Manhattan may be best known for their warehouse management systems, but they are really breaking new ground with integrated in-store capabilities in meeting the challenges of today's omni-channel retailers. Here are highlights from their annual conference, Momentum.
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Manhattan Studios Presents …
Momentum opened up with a short ‘movie’ about Mack, a manager at a DC trying to deal with the dozen or so temporary warehouse workers that he had hired for the peak season load. All of them standing there were millennials, all using their smart phones. As he was lamenting what to do, he was answered by Manhattan CEO Eddie Capel … not acting in the film, but the live Eddie on the stage at the conference, talking live to the recorded actor up on the screen in the movie. The actor on the video turned and looked at Eddie, and they had a dialog about what to do. Eddie became a live participant in the drama unfolding on the big screen. It actually worked, I’m sure with lots of practice by Eddie to get the timing just right.
The theme of this year’s Momentum conference was Delivering a Fulfilling Experience. They opened up the conference in a unique way, with a bit of theater involving Eddie and a mini-drama projected on the big screen (see sidebar “Manhattan Studios Presents”). Eddie said this was the biggest Momentum ever, with over 1,200 attendees. Other statistics included $500M spent by Manhattan on R&D over the last ten years (yes it costs half a billion dollars to create a platform like theirs), 31 new product releases in 2015 with 28 new releases already this year, no debt, 3,000 employees, over $550M revenue in 2015 (13% growth), with an operating income of $176M.
Eddie then talked about what it means to provide a truly personalized, ‘fully immersive’ experience, not just in retail, but across industries, requiring three capabilities:
A deep, holistic understanding of your customers; who they are, what they buy, how they buy, their value;
Full utilization of inventory across your network: at stores, DCs, in transit, at your suppliers;
Flawless, efficient execution: all employees—from sales associates, through the call center, to fulfillment—all working on one common integrated platform.
Then he offered a series of examples, starting with Finning, the world largest Caterpillar equipment dealer, whose vision is to serve the entire lifecycle of their customers’ needs. He showed the kinds of very specialized requirements when it comes to delivering these enormous mining trucks and other equipment, as well as LTL shipments, down to emergency overnight parcel shipments of a critical part needed to get a multi-million-dollar piece of equipment back up and running. Manhattan serves Finning’s end-to-end transportation needs across all these specialized requirements.
Next, Walgreens Boots Alliance Pharmaceutical Wholesale division, serves 19 countries in Europe and around the globe, each with separate inventory, logistical, and regulatory requirements. The challenge they had was how to standardize for efficiency, while allowing each country to independently meet their particular need. They use Manhattan as a global platform standard that allows country-specific process variations, as needed.
Walmart’s European subsidiary, ASDA, has 620 stores in the UK, with 18M shoppers visiting annually. It implemented its “To You” program, which uses those ASDA stores as a delivery point for etailers (i.e. retailers that only sell online), providing another (potentially lower cost) delivery mode for the etailer, while driving more traffic into ASDA. Walmart/ASDA is using Manhattan to provide this service to pure-play etailers, giving them a click and collect capability1 without the etailer having to own any stores.
For Manhattan customer Tory Burch, Eddie showed how a man, not knowing what his wife likes but knowing she shops at Tory Burch, could walk into a store and the store associate can immediately see what his wife has bought previously, her buying habits and favorite styles, suggesting something she would like, possibly even to go with a previous purchase. The wife loves the gift, making the store associate a hero.
Nike Using Manhattan WMS to Ship Over One Billion Units
We heard from Nike’s VP of Global Fulfillment, Keith Lambert, who started his keynote address by showing a video of Rory Mcllroy’s amazingly intense workouts and practice sessions. Keith then talked a bit on Nike’s history, culture, and mission of Nike and their goal to resonate with everyone from the elite athlete to the everyday athlete. In 2009, Nike moved from a product-centric approach to a category-centric approach.2 At the same time, they moved away from dedicated footwear and apparel DCs to centralized multi-product and multi-channel DCs.
Nike has over 10M square feet of DC space globally to serve their six geographies.3 They used to have 16 different WMS systems, but now have consolidated onto Manhattan’s WMS across all 17 of their high volume DCs around the world. They delivered over 1 billion units in FY15, 11% more than in FY14, and over half of those direct shipped.
Nike is a high growth company that invests heavily not just in product and marketing, but also in supply chain. They have a center of excellence that developed the Nike Distribution Platform, a set of standard methodologies for people and processes across their global network, both Nike owned or third party owned. Keith talked about ongoing opportunities for integrating online and offline sales. He said that competition is hot for supply chain professionals and developing that talent is critical for Nike and for the industry. They have made big investments in talent and functional competency development, manager excellence, and enterprise leadership.
Pet Supplies Plus Inventory Optimization Journey
I attended a session by Jeff Suttle, SVP of Supply Chain for Pet Supplies Plus (PSP), a 300+ store chain, founded in 1988 by Harry Shallop and Jack Berry4 who had a background in grocery stores and wanted to bring a similar kind of experience and convenience to the pet store … become the neighborhood ‘supermarket for pet products.’ Cats, dogs, and other pets are welcomed in their stores. Stores average around 10K square feet, carrying 6K to 8K SKUs per store, depending on the assortment. About half of the stores are company owned and half franchised.
Jeff said that 38% of their revenue comes from pet food, 26% from veterinarian care products, and 24% from OTC medicines. They are seeing tough price competition from online players, primarily Amazon.com and Chewy.com. PSP owns one 756K SF DC, located in Indiana where they do about 1,200 replenishment passes per day and 2,200 pallets shipped per week. Store replenishment orders are placed manually by store managers on a mobile device; about half the orders are fulfilled from PSP’s own DC and about half from external distributors, giving PSP stores access to a wider assortment of products and brands.
In 2011, PSP acquired five Manhattan solutions and went live with them over the next three years as follows: Inventory Optimization (IO) live in 2011;5 WMOS,6 and Supply Chain Intelligence (SCI) live in 2012; Slotting Optimization (SO) in 2013; and Labor Management (LM) in 2014. They selected Manhattan more broadly (and IO specifically) to tackle three problems; 1) they were about to move from a space-constrained DC to a much larger one where they could grow; 2) they needed to get off Excel to be positioned to support multiple DCs eventually; 3) they wanted to improve service levels and rationalize their products and suppliers, with the ability to bring in the right products for the season and market. They initially implemented IO in 2011, but had to reimplement (i.e. reintegrate) it in 2014 when they switched to a more modern ERP system. Today, they use IO in their DC. As a result of these initiatives, PSP improved fill rates from 93% to 95%+ in the DC. Next year they will use it in the stores as well. Since they are replacing the POS system in the stores, PSP will have yet another implementation in order to extend IO into the stores.
Jeff said that the use of IO has allowed their buyers to focus more on being merchants. As part of this process, they switched from having seven generic buyers, to category-specific buyers/replenishment analysts. The biggest challenge has been in change management/talent acquisition—getting the right people with the right analytic skills and competencies who could leverage the automation of the tools.
They are not going to roll out to all stores at once, but start with a few stores and certain ‘safe’ categories. They will start with suggested ordering, rather than forcing it on store managers. They need to work through change management, to help store managers understand and accept this new way of replenishing their stores. Since half of their stores are franchises, PSP can’t legally place an order without franchisees’ approval. Jeff said that franchisees, being entrepreneurs, will often believe they know better than the system … so that will be a challenge they need to overcome. He hopes to show them how they can reduce inventory levels (thereby reducing the franchisee’s capital investments) while increasing or maintaining service levels, and at the same time saving time and labor.
They expect material labor savings benefits from store replenishment, as it takes a lot of labor today to check all the inventory and decide what is needed. This will also require change management to build a culture of inventory accuracy. Accurate store/SKU perpetual inventory counts are needed for inventory optimization to produce better replenishment decisions. These changes will take a lot of work, but will be worth it as they expect improvements in slow movers, reductions in store and DC inventory, and better promotional forecasting.
Unicommerce, Empowering Store Associates
Manhattan’s acquisition of Global Bay mobile POS7 two years ago brought them into the store in a big way. A lot has happened since then, both at Manhattan and in the retail industry. Store associates are now expected to do multiple jobs, seamlessly interweaving pick, pack, ship, shelf replenishment, check-out duty, stock taking, and more … all while giving great personalized service to customers. Since the Global Bay acquisition, Manhattan has added clienteling (mid 2015) and internationalization (late 2015). They can support fixed, mobile, and hybrid POS scenarios.
Most importantly, they deliver all of the different functions the store associate needs on a single device with common UI and navigation between fixed and mobile POS devices. Besides the POS/checkout functionality, the device can show a customer’s purchase history and wish list, set up tasks to do for each customer, and keep notes for each customer, creating a ‘digital black book.’ They have ‘waiting room’ functionality, allowing an associate who is waiting on a customer in the dressing room and helping them coordinate an outfit to pass that off to another associate without disrupting the process. When a product is returned at the POS, the associate can see whether the product should go back into inventory or flow back into the supply chain.
Figure 1 – Manhattan's 'Unicommerce' Functionality/Comprehensive Customer View and Tools for Sales Associates
Manhattan supports complex fulfillment scenarios, such as a mix of online orders with in-store, buying in store, with being shipped to their home, coming from the DC vs from other stores vs. direct from supplier, and so forth. Messages can be added to the order so that whoever is handling it next understands what is happening with each part of the order. Manhattan refers to bringing all of these scenarios and capabilities together in one place as ‘Unicommerce.’
It’s all well and good to have a lot of functionality in one tool … but is it useable? To my eye, the UI looked clean, simple, and intuitive—bringing the right information to the forefront for each task, and providing easy navigation to other tasks or information as needed. It seems to me Manhattan has invested a lot in making the system work in the fast paced store environment with minimal training.
Figure 2 – Unified Omni-channel POS
Manhattan discussed how several of their retailer customers are using these capabilities. Lilly Pulitzer is implementing the unicommerce approach in their 40+ stores, bringing together POS, order management, call center, available-to-promise, store inventory management, and fulfillment into one integrated system. Very few traditional POS systems can do all that. Coach is using the system to provide mobile POS in their 700+ stores in the US. They tailor it differently to accommodate both their outlet and full line stores. In full line stores, the sales associate stays with the customer the whole time. A runner literally runs and brings the bag of requested clothing out to the sales floor, while the salesperson stays with the customer and accessorizes the bag. Since they started this approach, enabled by the Manhattan platform, Coach has observed an increase in the sale.
Tory Burch had very specific ideas about how they wanted to engage with the customer. Knowing their purchase history and wish list, store associates are personally reaching out to set up appointments to bring customers in, and preparing for each customer’s visit by laying out the clothing in advance in a very personalized service. They are using Manhattan’s clienteling solution to accomplish all that.
Not all retailers can have runners like Coach or one-on-one appointments like Tory Burch. Their sales associates typically serve multiple customers at a time. But Manhattan’s systems can still gather together the customer history and other elements needed to provide help for main stream retailers (who are not high end) to better engage with their customers as well.
Store Inventory and Fulfilment
We first wrote about Manhattan’s Store Inventory & Fulfillment app two years ago. They considered just modifying their existing WMS to work in the store, but wisely understood how different the environment in the store is and decided to build it from the ground up. They already understood well the criticality of simplicity of the UI and the ability for those tasks to be interrupted and returned to. Now they have this solution live at just under 10,000 of their customers’ stores, having learned a lot with all those implementations. They said that one customer shipped 90,000 order lines from their stores in a single day during peak season, and for some of their customers, 30%-50% of all ecommerce orders are being picked and shipped from the stores. Manhattan added 26 new capabilities during the last 12 months.
This year they are adding advanced in-store picking to support higher volumes. They are also linking together the inventory and fulfillment tasks. In addition, orders can be picked in batch mode, or in real-time, or a combination of the two—such as start with batch picking first thing in the morning and then switching to real-time as new orders flow in throughout the day. They have picking optimization, such as being able to prioritize specific orders based on rules such as pickup time. The system will generate the pick list based on order priority, picking method, optimal pick path and max batch size.
Supply Chain Meets Store
In the past, there has been a pretty bright line between warehouse systems and store systems. Omni-channel has changed all that. While many WMS vendors have ventured into supporting the new store paradigms, it seems to me Manhattan has been at it the longest and has taken this the furthest. It seems to me they are in the process of inventing a whole new class of in-store systems that is much more than a POS system, supporting the many hats today’s store associates wear, while integrating the store into a network-wide view of inventory and replenishment and a rich view of each customer.
1 Click and Collect, as it’s called in Europe, is generally known in the US as BOPIS (Buy Online, Pickup In Store) -- Return to article text above
2 Nike’s eight categories are Running, Basketball, Men’s Training, Women’s Training, Global Football, Action Sports, Golf, and Sportswear. -- Return to article text above 3 North America, Western Europe, Central and Eastern Europe, Greater China, Japan, and Emerging Markets -- Return to article text above 4 Pet Supplies Plus was acquired in 2010 by private equity firm Irving Place Capital. -- Return to article text above
5 PSP implemented Inventory Optimization for their DC in 2011. They are implementing it for stores next year. -- Return to article text above