the final quarter of 2002, Lilly Software Associates Inc. (LSA)
a privately held enterprise applications provider for small and medium sized
manufacturing and distribution enterprises, made a number of announcements of
enhancements to its product line. The details are covered in Part
One of this note. The Market Impact of those announcements are
discussed in Part
Two. This part is a Competitive Analysis. Part Four will discuss
Challenges and make User Recommendations.
Lilly's timely focus on SCE has proven to be wise and useful, since warehouse and transportation management have emerged as the two of a few rare remaining fertile enterprise applications areas where companies still have an ample opportunity to redesign and optimize the practices of warehouse employees scurrying around with clipboards and pick lists, while their deployments are at the same time less time-consuming and more oriented towards return on investment (ROI). Particularly during these calamitous times, manufacturing and distribution companies continue their effort to meet high customer expectations for on-time delivery by achieving general responsiveness, speed and agility.
While core ERP and not any less-cumbersome SCP systems might have traditionally excelled at planning, conceptual optimization and financial integration functions, they have not, however, addressed warehousing, distribution network planning, or transportation/logistics management. SCE is therefore gaining increasing awareness among companies that realize that planning can do only so much without the ability to make the right and timely decisions and execute on the shop floor, in the warehouses and/or within the entire distribution chain. Bringing down costs directly attributable to production has long been a matter of course for companies regardless of the economic environment. Yet, while it has also been long known that the behind-the-scenes activities like kitting, serialization, packing and shipping carry significant costs and customer (dis)satisfaction, only very recently has senior management begun to take a closer look at logistics, not only in terms of its costs, but also as a healthy contributor to their companies' bottom-line improvement.
Although products will always have to be handled physically, requiring warehouse space and people for putting away, picking, packing, sorting, and shipping, and means for transportation, WMS and TMS still largely remain out of ERP giants' reach, as opposed to their more successful annexation of SCP or customer relationship management (CRM) areas. While many ERP products on Lilly's level may support picking and putting away requirements, a vast majority of them do not have the ability to manage an order that might involve the increasingly required so called postponed manufacturing' (e.g., moving, kitting, light assembly, customization, reverse logistics, compliance labeling, gift-wrapping, custom packaging etc. aspects of light manufacturing in the distribution center).
The primary VISUAL Enterprise for Distributors features are focused on expanding wave picking, lot, serial number, and expiration date tracking capabilities. New functionality also includes support for third-party logistics (3PL) providers such as rule-based rate maintenance formulas. Given the traditional practice of ERP and WMS/TMS systems coming from at least two different vendors using different architectures, with all associated ramifications, Lilly's integrated solution should give many contesting vendors a run for their money.
2002, Lilly has further come forward with some new product announcements that
target specific verticals, specifically aerospace & defense (A & D) and project-centric
manufacturers, as well as biomedical (medical supplies and instruments), automotive
and consumer package goods (CPG). Contrary to most of its competitors that had
opportunistically pursued their customers randomly, and whose latest vertical
initiatives stem from the sudden epiphany that a certain percentage of their
customers come from certain industry, Lilly's recent vertical initiatives are
indeed a further sharpening of already focused solution for to order' manufacturers.
Therefore, it is plausible that the recently introduced two new variant products
-- VISUAL Enterprise Aerospace & Defense (A&D), and VISUAL Enterprise
for Automotive -- are not just press release hyped vertical wishful
thinking product announcements.
For instance, there is a real industry-specific functionality in these products, like Work Breakdown Structure (WBS), contract accounting, and program management in the A&D product, which should lend itself to another great marketing opportunity. Namely, while the commercial complex manufacturing industry may also suffer nowadays owing to the painful recession, it is quite the opposite case in the defense and other government-related industries, partly in light of possible confrontation with rogue countries abroad. Many enterprise applications vendors have spotted the opportunity and have lately been scrambling to address the exacting requirements of the project-based complex industries.
The combination of outsourced manufacturing with increasingly common configure-to-order (CTO) or build-to-order (BTO) production environments is making unit-level data management an increasingly high priority for Department of Defense (DoD) contract manufacturers and the companies that retain them. Additional tracking and reporting requirements are another big issue, since, to meet government compliance requirements, DoD contractors need extremely granular tracking functionality across the application spectrum, including the features like multiyear budgeting and burden rate application, earned value reporting by contract and project, change-order and configuration management, production scheduling, material requirements planning, and lot and part traceability, and process, document, nonconformance, and quality data tracking. The ability to track every product, each of its parts, and its stage in the production cycle has become a prerequisite to production efficiency and profitability. LSA seems to have responded to the many nitty-gritty's of the above industries, especially with additional functionality integrated for traceability, quality monitoring and standards adherence.
for the future, Lilly says it will be targeting vertical industries as above
with its now much extended-ERP system. For the near future Lilly Software will
leverage its job shop discrete manufacturing domain expertise, with the latest
enhancements and object-oriented architecture, and an established distribution
channel to pursue mid-sized manufacturers, distributors and distribution-oriented
manufacturers. VISUAL Enterprise for Repetitive Manufacturing
and VISUAL Enterprise for Biomedical will be other important
releases next year, founded on Microsoft .NET-based components
(with .NET-based VISUAL Financials Global Edition in multiple
languages and currencies being already in a beta release) should take the company
into other trenches of industries, conspicuously automotive and medical devices
the technology standpoint, the company has long supported Microsoft's technologies
(COM/DNA, ODBC and Office 2000), with a recent embracing and
move to Microsoft .NET architecture framework. Still, most of its products support
almost all relevant databases (SQL Server, Oracle, and IBM
DB2/400) and operational systems (Windows NT, UNIX and OS/400) platforms.
Going forward however, the firm appears set to consolidate on the Microsoft
platform, building particularly on the .NET beta release program, which will
lead its migration to more browser-based and wireless interfaces beyond currently
just the sell side and order management screens.
Lilly Software will have to address certain challenges in order to continue
to thrive in this increasingly ruthless competitive environment and to move
both down- and up-market. Its market awareness and global presence still require
much of a boost in spite of the recent international expansion like, e.g., in
the UK and the Latin America (nearly 81% of its revenues still come from North
America). On the other hand, the success also creates competition that will
now inevitably be appearing from many directions since the company now inevitably
competes in many diverse markets. To that end, in the traditional to order'
manufacturing ERP market, the threat comes from its peers like Epicor,
Made2Manage, ROI Systems, MAPICS/Frontstep
and Relevant Business Systems, via upper mid-market vendors
with strong ETO orientation (e.g., IFS, Intentia,
Cincom Systems, Glovia/Fujitsu, and Ramco
Systems), to the Tier 1 vendors storming down the market.
the pure WMS/TMS mid-market, there is an army of recently bullish players like
RedPrairie, Manhattan Associates, G-Log,
Yantra, Swisslog, Highjump,
Provia, EXE, and Catalyst,
many of these being consistently profitable and having a better international
presence at the same time (not to mention superior WMS/TMS functionality such
as multi-modal transportation, labor management or supply chain event management
(SCEM)). Further, the Tier 2 ERP vendors like of Adonix, SSA
GT, Syspro, MBS Axapta and MBS
Navision, which have also espoused a strong WMS product in addition
to their traditional back-office product, could prevent Lilly from penetrating
the ERP mid-market. In the pure-CRM mid-market, the archrivals would be the
likes of Best's SalesLogix, Salesforce.com
and FrontRange, particularly when teaming up with some of Lilly's
ERP nemeses. Not to mention that SAP, Oracle,
PeopleSoft, Baan, Manugistics
and J.D. Edwards will likely be faced in most if not all the
above markets as well, and will not any more shrug off at Lilly as an insignificant
small competitor. Last but not least, Lilly's expansion into the automotive
and repetitive manufacturing sectors will be fiercely defended by the likes
of BRAIN NA and QAD.
concludes Part Three of a four-part note.
One detailed recent announcements.
Two analyzed the Market Impact.
Four will discuss Challenges and make User Recommendations.