Exchange 2020

Manhattan Associates’ annual EMEA get-together for customers and partners – staged online instead of Berlin, as planned – offered plenty of useful insights into industry trends. Here are some highlights.

Supply chain, inventory and omnichannnel software specialist Manhattan Associates has come a long way since its June 1990 founding (at Manhattan Beach, California) and can celebrate its 30th birthday with a huge roster of some of retail’s biggest global names on its client list. Its Active WMS Solution is marketed as “the last WMS you’ll ever buy” (see interview in Logistics Business,
September 2020) and with nearly $600M in R&D spend over the past decade, it has the heft to back up the claims.

Unsurprisingly given the fast change in retail buying habits, Europe has been richly fertile for Manhattan Associates over the past five years. This year EMEA SVP Henri Seroux hosted the
company’s annual Exchange event for EMEA partners and customers (previous venues have included Barcelona, Amsterdam and Paris, with Berlin originally planned for this year) via a slick studio presentation, complete with live feeds to Singapore and Australia.

Seroux believes the pandemic has proven that cloud solutions are the right ones. He advises companies to rely on the cloud and invest in it. “The latest generation of cloud solutions delivers
exactly what companies need in a crisis such as this: unlimited elasticity, agility and speed. Companies don’t have to buy extra hardware when volumes double, it’s already there. If you want to benefit from innovation, you don’t need to upgrade the system first. New functionality is (almost) immediately available.” He recounts a customer story: “What happens if your central distribution centre has to shut down for quarantine reasons? Because that is exactly what happened to the American jewellery retailer Kendra Scott. The team at Kendra Scott were already running their unified commercial processes on Manhattan Active Omni, so they were able in just nine days to mobilise the inventory of their closed stores to fulfil and ship the online orders.”

Another key theme for logistics in the post-pandemic world is the potential for localisation of supply chains and manufacture. Seroux is not convinced. “Globalisation has given consumers in Europe and elsewhere a lot of purchasing power. The costs of buying a sweater, sofa or TV set are comparatively much lower than about 30 years ago. It’s an illusion to think that we can reclaim production on a large scale in order to start production here at much higher costs, just to minimise the risks and guarantee the supply.

“But that doesn’t mean we shouldn’t take measures to reduce our dependency on, say, one country, for example. We will have to diversify our supply chains and this diversification will in turn increase resilience. But fear not, this isn’t something that will just happen overnight, we’re talking about gradual, longer-term changes.” Every retailer or brand has to make its own trade-offs. “They will have to ask themselves how they should solve dilemmas: shorter and faster supply chains offer the benefits of quicker cycles to adjust to demand, but could also come with higher economic and environmental prices. Everything will have to be more flexible including inventory deployment. We will have to integrate our transportation, warehousing and unified commerce systems to be more agile and efficient.”

Read the whole article here.

Agility and efficiency were words that cropped up several times in a later Exchange presentation given by Clint Reiser, Director of Supply Chain Research at ARC Advisory Group. Revealing the results of an industry survey carried out just before the pandemic, he painted a picture of a sector on the cusp of a technological transformation, driven by the march to digital shopping. Survey respondents were divided roughly equally between 3PLs, retailers, manufacturers and wholesalers. Asked to assess which order fulfilment channels they expected to grow either ‘moderately’
or ‘extensively’ in the next three years, 51% of all respondents expect Direct-to-Consumer (D2C) to increase extensively, with DropShipping second on the ‘Extensive’ list at 24%. Significantly, in both cases 3PLs and retailers had higher expectations of growth than manufacturers and wholesalers. Unsurprisingly, all expected much greater piece picking in the 1-3 years ahead, with only 8%
of respondents suggesting that pallet picking will grow extensively. Reiser pointed out that the obvious result of this huge increase in piece picking will be more complexity in the warehouse and, almost certainly, greater cost.

With regard to adoption of technology and automation, 60% of respondents said that they were “very likely” to invest in such technology in the next three years. Crucially though, a whopping 96% said that they also expected the value proposition of such technology to become more applicable (ie more cost-effective) in the next three years. The drivers for their pursuit of automation technology were given as labour shortages (57%), an increase in throughput requirements at the warehouse or DC (48%) and labour costs (46%). One could speculate that pandemic-driven unemployment in other sectors, such as hospitality and travel, may put a cap on labour costs because warehouses may have a larger pool to fish in, certainly in the near term. This could be countered by acknowledging that the long-term trend towards expectation of labour shortage is clearly established. Meanwhile, automation options offering flexibility and scalability are increasingly
available to supply chain managers.

Asked what specific technology they expected to employ, 65% selected conveying and automatic sortation, followed by small shuttle systems (56%). Of the emerging technologies, there was a clear move towards robotic case picking, seen as supporting broad omnichannel needs including pallet picking. Collaborative robot systems and zonal solutions scored broadly the same at around 40% expecting implementation in the next three years. Single-vendor solutions were not strongly favoured – Reiser suggested that perhaps respondents see it as a “nice to have, not a need to have”. There was no question – and this shouldn’t be a surprise at a Manhattan Associates event – that in the software sector, WMS is seen as mission-critical, with 80% expecting to invest in such
technology in the next three years. Again, agility and responsiveness are the keys.