specialreport
BY C. DWIGHT KLAPPICH
Alive and kicking
Supply chain execution software can expect strong sales in the next
several years as companies replace aging systems and respond to new
priorities prompted by the recession.
This story first appeared in the
2011 special bonus issue of
CSCMP’s Supply Chain Quarterly,
a journal of thought leadership
for the supply chain
management profession and a
sister publication to AGiLE
Business Media’s DC VELOCITY.
Readers can obtain a
subscription by joining the
Council of Supply Chain
Management Professionals
(whose membership includes the
Quarterly’s subscription fee).
Subscriptions are also available
to non-members for $89 a year.
For more information, visit
www.SupplyChainQuarterly.com.
WHILE OTHER INDUSTRIES STRUGGLED DURING the recent recession and sluggish recovery, supply chain management (SCM) software
companies for the most part were able to maintain sales. As the economy
revives and companies look to increase productivity, the SCM software
market will be well positioned for even greater growth.
At Gartner Research, we are optimistic about sales growth in that market
for the next several years because of the results of recent user studies. For
the past four years, Gartner has conducted an annual survey of the wants
and needs of supply chain management organizations. That study provides
a picture of the current and projected business climate facing those respondent organizations.
The 2011 study found the business climate ripe for investment in supply
chain technologies. Exhibit 1 shows that some users planned to invest in
upgrades and new implementations in a variety of applications.
CHANGING PRIORITIES
While demand continues to be strong, it is driven by different needs than
those that have influenced sales in the past. In the two most recent Gartner
studies, supply chain management organizations reported that they are now
making more strategic decisions about what applications to invest in. In the
past, they exhibited a myopic obsession with having the latest software features. Now, they are more interested in choosing applications that target
their priorities while addressing the barriers to achieving those goals.
According to the survey results, the priorities for supply chain organizations have changed during the last few years, while the barriers to success
have not. Improving productivity and efficiency has surpassed reducing
costs as the number-one priority for respondents. Meanwhile, demand
variability, complexity, and lack of visibility were again identified as the
most significant barriers to achieving an organization’s goals and objectives.
Why the change in priorities? When the recession hit, many SCM organizations initially used brute force to drive down costs. Now, they hope to
maintain those low costs while also growing their businesses. The only way
they can achieve this, however, is by improving efficiency and productivity.
For this reason, companies are expressing interest in supply chain execution
technologies like warehouse management systems (WMS) and transportation management systems (TMS) that target process efficiency.
