SAN ANTONIO — A case study in the disjointed state that supply chain management can find itself in was having lunch at the Momentum conference, a gathering of 1,000-plus people who in one way or another rely on the supply chain software capabilities of conference host Manhattan Associates (NASDAQ: MANH).
“Bob” told his story of working for a fairly well-known retailer but one that was active in only one part of the country. He said his company recently had begun using Manhattan Associates’ Point of Sale retail software, a relatively minor part of Manhattan’s business compared to its transportation management and warehouse management systems, which are industry juggernauts.
But Bob, the CIO at the retailer, had a problem. The retailer had been purchased a few years back by a much bigger company, publicly traded in fact. And as the new owners reviewed the technical capabilities of the purchased business, they saw one particular supply chain issue: The only person at the company who knew the ins and outs of the Point of Sale software was the guy who had written it decades earlier. And that guy was Bob.
So here he was at Momentum, a new Point of Sale customer for Manhattan Associates, but more importantly, part of the supply chain migration away from spreadsheets and other old applications and on to platforms that provide “convergence” — migrating key applications to a single platform to drive efficiency.
While Bob in his lunchtime chat at the conference here this week didn’t use the word “convergence,” the need for a system that could work smoothly with processes at his now larger company clearly met the definition of the term as laid out by Brock Johns.
Johns is a director analyst for supply chain technology at Gartner (NYSE: IT), the research firm whose placement of companies such as Manhattan into Gartner’s “Magic Quadrant” research reports is considered analogous to a triple A rating in the software industry. Magic Quadrant status is considered a big achievement, which makes Johns an important person in the world of transportation management systems.
In a presentation at Momentum about the state of transportation management, Johns talked about the levels of convergence.
Level 1 applications are basic solutions, such as key performance indicators (KPIs). But as a company moves up to Level 5 and the applications become more complex, convergence among the company’s operations becomes possible through greater adoption of technology that in turn is increasingly complex itself.
The result, Johns said, illustrating the process with an arrow, is that while convergence between warehouse management systems and transportation management systems was possible in the past, it is now spreading to activities such as yard management systems that are converging with TMS and WMS. The last addition to the arrow was supply chain planning.
“Some of these things have come to fruition, and that’s where we really start to see a lot of the benefits,” Johns said, describing convergence as “bringing all these different parts of functional silos together.” And it’s happening, Johns said, because “we’re seeing the technology architectures change.”
The pace of change is “tremendous,” he added. As convergence occurs, it raises the prospect of a more integrated planning approach to a company’s supply chain.
But not everybody can do that. Companies that can use the convergence of various tools such as WMS and TMS are more “mature,” according to Johns.
“They’re more forward-looking,” he said. “They’re trying to figure out, how do we get ahead? How do we improve our current state? One of the ways to do that is to better align that execution function.”
On a slide Johns presented, the goal of the convergence was spelled out: “Align the function of supply chain planning to supply chain execution.” His presentation made it clear that he believes convergence is making that possible.
Getting people and systems to speak to each other
But the solution is not just technology, Johns said. Part of it comes in culture.
“How do we get the folks in other functional areas to come sit at the table?” he said. “How do we talk about shared data, shared information?”
A day earlier at Momentum, Bart De Muynck, a longtime independent supply chain consultant, spoke on a panel about supply chain execution and bringing in the disparate parts of a company’s supply chain. One of the clients he described sounded like an example of the need to share data and processes that Johns discussed.
Without identifying the company, De Muynck said he and the company’s executives realized that “to get more productivity out of our digital operations, we needed to get more visibility.” The lack of visibility was most stark in the fact that orders for particular products, some of them with strong demand, would come down to the sales team with a lead time of “like a few days.”
But the company’s planners had information about likely demand for the product, and it wasn’t shared. “The problem was the supply chain planning systems didn’t talk to the TMS system,” De Muynck said.
The fix wasn’t easy. “We ended up building something, but it took us about two years,” he said. “I’m not going to mention how many millions of dollars it cost us to build something in between the company’s [enterprise resource planning] that connected the supply chain planning systems to the TMS. We finally got something, but imagine if you have these systems that talk to each other. You wouldn’t have to go through all these challenges.”
And that was one of the points of Johns’ presentation about convergence: It is happening but not everywhere.
How big will AI be?
A day after Warren Barkley of Google (NASDAQ: GOOG) spoke about the AI capabilities that can be brought to bear on supply chains, Johns brought AI into his presentation on what’s brewing in transportation management.
He spelled out a few specific applications: using generative AI to create written content, such as drafting KPIs; writing standard operating procedure manuals; using chatbots (which Barkley also discussed); and summarizing meetings and communications.
But Johns was notably less boastful than Barkley about the prospects for AI in supply chain management.
He noted that AI is not just generative AI. Examples such as KPIs were “primary use cases.” But he added, “You’ve got people in your organization and on your team that think GenAI is going to solve world hunger, and it will not.”
“These are things that can help us do processes better. They can help us have a better user experience,” Johns said. “There will be more use cases in logistics.” But for now, Johns said, there may be value in “pumping the brakes.”
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