Logility Inc. announced today that it had acquired inventory optimization vendor Optiant, Inc. for approximately $3.3 million in cash.
Before beginning Supply Chain Matters commentary on this announcement, this author needs to disclose some background. I was the Vice President of Marketing and Business Strategy for Optiant two years ago, thus I have knowledge of the company’s legacy, technology and customer deployments.
First, this acquisition is another sign that supply chain network design and inventory optimization technology are becoming important capabilities to have within a modern supply chain planning and analytical business process. Other evidence to this trend occurred with IBM‘s previous acquisition of ILOG’s inventory optimization technology (the original Logic-Tools) and SAP‘s elevation of SmartOps being designated as SAP Enterprise Inventory Optimization.
Logility has found a bargain in this acquisition. Optiant’s sophisticated multi-echelon inventory optimization technology has proven its value in many customer settings, and it would be hard to replicate the technology, and more importantly the reference customer base, at this purchase price.
The technology has also been testified by many of Optiant’s existing customers as user-friendly, which is a very important differentiator for this type of technology. Logility also inherits a stellar listing of installed based customers, including Black and Decker (now part of The Stanley Company), Hershey Foods, Hewlett Packard, Kraft, Nestle, Procter and Gamble, and others. Many of these customers found positive benefits in their implementation, and were reluctant to let their industry peers know how much money they had really saved. These customers could further present some rather interesting cross-selling opportunities for Logility.
Optiant’s history is one reflecting problems with management turnover, consistency in strategic direction and sales execution. The company’s original primary investor moved on after sinking considerable sums of money in the company, and of late, Supply Chain Ventures had been a primary banker of the company. Logility now has the opportunity to provide more consistency in direction and go-to-market strategy.
Logility has indicated that it will brand Optiant’s applications as Voyager Inventory Optimization within its existing Logility Voyager Solutions suite. Thus, the prior Optiant technology will be offered on a standalone basis, which is a smart move for Logility. It will provide Logility additional time to build integration among Inventory Optimization and other components of the Voyager suite.
Another important implication brought about by this acquisition is that inventory optimization technology can not only be available for large companies, but also mid-market manufacturers and retailers, as well. The mid-market has been a key goal for Logility for many years.
Bottom-line, Logility has made what appears to be a smart move in its acquisition of supply chain network design and inventory optimization technology. Last year, in its research report on the inventory optimization technology landscape, IDC Manufacturing Insights predicted that these technologies will morph into a broader category of supply chain analytic and what-if capabilities. Logility must now build out the integrated components of this capability.
I, and I’m sure other ex-Optiant staffers are somewhat saddened to note the end of the Optiant name in the market. But just like any company with a troubled legacy, there is a need for others to navigate a new journey.