1. technology and computing

Information for Members of the
Warehousing Education and Research Council
W
hile southern California’s famous sunshine was absent for WERC’s
2010 annual conference, great topics, networking, and plenty of
attendees were not.
With a mixture of informative topics and fantastic headline speakers like Monster.
com’s Jeffrey Taylor, conference attendees could find all the inspiration they
needed to make improvements back at the office. Roundtables and facility
tours completed the bill and gave conference goers hands-on chances to learn
from others.
Networking is always a big draw of the conference, and this year’s opportunities
for meeting and greeting colleagues and partners were also plentiful. WERC
blocked out three separate slots of time for members to mix and mingle at
WIRE (Warehousing Industry Resources Event) events.
July/August 2010
In this issue...
Reports From the 2010 WERC Conference
Spotlight on topical sessions.
At WERC
Member news and events.
7
Chasing the Cloud
Cloud-based services evolving and expanding;
on the threshold of moving into supply chain
applications.
8
WERC Seminar Schedule
And when the event was over, members had the opportunity to take
in all that nearby Disneyland, the beaches and mountains had to offer.
All told, the 2010 version of the annual conference was all that members
could hope for, and more.
Here, then, is a look at some of the topical sessions included at the
conference:
FL!P: How to find and exploit opportunities
in an upside-down world
E
ver thought about taking what you learned in B-school and throwing it
out the window? Probably not. But that’s just about what Peter Sheahan,
CEO, Centre for Skills Development, recommended to attendees at the kickoff breakfast presentation.
Sheahan maintains that, in order to be competitive today, companies
need to shift the mindset of their current leaders. Not only that, but they need
to understand the changing expectations of both
their customers and their talent.
To make his point, Sheahan gave three examples
from the past 100 years of how leadership teams
failed to predict the future. The first was from
London in 1901, whereby the city’s mayor gathered
all of the town’s top thinkers to strategize a plan for
the city through the year 1925. The team came up
continued on page 2
1–6
“… all companies need
to be focusing on
four areas:
customer expectations;
innovation;
competitive advantage;
and the fact that times
have changed.”
Peter Sheahan
11
con f erence coverage
FL!P continued from page 1
“Customers will
become more
demanding in the
next two years.”
Peter Sheahan
threaten the physical distribution of their products.
All three examples show the failure of leadership
teams to predict the future. “You can’t blame them for
that,” said Sheahan. “It’s about the assumptions leaders
are making.”
Sheahan suggested that all companies need to be
focusing on four areas: customer expectations; innovation; competitive advantage; and the fact that times have
changed.
Customer expectations
with the need for 1 million horses,
a way to safely maintain those
horses, and a way to do so without raising the cost of
housing too much. At the time, some 75,000 cars were
already in existence—you can imagine the relevance of
the plan within just a few years.
Example two cited AT & T in the 1990s, where the
company hired a third party to study the opportunities
presented by the emergence of cell phones. The study
concluded that there was a global opportunity for
900,000 units.
The third, and most recent, example drew on the
CEOs of major content companies gathering to study the
distribution of their product. Their conclusion—that at
no time in the future could the speed of broadband
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2
/ JULY–AUGUST 2010
Looking at customer expectations, Sheahan pointed
out that, in two surveys taken six weeks apart in 2006
asking Americans what was “nice to have” versus what
they “must have,” a clear picture emerged. In spite of the
fact that the economy took a nosedive in the time
between the two surveys, people continued to rate items
like flat-screen TVs, high-speed Internet, and cell phones
as “must have” items. His point? “A satisfied need will no
longer motivate,” he said. “Customers will become more
demanding in the next two years.”
This makes it crucial that companies recognize how
consumer trends impact business. “The conversation is
beginning to shift from one of balance sheets and cash
flow to ‘where will we find business in the next three to
five years,’” Sheahan said. “You can find that business by
either doing what you do better, re-positioning yourself/
your products, or finding new markets.”
He pointed out that companies that compress the
distance between the source and the end customer have
an advantage—something that plays directly into the
distribution business.
When considering innovations and better practices,
Sheahan suggested that many of the most successful
companies or products are not all that innovative. “Some
of the not-so-new products end up being our biggest
successes,” he explained. “Take the iPod—Apple was the
fifth company to introduce such a product. But it did so
by bringing new concepts in with it, like iTunes.”
As to competitive advantages, the thinking has always
been that if you delivered two of three things—fast, good,
or cheap—you would succeed. Sheahan argued that now
and in the future, you must deliver all three.
He also argued that companies need to build a story
behind their products and services. He used Tom’s Shoes
as an example. Started by an “Amazing Race” contestant,
for every pair of shoes sold, the company donates a pair
of shoes to poor students in third-world countries. “Stories drive 93 percent of all human decisions,” he said. “The
story you tell will get people to buy from you, as does
helping them tell their story.”
He finished by pointing out how the Internet has
shown that by allowing people control, humans will
come up with good ways to do things, ala sites like
Google, YouTube, Wikipedia, and Facebook. This is a big
departure from traditional business, where the boss and
the brand determined how the customer behaved.
“The future lies in companies that can deliver fast,
good and cheap and do so by figuring out how to work
better with others,” Sheahan said. “Money gets made in
the cracks between the silos. You have the opportunity
to extract value from existing products and services.”
Q: What additional demands are placed on the supply chain as businesses are forced to run with
leaner inventory levels?
Bill Meisner: The supply chain must run better. We have
to be more reliable and responsive. We must be faster,
more accurate, and our transportation must be more
reliable.
The Leader’s Role
O
ver the past several years, the WERC conference
has included some great executive-level panels
addressing a variety of topics. This year, the panel
focused on supply chain leadership and included
Rick DiMaio, vice president of logistics for Sears;
Chip Edgington, executive vice president of operations
for Redcats; and Bill Meisner, vice president of strategy
and engineering for the Gap, Inc. Tony Ward, a partner at
Kurt Salmon, moderated the session, which focused on
the leader’s role in the changing supply chain world.
Ward posed the following questions to the panel:
Q: How are effective supply chain leaders taking
a broader role in driving business results
beyond traditional service reliability and
cost management?
Chip Edgington: Twenty-five years ago, we were thinking about managing cost and service. Today, there are
many layers of complexity to what we do. We have
to focus on social compliance, green initiatives, new
regulations related to terrorism, and the demands of the
Web. Executives today face many more demands and
wear more hats.
Bill Meisner: Today supply chain leaders need to take a
role in a company’s overall business strategy. Often the
supply chain is a source of cost savings and we have to
figure out how that fits into the big picture.
Rick DiMaio: Because of the economy, everyone is interested in costs and we are at the center of that. In addition,
we have to meet the demands of e-commerce and focus
on sustainability issues. Much of what we already had in
place played into sustainability already, but we just didn’t
call it that.
Rick DiMaio: For us, it means more analytics. The paradigm shift is what’s important. We all assume you need
to give up one thing to get another—we need to change
that way of thinking.
Q: Multi-channel fulfillment is creating complexity
in today’s environment. How are organizations
dealing with these additional challenges? What
are the risks, how to you mitigate them?
Chip Edgington: Customer expectation levels are high.
You must overcome the gap of time. We’re shipping
direct from factories to customers for apparel, for
instance. A big risk for traditional retailers is not understanding the complexity of multi-channel.
Rick DiMaio: For us, multi-channel is part of a multi-year
initiative. Today we have merged with all other aspects
of distribution—we have connected all the dots of all the
formats. Our goal is to fail quickly, learn, and move on. It’s
a difficult shift for a large organization and you must be
ready, willing and able to run with it.
Q: How has the end customer fared as a result of the
change and evolution of roles and collaboration
within organizations?
Bill Meisner: Faster speed to market and lower cost
Chip Edgington: The initial dot.com companies set up a
high expectation level, which put pressures on traditional companies. This continues today—everything
continued on page 4
/ JULY–AUGUST 2010
3
con f erence coverage
The Leader’s Role continued from page 3
about the customer must come first if you want a piece
of the market share.
Q: What role does supply chain leadership play
in the broader organizational goals around
sustainability?
Bill Meisner: Our role is to find opportunities. There’s
almost always a strong business case for sustainability.
We’ve done a lot with packaging, with shipping, and with
the hours we keep our facilities open.
Rick DiMaio: A ton of analytics go into figuring out
green methods. It has given people the chance to play a
much bigger role in the organization. When you consider
the amount of benefit the supply chain can contribute,
there’s probably no other part of the company that can
match it.
Q: Technology costs in the supply chain are
enormous but often yield benefits beyond
traditional distribution and transportation
models. How do you make the case?
Chip Edgington: It’s not a traditional ROI—it’s focused
on the customer. The impact to customer and expediting
transit is more acceptable than it was a few years ago.
“Our supply chain goes beyond the day-to-day
operations all the way to our customers,” said Gibbons.
“We look at how we can use the supply chain to connect
with our customers.”
For a while, however, Gibbons said that the company
lost sight of the “why” Starbucks is here. “We’re here just
to get coffee into people’s hands,” he said. “That customer
experience can only happen because we do what the
store managers need to succeed.”
In 2008, Starbucks began its transformative journey.
“We lost sight of the day-to-day excellence we needed to
provide the Starbucks experience,” Gibbons said. “At one
point we were building eight stores per day. With that
kind of growth, you start losing humility and making
mistakes. For the first time, we saw sales growth decline.
It was a huge wake-up call.”
All the while, the company was building a huge
supply chain and its costs were growing at an alarming
rate. “When sales struggle and costs go up, service goes
down,” said Gibbons.
The company decided it was time to put together a
new supply chain team. The first step was measuring
services with very tough metrics, which it
Bill Meisner: To make the case, it must be a part of a
bigger company initiative.
Starbucks’
Transformation Journey
W
hen you grab your Starbucks tall non-fat latte on
the way to work each day, you probably don’t give
much thought to how it got to you. As long as
the order is right, you’re happy and go on about
“We look at how
your day.
we can use the
But the Starbucks supply chain is long and
complicated and until recently, not all that orgasupply chain to
nized. The company went through a rapid period
connect with our
of growth, followed by the economic downturn.
customers.”
Both served to highlight the fact that Starbucks’
used to calculate customer sersupply chain was in need of an overhaul.
Peter Gibbons
vice levels and then took them
Peter Gibbons, executive vice president
back to the board of directors.
global supply chain operations, gave conference
Another step in the process was for the management
attendees an inside picture of exactly how the company
team to get out into the stores and talk with the managtransformed its supply chain into what is today a wellers and baristas. “That was very humbling,” admitted
oiled machine, one that is intent on ensuring customers
Gibbons.
receive top-notch service.
4
/ JULY–AUGUST 2010
From here, the company created a strategy. The
approach included the following steps:
“I believe that if
you don’t have
ideas, chase them,
and make them
happen, someone
else will.
Defining a purpose—to improve service, get costs
down, and develop talent
Defining how the company operates—safely, with
a focus on service, quality and costs
Determining how to organize—Laid out a plan to
source, make and deliver
Jeffery Taylor
Developed the “Golden Rules” on how to lead—
these included highlighting problems and
determining what is needed to fix them
Starbucks also brought in outside help to calibrate
the size of the “prize”—the potential savings—in its supply chain. “Above all, we tried to keep it straightforward,”
said Gibbons. “There’s lots of data to work with, but
when we talk as a leadership team, we focus on four
things: safety, procurement, supply-chain operating
expenses and on-time performance.”
After Starbucks made some of the necessary
changes, it developed a long-term plan. The plan
included the tenets of delivering competitive
advantage; getting the job done; and building supply
chain capability. The company also placed additional
emphasis on talent.
“Our journey started with a serious situation,” said
Gibbons. “But it’s our job to create the right focus, clarity
or purpose, and drive up serious. We work hard everyday
to ensure it.”
You are the CEO of
Your Own Life
E
verybody knows about Monster.com, the innovative
online job board with a presence in over 30 countries
and with over 30 million unique people. What most
people don’t know, however, is that visionary Monster
creator, Jeffrey Taylor, is a firm believer that everyone
can be the CEO of their own lives.
That’s the message he delivered in an energetic,
interactive presentation during a luncheon session at
this year’s conference. He focused his talk on innovation
and entrepreneurship. “I believe it all comes down to
being happy or not in your work,” he said.
To support his theory, Taylor used Apple as an
example. “Apple is different thanks to innovation,
geographical expansion, and great marketing,” he
said. “In China, for example, sales are up 470 percent.
Happy is that most of that growth occurs through word
of mouth.”
Taylor also used himself as an example. “I’m an entrepreneur and a CEO,” he said. “I believe that if you don’t
have ideas, chase them, and make them happen, someone else will. I really enjoy getting ideas off the
ground—it makes me happy.”
Transferring this to company dynamics, Taylor said
that “you can transform a company with happy
employees. What can you do to change as an organization?” he asked.
To help attendees answer that question, Taylor told
of his experience following his “retirement” as CEO of
Monster in 2005. “I took six weeks off and took notebooks with me to jot down my thoughts,” he said.
“I came up with several ideas about how to live my life
after Monster.”
First and foremost, he said, “You are the CEO of your
own life. You must drive your ideas forward.” He used
the acronym FAME to sum up his thinking:
F –Free agent. “It’s the free agent who can break out of
the job and get more done that can succeed.”
A –Train like an athlete. By working harder than anyone
else, you can succeed.
M –Market yourself.
E –Engage like an entrepreneur.
“Fame is not about being famous, but about moving
your agenda forward,” said Taylor.
He also emphasized the importance of understanding that you matter to the success of your company.
“If you can speak your mind—to customers, to
employees—you will start to engage and succeed,” he
said. “It’s all about seeing opportunities and taking
advantage of them.”
How do entrepreneurs know they are on the right
continued on page 6
/ JULY–AUGUST 2010
5
con f erence coverage
You are the CEO of Your Own Life continued from page 6
track? According to Taylor: “When you have an idea and
everyone thinks you’re crazy, and you still go for it,” he
said. “The challenge as an entrepreneur is that you need
to start alone.”
Another piece of the puzzle to being your own CEO
is technology, said Taylor. “You’ve got to focus on innovation and keep up with technology,” he said. “New
technology is critical.”
Finally, Taylor encouraged attendees to follow their
own “line.” “What’s the shortest way to get from point
A to point B?” he asked. “A straight line. But life doesn’t
always follow a straight line and that often causes
us anxiety.”
The straight line, Taylor said, is about the big idea.
“It’s your way of following your dreams,” he said.
In the end, Taylor pointed out how powerful the
mind can be if you let it be. “Write your ideas down when
they come to you,” he said. “I dreamed about a big bulleting board—the monster board—back in 1983. I wrote
it down when I woke up.” And everyone knows where
that led.
Alternative Power in
Lift Truck Applications
A
ll companies are trying to figure out the best way to incorporate sustainable practices into their supply
chains. One method that GENCO Supply Chain Solutions
has implemented is the use of fuel cell-powered lift
trucks. Bob Simon, a lean six sigma black
belt leader at the company, shared the
“The value of
company’s experience with attendees.
Since October 2009, GENCO has
cell-powered
been implementing the trucks throughtrucks goes well
out its facilities, partnering with its
beyond the
customers like Whole Foods, Wegmen’s,
Coke, and Kimberly-Clark in a costenvironment.”
sharing program. Additionally, the
Bob Simon
company received a $6.1 million grant
from the Department of Energy to put
the program into place. By the end of the project,
GENCO will have some 350 trucks throughout its supply
chain fueled by cell-power.
Fuel cell power combines hydrogen and oxygen to
generate electricity. Its only byproducts are water and
heat. “The value of cell-powered trucks goes well beyond
the environment,” explained Simon. “Our objectives with
the project were to accelerate cost reduction; establish
6
/ JULY–AUGUST 2010
domestic supply and manufacturing base and increase
employment opportunities, and to acquire operational
data and validate progress toward our targets.”
Since implementing the new trucks throughout the
supply chain, GENCO has been able to gain a great deal
of value from the project. Some of the value Simon
pointed out included:
Increased productivity by 15 percent
Internal rate of return of 30 percent
Reduction in carbon footprint of 90 percent
Having fuel cell power has also allowed GENCO to
avoid some capital cost. “We haven’t needed to expand
some of our facilities because we’ve recaptured space
previously used for battery changing,” said Simon.
“We’ve also been able to free up electrical capacity in our
buildings.”
GENCO has also been able to move more product
with less labor, and run the lift trucks at full speed around
the clock. “Our labor downtime has been reduced by 35
minutes a day that would have gone to battery changing,” Simon said.
In spite of the cost savings, however, Simon admitted that the program wouldn’t stand alone as well.
“Without the government incentives, fuel cell is harder
to justify,” he said.
However, fuel cell power also brings with it a great
deal of benefits, safety among them. Simon listed the
benefits as:
Eliminates the issues related to batteries
Decreases vehicle/pedestrian contact
Robust mechanical design
Alarm and hydrogen detection system
A tank that meets the auto industry standards
Lower overall operating costs
Reduced carbon footprint—by 90 percent as
compared to LPG; and by 75 percent when
comparing grid charging
For other companies considering fuel cell powered
trucks, Simon recommended keeping a few points in
mind. “This is a new technology,” he said. “It still needs
more adoption and proof.”
It also requires a non-traditional ROI analysis. “Expect
to factor in five to 10 years of operating expenses,” he said.
“And productivity enhancements are still not fully determined. I wouldn’t consider this technology unless you
were a DC running at least two shifts and 25 units.”
Copyright © 2010, WERC. All rights reserved.
At WERC
Here are some things to
keep you up-to-date on
what’s happening at WERC
Member Benefit: Vendor Locator
Do you know that as a WERC member, you can list your company
contact information in the online vendor locator at no charge?
Here’s a great way to let folks know about your product or
service on a website that gets over 10,000 hits a month. Try it!
Member Advantage:
Mentoring Membership
Today’s business world is all about connections. WERC encourages those connections by offering a mentoring membership.
For half the cost of a professional membership, you can “sponsor”
a colleague for a year of WERC member benefits—and the
chance to expand their network of contacts. Call us at
630.990.0001 or go online for the full details.
Upcoming WERCouncil Events
Cincinnati
September 23, 2010
Levi Strauss & Co. Distribution Center Tour
10:30 a.m. – 1:00 p.m.
Contact: Brian Jaynes 513.562.1387
North Texas
September 23, 2010
9th Annual Warehousing Resource Convention
8:00 a.m. – 4:00 p.m.
Grapevine Convention Center, Grapevine, Texas
Register on-line at www.werc.org QUESTIONS?
Call Norm Saenz, North Texas WERCouncil President and
Assistant Vice President, TranSystems Consulting
972-888-2535 or 817-919-1753
Congratulations to Rainmakers
DC Velocity magazine recently (August issue) recognized 16
logistics professionals who have made a lasting contribution
to the profession. WERC is please to congratulate all the “rainmakers” and in particular those who are our members: Catherine
Cooper, OHL; Tim Feemster, Grubb & Ellis; Steve Mulaik, The
Progress Group; and Rich Thompson, Jones Lang LaSalle.
Track Your Stats
A companion tool to the DC Measures report that comes out
every year is the online Track Your Stats on the WERC website.
Listed under “Resource Center / Industry Tools,” this tool links to
the DC Measures study statistics and allows you to input your
facility metrics and see how they stack up against those reported
for 2009. And Good News: Just fill in your email address and you
will be sent a unique ID code that will allow you to start where
you left off. All your data will be saved in the database. And, if
you like, you can edit your responses and see the impact on
the benchmarks over time.
Stretch Your Training Dollars
Have you checked out the online learning topics that WERC
offers? With over 20 topics—both general business and
logistics-focused—and very
reasonable pricing, what’s
not to like?
Another approach is to use
WERC’s self-study guides by
themselves or to supplement your classroom instruction. The books Practical
Warehousing; Recruiting, Interviewing and Selecting; Communicating, Decision Making & Managing Conflict; Managing
Performance; Coaching Employee Development and Mentoring
Programs in DCs are easy to understand and priced right.
For more information about these and other WERC events and benefits, go to www.werc.org or call 630.990.0001
/ JULY–AUGUST 2010
7
SYSTEMs
Chasing the Cloud
Cloud-based services evolving and
expanding; on the threshold of
moving into supply chain applications.
C
loud computing (aka The Cloud) is hot. How hot? Well,
Hewlett-Packard, as one example, plans to invest $1-billion to develop the next generation of cloud computing services.
Additionally, the Cloud continues to be the main topic of commentaries, analyses, research, webinars and discussions while its
deployment escalates in business, retail and consumer sectors,
among others.
Today, software providers and others are on the cusp of making a push for Cloud-based deployment options for supply chain
applications.
About the Cloud
“Cloud computing
involves getting
computer solutions via
the Internet that in
the past would have
resided on your PC or
an internal network of
servers and PCs.”
Steve Banker
Despite the early success of Cloud experiences, there remains
a lack of a standard Cloud definition. Part of the rationale
advanced is that the Cloud is still relatively new and evolving
and that time is still needed for the nomenclature to be
debated and resolved. However, there is no absence of
descriptions of the Cloud concept:
“Cloud computing is a style of computing in which
scalable and elastic IT-enabled capabilities are delivered
as a service to external customers using Internet
technologies.” (Gartner, Inc., Stamford, Conn.)
“Cloud computing is the set of disciplines, technologies
and business models used to deploy IT capabilities as
on-demand services.” (Burton Group, Midvale, Utah)
“The Cloud is the next logical step in the web-enabled
technology revolution. [It] is the logical extension and
integration of SaaS and pay-as-you-go web-based
storage.” (Sourcing Innovation blog: “Get Your Head in
the Clouds!”)
“Cloud computing is the emerging technology deployment
option that allows data and application functionality to be unconstrained by the location of the hardware infrastructure that hosts
the application or data,” says Chad Collins, vice president, marketing and strategy, HighJump Software, Eden Prairie, Minn. “It is
enabled by the Internet which provides access to infrastructure
that is typically located outside of the user’s firewall.” Consumer
examples of cloud computing include Internet-based e-mail,
social networking applications and various mapping/driving
direction applications.
Steve Banker, service director, supply chain management,
ARC Advisory Group, Dedham, Mass., explains, “Cloud computing
involves getting computer solutions via the Internet that in
8
/ JULY–AUGUST 2010
the past would have resided on your PC or an internal
network of servers and PCs.” He cites solutions such as:
Database services (storing data on a database that is
accessed via the Internet but which is not owned by
your company and resides outside of your company’s
local network)
Server services (connecting to servers via the
Internet that provide computing power but which
are not owed by your company)
Content services (accessing information that used to
be saved in paper documents or on local PCs/Servers
via the Internet)
Application services (accessing software hosted
elsewhere via the web)
When it comes to Cloud solutions, Banker says,
“Some are free (Wikipedia), some are paid by advertisers
(Google search) and some are leased, paid for via a
monthly subscription fee (SaaS).”
Cloud and SaaS
When quickly scanning some of the explanations it is
easy to assume that Cloud and SaaS (Software as a
Service) are one in the same. In many examples Cloud
and on-demand or SaaS are used interchangeably. In
fact, one explanation stated that the Cloud is just
another delivery method for multi-tenant SaaS.
According to Collins, “Because SaaS is a subset of
Cloud computing, the two are often used interchangeably when discussing enterprise software applications.”
However, he explains, SaaS typically refers to enterprise
software applications that are hosted by the software
provider and sold using subscriptions as opposed to
perpetual licenses.
Jim Burleigh, former CEO, SmartTurn, now head of
RedPrairie’s On-Demand WMS group (San Francisco),
likens Cloud computing to an electricity distribution
network. “You can have and operate your own generator
to supply your power needs, or you can tap into a distribution network for electricity as you need it,” he explains.
“That’s what Cloud computing is to me: a shared utility of
computing power, a shared utility of storage capability, a
shared utility of back-up capability.”
Specifically, he explains, “SaaS is having your application (WMS, TMS for example) as a shared utility. Having
your infrastructure or platform as a shared utility—
that’s Cloud.”
Cloud in the DC
While the Cloud phenomenon has been a relatively
late arrival for supply chain applications, the activity
nonetheless is expected to be robust as software providers develop, modify, and make available their solutions
for Cloud. Two recent industry events indicate how this
may occur over time. HighJump Software, for one,
announced it is offering its warehouse management
system in a Cloud delivery format. The hosted WMS
will have the same features and
functionality as the on-premise
“Having your
WMS, according to Collins, as well
infrastructure or
as the ability to build unique
business processes using the
platform as a
HighJump adaptability tool. He
shared utility—
further explained that in their
that’s Cloud.”
Cloud deployment option the
infrastructure is provided by a third
Jim Burleigh
party provider and the application
is provided by HighJump.
He also shared that HighJump “already offers a
Cloud-based option for TMS and route accounting
systems.”
In the second industry development, RedPrairie
Corporation (Waukesha, Wisc.) recently announced its
acquisition of SmartTurn, an on-demand inventory and
WMS provider. The acquisition adds a multi-tenant SaaS
WMS to RedPrairie’s E2e productivity suite and creates a
company, according to the announcement, with a WMS
solution for distribution operations of all sizes and levels
of complexity. Mike Mayoras, RedPrairie CEO, said the
company will offer a RedPrairie Integration Module
that “connects On-Demand WMS to our flagship WMS
product.”
SmartTurn’s inventory and WMS solution will be
rebranded as RedPrairie’s On-Demand WMS and will
focus on less complex distribution operations.
Banker adds, “RedPrairie was already offering
‘Cloud’ services in the WMS area, hosting the database
and servers offsite with the customers accessing the
WMS solution via the Internet, and paying a monthly
leasing fee.”
WMS is not the only application favored for Cloud
delivery; so is TMS. “There has been significant growth in
alternate TMS sourcing options—most notably the
growing adoption and popularity of outsourced hosting
such as SaaS and Cloud computing, which have added a
new dimension to the marketplace,” according to
continued on page 10
/ JULY–AUGUST 2010
9
Chasing the Cloud continued from page 9
“Transportation Lifecycle Management; Flexible Deployment Options for an Expanding Market,” a white paper
from Manhattan Associates, Inc., Atlanta.
An interesting observation in the paper is that determining whether SaaS or Cloud is the right solution has
less to do with company size and revenue and more to
do with the maturity or complexity of your overall transportation operation. “We recommend that our customers
consider the operational maturity to determine what
deployment option makes the most sense instead of
their annual revenue,” the white paper explains.
The three common deployment options include:
On premise. An on-premise deployment strategy
provides maximum flexibility and control. This
deployment, as described in the white paper, “implies
that the software will be hosted in your IT operation,
on your hardware and provides you with unlimited
flexibility in terms of configuring and modifying the
software to the unique needs of your operation.”
Public Cloud (hosted multi-tenant/single instance).
This deployment scenario “provides lower upfront
costs and faster speed-to-benefit by leveraging an
existing implementation that is pre-configured and
ready to use. This model eliminates the need for an
upfront investment in either a software license or
hardware.” Banker notes that this option features
software hosted “somewhere out there beyond
our firewall that is based on just one instance of
the software, but which many companies or users
can utilize simultaneously.” As an example he cites
MapQuest, a routing application based on a single
piece of software code but which many people
(multi-tenant) are using at the same time.
Private Cloud (hosted single tenant/single instance).
This deployment strategy combines the flexibility of
an on-premise option with lower up-front capital
expenditures available from an existing SaaS or
Cloud operational environment.
Cloud benefits
Cloud-based solutions are becoming more common
alternatives to on-premise software because businesses
are looking for ways to reduce their IT requirements and
simplify maintenance and upgrades. As the system’s
infrastructure is based in an off-site, secure data center,
according to Collins, Cloud solutions eliminate up-front
capital expense and reduce the risk and time required by
on-premise implementations.
“There’s different benefits for different situations,”
S idebar
Is the Cloud the Answer for Your DC?
“Determining if a WMS with a Cloud delivery model is right for you depends on your
specific functional needs and staffing priorities,” notes “WMS in the Cloud; Real World Business Option or Just Fluff?” a HighJump Software white paper. The key benefits a Cloud
option provides over a traditional on-site hosted solution are that you “gain the new WMS
capabilities you want for your business, and the solution is implemented more quickly and with less strain on
your IT staff—all without the large up-front capital expense.”
To analyze whether the Cloud is the best option for your business, examine the various solutions that are
available, the strengths and weaknesses associated with each, then calculate the costs of each as they relate to
your operation. Other factors/issues to consider as outlined in the white paper:
Do you have the expertise and the extra IT staff to dedicate to implementing and maintaining
the new application?
Is your current infrastructure over-taxed and in need of an overhaul?
Do you have a pressing need for the new WMS capabilities, necessitating a faster implementation?
Have you included operational costs such as energy, personnel and capital costs, including servers,
storage and software, when comparing Cloud costs to hosting the same service internally?
Have you considered the benefit of subscription-based pricing of the Cloud option?
And as a final recommendation: “Discuss the differences and the benefits with your operations and IT folks
to determine what option is right for your business.”
10
/ JULY–AUGUST 2010
WERC Seminars
maintains Burleigh. “But, in general, the Cloud or SaaS
approach is much less expensive because the costs for
management, maintenance, upgrading and tuning, and
other costs are actually shared among a large base of
users resulting in each paying a much smaller amount.”
The alternative, he explains, for an individual DC that
desires to have a web front end on their application,
would require a firewall, a web server, an application
server, a database server, storage, and to then multiply it
all by a factor of two to insure a “failover” capability to
avoid having the system go down.
“That eliminates about 95 percent of the facilities
because they couldn’t afford all that technology, plus the
technicians needed for staffing,” Burleigh explains. “At a
minimum most facilities would sacrifice on the failover
part and hope that the system wouldn’t fail.” He further
maintains that with the Cloud, “you achieve a higher
level of security, redundancy and performance than most
facilities will ever have because they will not expend
the capital required for the technical wherewithal to do
all that.”
Cloud deployment options provide a lower cost of
ownership because you don’t need to maintain server
infrastructure, storage, hardware, maintenance costs on
hardware and software, and IT staff to administer the
infrastructure, according to Collins.
In addition, “The software will always be up-to-date
and users will not need to do upgrades to receive
functional enhancements,” says Banker. Further, he adds,
“product enhancements are added on an ongoing basis
and typically are cutover into production in the wee
hours of the morning when few companies are
operating.”
Banker also observes that multi-tenant software has
the reputation of being simpler than traditional software.
“These solutions were designed for smaller facilities
using paper-based processes,” he explains. “The payback,
usually less than six months, comes in the form of almost
perfect inventory accuracy.” However, he’s recently
become aware of multi-tenant solutions that “while not
as complex as traditional Tier 1 WMS, do offer benefits in
the area of productivity improvements.”
Burleigh is optimistic about the future. “Generically,
for the industry, what you’ll see evolve over the next ten
years or so, is a very strong Cloud, SaaS supply chain
platform and assortment of applications, some of which
other functional IT areas have but are not yet available
for the supply chain.”
Copyright © 2010, WERC.All rights reserved.
Steve Banker, ARC Advisory Group, www.arcweb.com
Chad Collins, HighJump Software, www.highjump.com
Jim Burleigh, RedPrairie Corporation, [email protected]
Managing and Improving Warehouse Operations
October 25 & 26, 2010 Kansas City, Mo
In good and bad economic times, it’s always a good idea take the time
periodically to re-evaluate processes, procedures and strategies within
your operation. This seminar provides the perfect opportunity to do
just that. Whether you are looking to increase customer service, reduce
inventory, increase productivity, handle more SKUs or operate in less
space, many effective solutions are available just by knowing what to
look for, which is the focus of this seminar.
You’ll leave this seminar with a “Warehouse Operations Checklist”
as well as practical information on the following sampling of topics:
Understanding the “big picture” of warehousing within your
company and beyond
Identifying opportunities for improvement in the all areas of
your facility
Techniques for selecting the right equipment for your specific
storage and handling needs
Methods of analyzing your layout to optimize space and
increase efficiency
Effective ideas for increasing speed, cutting costs and reducing
travel time in your DC
Steps to SIMPLIFY-and increase productivity in the process!
Guidelines for managing and controlling inventory
Tips for streamlining the flow of information and materials
Understanding meaningful performance measures for your facility
VALUE! WERC Members - $749.00 / Non-members - $849.00.
Fee includes a continental breakfast and lunch each day, as well as
all seminar materials.
Kansas City Marriott Downtown
200 West 12th Street
Kansas City, MO 64105
Register at www.werc.org
Save the Date
Maximizing Warehouse Space –
The Key to Productivity
November 8 – 9, 2010
Suburban Chicagoland Location
Watch for more details with registration information for this
can’t miss seminar!
/ JULY–AUGUST 2010
11
Periodicals
Save the Date!
Preparation For Conference 2011
34th Annual WERC Conference
May 15 – 18, 2011
Walt Disney World Swan & Dolphin Hotel
Orlando, Florida
The entire event will be conveniently located in this one facility.
Exhibit & Sponsorships
2011 Warehousing Industry Resources Event
Call for Presentations
WERC’s annual conference is the only educational program of its
kind specifically-geared to the needs of warehouse and distribution management. Go to www.werc.org for full information about
submitting your ideas.
© Walt Disney World Swan and Dolphin
More space, more demonstration stage … we’re doubling the
exhibit space for 2011! The 2010
conference was a sell out so you
don’t want to miss 2011. Contact
Gary Master at 719.495.5050 or
Jim Indelicato at 630.521.9033
for information.