RedPrairie - New Name For A Brave New Value Proposition Paradigm

Event Summary

On November 8, RedPrairie Corporation (, formerly McHugh Software International), lately an upbeat 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 and consumer packaged goods (CPG) companies require running on supposedly the cost effective Microsoft Windows 2000 platform. The release has been coupled with RedPrairie's DLx Xpress rapid implementation methodology aimed at enabling swift deployment of food, beverage, and CPG functionality. RedPrairie believes this combination of technology and easy deployment provides competitive advantage and rapid return on investment (ROI) to its coveted smaller customers, and should render it more competitive in the lower-end of the market, below it's traditional radar screen.

The DLx Warehouse/D 6.0 release runs on the Windows 2000 platform using either Oracle or Microsoft SQL Server databases, and it is available with industry-specific deployment packages for Consumer Goods, Food & Beverage, and other environments. For food, beverage, and CPG companies, e.g., the system reportedly has extensive functionality to manage multi-level holds, time holds, catch weights, shelf life, expiration dates, quality assurance, recall processing and many other germane distribution functions.

The news comes at the heels of the November 4 announcement when RedPrairie announced its third consecutive record quarter, despite the continuing slump in the global software market. For Q3 2002, RedPrairie recorded earnings before interest, taxes, depreciation and amortization (EBITDA) of 19%, an almost incredulous increase of 183% over the same quarter last year, and bookings 152% higher than in Q3 2001. With this continued growth, RedPrairie has established itself as one of the leaders in the SCE industry. Fueling the company's record growth and profitability was a whopping 105% growth in software license revenue and total revenue of $18 million, representing a 14% increase from the same quarter last year. The company achieved higher gross margins driven by increasing license revenue and service margins, and a ???$5.0 million in cash generated from operations in the quarter, up $2.5 million from a year ago but, at the same time, it committed an additional 13% to research and development, compared to Q3 2001.

This Part One of a four-part article on RedPrairie.

Parts Two and Three will cover the Market Impact.

Part Four will discuss Challenges and make User Recommendations.

Other Recent Events

Other Q3 2002 highlights would include:

  • On September 13, RedPrairie introduced the above-mentioned of DLx Xpress rapid WMS implementation program, based on Six Sigma methodologies, which should enable mid-market companies to affordably adopt an advanced WMS solution. While mid-market companies should now be able to gain the benefits of a WMS solution with a flexible deployment model that can be tailored to their requirements, resources and budgets, the product could still also benefit larger companies requiring rapid implementation schedules due to project timelines. DLx Xpress reportedly combines a streamlined implementation methodology and industry-specific best practice process models. RedPrairie also claims to be the first software company in the supply chain management (SCM) industry to adopt Six Sigma principles as the foundation for its deployment methodologies, which is a widely recognized and accepted approach to achieving process quality and consistency.

  • On August 27, RedPrairie released a new version of its warehouse management software, providing third party logistics companies (3PLs) the solution to meet distribution needs across multiple verticals, including Consumer Goods, Food & Beverage, High Tech, Service Parts, Pharmaceutical and other industries. The foundation for this powerful 3PL offering is an enhanced version of RedPrairie's DLx Warehouse solution, which meets wide-ranging distribution and customer service requirements of third party logistics providers (3PLs) and end users across multiple industries.

    DLx Warehouse/D 6.0 reportedly offers significantly enhanced functionality to support distribution, transportation, productivity and performance management requirements for customers and 3PLs serving the above industries. The release marks the company's breakthrough, as the first time such broad industry functionality, executed through vertical-specific templates, has been provided through a single suite of warehouse, productivity and transportation management solutions, enhanced with applications for real-time control and performance management.

    For 3PLs that need a single system to serve the highly variable distribution requirements of customers across dissimilar industries, this new release might significantly reduce the complexity and cost of operations while enhancing customer service. DLx Warehouse/D 6.0 also reportedly offers enhanced integration to other DigitaLogistix? (DLx) applications, including solutions for:

    • Real-time labor reporting and productivity management

    • Transportation planning and execution

    • Logistics score-carding and performance measurement

    • Global supply chain visibility and real-time control

    • Pro-active event management and workflow-based resolution.

  • On July 12, the company announced general availability of release 6.1 of its DLx Labor software as part of a broader enhancement of its Productivity Management solution that should enable companies to increase logistics productivity, improve performance in areas such as customer service and profitability, and realize more consistent and predictable fulfillment operations. The 6.1 release also includes standard integration to voice recognition systems for hands-free, eyes-free capture of assignment completion times and real-time feedback to users and management on performance metrics, which should drive greater operational efficiency and cost savings through streamlined fulfillment processes and improved labor productivity.

    The first application of the voice recognition technology will be the integration of Vocollect's industry leading Talkman system for one of the largest grocery wholesalers and retailers in North America. The release also contains a standard interface to DLx Scorecard, RedPrairie's online supply chain analytics and performance management system, aimed at enabling companies to track and analyze performance metrics such as direct labor hours, indirect labor hours and travel times across multiple facilities in near real time to quickly identify performance problems and take corrective action before they adversely impact efficiency and customer service.

    RedPrairie's Productivity Management solution directly attacks fulfillment costs and customer satisfaction challenges by delivering measurable improvements in distribution center productivity, customer performance, and predictability of operations. It accomplishes this through the following four components that collectively act at ensuring improved results:

    1. Value / ROI quantification through comprehensive customer value analysis

    2. Identification of best practices, preferred methods and operational metrics

    3. Advanced productivity and resource planning software (DLxLabor)

    4. Complete engineering and change management services.

Other notable enhancements in the 6.1 release include streamlined authorization maintenance for maintaining users, roles and menu options, improved warehouse mapping and assignment handling, and a more flexible reporting engine.

RedPrairie Is Born

On May 22, the company adopted its new name, RedPrairie?Corporation, from formerly McHugh Software to mark its embracement of the most significant change in its over 25 year corporate history, with ensuing implications for how companies should achieve value from supply chain software solutions. RedPrairie wants to revolutionize the SCE industry by organizing its entire company and delivery systems to focus on customers achieving value and measurable results from its solutions. This approach will supposedly deliver logistics results for RedPrairie customers, which the company is willing to guarantee through a shared risk-reward program. The company believes this approach is so fundamentally different from other software providers that only a new company name could adequately signify this transformation -- with Red' signifying the revolutionary change and Prairie' signifying the ultimate order/harmony.

RedPrairie has transformed itself in response to two fundamental business issues facing the marketplace:

  1. The cost of logistics is too high and rising for many companies, the result of increased supply chain complexity and other cost pressures.

  2. Companies have not seen the returns they expected from IT investments, leading executives to become disillusioned with the false promises of many solution providers.

RedPrairie is committed to addressing both of these key business issues with a new approach to solution deployment and results achievement that ensures customers will reduce logistics costs and reach the results they expect from RedPrairie solutions. And RedPrairie is willing to guarantee these results through a shared risk-reward financial model. In addition to possessing one of the industry's deepest, richest set of SCE applications, the company is now leveraging these solutions through a new value delivery system (dubbed the RedPrairie Approach) that focuses end-to-end throughout the project lifecycle on value realization and results achievement. Leading by example, RedPrairie is also transforming its own internal culture and processes to support this results-focused approach, impacting every function and process, from employee titles to measurement and compensation systems. The model is intended to make RedPrairie more of a "logistics results company" than a mere software vendor.

This concludes Part One of a four-part note on RedPrairie.

Parts Two and Three will cover the Market Impact.

Part Four will discuss Challenges and make User Recommendations.

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