Trends shaping the WMS market today
-- Modern Materials Handling, 7/11/2001
Our July 2001 Special Report ranked the world's top warehouse management system suppliers. Here are some of the trends that affect the WMS market and the companies that supply it.
The WMS market is a hotbed of growth, even in a slowing economy. Sales for 2001 are expected to grow nearly 45% over last year, according to AMR Research, Boston, Mass., from $971 million to $1.4 billion. AMR predicts the market will then double to $2.8 billion by 2003.
Where will that growth come from? Here are some of the trends impacting the business today.
Globalization – Swisslog AG expanded its U.S. presence with the purchase of Sonica Software. Likewise, U.S. leaders are reaching beyond their borders for new sales. EXE, for instance, generated approximately 40% of 2000 revenues from outside the U.S.
Replacement systems – Most of the Fortune 1000 have already implemented a WMS system, but many of those are legacy systems that have outlived their usefulness. "They can’t be deployed over the Net, and they can’t bring in supplier relationships," says Chris Newton, senior analyst of supply chain strategies at AMR, who expects many of those users to throw out the old and bring in the new.
Tier II and Tier III -- Only 10 % of the 600,000 U.S. warehouses have implemented a WMS system, according to John Hill. "The price of the typical WMS package has dropped more than 30% in the last ten years," says Hill. "That makes it a much more attractive package for the mid-market."
Visibility and event management: These solutions allow a company to use the information produced by a WMS to track inventory, orders, and shipments anywhere in the supply chain. Steve Banker, director of supply chain solutions, ARC Advisory, Dedham, Mass., expects these to quadruple, from an estimated $125 million in 2000 to $518 million by the end of 2005.
However, the most significant challenge of all may not come from within the WMS industry, but from the much larger ERP players. Lilly Software, the only ERP vendor to make our list, already offers a best of breed WMS application now. The ERP giants are rumored to be upgrading their solutions. Oracle, for instance, is expected to roll out a best of breed solution before the year is out.
ERP vendors may not have the experience of established WMS vendors, but they have an installed base of thousands of customers. "The WMS guys still have the edge when it comes to functionality," says John Hill. "But if I were a user and could buy all of my supply chain solutions from one vendor, wouldn’t I want to take a look?"
That’s a question WMS users may be asking in the not so distant future.
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