Manhattan Associates Goes In-Store for ‘Omni-Channel’ Solution

January 22, 2013 Alex Woodie

In the supply chain management world, Manhattan Associates is synonymous with warehouse management systems. The company built a solid reputation on the back of its IBM i-based WMS, which is still used by many of the nation’s biggest retail chains. Last week, the company revealed it’s been working quietly for two years to build an “omni-channel” software package that will allow individual stores to fulfill Internet orders–that is, to function like mini warehouses.

The term “omni-channel” was ubiquitous at last week’s annual National Retail Federation (NRF) conference in New York, like white on rice. You could not read any news of the event without hearing about the latest omni-channel solutions from any number of vendors. If a hype-o-meter had been installed on the conference wall, its needle would have been pegged due to omni-channel chatter.

And Manhattan Associates was one of the vendors practicing omni-channel propaganda. But it would be incorrect to say Manhattan just jumped on the omni-channel bandwagon, like so many others have done. That’s because the Atlanta, Georgia, company has been quietly selling its omni-channel product, called Store Commerce Activation, for two years, and already has the software running in 1,500 stores around the country.

Scott Fenwick, senior director of product management for Manhattan, gave IT Jungle the low-down on its omni-channel aspirations and its newly minted Store Commerce Activation product during a phone interview last week. “We saw a huge opportunity. All these retailers are trying to solve omni-channel problems–specifically, how do I leverage all the assets I have in my network, whether it’s inventory labor etc., to service my customer who shops through multiple channels,” he said.

“Essentially, it’s all about how retailers can take their store assets, the brick and mortar assets, and pull them into digital selling strategies,” Fenwick continued. “There are a ton of retailers that have realized the advantages of pulling your inventory off your store shelves and shipping it directly to customers. Maybe the ecommerce distribution center [DC] can’t fulfill the order, but they have these assets sitting on the shelf that may not be selling. If I can leverage that inventory, and I’ve got need, then everybody wins.”

The strategy is sound, even if the term “omni-channel” sounds ominous. Retailers and their suppliers have been squeezing efficiencies out of their supply chains for years, and all of a sudden, a relatively simple idea comes along that promises to generate more than an incremental benefit. That’s what’s technically called a “no brainer.”

What it Does, How it Works

Becoming a multi-channel retailer requires more than routing unfulfilled orders to stores, printing out a UPS label, and watching the money roll in while the inventory flies off the shelves. There are challenges that need to be addressed, such as maintaining inventory accuracy and managing labor requirements. Manhattan is addressing these in Store Commerce Activation.

“Retailers told us, ‘I really want to be able to do this fulfill-from-store thing, but the challenge is, my inventory accuracy at stores is horrible. If I can’t rely on the inventory, then, I don’t want my associates running run around trying to find stuff that may not be there,'” Fenwick said. “We looked at that and said, retail stores can do all the stuff we do at DCs, things like receiving, cycle counting, and inventory adjustments. Most stores are not doing those things today. But if they did, accuracy would certainly improve.”

In addition to providing “DC-lite” inventory controls, Store Commerce Activation will help retailers manage the labor needs of an omni-channel strategy. When a retailer executes an omni-channel strategy, they’ll be asking employees to do more DC-oriented tasks, such as picking orders, taking inventory, or preparing a UPS or FedEx package for delivery. The challenge is that stores’ labor forecasting models currently don’t take these tasks into account.

“If you don’t start to think about how all these activities affect your labor forecast, one of two things will happen. You’re either not going to have enough people in the store to go do this extra work, or you might decide that you’ve got to go pay overtime or bring in temps to help during these peak periods. If you don’t think about all that extra labor you’re now spending, you’re going to waste some of that extra margin you just gained from all these extra sales.”

Manhattan may be getting into the in-store solutions business, but it’s definitely not in the labor management business. That’s why, at NRF last week, the company announced a partnership with Kronos, one of the biggest providers of so-called human capital management (HCM) software. As it so happens, many of Manhattan’s big IBM i and open systems customers are also customers of Kronos, which also sells IBM i and open systems products.

The plan is to have Store Commerce Activation feed data into the Kronos labor scheduler to get more accurate forecasts. The integration work hasn’t been done yet, and Manhattan expects to hash out the details while working with customers who have already adopted Store Commerce Activation.

Store Commerce Activation runs on AIX and Linux, with an Oracle or DB2 database. It’s a Java-based product, but Manhattan didn’t feel the need to certify the product to run on old reliable. “Our very first install is an IBM i customer, but they installed open system infrastructure to manage the store network,” Fenwick said. “As you know, Manhattan has such a strong legacy on the System i product that we wanted to make sure it was applicable to both WMSes, but it’s built using open source infrastructure.”

Employees interact with Store Commerce Activation through several client interfaces, including a Web browser, a terminal emulator on a Windows Mobile-based barcode scanner device from Motorola, and Android and iOS-based apps (used only for in-store order taking, not fulfillment activities). The software uses Web service-based APIs to access the shipping services of UPS and FedEx. A label printer is also required.