DC Velocity - May 2016

t ec h n o l o gyr e vi e w SU P P LY CH AIN S OF T WA R E

fifth place on the list, cited by 35 percent, was analytics, a software category that’s gaining in importance. (For the full list, see Exhibit 1.)

The ranking of the software tools in the middle also came as little surprise. Although demand planning offers value to companies selling or making thousands of stock-keeping units (SKUs), many of their smaller counterparts still aren’t using sophisticated software tools for forecasting. Similarly, inventory optimization tends to be used by companies struggling to manage the inventory for thousands of SKUs across several locations.

The tools ranked on the bottom of this list are either of interest to a narrow base or are new technology. For example, distributed order management systems were used by 10 percent. This type of software is deployed specifically by omnichannel retailers to determine whether to fill an online order from a store or a warehouse/DC. Another application, the control tower system, which was also cited by 10 percent, is a nascent technology that’s now only being deployed by multinational companies to manage the end-to-end supply chain. Ten percent of respondents were using trade management software, an application only of value to companies involved in cross-border trade. Finally, 8 percent were using demand sensing, an advanced application used currently by leading-edge consumer product companies to quickly discern changes in consumer buying preferences.

Thirty percent of those surveyed had bought new supply chain software in the past year. Most of the purchases were WMS packages, which were bought by 33 percent. Twenty-four percent bought a new TMS. Interestingly, the third most frequently purchased type of software was analytics, cited by 15 percent—another indication in our survey that more and more companies are interested in using software intelligence to gain insights into their operations.

THE PAYBACK STRUGGLE CONTINUES

The survey found that many companies are still struggling with the issue of payback on their software purchases.

Although 43 percent of respondents said they had received the expected payback from a purchase, an equal number said they were unsure as to whether they had recouped their investment. On the other hand, 14 percent were firm in their view that their company had not received the expected return on their supply chain software investment.

Given that a supply chain software license or subscription can run into the thousands of dollars and entail additional fees for consulting, training, and systems integration, many companies are clearly struggling with the issue of return on investment (ROI).

As the survey made clear, when it comes to payback,
expectations vary all over the map. At one end of the spec-
two years ( 10 percent), within six months ( 8 percent), and
within three years ( 5 percent). It should be noted that 38

percent of survey takers said they did not know what the time frame was for expected payback at their company.

Many companies have found that cloud-based software provides a faster ROI than the traditional on-premise deployments; in fact, 49 percent of the respondents that are using cloud software said that this deployment method had shortened payback. Because cloud solutions do not entail added costs for installation, hardware, systems integration, maintenance, and custom coding, they are generally less expensive to implement than traditional on-premise applications. The lower upfront costs translate to a quicker payback.

Given those benefits, it’s probably no surprise that the percentage of users moving to the cloud has increased over last year. Forty-five percent of survey respondents said that they are using cloud deployment for at least one type of supply chain software tool compared with only 33 percent in last year’s survey.

GROWING USE OF ANALYSIS

The survey underscored the growing use of software intelligence to find answers to supply chain problems as well as some of the issues that come with using these tools. Sixty-five percent of respondents said they are now using software for analysis. What’s interesting is that only 32 percent are using tools especially designed for analysis. That indicates that many companies doing software analysis are taking advantage of the embedded analytics that are increasingly found in more advanced TMS, WMS, and inventory optimization (IO) packages.