IBM i: Still a Great Fit for Manhattan Associates WMS

July 8, 2014 Alex Woodie

When it comes to tier-one ERP, IBM i still has some solid packages, but the platform has slipped a bit in the rankings compared to open systems. But when it comes to the warehouse management systems (WMS) that run the country’s biggest distribution centers, IBM i is still top of the heap, largely due to the work of Manhattan Associates. And with its new omni-channel capabilities, the WMS looks to stay there for a while.

Founded 24 years ago in the California city of Manhattan Beach, Manhattan Associates specializes in the development and support of supply chain execution and WMS systems. The company’s original WMS offering–developed for the AS/400 in the early 1990s–continues to be its flagship product. While it has developed other products–including a WMS for open systems, transportation management, supply chain planning, and in-store inventory and fulfillment solutions–the WMS for IBM i, or WMi, still accounts for more than 500 of its 1,200 total customers.

Manhattan Associates isn’t about to turn its back on this loyal customer base, says Adam Kline, director of WMi and BI products at the company, which today is based near Atlanta, Georgia.

“WMi remains a pretty heavy focal point for us because of those customers,” he tells IT Jungle. “We certainly can’t walk away from the maintenance revenue tied to those customers, as it’s obviously the single largest source of maintenance revenue. So we’ve got to keep them happy. That’s my job–to build new meaningful functionality into the product and to ensure that those customers remain engaged and see a solid roadmap inside the product.”

Lately, much of the new functionality that Kline and his team have been bringing to WMi revolves around so-called omni-channel supply chain functionality. The company kicked off its omni-channel strategy in 2011 at the urging of several customers who wanted more flexibility in fulfilling demand for products from multiple channels, including store purchases, e-commerce purchases, and distribution to wholesalers.

The WMS serves as an enabler of omni-channel in a distributed order management setting, Kline says. “It’s kind of playing the role of quarterback, where it’s really making the calls of where to source inventory from, whether that be from a distribution center or a store,” he says. “Depending on the call made by that client, warehouse management has to be ready to fulfill either store orders or .com orders or potentially wholesale orders, depending on our customer profile and their customers.”

Manhattan Associates tackled the omni-channel in three phases, which culminated in the 2014 release of WMi earlier this year. “In 2011 we started to put together some functionality to be able to do things like cross-allocation which basically says if you have some leftover inventory after you have addressed the store needs, then we can potentially repurpose the residual inventory for another allocation, whether that be for wholesale or e-commerce,” Kline says. “We’ve really refined that over the years and made that a stronger part of the system, and even in this past year made some additional enhancements to that flow to open it up even more.”

Today, when a pallet arrives at the DC (distribution center), the WMS is able to direct that inventory to a waiting bay, where it’s delivered straight to a retail location. That’s the cross-dock functionality, and it eliminates the need to put the inventory away before preparing it for delivery again, which costs time and money.

But say only 80 percent of the inventory on a pallet is cross-docked to a waiting truck. That leaves 20 percent that gets put away until an order comes up. With the omni-channel functionality, WMi is able to immediately scan the system for suitable orders from e-commerce or wholesale sites, without waiting for the next pick and pack “wave” to be done.

“So when I recognize that I have residual inventory, rather than wait for the wave process to be done, I’ll go out and interrogate the orders to look for a match for that item and quantity and some other characteristics that can be configured in the system,” Kline says. “Once find a match, I allocate it and put it out.”

This omni-channel functionality saves Manhattan Associates customers substantial amounts of time, labor, and fuel. It also helps those customers keep their clients happy, which is what the game is all about at the end of the day. “This isn’t one of those situations where we’re going to drop count of labor,” Kline says. “But the labor you have on the floor can be more efficient and stays heads down on the tasks that matter, which is preparing for outbound shipping.”

Manhattan Associates enjoys a prominent position as a supply chain software provider for the clothing and footwear industry. Clothing makers like Adidas, Cabela’s, David’s Bridal, Jockey, New Balance, and Under Armour all use Manhattan Associates’ WMS to ensure inventory is where it needs to be.

It’s also done quite well in food and beverage, consumer processed goods, and pharmaceutical industries, with customers such as Home Depot, Lamps Plus, McKesson, and Tesco. “We do have a strong life sciences practice as well,” Kline says “On any given day, the percentage of prescriptions that are filled that ManH customers have a hand in moving, it’s 90 percent plus. We’ve got the major pharmaceutical wholesalers leveraging our system, replenishment for IBM i.”

Somewhat surprisingly, the company also serves the light manufacturing industry. “I don’t want to call it a growing industry, but we haven’t talked about it a lot,” Kline says. “Some of our manufacturing customer use us for finished goods distribution. …We also have customers who use us all the way into manufacturing, who use us for the work-order processing and actual assembly of raw material to finished goods.”

These are good times to be Manhattan Associates, which recorded $414 million in total revenue in fiscal 2013, a 39 percent increase from 2010. More importantly, the company has executed well under CEO Eddie Capel, who was promoted from COO to the top job in January 2013. Earnings per share have increased steadily since 2010, and investors have rewarded the stock by driving it up more than 500 percent since 2010. MANH hit an all-time high of $39.85 in March, and has fallen back a bit since, but its market capitulation sits at a healthy $2.6 billion.

Manhattan Associates owns a sterling reputation when it comes to WMS and other facets of supply chain execution software–a reputation it developed in tandem with the IBM i platform. It often competes with SAP and JDA/Redprairie for WMS contracts. But if the customer has an affinity for the IBM i platform, it wins nearly all the time.

“My observation is we’re pretty much the last man standing in terms of a full featured WMS built on IBM i in the market today,” Kline says. “There are some smaller niche vendors that produce facets of WMS, whether it be from the transportation side, or smaller packages. But those who are addressing tier-1, tier-2 customers with complex supply chain needs, I believe we’re the only one left today. That puts us in a good condition. There are still plenty of customers and warehouses running IBM i When an opportunity comes our way where the preference is IBM i from a technology perspective, our sales guys get excited.”

At times, the computing world seems destined to move to the cloud, where what computer platform you’re running on is as important as what color socks you’re wearing. It’s refreshing to hear that in the real world of actual commerce–where stuff needs to get moved, and people and trucks and trains and boats do the moving– the combination of battle-tested enterprise software and highly honed hardware still makes a difference.