A few months ago, Microsoft announced they were to extend Microsoft Dynamics AX2012 with Warehouse and Transportation management functions. This was welcomed by customers but it also led to some uncertainties.
Traditionally, the Warehouse functions in AX were comparable to other ERP solutions, but it also left something to be desired with regard to market standards. Distribution and Transport functions were more or less non-existent. This fact considerably complicated the introduction of AX, in particular at production companies and commercial enterprises. Forwarding agencies could not map processes without resorting to an additional solution. The sigh of relief is accordingly loud now that an improvement can be achieved with the standard AX expansion.
And where did these abovementioned uncertainties come from?
In order that the processes could be covered using AX within the industry, AX users had two alternatives. Either the gap could be closed with project-specific (and costly) developments, or additional modules (add-on’s) were used which are produced by Microsoft partner ecosystem. Accordingly, the question can be posed as to how this affected investments made by end customers and partners dependent upon existing AX functions.
a) Project-specific adaptations
According to what we know today, the “old” WMS 1 and WMS 2 modules within AX that are incompatible with the R3 Warehouse Management Module. An upgrade path is not available. Nevertheless, the WMS1/2 modules are still available in R3. The next major release specifications remained a matter of conjecture. With this in mind, it is a positive development that a customer can migrate on R3 without losing previous investments. Nevertheless, the use of additional new WMS and TMS functions is not possible.
b) Adding Extra Modules
The most varied of manufacturers of vertical and horizontal enlargements (including CAPcargo) often achieved fulfilment of the process standards required by customers with their present solutions, to a high degree. Now these manufacturers must ask themselves whether the new standard can cater for the markets they have targeted up until now or not. Should the analysis show that an additional module is still required, the decision will have to be made as to how and with what sort of expenditure the integration can be achieved into standard AX under the new circumstances. Special attention will have to be given to the incompatibilities of the old and new warehouse management modules. It will be crucial for the manufacturers to consider whether the necessary investments can be financed with future licence yields.
What are the repercussions that will affect CAPcargo? A look at selected CAPcargo products:
CAP.Transport for Logistics Service Providers is a must, as it always was
The Transport Management expansions in the standard AX with R3 combination are aimed at the needs of the production industry in the area of Supply Chain Management. Nevertheless, forwarding agency enterprises and transport companies, as well as logistics service providers, will also depend in the future on the vertical solution CAP.Transport so that their business can also be displayed in the ERP system (Microsoft Dynamics AX). The new AX module always concentrates on warehouse transactions and does not dispose of transport orders, and it does not enable detailed tour and resources planning, or a settlement of the rendered forwarding agency services. The unambiguous statements from the Microsoft Product Management in Redmond (USA), as well as from the R&D team in VedbæK (DK) saying that AX will not cover such areas in the future, are reassuring for CAPcargo. A necessary requirement in order that further investments can be made in the product.
Transport planning is decisive for Production Operations
For production enterprises and traders, a decision will not be as easy regarding the management of transport processes. It will have to be seen as to where the new borders of the standard AX R3 are. Two trends are foreseeable at the moment:
– Enterprises which want to co-ordinate national / global goods flows (also between several production locations) will be well served with the R3 standard. The depth of integration into the warehouse itself will be decisive. The actual transport handling has a lesser priority because primarily subcontractors (forwarding agencies) implement these transports, delivery for delivery, using their own priorities. The new function of being able to find the cheapest forwarding agency underlines this assumption.
– Production companies and trading ventures which still want to have total control of their transports will not be too happy with the new standard. Detailed tour planning and variety in the contractual integration of subcontractors in the logistics chain will be sorely missed. In these cases CAP.Trade&Distribution will in future be used. Because the CAPcargo solution is based on sales, purchase and transfer orders, a connection can be created to the standard AX without laborious configuration of the new warehouse and transport modules. In spite of this, a certain opening of CAP.Trade&Distribution will occur under R3 so that R3 customers can profit from the new upcoming features and CAPcargo specialities.
A green light for CAP.warehouse too?
Mike Laib, responsible for Marketing & Distribution at CAPcargo:
“No, that’s simply not possible. Our idea that the Warehouse Management functions had to radically change in the standard AX sooner or later has turned out to be true. That’s why it was two years ago that we decided not to develop further our CAP.Warehouse product until it became clear where Microsoft Dynamics AX would place themselves. This decision was not easy to communicate to the market.”
New Warehouse Management solutions for logistics service providers (3PL/4PL) based on AX will be necessary for order management and the charging process, but nevertheless, it can now be supported on a broader base for warehouse management.
For this reason, specified and integrated industrial solutions will also be used in the future for the transport and warehouse management of ISV partners (Independent Software Vendor) in order to cover the process-specific demands of the industry for an ERP system.
Logistics service providers will completely depend on the CAPcargo modules. In contrast, production and trading companies that do not require transport planning and radical logistics can use the new R3 modules (TMS/WMS).