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Article
JDA's Opportunity for Reinvention

With the RedPrairie merger and past acquisitions, JDA has amassed what is arguably the most powerful collection of supply chain planning and execution software on the planet. At their recent annual conference, they laid out their strategy for turning that collection of assets into a more cohesive and value-generating whole.


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Reinventing JDA

At JDA’s annual conference this year (record attendance of over 2,200), CEO Hamish Brewer said, “We want to redefine who we are.” If the tenure of the management team is any measure, JDA seems determined to make changes. Of the five top executives in the firm, three have been there less than six months and only Hamish has been with the firm over two years. Besides bringing in some new blood and fresh perspectives, in Q4 of last year JDA conducted Voice of the Customer research, surveyed their employees, and had a series of discussions with industry analysts, to figure out their strategic direction and where JDA should go next … what Hamish referred to as ‘JDA 2.0’.1

Solution Suites

The most striking immediate manifestation of these new strategies is the five Solution Suites that Hamish outlined. Over the past two decades, JDA has made numerous acquisitions, including the two largest supply chain suite vendors (i2 and Manugistics) and of course more recently the merger with top-tier WMS vendor, RedPrairie. As a result, they have amassed a portfolio of about 130 different products. Many of these solve highly complex supply chain challenges. This made it challenging for customers to navigate all the capabilities and it was not always obvious how everything fits together. Now products are organized into a set of five conceivably cohesive Solution Suites, each addressing a specific problem domain: Manufacturing Planning, Collaborative Category Management, Distribution-centric Supply Chain, Retail Planning, and Store Operations.

But this is far more than just a logical way to group the products in JDA’s solution portfolio. It sets a structure for the company’s path forward that cuts across the full ‘stack’ of JDA capabilities, aligning product marketing, product development, product management, consulting, services, and sales. The goal is that the whole will be greater than the sum of the parts. Product management is being done in a matrix fashion—with product managers for each solution suite working closely with product managers for each product, many of which cut across the suites (for example the demand management product exists in almost every solution suite). Underpinning all is a common integration platform that JDA is building out.

Distribution-centric Supply Chain

To get a better sense of what these solution suites are all about, let’s examine the one JDA is rolling out first: Distribution-centric Supply Chain (DCS). Distribution involves three main functions—planning, warehouse, and transportation. The integration between these three, both on organizational and technology/application levels, has traditionally been “throw it over the wall.” Optimization happens during the planning phase. But of course nothing ever goes exactly to plan—weather events happen, carriers don’t arrive on time, a sudden high priority rush order arrives, labor doesn’t show up. As a result, warehouse and transportation managers make decisions on the fly the best they can, often suboptimally. With DCS, JDA intends to not only integrate these three areas, but innovate on adding additional intelligence that is not possible with each solution separately. A good example is iterative optimization.

Iterative Optimization

JDA developed iterative optimization between their supply chain planner and transportation manager modules several years ago. More recently they have been extending that capability to the solution suite level, focusing first on TMS and WMS iterative planning within DCS. How does this work? First TMS builds an optimal plan, understanding not just the transportation parameters (e.g. carrier capacity, multi-stop loads, early-late ship dates, etc.) but also the constraints of the warehouse. With this integrated view, the TMS can build the ‘perfect pallet’ and ‘perfect load,’ stacking products and pallets from heavy to light, ordering them based on crushability, placing heavier pallets on top of the axels, and so forth. In this way they are creating an optimal legal load built in the optimal load sequence for the warehouse. The WMS gets early visibility to the forecast and the actual ship dates, enabling better planning of labor.

Now in the heat of battle, if … I mean when the warehouse has to make a change in plan, for whatever reason, the WMS can transmit information back to TMS which can generate a new plan in real-time, removing the guesswork of a manual decision by the supervisor. The TMS and WMS software can go back and forth in real-time, communicating on which parts of the plan are now locked and cannot be changed vs. which parts can be modified to do the optimal re-planning. This kind of inter-application coordination is possible because both JDA and RedPrairie have SOA architectures and their developers can expose new APIs as needed. To the extent that similar APIs exist in other non-JDA solutions, they will be able to provide a subset of this functionality with a non-JDA WMS or TMS.

JDA is putting serious resources into this. Normally they have product releases about once a year. In this case, they are releasing at more than twice that pace. Over the next 15 months, DCS will have three major releases.

The other solution suites similarly look to help integrate traditionally siloed functions. For example, retail planning integrates marketing, merchants, buyers, assortment planners, and pricing.

Omni-channel Promising and Fulfilling—The Brains Behind the Pretty Face

JDA articulated a clear strategy not to invest heavily in the ecommerce front end. Instead they want to be the brains behind the order promising and fulfillment of orders. They stressed repeatedly it’s not just about creating a feasible or fastest order fulfillment, but an optimally profitable one. That takes the type of depth in systems that JDA feels they uniquely posses. In fact, their product management made a bold statement: “We will own and dominate Omni-channel fulfillment.

Distributed Order Management

A key element of JDA’s Omni-channel vision is DOM (Distributed Order Management), which enables profitable order promising and fulfillment. Profitable order promising is not just about finding the lowest cost path, but also other factors, such as how much the retailer will be able to sell the item for at different locations. Instead of shipping an internet order from the DC, it might make sense to ship it from a store where that item is not selling well and is or will be heavily marked down.

The impact of profit-optimized order promising and fulfillment ripples throughout the suite. In response to Amazon and others’ same day delivery services, retailers are looking at decentralizing inventory and determining which node in the network is ideal for fulfilling each order. It begins with planning, to make sure you have the inventory in the most likely profit-optimal location to begin with. Then DOM can take demand and analyze iteratively throughout the day to determine what is the most profitable current fulfillment point for each order, taking into account labor cost, transportation, as well as expected future demand (i.e. which items are or will be marked down and by how much) and then hand it to WMS, TMS, and in-store picking systems to execute. DOM is still in development, expected to be released in June or July.

In-store Fulfillment

JDA talked about in-store fulfillment, especially for ‘click and collect’ orders that will be picked up (or returned) in the store. Retailers are just grappling with how to scale these operations. There seems to be a lot of interest—JDA held events on in-store order fulfillment in London and the Nordic region last month and both were over-subscribed. Trying to profitably do in-store fulfillment at high volume impacts many areas, such as space planning (having the right footage available for the in-store fulfillment, understanding seasonal peaks), assortment planning (ideal location for items as you move from traditional to more omni-channel and in-store fulfill), workforce management, and in-store picking tool (striving for warehouse-like efficiencies)—so JDA is addressing and integrating all these and more.

Shifting Investment and Development Resources—Accessibility and Ease-of-Use

The DCS and Omni-channel descriptions above should give some sense of what the Solution Suites are all about. The goal of Solution Suites is not just to achieve the kinds of inter-product integration described above, but also to productize it in a way that these very sophisticated optimizations can be available to the mid-market, not just the top-tier firms. For quite some time, JDA has had some of the most powerful supply chain software in the world. This often required a high level of sophistication in the customer organizations to take advantage of the capabilities. JDA is trying to do productized integrations in a way that simplifies implementations and use, allowing them to serve more markets. JDA’s investment focus is shifting from adding more functionality to making the solution suites work well together while adding new value. They are making major investments in UX (user experience) enhancements, especially focused on DCS over the next 15 months.

Customer Executives—A New Role

In addition to Solution Suites, JDA has created a new role called the Customer Executive. Part of the feedback from JDA’s customers was that they had to deal with too many different points of contact, which was confusing. The Customer Executive will be the single primary account executive, measured and incented on total value delivered to the customer, with the goal of eliminating silos between sales and services. The CE will have anywhere between 2 and 15 customers each, depending on the customer size. The CE is not expected to know everything, but to coordinate and manage the relationship and bring in the right resources to help. They are assigned quotas and are empowered to sell everything JDA offers: cloud/hosting, software, services, and education. They also can help customers create business plans. JDA is trying to transition to longer-term relationship development and account management, rather than just transactionally selling deals.

JDA Cloud

Hamish also said, “We are a cloud company. It is central to our strategy to deliver our solutions as a service.” This does not mean they are committed to re-writing all their software to pure single-instance multi-tenant software, but rather they will provide hosting and (as desired) manage the platform. They are adding multi-tenancy to components on an as-needed basis, for example to support their 3PL customers (more on that below). JDA has also made investments in continuous updates to make the software patching and maintenance process easier.

Flowcasting

The concepts of DRP, CPFR, and Flowcasting have been around for a long time.2 As part of the RedPrairie merger, JDA acquired Flowcasting technology, plus two key people most responsible for it—Andre Martin, considered by many to be the ‘father of DRP,’ and Darryl Landvater, who was instrumental in actually creating Flowcasting technology. The basic concept is encapsulated in Andre’s maxim, “Never forecast what you can calculate.” The idea is to use the store level forecast, combined with POS data and accurate knowledge of inventory levels, to calculate demand and replenishment back through the DC all the way to the manufacturer. Done right, it offers the promise to dramatically reduce the bullwhip effect. JDA said they have done some pilots and have seen “stunning results in improvement of forecast accuracy and on-shelf availability—especially with slow moving items.” The Flowcasting concept has been around for a while, but has not been widely adopted for various reasons. However, it does hold a lot of promise, and it would be great if JDA is able to drive much wider adoption.

Global 3PL Initiative

RedPrairie (in combination with JDA) already has a strong presence in the world of 3PLs, with 7 of the top 10 global 3PLs and over 200 others as 3PL customers. They have decided to double down on this sector, seeing it as a significant growth opportunity. With a CAGR of 10% since 1996, the 3PL industry is growing much faster than the economy as a whole—and still has a lot of headroom for further growth. More importantly for JDA, 3PLs are intensely looking for ways to offer highly differentiated, high-margin services, in addition to the low-margin transportation and warehousing services that form the core of their business. Examples of high-margin services include order-building and real-time sequencing (especially in automotive), serialization, light assembly, packaging, final wiring harnesses (in electronics), regionalization, and postponement of differentiation. These higher value services are often more complex, requiring more sophisticated planning and execution systems, integrated together—right up JDA’s alley.

Most 3PLs don’t want to be software development companies. Though technology is critical to their success, software development is not their core competency. Yet they are expected to keep up with the rapid changes in their customers’ supply chains. This is where JDA sees the opportunity.

For JDA, 3PLs are viewed more like a channel or extension of their sales organization, rather than just another customer. JDA enables the 3PLs’ selling processes, by helping with things like co-marketing, joint collateral, answering specific questions in the RFx, logistics engineering and modeling, and providing customer references. JDA also helps the 3PLs build an implementation organization, training them, and helping set up the right governance structure to enable very rapid implementations while maintaining quality. JDA can also do the implementation. Speed is paramount. Contract periods are shorter and the 3PL can’t afford a six-month implementation when they only have a three-year contract. They are looking to go live in three to six weeks.

So here we have 3PLs that don’t want to build, maintain, and operate their own software any more. They seek sophisticated capabilities that can differentiate them. And they want ultra-fast, yet reliable implementations. JDA seems very well suited to bring all these pieces together, so it is no wonder that this is a key target area for them.

A Time of Opportunity

Hamish said he thought JDA was at an inflection point … one of those once-in-a-decade opportunities for a company to reinvent themselves. The merger with RedPrairie creates probably the most powerful collection of planning and execution systems anywhere. Going private gives JDA the leeway to invest as they see fit. Getting the right strategy and then executing on that transformation is never easy. But it does seem like JDA has a unique opportunity at this juncture. Supply chains everywhere will be the winners if JDA is able to take advantage of this opportunity and bring this promised higher value to a wider set of customers.

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1 Hamish was quick to point out that JDA 2.0 is not the official branding they are going forward with, but just an informal moniker. In fact, they hired a new CMO, Kevin Iaquinto to help figure out that branding and help reinvent JDA. Also new on the executive team, CTO Serge Massicotte and Chief Product Officer Jean-François Gagné. -- Return to article text above

2 In fact, ChainLink’s own Robert Bruce was central in coming up with the concept of CPFR in the ‘90s when he was leading Walmart’s supply chain and was involved with Andre Martin in developing and implementing the Flowcasting concept after that. -- Return to article text above


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