More on the JDA-RedPrairie deal
November 02, 2012
The meshing of supply chain and logistics technology providers RedPrairie and JDA Software could be promising on myriad fronts for shippers. There are various synergies for shippers in a number of sectors, especially retail, consumer packaged goods, and manufacturing, that have the potential to make life easier and more fluid for them.
That was one of the main takeaways of a conference call earlier today with JDA CEO Hamish Brewer, whom is expected to lead the new company as CEO, and Michael Mayoras, RedPrairie CEO, whom will serve on the board of the combined company.
Mayoras explained in his comments that the combination of JDA and RedPrairie is something that has made sense for a very long time.
“There is no question that the focus of RedPrairie’s organization is around extending supply chain execution into the store and connecting that to a multitude of channels and certain consumers with that smart fulfillment and a solid and efficient operating store and management of channels to connect those consumers efficiently to those supply chains,” he said. “When you think about RedPrairie’s core mix around supply chain management as well as store operational efficiency and management around workforce and around inventory management and events and the orchestration of those event and around e-commerce platforms, they perfectly compliment all the things JDA does.”
He added that this acquisition creates a “fantastic blend” of organizations that both have been working for a long time to improve in supply chain science and extend the idea of supply chain management throughout the organization. What’s more, he said this gives customers of both companies more scope and more scale and more value. And while both companies have been known as leaders and innovators, a byproduct of this deal, he said, is that it brings them into a whole new stratosphere.
RedPrairie’s focus on supply chain execution and supply chain inside the warehouse and supply chain in logistics and from the coordination and use of people throughout the enterprise has centered on one use and view of things like inventory and workforce/people/human capital that are orchestrated through a series of events and promotions to provide a better connection to multi-channel consumers. And Mayoras said RedPrairie has built supply chain warehouse management systems with industrial customers, manufacturers and distributors, 3PLs, and retailers and built an enterprise that is among the best in the world over the last 37 years.
Now, it can leverage that with JDA with a variety of customers that they share together and new ones already working with JDA.
JDA’s has had strong retail heritage over the last 25 years and expanded beyond retail with a focus on the end-to-end supply chain with acquisitions of Manugistics in 2006 and i2 in 2010, said Brewer.
This was part of a focus on supply chain, merchandising, and pricing, which he said were core focuses, with an emphasis on planning as opposed to execution.
“Our customer base today is very well-balanced between retail and manufacturing, as well as distribution companies and targeted transportation services,” he said.
He explained that when two large companies like these come together there is going to be some overlap but in this case it is very complimentary and it presents an exciting opportunity, as supply chain planning belongs with supply chain execution.
In addressing how the companies will be integrated, Brewer stressed that JDA can learn about how RedPrairie is organized and from the leaders of RedPrairie’s manufacturing unit, and he said the company plans to spend the next few weeks through the end of the year to come up with a detailed plan towards becoming an integrated company.
“We will have one engineering organization and one R&D organization that will manage our entire portfolio,” Brewer noted. “That is our goal and how we get there is what we will figure out between now and the end of the year.
Mayoras explained that the two companies rarely compete against each other and when he thinks about the combination of talent on an operational basis and from an engineering perspective, there is a very high value proposition for customers as things move forward.
Regarding how the companies will address the myriad aspects of IT integration, Brewer explained that it plans to integrate as many applications as possible onto a common platform and intends to offer a “best-of-suite” application with a manageable interface back to an ERP system. And he added that JDA has a new release coming out in the second quarter of next year, which he said will bring 11 of its 17 IT solution areas under one platform.
Mayoras said that “supply chain applications have to move at a different velocity than the rest of the company” and these applications must be more nimble and responsive to changes in real-time.
Ian Hobkirk, president of Commonwealth Supply Chain Advisors in Boston, said that RedPrairie should be able to present itself as a credible third option to the ERP vs. fragmented best-of-breed debate: a “super best-of-breed” that can manage the entire supply chain with a single interface back to the ERP.
And he also noted that retailers could benefit significantly from this deal as many are already using JDA applications for things like demand planning, merchandising, and store replenishment.
“These applications would, in theory, be much more closely linked with execution applications like warehouse management, transportation management, and store operations for greater responsiveness to changes in the demand plan,” he said.
What’s more, Hobkirk explained that manufacturers, wholesalers, and 3PLs will benefit from having the option to use world-class warehouse management and global transportation management systems from the same company, which he pointed out is “somewhat of a first in the industry.” Tighter integration between these applications can improve distributed order management and sourcing decisions, according to Hobkirk.
Adrian Gonzalez, Director of Logistics Viewpoints, also offered up some thoughts on the deal.
“The solution footprints of both companies are mostly complementary, with JDA’s strength in supply chain planning, merchandising and pricing solutions, and RedPrairie’s strength in warehousing, workforce management, store operations and e-commerce,” he said. “The biggest area of overlap is transportation management. JDA has a stronger market presence and larger customer base in TMS than RedPrairie, thanks to its previous acquisitions of Manugistics and i2 Technologies, so I suspect the new company will position JDA’s solution as the primary offering moving forward.”
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