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Chuck Schaeffer Supply Chain Management Year End Review

3.5 stars Average rating: 3.5 (from 35 votes)
 By Chuck Schaeffer

2014 Trends Impacting the Supply Chain Management Software Industry

Supply chain software continues an overarching trend of becoming more relevant in the IT portfolio of business software applications. In my opinion, the complexity and size of supply chain software is second only to ERP software applications and the line between the two continues to blur. There were few major events or shifts in the direction for supply chain software but the momentum does continue to advance these applications as more companies look for opportunities and efficiencies to ramp up to a global market, reduce costs and respond more swiftly to fluid customer driven demands and similar business changes.

Risk Management Reminders

Natural disasters such as floods, earthquakes, tsunamis and volatile weather patterns continue to impose their wrath on supply chains. Another year of disasters remind us of the need for systems to include risk management features to better understand, plan and mitigate natural and man-made tragedies. High impact risk management preparedness and response can be aided with software simulation models. To manage common and atypical interruptions, supply chain sub-systems can provide real-time updates on regional and global incidents and facilitate the quick deployment of contingency plans.

Supply Chain Software Trends

The last 12 months continued several supply chain technology themes from prior years. The advances in systems development having a transformative impact include convergence, collaboration and visibility. Convergence is the synergistic integration of supply chain planning and execution, whereby planning drives execution and execution feedback becomes the input into real-time planning. Collaboration breaks down lines of business, trading partner communications and hierarchical boundaries throughout the supply chain to improve planning and optimize SCM processes. Visibility brings real-time, accurate information into the supply chain so decision makers can accurately evaluate performance and make more informed decisions.

Supply Chain Planning (supply management, demand management, sales & operation planning) and Supply Chain Execution (inventory management, order management, WMS, TMS) systems continue to get more plugged in to the larger supply chain ecosystem with infrastructures that support information sharing, business rules, process design, workflow automation, user interfaces and business intelligence. IBM with its Smart Commerce, SAP with Netweaver and Oracle with Fusion are pushing their technology boundaries with underlying SOA services and innovative (cloud, mobile, social, user experience and analytics) technologies to facilitate supply chain convergence, collaboration and visibility. The payback is a smaller investment in working capital, shorter lead times, more efficient operations, adaptable systems and higher service levels—all of which contribute to higher margins.

RFID technology has been in motion since the 1960s, but is only now getting closer to the inevitable tipping point from limited deployments to full scale must have adoption. The hurdles holding back RFID from crossing this chasm include the cost of RFID tags, the initial deployment cost, and suppliers incurring the costs while downstream beneficiaries realize the savings. By replacing barcodes with RFID tags, warehouses stand to reduce costs and improve efficiencies.

With RFID, consider new ideas where systems can retrieve inventory information from goods that are actually in stock or identify an items physical location, replacing slow or inaccurate record keeping systems. Once RFID technology is imbedded in middleware and treated as an available service to all business systems, SCM software can then facilitate big savings. For example, imagine intelligent shopping carts, intelligent passive POS, passive real-time check in/out inventory portals, passive real-time asset tracking, plus many other systems that take humans out of everyday mundane tasks.

The Internet of Things (IoT) is one of the newer terms to enter the supply chain lexicon. However, at this point in time it's largely inspirational for most. Nonetheless, as the technology matures from innovative possibilities to real world solutions it will clearly make its way into the supply chain software suites and day to day operations.

Good Citizenship

Green supply chain management continues to get attention. It is now much easier to make the argument that being green delivers the dual benefits of public responsibility and improved bottom-line profits. Examples are plentiful: using electronic processes to reduce paper, using reusable packaging and containers to reduce waste, reducing inventory levels to decrease overhead, and better network planning and trading partner collaboration to reduce empty transportation miles. The good news is that many supply chain software vendors have already addressed many of these needs. Even better, a new frontier in green supply chain management (and overall cost reduction) is addressing the supply chain ecosystem as a whole, instead of each trading partner focused on reducing their foot print regardless if it increases their trading partners.

Supply Chain Software Industry

Supply chain management software revenues increased this year by what appears to be around 4%—with SAP, Oracle and JDA maintaining their top 3 positions in the supply chain software market.

Software acquisitions were relatively quiet and had minimal impact on the SCM competitive landscape. Oracle, SAP and other vendor acquisitions were minor, filling gaps in SCM offerings.

Cloud-based supply chain systems continue to show a slow but steady market adoption. Look for accelerated traction for supply chain software in the cloud in the year ahead.

Supply Chain Software Future

Not only has Supply Chain Management software improved business efficiencies, but the systems are also improving strategic planning, operations analysis, global trading and B2B relationships. Thanks to innovations in SCM software, many companies are recasting the way they organize and do business. The future of Supply Chain Management is in solidifying the advances already made, keeping up with new business trends and leveraging new disruptive technologies such as cloud, social media, mobility, analytics and the Internet of Things. Another area that looks promising is the supply chain ecosystem as a whole. Instead of cost shifting between trading partners, supply chain systems may finally tackle benefits that improve the overall supply chain ecosystem. End

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Supply Chain Management software revenues increased by what appears to be about 4%—with SAP, Oracle and JDA keeping their top 3 positions.


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