Thought Leaders for Manufacturing & Supply Chain Management
Date: 5/1/2006
Headline: Field Report: NavisWorld and the Emergence of On Demand WMS
Article: By Steve Banker, ARC Advisory Group
Navis, one of the largest Best of Breed Supply Chain Execution (SCE) suppliers that you have never heard of, had their biannual user conference in San Francisco last week.
The biggest news that leaked out of this event is that Navis will enter the WMS market with an On Demand WMS offering called SmartTurn. SmartTurn will be primarily aimed at small companies that could never afford a real-time WMS in the past but do have the need for real-time inventory visibility. SmartTurn will be formally debuted at DC Expo, but I've gotten permission to write about it in front of that event.
I've heard other WMS companies say that On Demand would never fly in this market. It may be time to rethink that notion. Navis has executives that came over from SalesForce.com, the company that really has done more to prove the viability of this model than any other vendor. The product, unlike some past attempts at On Demand in this market, is architected the correct way - it has a multi-tenant architecture. It has a very low price; they were talking about $500 per month. The offering is designed to minimize user risk, and it comes with a 90 day free trial. It is designed to be user friendly and quick to implement.
It may be that only a new entrant to the WMS market can really succeed with an On Demand model. Existing companies might find that this low priced solution cannibalizes existing opportunities and defers the large lumps of revenues from new implementations that most software companies have come to depend upon. Navis also has the advantage of being profitable and big enough to fund this kind of venture.
While On Demand WMS was the big news out of the event, the event itself was quite successful. There were over 300 attendees, a new record for Navis. The company attributes the record-breaking performance to the launch of its new terminal operating system (TOS), Navis SPARCS N4, and the participation of a record-number of customers and industry experts in panel discussions, technology forums, and case study presentations. For example, this analyst moderated a panel discussion on supply chain collaboration that included James Welch, CEO TNT Yellow Transportation, Peter Weis, the CIO at Matson Navigation, and John Maley, IBM’s Global Offering Leader in Freight & Logistics.
Navis’ historical strength is in execution solutions for port terminals (which is why most supply chain pros have never heard of them). As a result, topics like supply chain security were particularly apropos. The most interesting speech on that topic was given by Richard Softye from Pinkerton Consulting and Investigations division. He pointed out that the FBI estimates $12 billion in cargo losses from fraud occur every year. As a form of fraud, this is second only to welfare fraud. He also talked of the role the Coast Guard plays in port security. The Coast Guard decides which ships will come into port. If the ship has filed no security plan (very formal requirements on the delegation of responsibilities, documentation on how security systems are used for cargo handling, and other detailed requirements) they can decide not to let the ship in. Perhaps 40 to 50 ships per year get turned back (although ships are turned away not just for security reasons, there could also be environmental causes like the presence of gypsy moths).
Rich also talked about RFID and its impact on security. ARC has been hearing about the role that RFID can play in securing cargo for some time. Seals on containers can have built in sensors attached to RFID tags. Any unauthorized opening of the container's door is detected in real time, alerting security personnel immediately if problems are detected. But Rich pointed out that door sensors are not enough. What is to stop a thief from just using an electric saw to cut into the back of the container? Thus, a new type of RFID/ sensor application becomes necessary. In addition to the vibration, temperature, humidity and shock sensors that have been talked about, new acoustic sensors will be needed. Acoustic sensors, which are still in the experimental stage, detect non-door based entrances to a container. The sensors have to be "trained" to differentiate noises like the electric saw noises they are trying to detect from other types of loud noises.
As mentioned, the show also had practical case studies. For this analyst, the most interesting such case study was done by Bruce Meilhammer, a Logistics Business Development executive from Perdue Farms. Perdue, the third 3rd largest poultry producer in the US. They had a very successful implementation of Navis' Yard Management System (YMS), which is known as DC Flow. Their East Coast Distribution Center (DC) had congestion (at any given time they have 150-200 trailers in the yard) and visibility issues. The company realized that they needed to do some paving to support more trucks and more trailers, or invest in technology. They further realized if they did more paving that would just mean the hostlers would end up driving longer distances.
Bruce stepped us through their implementation which went so well that it has been recognized as one Perdue's most successful in recent years. The YMS went in ahead of schedule and under budget. What was most interesting to me were the steps they took to prevent having "people" issues. They decided to go with a train the trainer approach with super-users representing all the various types of roles (gate keeper, hostler, dock manager, etc.) that would use the system. Their process involved these super-users at several points.
In documenting the "as is" process, these super-users were interviewed. Next, after Perdue internally developed the interfaces between the new YMS and their legacy transportation solutions, super-users were involved in testing the interfaces. During the "unit" testing (testing of a sub-process like gate arrival), super-users were encouraged to provide input and played an active role in designing the user interfaces. As a result before the first formal training session, the super users were already almost trained in the solution.
This was supplemented with another round of formal training right before the go live. The super users, in turn, trained the other workers. Finally, there was a two week cut over period where workers were told, "We will turn this on in a production environment. You will use it. If anything goes wrong we will turn it off. Meanwhile we will maintain the present processes. At the end of these 2 weeks we will go live." This two week cut over process became, in effect, another round of training. Navis and Perdue implementation personnel were there the whole time working shoulder to shoulder with the various groups of users. The first week of cut over involved both active facilitation and enforcement (for example, driving around the yard at 3 am chasing down drivers that did not want to park where they were supposed to). During the second week they were present in a conference room and told workers, "If you need us, come and get us." After the two week cut over, they went out and got rid of all the paper processes and devices that supported the old process.
The result was a very people friendly implementation and the lack of the kind of complaining, foot dragging and passive resistance that has plagued so many SCE implementations. Implementations with "people" issues will usually end up having a sub par ROI.
What was their result? A substantial productivity bump! They are on track to push an extra 10 percent by weight through the same facility with the same staff. While they have not yet done a post implementation ROI analysis, they appear to be on track to achieve their targeted ROI. What is even more impressive, these savings are based only on improvements in productivity (for example, increases in moves per hour per jockey and mileage per jockey) and does not even include the substantial costs in construction they would have incurred if they had not done this project.