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Article
The Voice

At Connections 2015--The Voice of Supply Chain Success, we heard from Logility executives about new directions, a younger workforce, and a new generation of technologies.


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Logility’s conference, hosted at the Hard Rock Hotel in San Diego, CA, provided a great backdrop to entertain, educate, and inspire. The Voice of Supply Chain introduction by Karin Bursa, Executive Vice President of Marketing, Logility, promised (as The Voice does) that the voices of the customers would sing, rather than the voices of the producers.

Allan Dow, the CEO of Logility,1 gave the customary but important update of Logility’s progress, now with over 1250 customers across 80 countries. Perhaps the most interesting thing I learned from Allan’s talk and a one-on-one I had with him that day is that Logility is taking a dramatic new path forward in growing the company. A new generation of technologies—mobile, social, search, leveraging the explosion of data to create new approaches to analytics—is being developed by a younger generation of professionals, and Logility is investing heavily in these areas. (I will come back to that most important topic.)  

Logility has consistently grown at 10.2% CAGR for the last ten years with no debt and lots of cash, and added 59 new customers in the last year. That is super significant performance in the supply chain software sector. And interestingly, some of these customers were defectors from some other large brands of software. This trend will continue for Logility and other domain leaders in supply chain, I predict, as business, rather than IT, re-asserts itself as the decision-maker for technology selection.2  

A few highlights on the product front:

Integrated Business Planning

A  growth area for supply chain has been IBP. Senior managers today have a better understanding of supply chain and their need to drive its participation in a host of key decisions regarding capital and asset investment, new markets, and new products. IBP, a super-set of S&OP,3 includes more analytics for senior executives and integrates the organization more effectively.

Areas within IBP include strategic risk analytics, financials, new product introductions, and support for capital investment strategies. Companies often make huge misplaced bets on new plants, equipment, or acquisitions based on erroneous assumptions about the market and/or the capability of the organization to absorb these investments and leverage them for growth. IBP should be part of the tool set in these critical decision-making processes.

Retail Optimization

Retail has been a growing and greatly successful investment area for Logility.4 Retailers have been investing steadily in Merchandise Planning suites. However, those can be pretty complicated.5 There are, in all honesty, multiple layers of analytics to implement. A whole retail suite, including Merchandise Financial Planning, Allocations, and Assortment Planning and Replenishment is often implemented in stages/parts. The order of implementation may differ based on a company’s readiness to implement and manage in a new way, and it can take a few years to implement the whole suite. Thus, attendance in the retail sessions (in fact, in almost all the sessions) where customers talked about their successful projects, was standing room only as users explained to one another how to implement these capabilities.6 To note, though, each project was implemented in a few months. For example, Allocations, a very popular module, can be implemented in three to six months. However, users are constantly learning, and many of the companies brought two to six people from their firms and they were in their seats early to learn more.

The Dreams…and the Teams for Tomorrow

When sitting down with Allan Dow, I was startled when he stated, “More than 50% of the developers we will have will be hired in the next five years.” This reminded me of another statement I had heard at another conference—that 80% of their IT people would be retiring in the next ten years. Another company told me that 50% of all employees would be retired or changing jobs in the next five years. 

Why? Baby boomers are packing it in. And a new generation is pushing its way in. Approximately 25%7 of the world population is between 1 and 15 years of age and will soon join the biggest ranks of consumption the world has ever known. And another ~15%  of the world (those between the ages ~21 to 44) are already in the ‘working world’ in some form, in the years of gain (we hope) on the economic game board.

Why is it so important to state this here? Because it relates directly to the needs of the supply chain technology customer—and to the tech companies that provide solutions and services to them.

Firstly, if you are a manufacturer or retailer you know your customer is changing and that how they live, what they buy, how they decide and how they buy is also changing. As we consume resources and experience geopolitical and economic changes, the production sources are shifting too. Transportation costs will rise as these shifts lead to more rethinking of supply chain networks. And customers are now connected in new ways, so the way in which companies engage and connect has to change, too. These and other changes that we can’t even anticipate will require more, different, and new software.

Second, that also means there is no end to implemetation, really. As the businesses change and new software is developed, smart companies will take advantage of them. A flexible data foundation will need to be put in place that allows for change and growth. Sometimes it is difficult to understand and anticipate all the changes, so more and more companies are asking for new types of services from tech companies. And they are not just seeking technical advice, but business expertise. 

This support is needed, not just to build the information foundation for the future, but to help support oganizations going through staffing transitions as superusers leave jobs or retire and new, possibly untrained, employees take their place.

Logility has stepped up and confronted these challenges and is growing their Supply Chain Optimization services. Logility’s ranks are populated by experienced supply chain experts whose expertise, Ed Thompson, VP of Global Services, told me, is leveragable across multiple accounts. Thus, customers get the expertise needed without the full-time staffing. Or they have someone to lean on while they are getting their new staff up to date.

Business support and managed services are growth areas and that means change for Logility: modernizing the implementation methods, making new kinds of hires, and supporting customers around the globe 24-7.

Who Will Take Us to the Dreams of the Future?

These services do start to redefine the charter of tech companies, but customers want these services. In talking to many supply chain execs as well as listening to presentations, I heard that customers express their desire to work directly with the software company on all elements of the project—without getting any third party involved.8

Actually, at some level, the Hard Rock Hotel was a fitting backdrop for the conference. Scattered around the hotel are memor abilia of rockers old and new. Some lyrics from Jimi Hendrix caught my eye.

This has some relevancy to the whole discussion of the future. While we are not talking about “evils of today” in supply chain, there are definitely huge challenges to overcome and truly dreams of tomorrow. Customers probably dream of solutions that remove the uncertainty from planning and tedium from their work, and software providers are busy finding ways to take them to that kind of ideal world. For their part, Logility is planning their future so that they are the ones to take their customers there.

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1 Allan assumed the top spot in 2015 and Mike Edenfield serves as Chairman of the Board. Read their Management Bios here. -- Return to article text above

2 In fact, ERP is not—nor probably actually ever was—the advertised ‘no integration’ solution, that is, having low to no integration burdens. And today, ERP providers are selling modules and suites vs. monoliths. -- Return to article text above

3 Read Integrating S&OP -- Return to article text above

4 Part of their investment to move from the supply side into the store was last year’s acquisition of MDI. -- Return to article text above

5 Read Making Allocations Smarter. -- Return to article text above

6 Read Trouble with the (Size) Curve. -- Return to article text above

7 Based on 2014 data -- Return to article text above

8 I can state from experience in a prior job that the implementations we did that employed the software company vs. a third-party consultant were more successful. -- Return to article text above

 


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