About 1,000 of Manhattan’s customers and partners attended Manhattan Associates’ Momentum conference in Hollywood, Florida this week. Manhattan is an ARC Advisory Group client.
The conference is aptly named. Manhattan is on a roll – revenues are up 10 percent year over year; 35 percent of software revenues come from brand new customers; and despite only having one reported quarter under their belt, Manhattan raised their financial guidance for 2014’s full year projected earnings. A big driver of growth for the company is retailers’ omni-channel initiatives; something Manhattan is perfectly positioned for.
The most critical system – the omni-channel quarterback – is distributed order management (DOM). In a meeting with analysts and press, CEO Eddie Capel mentioned that in deals in which they are asked to compete, their win rate against major competitors is roughly 75 percent. IBM was included as one of their major competitors; and Manhattan is really only competing against IBM with DOM. There are very few suppliers of DOM, and historically IBM has been the largest supplier of this solution and was considered the safest pick.
Manhattan DOM implementations resemble that of a high end warehouse management system (WMS); Both typically take about 9 months. But there tends to be more ongoing service associated with DOM than is the case with a WMS. As retailers add new flow paths – for example, reserve online/pick-up in store – Manhattan is often called in for one to two weeks of configuration support.
Manhattan said they turned the corner against IBM in the DOM area about 18 months ago. While their DOM is a scalable, feature rich solution, part of the reason for the success that Manhattan is having is that their key omni-channel solutions – like DOM and the Store Inventory & Fulfillment solution – are on the same platform.
With omni-channel, stores become picking and ship from sites. Manhattan now has more sites live with Store Inventory & Fulfillment than they do with their core WMS solutions. This is somewhat breathtaking as WMS represents more than half of Manhattan’s revenues and they have been selling WMS for over two decades.
Further, I have viewed Manhattan’s and other WMS suppliers store fulfillment solutions as a WMS lite solution – a less functionally rich WMS that has receiving, put-away, packing, shipping, and cycle count capabilities. For other WMS supplier’s this is mostly true. And that is OK, a WMS light solution is a good solution for backroom picking at the store.
But most retailers do front of store picking, and here the Manhattan solution is superior. When I viewed a product demo, I realized that Manhattan’s solution really is not a WMS lite. It is custom built for store fulfillment. This solution is incredibly user friendly; it is easy to visualize a brand new 16 year old hire quickly learning how to use the system. Further, the solution has process flows that would make little sense in a warehouse, but which are perfectly suited for the front of a store. WMS solutions also have location logic – go to slot XYZ and pick three. But location logic does not apply to the way most retailers replenish the front of their stores. For Manhattan, the “go to” is by zone – department, display, or back of store for example. Finally, the Manhattan store fulfillment solution supports associate store selling activities, functionality no WMS has or needs.
The DOM solution and the store fulfillment solutions are synergistic. The DOM solution represents a form of planning, the store solution is focused on execution. Both planning and execution are needed to create a flexible omni-channel supply chain.
Here is how Eddie Capel described a flexible omni-channel supply chain in his keynote presentation:
- At the end of the holiday season, a retailer has distressed inventory that it wants to push out of its stores to make way for the spring line. In this season, the system needs to intelligently direct orders to the store that has inventory available, labor capacity to fill the order, and is in a location that can meet the delivery needs of the customer.
- During most of the year, when promotions are run, the retailer wants to leverage its distribution center (DC) for fulfillment because it can do the job cheaper and more efficiently.
- During the Holiday season sales rush, the DCs are running 24 hours a day, seven days a week. The stores augment the DC capacity to make sure no order goes unfilled. Suppliers are asked to drop ship to stores or straight to a consumer’s home.
In short, the omni-channel network should look and behave vastly differently depending on the time of the year, the business objectives, and customer demand.
As I mentioned before, Momentum was an apt name for this conference – Manhattan is on a roll. Not just from a revenue perspective, revenues are a lagging indicator. Manhattan has built a robust platform for enabling omni-channel fulfillment.
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