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From SCDigest's On-Target E-Magazine

- June 22, 2015 -


Supply Chain News: John Hill Unplugged Full Transcript Part 1

From Too Much Pain in WMS Deployments to Walmart's Failed RFID Mandate to Enterprise Supply Chain Management, Hill and Dan Gilmore Discuss Supply Chain


SCDigest Editorial Staff


John Hill is a legendary figure in the Warehouse Management Systems and automatic data collection worlds. Currently a consultant with St. Onge, he was CEO of WMS pioneer in the late 1970s/early 1980s, a company that helped define the modern WMS market and which produced a large number of professionals that greatly influenced the industry after Logisticon's ultimate closure.

He and a small group of folks - notably the late Dave Scott - ran a small consulting firm called Cypress for many years through and beyond the 1990s that had influence in the market well beyond its size. He was a fixture giving conference presentations for years, to the point many assumed he was running a very large consulting firm. He has been highly involved and influential in the MHI organization (the former Material Handling Institute) and automatic identification group AIM, and indeed is a chart member of a group called the AIDC 100.

In the Fall of 2003, just weeks after the first issue of Supply Chain Digest in September, Hill did the very first "unplugged" interview with SCDigest editor Dan Gilmore. Now he's back in 2015 with a much longer discussion, summarized in Gilmore's First Thoughts column last week.

SCDigest Says:

As the WMS market has grown and matured, I think frankly that the level of talent on the WMS vendors' front lines has diminished. And a number of them are subcontracting implementation to third parties.
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As promised then, below you will find part 1 of the full transcript of that interview. Part 2 next week.

Gilmore: When we first did this in 2003, there had been huge changes in the WMS market from when you helped build it in the late 1970s to that time, especially in terms of moving from largely custom systems to much more packaged products. What have you seen changing in the market from 2003 to today?

Hill: You know, it's hard for me to say "back in 2003." But you look and say it's been 12 years. Amazing. At that time, it had been almost 30 years since I joined Logisticon, the WMS pioneer. Most of the changes between the mid-1980s and 2003 had to do with the refinement of the WMS systems, significant improvements in functionality, and the move to more packaged systems, but what I think was perhaps more important was the early signs of market consolidation.

As you know, that consolidation has continued on for the last 12 years. In fact, only one tier 1 provider [Manhattan Associates] from the old days really remains today. Remember when we used to talk about there being more than 100 WMS providers, maybe even over 200 at one point? Some of them are still out there somewhere today, but the ranks have been thinned remarkably.

Since 2003, we've also seen the emergence of increasingly viable WMS modules from the ERP providers, Software as a Service and WMS in the Cloud, and growing capabilities in Warehouse Control Systems that are WMS-like. I think these trends are going to continue.

And of course, though the trend has already started in 2003, leading WMS providers have greatly expanded their capabilities beyond the four walls of the DC, beyond even Transportation Management and Yard Management to Distributed Order Management, supply chain visibility, vendor managed inventory and even supply chain planning.

All that means it may not be tool long before we start talking about my newest acronym: ESCM - enterprise supply chain management.

Gilmore: Did you hear that somewhat or did you come up with that?

Hill: No, I invented it last night - though we need another acronym like a hole on the head. [Alas for Hill, the term has already been coined, our research discovered.]

Gilmore: No, that's a good one, with the integration of planning and execution systems, we need a more umbrella term like that. I think you have a winner there.

Hill: Well, if I can copyright it and drive some revenue from licensing it that would be wonderful.

Gilmore: Well, I wouldn't count on too much of an income stream but you can live on the glory. But back to WMS - I've had this debate with some of the providers - have we taken WMS about as far as we can in terms of functionality, hence in part why the vendors are investing in all these other modules, or is there more that can be done in core WMS?

Hill: I think that's a great question. I am very hesitant to say we're at the end of it [advances in WMS], in part because there are always new developments, such as changes in the physical nature of warehouses and distribution centers that will change what is needed in terms of WMS functionality. But clearly a lot of the focus now for WMS vendors is outside the four walls, as we said.

Gilmore: What are some things that haven't really changed since 2003 - some universal sorts of things?

Hill: There are some concepts that we heard all the way back in the late 1980s through 2003 that are still very relevant today. Things like "real-time visibility," task interleaving, cross docking, slotting optimization, user configurability - we've made progress in all these areas, but they remain key focus areas, and will stay that way for a long time.

One other thing hasn't changed - I'll bet you that the average WMS user leverages less than 70% of the capabilities they could be using in their system. Why is that? We'd need a hour to really go through it, but the message to current users and prospective users is don't be in such a hurry to get the system deployed that you omit full training of the work force and really understanding what all you have there in terms of capabilities to maximize the efficiency of the operation.

Gilmore: I would add don't just declare victory because you got the system up and running. Look for additional capabilities you can turn on over time to drive continuous improvement.

Hill: Agree. And you know, that also applies to one of my other loves, the world of automatic identification. There have obviously been significant changes and improvements in that industry, and that has left it almost being taken for granted. If fact, one scanner manufacturers at a trade show recently told me their scanners were so good now you didn't really even need to worry about bar code quality any more.

Gilmore: Do you think he was right?

Hill: No!

(Distribution/Materials Handling Story Continues Below )


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Gilmore: Isn't there some element of truth in that idea though? I certainly don't hear hardly any stories of the kind of quality problem we use to see say in the 1990s that would cause real operational problems, bar codes that just wouldn't scan, etc.

Hill: No question bar code scanner and printer providers are producing much better products than they did back then. But don't think there aren't still occasional problems, and that's often again because users just take it for granted that the auto ID will work without doing enough homework on what is needed to make it work.

Just consider: is 99.5% success good enough when you are processing say hundreds of thousands of packages or cartons per day? No.

Gilmore: So your message here is that even though the technology has become much better, that taking it too much for granted is a mistake.

Hill: Right. Auto ID systems still need attention.

Gilmore: So let's stay on topic of auto ID. When we talked in 2003, the first EPC conference was just happening, Walmart had announced its mandate, and it looked like RFID was going to take over the world. Then the Walmart program imploded, and while RFID is being used in many places, in the US at least it is not much used in distribution. Is that going to change, do you think, or did RFID just miss the wave in distribution and it's just not going to happen?

Hill: The Walmart announcement was a watershed event, and cost a number of companies a lot of money in terms of preparing for those mandates. What we wound up with unfortunately were cost and performance issues that I might compare to "square peg-round hole." The technology was not ready at a price point that could be cost justified for the applications Walmart was trying to pursue.

You know I spent part of my career in RFID. In the 2000s, RFID could be made to work in those Walmart applications, but you'd never pay it back.

Gilmore: But that is a key reason why in the end the Walmart program collapsed.

Hill: Exactly. But much progress in the technology is being made. They are doing things with RFID today that are far beyond what was possible at the time of the Walmart announcement.

Gilmore: That's in part because so many venture capitalists poured hundreds of millions or billions of dollars into RFID companies after the Walmart announcement, and most of them lost their shirts over it, but it did move the technology along even if they turned out to be dumb investments. But still, not much activity in distribution.

Hill: There is obviously a lot of action in the apparel sector for item-level tagging. But they are doing it where they can find the ROI. Eventually that will drive tracking not just in store but throughout the supply chain. It will come.

Gilmore: Here's my theory John. If you look at bar code, it really started at the item level - the UPC code - and once that was in place in consumer goods to retail then eventually it led to case-level identification with the UCC128 label, and use in distribution. I think the same thing will happen with RFID. Once item-level tracking, starting in soft goods, is broadly in place, I think use of the tags will move back up into distribution.

Hill: I think you're dead right, and also what is driving it is ecommerce and efulfillment from stores. To do that requires high levels of inventory accuracy, which is what RFID can give you, in real time. In general though, when RFID is considered intelligently and dispassionately, married when it makes sense with bar coding and Voice technology and others coming along such as smart glasses, augmented reality, smart phones, even something called the HoloLens from Microsoft - I think some very powerful capabilities can be created, and that RFID will become an important part of the supply chain for many companies.

But I think it will usually be part of a team not the only solution.

Gilmore: Let's go back to WMS. My perception is that the implementations are too often too rocky and painful, and that in 2003 we would certainly have thought that would have changed dramatically by 2015, but it hadn't. Do you agree, and if Yes is there anything companies deploying WMS and WMS vendors themselves do to improve that situation?

Hill: First, I do agree with you.

Let's start with end users first. In my experience, supply chain projects fail when users didn't fully do their homework, or skipped important steps in the process, whether its failing to well define workflows and processes, performance goals, all the needed capabilities, etc.

But even when they've done all that, some companies still don't well connect all those requirement to what's in the different WMS packages they are evaluating. It's hard work, but it has to be done correctly, and if it's not in can lead to the kind of deployment pain you referenced.

We see that still today. When we sit down with a prospective WMS user, and stress the importance of understanding current workflows and desired workflows, and expected end results, a surprising number of even large companies want to shortchange some of that, and get right to selecting a system.

In fact, I recently had to meet with a company looking for a WMS to reinforce the need to go about it the right way. And again, this isn't an anomaly, and is a key factor in implementation issues.

The other issue with end users is a failure to build clear ownership and commitment of the WMS project from day 1. You simply can't spring a new system on workers and managers without their participation in the process, from requirements definition all the way through the system launch.

When companies fail to do that engagement - I saw one where this had happened earlier this year - things are bound to hit a rocky road, or even fail.

Gilmore: To me, you don't see the outright failures like you sometimes did in the old days so much anymore, but it's still just too painful too often, and I think the vendors also have to take some responsibility for that.

Hill: As the WMS market has grown and matured, I think frankly that the level of talent on the WMS vendors' front lines has diminished. And a number of them are subcontracting implementation to third parties. There are some good third parties out there, but some of them don't know a warehouse from an outhouse.

WMS vendors need to up their games in terms of who they hire and how they train them for these deployments. You need people who understand distribution, not just how to configure the WMS product. And that includes the front end, the salesforce, who I think need to have stronger knowledge of both distribution and the product they are selling.

I've received some sale pitches over the past few years where you wonder if they've ever walked a warehouse.

Gilmore: It's interesting that back in the highly customized WMS days, you needed to have very knowledgeable people up front, because you had to precisely define what code was to be written. Now here in the much more packaged WMS era, the idea sometimes is you don't need those kind of experts any more.

Hill: I think you are correct. When I look back 30 years ago, when we started turning Logisticon around is when I replaced all the good looking, well dressed sale staff who didn't know much at all about distribution with engineers. When I put them on the front lines, shortly thereafter our fortunes started to change.

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