omni-channel Archives

Manhattan Associates Prioritizes Investments in Omni-channel

Omni-channel logistics | By Steve Banker • 05/15/2017

Manhattan Associates’ is one of the leading suppliers of supply chain software solutions. They had their user conference last week in Las Vegas. More than the other large supply chain solution providers, they have prioritized their product development investments on supporting omni-channel fulfillment. Their conference showed that this continues to be true.

By far the biggest news was the release of a Cloud-based solution for their retail set of solutions. This suite – Active Omni – includes their distributed order-management, store inventory and fulfillment, point of sales, and call center solutions.

Distributed order management is at the heart of an omni-channel strategy. Cloud solutions allow for quicker implementations and make upgrades virtually a non-event. But their approach to Cloud is somewhat different from other supply chain vendors. Other vendors offer cloud solutions that do not allow any customization to their base code or they allow “enhancements” but heartily discourage them. Manhattan is offering a Cloud solution built not only to support enhancements, but based on the belief that almost all customers will want them!

In a meeting with industry analysts, Manhattan’s CEO Eddie Capel explained they are not going to Cloud as part of a strategy to make Wall Street happy. This two-year journey to get to a cloud-native solution was to solve their client’s pain around upgrades. Things in the omni-channel world are moving very fast, and “we want our most innovative customers to be able to use our newest functionality.” Further, retailer’s all have their own “secret sauce.” “We believe the first 85 percent” of the omni-channel code base “will be Manhattan. But the last 15 percent will be customer extensions.”

Manhattan Prioritizes Investments in Omnichannel — Eddie Capel, CEO of Manhattan Associates

Their store fulfillment solution is, for a supply chain guy, a bit counter intuitive. As a logistics guy, my natural reaction to the horrible state of inventory accuracy at the store level is to think that stores should be doing more barcode scans of store inventory. But that is not a tactic that the great majority of their customers want to pursue. Some of their customers consider this degree of scanning cost prohibitive. For other’s it is a cultural issue; the belief that a store associates main duty is to assist customers in the store. Manhattan has addressed this with functionality that can be used to penalize stores that have a poor record of being able to fulfill omni-channel orders.

Manhattan’s main solution by revenues continues to be warehouse management. Their WMS continues to make investments to support omni-channel logistics. They have built new waveless functionality that drops ecommerce orders to the floor on an ongoing basis rather than in waves. Their ecommerce order dropping considers the service level requirements, both the proximity and availability of labor to slots containing SKUs destined to fulfill ecommerce orders, and whether there is sufficient capacity in the material handling equipment to handle new orders. They have also improved their put wall functionality and the user interface that supports a returns station.

Manhattan Associates is not as well known for their demand planning and inventory optimization solutions. But these solutions have functionality to support omni-channel that I can’t recall any other supply chain supplier saying that they had. One core concept is that of “point of demand.” If an order comes in that can most economically be fulfilled at the warehouse, but ends up being fulfilled from a store because the warehouse is out of that inventory, the true point of demand that needs to be captured to maximize forecast accuracy is the warehouse.

Manhattan’s Omni Active suite, which includes point of sale, makes it easier for their forecasting solution to ingest this kind of data. When Manhattan acquired a POS solution in 2014, I saw the new POS as a “nice to have” rather than a “must have” kind of addition to their suite. Now the POS is in the same code base and architecture as the rest of the suite. Having seen the product demos, it’s importance is clear.

The demand/inventory solution also has interesting functionality to support lost sales analytics. Understanding lost sales is a devilishly difficult problem. Manhattan has a methodology to compare a store forecast to store sales to approximate lost sales. This is interesting enough functionality, and difficult to explain succinctly, that I may write a separate article on this at some point.

In conclusion, when I think omni-channel technology, Manhattan Associates is the first supplier that comes to my mind.

HighJump Elevates their Product Development

Omni-channel logistics | By Steve Banker • 03/20/2017

HighJump’s user conference – Elevate – was last week in Orlando. I heard what I expect to hear at this conference, happy Warehouse Advantage customers who are unusually effusive about their implementation support and ongoing maintenance. And Advantage customers continue to say that one of the primary reasons they selected the solution was its unparalleled flexibility. Warehouse Advantage is their top tier warehouse management system (WMS).

HighJump offers more than WMS. The company offers transportation management, supplier management, ecommerce front ends, direct store delivery, and other solutions as well. But I focused on user presentations featuring WMS, their leading product category.

But I heard something new from HighJump at this conference as well; cutting edge product development. Their CEO, Mike Cornell, quoted the business executive Jack Welch, “You’ve got to eat while you dream. You’ve got to deliver on short-range commitments, while you develop a long-range strategy and vision and implement it.”

HighJump CEO Mike Cornell Speaks at Elevate

Traditionally, HighJump was better at the first. The company continued to enhance their current products, and their customers were happy, but they were not known for tackling next generation product development. But the company is at a point where they can stretch; HighJump is doing well financially and they have the key technological building blocks in place.

They are developing a product called Unified Commerce Hub. Their executives were careful not to use the phrase distributed order management (DOM) in describing the product. But in an invitation only session, they described the product in detail; this product is clearly a DOM.

The place where increasing complexity is most apparent in today’s supply chains is the rise of omni-channel fulfillment, the attempt to reach customers across all channels in a uniform manner. This is most obvious in the retail sector, where the “brick and mortar” retailers have been losing market share steadily to ecommerce players. The retailers are attempting to turn their stores into resources by making them places where inventory can be shipped to customers, goods may be picked up, or returns made. But it is not just the retail sector facing these kinds of pressures, consumer goods companies and business-to-business companies are also facing increasing channel and customer complexity.

But engaging in omni-channel efficiently and profitably requires a distributed order management solution. This application that has been difficult to implement and extremely costly. A DOM must capture inventory statuses across the different inventory locations; allocate inventory to different customers, products, and channels based on a wide variety of rules; and then track the status of orders across their lifecycle. The biggest problem appears to be that many DOMs don’t have sufficient flexibility and configurability to deal with the plethora of fulfillment flow paths to the customer.

Besides describing some functionality that goes beyond what other DOM suppliers are providing, and what is an intelligent and scalable architecture for this product, what excites me about HighJump is that they will leverage their workflow modeling engine to provide the flexibility needed for a product that needs to deal with a huge range of process flow paths.

The company was careful not to say when this product would be generally available, but based on their description of the pieces already built, I’d guess by the end of the year.

And of course, the proof is in the pudding. They need to build it out, thoroughly test it, and get a couple of customers up who can serve as references. But my instinct is this could be a huge product for HighJump.

The Uberization of Last Mile Freight

Logistics Trends | By Steve Banker • 04/18/2016

Uber has disrupted the taxi industry. Can anyone copy the Uber model and disrupt the freight market? That question is generating a great deal of discussion among logistics executives with the “last mile” freight market generating the most buzz.

Uber Disrupts the Taxi Industry

Transporting goods long distances can be done far more cost efficiently than the delivery of the last few miles when goods arrive in congested metropolitan areas. Last mile delivery has taken on added urgency as traditional retailers have embraced omni-channel capabilities as a way to compete with ecommerce giants like Amazon. Omni-channel fulfillment, which spans a variety of delivery flow paths – store to home, delivery from warehouse, etc. – is all about last mile.

Uber has definitely created buzz. The company has grown incredibly quickly and has a very high valuation. Founded in 2009, it is reported that the company may now be worth $50 billion.

Uber’s secret? In is easy to use, often cheaper than taxis, and is generally a more pleasant experience than a taxi ride. If you are live in a metro area in the U.S., it may be hard to believe that there are people that don’t know about Uber. But Uber has not fully penetrated smaller towns in the U.S., and while Uber is a global company, it is not as widely available in other regions of the world as it is in North America.

So for non-Uber users a quick tutorial is in order. Uber is the tech company that developed an easy to use app that can be downloaded to smartphones. Using this app a person can order a ride. Uber is designed to leverage “the sharing economy.” In logistics we call this a “non-asset based model.” Both of these terms mean that Uber does not own any vehicles. Rather Uber drivers use their own vehicles to taxi passengers to their destination.

Carriers who own logistics assets and make last mile deliveries, like FedEx and UPS, are not competing based upon an Uber style business model. Nor is Amazon, who steeply subsidizes their deliveries, but still makes money based upon retail sales and other nonlogistics business lines.

Dick Metzler the Chief Marketing Officer at uShip, a sharing economy-based company that makes deliveries of vehicles, furniture and other bulky goods to consumers, is emphatic that the Uber model will not work for “on demand” parcel or food delivered in 1-2 hours.

“More volume just makes it worse.” Dick’s work history includes time at FedEx Freight, DHL Express and APL Logistics , so Mr. Metzler has a strong understanding of freight industry economics. “What works is route density; short miles between stops. One to two hour deliveries destroys the ability of a carrier to consolidate a route. There is lots of dead venture capital dollars chasing the wrong stuff. If you back off to one day deliveries, there is at least some prospect at getting to delivery density. But consumers don’t want one day. And they want free deliveries.”

In contrast, Dave Mount, a partner in Kleiner Perkins’ Green Growth Fund, believes there could be an Uber type play in last mile. Kleiner Perkins, incidentally, is an investor at UShip and that investment is “doing well.” According to Mr. Mount, “you would need participation of existing local fleets to create the necessary density. If a plumber or service technician is already going to a certain neighborhood – why not pick up omni-channel order for delivery” and make some extra money.

But Mr. Mount agrees that ecommerce built on retailers doing “same day free shipments as a cost of doing business” has very “challenging economics.” “Plus, the return rates for ecommerce are high” and this puts even more pressure on margins. “Building Uber on top of ecommerce will only work in the long term if ecommerce retailers are making enough profit per transaction to comfortably subsidize delivery cost.”

Mr. Metzler adds, “venture capital dollars are shielding (consumers) from the real costs of delivery. The chickens will come home to roost.”

A key question is whether Uber fully commits to last mile deliveries. Uber is exploring this market. They have launched a service called UberRUSH in San Francisco, Chicago, and New York. UberRUSH integrates with ecommerce markets like Shopify and Clover so deliveries can be booked at the time of purchase.

“Uber has critical mass,” Mr. Metzler points out. “They have a shot at profitable parcel deliveries if delivered on a same day basis. It is also an advantage that this would be incremental to their core business.”

In contrast, Mr. Metzler says, the “food delivery companies are choking. Instacart reshaped its relationships with restaurants. Sidecar went belly up.” These companies also used the parcel and passenger model, but they lacked critical mass.

In conclusion, making money by investing in Uber type last mile companies won’t be easy. What about applying an Uber style business model to other freight markets? That, it appears, is the more relevant question.

ARC’s Supply Chain Predictions for 2015: Hits and Misses

Logistics Trends | By Steve Banker • 12/07/2015

At the beginning of the year the ARC supply chain team made supply chain predictions for 2015. This article circles back and reports on how we did.

Very often any predictions you can make for a one year period are not about a brand new thing that will occur, the prediction is really part of a larger megatrend that has not only been going on for some time but will also continue for many years to come.

The megatrends affecting supply chain management include:

The goal of the article was to produce forecasts specific enough so that their validity could actually be checked at the end of the year. We made some specific predictions surrounding these megatrends.

Robotics

The big player in this space was KIVA, which was acquired by Amazon and then stopped supporting the bots they had already sold.

We predicted that that in 2015 we will see new types of mobile robots for the warehouse emerge from other suppliers.

Hit: Grey Orange, a India-based robotics manufacturing company, is producing warehouse robots that look much like Kiva bots. Fetch Robotics has produced a system with two robots that work together. Fetch is a bot with a single arm that ends in a two-fingered gripper that can pick boxes off warehouse shelves and pass them to its sidekick, Freight. Both bots have a wheeled base. Once the order has been assembled, Freight can carry the goods to a shipping station while Freight continues to pick to the next Freight bot that has just arrived. There are other suppliers we have not mentioned here, and still others we know of that are poised to enter the market.

The Industrial Internet of Things

We’ve made the argument before that the Internet of Things (IoT) is nothing new in logistics. In the logistics space, for example, we’ve been taking RF scans and using that data to improve warehouse processes since at least 1975. But IoT is getting a lot of attention, and new investors in this space should mean new solutions.

We predicted we will continue to hear of new IIoT applications emerging, ways to use remote sensor data to improve supply chain business processes, that never occurred to us.

Hit: One interesting example we heard of how IoT and modeling can be combined comes from last year’s Long Beach labor strikes. As shippers shifted volume to other ports they found other shippers were doing the same. Delays by port were changing on a day by day basis. What if models of port throughput were used and combined with AIS Vessel tracking data (a form of sensor data)? If the model understood how many ships were sitting outside a port, how many were headed to that port, the relative sizes of those ships, and the throughput capacity of the port, shippers could have made much better port scheduling decisions.

Big Data

IoT sensors are going to generate Big Data. Big data volumes are going to continue to grow exponentially. Solutions are needed to handle not just the growing volume of data, but also the velocity and variety of data. Complex event processing (CEP) technologies can help to tame data velocity. CEP technologies have been traditionally associated with financial trading.

We predicted that this is the year we will hear of good applications for CEP in the supply chain.

Hit: Actually, we stole this prediction from our colleague David White, who is ARC’s expert on analytics. We circled back to David and asked if he had seen good applications for CEP in the supply chain. He pointed us toward an article called Shipping logistics with event processing.

Omni-channel

Omni-channel investments by retailers have been all over the news. ARC’s research shows that distributed order management (DOM) is one of two key technologies that retailers need, but don’t have, to ramp up their omni-channel capabilities. But DOM is a complex solution, it can’t be easy to implement. In all our years as analysts, the ARC supply chain team has heard only one speech by a retailer on how their omni-channel implementation improved their multi-channel capabilities, and this speech talked about the implementation at a very high level.

We predicted that in 2015 I would finally see a good presentation by a retailer that goes into depth on the costs, benefits, and difficulties associated with a DOM implementation.

Miss: We still have not seen that presentation.

Relentless Competition

The most brutal competition is currently occurring in the shale oil patch where the cost of a barrel of oil plummeted. And yet, from a supply chain perspective, this is among the worst supply chains in North America. Further, shale oil producer’s key partners, the oilfield service companies, also run terrible supply chains. In neither industry are you likely to find practitioners talking about their Sales & Operations Planning processes.

We predict that we will finally see Shale Oil companies and Oilfield Services companies explaining to Wall Street how they are implementing a Sales & Operations Planning to improve operations.

Miss: A Google search fails to find any evidence that this is true. However, the need for S&OP in Shale Oil is being talked about much more by leading consultants than it was a year ago.

The ARC supply chain team will be back with a new set of logistics and supply chain predictions for 2016 in a few weeks.

Sneak Peek: The Omni-Channel Last Mile Dilemma

Omni-channel logistics | By Chris Cunnane • 10/07/2015

Omni-channel is all about the convergence of channels to provide a unified brand experience for the customer. Each channel has its own experiences, advantages, and challenges. The key is to connect the business processes and technology to create a holistic experience. One aspect of fulfilling the unified brand experience is to maintain control over the customer experience at all stages in the buying lifecycle: before, during, and after the sale. The last mile poses a unique logistical headache as part of this lifecycle. I have written multiple articles here about how retailers are treating the last mile, and what new technologies, business processes, and approaches they are taking.

I also recently launched an updated survey to build on the 2014 Omni-Channel Fulfillment strategic report that I wrote with ARC colleague and Logistics Viewpoints contributor Clint Reiser. Once again, I partnered with the folks over at DC Velocity to create and distribute the survey. The survey examined the overall fulfillment process, starting with channels of operation, warehouse logistics, fulfillment technologies, and last mile options. The new report will be ready later this month, and DC velocity will run their feature article in November. For now, however, I’d like to share a quick sneak peak of last mile processes from the survey. There are three basic categories of adoption: commonly used, plan to use, and no plans to use.

Commonly used: survey respondents indicated three options for supporting last mile deliveries at much higher rates, meaning that 50% or more of respondents are currently using these methods – courier delivery services (84.2%), drop shipped by partners (60.8%), and 3PL delivery partners (50%). The most commonly used method, not surprisingly, is courier delivery service (FedEx, UPS, etc.). These services were built to deliver small packages to your doorstep in a short timeframe. They are also affordable for small businesses to use, as well as retail behemoths. Drop shipments are used by retailers to reduce their inventory carrying costs. Instead, the order is sent directly to the manufacturer for delivery. This is especially common for large appliances and shipments. Finally, many companies are outsourcing their last mile deliveries to a 3PL delivery partner. This partner may control a private fleet or handle the company’s freight.
Plan to use: survey respondents surprised me a little bit with this one. Crowdsourced deliveries are something that are gaining steam in many places, but the survey respondents indicated they are not currently using them. However, 27.7% have indicated plans to include them in future plans. Companies like Deliv and Instacart are two models that have gained traction in the retail and grocery segment. Even though they already have high adoption rates, drop shipments (19.6%) and 3PL delivery partners (18%) are both showing strong planned adoption. For the top three (courier, drop shipments, and 3PL), 70% or more of respondents plan to continue to use or introduce them moving forward.
No plans: these methods are a mixed bag. The fact that 72% of respondents do not intend to use crowdsourced delivery models seems shortsighted to me. I think the other 28% are heading in the right direction. And despite all the headlines and press about Amazon testing drones, and the fight over regulations, our survey respondents have shown that there is not a sense of urgency for drones to become commonplace. In fact, 97.9% of respondents do not plan to use drones. This is one figure I’ll keep a close eye on over the next couple of years. There is still a lot of work to be done in the commercial drone space; once that work is done, we’ll have to see what happens.

That’s all for today’s sneak peak. Please keep an eye out for the full strategic report later this month as well as the summary article in DC Velocity this November.

Walmart Executives discuss their Omni-channel Logistics Initiatives

Omni-channel logistics | By Steve Banker • 06/22/2015

Kevin X. Jones, the Vice President of Inbound Transportation at Walmart, and Sheila Taylor, the Vice President of Logistics at Sam’s Club, discussed Walmart’s approach to omni-channel logistics at the eft (eyefortransport) conference last week.

Walmart’s ultimate goal is to understand their customers’ expectations, and yet be able to meet these expectations in a profitable manner. “We are expected to make a profit,” Kevin said.

The task is not trivial. In the first quarter of 2015 the company had $115 billion in sales, with 17 percent growth in ecommerce sales. The world’s biggest retailer has 260 million customers across their channels, which they serve with a combination of their own fleet and third party carriers.

In the US, their fleet is primarily focused on outbound moves. Walmart ships 6.3 billion cases annually out of 23 distribution centers (some run by 3PL partners) using roughly 6,000 tractors and 58,000 trailers on which they drive over one billion miles. Walmart employs over 12,000 associates in the transportation department.

Sheila talked about putting the customer in charge. Customers don’t want to do as much driving. Walmart’s customers have decreased their trip distance by 11 percent, partially based on Walmart opening more stores, particularly smaller format stores in more urban settings, and partially based on ecommerce sales.

There has been growth in mobile, up to 70 percent of customers use smartphones to shop. Walmart customers do come into the store and touch and feel products and then buy online, hopefully from Walmart.

Customers want goods fast and free. 22 percent of customers want to buy online and pick those goods up somewhere – at a store, or in a locker closer to their residence. And the pickup destinations aren’t easy to forecast. Customers are starting to buy goods for vacations, for example, and having them sent forward to the vacation destination. 65 percent of customers want to have items consolidated in fewer packages, and 63 percent of customers want to schedule a day and time for delivery.

While the demands on logistics are increasing, the pressure to move goods efficiently remains. Trailer utilization remains important despite the growth in each picking and shipping. Walmart executives know they don’t do a good enough job in inventory management at the store. The store level inventory accuracy must increase to facilitate new omni-channel flow paths.

The company knows they can’t build separate networks to support the different flow paths to the customers. They will need to move to a dynamic distribution model where goods don’t always flow from DCs to stores; or ecommerce warehouses to homes. The company will need to support new flow paths where goods may ship from a retail DC to a home; or an ecommerce warehouse to a store; or goods may flow to new, more customer centric, omni-channel formats not even in existence yet.

Walmart knows they don’t know how to do dynamic distribution yet; they will need help from 3PL partners and suppliers to move to this new model. They will need to continue to do pilots and experiments to learn what works. They have experimented with home delivery of groceries and grocery store pickup in Phoenix, Denver, and San Jose.

And in Phoenix, the retailer has began testing off-site pickup with a delivery truck parking in local business centers for two hours each week. The temperature controlled truck is segmented to keep frozen foods, refrigerated foods and items at room temperature. Walmart coordinates with area businesses to determine the appropriate times to park the truck at the mobile pickup site. At the site, customers pull up and are treated to a bottled water and snack while their online grocery order is retrieved from the truck and loaded into the customer’s car.

But Kevin said that when an experiment works, when they learn the costs and prove they can make money, Walmart is capable of scaling very quickly. Mr. Jones pointed to the example of neighborhood markets. For years they struggled to make money with these formats, when they figured out how to make a profit with this format they build 300 of these stores in the second half of the year. None of this was in the strategic plan at the beginning of the year.

While there is much work to do to improve their omni-channel capabilities, there have also been wins. Sheila pointed out that the integration between the ecommerce teams and store merchandizing is improving. The ecommerce team is doing a better job of giving their brick and mortar colleagues a head’s up when a particular SKU is selling extremely well. And the ecommerce and store procurement teams are talking more and doing a better job of leveraging their joint spend.

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