Descartes and GT Nexus announcements, along with E2open and Amber Road strategies, lead to an interesting hypothesis.
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The supply chain market has a history of suites: Manugistics, then i2 and others in the 90s—and now JDA—saw the wisdom of integration. MRP was inadequate without ensuring you had capacity. Why build something if you could not ship it? Or knowing that the answer in the supply chain was always, “Yes, we can do that,” how could we best take advantage of multiple sourcing locations to fulfill demand? Answering these complex questions required multiple software modules.
With outsourcing, 3PLs or contract manufacturers didn’t always ask such questions. So suites lost much of their market momentum. These third-party organizations (3PLs, CMS and EMS) asked more ‘singular’ or functional questions. So functional or domain software approaches such as Demand Planning or Transportation Planning as a standalone purchase thrived. In fact, they are thriving well. And as we have reported before, TMS is the fastest growing segment of this market today.
However, transportation management is a big topic and requires some big solutions to cover all the variables of the diverse processes and needs—from large, global, multi-mode shipments to local routes and direct store delivery.
TMS Strategies to Watch
The move into Global Trade Management (GTM) is a logical extension of any TMS system, as it helps ensure a complete shipment—right route, right information, and right ‘paperwork’ to comply with international trade regulations.
So it is interesting to observe Descartes’ on-going acquisition activities. Their recent acquisition of Integrated Export Systems, Ltd. and IES Asia, Ltd (IES) fits in with their grand philosophy of serving the diverse market of global and local carriers and shippers. Descartes has spent their time and backed that up with investments, listened to their customers, watched the market and continued to extend their platform—not just to cover core routing and scheduling—but to help transportation management companies manage their business. Good use of shareholder dollars!
Amber Road, which has been the darling of the GTM market, has taken the opposite—and highly competitive—tack, moving from the GTM into the core TMS. This, of course, may impact their long-term preferred-partnership status with many of the TMS and other supply chain suite partners who have been using them for so long.
And here’s another interesting strategy from GT Nexus. For quite some time, GT Nexus has augmented their TMS solutions with Trade Finances, once the domain of TradeCard. And TradeCard has extended in TMS and EDI, for example.
And in April, GT Nexus announced a partnership with Kinaxis to serve organizations that have outsourced. Kinaxis has done a good job of demand collaboration, so this partnership makes sense. It enables them to coordinate supplier commitments for products as well as delivery dates. This partnership is a departure for these companies that have not been as active in M&A or partnering as many other firms in the software industry have.
Or take the case of E2open extending their platform from a materials-centric domain—demand collaboration and procurement—to include the transportation domain, with their E2 Logistics Visibility product.
All these moves make sense in creating broader, more integrated extensions of supply chain workflow.
The question is, though, are these various moves by TMS firms signaling a broader-context market strategy? We think not. Of course JDA has had this collaborative ability for a quite a long time. And SAP, with their Ariba purchase can now boast a more collaborative view of the world. But users are buying only one module at a time.
So, although not headed to the suite status any time soon, these are still significant add-ons to applications to support the end-user craving for visibility and better orchestration across the chain.