The New JDA: Focused on the 3PL Industry (Takeaways from FOCUS 2015 Conference)

“It feels like a new JDA.”

That’s how JDA Software’s CEO, Baljit Dail, summarized the feedback he was getting from customers and partners at FOCUS 2015, the company’s user conference held last month in Orlando, FL, which had more than 2,000 attendees from 30 countries.

As Dail said in his keynote address, the new JDA is less about the new logo and tagline (“Plan to Deliver”), which the company unveiled last October, and more about listening to customers better, something he admitted the company didn’t always do well in the past.

Through a more formal Voice of the Customer (VOC) process, its Customer Advisory Board, and expanding Special Interest Groups (SIGs), customers are guiding JDA’s renewed focused on innovation. The company invested $125 million in R&D last year, a level it plans to sustain moving forward, and about 10 percent of that investment is going toward JDA Labs, which is focused on cloud, mobile, machine learning, predictive analytics, wearables, and other customer-guided projects.

In addition to innovation, JDA is also working on two other priorities for customers: improved product integration (via JDA Flex, the company’s platform architecture) and enhanced usability.

Not surprising, omni-channel retailing was in the spotlight during the event, with 18 presentations focused on the topic, including several related to Retail.Me, a new software-as-a-service consulting service that “applies advanced data science to historical performance and purchase data [to] identify key shopper segments and their buying behaviors.” JDA also announced new transportation management functionality, including enhanced load building capabilities, dynamic shipment splitting, and more integrated fleet management functionality.

The new JDA is also taking a more focused approach to the third-party logistics (3PL) market, which is one of the three core vertical industries the company is organized around (Manufacturing & Distribution and Retail & Services are the other two). This focus was evident at the conference, with Todd Peters, the CEO of GENCO (recently acquired by FedEx), giving a morning keynote address on the opening day, and a track dedicated to the 3PL industry with nine sessions.

I led one of the panel discussions — 3PLs, What Business Are You In? The Case for New Answers and Opportunities — which featured Rick Jordon (Panalpina), Marc Sherman (GENCO), and Sally Miller (Exel NA). We discussed a variety of topics, including how customer expectations are changing and the role of IT in helping 3PLs achieve their strategic objectives. Here are a few of my key takeaways from the conversation:

  • Time-to-value and scale are becoming more important for customers. In other words, customers want 3PLs to launch new operations and processes faster than ever before, and they look for partners that can scale — i.e., can meet their growing needs in terms of services offered and geographies served. This point was brought home during a dinner conversation I had with an executive from a leading 3PL. They had recently won a deal with a global coffee company that expected them to launch a new distribution facility in 90 days (which the 3PL was on track to do, but not without much work and support, including from JDA which was providing the warehouse management system).
  • Not all customers and prospects are created equal. Simply put, some customers and prospects are taking a more strategic, collaborative approach to their relationships with 3PLs, but many more are still taking a “What’s In It for Me?” approach to negotiations — an issue I wrote about earlier this year in Procuring Logistics Services is Not the Same as Buying Paper Clips.
  • The value of IT is in how you use it. The panelists underscored a point Todd Peters from GENCO had made in an earlier panel session, which was my favorite quote from the conference: “You can buy a Walmart violin and you can buy a Stradivarius, and if you give them to me to use I will make them sound equally bad…It takes no talent to buy software; [the value comes] in how you use it.”

While at the conference, I had a chance to interview Todd Johnson, Global Vice President of JDA’s 3PL Business Unit. JDA formed this dedicated business unit last year, so I asked Todd about the factors that led JDA to form this business unit and the results to date. Here’s an excerpt of what he said:

We made the decision [to form the 3PL business unit] based on a variety of factors. First, the 3PL market as a whole is continuing to grow at a significant pace…and it’s growing in a market that’s becoming more complex, which is driving the need for more sophisticated solutions. Also, a lot of 3PLs have a very broad mix of technology solutions today, and they’re trying to standardize on a smaller set of solutions to reduce total cost of ownership and have a much more strategic relationship with a fewer number of vendors.

In addition, JDA has more than 200 3PL customers, including 7 of the top 10 global providers, which was another driving factor.

I also asked Todd how Intelligent Fulfillment — one of JDA’s core solution offerings that brings together demand, fulfillment, transportation management, warehouse management, labor management, and flowcasting — aligns with the needs of the 3PL industry. Here’s a snippet of what he said:

One of the key enablers we can provide to 3PLs is to expand their service offerings outside of WMS and TMS to these other highly differentiated, higher margin solutions that help them build much stronger and more strategic relationships with their customers…Intelligent Fulfillment Solution is core to what we believe will help [3PLs] differentiate themselves in the market.

You can watch my full interview with Todd below, where he also talks about what he’s hearing from 3PL executives regarding the challenges and opportunities they face, how the IT expectations of 3PL customers (manufacturers and retailers) are different today than in the past, and how JDA’s 3PL customers are influencing the company’s innovation roadmap.

Yes, it feels like a new JDA, and part of the reason, I believe, is that the company is unifying around a new, common culture — a journey that has taken some time, and some management changes, following the acquisitions of Manugistics, i2 Technologies, and RedPrairie. The journey continues on the product integration front too, including to enable the full breadth of Intelligent Fulfillment capabilities, but as the new TMS capabilities demonstrate, the company is making progress in that area too.

Regarding the 3PL industry, as I said last April, the market opportunity is great, but so are the challenges. Simply put, compared to manufacturers and retailers, 3PLs are much more cost sensitive and don’t have as many IT resources, which means JDA and other software vendors catering to this market must adapt their pricing, deployment, and support models accordingly. Fortunately, it appears that JDA understands this reality, which is another reason why it created a dedicated 3PL business unit. The results and feedback from customers have been positive to date, but the journey continues on this front too. Stay tuned.

(Note: JDA Software is a Talking Logistics sponsor)