technologyreview
software for hard times
The economy may be slumping,
THE ECONOMY MAY BE DOWN AND BUSINESSES MAY BE
cutting back, but supply chain execution (SCE) software packages are
expected to sell briskly throughout 2009. That’s the consensus view
of leading analysts who follow the supply chain software market for
a living.
As for why these applications would be bucking sales trends, it’s all
about managing costs. In an economic downturn, companies are looking to pare warehousing and transportation expenses wherever they
can. And that’s precisely what tools like warehouse management systems (WMS), transportation management systems (TMS), and global trade management systems (GTM) are designed to do.
but analysts say demand for
supply chain execution software
will stay strong this year.
Why TMS is hot
The top-selling application in the supply chain execution sector this year will likely be TMS, software
that oversees freight planning and movements. TMS revenues totaled $650 million in 2008, according to the Stamford, Conn.-based information technology and research firm Gartner Inc. Despite the
recession, Gartner expects TMS revenue to grow 12. 3 percent to $730 million in 2009.
Gartner analyst Dwight Klappich says there are a couple of reasons for his firm’s bullish forecast.
For starters, he says, the number of TMS users is still fairly small, even in North America and Europe.
“Market penetration remains relatively low,” he explains, “so there is a lot of new business potential.”
On top of that, Klappich says, transportation management software offers a quick payback on the
initial investment. “It’s not uncommon to see cost reductions of 10 percent or more on the annual
freight spend,” he says.
In fact, nowadays, even small shippers can benefit from using a TMS, the Gartner analyst reports.
That wasn’t the case a year or two ago when the software’s primary selling point was its ability to consolidate shipments. “A small shipper could not justify the cost of a TMS on optimizing 20 LTL shipments,” Klappich explains.
In the last year, however, software developers have been loading up their TMS packages with new
functions: carrier rate comparison features, governance mechanisms that force users throughout the
corporation to select the low-cost carrier, and freight bill auditing capabilities that ensure that ship-
