After years of caution, manufacturing companies are finally increasing investments needed to achieve their supply chain objectives. As a result, the supply chain management (SCM) software market is expected to grow 5 percent, from $5.24 billion in 2003 to $5.5 billion in 2004, announced AMR Research at their Supply Chain Executive Conference. The bulk of new investment will be in supply chain execution initiatives and demand-driven supply networks.
AMR Research's annual enterprise market projections conclude that companies seeking profitable growth are investing in technology that allows them to reduce costs while improving customer responsiveness. "An obsession with cost cutting and asset utilization has evolved into a focus on innovation and creating an ability to capitalize on the variability of demand," said Kevin O'Marah, vice president of research at AMR Research. "Using technology to leap-frog the competition, reinvigorate growth channels, and provide shareholder value is the new earmark for supply chain savvy enterprises."
Factors such as increased outsourcing, supplier collaboration, and the pursuit of perfect demand information have spurred the need for applications that provide better management visibility across the enterprise. Vendors who work in these categories are likely to experience the most growth in 2004.
"The good news is that SCM investment is growing; the great news is that companies are grasping what enterprise applications can do for their businesses," said Tony Friscia, CEO of AMR Research. "Using IT to bring great ideas to market will undoubtedly keep technology spending up. Innovations in RFID and changes in the retail industry are spurring renewed growth."
Additional Report Findings:
- ERP vendors, with a strong installed base and maturing supply chain products, will grow 11 percent and consolidate their market share gains.
- A surge of interest in technologies to combat demand uncertaintythrough better sharing of partner data is fueling the revitalization of the SCM market.
- RFID continues to be a critical driver of SCE spending. In particular, warehouse management system (WMS) applications will grow six percent.
Consolidation is accelerating, especially among supply chain execution (SCE) vendors, in order to broaden functional footprints, deepen vertical-specific expertise and expand geographic coverage.
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