Adaptation is Critical (Takeaways from Manhattan Momentum Connect 2020)

“Adaptation is critical,” said Eddie Capel, Manhattan Associates’ CEO, in his opening comments yesterday at Manhattan Momentum Connect 2020.

He was referring to companies and their supply chains, especially in light of the challenges and disruptions caused by COVID-19. But Manhattan Associates, like others in the industry, has also had to adapt to current realities, like converting its in-person user conference (which was scheduled for this week) into a virtual event. Although I ran into a few technical issues, overall the event was well organized with many informative sessions — most of them 25 minutes long, which was the perfect length. The main drawback to virtual events compared to in-person events is that you miss out on the great learning and networking that takes place between attendees during the breaks. On the flip side, with a virtual event, you don’t have to choose between two or more sessions scheduled at the same time; you can attend them all on demand. 

Here are highlights from two sessions I attended yesterday, starting with a great example of adaptation.

Kendra Scott Enables Ship-from-Store in Under 10 Days

Kendra Scott, LLC is a retailer that offers jewelry, home decor, gifts and beauty products. The company has 108 stores across the United States, with a distribution center in Austin, TX and additional distribution capabilities provided by a third-party logistics partner.

Prior to 2019, Kendra Scott did not have an order management system (OMS). When Jim Dunlop, Chief Information Officer at Kendra Scott, joined the company, he made implementing Manhattan’s OMS a priority. “Since we didn’t have an OMS, we had no ability to truly manage orders and how to fulfill them,” said Jim. “Also, our distribution center was at capacity, so without an OMS integrated with our 3PL partner, we would not have been able to fulfill orders during the peak holiday season.”

The OMS implementation began in February 2019 and went live in August 2019. “What I can tell you about 2019 is that we as a company would not have met our financial projections, and more importantly, we would not have met our customer’s demand, if we had not implemented the OMS,” added Jim.

The company had plans to gradually roll out other capabilities in 2020, but then the COVID-19 pandemic hit. “In one swoop, we closed 108 stores [on March 16] and we quickly realized that our distribution center was at risk of closing too due to ‘Stay at Home, Work Safe’ requirements coming from the government,” said Jim. “So we had no revenue coming in from retail. I called our friends at Manhattan Associates and said we would like to begin shipping from stores. It was a 10-day window from the date of conception [March 21] to the date we went live with the first set of stores [March 31].”

“We turned our stores into mini fulfillment centers,” added Jim. “Rather than having to furlough workers, we actually employed them to do fulfillment work out of their stores. We were not only keeping folks gainfully employed, we were also utilizing inventory that was in stores that would not have been sold otherwise.”

Kendra Scott also enabled buy-online-pickup-in-store (BOPIS) capabilities in less than 30 days. In just six days, this new channel produced almost 7,400 orders across 30 stores. An additional 78 stores will be enabled with BOPIS capabilities in the next few weeks.

“We did an amazing amount of work in the course of 2 months that could have easily taken years,” said Jim.

Why has this partnership between Kendra Scott and Manhattan Associates worked? “I believe that you have to share a common culture, a common set of beliefs around things like hard work, professionalism, and treating others well,” said Jim. “That is something we certainly share with our friends at Manhattan.”

Jim also added, “We were in a dire situation as a company, so the ability to pivot very quickly and have the right resources who can plan and execute and deploy was critical. I’ll call out our friend Forrest [at Manhattan] who took us from ‘Let me do a quick proof of concept’ to ‘Let me get that set up for you and into production’ in about 10 days.”

In summary, this is a great case study in how this COVID-19 crisis is not only creating challenges and disruptions, it’s also serving as a catalyst for change and innovation and accelerating trends in the industry (in this case, ship-from-store and BOPIS).

Transforming Transportation Procurement

Dr. Chris Caplice from MIT gave a very interesting presentation on transportation procurement. He began by talking about dominant designs in products and services — that is, as Chris described it, “something that gains the allegiance of the marketplace that is not necessarily perfect, but good enough for most people. It is the ‘satisfier of the many’.” He gave several examples of dominant designs, such as the QWERTY keyboard, bicycles, and today’s smartphones (which all basically resemble the iPhone’s original design).

There is also a dominant design in transportation procurement. To put it simply, you conduct an annual procurement bid, which then populates a routing guide, and if contracted carriers reject a load, you use the spot market. 

“This process worked pretty well for 20-30 years,” said Chris, “until 2018 when shippers got ‘punched in the mouth’ [to paraphrase the boxer Mike Tyson] as capacity tightened and rates went through the roof dramatically.” Based on research conducted by MIT, shippers that went deep into their routing guide at the time were paying as much as 15% more compared to using their primary carriers, and 35% more if they went to the spot market.

In short, Chris argues that 2018 made it clear that the dominant design in transportation procurement is now outdated and it’s time to transform the process.

He presented two approaches that MIT is researching:

Proactive Transportation Playbook: Can we develop a trusted short-term forecast that allows a shipper to take proactive steps to ensure required capacity at acceptable costs?

Transportation Portfolio Management: Can we develop the ‘optimal’ set of contractual forms between shippers, carriers, and 3rd parties to better match capacity to demand considering carrier capabilities, shipper network structure, and other factors?

I don’t have the time and space to go into the details of each here (I’ll have to invite Chris to join me on Talking Logistics to talk more about this topic), but I’ll conclude with these words from Chris:

“The big thing that’s come out of the 2017-2018 timeframe is this whole idea of a call to action. Shippers and carriers have gotten the OK to experiment. And that’s really exciting because everyone has recognized [the limitations and drawbacks of the dominant transportation procurement design] and that there is no ‘one-size-fits-all’ solution.”

In short, to echo Eddie’s comment, adaption is critical in transportation procurement too.

Other Momentum Connect Highlights

The biggest product news from yesterday was the announcement of Manhattan Active® Warehouse Management solution, “the world’s first cloud-native enterprise-class warehouse management system (WMS) that unifies every aspect of distribution and never needs upgrading.” Here are some details from the press release:

Composed of microservices, Manhattan Active WM is truly cloud-native. In addition to delivering a step change in accelerating the speed of innovation, this new application architecture provides an almost limitless ability to automatically scale up to meet fluctuations in demand. The software is also designed to be easily extended at the data, services and UI level to meet the unique needs of each business. To speed time to market and reduce training, Manhattan has also incorporated new configuration wizards to help businesses of all sizes and complexities streamline the implementation process.

Pet Supplies Plus is the first customer using the new WMS solution (watch customer testimonial video).

There was a time, not too long ago, when many vendors and clients alike questioned whether warehouse management systems would ever truly be a cloud solution. It’s no longer a question.

On the transportation management systems (TMS) front, some highlights include:

  • Two major product releases, which include parcel execution and enhanced strategic modeling, mobile, and fleet dispatch capabilities with a redesigned user interface.
  • Global expansion, with growing implementations in Europe and South America.
  • A faster, phased implementation process.

Well, I’m out of time and space for today. I plan to attend a few more sessions in the coming days and will share additional takeaways in future posts.