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Yarkon Insight

NEXT-GENERATION TMS AND WMS: WHAT CAN THEY DO FOR YOU?

Traditionally, transportation and warehouse management systems (TMS and WMS) were complex, costly and time-consuming to implement. That meant big companies were the primary users.

However, new digitalization platforms, technologies, integration capabilities and applications are making TMS and WMS accessible – and affordable – to the rest of the business world.

So, if you haven’t looked at TMS or WMS solutions in a while, whether as a possible first installation or an upgrade, it’s now time to do so.

TMS: The basics

A TMS helps companies manage all aspects of freight’s movement from origin to destination efficiently, reliably and cost effectively. These solutions enable firms to manage freight sourcing, planning, execution and settlement, and provide visibility and performance management across all transportation flows.

Essentially, they create “a transportation control tower that gives you real-time visibility of freight flows across all your operations,” explains Michael Baumann, Vice President, Transportation Management Center of Excellence at DHL Supply Chain.

“This visibility – knowing what’s moving, where and what’s coming – allows you to do proper forecasting and develop predictive analytics that anticipate your freight flows for coming weeks,” Baumann explains. “Having just that capability is a significant breakthrough for companies. It generates savings well beyond just lower freight rates.”

Adoption of TMS solutions continues to grow. Gartner Group predicts the global market for these applications will reach  1.7 billion by next year, a compound annual growth rate of almost 7 percent.

The reason for this growth is simple. According to Gartner, TMS can save a company anywhere from 5 to 10 percent in transportation spend.

What’s New with TMS?

Next-generation TMS offer a number of new capabilities that bear reviewing.

  • New platforms, greater affordability

 TMS solutions today are offered not only on installed base platforms, but also on the Cloud and via subscription- based services (software as a service – SaaS). TMS, in fact, were one of the first execution-based supply chain applications to move to the Cloud. Cloud and SaaS offerings make TMS more accessible and affordable to a larger population of companies – including the medium- to small-sized organizations. As a result, Gartner reports a 15 percent growth in TMS usage within small- to mid-sized firms, with some vendors recording more than 20 percent growth in these markets. Now, companies with just $15 to $20 million in annual freight spend can afford to implement the new TMS platforms.

  • Real-time visibility – for real

For years, shippers have wished for true real-time tracking / visibility of their freight as it moves across land, ocean and air, which has proved elusive. Here again, that’s changing. “Visibility (capability) has exploded over the last 12 months,” notes Bart De Muynck of Gartner in a recent article. “Companies want the same kind of visibility and shipment tracking they get as consumers shopping on Amazon. More and more TMS providers are building that into their solutions for B2B applications.”

  • Uberization options

Uber-like freight applications enable shippers to “shop” for transportation via their smart phones or tablets, and then track the movement of that freight via a mobile device. These applications are particularly good for handling the “easy” freight – e.g., spot-market purchase of last-mile delivery. A number of start-up and existing players have jumped into this market space. For example, in mid- 2017, DHL introduced Saloodo!, a digital road freight marketplace platform. Other providers are popping up around the world – e.g., Freightos, Convoy, Uber Freight and UShip, to name a few. The new TMS allow for access to these ‘uberized’ marketplaces.

  • Faster, smoother installs and integrations

Because of their complexity, traditional TMS took as much as a year or two to install. “For many companies,” says Baumann of DHL, “this enormous timeframe was a barrier to even considering a TMS. The ROI just was too long.” The latest TMS, thanks to streamlined design and integration abilities, cut installation times dramatically, making them more affordable. “We’ve seen installation times fall from two years to two quarters or even fewer,” Baumann reports. TMS developers are also expanding integration capabilities to include not just the traditional enterprise systems like ERP, but also manual data (voice, email and text), self-service portals, web services and other application programming interfaces (APIs). This makes TMS more flexible and adaptive to the way business is done today.

According to Gartner, TMS can save a company anywhere from 5 to 10 percent in transportation spend.

Warehouse Management Systems (WMS)

WMS applications handle the complex activities of a distribution center, including receiving, put-away, stocklocating, inventory management, cycle counting, task interleaving, wave planning, order allocation, order picking, replenishment, packing, shipping, labor management and automated materials-handling equipment interfaces. Additional functionality can include labor management, slotting, yard management, voice picking, parcel manifesting, value-added services, light manufacturing / kitting and third-party logistics (3PL) billing.

While use of WMS in large companies in North America and Europe is fairly mature, demand for these systems is growing in the emerging geographies of Asia, Latin America, the Middle East and Eastern Europe. Statista predicts the market for WMS solutions will grow from $1.2 billion in 2015 to $4.1 billion in 2024.

What’s New in WMS?

“The core functionality of a WMS today hasn’t changed a lot in 10 years,” observes Antony Cotterill, Vice President, Global JDA Center of Excellence, DHL Supply Chain. “The screens and user interfaces are better, the processing speed is faster, but the basics are still there – process pallets or goods in, ship pallets or goods out, manage what goes on inside the four walls of the DC, connect with the TMS.”

That said, here’s a look at what’s new with today’s WMS.

  • Connecting to ‘smart’ technologies

WMS is expanding its connections to the new ‘outside world’ of smart technologies. Developers are designing interfaces to the Internet of Things, wearable / vision picking devices, augmented reality, dynamic asset positioning in the warehouse (e.g., forklifts), and collaborative robots.

Progress is slow, because the work is difficult. “Developers have to write new APIs for everything, and that’s a complicated, iterative process,” Cotterill says. “But we’ll get there, I have no doubt.”

  • Solving the ‘one-off syndrome’

WMS modifications, which were the norm in traditional implementations, can add 50 percent or more to the cost of a solution. And even if a company selected only one vendor, every time it installed the WMS in a new facility, each install location added custom bolt-ons. “If you have 21 warehouses,” says Cotterill, “and implemented them sequentially, by the time you got to the 21st warehouse, the number of bolt-ons made it difficult to manage any updating or refreshing on a global basis.”

WMS vendors and large users are working to solve for this costly and cumbersome ‘one-off syndrome.’ DHL, for example, is working with JDA Software Group to devise a system that provides universal refreshes to the full WMS suite. “This enables ‘global’ system updates and refreshes that are consistent across all locations – a tremendous advantage,” Cotterill explains.

Bottom Line Benefits

Clearly, TMS and WMS vendors are adapting their solutions to the new world of integrated supply chain digitalization. Applications are less monolithic, accessible via cloud and alternative platforms, more affordable and adaptable, extensible, and easier to maintain. This means these technologies are now within reach for even small companies.

That accessibility has a powerful benefit. It helps level the competitive playing field between large and small competitors. It gives ‘the rest of the business world’ access to technologies and the advantages the big companies have had for decades.

Statista predicts the market for WMS solutions will grow from $1.2 billion in 2015 to $4.1 billion in 2024.

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Yarkon Insight

Israel – eCommerce

Describes how widely e-Commerce is used, the primary sectors that sell through e-commerce, and how much product/service in each sector is sold through e-commerce versus brick-and-mortar retail. Includes what a company needs to know to take advantage of e-commerce in the local market and , reputable, prominent B2B websites.

Last Published:12/10/2019

Israel represents an excellent opportunity for foreign sellers of consumer goods because of high retail prices in Israel and the lack of domestic ecommerce competitors. The country’s middle class is looking for high quality, less expensive goods and are willing to buy from foreign eCommerce merchants

According to research firm Statista, 2019 eCommerce revenues in Israel are predicated to reach $3.8 billion and rise to $5.5 billion in 2023, a compound annual growth rate of 10.4%. The market’s largest eCommerce segment is Toys, Hobby & DIY, with a market volume of U.S. $1.2 billion in 2019.

While Israel is known for innovation and sophisticated technology, its consumer goods are often inferior in quality to those made in foreign countries and more expensive. Residents are eager to purchase everything from jeans to shoes to kitchen gadgets from foreign countries. China’s Alibaba, the largest eCommerce company in the world, has invested in several Israeli technology startups. Israelis like to purchase goods from Alibaba, which contributes to Chinese companies, collectively, being the top eCommerce source for Israelis.

Current Market Trends

  • A strong presence of foreign eCommerce in Israel has created a more competitive local environment and has pushed the Israeli players to offer equivalent services and products to retain their position in the local market.
  • The average annual revenue per user is $641.17. 53.8% were male users and the remaining 46.2% were female. The dominant user age groups are 25-to-34 and 18-to-24 of eCommerce buyers.
  • In 2017, the Israeli government changed its rules to make foreign companies subject to Value Added Tax (VAT) collection on digital services. A company must collect VAT if it has an online presence targeting Israeli consumers or has representatives seeking to find Israeli customers. Downloaded apps, software, music, games, television programs, films, and online gambling are all subject to the country’s 17% VAT.
  • Physical goods worth up to $75 are exempt from all taxes and purchases of up to $500 are exempt from duties but still subject to VAT. For example, Amazon must charge VAT on virtual products like ebooks, but not on physical books costing less than $75.

eCommerce Intellectual Property (IP) Rights

The Israeli IP law is written pursuant to the TRIPS agreement, therefore, Israel’s custom department is authorized to follow up on any IP, trademarks, and copyrights violations caused by imported products.

Online Payment

Israelis are avid credit cards users, with MasterCard being the most popular. PayPal is growing in popularity. Other leading payment processing firms include the following:

  • AllCharge, based in Israel, specializes in billing and processing services for merchants. The company is a full-service provider offering credit card processing, fraud and risk management, and content management.
  • ImGlobal Payments is an Israeli payment service provider offering payment solutions and multi-currency processing (supporting 150 currencies).
  • Tranzila is a merchant services and ecommerce payment processor based in Israel. Tranzila offers credit card processing in addition to eCommerce hosting, eCommerce management, and fraud detection.
  • Zooz enables merchants to link back-office functions to global payment systems. It connects with multiple financial institutions and integrates acquirers, e-wallets, alternative payment methods, fraud management, and other third-party services, while routing transactions through the payment process.

Major Buying Holidays

  • Local religious holidays, including Passover, Rosh HaShana (Jewish New Year), Sukkot (Feast of Tabernacles) and Hanukah, are all popular gift-giving holidays.
  • Black Friday and Cyber Monday have both become popular sales opportunities for the Israeli retail market.

Social Media

Social eCommerce has become a strong division of eCommerce that involves social media platforms and online media that support social interaction and consumer contribution to assist online buying and selling of products/services.

Today, social eCommerce has become the focus of competition between eCommerce companies. As a country, Israel is very active on social media. According to Internet World Statistics there are nearly 4 million Facebook subscribers, which accounts for 50% of the population. As a result, eCommerce companies spend increasing resources on their social media presence.Prepared by our U.S. Embassies abroad. With its network of 108 offices across the United States and in more than 75 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate the U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://export.gov/usoffices.

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Yarkon Insight

E-Commerce Marketing Trends in Israel: Summer 2019

As the weather in Israel heats up, we’re anticipating an interesting Summer in Israel for e-commerce and online businesses. After 12 summers in Israel things would get predictable, but not so . . . with cannabis laws on the cusp of change, technologies growing exponentially, and the way we interact with the world changing every day it’s hard not to get excited about the future!

2019 Marketing for E-Commerce in Israel is going to be very interesting!

Here are 4 top predictions we see happening in Israel over the Summer as they relate to my area of expertise: e-commerce.

  1. CBD Gets Legal, Goes Mainstream in Israel. Online shops are gearing up for the announcement that is expected any day now that CBD, free of THC, will be for sale without prescription on the open market. Retailers serving the Israel marketplace have already built websites in anticipation of this change. These websites are in Israel, in Hebrew and are marketing CBD oil to the Israel marketplace. Most countries have had legal CBD for a few years now.
  2. Reverse Logistics Solutions. Shoppers and industry-watchers alike have watched M & S and Target struggle to set up the successful model like Next. Next and ASOS – neither has a shop in Israel, are both are considered major players in the clothing retail industry. However, returns remains a pain point for both consumer and retailer even with Next and ASOS. A new start-up, OtailO, aims to tackle this problem and I predict even more interest in the field of reverse logistics solutions as e-commerce returns become more prevalent in the lives of most Israelis. We seem to be able to get the items here, but what do we do when they’re not what we wanted? There has to be a better solution.
  3. English Too! One of my favorite online sites, castro.co.il has been in English for a while. It’s a super friendly website, the clothes are really nice quality, and the sizing is almost always on-point. But are they reaching enough international consumers? This summer I see Israel-based retailers and manufacturers developing English-language websites and marketing to the international audience as an Israeli brand. With Eurovision taking place in Israel, maybe the European market has become used to seeing the Israeli flag more and would welcome items made in Israel.
  4. If I could make one wish for Israeli retailers and e-commerce shops online, it would be to make the shopping experience much better for consumers. From groceries to computer accessories, my online shopping experience has been mixed. I’ve received dented oozing cans, bags filled with liquid fabric softener, but also had deliveries that were absolutely beautiful where the shopper called me and we chatted a bit. I’ve ordered items that were supposed to be in stock and they weren’t, but that’s more the exception than the rule – probably because I check before I order if it’s in stock as a precaution. English speaking consumers already turn to other Anglos like Tamarim Concierge Service to send gifts in Israel instead of guessing that they will reach someone that understands their needs and meets the high level customer service they are accustomed to.

Israel is on the OECD, yet its consumer practices remain far behind – CBD is illegal still, the cost of returning items is more than they are worth, websites targeting the international audience are few compared to the overall numbers, and the consumer experience isn’t always great.

Wishing all Israeli e-commerce and other businesses a successful summer!