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World Supply Chain Management Software and Services Markets
Frost & Sullivan, March 2007
Market Overview
Supply Chain Efficiency becoming increasingly Crucial for Market Success
In an age of intense competition, supply chain efficiency and adaptability are not just requirements for success but necessities for survival. This being the case, the global supply chain management (SCM) software and services markets have continued to gain momentum, more so with the introduction of radio frequency identification (RFID) technology and the global trend of outsourcing. SCM is emerging as one of the drivers of today’s enterprises, as managing material and information flow is highly critical, and a key factor differentiating a firm from its competitors. In addition, benefits such as inventory management, cost savings, and customer satisfaction, derived from any SCM, are the basic requirements for competitive positioning.
However, a key challenge faced by supply chain vendors is the increasing need for integrated solutions. Due to rising complexities in the supply chain, the supply chain planning (SCP), supply chain execution (SCE), and supply chain coordination (SCC) components need to function together to achieve supply chain optimization. 'There is an increasing preference for supply chain solutions that integrate collaboration between planning, execution, and coordination of the entire supply chain network,' notes the analyst of this research service. 'By using technology to decide on the appropriate courses of action and then acting rapidly on these decisions, businesses can satisfy their customers’ requirements better and deliver the product at the appropriate place and time.'
Supply Chain Coordination Emerging as a Promising Segment
The SCC segment is expected to play a key role in the near future as event management and performance management applications emerge as the competitive tools in managing the highly complex supply chains, by reducing the lead time and cost. These applications help companies detect, diagnose, and resolve performance exceptions before they become expensive problems. Currently, customer satisfaction plays a significant role in the business environment. Therefore, knowledge of the real-time problems in the supply chain is likely to help companies serve their customers efficiently. This is ultimately expected to increase investments in SCC applications, which are fast gaining the attention of the venture capital (VC) community.
Geographically, North America accounted for the largest revenue share of the total SCM market in 2006. While its share stood at 43.3 percent, Europe, Middle East and Africa (EMEA) was the next largest market with a share of 34.8 percent. Asia Pacific constituted 15.4 percent of revenues in 2006, however, considering the economic growth and cost benefits in India and China, its share is expected increase significantly to 20.3 percent by 2013. 'Overall, the SCC segment is expected to grow at a faster rate than the planning and execution segments during 2007-2013,' says the analyst. 'In addition, there are signs of consolidation in the supply chain market, mainly due to the evolution of software suites including a number of applications under a single solution offering and the increasing number of enterprise resource planning (ERP) companies offering SCM solutions.'
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