Logistics Viewpoints

A complete analysis of logistics trends, technologies, and services

Cloud-Native WMS: Key Characteristics and Considerations

Cloud/Software-as-a-Service | By •

cloud-native wmsConsumer and enterprise software has gone through a significant evolution over the last five years. Consumers have reached a point where software as a service (SaaS) has become an imperceptible norm. Our use of Microsoft® Office products has silently changed to Microsoft® 365, which is provided as a service. Human resources systems have slowly migrated to service providers like Workday. And at home, we utilize an entire suite of Google, Apple, and other software products – all delivered as a service. Indeed, consumers rarely pay upfront to license software these days.

In the logistics and distribution space, supply chain-dependent enterprises have also started transitioning to SaaS solutions. Supply chain execution software, such as transportation management systems, has long been a cloud-based offering. However, in the distribution center (DC), because warehouse management systems (WMS) are so critical and complex, the move to the cloud has been slow. This inertia can largely be attributed to two primary concerns about system availability and response time latency of software solutions that operate in public clouds. Many warehouse system operators imagine a SaaS WMS offering as slow and unreliable. They see an application that runs in the public cloud and assume it must take a long time when a system request is initiated in the DC before hitting the core WMS application in the cloud and routing back to the DC with the response. In reality, the transaction latency between the DC and public cloud data centers is often proving to be even less than privately managed datacenters.

As expectations and experiences with SaaS continue to evolve, it’s clear that the days when firms make significant capital allocations toward acquiring and managing software are numbered. Enterprise application users expect to pay for software based on usage. They expect to have access to the latest features as soon as they are available, and they expect software performance to adjust for fluctuating consumption rates automatically. Meeting these needs requires the development of cloud-native or born-in-the-cloud software solutions, which unlock automatic scalability, continuous product innovation, easy extensibility, and intuitive configurability.

One might assume designing a SaaS-based WMS is as simple as taking a legacy WMS, deploying it in a public cloud, wrapping it up with managed services, and re-branding the offering as SaaS WMS. But to truly understand the benefits of being a cloud-native WMS, we have to look a little deeper. There are four key considerations enterprises need to evaluate when selecting a cloud WMS solution.

  • Microservices: Traditional enterprise software is built to be a single, monolithic application. Typically, product release cycles are annual because new features are added on top of the existing monolith and require extensive testing. At a certain point, the software gets too large and unwieldy to upgrade and maintain. Microservices architecture, however, breaks down the product into individual components of functionality. As a visual, one might picture Lego bricks. Each block is independent, seamlessly integrating with the neighboring block, and is disposable or easily replaceable. Every one is separate and designed to perform a specific function. In the WMS context, receiving, putaway, allocation, picking, packing, shipping, and labor management might all be independent bricks. Software constructed in this manner unlocks significant operational advantages:
    • Scale – by automatically duplicating blocks when needed
    • Update – by deploying replacement blocks in place of old ones
    • Innovate – by adding blocks with new configurations or shapes

Designing software constructed of loosely coupled and yet self-contained functional components, or microservices, is a foundational requirement to create versionless, scalable software.

  • Single-Product Codebase and Automation: To be versionless, the software must maintain a single codebase, which must be deployed to all customers. The lead time from when the product code leaves the development pipeline and goes into production must be minimized to ensure users have access to the latest product innovations at the same time. The development and deployment processes must be tightly coupled and highly automated to ensure all customers are operating on identical product code. Why is this important? The alternative – the software vendor maintaining a codebase that is tailored to the needs of each customer – is untenable. It is similar to a bakery customizing its cupcakes to each and every customer. The labor required would be prohibitive and too costly. To maintain the integrity of the solution, all customization to accommodate unique requirements must be managed outside of the core product offering because continuous innovation cannot be achieved if multiple versions of the software are proliferated.
  • Product Customization: Because of the need for a singular codebase, SaaS providers often do not support extending or customizing the product to meet individual requirements. But in the world of distribution, no two warehouses are the same. As a result, no WMS is built to fit all sizes and shapes of DCs perfectly. Therefore, it is critical to support product extensions. By leveraging a framework for building extensions that is external to the core product, the mandate for a single codebase is protected. At the same time, extensions allow the WMS to conform to the contours of each operation and are not broken when updates are released within the codebase. Only a cloud-native WMS can provide such an extensibility framework. 
  • Ease of Use: Generally speaking, users expect software to be easy to configure and use. In the warehousing world, this gets trickier when companies have a network of distribution centers where the software is deployed. A unified approach to configuration management is vital to increasing the speed of deployment. Configuring workflows for warehouse functions must be intuitive, guided by configuration wizards to minimize startup efforts and reduce time to value significantly.

The recent COVID-19 pandemic has highlighted both the importance of supply chains and the need for enterprises to pivot and adjust logistics operations quickly. Businesses whose systems have been equipped to deal with sudden, extended, service-level stresses and situational changes are the ones who have best navigated this crisis.

The warehouse is a central component of the distribution chain. When making decisions about a WMS, supply chain and IT leaders are best served by selecting one that is resilient, flexible, never needs to be upgraded, and – most importantly – one that can deal with whatever challenge or disruption comes next.

That can only be found in a cloud-native WMS.

cloud-native wmsUdai Tennati is the Vice President of Professional Services at Manhattan Associates and leads the technical services team responsible for the enablement of Manhattan’s Warehouse Management and Order Management product suites. He is also responsible for the delivery teams working on the Manhattan Automated Testing Services. Udai has over 20 years of experience working in the Supply Chain space and specifically designing and deploying warehouse management systems in distribution centers of all sizes and shapes across the globe.

A New Approach to Supply Chain Planning Software: Try Before You Buy!

Supply Chain Planning | By •

Supply chain planning software is very expensive. For large global companies, the implementation and software fees can run well over a million dollars. Software-as-a-service (SaaS) has improved the total cost of ownership. These are often public cloud solutions, which means the solutions can’t be customized. Customization often is a major factor in implementations that are over budget and go way past the original deadline. Further, customization results in difficult upgrades. This leads many companies not to upgrade their solution and eventually the software gets stale and stops being used.

In some cases, platforms can be designed such that there are design studios that allow new algorithms and functionality to be created, integrated with the software, and the software provider than certifies that the upgrade path is still protected. Kinaxis and JDA offer these types of environments.

The other advantage of SaaS is that it is a leasing model. Your upfront payments are not nearly as big.  The cost of implementations can be more expensive than the license payment and many more times the cost of the annual SaaS fees. But if it is a failed implementation, and the software is abandoned, the cost of failure is much lower in a SaaS environment.

When SaaS is based on per user pricing, it is also possible for customers to take a solution and have a small number of users play with it in a sandbox environment before moving to a full implementation and a larger user base.

Try Before you buy

But while the SaaS era is better for customers, nothing beats a try before you buy program. Indeed, when it comes to enterprise software this is so rare it counts as radical business innovation.

Mayne Pharma Gets a Try Before You Buy Deal

Mayne Pharma is a specialty pharmaceutical company listed on the Australian stock exchange. Mayne is focused on applying its drug delivery expertise to commercialize branded and generic pharmaceuticals. Mayne Pharma provides contract development and manufacturing services to more than 100 clients worldwide. I spoke to Carl Turner, the Vice President of Supply Chain at Mayne, about their experience with Vanguard Software.

“What sold us on Vanguard,” Mr. Turner said, “is that they agreed to take Mayne’s historical data on Bills of Materials, stock keeping units, and what previous sales were” and then forecast what they thought sales would be for six to eight months.  These were monthly forecasts from Vanguard’s perspective. But for Mayne, it was not a forecast at, it was for sales that had already occurred. In short, Vanguard had a “blinded view.” Mr. Turner explained that “None of other competitors offered to do the blind test.”

Vanguard’s forecasting engine provided results that were “clearly better” than what Mayne had been able to achieve. The mean absolute percentage error (MAPE), is a common statistical measure of prediction accuracy for demand forecasting. “We saw improvements in MAPE,” Mr. Turner said. Vanguard had told Mayne what the average MAPE error was for their industry. They were able to significantly improve their forecast and get to the industry average. This was very important for Mayne because there are six month led times associated with buying critical raw materials used in the products they produce. Further, drugs have an expiration date. Drug companies don’t want to buy a product that is on the verge of expiring.

Mr. Turner does not have a precise calculation of the savings, but obsolescence, drugs that need to be thrown away because they have expired, was reduced substantially. “Those savings are in the millions,” Mr. Turner exclaimed.

The software as a service sales model is a much less risky proposition for software customers than the old software license model. The industry has become more customer centric. Further, it must be admitted, that this try before you buy program is much more suited to demand planning than supply planning. Nevertheless, kudos to Vanguard for taking customer centricity to a radical new level!

More than Software Provider, Think Partner

Guest Commentary | By •

software providerSupply chain execution is complex, and the pace of change is rapid. Which is a big reason why companies continue to turn to software as a service (SaaS) solutions to help digitize and integrate their supply chains. In today’s environment where future-proof SCE technology leads the way, it’s also important to look beyond feature-function checklists and consider the long-term value of the partnership.

Technology…and so much more

Finding a software vendor that understands your business and can provide the technology and services to meet the proposed needs is just the beginning. Leaders are approaching the process differently, prioritizing the relationship value of their software provider over or along with cost and functionality. The requirements now go deeper to explore continued value long after the initial investment and implementation period.

Establishing a lasting partnership starts with the first engagement, discovering the true issues and how day-to-day pain points can be eliminated. There are high expectations for what today’s solutions can do to improve supply chain execution. Going beyond the first level of functionality, other important considerations include the ability to collaborate with a provider who is knowledgeable about your industry and willing to work with your company goals – one year, two years, ten years from now – so you’re continually getting the most value from your investment.

Companies selecting a SaaS solution to manage tens of thousands, often millions of dollars in transportation spend for example, are looking for more than just the lowest bid. A partner who understands your everyday challenges and requirements to serve customers can deliver more value through the software platform. Look for a technology provider that regularly incorporates user feedback into the development process with a structured approach to collaborating and prioritizing the ideas. Additionally, in-house managed services teams can provide valuable input into the development process when they are super-users of the same software.

Can you flex and grow with us?

Supply chain technology can help combine multiple processes into a single workflow to streamline operations. This is where it’s important to take a big-picture approach and evaluate how individual components are going to work together in the future.

For example, implementing a new TMS that manages the domestic movement of goods may work to solve today’s business requirement. But as your operations grow to meet increased global trade, can your solution handle international moves in all modes? What about parcel deliveries, or cross-border customs and compliance – do you attempt to manage it internally, or start the RFP process over in search of an additional solution?

With the right partner, the answer is neither. A technology platform with multiple applications to manage supply chain execution seamlessly helps your company adapt to change quickly and easily.

How will the partnership deliver long-term value?

By understanding how a provider plans to innovate and grow, companies can better determine if a potential partner is aligned with its long-term goals. Is the solution customizable and scalable? Are there supplemental product offerings that can easily be integrated and work with the current infrastructure? Will the solution evolve to meet the demands of tomorrow? How is the solution supported? How can our company benefit from being part of this network and ecosystem? Ultimately, the answers to these questions help determine how well you can work with a provider to achieve continuous improvement.

Determining the scope of work, network architecture, workload migration, and data are all discoveries of a traditional RFP process. Experienced leaders are finding the most value for their investment by going beyond the initial set of features and peeling back the layers of how a provider can be a partner that supports collaboration, continuous improvement, and growth for the future.

Stacie Vroman is Global Product Manager, responsible for Parcel and BluDex solutions at BluJay.

SaaS Makes It Easier for Big Projects to get Approved… Just Kidding

Logistics Technologies | By •

Software as a Service (SaaS) is a rental model that allows you to purchase enterprise software without paying giant upfront license fees. In theory, this means software becomes an operational expense (OPEX) rather than a capital expense (CAPEX). As software markets shifted from CAPEX to OPEX, we were supposed to see dramatic changes to software markets.

We have…  And we have not.

What we have seen is many enterprise software markets make a big transition to SaaS from the software license model. Customers really do prefer SaaS. And not just because of lower upfront software costs. In the supply chain markets that I cover, I have seen SaaS drive down implementation costs.  SaaS solution providers either can’t customize the software (Public Cloud solutions) or are reluctant to engage in customization (many providers of Private Cloud solutions). Consequently, project implementations are faster and the software industry’s implementation revenues are falling.

Saas can be based on a Public or a Private Cloud

In the transportation management system (TMS) market, where I’m wrapping up a global market study, we have also seen the SaaS model lead to smaller shippers and shippers from Latin America and Asia become increasingly willing to purchase TMS.

Sales Cycles are no Faster with SaaS

But as I have talked to software executives, there is one thing I am not hearing. I am not hearing that projects have a faster sales cycle because of SaaS. If SaaS was leading to a wholesale shift from CAPEX to OPEX, I would be hearing this.

A CAPEX project goes through a detailed budgetary process, where costs and cost savings are projected out for several years, a cost of capital is attached, and only relatively few projects end up being green lighted after being able to prove a high enough return on investment (ROI) to justify the risks.

In contrast, in OPEX, a manager with his or her own budget can choose to take on an expense if they believe it will help them hit their end of year goals. This should be much easier.

So, what is the problem? In short, the costs associated with implementations. In several supply chain software markets, the cost of implementations for tier one solutions run from several hundred thousand dollars to over a million dollars. Even a manager who owns a budget can take on the annual SaaS fees, they cannot swallow the upfront costs of an implementation; in short, they are still required to go through a CAPEX budgetary process to get approval.

If software providers were willing to spread the cost of an implementation over several years, like they do with the software license, we could truly say enterprise software markets have shifted from CAPEX to OPEX. They are not willing to take this risk on.  And for good reasons. The success of a software implementation requires customer to actively participate, have a strong project team, and make good decisions.

Forecasting Software Markets in the SaaS Era

For several years, the company I work for, the ARC Advisory Group, has employed an economist. This economist produces proprietary five-year global CAPEX forecasts for spending for many different industries. These forecasts are designed to make it easier for analysts that work at ARC to forecast how the markets they cover will grow. Because of SaaS, which I had been told was an operational expense, I had been ignoring these forecasts.  No more. In the TMS study, this is one of the data sets I am now using.

Cloud Solutions Upend the System Integration Market

Cloud/Software-as-a-Service | By •

Mark Hurd, the CEO of Oracle, made the point that this transition to the Cloud is big trouble for the $200 billion system integration industry, which has been designed around customization. “They need a new business model,” Mr. Hurd exclaimed, “the current model is unsustainable.”

Cloud Solutions Upend System Integration Market
Cloud Solutions Upend System Integration Market According to Oracle CEO Mark Hurd

Mr. Hurd made this argument at Oracle’s Modern Supply Chain Experience (MSCE) show last week. The central theme of the show was Oracle’s continued emphasis on the superiority of Cloud solutions and software as a service (SaaS). Their Cloud solutions launched 21 months ago.  According to Rick Jewell, a Senior Vice President at Oracle, 18,000 customers are on the Cloud “transformation journey.”

Not all of Oracle’s Cloud products have the full functionality of the legacy products. But Oracle is getting close. In the next twelve months Oracle expects to release process manufacturing and project manufacturing.  Meanwhile, warehouse and transportation management, global trade management, and supply chain planning are in the cloud.  These solutions are selling very well.  The warehouse management system Cloud solution, for example, has 2.5 times the sales it had at this point last year.

Mr. Jewell explained Oracle’s logic on the need for changes to the system integration market further in a meeting with industry analysts. System Integrators (SIs) business development tactic was to go to a company, talk to multiple departments and document requirements.  There would always be a gap between requirements and what any system delivered.  This was the entry point for expensive customization projects, long costly implementations, and the driver of very difficult and costly upgrades.  In short, it adversely impacted the total cost of ownership of IT products.

Mr. Hurd also met the industry analysts.  He was blunt, “What has dominated IT thinking has been procurement” and the drive to get low cost solutions. “That led to organizations having multiple vendors – mixing and matching solutions – that hasn’t worked.  The bulk of the IT budget is spent on maintenance.” Thus, “the ability to innovate is almost zero.  We can get 60 to 70 percent of the costs out of the IT budget.”  These are not just software maintenance costs, but the need to own storage and IT data centers. IT data centers, another executive pointed out, can cost $20 million to build and $10 million to run per year.

The move to the Cloud has been supported by a changing set of players who influence IT deals.  In the past, IT leaders often had “veto power” over deals.  “But CEOs and CFOs are more IT literate.  IT departments often report to CFOs.  The Cloud has also liberated functional leaders.”  But IT security issues are also beginning to give the CIO some of their power back.

But, as Mr. Hurd pointed out in his keynote, companies should not hesitate to move to Cloud solutions.  “We are more secure than any individual corporation could hope to be”, Mr. Hurd averred. Oracle spends more on IT security than almost any other entity in the world.

Mr. Jewell expanded on this thought in his meeting with industry analysts.  “We have more hackers working for us than almost any other company.”  They are continuously “beating on our own systems” to try and detect weaknesses.  Further, the Oracle databases are encrypted, so if a customer chooses to retain the encryption key, even Oracle can’t decipher the customer’s data.

What will the role of system integrators be? Mr. Jewell argues they need to evolve to be trusted advisors.  SIs need to show a system to customers and explain how the system can be configured to meet their business.  “They need to move to a business value consulting role.”

Jon Chorley, a Group Vice President for Supply Chain Strategy, said SIs can play another important role.  “Their can be a huge role for SIs in helping customers adopt new enhancements.  Instead of elephant hunting” – a focus on big, long costly implementations – “they evolve to more of a continuous engagement model.” The SI focuses more on a customer’s business model, change management, and helping companies to understand new technologies, like blockchain.

Mr. Jewell agreed, there could be more ongoing engagements where SIs do smaller implementations, but then have an ongoing maintenance contract.  The SIs “take the quarterly updates and dev test in the Cloud.” Many customers will no longer hire IT maintenance personnel.  Internal IT employees, in turn, will evolve to be more focused on being business process owners.

Oracle’s MSCE has grown dramatically over the last few years.  Over 3000 people were in attendance, making this, according to Oracle, the largest gathering of supply chain professionals in the world.

Share Everything: Why Multi-Tenant Technology Wins

Cloud/Software-as-a-Service | By •

ChrisJohnson_WebIt was 30 years ago that Robert Fulghum first published his collection of essays “All I Really Need To Know I Learned in Kindergarten.”  In the title essay, he provided a list of how to live, what to do, and how to be.  First and foremost on his list was “share everything.”  Software infrastructure was almost undoubtedly not what Robert had on his mind as he wrote his Credo many years ago, but the adage applies so well when discussing the benefits of multi-tenant technology.

Instead of having software installed behind a company’s own firewall or simply hosted for the company on a dedicated instance managed by the vendor or some other third party, multi-tenant solutions have companies share the application and underlying infrastructure (e.g., hardware, operating systems, storage, etc.).  The benefits of a multi-tenant software platform are immense.

Here are four areas of value with multi-tenant technology:

Connectivity – For applications that seek to connect users or companies to create a network, the need to be part of a multi-tenant environment is obvious. There would be no value in LinkedIn if you were not able to find, connect, and exchange ideas with other individuals.  Similarly, in supply chain applications, you are heavily reliant on connectivity and communication with your supply chain partners including carriers, suppliers, and customers.  A multi-tenant environment facilitates the real-time exchange of information among trading partners.

Lower Cost, Better Scalability – Multi-tenancy simultaneously lowers costs and improves scalability. With all participants sharing a common infrastructure, the cost of acquiring hardware and proprietary software licensing is spread across all users lowering the effective cost of the assets while ensuring access to a larger, more scalable pool of computing resources.  Peaks and valleys in use are readily absorbed by the infrastructure when all users are on a common instance, and companies – both large and small – benefit from having access to a pool of resources much larger than anything they could cost-effectively deploy on their own.  For supply chain applications, this often means faster, better optimization, more robust reporting, and quicker response times, which all contribute to increased effectiveness.

Powerful Analytics and Peer-based Benchmarking –  The ability to aggregate data and uncover insights is drastically simplified in the multi-tenant deployment model. With all companies sharing a common codebase, a common data-store, and having a consistent definition of fields and functions, everything from user behavior to company metrics can be readily analyzed.  By having simplified access to end user behavior including click paths, search criteria, common actions, etc., the guesswork is taken out of improving the user experience and workflow.  By understanding how various companies are using the software, best practices are quickly isolated and can be shared across the network regardless of industry.  And in the world of supply chain software, being able to easily aggregate and analyze cost and service data means companies can better understand how they are performing relative to their peers.

Worry-Free Upgrades – Multi-tenancy ensures companies have access to the latest features, functions, and security fixes. Participants don’t have to manage an upgrade cycle, worry about moving to the latest version, test for backwards compatibility, or fret about browser compatibility or dozens of other issues associated to trying to upgrade installed or hosted software. Multi-tenant providers are constantly adding new capabilities and rolling those capabilities out to their entire user base more quickly and more easily than vendors stuck managing hundreds or even thousands of installs. This upgrade cycle helps ensure companies are getting incremental value on a year over year basis as the software they use continues to evolve. For supply chain companies, this often means that they can continue to find savings through increased technology usage and adoption even after many years on a multi-tenant platform.

Sharing is not the easiest concept for a kindergartner to embrace, but in the technology field, it has been welcomed with open arms by companies like Salesforce.com, Intacct, and, of course, LeanLogistics. All three companies were founded in 1999, and survived the dot-com bubble, thrived during the global financial crisis, and continue to grow — thanks, in large part, to multi-tenancy.

—

Chris Johnson, Chief Technology Officer of LeanLogistics, oversees all research and development activity at LeanLogistics and is responsible for the LeanTMS® product roadmap. A LeanLogistics employee since 2004, Chris served as the lead technologist of several initiatives including optimization, LeanFleet®, LeanSource®, and LeanDex® before taking his current role. With a background in computer science and mathematics, his unique approach to software development continues to drive LeanLogistics’ technology solutions.

Copyright © 2020 Logistics Viewpoints, ARC Advisory Group. All rights reserved • Design by

Archives