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First Thoughts
  By Dan Gilmore - Editor-in-Chief  
     
   
  May 6 , 2011  
     
 

Supply Chain News: Trip Report: JDA Software User Conference 2011

 
 

 

I am just back from the annual JDA Software Focus user conference in Orlando, and it was an interesting few days, generating news and insights that I thought were worth sharing.

For a video version of my review from Orlando, go here: JDA User Conference 2011 Video Review.

Before I summarize a handful of very interesting company presentations, a few notes first on key themes from a JDA perspective. As most of you may know, the formerly retail-focused JDA acquired consumer goods-oriented provider Manugistics in 2006, and then high tech and retail focused i2 Technologies early last year. The strategy has been highly successful, with JDA enjoying strong levels of profit and revenue growth for a number of years, as highlighted in the opening presentation from CEO Hamish Brewer. This frankly is a company that appears very confident in its market position right now.

Gilmore Says:

PepsiCo's Animesh Ukidwe did a great job of explaining a new tool it has built to front-end its existing TMS solution that I can only call "wave management for the transportation planning."


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Brewer also reconfirmed JDA's product roadmap, which importantly includes plans for "convergence" releases that combine the capabilities of existing JDA/Manugistics products with those of i2. That product overlap occurs in supply chain areas such as demand planning or transportation management between the former i2 and "Manu" solutions, but also in several areas in core retail management, the legacy of i2's acquisition of a portfolio of retail software from IBM a number of years back.

These convergence releases are starting this year, and the first such solution - in the transportation procurement/bid optimization area - has been released. This initial target makes sense, as this category of software really just does one main thing, and differences in needs across industries are small.

The planned roll-out of the new products continues each year through completion in 2014. Brewer says these will be "supersets" that combine most of the functionality of both say i2 and Manugistics products. How this plays out will be interesting - just as an example, demand planners at cereal makers don't care much about "attach rates" and bill of materials explosion that high tech and discrete manufacturers using the i2 products do. So, JDA will be challenged to not make the converged solutions overly complex when providing the ability to handle the needs of virtually every industry, and to make the eventual upgrade process smooth for customers on both sides of the history.

Noteworthy, however, Brewer said there will be no pressure for customers to upgrade to the new products, and that some functional enhancements to existing solutions will be continue (though inevitably, I'll note, these will diminish over time for basic business reasons).

JDA is also pushing two mirrored concepts/visions for more integrated supply chains. In retail, this is called Integrated Planning and Execution (IPE). In consumer goods, the vision is one of the "shelf-connected supply chain."

We did a major report on integrated planning and execution two years ago, so I buy very much into the concept. and believe this in fact will be perhaps the most dominant supply chain theme over the next 5 years. The basic vision: there is no loss of fidelity as plans move from the highest strategy levels to sales and operations planning and then lower levels of planning, ultimately down to execution (see Fairchild Semiconductor presentation summary below). That in turn requires high levels of visibility and integration, combined with minimal latency in pushing actual results back up through decision processes. "Alignment" on steroids.

Brewer listed six or seven retailers, including Publix, The Sports Authority, OfficeMax and others that have in some way bought into the vision. I'll assume that means they have adopted this concept as a clear corporate strategy, and committed to some set of JDA solutions (and as importantly, integrated "workflows") to make it happen.

I have more I could summarize overall from the conference, but am likely to run out of space, so I am going to get right now to some of the noteworthy customer presentations.

For the third year, I participated in JDA's "demand optimization council" (DOC) meeting the day before the main conference started, which involves a dozen or so of JDA's most advanced users in the retail and consumer goods industries discussing issues and initiatives, largely but not only relative to forecasting, supply management, and replenishment.

I go to the meeting as a participant, and am very limited in what I can report back, but a clear theme this year was around advanced modeling of the supply chain. The concept of "flow path optimization" - frequently re-evaluating the lowest total cost route for each SKU from supplier to shelf - has been around for awhile but not much used. That is starting to change, and one retailer presented its very advanced model that after several years of development and experience has produced simply astounding results in terms of improvements in inventory, service and logistics costs.

Another has developed a "transload" model that helps it optimally transfer huge volumes of inbound 40-ft containers imported from Asia to 53-footers for shipment to DCs. It's a combinatorial problem - what SKUs coming in should go in what trailers going out? The solution is very cool, and the system has had a significant impact on reducing freight and handling costs.

One CPG company at the DOC meeting noted how rising transport costs and more importantly increasingly tight capacity has driven it to change its production scheduling. The goal is now to smooth loadings from production to distribution points, so it can consistently hit the capacity commitments it has from carriers. In 2009, capacity was abundant; if the company had 5 loads on Tuesday one week, and 12 the next, it was no problem. Now, those extra loads have a hard time finding a carrier, and the company was sometimes spending as much as 300% more than normal to get them moved. Now, some production efficiencies or inventory plans are being be sacrificed to improve logistics costs, to reduce total supply chain costs.

Fairchild Semiconductor's supply chain chief Kevin Chynoweth gave a great presentation on how to think about managing a supply chain in periods of demand constraints versus supply constraints, but what really struck me were the changes Fairchild has made to connect "top floor to shop floor." Unlike a few years ago, there is simply absolute alignment there now between S&OP forecasts and other high level plans and what happens in the downstream fabs and assembly operations, to the point where customer priorities and service policy segmentations at higher levels of the company's planning are exactly reflected in Fairchild's detailed manufacturing planning. Excellent.

PepsiCo's Animesh Ukidwe did a great job of explaining a new tool it has built to front-end its existing TMS solution that I can only call "wave management for the transportation planning," with my comparison being to the wave process used by many companies to release customer orders to the DC floor. (You heard it here first.) PepsiCo has a number of divisions, with many different transportation models/requirements across its incredible $2.2 billion+ freight spend annually

The traditional TMS process of planners manually grabbing orders and building optimization runs is too variable, subject to errors and delays, and just too labor intensive, according to Ukidwe. So, PepsiCo built an "Optimization Cockpit" as a front end, featuring a sophisticated rules engine that allows automatic or semi-automatic selection of orders to pooled for system-generated optimization runs, followed by equally rules-based system decisions about whether to move a given load over to execution or keep it longer (if feasible) for another optimization run tomorrow.

The benefits: much better planner productivity, and reduced freight spend due to smarter optimization runs and more orders in the optimization pools. This is true innovation, and I am convinced will become the way most large shippers will do this over the next five years.

Finally, Eric Robinson of Lowes gave a "tour de force" presentation on how Lowes is implementing a new set of demand planning and replenishment software. Unlike almost anyone, Lowes has "over invested" in upfront conceptualization phase, from wide ranging interviews to development of a full prototype system for analyzing the fit with business needs.

Clearly, more money and time at the beginning, but for the reward of clarity of purpose, needs, benefits, change management requirements, and more. You hear it, and say "this is how it should be done." Why not everyone?

More detail on some of these case studies soon.

Any reaction to Gilmore's JDA conference trip report? Did you attend? What takeaway did you have? Should companies spend more time as Lowes is on the upfront planning for software projects? Let us know your thoughts at the Feedback button below.

 
 
     
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