For years, supply chain management software solutions have fallen into two distinct camps: supply chain planning (SCP) and supply chain execution (SCE).

While the two types of software shared the words supply chain in their names, they had little else in common, says Steve Banker, director of supply chain research at ARC Advisory Group, Dedham, Ma., (www.arcweb.com). Planning software focused just on that function while execution systems managed daily activities in warehouses, transportation departments, and on factory floors. But that is about to change.

Banker expects to see a convergence between planning and execution systems due to factors ranging from the emergence of e-business and the need for greater integration to the acceptance of make-to-order manufacturing.

He points out that the development of e-business and collaborative commerce strategies requires a tighter integration between planning and execution.

"Historically, planning was purchased by CEO's, CIO's, and COO's who had little to do with order execution," says Banker. "Execution solutions were championed by operational managers who did little planning. With different buyers and needs, the result was the lack of a coherent supply chain management strategy and poor integration."

With the Internet facilitating inexpensive communication between companies, Banker adds, important customers want real-time visibility into the status of their orders.

"Providing that kind of visibility requires integration with supply chain planning and execution systems," Banker says.

Another driver is the emergence of make-to-order manufacturing. Customers want to know when to expect their goods to arrive when they place an order. In order to quickly and accurately provide that information and plan for production, planning systems need to know what's happening on the shop and warehouse floors.

Customers also want to know when events happen that alter those plans. Supply chain process management solutions are bridging the gap between planning and execution. These new applications provide real-time visibility into the extended supply chain and alerts when important deviations from the plan occur.

Besides changing how people will use the software, the growth of the two sectors is expected to converge too, says Banker.

The planning market has been one of the fastest growing areas in business software for the past 10 years, with compound annual growth rates of 40% plus. The market for SCE systems has been growing at more modest annual rates of about 20%.

Going forward, expect the gap in growth rates of the two to close: Banker is predicting compound annual growth rates of 17% for the SCE market and 20% for the SCP market through 2005.

For more information about developments in the supply chain planning and execution markets, visit ARC's web site or call 781-471-1000.