SUPPLY CHAIN EXECUTION SET FOR 10 PERCENT GROWTH

Logistics Insight Asia, 1/11/2007

It is difficult for large multi-billion dollar markets to grow rapidly, but the supply chain execution (SCE) market will achieve that feat, according to the new ARC Advisory Group study, “Supply Chain Execution Worldwide Outlook: Market Analysis and ForecastThrough 2011”.

The worldwide market for SCE is expected to grow at a compounded annual growth rate (CAGR) of 9.9 percent over the next five years. The market was US$4.6 billion in 2006 and is forecasted to be over$7.4 billion in 2011.

Supply chain execution includes collaborative production management for process (CPM-P) and discrete (CPM-D) industries, transportation management systems (TMS), and warehouse management systems (WMS), in theARC definition.

“It is surprising how fragmented this market remains,” says Dr Steve Banker, Service Director for Supply Chain Management at ARC Advisory Group and a principal author of the study, “There are over 250 suppliers. In 2006, the top 10 supplier’s shares of the total market had barely changed from 2003, despite the fact that virtually all of the top 10 had made SCE acquisitions.”

DIVERSE MARKET
SCE is a diverse market, composed of enterprise resource planning (ERP), best of breed, and automation suppliers. Automation suppliers mainly offer production management applications. An analysis of market share gains and losses among the top ten vendors by type of supplier shows that ERP and automation companies have gained market share at the expense of best of breed suppliers.

Historically, ERP suppliers’ SCE applications have not been as functionally rich as those offered by best of breed. However, with seamlessly integration to other applications, they could argue that they better supported holistic process flows and could provide better visibility to key executives who used their SCE applications. Further, their solutions often have a lower Total Cost of Ownership (TCO), says ARC.

The largest automation suppliers have also done well. The most successful of these suppliers provide total solution’s capabilities that include consulting and technology which spans across hardware automation to consulting services. They frequently have very deep domain expertise in core manufacturing verticals.