JDA Archives

The New JDA Flowcasting Solution

Business Intelligence | By Steve Banker • 05/19/2014

Last Tuesday it was announced that the CEO of JDA had been replaced with an interim CEO. Perhaps because I tend to be product focused, I find the most significant recent announcement the news that JDA had productized a Flowcasting solution. Previously, RedPrairie, a firm acquired by JDA, had a joint partnership to provide consulting services in this area.

We’ve gone through several iterations of how to effectively balance supply and demand in the retail/consumer goods supply chain. Flowcasting is currently the most advanced form of the next wave forward – demand driven supply chain management.

Historically, a consumer goods firm did forecasting based upon historical shipments. Anyone with exposure to supply chain management knows this did not work well; there were significant bullwhip effects.

Various forms of retail/consumer goods forecast collaboration have emerged to help cure the disease. The most prominent was Collaborative Planning, Forecasting & Replenishment (CPFR). To oversimplify a bit, in this initiative, the retailers and manufacturers compared their own forecasts and worked to come up with a consensus forecast. These collaborative forecast initiatives had positive impacts on inventories and service levels. But store, shelf-level out-of-stocks (OOS), the most critical KPI in this supply chain, barely changed.

The next wave forward is demand driven supply chain management. In this wave, consumer goods firms leverage a variety of different types of downstream data, including POS data provided by the retailers, to power more efficient supply chains. Some suppliers are using the POS data to improve short term forecasting, particularly promotion forecasting, and to highlight places where there are breakdowns in getting promoted products onto the shelves. This can blow back and change the shipment plan between the manufacturers’ and retailers’ distribution centers (DCs). But I have not seen the impacts propagate further upstream than that.

The JDA Flowcasting solution changes this. It is an interconnected retail/CPG supply chain model that starts with the sell through forecast and propagates backwards. The model understands store and retail DC reordering policies, as well as CPG manufacturing and delivery lead times. This single model of the business across the entire supply chain is shared by retailers and manufacturers. Because this is a cloud-based solution, the only logical architecture for deep collaboration, it allows for an executable plan between the manufacturer and retailer who are working off of a common point of view of what’s being sold at the store.

This is a multi-enterprise planning solution. Stop and think about that! For years, leading critics of SCM technology have pointed out that manufacturers have had one set of tools that aimed to optimize their supply chain while downstream customers have used a different set of solutions to independently optimize their supply chain. Yet it has long been a central tenant of supply chain management that optimizing links in a supply chain was not the same as optimizing the end to end supply chain. Now there is a multi-enterprise planning solution built on a unitary model.

The JDA solution supports:

Scenario creation and comparison, particularly scenarios that support a proactive restructuring of the supply chain. For example, would the shelf level OOS numbers stay the same while the manufacturers supply chain costs dropped, if the retailer ordered by pallet layers rather than by cases?
Root cause analysis which identifies shelf level issues and assigns root-causes that can include poor perpetual inventory performance in the store, systemic over or under forecasting, and poor replenishment occurring anywhere in the joint supply chain.
Supply Chain Analytics that proactively mitigate future overstocks and out-of-stocks.

The JDA Flowcasting team briefed the ARC supply chain team and showed us some screen shots from their new solution. The analytics and root cause features are impressive. But the large numbers of new scenarios that can be run is what really grabbed me. I, for example, have never seen a supply chain solution that can show how changing dimensions of the shelf facings ripples back and impacts the manufacturing supply chain.

JDA’s poster child for this solution is Kraft. The JDA team shared some really good results that Kraft had achieved. But I prefer not to hear these kinds of things second hand.

Fortunately, at the recent JDA user conference, Aldo Sanerelli spoke. Aldo is the Director of Logistics and Distribution at Sigma Alimentos. Sigma Alimentos is a leading food company with a direct store deliveries business model. The company is headquartered in Mexico. They are still early in this process, but their goal is to have consumption forecasts drive time phased capacity planning across transportation, warehousing, and production. They have already seen improvements in days on hand inventory, fill rates, in-stock performance, and thus ultimately the sales they have achieved. According to Aldo, “this is not a supply chain solution, it is a business solution.”

JDA Focus: A New Strategic Approach

Category Management | By Chris Cunnane • 05/05/2014

Last week, several colleagues and I attended JDA’s annual user conference in Las Vegas. The theme of this year’s conference was “Outperform” and had over 2200 customer attendees. The customer case studies were very informative, and could pique the curiosity of executives from every walk of life or industry. The show stopper for Day 2 was the keynote address from Captain Richard Phillips, former Captain of the Maersk Alabama (I probably don’t need to tell you who he is).

On day 1, JDA CEO Hamish Brewer’s keynote address outlined the organization’s recently refined corporate strategy. There were two key aspects to the refined strategy: technology and customer experience. From a technology standpoint, JDA has organized its product offering into five suites of adjacent and complementary solutions:

Manufacturing Planning: demand planning, sales & operations planning, master planning, factory planning, and inventory planning;
Collaborative Category Management: customer insights & analytics, assortments, planogram precision / volume, automation & workflow, mobility & task management, and flowcasting;
Distribution Centric Supply Chain (DSC): demand and fulfillment, distributed order management, transportation management, warehouse management, and labor management;
Retail Planning: demand planning, merchandise financial planning, assortment planning, pricing & promotions, and micro / macro space planning;
Store Operations: workforce management, task management, enterprise store operations, and in-store picking.

From my perspective, the DSC suite is one of the more interesting revelations from the show. The basic point of the suite is to bridge the gaps between fulfillment and transportation and warehousing. The integration of their TMS and WMS applications is already done. Additionally, JDA has integrated their TMS application with their fulfillment capabilities, and plan to have the WMS application integrated in the near future. In the next phase, JDA will integrate item locations from the warehouse into the TMS. While there was debate about whether this was actually an important piece of technology to have, it allows retailers to be more efficient when they are pulling inventory from a DC to deliver to the store. While most warehouses will have similar items located near each other, either on the same shelf or at least the same row, this capability will streamline the picking process when a retailer is receiving store replenishments as well as web orders to be picked up in the store. With more customers moving towards e-commerce, this becomes an important capability.

The final piece of the integration is to bring together distributed order management and inventory visibility. Distributed order management is really a key for omni-channel operations. This technology allows the retailer to capture all information in the order management process across all relevant channels. The benefit to retailers is that it doesn’t matter where an order originates; all fulfillment channels have access to the information and the retailer can appropriately allocate the inventory depending on stock levels, demand requirements, and timing of fulfillment.

The second aspect of JDA’s revised corporate strategy is an improved focus on the customer experience. JDA is investing in account managers for their customers due to feedback from their customers. By increasing employee headcount in these customer manager roles, JDA is seeking to ensure a single point of contact for the customer. This point of contact is responsible for coordinating all of the customer’s needs across the company, with a key focus on helping organizations get the most out of their investment with JDA. This starts with account planning and ends with execution.

Hamish Brewer outlined his commitment to his customers: customer value, quality, innovation, and real results. The alignment of the DCS product suite looks like it could be one way for JDA to deliver this promise. The integration of these key pieces of technology, with the distributed order management system as the backbone of omni-channel operations, puts JDA in a great position moving forward. Now, they just need to execute. Stay tuned for more news and insights from JDA Focus.

A Leading 3PL Creates a Warehouse Template for Success

Business Intelligence | By Steve Banker • 01/20/2014

For years, warehouse management system (WMS) suppliers have been introducing “template” solutions. These template solutions are either industry specific or are based upon getting a simpler warehousing solution up quickly. A best of breed WMS offers all sorts of configuration choices. The idea behind the template is that many of these configuration choices are predesignated in the template in order to achieve a faster implementation.

While over the years I’ve heard one WMS supplier after another brief me on their new templates. What I can’t recall hearing were examples of customers actually using these templates.

Until now.

A Director of IT and Strategic Integration at a leading North American 3PL specializing in warehousing and other logistics solutions, told me they have made the template idea work for them. For new warehouse customers they have standardized on JDA Warehouse Management (formerly RedPrairie). As a 3PL that relies on JDA WMS, they have their own JDA WMS center of excellence, do their own implementations, and provide their own support on this solution. They also have developed their own proprietary template for this solution.

This director described the template as providing “repeatable best practices” that they can then “tailor” for their clients. As an example, RF and computer screens would be specifically configured to their customer’s requirements.

Interestingly, the flexibility of the JDA solution is part of what creates thei ability to provide a template solution. When you hear the word “flexibility,” you naturally think of more choices; which one would think would lengthen implementations. But the JDA solution has a business process management and service oriented architecture. What this means is that much of a process can be locked down through preset configuration switches, but the solution allows for exit points. For example, the trailer loading process can be largely predefined, but once a trailer is loaded and closed, there is an exit point. At this exit point, if there are any customer specific actions, like printing a bill of lading (BOL) for BestBuy, the system can be configured to look for information to populate destination specific BOLs.

They support their templates with label libraries. So if one of their new customers says, “this is the label we use for Best Buy,” the 3PL can say “we can take the time and effort to duplicate your label, and charge you for the effort, or you can use our Best Buy label that has already been certified by Best Buy.”

Another place where WMS solutions can require customization is around inventory attributes. In the JDA solution, there are many existing inventory attributes. Architecturally, inventory attributes are basically distinct columns in the WMS database structure. But JDA also has unnamed inventory columns which this 3PL can define depending upon their customer’s needs. Because of this, a customer with a relatively unique inventory attribute can be supported without resorting to customization.

What I also found interesting is that templates are supported by giving a customer their own instance of the software for every new warehouse. A modern WMS can support multiple warehouses in one instance of the software. This can save on hardware costs. They have chosen to give every new warehouse its own instance because shared environment systems have some features that are enabled at the enterprise level, and thus prevent tailoring. One example is the look of user screens.

Secondly, regression testing is faster for an individual instance than in a shared environment.

Finally, virtualization technologies have led to steeply dropping hardware prices. From this IT director’s perspective, the hardware savings from a shared environment are not worth the costs incurred in a longer implementation.

This 3PL gains about one new customer a month. Since July, all new warehousing customers have chosen to go the template route based on an implementation that comes in at “25 percent of the cost but which gives the customer 95 percent” of the functionality.

Finally, another source of savings surrounding implementations is that the configurability of the JDA solution has meant that they can hire business analysts, folks that understand warehousing, to gather customer requirements. These analysts speak “logistics” rather than “IT”, and thus are easier for their customers to interact with. But their wages are also substantially less than that of IT analysts.

Not that long ago, a five month implementation was considered fast. This 3PL is now achieving relatively complex implementations in under two months. The Director told me that while modern WMS solutions have made many things quicker, integrating to customer systems is still labor intensive. Further, because the implementer is still at the mercy of the customer around issues like making their people available to help define the requirements, it is still going to be a challenge to implement in less than 30 days.

Customers Do NOT Expect a Similar Experience Across Channels

Inventory Management | By Chris Cunnane • 01/15/2014

The 2014 National Retail Federation (NRF) Big Show, one of the biggest trade shows in the country, was once again all about the customer experience. There are a lot of ways to look at the customer experience and what retailers are doing to shape it. And there are a lot of vendors out there that are delivering systems and platforms to enable retailers to provide a positive customer experience. When one thinks about the customer experience, there are generally a few thoughts that come to mind. First, the customer expects a similar experience across channels. And second, customer engagement is at the heart of the customer experience. These two thoughts have been written about time and time again, but each one is only a partial truth.

The simple fact is that customers do not necessarily expect a similar experience across (or regardless of) channels. Each channel is a separate interaction point and must be treated differently. There are different ways in which merchandise and promotions are presented. The level of personalization varies by channel. The lead time to receive a product varies, as does the means to receive the product. That is precisely why customers choose a specific shopping channel. The reality is that customers do not expect a similar shopping experience, but rather, a unified brand promise.

Creating a positive customer experience is not driven by customer engagement. Instead, it is driven by inventory availability. If there is no product to sell, there will be no customer, and hence, no customer experience. NRF 2014 was a showcase for companies ensuring that retailers can deliver products to their customers. This can be achieved through a variety of means: in-store stock, shipping from a warehouse or DC, shipping online orders from the store, transferring merchandise between stores, and buy-online pick-up in store. Managing the supply chain and flow of inventory between channels is the backbone of a true omni-channel retail experience. As channels continue to merge and evolve, and customers expect a converged brand experience, those retailers that can fulfill orders on-time and through the channel of choice will be the ones left standing.

Many retailers are integrating channels to create a unified brand promise, while simultaneously improving operational efficiencies. For example, a well-known fashion retailer is utilizing Manhattan Associates’ store inventory and fulfillment solutions to support the fulfillment of online orders from its stores. The retailer sets daily limits of “buy online, ship from store” based on the stores’ labor constraints. Also, thresholds are established by SKU to assure that store inventory remains available to support the in-store customer experience. The daily fulfillment limits are flexible and can be adjusted to accommodate changing demand patterns. A snowstorm during the recent holiday season substantially reduced foot traffic at a number of retail locations. The company responded by increasing the daily shipping of online orders from these stores, resulting in increased labor utilization and order fulfillment.

That ability to set inventory limits by channel is based on what is most commonly called a distributed order management (DOM) solution. IBM and Manhattan Associates have been particularly active in selling these solutions to the retail industry.

But JDA used NRF to talk about their offering in this area as well. The JDA solution leverages their history around providing profitable to promise solutions in B2B settings. This solution, however, has a distinctly retail flavor. If you are selling goods through multiple channels, and shortages occur, a retailer needs to reserve supply for channel, key customers, and promotions. This is done with allocation logic. My colleague Steve Banker had been given a detailed presentation on this solution and mentioned that the JDA allocation engine was a particularly flexible and powerful tool for determining how constrained supply is distributed throughout the allocation hierarchy and that the solution offered nice cost to serve capabilities.

Brick and mortar retailers are mainly focused on brand today, integrating their in-store and online channels to offer consumers a more seamless shopping experience. In subsequent phases of omni-channel, there will be more emphasis on tuning the logistics model to drive better profitability.

(Manhattan Associates and JDA are Logistics Viewpoints sponsors).

The Evolution of Omni-Channel Logistics

Retail | By Steve Banker • 01/28/2013

Traditional retailers were fairly slow to wake up to the huge threat posed by Amazon. But my recent visit to “Retail’s BIG Show,” put on by the National Retail Federation (NRF), convinces me that they are now wide awake.

One way bricks and mortar retailers have responded to Amazon and other e-retailers is by turning their stores into more of an asset with omni-channel commerce. Omni-channel is based on providing consumers with a more seamless shopping experience by better leveraging both stores and the e-commerce channels. The idea is that a customer should be able to go to a store, see something they like, and order it for home delivery. Or order the item online and pick it up at a store. The same sorts of permutations apply to returns.

Retailers can use new tools to decide whether it makes more sense to deliver an online order from one of their e-commerce warehouses or directly from a store. It will cost more in labor to deliver from the store, but perhaps less in transportation. Further, if it becomes clear that a store has too much of a particular type of inventory, it makes sense to deliver from the store, even if it costs more, rather than pay for transportation to move the excess inventory to another place in the supply chain where it is needed.

Manhattan Associates can help retailers make these fulfillment location decisions based upon a distributed order management (DOM) solution. Manhattan’s DOM solution provides visibility to all network inventory – e-commerce and store –and then provides rules-based decision making on where to fulfill from. JDA addresses the same problem from an optimization perspective. The company told me at NRF that its solution makes these channel/facility fulfillment decisions by instantaneously and optimally trading off the costs of labor, transportation, and inventory.

But a prerequisite of successfully deciding whether an order should be shipped from a store or a DC is inventory accuracy. In a warehouse using a warehouse management system (WMS), a cycle count should show at least 99.9 percent inventory accuracy. A cycle count not only proves that a company has the inventory it expects to have, it also shows that the inventory is in the correct slots, and that the correct number of items is located in each slot. In short, it shows that inventory has neither been stolen or misplaced.

I also saw folks from Checkpoint Systems at the NRF show. The company sells RFID and anti-theft tags (electronic article surveillance). They told me that the highest level of inventory accuracy the store floor can hope to achieve is about 96 percent, and then only through the use of item-level RFID tags. I believe this claim. It is far more difficult to prevent theft at a store than in a DC. Further, the store inventory system may be showing inventory that is really sitting in some shopper’s cart prior to check out.

If you were trying to do in-store fulfillment, a store associate would find at least four percent of the time that the inventory is not on the store floor. That is four unhappy customers out of every 100, which is too high, especially when you consider an unhappy customer may choose to take their business elsewhere in the future.

In the age of Internet retailing and fickle shoppers, I believe we may be greatly overestimating the lifetime value of a customer. But whatever the true lifetime value of a customer is, poor delivery capabilities will adversely affect it.

But inventory accuracy is not the whole problem for store floor fulfillment of online orders. Inventory accuracy does not mean location accuracy. Shoppers pull stuff off the shelf and put it back helter skelter. Therefore, you could achieve a high degree of inventory accuracy and still be unable to fulfill orders in a timely manner.

Item-level RFID will at least permit the items to be found. RFID scanners can be put in Geiger counter mode where they beep louder as you get close to the SKU whose number you have entered into the reader. But item-level RFID is expensive. Right now the only product categories it makes sense for is high-margin apparel and maybe electronics.

There are also customer experience and store management cultural issues that provide arguments against doing online fulfillment on the store floor.

There is likely to be a fair bit of experimentation around how to best practice in-store fulfillment. There will probably not be a one size fits all solution. But I believe most retailers will discover that if they want to use store associates to fulfill Internet orders, they will need to do it in specially designed backrooms, not on the store floor!

(Note: JDA and Manhattan Associates are Logistics Viewpoints sponsors)

This Week in Logistics News (January 14-18, 2013)

Mobile Technologies | By Adrian Gonzalez • 01/18/2013

Countless: the number of double spaces after periods I’ve had to delete as an editor over the years. Last weekend, Slate republished a much discussed article from two years ago titled, “Space Invaders: Why You Should Never, Ever Use Two Spaces After a Period.” If you are guilty of this writing crime, please read the article, and in the spirit of Lean and continuous improvement, stop adding that extra space.

In this week’s news…

SAP reported record revenues for 2012. Non-IFRS total revenue exceeded €16 billion, a 14 percent increase from 2011, and Non-IFRS software and software-related service revenue grew 17 percent year-on-year to €13.2 billion. The record results were driven by SAP’s HANA, Mobile, and Cloud segments. SAP HANA revenues reached almost €200 million in Q4 2012 (and almost €400 million for the full year), while the company’s mobile business contributed more than €220 million to software revenue for the year, and 12 month new and upsell subscription billings for cloud applications increased nineteenfold.

Other software and technology vendors will report year-end results in the days ahead, and we’ll see that 2012 will turn out to be a very positive year for most software vendors. Simply put, in the face of still uncertain economic conditions, companies continued to invest in technology as a way to control costs, increase productivity, and most encouragingly, to drive business process innovation. And the trend should continue in 2013, with investments in Big Data, Mobile, Social, and Cloud leading the way.

Speaking of mobile and cloud, SAP and JDA made announcements this week related to these areas, with a focus on retail. SAP announced SAP® Customer Loyalty, SAP® On-Shelf Availability Manager and SAP® Retail Store Ops Associate mobile apps at the NRF 102nd Annual Convention & EXPO. Here is an excerpt from the press release about SAP® On-Shelf Availability Manager:

SAP On-Shelf Availability monitors sales transactions, detects discrepancies in sales patterns that might relate to product availability on shelf and issues warning. Available now on iPad, the mobile app for store associates provides different departments with user-friendly tools to respond to on-shelf availability issues in a timely fashion and correct the issue…Retailers can:

Have real-time insight into on-shelf availability on a weekly, daily and hourly basis, as well as into processing status and processing time
Monitor sales transactions; detect discrepancy in sales patterns that might relate to the product availability on shelf; and issue warnings
List products that might be out of stock

Meanwhile, JDA announced the release of JDA® Customer Engagement Cloud, “a single solution that addresses omni-channel commerce and optimization logic in real time.” The solution includes several key capabilities, including Omni-Channel Commerce, In-Store Mobility, Profitable Promising, Allocated Inventory Optimization, Customer Order Management, and Omni-Channel Price Execution (see the press release for more details).

As I’ve said before, supply chain and logistics software vendors are showing a lot of love to the retail industry. And to be fair, so are analysts and the press. I hope this year we share the love and the spotlight with B2B industries too. Their supply chain and logistics challenges and opportunities might not be as sexy as those in consumer-centric industries, but they are just as important.

Walmart made the headlines this week by announcing that it will buy more US-made products in the years ahead. Here are some excerpts from the press release:

On domestic sourcing, Walmart and Sam’s Club will buy an additional $50 billion in U.S. products over the next 10 years. The company will grow U.S. manufacturing on two fronts: by increasing what it already buys here – in categories like sporting goods, apparel basics, storage products, games, and paper products, and by helping to onshore U.S. production in high potential areas like textiles, furniture and higher-end appliances.

To help achieve this commitment, Walmart has created a senior team within the company to lead this effort and it will sign longer term purchase agreements to give suppliers more certainty [emphasis mine].

The scope of this initiative, along with the stated intention to sign longer term agreements with suppliers, makes it an ideal opportunity for Walmart to explore Vested partnerships with its suppliers. There is no way, in my opinion, that suppliers are going to make the necessary investments in capital and resources to build or expand their manufacturing operations in the United States unless they and Walmart take a more Vested or collaborative approach to working together (see “Vested Outsourcing: The ‘Mind Shift’ is Finally Happening” and my recent video interview with Kate Vitasek and Karl Manrodt).

Walmart also announced that it plans to hire over 100,000 veterans during the next five years. The news reminded me of the guest commentary we published last April by Kevin O’Meara: “The Greatest Talent Pool Available – America’s Veterans.”

Finally, with Dell’s market cap down to $19 billion from more than $100 billion several years ago, the company is considering going private. According to the Wall Street Journal, “Silver Lake Partners was in discussions Tuesday with Dell for a leveraged buyout at around $13 to $14 a share, according to a person familiar with the matter.” Steve Banker at ARC commented, “The company once lauded for supply chain excellence is now not doing so well on Wall Street. This is a cautionary tale about a company with a supply chain that provided incredible differentiation at a certain point in the market’s evolution, but now has the wrong kind of supply chain as buying behaviors have changed.”

Have a great weekend!

Song of the Week: “Cities in Dust” by Siouxsie and the Banshees

(Note: JDA and SAP are Logistics Viewpoints sponsors)

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