The WMS Market
November 8, RedPrairie Corporation (www.redprairie.com,
formerly McHugh Software International), a provider of comprehensive
supply chain execution (SCE) solutions including transportation, labor productivity
and warehouse management, as well as supply chain visibility and collaboration
solutions, released a new version of its warehouse management system (WMS),
DLx Warehouse, containing the specific processing requirements
food & beverage companies require running on supposedly the cost effective Microsoft
Windows 2000 platform.
While the WMS market is expected to continue to grow modestly and faster than many other applications, it appears the customer order fulfillment process management as an add-on solution to WMS will experience much higher growth.
fact also remains that the likes of RedPrairie's areas of focus still largely
remain out of ERP giants' reach, as opposed to their annexation of SCP or customer
relationship management (CRM) areas. Market wide, the growth of industry specific,
vertical solutions continues with concurrent internal development, acquisitions
and partnerships, and the notion of an "end-to-end" solution continues to evolve.
At the same time, best-of-breed SCP vendors have been stripping down and streamlining
products sets, given their cumbersome and confusing offering in the past, which
have consequently resulted with a bad image in many cases. When it comes to
transportation procurement and execution, however, most ERP vendors, even those
with strong native transportation planning capabilities (e.g., J.D.
Edwards) have had to turn to the partnership option.
WMS applications traditionally automate activities falling within the four walls of a warehouse, such as receiving, put-away, serialization, picking, packing, and shipping. However, since the warehouse is no longer merely a static storage facility, it now has to use real-time data to closely match supply to demand, eliminate the need to hold excess inventory, and increase the flow of goods throughout the supply chain. Therefore, the SCE software's capability to handle complex requirements does not necessarily have a negative connotation like in the case of SCP, since there has been a trend of pushing many light manufacturing operations (e.g., final assembly, customized packing, etc.) from shop floors to warehouses and DCs.
software market for WMS has consequently become more and more competitive as
the technology has evolved to address the lion's share of customer requirements.
Like any software technology that has reached a plateau in the maturation curve,
WMS have evolved to a point where there is little differentiation among them.
This environment has prompted forward-thinking companies to take action, extending
their solutions to include applications complementary to WMS. Of these, transportation
management system (TMS) has also been one of the most prevalent simply because
users instinctively regard logistics operations as the "spokes" through which
goods are conveyed to and from the warehouse and distribution center "hubs".
While nearly all of the SCE market leaders have either acquired (see Logistics.com
Becomes The Newest Of Manhattan Associates) or internally developed transportation
management systems (TMS) and other applications to enhance total solutions,
there is still a marked lack of cohesion between products in their suites.
that end, a product acquired from Software Architects a few
years ago provides the fundamental component architecture for RedPrairie's
DLx suite. This platform imparts uniformity among the various modules
that, though drawn in some cases from different sources, speak the same data
language. Hence, RedPrairie can offer diversity of scope with uniformity in
presentation, data structure, and business objectives. This is an important
differentiator in a market characterized by a host of competitive offerings
that are sometimes slapped together with little thought to ensuring connections
make sense. Additionally, RedPrairie's ability to prudently expand outside of
its traditional WMS heartland to address the above-depicted broader SCE concerns
(e.g., increasingly required customers' order fulfillment management) has played
well to its enduring strong performance. Spending increasingly on R&D in an
effort to develop enhanced products is one of the key tenets that have led to
its continued success. The vendor has so far focused most of its R&D on enhancing
execution capabilities for specific industry requirements, on real-time collaboration
of the extended supply chain, and on delivering more functionality from its
suite of optimization products, which take the raw data from WMS and transform
it into useful information.
is Part Three of a four-part article on RedPrairie.
One detailed recent events.
Two began the discussion of the Market Impact.
Four will cover Challenges and make User Recommendations.
transformation has been long though, since, over six years ago, the company
expanded beyond its WMS roots to include transportation and labor management,
with WMS today accounting for only about 25% of revenue. The company also offers
event management solutions that focus on real-time control of logistics processes
at a distribution network level. This is accomplished through an integrated
suite of DLx (DigitaLogistix) solutions
that provide the transportation, labor productivity, and distribution management
capabilities, enhanced with action-oriented components for real-time control
and performance measurement. Thus, the company's continued expansion, increases
in research and development (R&D) investment, and a notable portion of revenue
coming from new product initiatives and new markets have been flying in the
face of current pessimistic sentiment in the IT market.
Another strength of DigitaLogistix made possible by the component architecture is its incorporation of proven applications for WMS and TMS alongside next generation tools for labor management, performance management and supply chain visibility & collaboration. The company has indeed developed both broad and deep functionality. For instance, looking at horizontal functional areas, with a focus on third-party logistics (3PL) functionality, DigitaLogistix covers the following bases:
Functional Execution level, with the following modules:
Warehouse/D, with comprehensive support for food, beverage and consumer
package industry customers recently bundled with functional support for high
tech, automotive, and other discrete manufacturing verticals. These capabilities
work in a natively multi-customer WMS environment, supporting complete inventory
ownership by individual 3PL client, with a 3PL billing system included in
the base WMS package.
Labor, which provides strong labor planning and reporting against
engineered, discrete standards to drive 3PL productivity gains, and enable
3PLs to granularly measure activity-based costs (ABC) and determine actual
cost-to-serve individual customers or perform individual warehouse operations,
all to make better service pricing decisions.
Transportation, which provides network-based transportation planning
and execution, enabling 3PLs to optimize and manage freight movements into
and out of their own facilities as well as to offer transportation management
as a hosted service for non-warehouse customers. The module also supports
full multi-client billing.
Logistics Management level, with the following modules:
which provides end-to-end, real-time visibility to orders, inventory, shipments
and events (event management) across the network, enabling 3PLs to customize
these data views securely to individual clients.
Commander, which is a set of command and control applications that
enable companies to take centralized action in response to logistics requirements
Scorecard, which is an on-line performance measurement tool that
enables 3PLs to measure their own performance across a variety of Key Performance
Indicators (KPIs) and to collaborate with customers to drive continuous operational
Chain Collaboration & Optimization level, with DigitalApps,
which is a suite of role-based web applications for collaboration among multiple
supply chain participants.
Meeting the Customer's Challenges
As mentioned earlier, RedPrairie's solution for the first time enables both private & third party logistic providers (3PLs) to meet the needs of multiple vertical industries within a single WMS solution. These providers face special challenges because their customer base may include companies in multiple verticals, each having unique distribution requirements. For example, consumer goods and food & beverage companies need detailed tracking of catch weights, aging profiles and expiration dates, multiple overlapping holds, and other lot control criteria while high tech companies are more interested in nested serial numbers, kitting and de-kitting services and other assembly or light manufacturing requirements. Having one system that can meet all of these needs could provide competitive advantage to 3PLs users.
On the other hand, the solution caters to the key logistics flows that run through the logically grouped supply chain processes of "Source" (including Inbound Logistics and Supplier Collaboration), "Make" (including Manufacturing Logistics and Inventory Management) and "Deliver" (including Order Fulfillment, Outbound Transportation, and Productivity Management), with a powerful set of capabilities that can be deployed stand alone to solve specific problems, or together to solve complex challenges and achieve the benefits of integrated logistics operations.
RedPrairie's capabilities within the "Make" process are still regarded as unmatched in the industry, particularly handling the real-time flow of raw materials, WIP and finished good inventory, since the solution can track task costing at a very granular level. For instance, every discrete task, by operator, is captured and reported in the system by actual time to complete, the time to complete that task against standard (if standards are used), and the cost of labor associated with the actual time. This time and cost can then be rolled up for reporting purposes and can be reported by specific 3PL customer or work area. For example, the system can report exactly how much put-away time and cost was utilized for each of the clients, and how that time compares to the standard times in total and for each client.
The system can also be used to compare the actual work profile for a given customer and compare it to the expected profile that was the basis of the 3PL contract, which is a feature 3PLs have been finding very useful, as their issues with the client often emanate from actual work profiles that differ from those on which the contract was based. The 3PL billing module also contains detailed reporting on actual space utilization, with flexible billing parameters. To that end, total storage utilization by client can be reported, both by numbers of slots or other amount of space, and the time the storage was actually used, based on "in and out" data. The system can also be configured to easily support flexible storage utilization charge agreements, for example with no charge for a certain number of days of storage, and then with a certain rate beyond the "freebee" period per pallet or unit load.
Labor Management Systems
Also, Labor Management Systems (LMS) have only recently appeared on radar screens and RedPrairie admits to having to adopt an evangelical role in order to sell the market on its LMS application. While LMS is not yet a hotbed within the enterprise application buyer's market, many users are examining the labor-intensive portions of their operations and concluding that considerable cost savings could be obtained through software automation. Although union leaders may bristle at any initiative for motion tracking and improving labor efficiency, LMS can nevertheless make lives easier for warehouse personnel and CFOs alike.
We expect LMS to enhance sales of DLx, as LMS represents perhaps the lowest hanging fruit for companies interested in reducing supply chain and distribution costs. To that end, DLx Labor takes labor productivity management to the next level by calculating goal times for specific tasks based on their characteristics, whereby managers would receive feedback on how employees are performing against goal times, which should enable them to shift resources if necessary, maximize labor utilization, and minimize overtime
The system is used by operators to record tasks performed, while managers can query the system throughout the day to obtain live reports or answers to questions, like how many people they need for a certain task, or how to assign work to finish the jobs that need to be done by the end of the day. They can also find out how long each task should take, and produce detailed performance data for each employee. When integrating with a WMS, pick lists are created and passed to the LMS, and then, the LMS calculates goal times and stores the data for future assignments, when each job is dispatched to the operators from the WMS.
However, while many renowned companies in the retail, food & beverage, consumer goods, and 3PL segments of the market have successfully implemented LMS and achieved these benefits, a greater number of these have yet to do so. Given the economic and operational potential benefits of LMS, the failure to implement advanced labor management appears to be attributable to a number of misconceptions surrounding LMS process, technology and impact. Also, not many WMS products yet provide the depth of functionality of advanced LMSs in such areas as support for discrete standards, labor planning, robust labor reporting and the ability to determine "cost to serve" specific customers.
concludes Part Three of a four-part article on RedPrairie.
One detailed recent events.
Two began the discussion of the Market Impact.
Four will cover Challenges and make User Recommendations.