SCM technology spending to rise 5pc

24 Oct 2006

Expenditure on supply chain management (SCM) technologies is forecast to increase 5pc in 2007, according to AMR Research’s latest European IT supply chain spending survey.

The survey of 120 businesses across Europe found that supply network co-ordination, forecasting and planning are the three top business issues behind supply chain decision making.

According to larger companies’ responses, growth opportunities are likely found in the execution side of the business. Spending in 2007 on transportation systems is expected to grow 6pc in companies with revenue in excess of US$1bn. Little or no transportation management system growth is expected in companies with less than $1bn revenue.

Spending on RFID-based (radio frequency identification) products is expected to increase 5pc in the next year, mostly among companies in excess of US$1bn in revenue. But in revenue terms, supply chain planning and forecasting are also growing in the next year, by 4pc and 6pc respectively.

The supply chain reporting structure also came under scrutiny in the survey. Respondents report that the reporting structure is shifting away from traditional manufacturing roots and is now more frequently owned by broader operational roles.

Decision making has also matured. Three-quarters of organisations have a leadership team focused on supply chain issues (similar results were found among US organisations) and there is now broad, cross-functional participation in supply chain decisions.

IT is typically seen as support and not a leader in supply chain decision making although IT still funds supply chain projects in approximately 50pc of projects, so IT is very much a key stakeholder in the decision-making process. However, there continues to be a shift toward more business involvement in supply chain technology decisions.

Supply chain planning and execution are relatively mature technologies throughout the European geographies and industries surveyed. More than three quarters of organisations indicated they are currently using supply chain execution and planning software.

Overall, ERP (enterprise resource planning) vendors are very well positioned to capture current and future opportunities in the supply chain area, according to those surveyed.

A significant number of organisations have built supply chain functionality as a bolt-on (or addition to) their existing ERP systems, with a focus on manufacturing functionality. ERP vendors are also consistently listed as the vendor of choice, ahead of custom-built and independent/best-of-breed vendors, for a host of supply chain functions.

By John Kennedy