Logistics technology: 2010 was a solid year for supply chain software

2010 was a solid year for supply chain management software. The industry posted a 10% increase over 2009 and about $4.6 billion in revenue for SCM applications, not counting procurement.

The numbers come from Chad Eschinger, research director with Gartner. Eschinger and Gartner also provided the compilation for our annual list Top 20 providers of supply chain management software, ranked by revenue.

The article will appear in the July issue of Modern Materials Handling, LM’s sister publication. In addition to the numbers, Eschinger identified the trends that drove last year’s rebound. Much of the growth may have been the result of pent up demand. A number of projects went forward that had been stalled because of the recession. But Eschinger also identified several key drivers.

-Lack of visibility: Large corporations were left with too much inventory when the recession hit and too little inventory when demand picked up in 2009. “Users are looking at applications like sales and operations planning, transportation management and asset management applications that can be levered to track goods in motion,” Eschinger says. “They want a better handle on their plans.”
-Enabling corporate strategy: Everyone wants to reduce their costs, but increasingly businesses are targeting their supply chains to improve their overall corporate viability, especially customer service.
-Total landed cost: Blame it on the high cost of transportation, increasing wages in emerging markets and multi-channel sales and distribution strategies, but companies are using their supply chain systems to take a more analytical look at what it costs to fill an online order versus a retail store and what is the total landed cost to source in Mexico versus China.

The question now is whether the growth in 2010 will continue in 2011. Eschinger believes it will and that 2012 is looking good as well. After that, we’ll have to see how the recovery proceeds. You’ll be able to read the whole report online next week.