Tracing Supply Chain System Evolution

Whatever your supply chain network it might be (retail distribution, wholesale distribution, e-com fulfillment, or 3PL), it’s important to remember that not all distributions run the same version of software or even the same programs.  For those tasked with the supply chain or fulfillment tasks, this is a conundrum. Consistency is critical to allow for standardization of training and processes across every distribution center in the organization.

Generally speaking, there are two types of supply chain system: execution and planning. After 20 years in the industry, I would point to a couple of good examples. Manhattan Associates (MA) started as a contract programmer, and notably landed a project for Jockey. The team moved from sunny Southern California to brutally cold Wisconsin and spent 18 months creating a pick ticket management system.  The eventual result was a unique and highly configurable and flexible product that ran on the IBM AS400 or iSeries.  The platform is legendary for its robustness which is part of the success of the project. 

As they worked with Jockey, they discovered that many skippers were struggling with label compliance requirements imposed by retailers. Non-compliance translated into heavy finds, anywhere from 7% to 14% of the invoice. The team solved that problem by incorporating the top 100 retailer labels into their software. Then, all the shipper had to do was to bridge the right label type into the order header. That invention propelled the company to great success, and a continued path of leadership.   

For vendors like MA, a big portion of revenue comes from annual maintenance fees paid by customers. Particularly in the wake of Sarbanes Oxley Act (SOX) of 2012, which regulates financial practice and corporate governance. Under these new rules, public companies needed to stay on a supported version of whatever software they chose. Vendors, meanwhile, strove to provide increasing value. Once warehouse management systems (WMS) were optimizing inventory, the next natural step was to add a labor management system (LMS) component.

Another great example is i2 Technologies, which has since been acquired by JDA Software. A young engineer working for Texas Instruments witnessed long processing times for purchase orders (POs) in the automotive supply chain. He decided to try to solve the problem by leveraging technology. This fellow, who was named Sanjeev Sidhu, wrote a program called Rhythm. He offered it to a manufacturing company, asking to be paid only if the company enjoyed cost savings fgrom it. Eventually, his company was born and Sidhu became a billionaire.

The biggest difference between these two best-of-breed supply chain providers is that I2 entered the supply chain planning space, while MA focused on supply chain execution. JDA, meanwhile, has both planning and execution capabilities and tries to provide and end-to-end pre-integrated solution in order to reduce customer risk.

Another category of supply chain software provider is enterprise resource planning (ERP) companies. These companies recognized that existing customers were often looking for a WMS and then going through the pain of integrating the two solutions. Done poorly, the integration point becomes a failure spot and orders fall through the cracks, leaving the customers confused and unhappy—and often sending them to other sources of supply.

In order to address these kinds of challenges, ERP vendors such as SAP provided a pre-integrated WMS to ERP customers. Often, to insure integration, these customers migrated to their ERP vendors WMS solution. Some ERP companies even gave the WMS features to customers for free. Of course, these free solutions were more basic, without specific vertical capabilities. Unlike best of breed supply chain solution providers, they felt their core was ERP, so they didn’t optimize many aspects of the WMS. 

That means that organizations running leading ERP systems like SAP have a variety of chances to optimize and integrate their WMS solutions. The best of breed solution providers aggressively pursued efficiency and productivity improvements with technology such as voice and in-built integration with material handling equipment, LMS and more.

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