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World Supply Chain Management Markets
Frost & Sullivan, July 2004
RFID Technology to Change the Face of SCM
The current business environment requires that companies economize, cut inventory and operational costs, and optimize supply chain management (SCM). The resultant savings translate into innovative and cost-effective solutions that attract customers. One such measure is the use of radio frequency identification device (RFID) for real-time inventory, a technology widely used in vertical industries such as consumer packaged goods (CPG), retail, and government sectors. Using RFID, companies can track and monitor goods without scanning them using bar code scanners. This technology streamlines warehouse management systems, encouraging its adoption and that of other SCM solutions.
This research studies SCM software, classifying it into planning, execution, and coordination software. It contains a detailed analysis of current major market drivers and restraints faced by the market. The geographic analysis helps software providers understand the diverse software needs in various regions and formulate growth strategies accordingly.
Automation Helps Drive Down Operational Costs and Increase Efficiency
Companies are tackling mounting operational costs by automating processes. This frees up support staff to work on other value-added activities. In a bid to balance customer demand with associated internal costs, manufacturers are seeking powerful solutions that can help achieve low-cost operation while maintaining the highest level of customer satisfaction, says the analyst.
Due to the complex business models adopted by companies today, manufacturing, distribution, and logistics operations are also getting complex. Adding to this is the issue of outsourcing. These complications prompt manufacturers to pile up inventory, jeopardizing the company’s bottom-line. SCM tools such as event and performance management can help manage supply chains without immense business risks or carrying huge inventory.
Efficient Interoperable IT Infrastructure Necessary to Fine-tune SCM
Since companies are hesitant about investing in new IT solutions such as supply chain planning (SCP), the prevalent IT infrastructure is not efficient enough to provide information on product availability or track order status. This translates into slow response to customers. There is also the difficulty arising due to the lack of interoperability between various systems. With more and more software vendors forming alliances to attract customer base, the issue of interoperability should be resolved and better infrastructure is likely to be installed, notes the analyst.
Meanwhile, enterprise resource planning (ERP) and SCP vendors are posing a threat to traditional supply chain execution (SCE) software vendors with packages that cut into the latter’s domain. Companies are also in favor of using the ERP provider’s offering owing to price pressures. The cost factor coupled with the perception that the ERP solutions can provide end-to-end supply chain solutions is acting as a major restraint for the SCE solutions. Consequently, SCM solution providers are either realigning their product strategy or moving into niche solution markets.
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