SCM Technology

If you don’t find supply chain management and technology interesting topics, stay away from me at a happy hour!  As HighJump Software’s Vice President of Marketing and Strategy, I monitor the trends in using technology to advance supply chain business practices.  My blog covers a wide range of topics in the areas of supply chain management and HighJump Software’s product strategy.  

My knowledge has been developed as an “occupational hazard” of over 13 years experience in supply chain consulting and technology management and an MBA focused in supply chain management from the Carlson School of Management at the University of Minnesota.  When not “heads down” on supply chain topics, I enjoy the short Minnesota golfing season and spending time with my family.

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I spent some time last week with a HighJump Software customer who is considering further expansion of HighJump WMS solutions in their distribution centers. The customer is undertaking a massive ERP program that will allow the ERP system to be the IT backbone of their worldwide operations. They are also evaluating WMS solutions from this ERP provider.

In a meeting with senior IT leaders of this organization, I explained that I was highly confident the outcome of their pending due diligence regarding total cost of ownership (TCO). I contend that a best of breed solution will result in lower long term costs for this IT organization. Here are a few things that make me confident in my position:

Best in Class Functionality

While ERP-based WMS solutions have advanced significantly, they are limited to the “classical” warehouse operations including receiving, put-away, inventory control, picking and loading. Supply chain best practices such a labor management, slotting management, advanced wave planning, and last mile delivery are not traditionally supported with ERP WMS solutions. This means that when supply chain operations teams demand these capabilities, IT organizations are forced to address them with expensive customizations or bolt-on solutions with multiple integration touch points.

Upgrades

A WMS solution typically has a 10 year lifespan. In this lifespan a WMS could be upgraded five times. ERP upgrades are generally more expensive to upgrade because of the interdependencies between modules and re-application of source code customizations. Additionally, corporate IT governance and change management processes often make it difficult to upgrade a single module. Therefore the business users may be forced to wait for new features because of dependencies on modules that have nothing to do with distribution and logistics. View this video to learn more about HighJump’s approach to simplified upgrades.

Adaptability Tools

If your organization views distribution as a source of competitive advantage, then ERP-based WMS could be problematic. By definition, a competitive advantage must be unique to the organization. Business processes available in commercial off-the-shelf software packages (like ERP) therefore cannot contain business processes that are sources of competitive advantage.

To really ensure you have the flexibility to maintain and create further sources of advantage in your distribution operations, your supply chain logistics software must have the ability to create processes that are unique to your business.

HighJump has a unique approach that allows customers to define unique workflows that does does not involve any source code modifications. I am not aware of any ERP based WMS solutions with a similar architecture.

Without this architecture it can be very expensive for IT organization to deliver these workflow changes.

I recently received a direct mail marketing piece from a HighJump Software competitor. The mailer included a press release announcing that this company had “enhanced direct store delivery integration” and a one page datasheet which described a direct store delivery value chain as manufacturing + regional warehouse + mobile resources + retail shelf.

HighJump Software is the North American market leader for direct store delivery software solutions. If our primary competitor in the warehouse management systems market had encroached on our market position I needed to know. Perhaps they had acquired a route accounting solutions provider or acquired a provider of mobility solutions for mobile selling and delivery at the retail location. I consulted a trusted industry analyst who confirmed my suspicions… this was marketing hype and this company’s approach to direct store delivery still had significant “holes.”

Anyone familiar with the value chain of direct store delivery companies knows there are some specific complexities that must be addressed in order to have “comprehensive coverage across the extended supply chain.” Here are some things companies should consider when search for direct store delivery software solutions:

Certified Route Accounting Systems

Route Account Systems are unique software systems to manage the complexities of route-based sales and delivery. They typically manage the entire order-to-cash cycle and are geared toward the world where sales, inventory, and business metrics are all tied to a “route.” Although traditional ERP systems can be used for route accounting systems, they typically require customization to deal with complex pricing/promotion, cash settlement, truck inventory, and supplier e-commerce integration. To further understand the complexities in the beverage value chain read It is Hard for Anheuser-Busch to be Procter and Gamble.

Mobile Sales and Delivery Applications

Success or failure in a direct store delivery business is determined at the store shelf. Direct store delivery companies have large workforces of mobile sales and delivery professionals who need to be equipped with mobility technology for them to effectively accomplish their objectives. HighJump Software provides a comprehensive suite of mobility products which support industry best practices for order capture, goal-based selling, delivery tracking and cash settlement. For more details on these solutions read about our latest mobility suite product release HighJump Software Enhances Mobility Solutions With New Release of Mobile Route Sales and Delivery Software Suite.

Load Optimization

Optimized loading of side bay beverage trucks can be complex. While there are numerous packages for creating optimized load plans of traditional van trailers or flatbed trailers, optimizing for side bay beverage trucks is another animal. Additionally, this business problem becomes even more complex when you have a “peddle” environment (driver selling off truck without pre-sold orders) and driver preferences must be taken into account at the load and pallet level.

I think the moral of the story is “don’t believe the hype.” Direct store delivery software solutions are specialized for the unique needs of this industry. Direct store delivery software solutions deal with complexities of supplier integration, cash settlement and truck inventory. A WMS, TMS and retail workforce solution will not meet the needs of most food and beverage distributors in their direct store delivery operations.

Today HighJump announced that our latest route accounting system (RAS) has received certification with Anheuser-Busch InBev for use by their wholesalers. The result of this certification is that HighJump RouteCenter receives the highest level of compliance, Level 1 ISV – Strategic Partner. The news release: HighJump Software Named Strategic Partner by Anheuser-Busch InBev.

The role of route accounting systems in Anhueser-Busch InBev’s value chain is critical. In order to fully understand the importance of this software, it is important to contrast the value chain of the large four beverage suppliers from a traditional CPG value chain. Let’s explore the differences …

Traditional CPG Value Chain

The traditional CPG value chain is largely vertical. A vertical value chain is one where each component of the chain including source, make, deliver and sell is controlled by the same company – in this case the brand owner. This allows retailers and brand owners to collaborate about every aspect of the product including quality, new product introduction, price, promotions, and electronic commerce. With today’s sophisticated supply chain software it is possible for most CPG companies and retailers to know exactly what was sold (and at what price) at every retail location every day.

Additionally, most traditional CPG companies have the following inventory flow: manufacturing/production -> regional distribution center -> retailer’s distribution center -> retailer. In this scenario the retailer is primarily responsible for managing the inventory that is shipped from the manufacturer to the retail distribution center (ordering) and the flow from retail distribution center to store (although there are certainly evolving collaboration techniques to share this responsibility across the manufacture and retailer).

Big Beverage Value Chain

The value chain of the big 4 US beverage suppliers (AB InBev, MillerCoors, PepsiCo and Coca-Cola) are more fragmented than the traditional CPG companies. In the case of the beer suppliers, they manage the manufacturing/production process and then resell their beer to independent wholesalers/distributors that distribute and sell to the retail location. In the case of the large soft drink suppliers, they do not even manage the production process but leave make, deliver, and sell to independent bottlers.

Additionally, in most situations beer and soft drink products are delivered directly to the retail location and by-pass retail distribution. This approach benefits the retailer because they are not forced to handle and transport beverage products which are significantly heavier than most food products. The beverage companies benefit from the ability to merchandise themselves and manage promotions at a local level.

Why Retailer Collaboration is More Challenging in the Beverage Value Chain

Retailer collaboration through e-commerce initiatives is more complex in the beverage value chain. This is because unlike the traditional CPG chain which has full visibility to transactions with the retailer, the big 4 beverage suppliers are reliant on their independent distributors who transact with retailers. AB InBev needs to have the same level of visibility over their independent wholesalers as Proctor and Gamble has over its distribution centers….no easy task.

How the Route Accounting System Helps

The route accounting system is the core back office system for independent beverage distributors (think ERP for beverage distributors). Best-of-breed route accounting systems have certified integration back to the large beverage supplier organizations. Through this integration, the large beverage suppliers are able to have transaction visibility throughout their distributed value chain. This collaboration allows product, pricing, and promotional information to flow from the supplier to the independent distributor. It also allows sales transactions to flow from the independent distributor back to the supplier so that the supplier can provide this information to the large (and demanding) retailers. Therefore, it is really the route accounting systems which allow the large beverage supplier organization to provide retailers the e-commerce supply chain collaboration they demand.

HighJump’s new VP of Sales, Jim Bork, was in my office the other day and asked me, “Why don’t more people implement our Yard Management solution?” After hearing a customer case study at Innovation 2009, HighJump’s annual user conference, where the customer claimed benefits from yard management in excess of $1 million, Jim wondered why all of our customers wouldn’t leverage this technology. As I started thinking about this question, I realized that maybe companies are looking at the wrong business case for yard management.

What is Yard Management?

Yard management is a kind of supply chain logistics software solution that tracks trailers and containers in a yard outside of a manufacturing facility, warehouse or distribution center. Using workflows, the software can support the following activities:

·         Driver check-in or check-out including collecting all relevant data from the driver and tying the arrival to a specific dock appointment

·         Optimized storage of trailers or container within the yard. Trailers with “hot” product can be moved directly to dock door locations. Other trailers can be dropped in the yard for unloading in the future.

·         Visibility to trailer aging is provided so companies do not incur demurrage charges for holding a trailer in the yard for excessive time periods. (Trailers and containers are typically owned by a 3^rd party and holding them for too long can trigger a charge called demurrage).

·         Optimized work instruction is provided to yard drivers for moving trailers to and from dock door locations.

Work Optimization – The Old Thinking

Yard management provides benefits on multiple levels, however, most supply chain management professionals first think of the work optimization as the primary benefit. Work can be optimized creating labor savings and more efficient flow of inventory. However, if you “run the numbers” on a typical yard, labor savings alone will not drive a strong ROI on a labor management system.

The Safe Thinking

Safety and security has become a primary concern for many businesses in light of focus on national security in many countries.  A yard management solution will also provide benefits in the area of safety and security. Yard management systems help facilitate a single point of entry and exit from the yard. Additionally, a yard management system will systematically collect information about specific loads that could be used to comply with internal or homeland security requirements. While safety and security are important it is difficult to build a hard business case around these factors.

Inventory Optimization – The New Thinking

Companies with the most successful yard management initiatives find ways to optimize inventory across the yard, manufacturing facility, and distribution center. As companies in the US and Western Europe are transitioning from manufacturing-centric to distribution-centric, inventory in the yard has become a serious issue. Import-centric supply chains leverage low cost of materials and product, but suffer from long lead times and product obsolescence. Often this results in large amount of inventory being held in containers in the yard.

The best way to build a business case for a yard management system is treat your yard like an inventory buffer. An inventory buffer in the yard will allow many companies to carry additional inventory without facility expansion in their distribution center.
An additional inventory buffer provides significant benefits in terms of supply demand matching and perfect order performance.

HighJump has one yard management customer who drops orders to the warehouse for fulfillment even when the expected inventory only exists in the yard. This means they must coordinate a trailer move of inventory to the dock door, cross dock the needed product, and marry it with the other product required for the customer’s order. Clearly, this logistics capability is something to build a business case around!

So before taking your yard management system business case to the corner office, ensure you have considered all aspects of intelligent inventory positioning and supply chain management best practices that can be gained from a yard management system.

I have been without a home personal computer for nearly a year now. After the hard drive failed in the family desktop for a second time in 6 months, I packed it up and moved it to the garage (a trip to the electronics recycling facility is coming soon). I have been delaying the purchase of a new computer because I don’t want the hassle of administering virus software and installing new applications.

Now, through my recent exposure to SaaS and cloud computing at work, I am starting to rethink my needs at home. Very soon HighJump will be announcing that of our newest route accounting platform, HighJump RouteCenter, will be delivered in a SaaS model. This model allows our customers to focus on what they do best – selling more beer, wine, spirits, and soft drinks – while we worry about maintaining hardware and network infrastructure. No longer will customers need to worry about data centers, electrical, cooling, system administration, patching, cabling, and other low-value but expensive IT infrastructure costs. Additionally, our customers get a “network effect” as they can leverage pre-defined integrations to major supplier organizations like Coca-Cola, Pepsi, Anheuser-Busch, and MillerCoors. We have projects underway to expand this approach across the product suite and even run on commercial cloud solutions. These are exciting developments! I am convinced this will change the way customers think about their IT going forward.

Now back to my home computing situation….I don’t really need a personal computer (or Mac). I need a window into the cloud that allows me to access photo collections on Flickr, my friends on Facebook, office applications from Google or Microsoft and email from Google. So it looks like a NetBook is the newest item on my shopping list!

Just a few years ago, the definition of a technology company was fairly straight-forward. Technology companies had product-focused R&D, launched products and sold those products directly or through channels. It is not as straightforward any more. Is Facebook a technology company? How about Amazon? How about a third party logistics provider?

The answer is becoming more nuanced as firms are finding ways to use technology to drive process differentiation in the market. Amazon has simplified the process of buying over the web to the point that this technology service is becoming as important a “product” as the consumable products sold through their site. Amazon’s expansion into technology services has even led them to provide Infrastructure as a Service (IaaS) through their cloud computing solutions. 

Sure, technology still has a role of making businesses more productive and helping them gain economies of scale. However, this is only the most basic level of thinking when it comes to applying technology to business problems. A more sophisticated approach is to determine what customer needs are currently unmet in your market and can be satisfied through the unique use of technology.

I often hear that supply chain execution technology is considered “commodity” IT. This reference is common when people evaluate best of breed technology solutions against ERP based solutions. Any company looking to derive an advantage from their supply chain should not view their execution technology as commodity. Companies who look to differentiate based on their technology service and supply chain should look to solutions that provide them full functionality and the ability to create unique, differentiated processes within the system.  Amazon certainly did not get to where they are today with a “commodity” view of technology.

I was talking with a friend the other day and the topic of Facebook came up. This friend had joined Facebook but become disengaged quickly saying he just didn’t “get it.” Rather than embracing the technology, engaging with friends and trying to figure out why millions of people are flocking to social networking, he threw his hands in the error in disgust. It reminded me of my grandmother trying to program the VCR “back in the day.” My friend is inflexible, unable to change, and unable to support the new process of communication. 

Many warehouse management systems suffer from these same challenges – inflexible, unable to change and unable to support new communication processes.

Many enterprises implemented WMS Warehouse Management Systems in the late 1990’s and early 2000’s to support their growing operations. While the initial value and return on investment of these systems has been achieved, the current state of these systems is a concern for many IT and supply chain executives.

Changing the system to meet new operational needs.

Your distribution and supply chain operations are probably significantly different than when you initially deployed your WMS warehouse management system. Product mix changes, increases in volumes, changes in material handling equipment and new distribution strategies can have significant impact on warehouse operations. Many warehouse management systems provide you with just two options to address these business changes: pay the software vendor to the customize the software for your new process, or develop a workaround outside of the system. Neither approach is optimal. Obtaining approval for software change orders is increasingly challenging as IT organizations are forced to look at every opportunity for cost reduction. Enabling processes with system workarounds results in quality issues which impact customer satisfaction.   Many companies operating aging WMS technologies suffer from these challenges.

Relatively high total cost of ownership.

It is widely known that WMS warehouse management systems are one of the most customized software applications in the enterprise. This is especially true of warehouse management systems implemented five to ten years ago. Not only are many companies dependent on the vendor to make ongoing system changes, the cost of system upgrades is extraordinarily high. Relative to other enterprise applications, aging WMS platforms have high upgrade costs because source code modifications must be reapplied to future versions. This is often a risky process which includes significant consulting hours from the software vendor. Additionally, WMS warehouse management systems purchased five to 10 years ago was significantly more expensive than WMS warehouse management systems purchased today. Because annual maintenance and support fees are typically based on a percentage of the license fees, many enterprises with aging WMS technologies are paying significantly higher fees than enterprises who recently implemented modern technology platforms. It just doesn’t make sense, why should you pay more for an older platform that doesn’t fit your business?

Uncertainty about your vendor’s strategy for the product line.

Many WMS Warehouse Management Systems implemented five to ten years ago were provided by vendors who are no longer market leaders in WMS. Many of these vendors have been acquired by financially focused firms who collect software maintenance and support fees without re-investing in product development and customer service. In many cases, it is unclear how long the vendor will provide software updates and technical support on these product lines. Each time there is an ownership change with these software vendors, the viability of the product line you use is called into question. Can you trust your distribution operations to a software vendor with questionable long term viability?

Do you have these symptoms of an aging WMS?

It is possible to move from aging WMS platforms to modern technology platforms with a simplified upgrade path. In many cases the annual cost of the new software is equal to the current costs of the aging platform. 

I will not replace my friend because he is aging, but you might want to consider replacing your aging WMS!

 
Image via Flickr user kid_entropy

Recently I have had some events that again have me wondering why companies continually trust their complex, high volume distribution operations to ERP-based WMS Warehouse Management Systems. Allow me to describe these events…

1. I spoke with a large HighJump Software customer who told me the CIO had been pushing for a global deployment of an ERP system across all functions including distribution operations, but had been stalled by business owners who were concerned about the distraction and cost relative to the value.
2. I spoke with a prospective HighJump customer who has spent millions of dollars and multiple years attempting to implement an ERP based inventory WMS system. They have finally conceded that their distribution operations are too complex for an ERP solution and are turning to a best of breed solution.
3. I attended a panel discussion of users of an ERP based WMS Warehouse Management System. Presumably, these were the “flagship” customers because the panel was chosen by the ERP vendor. Customers openly complained about the performance of the system which they attributed to an inventory model that was not suited for distribution operations and a transactional model that was financially-focused rather than distribution-focused.

I would urge anyone considering the implementation of an ERP based WMS Warehouse Management System to consider these factors before finalizing their strategy to move forward with an ERP based WMS Warehouse Management System provider.

The Integration Myth

It is commonly perceived that integration between a WMS Warehouse Management System and other business systems will be easier if both systems are packaged as a suite. The truth is that most ERP WMS solutions have an API-based interface between the WMS Warehouse Management System and the rest of the business applications. In many cases best of breed WMS Warehouse Management Systems have packaged integrations that utilize the same API-based interface as the ERP WMS. While many of the ERP interfaces are “hard coded,” a best of breed WMS Warehouse Management System often provides integration tools (like HighJump Software’s Advantage Link module) which allow data mappings to change based on specific business requirements. It is important to understand the details of the interface approach before assuming that cost will be less and functionality will be greater with a “suite” solution.

The Transaction Models Are Different

During my time as a consultant, I implemented ERP systems and best of breed supply chain systems. There is a fundamental difference in how these systems are architected. Supply chain systems start with a practitioner’s view of the business problem. Screens and workflows are suited toward the needs of people who are supply chain professionals. ERP systems have an accountant’s view of the business problem. Nearly all transactions that occur in an ERP solution tie to a general ledger transaction. Often this accounting-centric view results in business processes that are not optimized for the supply chain.  

For more information on Best of Breed vs. ERP WMS, please read HighJump Software's Special Report on the topic.

HighJump Software just had another customer go live with HighJump Warehouse Advantage and the Embedded Voice module. This customer is a third party logistics provider who plans to use the improved productivity and accuracy of their voice-enabled WMS Warehouse Management System to help them gain additional clients. Yesterday we released a video success story on Fox Racing who also utilizes embedded voice technology in their operations. See the Fox Racing video. The benefits of voice technology in the warehouse seem well understood by most distribution professionals I speak with. Most are quick to point out improved productivity (takes less time to accomplish tasks), safety (workers are hands and eyes free), and accuracy (complex check digit validations). Yet I often hear several misconceptions about voice technology that prevent adoption. Below is a listing of five common misconceptions I frequently hear about voice technology.

1.       I require proprietary hardware solutions for voice.

At one time this was true. However, voice technology providers like HighJump Software’s partner Vocollect, have worked with the leading rugged mobile computer manufactures to provide a solution that runs on a traditional device used in the warehouse. It is now possible to utilize the same device to accomplish both voice processes and traditional RF scanning processes.

2.       It does not work in the language spoken by warehouse staff.

With HighJump Software’s voice solution, warehouse workers can speak to the device in any language they choose. The recognition technology will respond to spoken commands in any language. Additionally, HighJump Software’s WMS Warehouse Management System is fully internationalized so warehouse employees can be prompted in any of the languages supported in the system.

3.       I don’t need a WMS if I have a voice picking system.

Voice enablement is a standard feature in a best of breed WMS Warehouse Management system. The voice technology allows multiple processes such as picking, cycle counting, and put-away to be automated with voice-based interaction with users. A voice system does not optimize all functions within a warehouse and assign warehouse work in the most optimal way. In addition, a best of breed WMS expands beyond the four walls of the distribution center to integrate with suppliers (supplier enablement/supplier integration) and customers. These extended features are not found in voice enablement technology.

4.       Voice picking systems simply voice-enable RF prompts.

Most distribution professionals focus too much on the voice technology and not enough on the process differences between traditional RF prompting and voice prompting. Interacting with a text based interface can be completely different than interacting with a voice system. Workflows often need to be optimized for a voice environment. This often means reducing the number of commands spoken and shortening operator response. There is also a different approach to validation because bar code scanning is often minimized in voice environments. 

5.       My distribution center is too small for voice.

Voice technology is not just for the “big boys” any more. Simplified WMS integrations make voice implementation straight forward for the end customer. The emergence of multi-modal hardware solutions also mean that distribution centers with smaller teams can have team members easily move between voice enabled processes and non-voice processes. Voice technology represents a strong ROI for any distribution professional who wishes to improve productivity, accuracy and the safety of warehouse employees. 

About 24 months ago at our midyear sales meeting I unveiled HighJump’s strategy to more aggressively target logistics service providers with our supply chain management software solutions.  The reaction from the sales team was mixed.  Logistics service providers are notoriously highly variable sales processes because the system purchase is typically tied to the acquisition of a new client for the logistics service provider.  The market data supported our strategy.  Use of logistics service providers is increasing worldwide as more companies outsource all or a portion of their logistics capabilities.

Times have changed.  The sales team now loves this strategy as logistics service providers are turning to HighJump Software for their supply chain logistics software.  The most recent logistics service provider to select HighJump is Cresent, a leading logistics outsourcing partner for a number of consumer goods companies.  Read the HighJump news release regarding Cresent.

HighJump WMS Warehouse Management System will automate many of Crescent’s previously manual warehouse processes and optimize the movement of goods throughout Crescent’s distribution centers, boosting productivity and inventory accuracy. The system will also enable the company to meet customer traceability requirements for batch and lot code tracking. Crescent will also be able to interface to customer ERP systems, a requirement that often previously hindered new business wins. The company will utilize HighJump’s Manufacturing Execution System Software in its co-packing operations, where it assembles product multipacks and builds product displays.

Why are so many logistics service providers turning to HighJump Software for their supply chain logistics software?  Here are few of the contributing factors.

Billing Management
HighJump Billing Management helps ensure maximum revenue and minimal billing cycle time by enabling activity-based billing of each client according to their distinct attributes. Appropriate charges are automatically generated for storage of goods and any other services you perform as a logistics services provider.
HighJump Billing Management’s capabilities extend far beyond billing and reporting. This comprehensive solution can also help make your business more attractive to current and potential clients by enabling you to offer more value-added services, superior inventory control and overall cost reduction—making you stand out in a commoditized logistics marketplace.

Dynamic Inventory Attribute Tracking
Logistics Service Providers have complexities of handling a variety of products with complex tracking requirements.  The same facility may manage perishable products that require best before date tracking, apparel that requires style color size tracking, and electronic products that require serial tracking.  With HighJump WMS Solutions all these attributes can be tracked in the same inventory model.  In fact, as the logistics service provider encounters uncommon data tracking requirements they can configure the solution to track these inventory item attributes.  Additionally any of these attributes can be shared with end clients through inventory visibility portals.

Integrated Transportation Management
Many logistics service providers in traditional public warehousing or in contract warehousing are branching into managed transportation services.  HighJump Software provides a transportation management solution used by many logistics service providers and is fully integrated with WMS warehouse management system.  The TMS support management of buy-side and sell-side contract rates allowing a logistics service provider to manage rates for contract carriers and separate rates for the price they sell the transportation service to their end client.

Flexibility to Meet the Changing Needs of Clients
The most important business differentiator for a logistics service provider is flexibility.  Existing clients frequently have new requirements and winning new business often requires changes to the operations and supporting systems.  HighJump has developed an out-of-the-box rules based architecture to allow logistics service providers to create unique rules that influence how a process works in the warehouse.  The rules can then be assigned to a client, an item, a vendor, or any attribute within the WMS warehouse management system.  Additionally if a standard rule cannot meet the specified requirement, a new rule may be created using Advantage Architect, HighJump’s workflow management adaptability tool.

How many times have you talked to a business user of enterprise software who wanted access to features in new software versions, but the cost and risk of software upgrades prevented them from accessing those features?  In my experience this is a frequent occurrence in many enterprises and a strong contributor to the growing angst between IT and line of business software users.

It shouldn’t be this way!  Enterprise software providers have made advances in service oriented architecture (SOA) and software as a service (SaaS) but few have been able to provide incremental features to end users on a feature by feature basis. 
HighJump Software’s unique Advantage Platform architecture addresses this specific challenge.  HighJump customers are easily able to upgrade their underlying technology platform (usually over a weekend) without modifying the business process workflows that run on the platform.  Then as business needs dictate, they can merge new business process workflows from the latest version into their production environment.  Instead of a big bang upgrade that requires data migration, significant change management, and risk, HighJump customers can merge in specific workflows as they need, in a risk reduced manner.

The video link provides a description of how this works in HighJump’s architecture and a practical example of how this creates immediate business value. The HighJump Upgrade: A steady stream improvements to support your changing business. 
 

Dan Radunz
Dan has a 13 year history with HighJump Software.  He moved up through the organization from software developer, to team leader, to Director of Technical Development Services.  Dan is a guru when it comes to the Advantage Platform, HighJump’s unique platform for supply chain technology that is highly adaptable and flexible.  I’ve had the privilege to listen to Dan speak of customers and prospective customers about the technology features of the Advantage Platform.  He has a knack for explaining highly technical concepts in a simple manor and can go deep in the weeds with the most technical audience members.  Dan will bring this technology leadership to the Direct Store Delivery Software products as we move forward with making newly acquired platforms available to existing customers.  Dan will also be critical in advancing our agile development methods across the organization.  
    
Millions of Moms, Millions of Flowers
Apparently, I wasn’t the only guy who found it easy delight my mother with a bouquet of flowers by placing an easy on-line order.  During the peak flower giving seasons of Valentine’s Day and Mother’s Day, a HighJump WMS warehouse management system customer ships millions of flowers in a very short time period (including my frequent orders).  The millions of WMS warehouse management system transactions required to support this volume are astonishing.  Only with supply chain logistic software that is benchmarked and proven to scale, is this type of operational volume accomplished.  It is a good feeling to know our software plays a critical role in these operations.
 

I was recently reviewing research from Brad Wyland at Aberdeen research which is sponsored by HighJump Software titled “Distribution Center Strategies in Today’s Economy: Managing Growth without Adding Labor or Space.” Brad uses an interesting analogy in this piece by comparing companies who will be well prepared to take advantage of an uptick in the economy to a basketball team that executes the fast break effectively. As Brad points out, the well executed fast break always starts with the rebound. A basketball team needs to be well positioned and organized for rebounding before they “run the floor” on the fast break. Similarly, companies who will be prepared to take advantage of what is sure to be a sudden revival of the economy must be positioned and well organized for the rebound.

It should not surprise me that Brad used a basketball analogy. I have known Brad for many years and during the college basketball season we will exchange a bit of email “trash talk” as his Pitt Panthers do battle with my Marquette Golden Eagles in the Big East. He holds the bragging rights this year as Pitt defeated Marquette handedly in Big East play.

So how should companies organize their distribution operations to take advantage of the rebound? As a software provider, part of me encourages businesses to make large investments in their supply chain technology infrastructure resulting in benefits such as improved throughput, increased inventory visibility, and better customer service through strong perfect order performance. However, as a business person I realize that most businesses will be scaling back capital expenditures. So what should companies be focusing on? I propose that most distribution executives should use this time period to perform a complete evaluation of their business processes and re-engineer where appropriate. Few companies are shipping at peak volumes in this economy.   It is a great time to execute on business process re-engineering projects utilizing methodologies like lean Kaizen or Six Sigma.

Once business processes are re-defined distribution executives should look to leverage existing IT infrastructure to the greatest extent possible. After all, a large system purchase will likely be scrutinized by the CFO. To get the most out of the supply chain execution software, utilize adaptability tools provided by the software provider that allows you change the software to match you new business process definition.

The economy will recover and will likely recover so quickly that many distribution executives will be caught by surprise. The savvy distribution executive will leverage this time period to prepare for the rebound. By re-engineering business processes and ensuring your technology supports these new processes you should be prepared to ship at even greater volumes (run the fast break) after the rebound.

Have you ever anxiously awaited the results of an exam wondering if you had even received a passing grade? I must admit that there were a few electrical engineering courses in college where I hoped the “curve” put me into passing range. I had a similar feeling when reviewing HighJump Software’s direct to store delivery software capabilities against a list of “next generation” technology capabilities to support direct to store distribution processes.

I recently had the opportunity to participate in a panel discussion at the Grocery Manufacturer’s Association Information Systems/Logistics Distribution conference. The panel was chaired by Lora Cecere from AMR Research and consisted of leaders from several software companies that provide direct to stored delivery (DSD) software. 

The GMA has a committee of DSD manufacturers who have identified “next generation” technology capabilities to support their DSD processes. I will highlight a few of these next generation capabilities and explain what HighJump Software is providing in these areas.

In Store Survey Assessment for Competitive Information – in Mary 2008, HighJump Software launched HighJump™ Survey Management.   This new product integrates with existing HighJump mobile pre sell technology and allows competitive information to be collected in the field and analyzed at headquarters by sales and marketing professionals. 

Return and accounting for marketing materials, coolers, display units – management of non-product assets in the direct to store delivery supply chain is critical. These items could be point of purchase merchandising materials, branded coolers, or beer tap handles. In the battle for consumer mind share, the proper tracking and delivery execution of these materials is as important as the product itself. HighJump’s route accounting systems (RAS) have capabilities to manage and track these promotional materials.

Near real time synch – significant technology advancement has occurred in this area. As rugged mobile computers have advanced with cellular data connectivity, the ability to leverage real time information in the direct to store delivery process has increased. With HighJump direct to store delivery solutions, the mobile workforce has the ability to view inventory and place orders in real time. Additionally, with the HighJump™ Usable GPS management can gain real time visibility to the location of their mobile workforce and view progress against a previously scheduled route. 

Based on these emerging trends in direct to store delivery technology, I would have to say that HighJump Software receives a passing grade (likely better than just passing). It seems that our over 500 direct to store delivery customers have helped steer our product in the right direction. 

I recently had the opportunity to participate in a panel discussion at the Grocery Manufacturer’s Association Information Systems/Logistics Distribution conference. Although the event featured an attendee list of CPG supply chain heavyweights, the venue is what really caught my eye when I received the initial invitation. The Marriott Doral in Miami is home to one of the most famous holes on the PGA tour, the 18^th hole on the Blue Monster course. My schedule did not permit me to squeeze in a round on the famous course, but I was able to wander around the famous finishing hole at dusk and image the many professionals who blew their chances at PGA tour win as they hit their tee shot in the water at this famous hole.

The next morning I suited up and got ready for the panel discussion on technology trends in direct to store distribution. The panel was hosted by Lora Cecere of AMR Research. Lora and the GMA have recently partnered to create a report titled “Powering Growth Through Direct Store Delivery.” The report highlights the impact of direct to store distribution for retailers and manufacturers including the following key metrics.

• Direct to store delivery (DSD) products represent 24% of the volume for grocery retailers
• Direct to store delivery (DSD) products represent 52% of the retail profits in the grocery value chain
• 7 of the 10 largest grocery categories are managed through direct to store delivery (DSD) processes
• Direct to store delivery (DSD) products have a replenishment cycle that is 5 times faster than traditional retail distribution

With benefits like this, it is clear that the direct to store delivery (DSD) model is here to stay. The key question for the future is “how well can the process be executed going forward?” Over the next few blog postings I will provide some insights into the technology trends in direct store delivery software and collaboration between retailers and suppliers in the direct to store delivery business process.   

I started with HighJump Software in February of 2002. The economy was still rocky following the September 11^th tragedy and the enterprise software industry was particularly hard hit on the back of the dot com bubble burst. Some might have said it was a terrible time to move from management consulting to the software business. Interestingly, HighJump was able to weather the difficulties and produced rapid growth in the early 2000’s. For several years in that time period, our marketing message prominently highlighted that we were the “fastest growing supply chain execution software provider”. As HighJump established a larger position in the supply chain execution software market, we de-emphasized that message.

The recent news that HighJump was cited as the fastest growing provider of Warehouse Management Systems (WMS) in a report by ARC Advisory Group titled “Warehouse Management Systems Worldwide Outlook: Marketing Analysis and Forecast Through 2013” was a bit like déjà vu, especially given the current economic situation. There appear to be some factors that remain important to WMS warehouse management system buyers when they select HighJump over our traditional competitors.

Flexible Architecture – traditional approaches to WMS solutions remain primarily switch driven. This means that functionality is enabled through setting of interdependent switches to define a business process. HighJump does provide switches for all standard functionality in the warehouse management system (WMS). In addition to the traditional switches, HighJump’s architecture provides a workflow modeling tool which provides even greater flexibility when defining operational processes such as those in a warehouse. Prospective buyers who understand their distribution center operations will likely change over time, see value in this flexible architecture.

Total Cost of Ownership - ongoing cost of enterprise software applications is being heavily scrutinized by IT organizations during this economic slowdown. HighJump encourages buyers of warehouse management systems to evaluate cost of ownership over the full lifecycle of the software system, typically 7-10 years. Specific areas to understand include: initial software license fees, implementation services, customization fees, maintenance and support fees, upgrade fees (assume an upgrade every 2-3 years) and ongoing customization fees to support business changes. Our experience shows that buyers who perform this analysis will see clear differentiation in total cost of owner between HighJump its traditional competitors.

I believe flexible architecture and total cost of ownership are heavily weighted criteria when evaluating a warehouse inventory management system in an economic slow period like we experienced in the early 2000’s and are currently experiencing. These factors may provide some indication of why HighJump’s business performance will remain healthy during these time periods.

The snow is finally gone from my backyard and the squirrel chasing season has begun for my dog. Throughout the spring and summer my dog will hunt down squirrels every time he is let out the back door. Squirrels consistently scurry up the nearest tree and leave him standing below barking.

This was the visual I had when I realized that food and beverage manufacturers and retailers may be barking up the wrong tree when it comes to getting real demand information.

I have engaged in discussions with many consumer products and food and beverage companies who view retailer point of sale data as the holy grail of demand planning. The argument seems to be that if retailers could provide accurate timely point of sale information, demand planning would be easy. In the same breath these manufacturers go on to explain the data cleansing challenges associated with making point of sale data meaningful.

I propose an alternative solution that can be used by many food and beverage companies who utilize direct store delivery. Most direct to store distribution processes have field sales people, merchandisers, and delivery drivers visit retailers on a daily basis. For sales people, the process often involves taking a physical inventory at the store shelf and back room to calculate an order size (often called “build up” quantity) using mobile computers connected wirelessly to route accounting systems (RAS). In most cases this inventory level will be a more accurate indicator of actual sell-through at a retail location than the point of sale data. At a minimum this inventory level provdes another data point that can be used along with point of sale data and sell-to data to provide an accurate view of sell-through by product.

I suggest that manufacturers with direct store delivery capabilities leverage their existing business process and systems infrastructure to gain visibility to true demand patterns at the retail location.