Designs on bigger things for LLamasoft?

The supply chain design software provider has acquired two competitors this year – does it have plans to become more than just a provider of network modeling solutions?    Does LLamasoft have designs beyond supply chain design?
   That’s the question following the Ann Arbor, Mich.-based software company’s most recent acquisition of Barloworld’s supply chain software solutions and team. The deal means LLamasoft has acquired two of its larger competitors in the supply chain design software space this year. The company earlier acquired the LogicTools supply chain design software of IBM.
   The company has grown fast due to its emphasis on product design and usability, and has a number of major shipper customers that use the tool to model all or some part of their supply chain.
   James Cooke, principal supply chain analyst at Boston-based Nucleus Research, said the system’s usability is a big differentiator in the supply chain design market, as it allows users to almost continuously refresh the models they’ve built with new inputs.
   While supply chain design is no new discipline, what LLamasoft’s usability enables its customers to do is take modeling in house, as opposed to turning to supply chain consultants to do the modeling for them. Consultants that offer network modeling services either use a proprietary design tool, or often use a tool like LLamasoft’s or one of its competitors, like JDA Software or Manhattan Associates.
   In fact, LLamasoft’s first customers tended to be consultants, not shippers. But Cooke said the math behind modeling in-house adds up.
   “You can hire two or three supply chain modelers on staff and do continuous modeling for the price of a consultant,” he said.
   He mentioned one LLamasoft customer he spoke with that had had essentially paid for using the tool through cost savings from a pilot project alone.
   The question now is whether LLamasoft plans to be more than just a provider of supply chain design software, where it has carved out a pretty dominant niche.
   Cooke pointed out that the acquisition of Barloworld’s Optimiza product, a demand planning and inventory optimization tool, could be one clue. Branching into outright supply chain planning would let them go deeper with existing customers and potentially start competing on a broader basis with supply chain software providers that had wider toolsets.
   “They have entrees in to large companies,” Cooke said. “If they want to build out their suite of offerings, they have access to supply chain executives who know what they’ve done.”
   Remember that LLamasoft received backing from Goldman Sachs to the tune of $50 million in late September. Consider Barloworld the first salvo in LLamasoft’s designs on being more than just a design tool.
   LLamasoft Chief Executive Officer Don Hicks intimated in a letter to customers that the company has big plans.
   “Change is often scary,” wrote Hicks. “This industry is full of stories of companies that ‘sell out,’ squeezing customers for higher fees and putting innovation on the shelf. This is not that story. Through this acquisition we look forward to providing more resources to our customer base, greater innovation and stronger products.”