The tech industry is no stranger to inflated valuations and over-priced acquisitions that ultimately destroy shareholder value. One can’t help but ponder these facts when observing the bidding war being waged between industry titans Hewlett-Packard and Dell for a previously little known data-storage company, 3PAR. Prior to Dell’s initial acquisition announcement on August 16th, 3PAR had a market capitalization of around $600M. As the bidding war has played out, 3PAR’s valuation has rocketed to over $2B. All of this for a company with just under $200M in revenue in fiscal 2010 that has yet to register a profit.
To be clear, this is not a commentary on the wisdom of this prospective acquisition. However, it provides a good opportunity to consider why such an intense battle would be fought over a relatively obscure company. Finding growth opportunities is challenging for large companies. HP and Dell’s dogged pursuit of 3PAR supports the view that cloud computing is an area of intense interest to the firms and that it is viewed as a growth vehicle.
Cloud computing solutions (aka hosted solutions) offer an alternative to on-premise systems that have traditionally been deployed. Some of the many benefits of the cloud deployment model include lower total cost of ownership (no upfront capital expenditure), reduced reliance on internal IT staff, and the ability to easily stay current with software/hardware updates.
In the supply chain execution space, cloud computing solutions have been around for some time with transportation management systems being the most widely adopted. As IT budgets and resources continue to tighten, companies are looking hard at this model for a wider range of solutions. For example, demand is increasing for full-function, best-of-breed warehouse management systems that go well beyond basic inventory control systems that have historically been on offer as a hosted solution.
Time will tell if this particular acquisition generates shareholder value for the ultimate winner. What is certain, is that cloud computing is an area that is expected to continue to grow quickly. Having the heft of an industry leader such as Dell or HP leading the charge can only accelerate adoption and growth of cloud computing for a wider variety of applications… including supply chain execution solutions.
More than 500 million eggs have been recalled in recent weeks. Nearly 2000 people report being sick from eggs thought to be carrying salmonella. The eggs are traced back to a pair of Iowa farms with common ownership. Like many food products the eggs were then marketed under multiple brand names and through various distribution networks.
Some troubling information about this event is that despite the first signs of contaminated eggs occurring in May, the recall was not conducted until August. The finger pointing between producers, government agencies, and consumers continues today. Based on this recall, recent peanut recalls and growing concern by Americans over food safety, I would guess we will see more strict federal legislation governing food safety soon. In fact, the timing would be perfect for the FDA Food Safety Modernization Act to pass the senate in September.
While many industries fight additional regulation, many major food brand owners have advocated for this type of legislation. A CNN Money article highlights some of the financial impact on brand owners when a recall occurs.
• Kellogg’s took a $34 million hit in their 2008 earnings as a result of the peanut recall.
• Overall peanut butter sales volume declined by 22% at the beginning of 2009
As with most legislation, the Food Safety Modernization Act is descriptive in terms of authority, but vague in terms of how companies would implement practices to support improved safety in the food supply chain. Here are a few pieces from the current legislation and my thoughts on how technology can be used to help enforce the process.
“require that each person (excluding farms and restaurants) who manufactures, processes, packs, distributes, receives, holds, or imports an article of food permit inspection of his or her records if the Secretary believes that there is a reasonable probability that the use of or exposure to such food will cause serious adverse health consequences or death”
This bill pertains to the majority of the food value chain. Food chain participants must be able to create and store records related to the products they handle. Clearly, technology can assist with the capture and storage of this information.
“Requires each owner, operator, or agent in charge of a food facility to: (1) evaluate the hazards that could affect food; (2) identify and implement preventive controls; (3) monitor the performance of those controls; and (4) maintain records of such monitoring.”
Again, technology will play a critical role implementing preventative controls and monitoring the performance of the controls. Supply chain technology can help support best practices such as stock rotation (first-in-first-out, first-expired-first-out), lot/batch tracking, product labeling, and quality inspections.
Additional Resources:
Fisher Nuts improves traceability in manufacturing and warehousing operations with HighJump warehouse management (WMS)
Three Components of Product Traceability in the Food and Beverage Supply Chain
Mom’s Foods Case Study
Read the full press release.
I was reading an article a few weeks ago which said that by the year 2020 most users will be living in the cloud. This comes as no surprise when we look at the way technology is trending. More and more users everyday are adopting cloud-based applications for their personal use, and much of the reasoning behind using a cloud-based format for personal applications is applicable to business as well.Not too many years ago I recall a time when essentially every application on my computer was purchased from a store and came on a disk. The Internet was either nonexistent or too slow to support any large applications. We have come a long way to the point where purchasing programs from a physical store rather than the "app store" is unheard of. The software now is almost always free to start and then you either pay a monthly fee later or pay by letting advertisers put their message in front of you. This has made most software much more accessible to everyone who wants to partake.
• Storage Space
With all of the cloud-based programs I use, I know that I could not support them if I had to host all of that information on my physical PC. The ability to access information stored on servers makes it possible to utilize a much greater amount of information because I don't ever have to worry about whether I have enough space to house another application and its contents.
• IT Workload
I don't know about you, but my personal IT team is pretty small, consisting solely of typing any problem into Google and hoping it comes up with the right answer. That said, the adoption of cloud-based applications had lessened the requirements of the end user to keep the system up to date. Rather than having to download large updates and spend the time installing them, users log in and the updates and changes have already been applied. Now my personal IT team is able to spend time doing more useful things like checking the baseball scores from the previous night.
Related Resources:
Link to CNN article: “Experts say we'll be working in the 'cloud' by 2020”
HighJump Warehouse Management in the Cloud
Special Report: WMS In the Cloud - Real-World Option or Fluff?
Recently I read a blog post by Adrian Gonzales of ARC Advisory Group which included examples of how social media tools are being put to practical supply chain use in businesses such as Con-way, where Twitter feeds are helping match carriers with available freight. This combined with the fact that mobile internet use / wireless connectivity is growing faster than most people expected clearly demonstrates the practicality of two entirely different types of technology coming together to create an amazing hybrid supply chain solution. This leads me to wonder: is supply chain management ready to cross paths with social media?
On second thought, maybe we need to differentiate between operational supply chain management and supply chain management research and networking. Could it be that some supply chain management professionals are ready to acquiesce when it comes to testing and adopting some “bleeding edge” Twitter and mobile execution solutions if it leads to pragmatic business benefits, but that they aren’t ready to whole-heartedly make the jump into using Facebook and LinkedIn and Twitter as trusted sources for evaluating new technology purchases? What about giving feedback and collaborating about the solutions they already have?
Cisco recently won a “Best Use of Facebook” award for their Facebook fan page (http://www.facebook.com/Cisco). The page was originally created to aggregate all of Cisco’s social networks and content into one channel and create a unique experience for their fans, and now it’s grown to almost 80,000 members strong.
Seems my writing has led me to more questions than answers. What do all of you think? How to supply chain technology buyers like to collect peer group feedback on purchases and vendor experience? Are you ready for supply chain software vendors to jump in wholeheartedly with social media efforts beyond the popular blogs?
Congratulations to HighJump warehouse management system (WMS) customer The Bon-Ton Stores for being featured on the cover of the June issue of Modern Materials Handling! The story highlights the company’s impressive growth, launch of e-commerce, and implementation of the HighJump WMS.
Read the story.
Most recently, The Bon-Ton Stores implemented the HighJump WMS in its Fairborn, Ohio distribution center, which supports operations for 70 retail stores. The HighJump system manages a fully automated material handling system and coordinates movement of store merchandise — 85 percent of which is routed onto outbound trucks within four minutes of arrival at the warehouse. The remainder of the merchandise is routed for value-added services like re-ticketing or tagging before being shipped to stores.
The Bon-Ton Stores has an aggressive growth plan for its online business and expects to double the number of orders it processes over the upcoming holiday season. The company has increased productivity in the area by 13.6 percent. Additionally, the solution has helped increase inventory accuracy and enhance visibility of the fulfillment workload, aiding planning for daily staffing.
What sales model works for you, and why?
Today I would like to discuss some of the points associated with three business models for managing the point of sale inside a direct store delivery (DSD) operational cycle.
The “traditional” view of a DSD route driver is probably best described as one of the peddle salesman. The driver takes his load of goods to his list of daily stops and restocks his customer’s shelf space, while attempting to leverage that relationship by getting the product(s) into more & better shelf space. Despite the changes over the years, this model definitely still exists in one shape or form in many operations. This model certainly helps many smaller-end clients minimize their costs by making last minute purchases of minimum quantities. However, the cost to taxi product from place to place, and the operational requirements to restock the truck at the end of sales cycle (typically per day) is definitely not favorable for the DSD distributor. It also creates obvious supply chain challenges ensuring sufficient stock is allocated/available, while tying up inventory on the truck that others may have been able to sell had it been in a central location.
If you move beyond the traditional, many suppliers go with what I would call a “Hybrid Presell” model. In this case the driver delivers goods, as well as places the order for replacement stock for future delivery. This model provides the distributor with advanced knowledge of order quantities and can therefore use operational capacity to build deliveries/loads with appropriate resources. However, this combined role can generate new challenges. Traditional compensation/incentive model (i.e. per cases sold) means the driver is better served by having a relationship between the driver and the customer, thus prohibiting the possibility of utilizing a route optimization solution. You also suffer from having contradicting requirements for the driver. This driver wants to get in/out of stops as quickly as possible to maximize delivery cases, but should also want to spend sufficient time to develop account relationships to enhance future opportunities.
If you complete the division between sales and delivery roles, you end up with dual resourcess: one delivery driver responsible for product movement, and a pre-sale resource that is responsible for managing orders and perhaps some additional tasks like merchandising or helping with vendor managed inventory. There are definitely benefits to this model, as you get to utilize resources for specific tasks to their strengths, without having to divide their energy/attention. You also get the freedom to effectively utilize a route optimization package given the established relationship between pre-sales and client with limited risk of damaging customer relations (see my previous blog post on that topic). However, this obviously means an extra set of wheels on the road to get face to face customer interaction, and the costs that go with that.
Changing from the traditional "face to face" model of sales, and utlizing either tel-sell or web-based ordering is yet another method to split the delivery and sales roles. This reduces the costs listed above, perhaps giving the DSD distributor an "easier" fit, since the benefits remain but you then have to determine the value of that customer interaction. Is your sales force going to continue to be as effective without it?
So which one is the “best” scenario? As with most things in life, I believe the answer is “it depends”. There are great many factors to consider, some key points to consider are:
- Geographical distances between stops on your routes and from warehouse to stops.
o The further you are driving the less likely you want to send a second vehicle to service customers.
- Ability of resources to handle dual responsibilities.
o Obviously you need this skill set if you are going to attempt the hybrid model so resource limitations may force your decision making as well.
- Supply chain costs associated with building orders in advance or at the last minute.
o Stripping trucks, operational down time during the day, and night crew efficiency all factor in here forcing you to make difficult choices regarding servicing your customers.
- Customer size and their ability to predict future order requirements.
o Smaller customers typically suffer from more extreme peaks and valleys of demand, so being able to handle/support these is of utmost importance here.
- Customer is willing (and able) to support a non face-to-face sales model.
o Possible resistance to technology changes or ordering limitations may limit the opportunity for benefit here.
What were the key factors that you used to determine your sales model?
I have to admit I am not an avid World Cup soccer fan...but I have enjoyed the coverage and subsequent drama unfold with a few of the higher profile upsets and controversial rulings on the field. The ironic story regarding the English team's history with the "Ghost Goal" certainly caught my attention (England clinched its only World Cup victory in 1966 with a similar dispute goal line marker) as the one disallowed versus Germany, en route to a 4 - 1 German victory.What I found particularly interesting was reading how Sepp Blatter (FIFA President) first maintained the "human aspect" of the game was key and could not be replaced, only to later change positions and seem open to technological advances to assist the officials.
http://www.guardian.co.uk/football/2010/jun/29/sepp-blatter-goalline-technology
How does this relate to direct store delivery (DSD) companies and their challenges? It seems that Sepp did some soul searching and came around to the concept of at least considering, if not implementing, technological advances. So what are some signs for DSD companies to recognize when it is time to move forward with a project that advances their use of technology? Below I talk about five points that really should trigger at least an investigation into what alternatives exist.
1. Hinderance or Help?
Your company bought that software (route accounting systems (RAS), mobile sales solutions, or maybe an inventory application) or possibly hardware with the intent of helping your employees get the job done faster and better than ever. At first things were great and you saw immediate improvement in your daily process, but those days are gone. Today you are more frequently forced to create work arounds or miss opportunities all together due to limitations in your technology suite rather than it helping you achieve improved results.
2. Reliability Issues?
How often do you hear your route drivers complaining of having to "re-key" a route due to data loss? Or perhaps a rushed purchase order has been placed due to an unrealized inventory issue from a batch posting failure? A better question would be - how many times can you let this happen before you realize there is a problem? Whether it is hardware or software that is letting you down, when these solutions start to impact your business due to failure it may be time to act.
3. Falling behind competitors?
When the calibre of your lawn falls behind that of your neighbors there may be some good natured teasing involved, but not much more. When your ability to deliver goods, invoice accurately or manage your supply chain falls behind your competitor you have a much more serious issue to deal with. In today's economy DSD providers are having their margins tightened while dealing with increased costs, so this is no time to give your competition a head start!
4. Increasing Cost of Ownership?
What did your IT staff look like when you first implemented your route accounting system? How did you roll out sales process changes with your route salesmen? What budget do you allocate to these activities now? Upgrades, maintenance, support and enhancements are all costs that hit the bottom line. If your IT spend continues to grow but your ability to handle new functionality (or possibly even maintain the status quo) hasn't progressed, isn't it time to start asking why?
5. End of Life?
Perhaps one of the more feared phrases of the IT world, if the above listed points haven't triggered the proverbial "spidey senses" then this one surely will start your temperature to rise. When Microsoft or IBM delivers the notice that product "X" is getting the End of Life treatment you may be able to stretch your utilization past the date, but if anything goes wrong the costs to support / correct / replace will be substantial. Better to act quickly and start identifying alternative paths to support your business.
The list of compelling events for your operations may be considerably different depending on the circumstances in which you exist. But by reading this, I trust that you are actively monitoring where you stand in your technology's life cycle...and good luck making your decisions!
Navarre Adds 3PL Services to Distribution Operation Using HighJump Warehouse Management System (WMS)
Computer Software Publisher and Distributor Uses HighJump 3PL Billing Management Software to Adapt Its Business Model
HighJump Software, a global provider of supply chain management software, announced Navarre Corporation is extending its service offering to include third-party logistics (3PL) services with the help of its HighJump solutions. Navarre is a distributor and publisher of computer software and home entertainment products. The company processes 2.2 million orders a year and manages 15,000 SKUs on a campus of three facilities with a combined 320,000 square feet in Minneapolis, Minn. and a 30,000 square foot facility in Toronto. After implementing the HighJump Warehouse Advantage WMS, Navarre has seen improvements in efficiency, worker productivity and inventory accuracy.
Read the full press release.
HighJump Software announced Foster Farms Dairy has selected the HighJump warehouse management system (WMS) to optimize its operations. The company processes a wide variety of dairy products at three plant locations and distributes throughout northern and central California from multiple branch facilities. In the project’s first wave, the HighJump WMS will be implemented in the company’s three manufacturing locations and one of its distribution centers.
Foster Farms Dairy recently began a search for a warehouse management system as part of its commitment to continuous process improvement and satisfaction of customer quality and service needs. Lon Nebiolini, Technology & Systems Director Foster Farms Dairy, said “We selected HighJump Software because of its strong reputation in the marketplace, successful applications in the food and beverage industries, and its full suite of supply chain execution solutions, which Foster Farms Dairy plans to take advantage of in the future. Another important factor was HighJump
Software’s adaptable architecture, which will maximize flexibility with respect to changing business requirements without excessive costs or business disruption.”
Read more about Foster Farms Dairy's selection of the HighJump warehouse management system (WMS).
It’s the point of decision: the consumer is reaching through the convenience store cooler door to grab her chosen brand. What affected her decision? What if you see each DSD technology touch point involved in getting the product to the store, and understand how it affected the consumer’s decision?
HighJump’s new video makes it easy to understand how a modern DSD suite works together, including route accounting system (RAS), mobile presell and delivery, surveys and data collection, load optimization, GPS tracking and more.
Related posts: The Real Components of a Direct Store Delivery Software Solution
HighJump Software is proud to have been included once again on the Supply & Demand Chain Executive 100. 
About the honor: Each year, Supply & Demand Chain Executive identifies leading providers of supply chain services and technologies who are helping customers/clients achieve supply chain excellence and prepare their supply chains for the post-recessionary return to growth. Based on submissions to the "100" from end users and solution providers, the editorial staff of the magazine has compiled a list of leading supply and demand chain innovators.
Final recipients are featured in the cover story of the May/June 2010 issue of Supply & Demand Chain Executive, as well as online at www.SDCExec.com/SDCE100.
Walmart….I know it is almost universally recognized as a dirty word for the many challenges they create for their DSD suppliers. However, today I would like to talk about the beneficial changes to operations that have resulted from their ASN initiative.
Let’s first look at how many “traditional” DSD vendors handled their order flow before ASN’s (I am going to state the implied assumption of pre-sold orders rather than peddle sales here, but really ASN is conceptually impossible without pre-sales).
- Order is received by vendor “X” hours or days in advance of required delivery (the method of entry is for another discussion at a later date) into route accounting software.
- Order goes through some level of processing to determine how it will be built. Eg. Products are aggregated with common packages, or order is built specifically for customer (read my previous blog on whether to build by order or not).
- Pallet(s) are built by the distribution warehouse staff with paper pick tickets / load sheets. Possibly with, but more likely without checking of pallet content.
- Driver shows up the following morning and verifies his load content and has to either manually pick additional product to replace short picks / miss-picks, or if they are lucky gets some help from the receiving staff.
- Driver delivers goods to store where additional invoice/delivery adjustments may be required due to earlier verification issues.
This process obviously has some fairly inefficient steps here, but I think it is safe to say this was generally accepted, and even still is today with many small to medium sized distributors.
The Walmart ASN initiative continues to roll out across North America. To be compliant DSD suppliers not only have to pick at a rate of near constant perfection, but they also have to submit this information well in advance of the driver showing up at the back door with product. Meeting these requirements means manual picking processes have to go away and any pick discrepancies must be accounted for AND communicated in advance of delivery. This means adding a step to update pick quantities and another step to update delivery handhelds have to above process. It doesn’t take a rocket scientist (no offence to the rocket scientists), to figure out the changes required to complete these tasks cost $$. But let’s look at how these operational changes provide benefit beyond being able to continue to supply Walmart with product.
- Productivity Metrics: by using either a handheld or mobile computer solution you should be able to track more data than just updated pick quantities. Why not select a solution to track picking time to generate productivity numbers? These metrics could be used for incentive picker compensation or alternative motivation plans.
- Driver Check Out: with loads already reflecting the changes to pick quantities driver checkout processes should take far less time, getting them out into the trade faster.
- Delivery Time Reduction: similar to point above, with accurate load/invoice information route drivers reduce time required to handle the administration side of mobile sales, and should be able to spend more time actually servicing stops.
- Risk of Fraud: unfortunately fraud happens…but with accurate order/invoice numbers the need for invoice adjustment will theoretically go to zero. While I doubt the zero adjustment goal will be present 100% of time, far fewer invoice adjustments means those that happen need better explanation and can be investigated to confirm legitimacy.
- Route Reconciliation: here is yet another spot where accurate orders result in time savings. The lack of invoice adjustments, and accurate inventory numbers save labor for route drivers and reconciliation clerks alike.
- Inventory Accuracy: actual pick quantities rather than relieving inventory based on expected numbers give your operation and sales teams real on hand data to know what needs to be ordered, and what is available to sell.
As you can see there are definite benefits to implementing a process solution where actual picked quantities are efficiently tracked. To truly reap the benefits of this process though, operations should be applying this supply chain improvement not only to their Walmart ASN accounts but to all (or at least the majority) of their accounts!
Traditional perceived challenges to dealing with Walmart aside, I think this is one area where the supplier integration changes they have created in the DSD supply chain best practices are actually forcing operations to become more efficient! I hope that you consider some of the points above and how they could help your direct store delivery operations as well.
“Gary and Amy are valuable additions to the HighJump executive management team and bring extensive experience to their roles,” said Russell Fleischer, CEO, HighJump Software. “Amy has served in many key positions at HighJump that make her uniquely suited for this newly created executive position, and Gary has extensive sales leadership experience in the supply chain software industry.”
Read the press release.
HighJump Software is proud to have been named to the Inbound Logistics Top 100. Every year, Inbound Logistics editors recognize 100 logistics IT companies that support and enable logistics excellence. Drawn from a pool of more than 300 companies, using questionnaires, personal interviews, and other research, Inbound Logistics selects the Top 100 Logistics IT Providers who are leading the way in 2010. Editors seek to match readers' fast-changing needs to the capabilities of those companies selected. All companies selected reflect leadership by answering Inbound Logistics readers' needs for simplicity, ROI, and efficient implementation.HighJump Resources
Watch a Video: 3PL achieves supply chain success using the HighJump Software warehouse management system (WMS)
Watch a Video: Fox Racing doubles distribution productivity with the HighJump warehouse management system (WMS)
A constant battle in any working environment is finding ways to best utilize your time so that you are doing what you do best and not spending your time on other tasks. As an example I have seen warehouses in which the warehouse manager spent nearly all of their time taking orders from paper and entering them into the computer so that they could print the pick ticket, and then after the order is picked he or she has to update the system and print the invoice. They hardly leave their office, leaving them essentially no time to see what is going on around the warehouse or look for ways to improve operations.
I think Marcus Buckingham has it right when he says "Do what you do best, Outsource the rest". We only have so much bandwidth when it comes to day to day activities and sometimes it is important to step back and re-evaluate priorities to find out what tasks can be "redistributed". In the case of the warehouses I mentioned above, a warehouse management system(WMS) would not only be able to free up those warehouse managers' time but allow them to take a look at their warehouses and see where they have opportunities to improve productivity, efficiency, etc. In the case of IT personnel who spend all of their time trying to keep their server up and running, a WMS in the cloud might be just what they need to free up the time to improve overall operations. And as for the warehouse logistics workers who spend much of their time fixing errors, running to find missed product, or trying to find where that last shipment was put away, there is substantial time saving. Even the time and hassle of shutting down your warehouse every month to do a physical inventory count can be overcome with cycle counts, also decreasing the number of errors which the people in the office have to sort through. So the next time you find yourself thinking, "There has to be a better way to do this," there probably is and it might be worth your time to look into a system that would help you do what you do best.
No this blog entry is not going to be a behavioral reminder from your pre-school teachers…rather this is about how the supply chain software market continues to change, specifically for DSD users. Long gone are the days where features and functionality were the key factors to any software purchase decision. It is true that without solid functionality and key market features software will quickly drop off the desirable list, but these two points are merely the first gauntlet to pass towards a positive decision regarding software selection.
Today, being able to provide “out of the box” integration options, tool kits and breadth of product solutions are more important than ever in the DSD world. A next generation RAS is great, but what else comes with it? Does it provide a flexible mobile sales solution? What about your inventory and truck loading solutions? Traditional (aka Green Screen style) RAS solutions have been able to provide batch data entry for inventory, and load sheets for your picking team but does this technology really cut it in today’s world? That covers some of the basic points of entry of data into your system…but what are you going to do with it once you have it there? Do you have a robust report generation solution? Even better than that, how about a data mining tool with not only canned reports, but also an easy interface where users can define their own “custom” queries to identify the exact data elements you want and need for executive dashboards?
Beyond what I would consider fairly “standard” offerings listed above, many operations are running back end ERP software solutions as well. Being able to provide reproducible integrations to these solutions is quickly becoming as important as the software solution itself. Software users today have existing structure and systems that are not going away, and any future solutions must integrate easily and seamlessly in order to maximize benefit of your DSD solution. This is one area where most companies want to avoid being on the “bleeding edge” of technology, and would really prefer to see an offering that can reference others.
Another reason to consider integration options is as simply as taking advantage of the strength of other solutions. Leveraging the functionality of other solutions not only provides the users benefit, but can do so in a more cost effective manner (if done properly) than building additional modules outside of your core competencies. This may be a difficult decision for some to make, but I think that this is an area that can definitely be used to your advantage if properly evaluated.
I will end this post with the following question…can you really only consider one component to your DSD solution in isolation, or will you look at the end to end integration of all components?
Let's take a look back at our top five most popular posts of the year.
1. Is Wal-Mart Sub-optimizing Its Extended Supply Chain?
2. Why Inventory is Not an Asset
3. Why Cap and Trade is Not the Answer
4. What Makes a Good Metric?
5. Where did my variance come from this time?
We'd like to thank you for your readership and comments. We had some great dialogue and ideas shared here by our readers. Here's to another great year of blogging!
Greetings from 35,000 feet! I am on my way to the west coast for meetings with another prospective HighJump warehouse management system (WMS) customer. This visit will likely be consistent with several meetings recently with large companies who are looking to standardize their WMS platform and move away from homegrown systems. This sounds like a fairly straightforward proposition…until you get into the details.
In each of my meetings, the company has strong feelings that their current homegrown WMS system provides them a true source of competitive advantage. It is not that the system contains “industry best practices”; these homegrown systems enable distribution processes that are actually sources of differentiation from competition. The processes and the systems supporting them are years in the making and unique to each business. By definition, many of these competitive advantages will not be found in traditional commercial off the shelf software – they are proprietary, confidential, and not available to everyone in a given industry.
These companies are pursuing commercial software as a means to reduce IT complexity and reduce total cost of ownership – common objectives of a WMS standardization initiative. However, there is reluctance to proceed based on the sources of competitive differentiation these companies have with their homegrown systems. In the traditional enterprise software approach, these companies will be forced to purchase commercial software, pay exorbitant fees for customizing it to enable their competitive advantage processes, pay exorbitant fees to upgrade (or elect to stay on old technology), and risk that their technology vendor will think their practices are so great that they should be put in the next version of the “standard package” (thus making the competitive advantage available to everyone).
HighJump offers a unique approach.
HighJump’s Supply Chain Advantage suite is architected with an expectation that you will want to enable business processes that are sources of advantage on our technology stack. It is HighJump’s philosophy that 80% of supply chain practices are not sources of differentiation and should be covered by industry supply chain best practices enabled with standard product. However, we also expect that there are 20% of your supply chain processes that are potential sources of competitive advantage. For this 20%, we provide a flexible workflow architecture that allows end users to modify the workflows in the product to support their sources of competitive advantage.
This presents a “best of both worlds” value proposition for our customers. Customers moving off homegrown systems get the benefits of commercial software (new releases containing technology and functionality updates, a worldwide product support organization, and technology partner that will stand by them in the long term) with the flexibility to support their business processes that are sources of competitive advantage.
Related Resources:
HighJump Adaptability Datasheet
GM2 Video: 3PL achieves supply chain success using the HighJump Software warehouse management system (WMS)
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