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May 1, 2015 - Supply Chain Flagship Newsletter

This Week in SCDigest

bullet Trip Report - JDA Focus 2015 bullet SC Digest On-Target e-Magazine
bullet Supply Chain Graphic & by the Numbers for the Week bullet Holste's Blog/Distribution Digest
bullet Cartoon Caption Contest Continues bullet Trivia      bullet Feedback
bullet Stifel Weekly, Expert Insight & Supply Chain by Design bullet Videocasts/On Demand Videocasts

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Supply Chain Graphic of the Week
Walmart and Renewable Energy

Walmart has Nearly Doubled Fleet Efficiency
US Economy Slumps Badly in Q1
Canadian Grocer Loblaw Making Hay with Private Label Brands
Amazon's Q1 North American Merchandise Sales Soar


April 21, 2015 Contest

See The Full-Sized Cartoon and Send In Your Entry Today!

Holste's Blog: Escalating Labor Costs Drive DC Automation



Weekly On-Target Newsletter:
April 30, 2015 Edition

Cartoon, Walmart's Mission, Navigating China, DC Labor Costs and more

Stifel Transportation Weekly for April 20, 2015
by John Larkin
Managing Director and Head of Transportation Capital Markets Research Stifel Financial Corp

Managing China's Changing Regulatory Landscape
by Scott Byrnes
Vice President, Marketing
Amber Road

Routing Optimization is Hard: Lessons from UPS

by Dr. Michael Watson


Name the four major companies JDA has acquired since 2000 to move into supply chain from its retail system roots?

Answer Found at the
Bottom of the Page

Trip Report - JDA Focus 2015

I am fresh back from three days at the JDA Software user's conference meeting at the Marriott World Center hotel in Orlando, including Sunday duty.

I spend this time and bring you this report because the pure scale of JDA, especially after its late 2012 merger with RedPrairie, is obviously a major force in the supply chain industry. Somewhere I think a bit under $1 billion in revenue (it's a private company after the merger and doesn't share a lot of detail on such matters now), with 4000 or so customers worldwide, and with very strong positions in the consumer goods and retail segments, how JDA is doing and where it is going is of significance to a large share of our readers. Importantly, when I do this sort of vendor-specific trip report, I also try to find insights that apply more generally to even non-JDA customers.

So here I go. You can also find our daily review and comment videos here: Day 1 and  Day 2.


"Under Dail, JDA has been working hard to right the WMS ship and seems to have largely succeeded."


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I would say it was a confident JDA at this year's conference, a state software companies of course nearly always try to project, but I think that modest swagger was based on a justifiable foundation here in 2015. There were more than 2000 attendees, a good number in these times, and that includes dozens of big name companies from across the globe.

It was the first Focus as CEO for Bal Dail, who took on the permanent role last fall after some months in an interim spot, which he assumed after long-time CEO Hamish Brewer was let go not long after the 2014 conference. Since Dail had been chairman since JDA and RedPrairie merged and was very involved in the development of a new strategic agenda in late 2013, there has been virtually no disruption in the transition from Brewer to Dail - unusual for this kind of change. Indeed, Brewer was moved out because the board felt he wasn't moving fast enough on the new strategies that under Dail have now been accelerated.

Those strategies start with doing a better job of engaging with customers, driven by an on-going "voice of the customer" program, an organizational restructuring meant to remove barriers to customer centricity, employee incentive programs aligned with customer satisfaction, and more.

Is it working? A little too early to tell yet, but Dail said in his opening keynote that this is a "new JDA," and that customers are already noticing the difference. I think there is some truth in that, from what I could gather from the event. Dail on stage noted that in some ways JDA had until recently been at times "arrogant" in its customer interactions - something I can vouch was indeed perceived by many companies - and that the new JDA includes a more humble, customer-centric orientation. Good to see a software company own up to some previous errors in its ways - doesn't happen often.

Another key strategic element is a turbocharged emphasis on innovation. That includes some $125 million in annual R&D spend - obviously a substantial number - but more interestingly the launch of a new "innovation lab," run by Jean Francois Gagne and staffed with about 50 full-time employees across many different disciplines. That represents about 10% of overall R&D spend, though that number is actually understated, as participants from JDA consulting, industry groups and more are enlisted part-time for specific initiatives/projects sort of "off the books" of the direct lab investment.

Gagne told me the lab has some 20 initiatives going at any time, from very early, almost basic research through commercialization of new JDA products. It is currently working on things such as augmented reality (think order picking with smart glasses), borrowing from virtual reality games to create a new way to look at planning data, and image recognition (think monitoring store out-of-stocks using video cameras).

Important for JDA customers, the innovation lab will actually be the conduit through which totally new solutions are first taken to market, basically maintaining control through customer beta testing. This is currently how it's is working with a new product called RetailMe, which is a retail customer analysis tool that allows companies basically to create campaigns, offers and content to individual consumers, based on analytic insights about each of us (you and me) from loyalty  program data, web site interactions and more.

JDA's traditional product development group will now (as I understand it) be focused just on enhancing existing products.

I think the lab is a great idea, analogous a bit to Walmart's innovation lab in Silicon Valley, where a few thousand people are trying to figure out ways to beat Amazon. Putting all JDA new product development in the lab is not without some risk, and of course payback from the approach will ultimately determine its fate. That will take a couple of years at least to play out, but we will certainly be interested in any innovations coming from the lab.

Changing direction just a bit, there was a highly pronounced and visible pivot towards Warehouse Management Systems (WMS) and supply chain execution generally at this year's event - to the point of almost too much (and I'm an old WMS guy).

WMS received marginal attention at the 2013 conference and not all that much more in 2014. This year, was a totally different story, with Dail emphasizing WMS/execution in his keynote, JDA exec Razat Gaurav featuring as one of two new mobile "apps" he showed on stage one around DC labor management analytics, WMS customers winning a sizable percentage of the "real results" awards, a keynote from WMS customer Genco, and a heavy dose of breakout sessions around WMS/execution topics.

Got the idea? It's no secret that JDA screwed up the first year+ of the RedPrairie integration, letting far too much WMS talent get away, leading to issues in sales and implementation. Under Dail, JDA has been working hard to right the WMS ship and seems to have largely succeeded. WMS is the single biggest product line by revenue within the company now, Dail told me.

I think early on in the JDA-RP merger there was frankly a bit of disconnect with the JDA planning-oriented execs, who largely all remained in place for a time after the combination. Planning types have historically looked down their noses a bit on WMS and execution generally, which they view as a lower lifeform involved in slugging boxes around distribution centers. I think that kind of attitude impacted how JDA initially treated the RedPrairie talent and solution line.

But now there is a new executive team in place that doesn't have those biases. Several came from the execution world. Combine that with the reality that where retailers and many manufacturers right now are spending money is on omni-channel capabilities and efulfillment, in some cases pushing planning investments back in the priority line for now, and a renewed focus on WMS/TMS/execution makes a lot of sense.

That said, JDA seems to be finally getting its messaging and value prop around its "intelligent fulfillment" solution set right. This suite is designed for distribution-intensive companies and combines planning capabilities with execution in a prescriptive fashion.

It initially felt a bit like a forced fit, a construct primarily created to find some way to link the planning and execution parts of the company, but the idea has gained strength, and I think JDA itself believes in it more now than it did when the solution set was unveiled two years ago. The capable Fab Brasca is now running this from an industry solution group perspective. Importantly, this includes a partnership with IBM around distributed order management (DOM), an essential component for omni-channel commerce and beyond. Both JDA and IBM will be taking this combined solution to market, and sales execution will be key to its success or not - as usual.

Finally, JDA seems to now have its act together for its Flowcasting solution, inherited from RedPrairie and which provides a unique collaborative store-level forecasting capability. It took a while to work out the business arrangements (RedPrairie only owned half of Flowcasting) and then more time to figure out how to work the existing Flowcasting solution into JDA's existing product line.

That baggage seems to be behind Flowcasting. Again, I think more of JDA's own people believe in the Flowcasting approach today than did last year. I also spoke to several retailers and manufacturers who said they were at Focus specifically to better understand Flowcasting. We'll keep you posted on this one too.

I am out of space. Will be back with insights from Focus customer presentations in two weeks. Next week will be a trip report from the WERC conference.

Any reaction to the issues or insight from our JDA Focus coverage? Let us know your thoughts at the Feedback button or section below.


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More feedback from our article on Amazon's plans for a "ninth generation" fulfillment center design. The eighth generation design is in place at 10 DC's and features widespread use of the Kiva robots Amazon acquired in 2012. Who else thinks in terms of generations of DC besides Amazon?

Some of the Feedback is from our friends over at RetailWire, which summarized our article.

Feedback on Amazon 9th Generation Fulfillment Centers:


Amazon has deftly leveraged technology to lead in fulfillment but continues to be blithely unconcerned about profitability. Other retailers in test to improve profitability so need a faster and higher ROI.

So AMZN cannot really afford their model. That said, the cost of robots including drones will cone down as volumes rise and new innovations come to market, and more retailers will use them over time.

Christina Ellwood
Moreland Associates


When I read this question, I imagined another time when someone might have walked down to the warehouse to tell Fred, the head of the warehouse, to wear his tie for some East Coast investment people.

But this is now and Fred's PhD thesis was entitled "Dynamic Vehicle Routing for Robotic Networks" because as much as AMZN is a retailer, its profits, when they finally make some, will be due to their logistics expertise.

Just as Walmart succeeded with EDLP, AMZN right now needs to focus on two letters, P/E - and that's what those East Coast investment people came to justify. Good luck Fred.

Vahe Katros
Plan B


Amazon's main strategy is to invest, advance, revolutionize, and otherwise stay well ahead in the inventory management and fulfillment (among many many others). So much about winning in omnichannel is about flawless fulfillment - allowing customers to buy, pick-up or have delivered, and return products without a hitch and barely a thought. Amazon owns that in retail. And this will likely only increase their competitive edge.

I am one who believes Amazon could turn on the long berated and so-called underperforming profit switch any second they so desire. Instead, they invest, invest, invest and invent to stay ahead of everyone else, and one day they hope they'll dominate in a way we have not yet seen.
Whatever version 9 of their fulfillment centers is will be part of that strategy - and likely more advanced than we imagined. But even with current investments and centers, they have a major advantage.

As for lower volume retailers, I do not see them competing in this area. Instead, they will more and more have to choose the best supplies they can to provide the greatest services. Or perhaps served by Amazon (though not likely on terms they will want.) They will, as always, have to find the exact right niche on the product or customer engagement side to thrive or survive. But they cannot afford, alone, anything near Amazon's level of automation.

Marc Millstein



Q: Name the four major companies JDA has acquired since 2000 to move into supply chain from its retail system roots?

A: e3 (2001), Manugistics (2006), i2 (2010) and then RedPrairie (2012).

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