This Month in Modern: Recession’s silver lining

In business, as in life, the tougher the challenge you face the smarter you have to work to see your way through to a resolution—and never did the readers of Modern meet a tougher battle than “doing more with less” during the recession.

But according to the latest numbers that our research partners at Gartner dug up on the worldwide market for supply chain management (SCM) software, it appears that many Modern readers have indeed learned some tough lessons and are preparing to be equal to the task, especially when it comes to working smarter by leveraging the enabling benefits of technology.

According to Gartner, the worldwide market for SCM software applications, maintenance and services came in at $5.2 billion in 2011, an extremely impressive 12.1% jump over 2010. In fact, Gartner has projected a compound annual growth rate of SCM software of 8.7%, which should just about double the size of the market over the next 10 years.

So, what’s driving supply chain organizations to finally be more aggressive in SCM software adoption? Gartner’s Chad Eschinger, vice president of supply chain research, tells our Bob Trebilcock this month that the recession era validated six key drivers that will continue to push the adoption of SCM software—and none of them should come as any surprise considering the lean environment Modern readers now find themselves managing within.

I’ll certainly won’t give away too many of the details that Trebilcock unveils starting on page 24, but I will touch on just one of the drivers that illustrate the broader supply chain thinking that is pushing warehouse and DC management professionals to better integrate operations with that of other aligned supply chain functions—and software adoption is proving to be the enabler.

Clearly, the top driver that caused the most acute pain point for many of our readers during the recession was the call to “improve customer service” while your equipment and labor budget were being cut to the bone. According to Eschinger, it will certainly remain the top reason companies will continue to invest in SCM software in the future.

“More with less” is a mantra that stuck, but your internal and external customer demands are now greater than ever.

According to Eschinger, what many supply chain organizations learned once they adopted supply chain planning (SCP), more robust warehouse management systems (WMS), and started to integrate data from transportation management systems (TMS) was that they were able to improve demand planning, orchestrate supply chain activities, and gain an overall visibility that they had never had in the past.

“The floods in Asia and the earthquakes put a spotlight on the complexity in today’s networks,” says Eschinger. And in turn, many users were able to manage the disruptions, be more nimble, shift freight and inventory on a dime and keep costs in line all while meeting customer expectations.

We continue to discover more and more case studies of readers who have used the management pressures of the recession as a springboard to software adoption, and the Gartner numbers certainly validate that fact. And when you think about it, the recession has generated many silver linings; but the fact that we’re working smarter through technology may have the longest-lasting benefit.