The biggest news this week was Hurricane Sandy, which left a path of flooding, power outages, and destruction along the east coast. Our thoughts and prayers are with everyone affected by the storm, especially those hardest hit in New Jersey and New York City. The storm also disrupted logistics operations, including the closing of local airports and the Port of New York/New Jersey. Events like these are another reminder of why companies need to prioritize and invest more in supply chain risk management.

In other news…

• JDA and RedPrairie to Merge, Establishing Global Enterprise Software Company that will Provide Customers Comprehensive Planning and Execution Solutions
• JDA Software Announces Third Quarter 2012 Results
• Con-way Inc. Reports 2012 Third Quarter Results
• SAP Redefines Enterprise Social Software with New Cloud Offerings
• Photo Release — Manhattan Associates Announces Mobile Shipment Manager for Manhattan SCALE(TM) and Windows 8
• FedEx Freight Debuts New LNG Tractors in Dallas
• U.S. Postal Service Plans To Launch Experimental Same-Day Delivery Service In November (TechCrunch)

Earlier this week, rumors started circulating online that JDA Software was on the block. Yesterday, those rumors were confirmed with the official announcement that RedPrairie and JDA Software are merging. According to the press release, “entities affiliated with RedPrairie,” namely New Mountain Capital, “will effect a cash tender offer to acquire all outstanding shares of JDA common stock for $45 per share, [which] represents a 33 percent premium to JDA’s stock price on October 26, 2012…The transaction has a total enterprise value of approximately $1.9 billion.” The new combined company will be private, with JDA’s current president and CEO, Hamish Brewer, serving as CEO. RedPrairie’s CEO, Michael Mayoras, will remain on the board.

The solution footprints of both companies are mostly complementary, with JDA’s strength in supply chain planning, merchandising and pricing solutions, and RedPrairie’s strength in warehousing, workforce management, store operations and e-commerce. The biggest area of overlap is transportation management. JDA has a stronger market presence and larger customer base in TMS than RedPrairie, thanks to its previous acquisitions of Manugistics and i2 Technologies, so I suspect the new company will position JDA’s solution as the primary offering moving forward.

I’m still thinking through what this merger means for both companies, their customers and employees, and the market in general, but here are some quick thoughts and observations:

• A lot of the buzz and hype generated by supply chain vendors these days is centered on CPG-Retail, with discussions about omnichannel, mobile, and social media leading the way. If you’re a B2B company, say in the paper or chemical industry, you’re probably not feeling much love these days, at least from the marketing folks. Let’s hope the R&D folks don’t forget about you too. And to be fair, the same goes for analysts and industry watchers like us.
• I wonder if SAP and Oracle are smiling today. Best-of-breed providers used to criticize them for their single-platform strategy and value proposition (and their lack of supply chain and logistics functionality, at least historically), but now these best-of-breeds are migrating toward a similar single-platform strategy and value proposition. This merger, at least in part, is a response to the shifts taking place in the competitive landscape and the ongoing desire by customers, especially large companies, to simplify their IT landscape.
• As I’ve argued in the past, software alone is not enough. You can have a best-in-class enterprise software platform within your four walls, but without an adequate B2B connectivity network and associated capabilities, you can’t effectively manage end-to-end supply chain processes. This is an area that RedPrairie and JDA still need to address.
• JDA’s revenues are down 2 percent this year through the end of September compared to the first nine months of 2011. Software and subscription revenue declined 18 percent in Q3 2012 compared to last year. In contrast, peer companies like Manhattan Associates, SAP, Oracle, and Descartes Systems Group have all grown their revenues this year. This merger won’t help sales in the near term, as customers wait for more clarity and information about what this means to them, but going private and taking Wall Street off its back could help down the road.

Here are some initial thoughts from Steve Banker at ARC:

Product integration is always difficult in these situations. When a new common product set is achieved, moving to the new solution is more akin to a brand new implementation than an upgrade for existing customers. That said, JDA has a lot of experience in this area. The JDA/i2 integration went quicker and smoother than I had expected.

 

After years of talking about eCommerce, eFulfillment, and Omnichannel, I think the time is now for bringing a more holistic solution set to market. Home Depot had a conference call for financial analysts in June where the sense of urgency for big retailers in this area came through. The biggest product holes are that neither RedPrairie or JDA has a Demand Signal Repository, although JDA has argued the DSR matters less than the analytics that ride on top of the DSR. And omnichannel requires much better store level inventory accuracy. Will retailers buy what in effect is a light WMS for the store? RedPrairie has such a solution but I don’t sense that retailers have been buying that type of solution.

In other news, Con-way reported Q3 2012 results this week. Revenue increased 2.0 percent and operating income declined 9.7 percent in the quarter compared to Q3 2011. Here are some excerpts from the press release:

Commenting on the quarter, Douglas W. Stotlar, Con-way’s President and CEO said, “Consolidated third quarter results for 2012 fell short of our expectations, due largely to higher-than-anticipated employee benefit expense, primarily healthcare, at Con-way Freight, and technology costs incurred in support of our three-year improvement roadmap.” Stotlar added that volume trends so far in the fourth quarter at Con-way Freight have declined compared to last year. “Tonnage levels in October, prior to the effects of Hurricane Sandy, were about three percent below those of October 2011, so we expect the fourth quarter of 2012 to be challenging as well.”

 

Menlo Worldwide Logistics…maintained consistent growth in revenues and net revenues but saw a modest decline in operating income. “Gains in core transportation management services were somewhat offset by lower warehouse management revenues,” Stotlar said. “Menlo continued to benefit from its international operations and their pipeline of opportunities.”

On the technology front, social media and mobile solutions continue to dominate the headlines. SAP introduced two new social offerings: the SAP® Jam social software platform and the SAP® Social OnDemand solution. Here are some excerpts from the press release:

The design principle behind SAP Jam was to create a unified environment in which users can easily connect with colleagues and collaborate around data, content and processes right where they are working, to more effectively solve problems, make decisions and drive results…The platform combines the best parts of SuccessFactors Jam for enterprise social networking, the SAP® StreamWork® application for social workflow and problem-solving as well as new capabilities.

 

SAP Social OnDemand helps marketing organizations take action on insight by simplifying the process of prioritizing and engaging on social media and honing in on key trends. With real-time monitoring, routing and escalation, it helps ensure that critical conversations are not missed and that responses are appropriate, based on a poster’s profile that includes social influence metrics as well as customer data from other enterprise systems.

Meanwhile, Manhattan Associates announced the development of Mobile Shipment Manager, an application for Manhattan SCALE available on Windows 8 and Windows RT. “Mobile Shipment Manager, the latest creation from Manhattan Mobility Labs, provides immediate visibility into supply chain shipments and allows one-touch management access via any Windows 8-enabled device.” The press release includes the following quote from Jim Casselman, chief information officer, Buffalo Hospital Supply: “An application like this will enable me to re-route shipments as needed, execute rush deliveries and immediately remedy any challenges from a mobile device while integrated to Manhattan SCALE. Being able to make key supply chain decisions anywhere is invaluable to me and my operations team.”

Finally, and shifting gears from logistics, yesterday was Type 1 Diabetes Day (T1D), an initiative launched by JDRF to raise awareness about this chronic disease that affects millions of children and adults, including my oldest daughter who was diagnosed last year at age 11. Unfortunately, Type 1 Diabetes (which is not the same as the more common Type 2) is on the rise for reasons that aren’t clear to researchers. This not only raises the stakes for finding a cure and improving treatments, but also for educating the public about this disease. As I’ve learned this past year, many people (like I was until a year ago) know very little about T1D — or worse, they have incorrect information. So, instead of providing a song of the week, please take a few minutes to watch this informative “Type 1 Diabetes 101” video featuring kids providing an overview of the disease, its symptoms, and how it impacts their daily lives.

(Note: Con-way, JDA Software, Descartes Systems Group, Manhattan Associates, Oracle, RedPrairie, and SAP are ARC clients and/or Logistics Viewpoints sponsors).