The market for supply chain management software (SCM), an umbrella term that includes supply chain planning, collaboration and execution applications, is on the road to recovery, according to "Supply Chain Management Worldwide Outlook," a new study authored by Steve Banker, service director for supply chain management, ARC Advisory Group.

The worldwide market is expected to grow at a compounded annual growth rate (CAGR) of 7.4% over the next five years, from $5.1 billion in 2003 to $7.4 billion in 2008. This includes all supply chain software from warehouse management to manufacturing execution.

That may be expected now that business is investing in technology once again, and other enterprise markets are also on the mend. What may come as a surprise is that three of the top ten market leaders are not traditional software companies at all, but large industrial companies serving heavy process industries like chemical, paper, and oil and gas: Honeywell, ABB and Rockwell.

With its purchase of HighJump Software, a provider of supply chain execution solutions, 3M is also throwing its hat into the ring.

The lessons those suppliers have learned from providing the critical hardware, automation and control systems to those industries provides them a competitive advantage over enterprise resource planning (ERP) and supply chain planning suppliers who only sell software, Banker says.

"Conventional supply chain management solutions are derived from the discrete industry," Banker explains. "They do not adequately address the 'special requirements' of many process industries. Furthermore, process industry specific functionality must be considered in the design of data structures and planning algorithms, and cannot easily be added to conventional solutions."