Extension to Yard Management
Enterprise systems are penetrating every aspect of a company's operations. For some time now, organizations have realized that the warehouse must become a dynamic area. Warehouse personnel must have access to real-time data to closely match supply and demand and to streamline the supply chain, so inventory is not bogged down in warehouses causing precious overhead to be lost. As a result, supply chain execution (SCE) software has broadened its functional scope to include many warehouse manufacturing trends. (See part one.)
Part Two of the Who Needs Warehousing Management and How Much Thereof? series.
The lines between warehouse management, distribution, and transportation management systems (TMS) are also increasingly blurring as more WMS' handle logistics functions such as load planning and building, shipment scheduling, and yard management. For example, functionality in TMS' have been extended by the inclusion of a yard management system (YMS) with browser-based graphical drag-and-drop control of yard activities and yard control (including trailer tracking, trailer contents, trailer movement, and graphical yard presentation); appointment scheduling (including inbound/outbound time, service time, resource requirements, and equipment requirements); and carrier performance tracking (like on-time and correct equipment aspects). The seamless integration of YMS with WMS, thereby extends the WMS' functionality beyond the four walls of the warehouse into the yard.
For instance, each trailer that comes into the distribution center (DC) is checked in through the YMS, which then triggers activity throughout the WMS, including wave planning, trailer loading, and cross-docking. The YMS and WMS communicate continuously as the YMS helps direct trucks to the proper dock door for loading while the WMS prepares the orders to be shipped out. The YMS then checks out trucks as they leave the facility and automatically informs the enterprise resource planning (ERP) back-office system. A color-coded, graphical view of all trailers in the yard is a nifty feature that yard managers find intuitive in pinpointing bottlenecks, as operators can see color changes if trailers are beyond an appointed time. Operators can also see where loads have not even been started. For more relevant information, see Provia Tackles RFID in a Twofold Manner; Part Seven: WMS Market Impact.
This Part Two of a two-part note.
Part One defined WMS Solutions.
Competitive Analysis Update
The sluggish economy has lately caught up with the otherwise resilient SCE market, and competition has intensified from many ERP vendors, particularly from tier one vendors like SAP, Oracle, Infor Global Solutions, Adonix, and SSA Global (see ERP Vendors Intrude on SCE/WMS Safe Haven). Such vendors have been selling WMS solutions based on the same code base and data model as their flagship ERP solutions.
Another challenge for SCE pure players has been the dreaded word, "commoditization" and its subsequent price erosion. Largely, most products are still functionally on par, at least within the WMS market, which is still the main breadwinning offering for more SCE vendors (if one considers the "within four walls" functionality). Only nuances in ease of configuration or industry focus differentiate the winner. Moreover, ERP vendors have largely taken advantage of this unfavorable perception of WMS specialists, in order to shore up their own huge install bases, and to compete for some "greener fields" of opportunities.
Thus, instead of intra-market consolidation (except perhaps for RedPrairie's acquisition of LIS (see RedPrairie to Spread Across Europe through LIS Acquisition ), we may end up witnessing a stratification of the market, where the "big gets bigger" and the small, in the shadow of the giants, recoil into a survival mode focusing on some safe market havens. Others vendors, like Catalyst International, will have to strategically fill unique market needs in order to gain growth and scale (see Will Recent Acquisition Catalyze Catalyst's Strategy?).
Challenges Remain for All
This is not to imply, however, that the SCE market has been spared from acquisitions, given that there have been more than twenty acquisitions or mergers of companies with WMS solutions in last few years, despite the market's continued (albeit modest) growth. Namely, beside Catalyst, which was a public company prior to its acquisition by ComVest Investment Partners in mid 2004, RedPrairie was acquired by Francisco Partners, a private venture fund, in May 2005, and HighJump Software was acquired by 3M in early 2004 (see 3M Wraps Up HighJump, While Retalix Shops OMI International). HighJump has subsequently unveiled the development of its production management solution, with the prospect of its traditional SCE suite exhibiting considerably more manufacturing-oriented functionality down the track.
Yet, while some of these vendors can expect to continue to grow their revenues, historically mergers and acquisitions have often proven to be an impediment to growth. When some software specialist are acquired by private investment houses or companies with few roots in the software industry, customers can naturally wonder how well the new owners understand software in general and in their particular industry. On the other hand, there have been some acquisitions of WMS providers by related buyers with the idea of creating a platform for enabling the extended supply chain, such as Retalix' purchase of OMI International, Click Commerce's acquisition of Optum, or Sterling Commerce's acquisition of Yantra.
The business remains challenging to even the most established vendors such as Manhattan Associates, since an intensifying product architecture rejuvenation and functional enhancements cycle, the pressure from the ERP intruders, and continued market consolidation exert fiscal pressure across the sector. To that end, Manhattan continues with its footprint extension beyond SCE (see Logistics.com Becomes The Newest Of Manhattan Associates), with the recent acquisition of the supply chain planning (SCP) provider Evant, and in tune with the convergence of SCE and supply chain planning (SCP) (see SCP and SCE Need to Collaborate for Better Fulfillment).
Incidentally, every company has to be careful not to spread its development resources too thin trying to maintain multiple platform product configurations. Namely, although the trend for the target market is often towards the Microsoft technology in the lower-end of the segment, some product are yet to be fully Microsoft. NET-compliant. Also, some are not yet completely radio frequency identification-compliant (RFID), at least in terms of handling an expected deluge of data via a middleware layer, despite the apparent need in the foreseeable future (see RFID—A New Technology Set to Explode?).