Please click here for the first installment from our conversation with David Dobrin following JDA's announced merger with RedPrairie.
JB: Now that we've looked at JDA and i2, let's examine RedPrairie.
DD: RedPrairie manages warehouse operations. Trucks drive up. Stuff gets unloaded and put away. An empty truck drives up. Stuff gets taken down from the shelves and loaded on. Remember the end of Raiders of the Lost Ark? This is the stuff that lets them find the Ark again.
JB: So where does warehouse management fit in with merchandising?
DD: It's actually very confusing. Retail goods typically go through a retail warehouse. But retail planning usually assumes that the warehouse is a black box. So right now, today, the two systems are typically quite separate. Orders and deliveries will be pushed from one to the other, and that's it.
JB: But the warehouse and the store are all part of the same supply chain?
DD: They are. Maybe theoretically, you should have a combined merchandising and warehousing and transportation management solution. But historically, the systems grew up separately.
JB: Why is that?
DD: The concerns are different. The warehouse business is about operational efficiency. They have razor thin margins, and for most of these guys, margin comes down to labor cost – how do I put it away efficiently, how do I take it away efficiently? So what Red Prairie does is build applications that help people do this. There can be a lot of pieces and parts: yard management, maybe RFID, whatever. For retail stores, the situation is different.
JB: Don't stores have a back-room area and razor-thin margins?
DD: Yes, but the concerns are different because of the size. You don't have a lot of workers who only do deliveries. RFID is not as important except in very big retail operations. (Interestingly, RFID was developed for store shelves, but has never really worked for that environment.)
JB: But maybe a combined, integrated system could give all users the planning and operations flexibility of TPL providers?
DD: Maybe. But that's not the history at JDA. They usually just leave the systems alone. Also, I'm not sure there's a lot of demand.
JB: But it sounds like a match made in supply chain visibility and planning heaven.
DD: Well, maybe, if you think that JDA has the picture of the entire supply chain and they have applications that can figure out what demand is looking like. Then the software can give you a holistic view of supply chain all from the CPG company (which is using same software, ideally) all the way up to store shelf.
But each layer of management, operation and tier is completely different, and JDA has never explored what it would be like to integrate them. That's not their business. JDA is really a cost-play at heart. I'm not objecting to that. What they did with i2 definitely served investors. Frankly, for the few companies that really would have a need for all their products, there's a definite appeal to buying them from one company.
But don't believe for a minute that they are working toward an integrated planning, scheduling, warehouse management and workforce management suite for retail or other sectors. The number of platforms here conjures up Macbeth: "Confusion now hath made his masterpiece."
Spend Matters would like to thank David Dobrin for sharing his candid views, history and analysis of the JDA/RedPrairie combination.