A Stronger Partnership
When JDA Software Group announced it was acquiring Manugistics, many consumer goods executives currently using software from the acquired worried what it would mean for their business. This month, CGTsat down with Hamish Brewer, CEO, JDA Software Group, to discuss the acquisition and what it means for the company's consumer goods industry focus. In addition, Brewer shares his perspectives on culture change management, trade promotion effectiveness and manufacturer/retailer collaboration.
How are you merging JDA and Manugistics so that the transition is seamless for your customer base?
Prior to the acquisition, both JDA and Manugistics were approximately the same size and had both become leaders in their respective fields through more than 20 years experience. Additionally, both companies were focused on one common goal, to improve decision making in the global demand chain industry through superior insight into consumer buying decisions. So, although this looks like a sizable integration challenge, there is actually a surprising amount of commonality in our cultures and goals prior to the acquisition. We are finding more and more reasons why this transaction makes sense and our customers have positively responded as well. We have already started selling solutions made from combinations of JDA and Manugistics products, and we will deliver the first standard product integration in the second quarter of 2007.
Your company has been perceived as retail focused. How is JDA committed to the consumer goods industry?
JDA has been developing our "supply chain" business over the past five years and we have reached a point prior to the acquisition where we were realizing about 20 percent of our revenues from the consumer goods manufacturers and distributors. Our non-retail customer base was more than 3,500 companies. However, the breadth of the solution footprint we could offer was still quite limited. Now, with the acquisition of Manugistics, we have a substantially greater presence in the upstream end of the demand chain industry. Our mission, for our manufacturing customers in particular, is to bring transformational benefit to their businesses by aligning their daily plans and decisions around one pivotal and essential truth; superior insight into consumer buying behavior, store by store, will permit better merchandising, promotional, manufacturing, supply and distribution decisions.
How can consumer goods companies better manage trade promotional spend?
Trade promotions remain a largely imprecise marketing tool for manufacturers. I believe that there are opportunities for the new JDA to help improve the predictability and measurability of the effect of these programs for both manufacturers and retailers. We have not announced any new offerings to support this vision yet, but this will remain a core part of our value proposition.
How does being category captain allow a consumer goods company to be a better partner to its retail customers?
The fundamental truth in the practice of category leadership is that the supplier, with all of its focus on a limited range of products, can justify far greater time and energy invested in the optimization of that discreet product set. JDA has recognized this collaborative opportunity and supported it with our category management solutions worldwide. Moving forward, we can take these capabilities to the next level by integrating the category management decisions into supply chain optimization and promotional optimization solutions. Connecting these dots for both manufacturers and retailers represents the next big collaborative win.
What hurdles must retailers and manufacturers overcome to form a more collaborative working partnership?
There are still fundamental conflicts of interest between the manufacturer and the retailer. While collaboration continues to offer benefits to both parties, I think that we will see more collaboration, particularly around consumer insight and improved cost to serve. However, JDA is also aware that we need to provide optimization capabilities to both manufacturers and retailers that focus on their different priorities and allow each of these stakeholders in the global demand chain industry to maximize their revenue and earnings potential. The most compelling argument for collaboration is the financial benefit that it brings by addressing the inefficiencies of independent and disconnected supply chain planning and execution decisions. I believe that as JDA expands the realm of possibilities in this arena we create new reasons for both parties to work together to improve service to the consumer. CG