Through its 2004 acquisition of the once privately-held Tewksbury, Massachusetts, (US)-based supply chain fulfillment vendor, Yantra. Sterling has since leveraged this purchase to help Sterling's development of composite SCM applications, built with Java 2 Enterprise Edition (J2EE) technology, and is considered an advanced SOA platform, which enables business collaboration beyond the four walls of the enterprise.
Yantra's solution had long offered tools to build and manage complex event-based workflows which synchronize supply chain order fulfillment activities among a variety of suppliers, carriers, and channel partners, etc.—all the way to the end customer (often a consumer). Yantra's warehouse management system (WMS), Yantra WMS, provided the typical execution and management of complex processes, inventory, and labor. In addition to the typical WMS functions, which enable supply network communications; coordinate business processes and services; and optimize supply chain execution fulfillment functions (see Who Needs Warehousing Management and How Much Thereof?), Sterling enhanced Yantra WMS to create Sterling WMS, which today caters to both the selling and fulfillment and side. For selling, multi-enterprise, multi-division, multi-location capabilities provide central point of control over complex processes, while a flexible process definition framework enables easy configuration of customer specific value-added services. For the latter, fulfillment, in addition to real-time operational views, and activity monitoring enable continuous improvement, while resource and productivity tools are to improve labor planning and utilization to drive out unneeded costs.
When we evaluated Yantra in 2002, (Leader in Distributed Order Management, But Wait There's More) we noted that its platform was marked with flexibility. Based on object-oriented (OO) programming, it allowed components to be assembled into "custom" solutions in the same runtime as traditional solutions. Yet it offered a protected upgrade path, and allowed different distribution centers (DCs) to run off a single instance of the overlaid fulfillment software even if their processes and practices were quite different. The fact that Sterling paid $170 million (USD) in cash for the privately-held company—about four times of Yantra's estimated revenues—likely indicates that Sterling Commerce deliberately paid a premium to get a differentiated technology (with the "Single platform, Multi, Multi, Multi…" message). Sterling has also largely kept the staff of around 250 to operate Yantra as a new business division. Consequently, with embedded SOA and process-centric modeling capabilities, Sterling WMS is highly adaptable, enabling rapid process change to ensure consistency across multi-site warehouse operations while providing for facility-specific configuration. The product provides a central point of control over complex warehouse operations and across multiple facilities of varying types. Further, its support for radio frequency identification (RFID) and materials-handling integration, as well as strong planning, execution, and measurement tools for distribution managers, brings operational discipline to many complex warehouse operations.
Additionally, building on Yantra's distinctive distributed order management (DOM) functionality, the Sterling Order Management product also supports complex fulfillment (order execution) and selling (order capture) requirements. As for fulfillment, an intelligent sourcing engine orchestrates complex fulfillment scenarios across the supply chain, deciding which location, based on predefined business rules, is the ‘best' location to fulfill the order. Additionally a single order repository allows a complete view of all orders no matter where the order was taken or which ERP system it resides. Global Inventory Visibility provides an aggregated view across multiple systems to provide an accurate view of all available supply and demand requirements. As for the selling side, reverse logistics capabilities automatically direct returns to the appropriate location, including partner locations, based on user-defined return rules, while a multi-channel call center management provides visibility into order and service fulfillment across channels. Visibility is also given through scripting, wizard-driven interactions, and intuitive UIs for quick order management.
In early 2007, Sterling Commerce announced the availability of two new modules for the Sterling WMS solution: 1) the Resource Planning module, and 2) Activity Reporting Manager module. The first module provides increased visibility into labor performance within the warehouse (for improved operational productivity), while the latter ensures more accurate and granular view of billing for tasks executed, thus enabling companies to better understand the true cost of serving multiple clients or divisions. Since labor availability is often the biggest impediment to meeting shorter lead times or providing value-added services when fulfilling orders, the new Resource Planning module aims at helping companies manage demand variability by providing analytic capabilities that enable dynamic labor deployment for manufacturers, retailers, and logistics providers. It verifies, in real time (or near real time), if demands can be fulfilled with available capacity, and when capacity falls short, helps assign resources to cover the shortfall. The module graphically depicts the balance of workload and resource availability and enables "what-if" scenarios to help organizations manage demand variability, leading to increased on-time fulfillment and optimal resource utilization. In addition, it monitors activity with real-time views of operations, enabling continuous improvement for increased productivity.
On the other hand, because value-added services are the main staple for companies that manage warehouse operations for others, such as 3PL providers or fulfillment houses (which companies also face multi-tenant situations that warrant more accurate billing for tasks executed), Sterling Commerce introduced a new Activity Reporting Manager module. This module is designed to help these companies understand the true cost of serving multiple clients or divisions. Both new modules can leverage labor standards available through the existing Productivity Manager module of Sterling WMS, which has also been enhanced to offer a new method for creating labor standard benchmarks. By creating a benchmark based on an analysis of historical task execution data instead of engineering standards, Productivity Manager provides labor benchmarks that can be implemented easily and kept current, which has been a challenge for most warehouse operations. In 2008, Sterling unveiled Sterling Yard Management System (YMS), and administrative controls and additional multi-enterprise controls for the SOA platform, which will be detailed later on.
Adding Transportation and Logistics Management Capabilities
Sterling had created Sterling WMS and Sterling Order Management as starting blocks that enable companies to orchestrate inventory globally, across multiple fulfillment locations. And by providing a level of configurability and supporting multiple operating requirements across industries, customers, products, and warehouse types, the solutions allow companies to manage their extended enterprises to meet various business requirements. Sterling then addressed another area of supply chain execution (SCE)—transportation and logistics management. Through this, the company saw additional, significant efficiency improvement opportunities for its customers (and, to be fair, cross-selling opportunities for itself) through a combined WMS and transportation management system (TMS) solution. This combination should not only provide customers with a way to cut costs in an industry estimated to be almost a trillion dollars in the US alone, but also a means to improve customer satisfaction and loyalty, because the integrated solution should improve visibility and control throughout the whole order-to-shipment supply chain process. This should be attractive to many companies that have recently seen double-digit growth (in terms of percentage) in transportation costs, while they would rather focus on their core business of designing, making, and delivering high-quality products on time, and at competitive prices.
To meet this goal, Sterling Commerce acquired Nistevo, a privately-held provider of on-demand transportation management services in mid-2006. At that time, the Eden Prairie, Minnesota-based (US) company had approximately 45 employees and offered Nistevo Collaborative Logistics Network for transportation management, an on-demand software as a service (SaaS) (see What Is Software as a Service?) which enables manufacturers, retailers, distributors, and logistics service providers and carriers to view, plan, execute, settle, and report on their shipments. Although the Nistevo's original focus was on collaborative transportation, which is a method of bringing shippers together to create combined shipments and routes, the company ultimately developed an on-demand transportation planning and execution network-based solution with more than 130 connected shippers, spanning a community of over 9,000 carriers who manage approximately 65 million transactions during 2008. Using the network, members were managing more than five million shipments annually, resulting in significant cost savings for freight moved. Nistevo's clients included Church & Dwight Co., The Dial Corporation, Tractor Supply, Clorox, Smithfield Foods, Cargill, Burlington Coat Factory, Autozone, HP Hood, and Seneca Foods.
Sterling was attracted to Nistevo's on-demand competence, as a way to lower the entry-level costs for implementing vastly transparent SCM systems. Transportation management is innately a network-centric process that lends itself well to the SaaS deployments, where the exchange of timely, accurate, and complete information among trading partners is critical. Although connectivity has long been Sterling Commerce's "bread and butter" (a capability that most pure enterprise applications vendors lack), Nistevo's on-demand solutions complemented several solutions Sterling Commerce offered at the time as part of the company's efforts to provide a wide range of deployment choices for its customers.
Sterling has since absorbed Nistevo's web-based Collaborative Logistics Network into its existing supply chain application portfolio. Today, Sterling TMS is the leading on-demand network for transportation management, providing a vast member logistics network that increases available transportation capacity and simplifies and automates carrier communications. Sterling TMS addresses fulfillment issues via on-demand, multimodal transportation management capabilities and a pre-connected logistics network of over 9,000 carriers and 30,000 suppliers. As a result, when enterprises buy Sterling TMS, they do not just buy the software, but they also get a network of providers to do business with immediately. Like its predecessor Nistevo product, Sterling TMS also enables shippers, third-party logistics (3PL) providers and carriers to view, plan, execute, settle, and analyze their inbound and outbound transportation via these capabilities:
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Planning. Seeks routes, organizes loads, and structures transportation for carriers to fulfill delivery times. Through this function, Sterling TMS addresses selling issues, since automatic load tendering ensures all shipments are scheduled for the best possible, on-time delivery performance. Optimization tools consolidate orders into shipments and builds multi-stop, multi-pickup routes using preferred carrier allowing users to select the "best cost" service for an order.
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Execution. Moves goods from the dock and to the end point, and monitors the flow of carrier information. Fulfillment is addressed via integrated visibility tools that enable internal users, customers, and suppliers to track shipment status for their orders.
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Invoice and settlement. The automated freight settlement validates carrier contracts against invoices or enables self-invoicing based on agreed carrier rates, resulting in reduced processing costs (contract carrier management can create savings of up to 10 percent for inbound shipments).
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Analytics. Show the best performing carriers, enabling customers to follow supplier performance, including on-time delivery and cost per lane and associated accessorial costs.
In addition to these components, Sterling Collaboration Network is sometimes offered. It originates from the company's almost proverbial experience with operating value-added EDI networks. Sterling Collaboration Network manages over 200 million invoices each year from over 300,000 EDI-enabled businesses, arguably making it the market leader in EDI and managed file transfer (MFT). It is a full-service private network within a real-time, event-driven environment that can host both integration services and applications.
Essentially, the on-demand TMS software can work with a user company's existing SCM application and with Sterling Collaboration Network to automate transportation planning, execution and freight payment processes, hence enabling the company to improve logistics efficiency and customer satisfaction. The orders are accepted from the user's order management application and automatically fed into Sterling TMS for transportation planning. The plan is shared with the order management application and the WMS application for increased efficiency at the dock-door. Sterling TMS customers cite selecting the product for its on-demand architecture and rich application functionality, including settlement process automation and improved reporting, which have allowed them to fully automate their transportation management process. Automating the settlement process is one of the biggest benefits customers often get from Sterling TMS, enabling the freight audit and payment process to be managed in-house instead of outsourcing to an audit and payment company. Eventually, this eliminates manual invoicing from the user company's commercial carriers and enables the company to move to a paperless invoicing system.
Some Internal Development Helps Too
Following these two acquisitions, Sterling Commerce further embarked onto blending these applications with its existing B2B connectivity infrastructure (being the industry's renowned provider of secure file transfer and EDI solutions), and some notable internally developed solutions. Thus, in late 2006, the vendor announced enhancements to its evolving supply chain applications portfolio, with the idea of benefiting both its existing customers and their extended trading communities. Specifically, Sterling Commerce enhanced its portfolio with new capabilities that leverage business process management (BPM) to help companies better serve their customers' unique demands (see The Future of Business Process Management Where is BPM heading?). According to a Sterling press release, these enhancements included
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New process modeling capabilities that open new fulfillment channels and offer support for new delivery options. For example, companies can now model new sourcing rules to accommodate new fulfillment channels, such as pick-up in store (after, e.g., ordering online);
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Out-of-the-box workflows that address many possible exception scenarios encountered in order administration process, as well as customer-initiated order inquiries common in a business-to-consumer (B2C) environment; and
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New task-based retail order entry and modification user interfaces (UIs) that provide the ability to handle special orders, services and a mix of fulfillment methods of different lines on the same order.
The press release further explains that some new capabilities built on the Sterling Commerce's application foundation are designed to improve the return on investment (ROI) in existing software. These features include
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A new user screen that enables quicker on-boarding of customer service agents;
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New more efficient, task-based UI's specialized for each store role to reduce training time and costs; and
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A new alerts framework that aims at improved exception handling and reduced costs and errors. This framework simplifies the process of handling exception workflows by intelligently routing alerts based on priority and supporting context-sensitive alert resolution.
To enhance the end-to-end fulfillment process, Sterling added to the Selling and Fulfillment Suite Sterling Yard Management (YMS). According to the company's PR (Source: Sterling Commerce Extends Supply Chain Application Portfolio), offered as an On-Demand solution, YMS delivers operational efficiencies for both shippers and carriers through increased visibility into the yard to manage trailers and shipments:
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Shippers can assign available trailers to loads to ensure that demand and supply of trailers match, resulting in improved on-time departure.
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Dispatchers can switch carriers easily based on available trailers and communicate to the new carrier with a shipment pickup request.
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All users can inquire on trailer availability by carrier, for example whether any trailers are ready for pickup.
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At time of arrival, users can inform an inbound delivery driver about an outbound load that is ready for pickup.
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Carriers can drop a loaded trailer and immediately leave with the correct empty trailer, without having to wait for the unloading process to happen.
With YMS, Sterling now offers a fully integrated fulfillment solution that coordinates all activities related to the warehouse, yard and transportation, sharing delivery schedules, order status, inventory and asset availability to carriers, 3PLs and to all departments within the company.
At about same time, Sterling Commerce introduced Sterling Supply Chain Visibility On-Demand, a new internally developed application that automates and provides the holistic collaborative execution of many SCM processes. Specifically, the software combines real-time visibility of supplier information with proactive exception management to enable companies to better manage the performance of their inbound supply chain. This combination aims at better inventory allocation, improved customer satisfaction, consistent lead times, reduced risk and lower operational costs. It goes without saying that with the complexity of today's global supply chains, it is a competitive advantage for companies to have visibility into their entire supplier community and the ability to manage the community, based on real-time information. For example, managing shared processes (those that involve interaction with other companies), are harder to coordinate and synchronize. Today's businesses thus require visibility into shared processes more than ever before, as they rapidly change and globally extend themselves, creating global supplier communities that include 3PL providers, outsourced operations, and decentralized organizations (see Using Visibility to Manage Supply Chain Uncertainty). Yet, the primary means of identifying exceptions today still relies heavily on manual mechanisms like fax, e-mail, and phone, which are costly to manage and error-prone.
Accordingly, Sterling Commerce has been striving to deliver connectivity across the entire supply chain; Sterling Supply Chain Visibility provides inbound supply information amid supply trading partners (e.g., the management and monitoring of inbound inventory, purchase orders and shipments) in several usable, understandable, and actionable formats, such as the following:
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Dashboards provide a comprehensive view of supply and demand associated with late shipments and items.
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Event (exception) management offers full alerting, notification, and automated action functionality. It flags disruptions early in the supply process to improve operational performance and customer satisfaction. Proactive alerts enable users to manage supply exceptions and avoid sifting through volumes of information.
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Supply and demand matching minimizes the impact of supply disruptions
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Supplier key performance indicators (KPIs) with further drill down capabilities measure supplier performance over time.
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Business modeler allows users to reconfigure supply processes easily without IT involvement. The automation of manual processes typically results in the ability to adapt more quickly to changing business situations with suppliers.
These product deliveries mark the continued momentum in Sterling Commerce's strategic use of SOA for its customers' benefit and its own broad effort to expose its SOA foundation to deliver more streamlined and cost-effective multi-enterprise collaborative solutions. As mentioned earlier, by harnessing SOA, Sterling was reportedly able to integrate Nistevo Collaborative Network (now called Sterling TMS) with the Sterling Commerce supply chain application portfolio in just three months after the Nistevo acquisition.
Closing the Multichannel Sales Order-to-Fulfillment Circle
To address the customer and partner-facing side, such as order capture (and thus address the entire order management cycle consisting of the "buy", "sell", "ship" and "pay" processes), Sterling Commerce acquired Comergent Technologies Inc., in early 2007 for approximately $155 million (USD) in cash. This Redwood City, California (US)-based developer of e-business software had offices in the US and Europe. Comergent's software has helped many organizations orchestrates complex product, selling, and order management processes across multiple systems, business organizations, and sales channels. . And with this addition, Sterling Commerce continued to strive to deliver a more comprehensive order capture and order management solution that spans across both supply (fulfillment) and sell (creation and capture) processes.
In other words, together, Sterling Commerce and Comergent solutions should now address the fuller spectrum of the order management lifecycle, which, with its multiple touch-points to customers, partners, and suppliers, is a difficult process to properly execute, given its reach well beyond the typical four walls of an enterprise. To that end, Comergent had long offered an e-business platform and application suite that simplifies and improves the selling of complex products, services, and product bundles across channels, where one has to also deal with sophisticated pricing and discounting models to boot. The Comergent solution complements Sterling's existing application suite, which, at the time, was able to manage the dynamic and complex processes associated with warehousing, transportation, distributed order fulfillment, and supply chain visibility.
Specifically, Comergent's applications covers order capture capabilities from Web storefront creation, dynamic catalog and pricing management, to tools for guided selling and product and service configuration, and automating the quote negotiation and approval process. Thus, the solution offers e-commerce capabilities that allow internal (sales, call center, etc.) and external (partners and suppliers) to participate together in the selling process B2B-commerce.
Because Sterling Commerce has always had strong solutions in the retail industry (and not really in manufacturing), the idea was that the combined solution would allow the vendor to do for manufacturing what it has long been doing for retail customers. The first driver for such a solution was the convergence of what are often complex processes for capturing sales orders (due to intricate product configurations, Web-based selling, demand variation, and fragmentation in the channels) and then fulfilling them—because of the sheer number of suppliers, contractors, and distributors and channels. The second driver had to do with most larger manufacturers' plans to consolidate their disparate (and costly) systems that arose from mergers, legacy point solutions for business management, production, warehousing, logistics, and so on.
The former Comergent solutions have been renamed Sterling Multi-Channel Selling and can help companies economically increase market share, improve the buying experience, and reduce costs while driving higher customer loyalty. This should be achieved via providing user enterprises and their trading partners with the ability to find, configure, and order complex products and services through most available touch points. Likewise, by mid-2007, Sterling Commerce announced the availability of Sterling Service Contracts, a new product within the Sterling Multi-Channel Selling solution that delivers capabilities for administering and automating the life cycle of service, subscription, and other duration-based offerings. The idea here is to help companies deliver a better buying experience to their customers and partners by managing the complexities of selling and post-sales management of duration-based offerings, such as product and service bundles (including cell phone and service plans), service and maintenance contracts, and software subscriptions. This is in contrast to traditional order management systems, which were designed to take and fulfill an order, but not necessarily to deal with long-term customer commitments, such as maintenance contracts, warranties, and service plans for cell phones. Conversely and according to a Sterling press release Sterling Service Contracts are expected to allow companies to match the right product and service bundles with customer needs, help them grow revenue through up-selling or cross-selling opportunities, reduce customer churn (attrition), and improve customer service. The company aspires to this through using flexible and rules-based architecture that should enable companies to manage many types of service contracts. The press release further explains that Sterling Service Contract is expected to:
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manage the complex business rules that define how product and service offers are bundled and priced for selling and post-sale contract changes (upgrade, change, renew, cancel, etc.);
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proactively monitor equipment warranties, maintenance agreements, and service commitments, and automatically notify customers of contract expirations and offering auto-renew contracts;
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manage the sale and maintenance of service contracts through self-service storefronts, as well as applications for customer service representatives, direct sales and indirect sales, through distributors, resellers and other selling partners; and
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manage complex pricing for services, including multiple price types to support, for example, one-time fees, subscriptions, cancellations and usage charges.
More recently, Sterling added merchandising and marketing capabilities to Sterling Multi-Channel Selling to provide real-time feedback on user behavior and purchase history by grouping users for merchandising and marketing purposes based on profile and interactions, and enable companies to drive customer retention and greater share of wallet. According to the company's PR (Source: Sterling Commerce Delivers New Multi-Channel Selling Capabilities That Drive Greater Customer Loyalty and Sales), Sterling Multi-Channel Selling can track important behaviors and purchase history and make those events actionable for merchandising and marketing purposes, provide dynamic behavioral segmentation capabilities to group users for merchandising and marketing purposes based on their profile and interactions, and streamline merchandising and marketing execution by allowing companies to more effectively target customers with the most applicable offers and take advantage of cross-sell/up-sell opportunities.
Sterling Multi-Channel Selling also provides gift registry and wish list capabilities that enable consumers to create, manage, and purchase from registries. Registrants can set-up registries for multiple gifting events including weddings and baby showers (Source: Sterling Commerce Advances its Business-to-Consumer Strategy). With these additional solutions, Sterling Commerce customers should now be able to gain a better understanding of who their partners are, what they sell, where they sell, and to whom they sell.
These capabilities align with Sterling Commerce's strategy to excel at problems that reach beyond typical enterprise boundaries. This problem solving is to be done by providing solutions that eliminate barriers to working better with an organization's business community, like trader partner organizations, such as customers and suppliers. As discussed previously, the order management process is becoming more complex as customers demand more channels (for example, in-store, Web, direct mail, etc), more delivery options, and more information throughout the fulfillment process. Other potential synergies have apparently come from both companies leveraging SOA principles to allow customers to incrementally adopt new capabilities as an industry or customer dictates. Furthermore, Sterling Multi-Channel Selling is built on an architecture that supports deployment as on-premise or hosted managed service provider (MSP) offerings. Sterling Commerce's offerings were part of its efforts to provide a wide range of deployment choices for its customers. We would expect to see Sterling Commerce leveraging its parent, AT&T, and offering more managed services offerings for Multi-Channel Selling.
The Comergent acquisition not only gave Sterling Commerce's suite a strong front-end customer experience, including well known configuration and pricing capabilities, it was also seen to leverage the industry-specific expertise of each company. For Sterling Commerce, this meant benefiting from Comergent's manufacturing, high-tech, and telecommunications expertise, and for Comergent, this meant benefiting from Sterling Commerce's retail expertise. Through this, Sterling was able to better address MEC challenges for those industries. Sterling Multi-Channel Selling has a large customer references with tier one high-tech manufacturers, such as NEC Solutions America, Hitachi Data Systems, Symbol (now Motorola)Haworth, Toro, and Pitney Bowes—as well as Life Technologies and GlaxoSmithKline in life sciences, and companies like Gates and Goodrich in automotive and aerospace (A&D) respectively. Other notable customers of Sterling Multi-Channel Selling (about 175 in total) included organizations such as Quantum, CF Industries, Boston Market, DIRECTV, and RCN.
