Field Report: Manhattan Associates' Momentum in Europe By Simon Bragg, ARC Advisory Group Manhattan Associates (MA) has been consolidating its position in the UK, with a team of 99 people, supporting 85 customers. During 2005/06, there were 25 deals with customers, and 26 customers went live. Four out of the top five UK food retailers are Manhattan customers, five of the leading 3PL's, as well as over 30 high street fashion brands. UK Trends
MA is well positioned to meet the UK's emerging requirement. UK retailers are developing multi-channel fulfillment capabilities, to support both high street and internet sales. For instance, the leading grocer, Tesco, recently announced that at its current run rate, internet sales will exceed £1 billion this year. Voice directed picking continues to gain traction, and MA is seeing a resurgence of interest in its iSeries solutions. RFID is not gaining traction, partly because European regulations limit the power and range of available frequencies, such that only small-scale pilots are currently technically feasible. New Manhattan Initiatives
Manhattan Associates has established a Performance Services team, whose main role is to help customers extract the most value from Manhattan's solutions. Their focus is supporting customer's process and business issues, not technical issues. One customer, apparently, had always allocated 10 people to the fast, average, and slow areas of their warehouse. Since the performance management team could better analyze the labor requirements, they could generate the figures to show that the fast team was overstretched, and the slow team underutilized. With the figures in the hands, management could institute the changes. Other WMS companies are developing collaborative production management solutions, but MA, through acquisition, has expanded its solution to supply chain planning and execution. Boots Alliance implemented MA's replenishment planning solution. Inventory fell from £138 million to £107 million, and is still falling, representing a reduction of about 4.5 days worth of stock. In addition, planners are completing their tasks by mid-afternoon, instead finishing after 6pm, since there is now almost no need to change the systems' recommendations. Overstocks fell by £17 million but are now intentionally increasing, since planners are undertaking more financially justified "deal buying". Many US based TMS companies have failed to replicate their success in the European market. Partly because European transportation management processes are different to those in the US, and US suppliers have not developed appropriate European functionality. For instance, European companies often use dedicated fleets, even if the fleet is managed by a 3PL or is privately owned. However, a major UK retailer is currently implementing MA's TMS solutions, and if MA continues to understand and adopt European requirements, the company could contend for leadership of the European transportation software market. Over the last year, Manhattan Associates has developed four channel partners, in Russia, Nordics, South Africa and the Middle East. In ARC's view, it continues to be extremely difficult for an ethical US company to do business directly in Russia, yet there are around 82 warehouses currently under construction in St. Petersburg. Conclusion
European growth has been relatively slow over the last few years, as Manhattan Associates has had challenges in Germany, and France is proving a tough market to dominate. There are opportunities in the EU accession countries, which have yet to be exploited. Nevertheless, in the UK, MA has developed a set of initiatives and solutions that if rolled out across Europe will enable the company to increase market share over the coming years. |
