When it comes to Warehouse Management Systems (WMS), HighJump is one of the three biggest providers of best of breed solutions. Last week, HighJump held their annual user conference – Elevate – in Dallas. This is always a good chance to get caught up with one of the major players in the supply chain execution marketplace.
HighJump was acquired by Körber (rhymes with Gerber) from private equity firm Accell-KKR, which had owned HighJump for the past five years. Chad Collins, the CEO of HighJump, explained why this was a good thing for HighJump customers and future customers.
According to Mr. Collins, their strategy has been to get larger, in part from mergers and acquisitions. The reason for this is that they have been successful in selling WMS in certain types of situations. When it was down to just three suppliers in a WMS selection, Mr. Collins said that they win 73 and 68 percent of the time respectively against the two largest providers of best of breed WMS solutions.
HighJump’s ability to win these deals is based in part of the flexibility of their solution, a message emphasized by HighJump executives and echoed in the presentations of customers like Parts Town, Mr. Price, Conn’s HomePlus, and Ashley Furniture Industries.
This win rate has allowed HighJump to grow. They added 250 customers in 2017 (not all in WMS), revenues grew 22 percent, and Cloud revenues – all of which represents organic growth – was up 18 percent.
The problem is that they have the potential to do much better. Many prospective customers are looking for a broader supply chain suite; in these instances, HighJump often did not make the short list of suppliers being considered.
Körber, headquartered in Germany, can provide money for further acquisitions. Körber is a €3 billion holding company that invests in supply chain technologies as a growth opportunity. The Körber family of companies includes material handling and logistics robotics companies, consulting companies that can help companies build a highly automated warehouse from the ground up, a system integrator that implements SAP Extended Warehouse Management (EWM) in Germany, and Inconso, a European WMS and supply chain execution solution provider with a robust warehouse control system (WCS).
Körber is an interesting company; the company has one shareholder, the Körber Foundation. Körber was founded by Kurt Körber, who had no children. Mr. Körber passed his assets to the foundation at the end of his career. The Körber Foundation is a nonprofit that is focused on promoting international dialogue between the realms of politics, science, business and society, by fostering gatherings of policy-makers, diplomats and experts in international relations.
Every year Körber passes a small portion of its profits to the nonprofit and retains a large portion of the profits to invest in growth. This makes HighJump’s new parent company a very patient investor. Mr. Collins mentioned that HighJump has had several venture capitalists invest in them over the years. Typically, according to Mr. Collins, equity companies have a four to five-year investment horizon. That means these equity companies invest in growth in years one and two, but then seek to reduce the investments, harvest extra profits, and position the acquired company for sale in year four or five.
The various Körber logistics businesses are loosely coupled – they are stand alone businesses. But there are opportunities to work more closely with Inconso. Inconso WMS will continue to be sold in Europe. Inconso’s solution is more focused on automated warehouses. But HighJump will sell Inconso’s WCS in North America, where the difficulty in getting workers willing to work in the warehouse is increasing the importance of automation. HighJump had also acquired ViTech in February, before they themselves were acquired. ViTech has an active business in implementing Voice solutions in warehouses, another form of automation that can ramp up productivity and damp down the need to hire as many workers.
In addition to a message focused on flexibility, the other thing you notice at a HighJump show is the culture of the company. This is an open, Midwestern company filled with straight shooters. This is a nice style for making customer’s happy, but they have begun using the Net Promoter Score to further improve their ability to satisfy their customers.