Kinaxis recently announced it has acquired a Netherlands-based company, MPO, a cloud-based software offering that orchestrates multiparty supply chain execution. The combination is designed to enable Kinaxis to extend its concurrent planning platform to handle core elements of supply chain execution. Kinaxis acquired all the shares of MPO for approximately US$45 million, with some of the final consideration dependent on performance. MPO will continue to operate as a standalone business, but will be increasingly integrated into Kinaxis’ operations worldwide.
Planning and analysis capabilities are much more valuable when they are directly linked to execution. This is especially important for organizations with even moderately long or complex supply chains, given the ongoing need to adapt to changing circumstances. The acquisition promises to be mutually beneficial from a commercial standpoint, since over the next few years, MPO can add incremental revenue to Kinaxis by selling the software to Kinaxis’ existing installed base of RapidResponse users. From a longer perspective, the relationship may provide a strategic, competitive advantage, offering a more complete, end-to-end planning-to-execution capability. MPO for its part will likely gain competitively in its standalone sales by being part of a larger organization, because its small size may have been a disadvantage in winning deals.
MPO offers a cloud-based software platform for multi-party orchestration of orders, inventory and transport. It complements Kinaxis’ RapidResponse by extending supply chain planning into action, offering near real-time visibility into customer orders in an end-to-end process that spans a planned commitment through to final delivery. This visibility is designed to improve coordination between suppliers, distributors, product companies, transportation providers and customers so that any change taking place at any node in the chain can be managed quickly and adapted to in the best possible way, balancing priorities such as service levels by customer status or minimizing costs. Orchestration also is designed to adapt to changing conditions in order status, inventories and transportation networks. It manages inbound, outbound and reverse flows (from customer back to vendor), with the last especially important as the volume of ecommerce returns have grown.
Post-merger, there will be a significant investment in strengthening the connections between the two companies’ platforms, with emphasis on:
- A “control tower” that provides end-to-end transparency spanning supply chain planning and execution.
- Orchestration of individual orders from plan to delivery so as to intelligently manage trade-offs such as achieving the desired balance of fulfillment rates within cost and carbon emission constraints.
- Real-time order promising and communication for ecommerce for business-to-consumer and business-to-business channels to address the growing demand by business buyers to have “Amazon-like” frictionless purchasing and immediate status visibility.
- Multi-enterprise planning to support those strategic buyer-seller relationships built on collaborative planning, forecasting and replenishment.
Underlying all these initiatives is the need to manage data holistically so as to have a unified set of methods and a single, logical nexus of data available to all users. Unlike a general-purpose facility such as a data warehouse, having a dedicated data store that’s part of a business application platform ensures that everything a user of the system needs is readily available and easily accessible, with labels that are immediately recognized and understood. (I have called these, somewhat tongue in cheek, data pantries.) Moreover, compared to a general-purpose warehouse or data lake, this type of dedicated data store better supports machine learning necessary for training artificial intelligence capabilities that are part of the business application. The need to support machine learning will increase significantly over the next three years, and I assert that by 2024, a new breed of supply chain technology focused on robotic automation and operational workflows that incorporate AI and machine learning will begin to guide supply chain optimization.
Combining supply chain planning and execution enables organizations to, for instance, respond quickly to delays in landing a shipment of parts used in manufacturing (enabling it to find a new supply source or juggle commitments strategically), or identify disruptions in transportation networks and quickly determine the best response.
Marrying supply chain planning with order execution in a straight-through digital process can substantially shorten process cycles, improve responsiveness to customers and build agility to cope with unexpected events large and small. Supporting better collaboration is key to improving performance, and is needed: Our Dynamic Insights Sales and Operation Planning Research found that only 30% of organizations collaborate effectively or very effectively in this process.
One important competitive feature is that both RapidResponse and MPO are role-centric in design, and therefore in many ways better able to support the specific needs of these individuals in their position compared to other approaches to supply chain planning and execution.
As with any acquisition, translating promise and potential into market position and profits is highly dependent on execution, especially in getting existing customers to transform existing processes. However, the acquisition appears conceptually sound, and given its size poses limited financial or operational risk. Both organizations offer cloud platforms and therefore integration issues and risks appear limited. I recommend Kinaxis’ customers assess the use of MPO for supply chain operations, if only in some pilot project that can prototype process changes and rollouts that speeds time to value, reduces risk and improves performance.