SCM to Grow Despite Gloom

by CXOtoday Staff    Nov 24, 2008

Notwithstanding the gloomy economic conditions of 2008, the current supply chain management (SCM) applications market is likely to experience a steady growth in the forthcoming years too.

A recent study by AMR Research forecasts a steady annual growth of 7 per cent for the next five years which will bring the SCM applications market close to $9.2 billion in 2012 from the current $6.5 billion status.

There is a high likelihood the economic challenges of the coming years will offer much greater opportunity for supply chain technology adoption, shows the analysis. “The supply chain, and the technologies that support it, will help companies deal and thrive in an economy that is going to be quite unlike anything we’ve seen in the post-war era,” said John Fontanella, vice president of research at AMR Research.

The study named five major forces that will be at work in the economy and society in the foreseeable future, and how the supply chain and the technologies that support it will help companies in the next five years.

* High inflation - Inflation will force supply chain managers to play an important role in protecting product and company margins through cost control and increased efficiencies in their operations.

* Rising commodity prices - Pressure from higher commodity prices more in line with demand and reduce inventory levels from raw materials to the finished product.

* Threats to brand security - Counterfeiting, the gray market, and questionable quality standards will make brand protection a top priority. Companies will look to adopt risk mitigation and global trade technologies as well as analytics to monitor distribution channel buy-and-sell patterns.

* Sustainability becomes a component of corporate decision making - Public sentiment will force substantive measures by industry to become more environmentally friendly. This will present opportunities to more directly connect product development efforts with supply chain management to minimize waste and material usage.

* Cash is king - Capital spending will come under great scrutiny as companies preserve cash. Technologies that increase the velocity of cash collection, including B2B e-commerce, will become a critical component of future initiatives.