Supply Chain Process Management market to quadruple to $518 Million by 2006

by Canadian Shipper

The Supply Chain Process Management (SCPM) market, which exceeded $125 million in 2000, will more than quadruple to $518 million by the end of 2005, growing at a cumulative average growth rate (CAGR) of just under 33 percent, according to a new study by the ARC Advisory Group.

SCPM, also called Supply Chain Event Management and Supply Chain Visibility, provides alerting, alert resolution logic, and extended supply chain visibility into inventory in motion (incoming raw materials and outbound finished goods), inventory at rest (inside a factory and inventory in Distribution Centers), and a real-time view of Key Performance Indicators (KPI), according to the Supply Chain Process Management Global Outlook.

"This type of solution improves customer satisfaction by helping companies to drive strong performance on the perfect order metric, which is an order delivered on time, in the quantities ordered, with no unauthorized substitutions, with the correct Value Added Services executed, and with the correct billing," according to the study’s author, ARC Director of Supply Chain Solutions Steve Banker (sbanker@arcweb.com). "The payback appears to fall into four categories: reductions in inventory, elimination of sources of order fulfillment variance and automation of processes (with an attendant reduction in headcount), and the reduction in the number of costly returns."

SCPM, which is a young and immature market, appears to offer the same kind of robust payback offered by Supply Chain Planning (SCP), a market that grew at about a 40 percent CAGR over the first six-to-seven years of its existence when it offered a payback in less than one year for a high percentage of customers. Even though the forecast for SCPM is among the highest growth rates of all software industries, "if subsequent ROI research shows that the payback period is in fact similar to or better than SCP," Banker says, "then a growth rate of closer to 40 percent would be warranted. Also contributing to the strong growth of this market are the Enterprise Resource Planning (ERP), Supply Chain Planning (SCP), and Warehouse Management System (WMS) suppliers that will offer this solution. Initially, they will sell into their installed base. In such situations, sales are much easier."

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