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being pure-play WMS players to end-to-end supply chain execution providers. RedPrairie, which was once synonymous with. WMS, today offers packages for.
VS BREED

ERP

BEST OF

T H E S U P P LY C H A I N D E B AT E R A G E S O N

THE DEBATE OCCURS IN CONFERENCE ROOMS ALL AROUND THE WORLD: “Should we expand our ERP capability to include supply chain execution, or go with a best-of-breed provider of supply chain solutions?” The arguments are intense. There’s validity on both sides.

“We need to improve our global supply execution. Let’s call our ERP provider. They have some new stuff”

“Are you sure? From what I hear, their supply chain capabilities are ‘veneer deep.’” If we are going to win at this game, we need deep

“I don’t agree. The ERP guys have

supply chain expertise from a

come a long way, and it’s much easier

totally focused provider.”

to integrate their WMS functionality back into our ERP. “True, they’ve added more functions, but I’m told the so-called integration “Well, I am less concerned about

advantage is smoke and mirrors.”

functionality and expertise than I am about having one throat to choke, if there is an issue.” “I hear you. But, we better get this right. Or the throat you’ll be choking is mine!”

In this debate, there is no always-right answer. Frequently, what you’ll find is that IT management comes down on the side of the ERP messaging and supply chain practitioners prefer the functionality of the best of breed. But every situation is unique, and every ERP user’s situation is different, so it pays to keep an open mind in determining which suppliers will best meet the organization’s long-term needs for supply chain execution. The best way forward is for organizations to evaluate solutions from not only their ERP supplier, but also from best-of-breed providers. That’s the only way a company can determine which solution will best deliver the most important metric of all, return on investment.

Factoid

According to ARC, the two largest best-of-breed providers accounted for 47.5% of WMS revenue in North America in 2011, compared to 12.9% by the two largest ERP providers.

WHAT’S “PARITY”? Most large companies tend to have Enterprise Resource Planning (ERP) solutions that include financial accounting, cost accounting, Human Capital Management (HCM), Enterprise Asset Management (EAM), Environmental Health and Safety (EH&S) and a variety of other tools to help run large and complex businesses. Among the many advantages of ERP systems are that they share common databases and other characteristics across several facets of an enterprise, including a common user interface across most modules. Not surprisingly, as some companies began using ERP solutions in the warehouse, they quickly began demanding more than the rudimentary picking and inventory management features that were available in the early days of ERP systems. ERP developers responded with optional components that do a better job addressing supply chain execution requirements. Warehouse Management Systems (WMS), on the other hand, represent the foundation of solid supply chain execution. The basic “pick, pack and ship” functionality inherent in typical WMS solutions covers about 75 percent of the functionality that most organizations need within the walls of their warehouse. You can look at these functions like accountants might look at a general ledger system. If it does nothing else, it must handle debits, credits, journal entries, accounts payable/receivable, etc.

4.1%

The average annual revenue invested by companies in their ERP systems. Source: Panorama Consulting Solutions

Typically a WMS implementation is followed by, and integrated with, other supply chain solutions, especially: • a workforce management (WFM) system to assure that the right people are assigned to scheduled tasks. Based on engineered standards and optimal methods for performing tasks efficiently and safely, a WFM can encompass scheduling, task assignment, and performance measuring. • a transportation management system (TMS) to support improved efficiency in logistics and transportation. Essential functions here include transportation bidding and procurement, load consolidation and lane assignment, scheduling and more. Both ERP and best-of-breed solutions can easily handle the “basic” WMS, WFM and TMS tasks noted above. But after that, things begin to get a bit murky. The increased complexity and required agility of today’s global supply chains, new customer fulfillment channels, new technology, and new regulatory requirements are driving innovation at an unprecedented pace. These new market dynamics also point to greater competitive advantage for organizations that deliver execution excellence up and down their supply chain. To determine whether an ERP or best-of-breed solution is right for your business, it is important to understand the level of complexity inherent in your supply chain (both today and in the near future) as well as the agility, flexibility and responsiveness required to stay ahead of the competition.

“There seems to be no end to just how creative firms can become as they compete, or how creative the demands of customers can become. Hence new functionality is continually being requested, and the idea that everyone's needs can be pushed in to one ‘fully matured’ product is simply misleading.” John Pearce, StoneCross Group1

Some additional questions you should ask yourself: • Do you need end-to-end supply chain visibility, including the ability to track product at any stage of the network and measure each component’s performance? • Do you want to reach outside your four walls and gain visibility into your suppliers’ suppliers’ systems? • Do you want to more tightly integrate your demand chain, such as your sales, retail or eCommerce functions into your supply chain? • Do you want to extend your supply chain capabilities into special areas, such as equipment yards? • Do you have special/urgent needs such as lot traceability or a focus on small parcels? • Are you trying to more tightly integrate your workforce and labor standards into supply chain management? • Are you trying to leverage the latest technologies, such as voice automated picking or RFID? If two or more of these are decision drivers, you owe it to your organization to look at the best-of-breed providers in addition to your ERP vendor. That’s because, for basic supply chain functions, ERP vendors are generally on parity with SCM solutions from best-of-breed providers, but best-of-breed supply chain solution suppliers are consistently ranked by analysts and users as superior to ERP solutions for the depth, breadth and sophistication of their supply chain solutions. Much of their development efforts include applications that surround the WMS, WFM or TMS – like yard management, visibility, fleet management, score carding and more. Additionally, they typically have more supply chain experts than ERP vendors, and—perhaps most importantly—these experts tend to be more readily available and accessible.

“Warehouses are the backbone of successful logistics operations. Each warehouse operation is unique to the business it supports, and a WMS software decision must reflect these nuances.” “More complex operations are choosing feature-rich best-of-breed systems and integrating them with their ERP suites. If a warehouse operation wants more advanced features like cross-docking, interleaving, advanced labor standards, or advanced technology integration, those features may not be offered by their ERP.” ERP analyst Michael Koploy3

BEYOND “PARITY” THE RACE FOR SUPERIOR EXECUTION SCM is a vast, complex, ever-changing field that requires a vendor’s full-time focus to stay on top of market demands for more sophisticated capabilities, such as advanced wave picking or parcel shipping functions. According to AllSupplyChain.com, best-of-breed SCM providers “typically deliver deeper domain expertise, more specific functionality, and industry-specific innovation.” While ERP vendors have been catching up on the core WMS capabilities, best-of-breed vendors have been on the forefront of innovation by responding to market needs for more sophisticated capabilities both within the WMS and in surrounding applications – what Gartner calls the “extended WMS.” ARC Advisory Group reported that companies are increasingly adopting advanced functions—such as labor management systems, voice recognition, and other add-on capabilities—as they extend their WMS footprint to capture additional efficiency and increase warehouse productivity.

“It is no more a WMS race. It is more of a logistics suite race as the vendors have moved from being pure-play WMS players to end-to-end supply chain execution providers. RedPrairie, which was once synonymous with WMS, today offers packages for Warehouse, Store, Transportation, Workforce, Visibility, Performance and multi-channel commerce. BoB [best of breed] WMS continue to provide rich functionality and tighter integration to other logistics suites as well as to leading ERP packages.” Pragash Muthukumar, supply chain consultant and blogger5

A DIALOG OF SUPPLY CHAIN PROS

“The typical value proposition for best of breed software is the deeper and industry-specific functionality provided. This advantage is especially important for generating competitive advantage.” Brett Beaubouef, Source: Blog posts at http://gbeaubouef.wordpress.com”

“Many full suite solutions make compromises in usability based on the need to meet the functionality requirements of a full suite. This very often results in a complex or cumbersome solution for some of the specific areas that would be covered by a best-of-breed solution. The best of breed is optimized for that point functionality and can add prodigious amounts of efficiency to an organization. So it is not always world class competitive advantage that drives the best of breed decision.” Todd Fitzwater, Source: Blog posts at http://gbeaubouef.wordpress.com”

IDENTIFYING TRUE DIFFERENTIATORS:

SIX SIGNPOSTS

What makes real differences in supply chain

cost control

execution? What are the real differentiators that control costs, enhance value, and improve ROI? To answer these questions, companies evaluating SCM solutions should look for clues to help judge

best practices straight ahead

whether a product under consideration is from a leading-edge player, or a vendor playing catch-up.

Here are six signs that can help indicate if a vendor is a leader, or a follower:

2. Elevated attention to cost control.

1. Building innovation on top of best practices.

organizations are now using labor management

Industry experts agree that automation alone doesn’t deliver the full promise of excelling in supply chain execution. An effective

A key aspect of superior supply chain execution is finding every feasible way to control labor costs. Many components of SCM solutions to monitor worker performance compared to engineered labor standards.

SCM solution must closely reflect industry best practices – thereby

Some best-of-breed providers support the labor

opening new avenues for innovation.

management concept with preferred methods that are

What makes innovation happen? The prerequisite for sustained product innovation is the software provider’s supply chain expertise, and the provider’s collective understanding of the issues facing its customer’s industry. As an example, AllSupplyChain.com’s Steve Heistand described the current trend toward distribution and supply chain systems that enhance collaboration across hierarchical, departmental and organizational boundaries: “As Supply Chain Management becomes increasingly strategic, adaptive and demand driven, software vendors will work with key stakeholders to define and implement best practices for the new SCM paradigm.”6

proven to deliver enhanced value. The key to unlocking full value is getting workers to use the most efficient methods for doing each task. Otherwise, the software is just monitoring old inefficient practices.

road to traceability ahead

parcel mgmt

manufacturing execution this exit

left to warehouse productivity boost

4. Parcel management. Many companies are seeing a major increase in parcel shipments, triggered by the trend toward smaller, more frequent shipments, especially with online orders. The parcel management capability can help high-volume shippers by supporting their complex requirements for shipment consolidation, rate shopping, manifesting and label printing.

3. Productivity-boosters for the warehouse.

5. Manufacturing execution.

Getting more from the workforce extends beyond labor

In many industries, such as food and electronics,

management. How is the solution provider enhancing its WMS

the lines between production and distribution are

offerings with additional functions and features that improve

increasingly blurred. To support customized orders and

labor productivity on the warehouse floor? Key capabilities that

sequential delivery of materials to assembly lines, some

can make a bottom-line impact include:

best-of-breed providers have integrated manufacturing

Slotting—putting high-moving products in forward pick areas to make pickers more productive. Task interleaving—dynamically directing workers to the next best task based on priorities, proximity and that particular worker’s qualifications.

execution capabilities with their SCM offerings. These capabilities also enhance traceability by enabling users to track raw materials and work-in-process.

6. Traceability. According to a study by RedPrairie, almost 72 percent of senior supply chain and operations executives are not completely

Wave planning—enabling workers to pick multiple orders at

confident in their organizations' product recall and traceability

the same time by intelligently grouping picks into “waves.”

capabilities. In response to safety and regulatory requirements, plus the need for greater supply chain visibility,

Voice enablement—Workers use headsets to hear next tasks for picking, wrapping, loading and other labor activities. Using voice technology to direct tasks improves accuracy and efficiency by freeing workers to use their hands and eyes for task execution. Most workers prefer this approach to any other technology they’ve used.

more and more companies require full lot/order traceability and recall management capabilities. Manufacturers, retailers and value chain partners in food, beverage, and pharmaceutical industries need these advanced capabilities to adjust their processes for evolving requirements.

ConAgra defines preferred methods, links workforce management with ERP, and saves $1.5 million ConAgra Foods, a Fortune 500 company with 2011 sales exceeding $12 billion, sells nearly 13 million packages of food products daily. The company sought to improve workforce productivity at its eight processing plants, which employ about 300 people. There was little standardization in how tasks were performed, and no mechanisms were in place to determine and teach employees the most efficient task methods. To address these issues, ConAgra selected RedPrairie’s Workforce Management Solution (WFM). To ensure a successful rollout, ConAgra, its unions, and RedPrairie worked together to define preferred methods for each task. RedPrairie taught ConAgra how to use WFM effectively with the new preferred methods. ConAgra’s first site went live with WFM in January 2011, with an additional site becoming operational every three months thereafter. WFM uses a RedPrairie data extractor to pull real-time information from SAP. With WFM, ConAgra can now assess its daily labor needs and adjust its workforce accordingly. The benefit: operational efficiencies, with no disruption of work flow. From the outset, the new processes quickly began to improve behavior. “With RedPrairie workforce management, we have improved our ability to coach and train employees,” said Kevin Freedman, director, Transportation and Warehouse Methods and Applications for ConAgra. Even before the WFM rollout is finished, results are impressive. “By standardizing our processes and enhancing our ability to assess labor needs, we reduced our labor expenses by $1.5 million within 18 months of implementing WFM.”

THE CHECKLIST

TRAP

Many providers, both ERP and best-of-breed, will claim during the RFP process to have some or all of the capabilities discussed above. The key for evaluation teams is to avoid “the checklist trap”: while Vendor A and Vendor B may both have labor management modules, the actual capabilities that deliver ROI may be vastly different.

For each required capability, evaluators need to carefully examine each competitor’s approach and capabilities to determine: • Is the function well designed? • Has the solution provider completed developing the function? • How many companies are using the function, and what are their experiences with it? • How will the function’s process work within the business user’s environment? • Can the function be economically implemented? • How will the solution specifically help achieve business goals? What value will result?

IS INTEGRATION AN ADVANTAGE FOR ERP VENDORS? For ERP suite vendors, ERP-SCM integration is a cornerstone of their value proposition. Companies opting for best-of-breed SCM solutions may wonder whether they are undermining a key advantage of having an ERP suite.

Consider four points:

1.

ERP suites have multiple internal file structures and data models that must be interfaced. Likewise, interfaces must be built for external systems, such as RF technology, material handling equipment, and parcel manifesting systems.

2.

According to a May 2012 story in Supply Chain Review, ERP vendors reacted to competition from best-of-breed solutions with a wave of acquisitions, and have since had mixed results in integrating acquired products with their ERP suites. Some of the acquired products “were very loosely ‘bolted’ on,” Gartner’s Marcus Blosch said. Now, he added, the modularized approach of best-of-breed providers is the way of the future. “[Companies] are definitely starting to want more control over their architecture, their portfolio and ultimately their destiny.”

3.

The quality and availability of an interface is more important than its source. Best-of-breed providers have long been building “links” to other commercial software systems, including ERP products. For years, best-of-breed providers have supplied their customers with pre-built interfaces to major ERP suites. Moreover, some providers, such as RedPrairie, have obtained certification of their interfaces from ERP vendors. And some best-of-breed providers have more experience than their ERP competitors in integrating to the material handling systems that are integral to many distribution center operations.

4.

Stand-alone modules of an ERP system are “on par” with pre-built integration modules offered by best-of-breed suppliers, thereby neutralizing any “ease of integration” advantage ERP vendors had. The chart below illustrates this point.

VS BREED BEST OF

ERP

SAP WM / eWM

RedPrairie WMS

Requires interface to SAP core

Pre-built, customer-tested interface to SAP

Standard interface points/flows

Standard interface points/flows

Separate data model

Separate data model

Interfaced to current R/3 version

Interfaced to many R/3 versions

Limited material handling integration

Extensive material handling integration

Limited integration to legacy appls

Extensive integration to legacy, 3rd party appls

SOA, web service enabled

SOA, web service enabled

NetWeaver enabled

NetWeaver certified

Limited customer integration experience

Extensive SAP and customer integration experience

“In a world where things rarely go as planned, our WMS implementation went exactly as planned. It was on time and on budget, with virtually no disruptions to the business. Moreover, RedPrairie’s WMS easily integrates to our ERP system.” Chris Gerblick, vice president of IT, Professional Development and Publishing, Kaplan Early Learning

THREE ERP USERS EXPLAIN WHY THEY WENT WITH BEST OF BREED

Levi’s sought to establish a global standard for warehouse management at 29 distribution centers, some of which are operated by 3PLs. Levi’s evaluation team concluded that the basic warehouse management capabilities of its ERP suite were inadequate for higher-volume warehouses. Next, they compared the ERP vendor’s more advanced WM product with best-of-breed solutions. Levi’s selected RedPrairie for these reasons: • Scalability and versatility. “[The ERP product] has weaknesses in material handling due to its technical foundation. RedPrairie’s WMS is more versatile,” said Sam Rogers, IT director of Global Distribution and Logistics at Levi’s. • RedPrairie WMS had a proven track record of integrating with Levi’s ERP system. • Locations with lower volume or complexity can operate RedPrairie independently of an ERP. “It would be cost-prohibitive for some of our non-ERP locations to install ERP just to get warehouse management capabilities,” Rogers explained. • “Parcel management capabilities are a simple add-on for RedPrairie, but with our ERP system, that function requires a large, complex implementation,” said Rogers.

Hershey’s, a global leader in chocolate and sugar confectionery, has operations throughout the world and more than 12,000 employees. The company has used RedPrairie’s WMS at its three U.S. DCs for more than 10 years and is in the process of rolling out upgraded versions at each site. They will also launch WMS at a new Canada DC in the spring of 2013. Since they also use an ERP system, they evaluated that vendor’s EWM system before deciding to stay with RedPrairie and upgrade to the newer version. “WMS does a great job managing worker travel time and increasing the efficiency of the labor force, so it has a physical payback. That’s the number one reason we selected RedPrairie WMS over our ERP vendor’s product,” said Jeff Rose, director, Application Development for Hershey’s supply chain systems. Rose then went on to explain several more RedPrairie advantages: • “By integrating WMS and WFM, we gain the ability to use engineered standards, along with a map of the warehouse, to account for actual travel time and distance. It gives us a more accurate reflection of labor time.” • “RedPrairie’s WM solution integrates nicely with the ERP.” • “We went away from traditional EDI. Instead, we use RedPrairie’s Hub Integrator to move data between the ERP and WMS. It works nicely.”

A global manufacturer of consumer foods embarked on a project to replace its obsolete warehouse system in 27 company-owned locations. To gain the most robust features available in the market, the company focused its selection process on best-of-breed WMS solutions. The company’s senior manager of Materials Management named the top reasons for selecting RedPrairie’s WMS: • “RedPrairie was then, and still is, the leading provider of SCM solutions for the food and beverage industry. They know our business.” • “We felt good about the organization. We met a lot of RedPrairie people at various levels, and we were confident they had their act together.” • “Unlike our ERP vendor, RedPrairie had advanced functionality already baked into its product.” RedPrairie, the executive added, has since proved to be a sound choice. Vendor specialists have worked with the company in system integration and in the 27-site rollout. “RedPrairie has done everything we asked for. We have been replacing legacy systems at a challenging pace,” he said. “It is a testament to RedPrairie’s team and our team that we have met the schedule flawlessly.”

LOOK

BEYOND THE PRESENT

What’s ahead? Industry-specific capabilities will be the driver of many innovations. In retailing, for example, all-channel integration is the driver for a host of complex requirements. Retailers are keenly interested in the concept of "buy anywhere, fulfill anywhere" processes that span the entire supply chain, from manufacturing, to distribution, to stores, to third party service providers. Delivering these capabilities requires retailers to view inventory positions across the network, so they can fulfill orders in unique ways.

Lora Cecere, founder of Supply Chain Insights, believes there are vast opportunities to rethink conventional supply chain processes10. She states,

“The dream of ERP II and building the end-to-end supply chain on the back of ERP and B2B was too limiting.” “For me, the most exciting news is coming from the best-of-breed providers,” Lora Cecere wrote. She believes they will lead the way— first to the digital business era, and ultimately to an era of “business-to-business, end-to-end commerce.” She names RedPrairie as one of the best-of-breed providers that she feels will prevail.

TWO INDUSTRY REPORTS VALIDATE BEST-OF-BREED OFFERINGS, REDPRAIRIE MARKET LEADERSHIP

Report #1 In February 2012, Gartner, Inc. released its “Magic Quadrant for Warehouse Management Systems” report. Written by analyst Dwight Klappich, the report:

1.

2.

Named the two foremost providers of best-of-breed software as the only two suppliers in the “Leaders” quadrant. They attributed this to, among other factors, “industry-leading depth and breadth of both core and extended WMS capabilities.”

Noted RedPrairie’s “long track record of delivering WMS solutions for some of the most complex warehouse operations, combining strong WMS products and services to support the needs of demanding clients.”

3.

Said RedPrairie has a strong portfolio of related products, such as labor

4.

Named RedPrairie as the best-of-breed WMS provider with “the most

management and transportation management.

comprehensive and well-defined industry vertical strategy.”

Report #2 ARC Advisory Group publishes “Warehouse Management Systems Worldwide Outlook.” According to the report, the two largest best-of-breed providers accounted for 47.5 percent of WMS revenue in North America in 2011, compared to only 12.9 percent by the two largest ERP providers. The report’s market share data demonstrate RedPrairie’s leadership in a wide range of categories and industries:

Food & Beverage market share [1st]

30.7%

Logistics market share [2nd]

18.0%

Household & Personal care market share [1st]

35.0%

Pharmaceutical & Biotech [1st]

15.4%

Service revenues market share [2nd]

17.2%

Implementation services market share [2nd]

21.1%

1 “Key Trends in WMS and Supply Chain Execution Technology (Part 1).” SCDigest. August 14, 2012. 2 “RedPrairie Supply Chain Software Review.” allSupplyChain.com. 3 Koploy, Michael. “2011 Market Trends Report: Warehouse Management Programs.” Software Advice, February 9, 2011. 4 “Warehouse Management Systems Worldwide Outlook.” ARC Advisory Group, 2012. 5 Muthukumar, Pragash. “Has Best of Breed Won the Race?” www.infosysblogs.com, January 5, 2012. 6 Heistand, Steve. “Modern Best Practices Driving New Supply Chain Management Systems.” AllSupplyChain.com. 7 “Best of Breed vs. Integrated ERP.” Blog post and comments, “ERP the Right Way!” April 30, 2011. 8 “Almost 50 Percent of Brands Are Unable to Recall Products Within Hours, Finds RedPrairie Study.” Press release, RedPrairie Corporation. June 12, 2012. 9 Game-Lopata, Anna. “Our Say: It’s RIP for ERP.” Supply Chain Review, May 29, 2012. 10 Cecere, Lora. “Which Boat do You Sail to Cross the Blue Ocean?” SupplyChainShaman.com, August 6, 2012. 11 “Magic Quadrant for Warehouse Management Systems.” Gartner, Inc. February 27, 2012.

Copyright © 2012 RedPrairie Corporation. All rights reserved. For more than 35 years, RedPrairie's best-of-breed supply chain, workforce, and all-channel retail solutions have put commerce in motion for the world's leading companies. Installed in over 60,000 customer sites across more than 50 countries, RedPrairie solutions adapt to help ensure visibility and collaboration between manufacturers, distributors, retailers, and consumers. RedPrairie is prepared to meet its customers' current and future demands with multiple delivery options, flexible architecture, and 24/7 technical and customer support. For a world in motion, RedPrairie is commerce in motion. To learn more about how RedPrairie solutions can optimize your inventory, improve employee productivity, or increase sales, visit RedPrairie.com or email [email protected].