Warehouse Advantage: HighJump has extended its warehouse management solution
to include RFID compliance as well as workflows that support RFID, so that
all HighJump customers now have the option of selecting which activities they
want to perform with RFID, bar codes or both.
Compliance Advantage: This solution allows suppliers to relatively quickly
and easily achieve RFID compliance as mandated by leading retailers such as
Wal-Mart and government agencies such as the Department of Defense (DoD).
It can also be adapted to meet evolving RFID standards and future mandates.
Tracking Advantage: This solution provides tracking for returnable containers
and other high-value assets in closed-loop environments. In addition to providing
hands-free recognition of inbound and outbound containers, this application
aims to ensure total management and visibility of them throughout the supply
Data Collection Advantage: This solution should enable manufacturers to track
work in process (WIP) and finished goods with RFID technology, which is especially
important to the manufacturers that track items in lots or by serial number.
With the introduction of RFID Configurator, HighJump claims to offer a unique and powerful approach to incorporating RFID into existing supply chain processes.It should allow customers to effectively position their operations to meet RFID mandates from their mighty customers, while preparing for additional RFID utilization and compliance requirements as they evolve. This approach fully supports the co-existence of bar codes and RFID that most industry experts predict will be necessary for many years. For example, because configuration capabilities are available at the trading partner level, truck loading for Wal-Mart could be configured to use RFID processing while bar codes are used for other retail customers. This can be accomplished on a stand-alone basis or by adopting integrated solutions that link the information flow from suppliers all the way to customers.
The RFID technology could potentially replace bar coding in the long term, if global technical standards develop. While the radio transmitter technology has been around for decades, the technology got a major endorsement this past fall when both the U.S. Department of Defense and retailing giants Wal-Mart and the Metro Group decided to make RFID tags a key part of their logistics. To that end, Wal-Mart has recently instructed its top one hundred suppliers that it wants RFID transmitters on all pallets and cases starting January 2005.
3M Industrial Services and Solutions
its hand, in January 2003, 3M launched the 3M Integrated Packaging Tool,
a web-based, data-enabled packaging information management system, which helps
customers design and make packaging such as cartons. 3M touts this tool to be
the first to integrate product information, package design and production systems
to better manage compliance, time to market, product surety and packaging costs
for customers in industries such as food and beverage, life sciences, chemical,
and CPG. That software and newly acquired HighJump together will be part of
a new division 3M created two years ago called Industrial Services and
Solutions. 3M believes combining its strong brand, global presence
and business process excellence with HighJump Software's SCE will help customers
optimize their business processes across an even broader range of industries
3M is not a newcomer in the goods-moving department, and it already uses HighJump's
software in several divisions. Although it is considering integrating HighJump's
software into its own supply chain system, the company maintains its main goal
in buying HighJump to grow the business. While 3M currently does not have a
product similar to HighJump's software, its researchers have for some time been
experimenting with RFID tags. The conglomerate's lesser-known Library
Services Division already sells librarians everything from Tattle-Tape
magnetic security strip to book-tracking radio transmitters, and security checkouts
with alarms. 3M's brands include icons such as Scotch, Post-it,
Scotchgard, Thinsulate, Scotch-Brite,
Filtrete, Dyneon, and O-Cel-O.
Serving customers in more than 200 countries around the world, with its 70,000
people, the company has established expertise, technologies and global strength
to lead in major markets including consumer and office; display and graphics;
electronics and telecommunications; safety, security and protection services;
health care; industrial; and transportation.
Retalix And OMI International
Coincidence or not, also on January 5, Retalix Ltd. a Dallas, Texas, USA-based provider of integrated enterprise-wide software solutions for the retail food industry worldwide, including supermarkets, convenience stores and restaurants, announced that it has acquired all of the outstanding shares of OMI International, Inc., a leading provider of SCE and WMS software for the US grocery sector. Retalix acquired OMI International, Inc. for $18.6 million (USD), of which $13.6 million (USD) was paid in cash and $5 million (USD) in 226,040 restricted shares of Retalix. For the twelve months ended December 31, 2003, OMI International had revenues of approximately $14 million (USD). Retalix funded the cash portion of the consideration from existing cash-on-hand, and the transaction was completed on January 2.
Founded in 1984 and also headquartered in Dallas, Texas, OMI International is a privately held company with affiliate partners in the UK, France, Spain and South Africa. Throughout North America, OMI's software systems are currently in use in fifty-eight of the top one hundred retail grocery organizations and in over 40 percent of the wholesale grocery business. OMI's applications integrate enterprise-wide purchasing and logistics management using advanced radio frequency, RFID, and voice-based solutions. Other solutions in the OMI product suite support store-level point of sales (POS) forecasting and yard management along with applications for invoice and payment reconciliation.
its hand, Retalix offers a full suite of software applications that support
a food retailer's essential retailing operations and enable retailers to increase
their operating efficiencies. With installations in more than 25,000 stores
and quick service restaurants across forty-four countries, the company markets
its software solutions through direct sales, distributors, local dealers, and
its various subsidiaries. Retalix was founded in 1982 as Point of Sale
Limited and changed its name in November of 2000 to Retalix Ltd. Its
growth strategy over the past several years has been to expand its enterprise
and supply chain management (SCM) applications while maintaining close integration
with its widely installed, in-store solutions. The planned integration of OMI's
SCE solutions into its current application suite is touted as a perfect example
of this strategy by the company's officials, which believe that this combination
of technology and expertise will enable Retalix to offer an unequaled level
of supply chain efficiency to retailers.
concludes Part One of a three-part note.
Part Two will discuss the market impact.
Three will cover challenges and user recommendations.