Optiant Going to a (Much) Better Place: Logility - Part 3

Part 1 of this series analyzed the late-March acquisition of long-struggling inventory optimization (IO) provider Optiant by long well-performing supply chain management (SCM) provider Logility. I then discussed Logility’s acquisition history to set the stage for the current offerings that Optiant will join.The 2004 acquisition of Demand Management, Inc. (DMI) and its Demand Solutions brand was especially valuable as it provided more than 800 active customers in the growing small and midsize enterprise (SME) market for Logility. Today, Logility’s customer base encompasses about 1,250 companies located in more than 70 countries, which gives Logility the largest installed base of supply chain planning (SCP) customers among application software vendors. Moreover, Logility is possibly the only SCP vendor that can meet the needs of SMEs, large companies (i.e., from US $200 million to US $1 billion in revenues), and Fortune 1000 markets (with over US$1 billion in revenues).

Part 2 thus first analyzed the Demand Solutions product line [evaluate this product] to the SME market through DMI’s global value added resellers (VAR) network. The article then started to analyze the Logility Voyager Solutions suite [evaluate this product], which is a broader SCM offering for the upper end of the market. The final part of this blog series now continues with the analysis of the Logility Voyager Solutions suite and analyzes how Optiant might fit in.

As depicted in Figure 1 below, Logility Voyager is a set of both SCP and supply chain execution (SCE) solutions, which is a comprehensive solution rarely offered in the market (even by much larger SCM providers).


Supply Chain Planning

This set of modules within Logility Voyager Solutions optimizes material, inventory, production, and distribution assets by synchronizing supply and demand. Optimized supply plans are generated based on manufacturing, storage, and transportation constraints as well as various sourcing, production, and distribution options via the following applications:

  • Voyager Supply Planning optimizes complex sourcing and production decisions to balance supply, manufacturing, and distribution constraints based on corporate goals for either maximizing profit or minimizing costs.

  • Voyager Replenishment Planning provides visibility of future customer demand, corresponding product and material requirements, and the actions needed to satisfy those demands.

  • Voyager Manufacturing Planning creates optimized constraint-based manufacturing schedules and compares multiple schedule scenarios to determine the optimal trade-off between manufacturing efficiencies, inventory investments, and greenhouse gas emissions. The product optimizes supply and demand balance while using constrained manufacturing capacity to provide lower costs, fewer setups, and increased product availability. The Voyager Manufacturing Planning module handles the following factors: single- and multi-stage operations, sequencing and pre-building, orders, forecasts, transfer demand, and component and labor availability. There is dynamic work order integration between shop floor scheduling and planning, with the ability to automatically reschedule released work orders by either pushing them out or pulling them forward based on actual execution.

The stand-alone Voyager Manufacturing Planning module has been recently enhanced for managing shelf life constraints and projected shelf life losses for intermediate products and raw materials. The product has the ability to plan production with multi-plant transfers, while the KPI Viewer feature compares alternate scenarios using over 70 time-phased planning key performance indicators (KPIs) in user-defined periods.

Users have the ability to compare KPIs from multiple plans in a “planned vs. actual” manner. In addition, tabular and graphical presentations include current and prior scenarios. Voyager Manufacturing Planning is well suited for process and discrete manufacturing industries and competes with AspenTech, WAM Systems, and SAP APO Demand Planning.

Transportation and Logistics Management

The execution part of Logility Voyager Solutions provides capabilities for optimizing both warehouse and transportation operations. These solutions systematically balance logistics strategies, customer service policies, carrier effectiveness, and inventory management to boost the delivery of perfect orders and spur improvements that favorably impact profitability.

In addition to Voyager Transportation Planning and Management (mentioned in Part 1), Voyager WarehousePRO [evaluate this product] provides shipping and inventory accuracy by optimizing the flow of materials and information through distribution centers (DCs). Voyager WarehousePRO helps cut operating costs and improve productivity, increase order fill rates, optimize warehouse space utilization, and improve customer service.

Competitive Landscape

Logility’s current release of Logility Voyager Solutions is Version 7.6, but Version 8 is slated for release in the very near future. Both versions use an Internet-based architecture for increased scalability and messaging functionality that supports the increasingly distributed nature of SCP, global sourcing, SCE, and collaborative commerce. Logility Voyager Solutions interfaces with leading enterprise resource planning (ERP) vendors such as SAP and Oracle.

Logility has licensed one or more modules of Logility Voyager Solutions or Demand Solutions to 1,250 companies worldwide, including A.O. Smith, Abbott Diabetes Care, Alberto Culver, Armour Eckrich, Augusta Sportswear, Avery Dennison Corporation, Berry Plastics Corporation, British Petroleum (BP), British Telecommunications (BT), ConAgra, Continental Mills, Electrolux, Farnell InOne, Fastenal Company, Jarden Corporation, L’Oreal, Malt-O-Meal Company, Mercury Marine, McCain Foods, New Balance, Pernod-Ricard, Pfizer, Porsche, Remington Products Company, Rexnord, Shaw Industries, Sigma Aldrich, SKF, Standard Motor Products, Starbucks China, Subaru, Trek Bicycle, Verizon Wireless, Warnaco, and VF Corporation.

These customers credit Logility’s products with their increased revenues, reduced inventory costs, improved forecast accuracy, decreased order cycle times, managed global sourcing initiatives, optimized production scheduling, streamlined logistics operations, reduced transportation costs, and improved customer service. In fiscal 2009 Logility added 68 new customers, and 30 more customers in the first half of fiscal 2010, which is not bad at all in this economic environment.

Logility is widely recognized as the leader in the demand management space and is currently leading the charge to define a multi-tiered supply chain collaboration process; its executives have long been involved with the VICS standard body’s n-tier collaborative, planning, forecasting, and replenishment (CPFR) initiative.

Sure, in the realms of warehouse management systems (WMS) and transportation management systems (TMS), Logility Voyager is often no match for Manhattan Associates, RedPrairie, Infor, or HighJump, with their greater capabilities. Still, in some accounts where the company opens the door with its demand planning and sales and operations planning (S&OP) capabilities, it is not difficult to imagine its attractiveness if the client also need some WMS/TMS offering from the same vendor.

Logility Voyager may face competition from other application software vendors, including ERP vendors that from time to time jointly market Logility’s products as a complement to their own systems. To the extent that such vendors develop or acquire systems with functionality comparable to Logility’s products, their significant installed customer base, long-standing customer relationships, and their ability to offer a broad solution footprint could provide a competitive advantage over Logility’s products.

Logility’s principal competitive advantages are its comprehensive and integrated solutions, its list of happy customers, its substantial investment in product development, its deep domain expertise, the ease of use of its software products, and its ability to deploy quickly and to deliver rapid return on investment (ROI) and business benefits for customers (as mentioned in Part 1). A former Manugistics employee recently told me that Logility would repeatedly beat Manugistics (now JDA Software) almost exclusively on price, especially if the prospective user company was between US $500 million and US$1 billion in size.

If the prospect had strong demand and inventory planning needs, was in the consumer packaged goods (CPG) world (especially beverage) but did not have an overly complex network or thousands and thousands of products, Logility was very competitive.
“I have seen them come in at a $250,000 price point while we were twice or three times higher. It became very hard to justify that much of a price difference. We would beat them if scalability were a concern, if the prospective company needed a very deep, integrated solution for demand and inventory planning (multiple planning tiers, etc.), and/or if the company needed deeper manufacturing planning and scheduling capabilities. If TMS was also in the equation, they usually fell out.”

Karin Bursa, Logility's VP of Marketing, said the following as a reply to the above assertions:
"Logility Voyager Solutions are designed for scalability and quick deployment to drive value in a number of distribution-intensive industries including consumer goods. We have several customers that rely on Logility Voyager Solutions to simplify their complex networks including a chemical manufacturer and distributor with more than 300,000 SKUs for 80,000 customers that purchase in small volumes. Additionally, one of the largest snack producers and distributors in North America has dramatically reduced costs throughout its complex national network with Logility Voyager Solutions.

If a license fee proposal came in at $250,000, it’s because the Logility team evaluated the opportunity and determined the prospect had supply chain challenges that could be addressed with a $250,000 investment.  As you have seen, the Logility Voyager Solutions suite is very scalable and quick to deploy.

If an ex-Manugistics sales person came to the table with a license fee proposal three times higher because they needed to engineer a solution to meet the requirements of a specific prospect, their implementation services were likely to at be least five times higher than Logility. And, keep in mind that JDA/Manugistics' higher cost typically demands a larger implementation team headcount, much longer deployment time frames, and a more challenging upgrade path which delays the customer’s time to benefit and significantly increase the total cost of ownership (TCO).

With Logility Voyager Solutions, you get a best-of-breed robust solution that is functionally deep and can help make a complex supply chain significantly easier to understand and visualize. Logility is widely recognized for driving value, delivering intuitive usability, and offering low TCO."

How Can Optiant Help?

Figure 1 above describes where Optiant will fit and how it can bolster all other abovementioned Voyager modules. Optimization is not a new notion for Logility, since the company had built out its own optimization technology for supply planning, sourcing, and transportation functions (the latter explained in Part 1), but it had not fully developed similar technology focused on inventory prior to its acquisition of Optiant.

For their part, Logility’s procurement optimization capabilities help companies optimize their future purchase plans. To that end, tiered pricing optimizes the opportunity to buy more products at a lower cost and compare this saving against the cost of holding inventory for longer periods of time.

Price breaks can be either discounted purchase prices or free freight (e.g., if you buy more than 100 units, the vendor will pay for shipping). Users can also calculate and store award points by vendor, which allows buyers to view how close they are to achieving specific goals with their suppliers.

As in other Logility Voyager modules, the IO technology will be sold standalone to customers that do not require the full Voyager suite. Eventually, the Optiant and Powerchain brand names will be phased out in favor of Voyager. Based on how Logility has handled its two previous acquisitions, I don’t doubt its success with Optiant. Chris Russell, VP of sales at Optiant, has joined the Logility team.

Also joining Logility will be Optiant CTO and co-founder John Ruark, along with fellow founder Sean Willems, both of whom will be involved in future product development. Additionally, members of the Optiant support and implementation teams have joined Logility and will help ensure customers receive the same high-caliber services that Logility is well-known for delivering. Logility Voyager customers (and perhaps some Demand Solutions users) should evaluate the Optiant IO solution in conjunction with Logility's roadmap to integrate the solution into Voyager.

Dear readers, what are your comments, opinions, etc., on Logility’s strategy? We would certainly be interested in your experiences with any of the abovementioned SCM software categories (if you are an existing user) or in your general interest to evaluate these solutions as prospective customers.
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