Are Manhattan Associates and RedPrairie's Paths Really Diverging?

My 2009 series on a few good supply chain management (SCM) players portrayed Manhattan Associates (NASDAQ: MANH) and RedPrairie Corporation as fierce competitors. Indeed, these two vendors continue to duke it out at almost every large-scale selection deal for a warehouse management system (WMS), distribution labor management system (LMS), or transportation management system (TMS) solution.

Curiously, both vendors are now headquartered in Atlanta, Georgia, US, after RedPrairie’s mid-2010 HQ move from Waukesha, Wisconsin, US (which remains a major office that is undergoing a major renovation). Atlanta is also the base for Infor, Logility, CDC Software, Servigistics, and many other enterprise software companies, but I digress.

Over a last few years these two vendors have also pursued somewhat different expansion routes from their traditional supply chain execution (SCE) realms, where they will likely face different competitors. Recently, at the National Retail Federation (NRF) Big Retail Show 2011, I had a chance to meet with both vendors to discuss their strategies. 

RedPrairie: Mission “Retail Shelf” (Almost Accomplished)

For its part, one major area of focus for RedPrairie has been retail store solutions, in terms of store workforce planning and scheduling, task execution, and demand planning (which includes the flowcasting concept), where it will face Kronos, Infor Workbrain, Reflexis Systems, CyberShift, Dayforce, and other competitors rather than Manhattan. As said in my article right after RedShift 2010, RedPrairie’s user conference, the company is currently able to help retailers with forecasting, replenishment, optimized scheduling and execution in the store, and labor planning and management. However, retail merchandizing, pricing and assortment optimization, and store space planning and optimization are some apparent functional holes, if RedPrairie wants to seriously compete on the shelf level with JDA Software, Oracle Retail, SAP Retail, SAS Retail, Retalix, Epicor Retail, etc.

To that end, at the NRF 2011 show, RedPrairie announced a tuck-in acquisition of SofTechnics, a Columbus, Ohio provider of in-store software for price and inventory management, intelligent store ordering, and direct-store delivery (DSD). With its most recent acquisition of Escalate Retail, a multi-channel e-commerce provider (a concoction of former Blue Martini, Ecometry, and GERS), RedPrairie will be soon positioned to manage both supply chain distribution and retail activities, from the time a customer first makes contact with the retailer—no matter via which channel, touch point, or device—all the way through to fulfillment.

The key concept is that RedPrairie is joining the two key areas involved in responding to customer demand – 1) the ability to capture the order from any source or device and 2) the ability to fulfill it anywhere (e.g., at the store, sent directly to the consumer, etc.). Additionally, RedPrairie believes that it has enhanced its ability to leverage its existing Workforce and Inventory Management solutions to help retailers optimize inventory and fulfillment processes regardless of where the order is in the supply chain.

These announcements are part of a larger strategy for the retail sector that RedPrairie is not quite ready to espouse publicly. I was told to stay tuned for an in-depth briefing, since within a short period of time the company should be able to provide a much broader picture that the market observers will want to report.

Pursuing Smaller Companies via SaaS

A week or so after the NRF show, RedPrairie acquired Shippers Commonwealth (ShipComm), a software-as-a-service (SaaS) TMS and collaborative transportation solutions provider. RedPrairie will treat ShipComm as a standalone business as it did with SmartTurn (a SaaS WMS product that was acquired just prior to RedShift 2010), but these on-demand businesses are quite different. While SmartTurn is a true multi-tenant SaaS model serving smaller single-site companies, ShipComm uses RedPrairie’s flagship TMS solution to offer TMS on a hosted basis to Tier 1 and mid-market companies.

Although ShipComm markets its multi-tenant SaaS capabilities, only some add-on modules such as ShipBid for carrier bidding and ShipMart for market analysis of shipping rates are truly SaaS. The company also talks about a SaaS pricing model for TMS, but that is for pricing purposes only, and it is still RedPrairie’s single-tenant hosted TMS. ShipComm has been competing with some better-known SaaS TMS providers, such as LeanLogistics and MercuryGate on the strength of RedPrairie’s full-fledged TMS system wedded to ShipComm’s high-touch service and fast implementation model. The company has a very satisfied customer base.

RedPrairie made the acquisition to strengthen its push into the on-demand software market, including cross-selling other of its products to ShipComm’s customers and to market some of ShipComm’s add-ons into its on-premise customer base. It is not a major strategy change for RedPrairie, just an incremental diversification move.

Manhattan’s SCM Platform Play

On the other hand, Manhattan Associates seems to be going in a different supply chain direction from RedPrairie, i.e., upstream (retail distribution) rather than downstream (retail shelf). To be fair, Manhattan already provides retailers with Planning and Forecasting tools to sense and respond to demand and support all levels of enterprise merchandise planning, from strategic level planning down to assortment and key item planning. Its Planning and Forecasting solutions provide capabilities to manage multi-channel planning and forecasting business processes, and include the following features modules: Demand Forecasting, Multi-Channel Planning, Financial Planning, Assortment Planning, Item Planning, Promotional Planning, and Store Cluster.

Still, these planning solutions largely end at the retail distribution center (DC) or at the store level, at best. Thus, Manhattan is not well-known for its retail store applications as compared to its forays into holistic (multi-channel) order lifecycle management in the upstream supply chain (i.e., from manufacturing DC’s to retail DC’s). Manhattan’s solutions aim to help wholesale distribution and retail organizations optimize their supply chain operations holistically, from planning through execution. This all-encompassing approach can be leveraged to create operational and market advantages from the following market trends:

  • Overarching Optimization: Making decisions about inventory, transportation and/or labor in isolation without considering data, workflows, and inputs from the other areas can lead to more costly and suboptimal decisions. Each of these cost areas directly impacts the others, and “optimizing” one area in isolation often has a negative and unanticipated cost and/or service-level impact on the others. In most distribution-centric supply chains, the greatest savings will come from reducing system-wide inventories rather than from the compartment-based cost savings associated with, say, more efficient transportation or more productive warehousing. Manhattan believes that true optimization must synchronize decisions across the entire organization based on a common set of business priorities.

  • Mastery (including Optimization) Over Channel Proliferation: Selling channels and customer touch points are proliferating across all market sectors and affect almost every area of a business. From brick-and-mortar stores and in-store kiosks, via websites/ecommerce catalogs, call centers, printed catalogs, mobile marketing/social media, etc., the term "multi-channel" has lately evolved into "omni-channel." As described in TEC’s 2005 article entitled “Consumers Shop Everywhere: Understanding Multi-Channel Sales,” it is irrelevant whether the customer order is coming in through the Web, by talking to a store associate, or calling a toll-free 1-800 number. Customers want the person and/or the site avatar they are talking with to be able to fulfill their requests flexibly, easily, and quickly. Providing the means to plan and manage these channels independently, yet execute as a united entity, is the key to optimizing revenue and mitigating unnecessary and duplicative costs and inefficiencies.

  • “Greener” Supply Chains: Whether the priority is reducing the carbon footprint and greenhouse gas emissions (e.g., via optimized transportation routes in a full-truckload [FTL] manner) or improving reuse and recycling (via reverse logistics), supply chain solutions must help companies improve their eco-friendliness while keeping their business profitable (sustainable). While the "green"conversation du jour might have subsided of late, sooner or later the "being profitable while also being gentler and more responsible to the planet and next generations" theme might regain its appeal (at least outside the US).

What Is Manhattan’s Functional Scope?

Manhattan has dubbed its portfolio of supply chain software solutions Manhattan SCOPE, denoting “Supply Chain Optimization, Planning through Execution.” Built on a common Supply Chain Process Platform (SCPP), the SCOPE suite combines Planning and Forecasting, Inventory Optimization, Order Lifecycle Management, Transportation Lifecycle Management, and Distribution Management to enable overall supply chain optimization. Predictive and algorithmic technology embedded in SCOPE’s cross-application optimization engine helps organizations refine decisions dynamically as market or operational conditions change.

Advantages derived from coordinated real-time visibility, event management, ecosystem collaboration, and business intelligence (BI)/performance management across supply chain operational departments and functions avert having decisions in one supply chain area unexpectedly affect another unfavorably. By organizing supply chain optimization holistically, Manhattan strives to enable customers to fine-tune costs, profitability, and customer service levels as their business objectives and market conditions evolve.

SCPP as the SCOPE’s Brain

At the foundation of Manhattan’s SCOPE portfolio is the aforementioned services-based platform, which enables customers to manage their supply chain ecosystems. SCPP utilizes a service-oriented architecture (SOA), common data model, extensive collaborative gateways, and an optimization engine to facilitate necessary supply chain transformations. For example, to be able to provide a lofty “buy-from-anywhere/fulfill-from-anywhere/return-to-anywhere” value proposition of multi-channel environments, integration across channels has extensive requirements for the entire supply chain and its technical underpinnings.

Having a flexible integrating and orchestrating platform makes it much easier to create workflows (business processes) that span different corporate functions and related SCM modules. In addition, the component-based and event-, rules-, and data-driven platform provides the foundation for ensuring that Manhattan’s solutions reside on a common architecture, leverage common master and transaction data, and utilize the same business objects and services to accomplish tasks common to multiple SCM solutions.

By leveraging Java Platform, Enterprise Edition (Java EE), SCPP has broad support for industry standard operating systems (OS) and database options as well as an emphasis on performance and scalability. Without going into the technological guts, the high-level SCPP components are as follows: reporting services, presentation services, enterprise portal services, an optimization engine, a business process engine (with workflow execution engine and Eclipse-based graphical editor), and an event-condition-action (ECA) business rules engine that is driven by data and is configurable.

SCPP: Not Merely a Whizbang Toolset

In addition to being enabling technology, there are a number of platform applications that span the entire Manhattan SCOPE portfolio to provide key visibility, intelligence, and adaptive functionality across the extended enterprise. These solutions offer the broad supply chain insight and analytics that are critical to an executive’s ability to proactively manage the entire supply chain. The platform applications are as follows:

  • Supply Chain Event Management (SCEM)

  • Supply Chain Visibility (SCV)

  • Supply Chain Intelligence (SCI)

  • Total Cost to Serve (TCS)

Whether deployed with the fully-integrated Manhattan SCOPE suite or integrated with other enterprise systems, these SCPP applications provide a comprehensive range of event and schedule tracking; alerts and notifications; inventory, order and shipment visibility; cost monitoring and tracking; and analytics and reporting with graphical depictions of critical supply chain performance metrics.

Due to a scheduling conflict I was not able to attend Manhattan’s Momentum 2010 user conference, but I was able to follow it remotely and vicariously through other analysts and bloggers’ reports. The conference’s tagline was expectedly “Platform Thinking” and here are incisive reports by Bill McBeth of ChainLink ResearchSteve Banker of ARC Advisory Group, and Shawn Beilfuss of Cross Border Journal.

A separate blog series will zoom onto Manhattan’s SCOPE, SCPP, and distribution order management (DOM) capabilities, with a special focus on these concepts and solutions deployment for retailers. In this space, Manhattan will likely compete with Sterling Commerce (now part of IBM), Oracle Retail (including the recently acquired ATG e-commerce platform), TAKE Supply Chain, Epicor Retail, DemandChain, and back to RedPrairie (when and if it fully integrates the Escalate portfolio).

In the meantime, your comments, thoughts, suggestions, or individual experiences with the aforementioned vendors and their SCM tools are more than welcome. What do you think about these vendors’ individual approaches and their chances to survive as independent best-of-breed SCM companies? Is it possible that both vendors might be ultimately correct in their somewhat divergent pursuits?
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