Frost: Collaborative Approach, Integrated Solutions Hold Potential for Supply Chain Management Markets
October 23, 2007 // Published as a news service by IHS
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The global supply chain management (SCM) software and services markets gained momentum with the introduction of radio frequency identification (RFID) technology and the global outsourcing trend.
According to Frost & Sullivan, SCM continues to differentiate competitors and has emerged as a driver for today's enterprises, as managing material and information flow remains highly critical.
Benefits derived from SCM, such as inventory management, cost savings and customer satisfaction, comprise the basic requirements for competitive positioning.
Recent analysis from Frost & Sullivan of the world supply chain management software and services markets found revenues totaled $6.5 billion in 2006, with estimates to reach $11.64 billion in 2013.
"Supply chain event management (SCEM) provides companies with real-time alerts on any irregular events in the entire supply chain, which enables the company to make informed decisions," said Frost & Sullivan research analyst Dushyant Mehra.
"The growing need to provide suppliers and management with early warnings based on data obtained from internal enterprise resource planning (ERP) and other supply chain management [SCM] systems acts as a major driver for the uptake of supply chain solutions."
The supply chain coordination (SCC) segment will likely play a key role in the near future as event management and performance management applications emerge as competitive tools in managing highly complex supply chains by reducing lead times and costs.
Analysts said these applications help companies detect, diagnose and resolve performance glitches before they become expensive problems. As a result, knowledge of real-time problems in the supply chain will help companies serve their customers efficiently.
Analysts said the increasing need for integrated solutions represents a key challenge for supply chain vendors. As complexities in the process increase, supply chain planning (SCP), supply chain execution (SCE) and SCC components need to function together to achieve supply chain optimization.
"There is an increasing preference for supply chain solutions that integrate planning, execution and coordination of the entire supply chain network," said Mehra. "By using technology to decide on the appropriate courses of action and acting rapidly on these decisions, businesses can satisfy their customers' requirements better and deliver products at the appropriate place and time."
Supply chain vendors will be required to pay greater attention to product customization and supply chain visibility. Since visibility of goods in the supply chain represents a critical factor in maintaining optimal inventory levels, analysts said supply chain visibility continues to gain significance. Likewise, customization slowly gathers pace due to the increasing demand from cost-conscious customers.
Source: Frost & Sullivan.