With quite a few mergers & acquisitions in the WMS space during the recent months, I was wondering what should be the strategy for companies planning to implement a WMS?
Also, for companies that have already implemented these packages, what should be their strategy with respect to upgrades, support etc.?
Full Article:
Adapted from a response by Jim Willems on 10/03/2008. I believe that if a company completes an accurate selection process (meaning they buy a system according to their needs not their desires) and they structure the contract terms correctly, the consolidation of the WMS industry should be minimal. In my experience most clients are looking for a 5 to 7 year life from their WMS - meaning their system should be up and live prior to their vendor being purchased. Most acquiring firms are not going to immediately change anything, allowing for the client to get even closer to the point of their systems live expectancy. If the new vendor does significantly changes to the culture, pricing, and system the client should be at a point of having their ROI and able to move to a new system if needed.
Showing posts with label WMS. Show all posts
Showing posts with label WMS. Show all posts
Monday, September 28, 2009
Thursday, September 10, 2009
Consolidation looms in WMS market
Top WMS suppliers gain more market share in shrinking market By Dave Hannon
Recessions tend to drive market consolidation, as the lean revenues thin out the herd in nearly all markets. And the warehouse management systems (WMS) market is no exception, say market analysts at ARC Advisory Group.
In a recent report, ARC analysts say the top-tier vendors in the WMS market saw strong growth in 2008, as they have in most of the past 10 years ARC has performed the study. However, that trend of the big getting bigger cannot continue for much longer, and soon—maybe as soon as next year—the WMS market will have consolidated to the point where the only way the top five vendors can grow is by taking over one of the other top five.
Overall the WMS market shrank by 1% in 2008 and is forecast to decline again this year in total size before trending back up to grow again in 2010 through 2013. Compound annual growth for the WMS market through 2013 is forecast to be 2.2%, but much of that top-line growth is driven by the largest vendors.
“ARC expects that at least 10 WMS suppliers will go out of business”in 2010, says Steve Banker, ARC analyst. “In a smaller, consolidated market, the major suppliers will find that the WMS market is much more of a zero sum game. One vendor’s growth will come at another’s expense.”
And among the smaller vendors, there is likely to be a snowball effect—as WMS buyers get more concerned about the risk or going with a lesser-known vendor, they will ask those vendors to open up their books. “And many will fail that test,” ARC reports.
Recessions tend to drive market consolidation, as the lean revenues thin out the herd in nearly all markets. And the warehouse management systems (WMS) market is no exception, say market analysts at ARC Advisory Group.
In a recent report, ARC analysts say the top-tier vendors in the WMS market saw strong growth in 2008, as they have in most of the past 10 years ARC has performed the study. However, that trend of the big getting bigger cannot continue for much longer, and soon—maybe as soon as next year—the WMS market will have consolidated to the point where the only way the top five vendors can grow is by taking over one of the other top five.
Overall the WMS market shrank by 1% in 2008 and is forecast to decline again this year in total size before trending back up to grow again in 2010 through 2013. Compound annual growth for the WMS market through 2013 is forecast to be 2.2%, but much of that top-line growth is driven by the largest vendors.
“ARC expects that at least 10 WMS suppliers will go out of business”in 2010, says Steve Banker, ARC analyst. “In a smaller, consolidated market, the major suppliers will find that the WMS market is much more of a zero sum game. One vendor’s growth will come at another’s expense.”
And among the smaller vendors, there is likely to be a snowball effect—as WMS buyers get more concerned about the risk or going with a lesser-known vendor, they will ask those vendors to open up their books. “And many will fail that test,” ARC reports.
Monday, August 3, 2009
Supply Chain Software and Technology: The Status and the Future
A Great article that give great presecptive on the SCM IT market
By Bridget McCrea -- Supply Chain Management Review, 9/1/2008
You've heard that technology moves at the speed of light, and nowhere is this more evident than in the supply chain space, where new and improved offerings crop up every year. There are new iterations of TMS, WMS, ERP and GTM systems to test out, budding technologies like RFID and GPS to try, and many other options at your fingertips in this age of innovation.
In this article, we'll divide the supply chain technology space into segments—the software and solutions that vendors are developing, and the technology that they're using to make those systems better, faster and cheaper. Then, we'll look at what's around the next corner, what's coming down the pike, and the directions that software and technology are likely to take in the years to come.
So strap yourself in, sit back and enjoy the ride as we take you through the present and future of supply chain technology.Software and Solutions
Historically, supply chain software has been divided into two broad categories: supply chain execution (the optimization of product and service flow from source to customer) and supply chain planning (the coordination of assets to optimize the delivery of goods, services and information from supplier to customer). Over the last year, however, the lines between the two have become blurred, with new software bridging into both areas.
Nari Viswanathan, research director, supply chain management, for Aberdeen Group in Boston, points to One Network as a vendor that's helping to bridge the gap. “Its solution can do both planning and execution,” says Viswanathan, “and provides solutions that cover a wide variety of user roles and functions.” He says shippers are embracing the trend, with large high-tech, CPG, aerospace and defense manufacturers purchasing the software, which “sits on top of existing ERP systems.”
Also growing in popularity right now is the use of replenishment software, which is being developed by vendors like Oracle. Credit the fast-paced manufacturing environment with stoking the need for such systems, which help shippers achieve faster replenishment processes.
“This software runs several times a day, making use of the demand pattern provided by retailers,” says Viswanathan. “For a DVD manufacturer, for example, the software can help retailers replenish the stock within just a few hours.”
Joe Francis, executive director of technology for the Supply Chain Council in Washington, D.C., says global visibility has come to the forefront for many companies. And this, in turn, has pushed vendors to come up with solutions that effectively make the world smaller for those doing business internationally.
“Global visibility is the best practice that everyone wants right now,” says Francis. “Bad events are so disruptive that we're starting to see much more emphasis on track-and-trace and predictive events control.” Such controls aren't necessarily the domain of large ERP systems, says Francis, which tend to be more transaction-oriented in nature, rather than predictive. For help, shippers are turning to more specialized supply chain applications that can better tackle the global environment.
According to Steve Banker, director of supply chain management at Boston-based ARC Advisory Group, a recent survey of 140 supply chain managers uncovered TMS as the top-of-mind technology solution right now. Banker says that high fuel costs and a growing interest in green initiatives are pushing shippers in that direction, followed closely by WMS solutions that allow shippers to use RFID or speech recognition in their DCs. “TMS ranks the highest, and WMS is next as the most important supply chain applications right now,” Banker says.
Within those two categories, on-demand or “fast” solutions have gained much traction over the last few years. “Everyone has embraced the Web—particularly in the transportation realm—as the application space for solutions,” says Ann Grackin, managing director, global supply chain risk intelligence for Marsh Consulting in New York. Such solutions are particularly attractive for shippers that want to get up and running fast (without having to deal with the purchase-and-install process) at an affordable price and in an application environment where their trading partners can do the same.
“The concept isn't new, but the rate of adoption of these on-demand systems is increasing,” says Grackin. “Not just because we're seeing more complex supply chain networks that have to talk to each other, but also due to the increased need for visibility. The Web is the way to get that done.”
So whereas in the past, large companies would send out mandates to their trading partners to get hooked up on a specific solution, today those same firms are closely collaborating with their vendors and customers to create systems that help the various entities work together in the most efficient manner possible. Grackin points to the bumper crop of product recalls and counterfeit challenges in 2007 as one of the major catalysts for change in that arena.
“This year, we've seen a 2.7 percent increase in border seizures of counterfeit product, and that number could rise to 5 percent by the end of the year,” says Grackin. “That's driving companies to sit down with their trading partners to figure out how they can work together better and secure their supply chains while also increasing visibility and transparency. Then, they're coming up with strategies to put those discussions into action.”
According to AMR Research, users will be reaching out to both ERP vendors and so called best-of-breed specialty vendors to support a wide range of supply chain functions. Exhibit 1 gives a breakdown of the sources they turn to for the various applications.The Tech Behind it All
As companies are assessing the latest and greatest supply chain solutions, they're also looking at the technology behind those systems. Right now, for example, some have their hopes pinned on new combination RFID-GPS systems that integrate the two technologies into sensors and cellular devices. “Combining the two technologies allows tags to be used in every environment—whether they are remote or local,” says Grackin, “and solves the problem of 'where in the world is the reader?'”
At both the enterprise level and the third party (3PL) level, Francis says GPS is providing shippers with much more detail than they previously were able to access. Advancements in the technology is allowing for a “merging of fields” which enables companies to reroute shipments in the field (when an order change comes in, for example), thanks to the fact that their exact locations are known.
Francis says he “still hasn't seen the killer app for RFID that everyone is waiting for,” but adds that the technology has been most effective in military logistics applications, particularly in reverse logistics. “When you return from the field with material, you don't have a lot of time to scan in the bar codes on your trucks for parts,” Francis explains. “You'd rather put them in a box and have someone else know what's in them by simply punching a button.”
From her vantage point as research director at AMR Research in Boston, Jane Barrett says that adoption of RFID and service-oriented architecture (SOA) have so far been “slower than the vendors would like.” With companies under pressure to finish projects, getting new technologies isn't always easy. “Companies don't always feel that they will get the ROI that they want, and they often lack the skills and resources to get these new technologies,” says Barrett. “In some cases the technology is out there, but companies are under such pressure to try to keep the wheels turning, and as a result are struggling to adopt it.”What the Future Holds
As technology continues to evolve, so too do the supply chain applications that companies are using to increase visibility, optimize operations, streamline transportation channels, and increase their bottom lines. Studies by AMR Research show that these applications will be driven by customer demands, heightened global competition, and regulatory compliance among other issues. (Exhibit 2 shows the issues impacting application investments.)
Looking forward, Grackin sees more developers looking to address risk management, and creating data and the solutions that surround such activities. “Future software applications will have to understand and embrace a new set of performance matrix around supply chain management, such as those that can look at existing models and try to extrapolate what can go wrong,” the Marsh consultant says. “While we've seen architectures in the risk management arena, we haven't really seen the data and solutions yet.”
In looking at the 3PL space, Francis says optimization will continue to be an ongoing goal for these providers and their clients. Many are beginning to use solutions from vendors like Xelocity, for example, to model their entire logistics network and develop their RFPs. “We see a big trend in custom logistics providers using this type of simulation software to set up their contracts,” says Francis. “Using this process, the 3PLs can then do pre-execution using a fairly accurate model that helps them understand the level of optimization necessary to go into the contract bid.”
Calling SOA “more rhetoric than reality” and a “slow, gradual process,” Banker says software as a whole is becoming more SOA-like every day. “Some suppliers are ahead of others,” he says. “In TMS, for example, on-demand works pretty well and is becoming more and more prevalent.”
Banker sees more supply chain managers turning to voice applications in the future. “I'm hearing from companies that voice is coming up in more and more deals,” says Banker, who expects voice to be integrated with other systems for maximum effectiveness. “It's sort of the multi-modal idea of being able to use voice in the beginning in conjunction with other applications.”
Finally, Banker says shippers are showing an interest in the use of appointment scheduling capabilities based on user-defined business tools such as optimization as well as dynamic routing guides that allow companies to select the most efficient and affordable routes possible for the shipment of goods. “This is a relatively new application that factors in carrier performance and dynamically adjusts based on that measure,” says Banker. “It's a relatively new technology that users are highly interested in.”More to Come
Viswanathan of the Aberdeen Group expects the evolution of service or “interarchitecture” and master data management to come to the forefront of supply chain applications in the future, and to result in further innovations over the next few years. More and more, he says, there is a need for the creation of globally-integrated supply chains, with all trading partners (suppliers, customers, shippers and carriers alike) functioning as part of a single, large supply chain, rather than a bunch of individual ones.
“Going forward,” says Viswanathan, “I see SOA and master data management allowing companies to synchronize across these disparate systems.”
As they struggle under the pressure of rising commodity costs and competition both domestically and overseas, expect more shippers to look to technology to solve their supply chain problems. Vendors are stepping up to the plate and coming up with new technologies and solutions to meet their customers' growing needs.
“Many of today's supply chains were designed around $20-a-barrel oil, and now many companies are rethinking what their entire supply chains look like,” says AMR's Barrett. “Technology is one major piece of that puzzle.”
By Bridget McCrea -- Supply Chain Management Review, 9/1/2008
You've heard that technology moves at the speed of light, and nowhere is this more evident than in the supply chain space, where new and improved offerings crop up every year. There are new iterations of TMS, WMS, ERP and GTM systems to test out, budding technologies like RFID and GPS to try, and many other options at your fingertips in this age of innovation.
In this article, we'll divide the supply chain technology space into segments—the software and solutions that vendors are developing, and the technology that they're using to make those systems better, faster and cheaper. Then, we'll look at what's around the next corner, what's coming down the pike, and the directions that software and technology are likely to take in the years to come.
So strap yourself in, sit back and enjoy the ride as we take you through the present and future of supply chain technology.Software and Solutions
Historically, supply chain software has been divided into two broad categories: supply chain execution (the optimization of product and service flow from source to customer) and supply chain planning (the coordination of assets to optimize the delivery of goods, services and information from supplier to customer). Over the last year, however, the lines between the two have become blurred, with new software bridging into both areas.
Nari Viswanathan, research director, supply chain management, for Aberdeen Group in Boston, points to One Network as a vendor that's helping to bridge the gap. “Its solution can do both planning and execution,” says Viswanathan, “and provides solutions that cover a wide variety of user roles and functions.” He says shippers are embracing the trend, with large high-tech, CPG, aerospace and defense manufacturers purchasing the software, which “sits on top of existing ERP systems.”
Also growing in popularity right now is the use of replenishment software, which is being developed by vendors like Oracle. Credit the fast-paced manufacturing environment with stoking the need for such systems, which help shippers achieve faster replenishment processes.
“This software runs several times a day, making use of the demand pattern provided by retailers,” says Viswanathan. “For a DVD manufacturer, for example, the software can help retailers replenish the stock within just a few hours.”
Joe Francis, executive director of technology for the Supply Chain Council in Washington, D.C., says global visibility has come to the forefront for many companies. And this, in turn, has pushed vendors to come up with solutions that effectively make the world smaller for those doing business internationally.
“Global visibility is the best practice that everyone wants right now,” says Francis. “Bad events are so disruptive that we're starting to see much more emphasis on track-and-trace and predictive events control.” Such controls aren't necessarily the domain of large ERP systems, says Francis, which tend to be more transaction-oriented in nature, rather than predictive. For help, shippers are turning to more specialized supply chain applications that can better tackle the global environment.
According to Steve Banker, director of supply chain management at Boston-based ARC Advisory Group, a recent survey of 140 supply chain managers uncovered TMS as the top-of-mind technology solution right now. Banker says that high fuel costs and a growing interest in green initiatives are pushing shippers in that direction, followed closely by WMS solutions that allow shippers to use RFID or speech recognition in their DCs. “TMS ranks the highest, and WMS is next as the most important supply chain applications right now,” Banker says.
Within those two categories, on-demand or “fast” solutions have gained much traction over the last few years. “Everyone has embraced the Web—particularly in the transportation realm—as the application space for solutions,” says Ann Grackin, managing director, global supply chain risk intelligence for Marsh Consulting in New York. Such solutions are particularly attractive for shippers that want to get up and running fast (without having to deal with the purchase-and-install process) at an affordable price and in an application environment where their trading partners can do the same.
“The concept isn't new, but the rate of adoption of these on-demand systems is increasing,” says Grackin. “Not just because we're seeing more complex supply chain networks that have to talk to each other, but also due to the increased need for visibility. The Web is the way to get that done.”
So whereas in the past, large companies would send out mandates to their trading partners to get hooked up on a specific solution, today those same firms are closely collaborating with their vendors and customers to create systems that help the various entities work together in the most efficient manner possible. Grackin points to the bumper crop of product recalls and counterfeit challenges in 2007 as one of the major catalysts for change in that arena.
“This year, we've seen a 2.7 percent increase in border seizures of counterfeit product, and that number could rise to 5 percent by the end of the year,” says Grackin. “That's driving companies to sit down with their trading partners to figure out how they can work together better and secure their supply chains while also increasing visibility and transparency. Then, they're coming up with strategies to put those discussions into action.”
According to AMR Research, users will be reaching out to both ERP vendors and so called best-of-breed specialty vendors to support a wide range of supply chain functions. Exhibit 1 gives a breakdown of the sources they turn to for the various applications.The Tech Behind it All
As companies are assessing the latest and greatest supply chain solutions, they're also looking at the technology behind those systems. Right now, for example, some have their hopes pinned on new combination RFID-GPS systems that integrate the two technologies into sensors and cellular devices. “Combining the two technologies allows tags to be used in every environment—whether they are remote or local,” says Grackin, “and solves the problem of 'where in the world is the reader?'”
At both the enterprise level and the third party (3PL) level, Francis says GPS is providing shippers with much more detail than they previously were able to access. Advancements in the technology is allowing for a “merging of fields” which enables companies to reroute shipments in the field (when an order change comes in, for example), thanks to the fact that their exact locations are known.
Francis says he “still hasn't seen the killer app for RFID that everyone is waiting for,” but adds that the technology has been most effective in military logistics applications, particularly in reverse logistics. “When you return from the field with material, you don't have a lot of time to scan in the bar codes on your trucks for parts,” Francis explains. “You'd rather put them in a box and have someone else know what's in them by simply punching a button.”
From her vantage point as research director at AMR Research in Boston, Jane Barrett says that adoption of RFID and service-oriented architecture (SOA) have so far been “slower than the vendors would like.” With companies under pressure to finish projects, getting new technologies isn't always easy. “Companies don't always feel that they will get the ROI that they want, and they often lack the skills and resources to get these new technologies,” says Barrett. “In some cases the technology is out there, but companies are under such pressure to try to keep the wheels turning, and as a result are struggling to adopt it.”What the Future Holds
As technology continues to evolve, so too do the supply chain applications that companies are using to increase visibility, optimize operations, streamline transportation channels, and increase their bottom lines. Studies by AMR Research show that these applications will be driven by customer demands, heightened global competition, and regulatory compliance among other issues. (Exhibit 2 shows the issues impacting application investments.)
Looking forward, Grackin sees more developers looking to address risk management, and creating data and the solutions that surround such activities. “Future software applications will have to understand and embrace a new set of performance matrix around supply chain management, such as those that can look at existing models and try to extrapolate what can go wrong,” the Marsh consultant says. “While we've seen architectures in the risk management arena, we haven't really seen the data and solutions yet.”
In looking at the 3PL space, Francis says optimization will continue to be an ongoing goal for these providers and their clients. Many are beginning to use solutions from vendors like Xelocity, for example, to model their entire logistics network and develop their RFPs. “We see a big trend in custom logistics providers using this type of simulation software to set up their contracts,” says Francis. “Using this process, the 3PLs can then do pre-execution using a fairly accurate model that helps them understand the level of optimization necessary to go into the contract bid.”
Calling SOA “more rhetoric than reality” and a “slow, gradual process,” Banker says software as a whole is becoming more SOA-like every day. “Some suppliers are ahead of others,” he says. “In TMS, for example, on-demand works pretty well and is becoming more and more prevalent.”
Banker sees more supply chain managers turning to voice applications in the future. “I'm hearing from companies that voice is coming up in more and more deals,” says Banker, who expects voice to be integrated with other systems for maximum effectiveness. “It's sort of the multi-modal idea of being able to use voice in the beginning in conjunction with other applications.”
Finally, Banker says shippers are showing an interest in the use of appointment scheduling capabilities based on user-defined business tools such as optimization as well as dynamic routing guides that allow companies to select the most efficient and affordable routes possible for the shipment of goods. “This is a relatively new application that factors in carrier performance and dynamically adjusts based on that measure,” says Banker. “It's a relatively new technology that users are highly interested in.”More to Come
Viswanathan of the Aberdeen Group expects the evolution of service or “interarchitecture” and master data management to come to the forefront of supply chain applications in the future, and to result in further innovations over the next few years. More and more, he says, there is a need for the creation of globally-integrated supply chains, with all trading partners (suppliers, customers, shippers and carriers alike) functioning as part of a single, large supply chain, rather than a bunch of individual ones.
“Going forward,” says Viswanathan, “I see SOA and master data management allowing companies to synchronize across these disparate systems.”
As they struggle under the pressure of rising commodity costs and competition both domestically and overseas, expect more shippers to look to technology to solve their supply chain problems. Vendors are stepping up to the plate and coming up with new technologies and solutions to meet their customers' growing needs.
“Many of today's supply chains were designed around $20-a-barrel oil, and now many companies are rethinking what their entire supply chains look like,” says AMR's Barrett. “Technology is one major piece of that puzzle.”
Thursday, July 30, 2009
Top 20 SCM Vendors
The leaders in 2008 look much the same as in 2007. Once again, No. 1 SAP with $942 million and No. 2 Oracle with $715 million top the list. In a tough year, both posted significant percentage gains, with SAP up nearly 12% and Oracle growing by nearly 9%. JDA Software with $390 million, Manhattan Associates with $337 million and RedPrairie with $293 million rounded out the top five.
The TMS market was essentially flat, coming in at $1.2 billion, up from $1.1 billion in 2007, according to Adrian Gonzalez, director of the logistics executive council for ARC Research (781-471-1000, www.arcweb.com). The high price of fuel continues to be the most important factor driving the TMS market, according to Gonzalez. "Record oil prices through the first nine months of 2008 helped the market post an overall respectable number for the year."
The WMS market, meanwhile, was also flat, at $1.2 billion, according to Steve Banker, ARC's service director of supply chain management. The most important development in the market may be that big players like RedPrairie, Manhattan Associates and HighJump continue to take market share from the small to mid-sized providers. As Banker looks at the market, he sees as many as 20 small players that are on life support and may not survive in the current economy.
The most significant trend may be the emergence of new models, like on-demand, software-as-a-service, and by-the-transaction subscription models, for delivering and pricing supply chain management solutions. In the TMS market, for instance, the hosted model already represents about one third of the implementations, according to Gonzalez. While it has been slow to expand to the other applications, vendors are experimenting with new models. One idea that is emerging would deliver and price software services based on the number of transactions similar to the way a 3PL charges for order fulfillment services. Both Banker and Jacobson have had conversations with WMS and MES providers that are talking about this concept. Whether it will catch on or not is too early to tell.
"The on-demand market is about 1% of the WMS market," says Banker. "But vendors are looking at ways to reduce the upfront cost of implementing a solution."
Asia Pacific is about 8-12% of the global market and I predict significant change in the make-up of the SCM vendors in Asia Pac in 2009-2011.
The Asia Pacific market for WMS is still over $100M ..
More to follow..
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