Supply Chain Software: WMS providers reach beyond the four walls
Charles Darwin said the key to survival is being responsive to change. And in many ways, that’s also a key to being a successful software provider.
Once upon a time, a typical warehouse management system (WMS) would make sure inventory was where it’s supposed to be—and in the right quantities—then oversee the order fulfillment process. At the time, that was pretty good, and many WMS providers focused solely on offering that solution to its customers. But today, providers have expanded beyond WMS to offer supply chain management solutions, which suggests a larger suite of products.
“This is a funny space,” says David Landau, vice president of industry marketing for Manhattan Associates. “When I started in the 1990s, there were probably about 200 companies doing WMS. Now you can count them on one hand. Some companies were innovators and some were well managed: Those were the ones that survived,” Landau says.
This evolution of the WMS space was a topic of conversation at the 2011 Material Handling Industry of America (MHIA) Spring Meeting held recently in Charlotte, N.C. In one meeting of the supply chain execution group, John Hill, vice president of TranSystems, discussed how the WMS industry has changed. He said providers of warehouse management software used to be WMS companies, but today they are something far different, offering software that goes well beyond the four walls of a warehouse.
“In order for Tier 1 WMS providers to grow, they have to find more things to bring to the party,” says Hill. “It only makes sense for them to expand outside the four walls if they’re going to provide users with supply chain systems that provide visibility from source to consumption. That’s what’s driving large providers.”
Conceptually, providing complete visibility through the entire supply chain is not a new idea. “We only dreamed of this 20 years ago,” says Hill. “What’s new is the collection of tools that’s available today, particularly the tools used in the collection of real-time information and the ability to share that data across multiple supply chains or supply chain-related systems.”
As the technology catches up with the concepts, end users want more than a traditional WMS, they want an integrated solution that enables them to effectively manage the flow of product across the entire supply chain.
“There has been an evolution in terms of the business processes that customers are trying to support,” says Jennifer Sherman, senior director of logistics product strategy for Oracle. “Five years ago, the holy grail would have been a WMS that could talk to transportation, but to a large extent that’s done. Customers are asking how they can leverage their platforms, and we’re talking about bringing those applications to other areas of the business.”
Here’s a look at how four of the leading supply chain software providers view the evolution of the supply chain execution space and how they are approaching their customers.
In general, companies that were once primarily WMS companies have expanded into other areas and are repositioning themselves as supply chain management companies, explains Chad Collins, vice president of marketing for HighJump. “There’s really been an evolution from traditional distribution and logistics offerings into the broader supply chain with some form of inventory planning and moving out all the way to the store shelf,” he adds.
According to Collins, one reason for the shift is that buyers and users of these systems would prefer to get their products from a single source. Having fewer vendors makes the process easier from a technical perspective. Getting the solution from one provider means visibility of the data on a common application platform, says Collins.
This is especially important in the U.S. food and beverage sector. Being a $2.1 trillion dollar industry with very thin profit margins, there’s a constant demand from users to find tools that efficiently manage the flow of goods while boosting the bottom line.
HighJump is responding to that demand by connecting distribution activities with in-store activities through direct store delivery, or DSD. In DSD, product is delivered directly to the retailer and merchandised by the manufacturers themselves on the retailer’s store floor.
“In food and beverage, there are suppliers that don’t ship to intermediary warehouses, they go directly to the retail store,” explains Collins. “With DSD, the manufacturer controls the entire process from product readiness through order taking, shipping and merchandising.”
There are benefits in shipping directly to the store, Collins adds. From the supplier side, returns are lower, and profitability and sell through are much higher. From the retailer side, studies have shown that DSD products can be the most profitable because the supplier is responsible for the costs for delivery, inventory management and merchandising. And from the customer vantage point, it means product is where they want it, when they want it.