Manufacturers are finding that their supply chains are becoming increasingly complex, and are having a greater impact on their overall business. Gone are the days of comparing two manufacturing companies. Now, it’s a case of two supply chains, and as such, the capabilities of modern supply chain management (SCM) suites to streamline processes associated with both partners and customers are driving significant investment.
Similarly, vendors are finally offering SCM solutions that fit the needs (and budgets) of smaller manufacturers looking for similar functionality, yet a much lower cost. These factors are causing continued growth in the SCM market.
SCM software revenues to reach $2.5 billion by 2010
Business strategies such as lean manufacturing and demand-driven supply chains promise to alleviate some of the business pressures, yet can be difficult to implement. For many, investment in technology such as SCM is the most viable path. Collecting, organizing, storing, analyzing and using the data from key business metrics allow manufacturers to assess the impact of their implemented strategies – and provide additional functionality.
By 2010, it is estimated that the worldwide market for SCM applications in the manufacturing industry will grow to $2.5 billion, up from $1.6 billion in 2005. This growth in revenues will be driven by both small to medium enterprise (SME) manufacturers and the larger enterprise manufacturers as they look to either replace legacy systems or start a new implementation from scratch. Advancing technologies such as RFID that rely upon a solid SCM suite will also drive adoption as manufacturers seek to improve their overall performance.
Over the next few years, the automotive, consumer packaged goods and high-tech and electronic industries will lead the investment rankings, with other industries such as pharmaceuticals close behind.
Outlook positive for vendors, but communicating remains an issue
The significant opportunity for vendors within the manufacturing industry is good news. However, the problem of effective targeting and communication remains a significant one. Many vendors are failing to fully understand the industry dynamics that their customers operate in, and as such lose out on critical sales. Speaking the same language as manufacturers should be a key focus for vendors as poor understanding can be the difference between success and mediocrity.
Manufacturers will always have a focus on their bottom line as businesses try to maximize revenue without passing on costs to their customers. What makes for interesting reading is the high priority being given to products and really driving revenues. Product differentiation, time to market and post-sales support are major focuses for manufacturers. For many of the associated processes, these companies will be looking to their technology partners for support.
