BluJay Solutions has been listed in the 2021 Gartner Market Guide for Multicarrier Parcel Management Solutions and awarded the Platinum Tier Award for 2021 by FedEx. Read more
Gartner reveals supply chain leaders must develop a culture of quality
A single disruption in an organisation causes an average culture of quality to drop 9 per cent, according to a survey by Gartner, Inc. and organisations experience on average three disruptions per year and supply chain leaders must find strategies to sustain their quality levels.
Gartner 2020 Magic Quadrant for WMS leaders announced
Gartner’s 2020 Magic Quadrant for Warehouse Management Systems (WMS) report has revealed the top supply chain technology providers in the market, including Manhattan, BlueYonder, Körber, Infor and Microlistics.
Technology => efficiency – from MHD magazine
Government regulations requiring greater compliance, the increasing need for visibility into the status of shipping loads, and an increasing responsibility for driver safety continue to drive demand for mobility technology in transport. It remains a top technology investment, according to a recent Gartner supply chain survey. Read more
Gartner's top 8 supply chain technology trends in 2019
Gartner’s top strategic supply chain technology trends have broad industry impact, but have not yet been widely adopted. They might be experiencing significant changes or reaching critical tipping points in capability or maturity.
Artificial Intelligence (AI)
AI technology in supply chain seeks to augment human performance. Through self-learning and natural language, AI capabilities can help automate various supply chain processes such as demand forecasting, production planning or predictive maintenance.
“AI supports the shift to broader supply chain automation that many organisations are seeking,” said Mr Titze. “For example, AI can enhance risk mitigation by analysing large sets of data, continuously identifying evolving patterns, and predicting disruptive events along with potential resolutions.”
Advanced Analytics
Advanced analytics span predictive analytics — those that identify data patterns and anticipate future scenarios — as well as prescriptive analytics — a set of capabilities that finds a course of action to meet a predefined objective. The increased availability of Internet of Things (IoT) data and extended external data sources such as weather or traffic conditions allow organisations to anticipate future scenarios and make better recommendations in areas such as supply chain planning, sourcing and transportation.
“Advanced analytics are not new, but their impact on today’s supply chains are significant,” said Mr Titze. “They will help organisations become more proactive and actionable in managing their supply chains, both in taking advantage of future opportunities and avoiding potential future disruptions.”
IoT
The IoT is the network of physical objects that contain embedded technology to interact with their internal states or the external environment. “We are seeing more supply chain practitioners exploring the potential of IoT,” said Mr Titze. “Areas on which IoT might have a profound impact are enhanced logistics management, improved customer service and improved supply availability.”
Robotic Process Automation (RPA)
RPA tools operate by mapping a process in the tool language for the software ‘robot’ to follow. They cut costs and eliminate keying errors. “We are seeing a significant reduction in process lead times RPA technology is used to automate the creation of purchase and sales orders or shipments, for instance,” said Mr Titze. “RPA technology reduces human intervention and improves consistency across manual data sources within manufacturing.”
Autonomous Things
Autonomous things use AI to automate functions previously performed by humans, such as autonomous vehicles and drones. They exploit AI to deliver advanced behaviours that interact more naturally with their surroundings and with people.
“The rapid explosion in the number of connected, intelligent things has given this trend a huge push,” said Mr Titze. “The once distant thought of reducing time for inventory checks by using drones’ cameras to take inventory images, for instance, is here.”
Digital Supply Chain Twin
A digital supply chain twin is a digital representation of the relationships between all physical entities of end-to-end supply chain processes — products, customers, markets, distribution centres/warehouses, plants, finance, attributes and weather. They are linked to their real-world counterparts and are used to understand the state of the thing or system in order to optimise operations and respond efficiently to changes.
“Digital supply chain twins are inevitable as the digital world and physical world continue to merge,” said Mr Titze.
Immersive Experience
Immersive experiences such as augmented reality (AR), virtual reality (VR) and conversational systems are changing the way people interact with the digital world. “In supply chain, organisations might use AR along with quick response (QR) codes and mobile technology to speed up equipment changeovers in factories,” said Mr Titze. “Immersive user experiences will enable digital business opportunities that have not yet been fully realised within global supply chains.”
Blockchain in Supply Chain
Although supply-chain-related blockchain initiatives are nascent, blockchain has potential to fulfil long-standing challenges presented across complex global supply chains. Current capabilities offered by blockchain solutions for supply chain include traceability, automation, and security.
“Organisations might use blockchain to track global shipments with tamper-evident labels, allowing a reduction in the time needed to send paperwork back and forth with port authorities and improved counterfeit identification,” said Mr Titze.
“The 2019 Top Supply Chain Technology Trends You Can’t Ignore,” from Gartner provides an outlook into other emerging trends that might disrupt supply chain operations in the upcoming years, such as 5G and edge computing.
Disrupt demand – from MHD magazine
Tom Enright
Highly predictable future demand is the dream of most supply chain executives, all striving for an effective end-to-end supply chain. Companies have long struggled with average forecast errors of more than 27 per cent, according to a Gartner survey.
This challenge will only become tougher as supply chains become increasingly disrupted by new competitors, new business models and digitalisation. Demand will also shift to parts of the world where companies don’t have mature infrastructures.
You’ll need to improve your demand-sensing, shaping and forecasting capabilities to be successful. Move away from owning assets. Instead, move toward accessing and using them through implementing more collaborative supply chain network designs.
“You’ll need to improve your demand-sensing, shaping and forecasting capabilities to be successful.”
New opportunities to better predict demand
The sheer volume of data currently available is greater than most current demand technology can absorb and use for effective insight and decision making. This data needs to be used in a different way than it is today to improve demand planning and forecasting.
Improving demand accuracy is now intrinsically linked to the use of analytics to recreate the environment in which historical demand occurred. This means including more inputs than those of sales, inventory and variable prices in statistical forecasting today, which don’t sufficiently create a comprehensive set of attributes that influence historical demand.
Instead, elements such as weather, social commentary, demand transfer, competitor pricing, and shipping and returns policies need to become inputs to demand calculations. All of these influence how customers purchase, whether in B2B or B2C environments, across multiple industries. All of these elements should be considered when predicting future demand.
This new set of data inputs need advanced machine learning algorithms to learn from richer historical data to sense demand, predict and prescribe action. Unlike statistical forecasting, a machine learning approach uses a wider variety of data inputs, which can produce a more accurate demand plan.
Viewing technology as a source of competitive advantage is critical to understand the impact of disrupting demand for people, products and services, as well as appropriately reacting to it.
“Wealth and demand for products and services will increasingly shift to parts of the world where companies lack mature infrastructure in terms of sales, supply and recruitment.”
Participate in trading partner networks
To gain new insights from the proliferation of data and increase demand management performance, you’ll increasingly need to pool resources with other partner companies in your extended supply chain.
Each company will play a role in this network of suppliers and service providers, sharing people, information and technology. Rather than extracting value from its own asset, your company will gain value and advantage using data, people, technology and services belonging to others. Isolated companies will become weaker in influence in the overall supply chain.
The need to develop multi-enterprise collaborative supply chain infrastructures will define the future of supply chains across global industries. Extracting value from information, assets and people will no longer be based on ownership, but instead on accessibility and usage.
The sharing of supply chain assets will be accelerated by the emergence of digital platforms across manufacturing, warehousing and logistics. Ecosystems as a platform have been emerging for many years.
Cars have evolved to become platforms, for example, delivering a customer experience that draws on a cross-industry ecosystem of partners, from the car manufacturer to companies that specialise in communications, entertainment and navigation.
What’s new about ecosystems today is the infusion of digital connections, combined with the fact that they’re delivering digital products.
Forces such as globalisation, government pressure, network capacity constraints, freight margin reductions and increased outsourcing will drive companies to explore how to become more efficient in using their networks and resources across their ecosystem platforms.
Most companies will need to leverage an asset-light network that enables them to be flexible and timely in a cost-effective manner. Instead of looking internally and only optimising your own assets, connect with an ecosystem of third parties to share assets. This builds more responsive supply chains.
Individual customer orders will be fulfilled by whatever combination of partners meets the demand requirements at the time of execution.
Keep ahead of market forces
A global shift in population growth, wealth and workforce resources requires better demand-sensing and shaping capabilities.
Wealth and demand for products and services will increasingly shift to parts of the world where companies lack mature infrastructure in terms of sales, supply and recruitment. It’s likely we’ll see a large increase in purchasing power in less-developed countries in the coming decades.
These shifts in economic power will change demand and potentially how customers will buy. Will they want value products, or will demand for more choice and for premium products increase? Will they buy in urban stores, rural locations or will most purchases be done online?
Companies that fail to take action will find their existing markets declining in terms of spending power and as older consumers age.
Advanced analytics technologies – spanning predictive and prescriptive analytics – are playing an important role in helping companies to keep ahead of these market forces. The impact on supply chains is significant.
Predictive analytics are undoubtedly a powerful competency that enable companies to be proactive and take advantage of a future opportunity, or mitigate or avoid a future adverse event.
Prescriptive analytics on the other hand can improve decision making in functional areas like supply chain planning, sourcing, logistics and transportation. More importantly, prescriptive analytics can be deployed to improve the supply chain performance by recommending course of action that best manages trade-offs among conflicting functional goals.
Tom Enright is a VP analyst at Gartner, specialising in supply chain strategies and operations across the retail sector. His focus areas include distributed order management, in-store logistics and last-mile fulfilment. For more information visit www.gartner.com/supplychain.
Supply chain skills for the future – from MHD magazine
Patrick Van Hull
The supply chain team of the future will look very different from the one we’re familiar with today. In some cases, the team will need radically different skills and capabilities. Many of these skills fall outside the traditional realms of functional supply chain expertise.
It almost goes without saying that people are one of a supply chain organisation’s biggest assets. Although investment in talent is a top priority today for many supply chain leaders, this hasn’t always been the case.
Rewind just a couple of years ago. A 2016 Gartner survey of 261 supply chain leaders revealed that talent development was a top investment priority for only 28 per cent of respondents, a mere 12th on the list of other competing investment buckets.
Supply chain has been, and always will be, an ongoing balancing act of competing priorities. Can supply chain leaders really afford to continue to devalue talent in favour of the functions they serve? In the many conversations Gartner has had with the supply chain community over recent months, the answer is increasingly a resounding “No!”
What’s changed?
A number of external factors have contributed to this urgent realignment and prioritisation of expertise and capability development. First is the growing complexity of business and the level of agility required to meet increasing customer demands, which requires increasing excellence in execution.
Then there’s the elevated role of supply chain within the wider organisation as a creator of value, rather than just a service function or cost centre. This demands a broader understanding of the business through all levels of the supply chain.
Acting as the ‘glue’ between multiple parts of the business — as well as with customers, suppliers and other external partners — requires a shift in skills beyond pure functional supply chain expertise to less tangible social skills around communication and influence. This draws on analytically minded, problem-solving skills to make more effective business decisions, as well as keeping assembly lines running and delivery promises to customers.
Finally, the explosion of new technologies enabling the automation of previously manual activities and the augmentation of other human-led capabilities, have given rise to a new of era of digitalisation requiring new levels of skills and new ways of working.
Once harnessed, digital technologies provide opportunities to deliver innovation in both product and process for the benefit of the customer. They’re also putting pressure on organisations to develop new capabilities and lead the existing workforce through a period of uncertainty.
Now’s the time
These demand drivers for talent realignment and prioritisation are being met with pressures from the supply side of the equation. Supply chain leaders are challenged to develop their existing talent to align with the changes in competency profile. Where gaps on their benches are identified, they must bring in the expertise required.
The speed of change within the business, coupled with the explosion in the need for expertise in digital technologies, is met with the reality that those skills take time to develop and aren’t always readily available from the marketplace. At the same time, a strong competitive market for supply chain talent prevails.
Now’s the time for supply chain leaders to lead the charge on talent strategy and execution by developing winning talent strategies and innovative battle plans. Companies already taking the lead on this are developing strategies that embrace the entire supply chain organisation, from hourly associate to the most senior level executive.
The goal is to build an agile team equipped to face the challenges of tomorrow, starting today. The good news is that Australia has a relative abundance of supply at all hiring levels, indicating a healthy talent pool countered by a tightening of suitable employment opportunities.
Agility is the new watchword for talent
Building out organisations requires a balance of planning for long-term requirements and change management processes, at the same time responding to more short-term needs, such as emerging digital technologies.
A one-size-fits-all approach to strategic workforce planning will no longer work. Develop a talent roadmap for the future.
“Develop connections, both formal and informal, between different parts of your organisation to enable broader exposure to the business and facilitate collaboration across functional teams.”
With a clear business strategy in place, harness this to develop career pathways and roadmaps for existing employees who may need to alter their skill sets with your support to meet the future needs of the business.
Take care to minimise any change-related anxiety that may lead to decreased levels of motivation and workforce effectiveness or even loss of key talent. Where appropriate, consider working with outside providers to fill in capabilities in key areas — blockchain is a good example.
Don’t compete with the ‘cool’ brands – build your own
Competition for talented supply chain professionals is on the rise, with high-profile brands like Amazon, Google and Apple with ‘cool’ value propositions posing a real threat to other companies offering more traditional career pathways. Moving forward, companies will be compelled to sell themselves more overtly as ‘destination employers’ to attract top talent their way.
Create a unique talent brand that establishes clear on-boarding and development paths for new employees, as well as programs to develop existing employees at all levels. Building expertise internally will likely be much more cost-effective than buying new skills.
Take a global view of the talent market landscape
Talent has become an increasingly critical component of overall supply network planning. Take into account the differences in the talent supply market across geographies, when considering where to position teams that require colocation. Could global centres of excellence be located in markets with a richer seam of qualified supply chain talent?
Equally, be prepared to embrace a flexible approach to remotely based employees where supplies of local talent are in short supply.
Develop strong internal ‘glue’ to keep your supply chain organisation integrated and robust
The connections developed between people in your organisation create a glue that holds the parts together. Develop connections, both formal and informal, between different parts of your organisation to enable broader exposure to the business and facilitate collaboration across functional teams.
Likewise, building connections between different levels of the organisation through initiatives such as mentoring, can connect less experienced people with those more tenured and facilitate successful knowledge transfer in both directions.
Similarly, although diversity initiatives may run the risk of neglect during challenging times, they can prove a useful tool for both filling talent gaps and enabling a more inclusive and cohesive workforce.
Patrick Van Hull is a research vice president at Gartner. He provides insights into the key challenges and trends affecting global supply chains, across industries. For more information, visit www.gartner.com/supplychain.
The logistics revolution: the route ahead – from MHD
Beth Morgan
Long the steady workhorse of supply chain, logistics has stepped to centre stage, carrying the responsibility as never before of delighting or disappointing the customer.
Driven largely by the impact of e-commerce, combined with advances in operational technologies, logistics has become the new playing field for competitive differentiation.
Logistics can’t operate in a vacuum. It plays an increasingly vital role in orchestrating supply chain performance in a way that adds maximum value both to customers and the business. Achieving this requires opening up the flow of information between all parties in the supply chain.
As a function that relies heavily on third parties and outsourced services, an open approach brings both risk and reward. Choosing the right partners, with the right infrastructure and technologies to support changing business models, is vital.
The opportunity to deliver value by optimising the logistics process through digitally enabled collaboration stands against a backdrop of increasing complexity on a scale not seen before.
In recent years, logistics has come under tremendous pressure from all corners. This includes increasingly demanding customer expectations, fluctuations in demand, rising transportation costs, freight capacity issues, labour shortages and disruptions. It also comes from uncertainties around global economies and international trade routes and agreements. Last-mile logistics is in turmoil as dozens of new entrants compete for business.
Necessity is the mother of invention
In response, the logistics industry is in the midst of an innovation-driven shakedown, as it resolves ocean and air freight capacity issues, shifting increasing volumes to rail and tackles labour issues head on. In parallel, consumers, retailers and small start-ups leverage mobile, GPS and even drones to push the boundaries of what’s possible.
Logistics has the opportunity to move beyond being a mere commodity service function to being a strategic partner to the business, providing competitive differentiation through performance excellence and innovation.
Advances in digital technologies are making logistics more agile than ever before, turning it into a hotbed of innovation. Automation in warehouses and distribution centres is driving process and cost efficiencies, helping to decrease delivery cycle times and optimise shipping options for customers in the most profitable way.
New sharing economy-based applications and services are exposing new opportunities for businesses to flex their logistics capacity by connecting them with idle assets and resources for storage and transport.
Control tower-type platforms connected via the cloud are helping provide greater visibility into logistics performance across the connected supply chain. This enables companies to be alerted to disruptions and quickly find solutions to mitigate operational risk, optimise processes and strengthen customer relationships.
These technologies promise visibility on a grand scale, offering a panacea to not only fix issues faster retrospectively, but to provide new levels of insight to drive increased optimisation and value.
This combination of pressures and opportunities puts logistics firmly in the driving seat to rethink and elevate its role within the business, its value to customers and its relationship with partners and suppliers.
Take control of chaos
As you consider the full range of possibilities made possible by new technologies and services, the key question is whether it makes most sense to run logistics fully in-house, in partnership with one or more third-party logistics service providers, or via a hybrid combination?
To help make this decision, start by determining the strategic value of logistics to your business. In the context of your three- to five-year strategic roadmap, review the current role of your logistics function as a source of competitive differentiation for your business.
If not already a strategic partner to the business, it’s possible that you’ll need to establish a new vision for your logistics function. This will require full representation at the highest levels of strategic supply chain and business planning.
Engage with your current logistics partners to understand their future roadmaps. Sit down with your key partners and have a serious conversation about their strategic development intentions over the next three to five years. If they don’t have the services you need and aren’t planning to develop them in a timeframe or direction that meets your future requirements, challenge them to consider developing them with you.
“Prepare a plan now to develop your existing teams and prepare the organisation for a shift towards more automation.”
Otherwise, prepare to review your strategic relationships and establish new relationships elsewhere. But be warned: global logistics service providers are becoming increasingly discerning about the number and type of new relationships they take on. Be sure you have the leverage potential before thinking about jumping ship.
Take a creative approach to partnerships. Consider synergies in logistics beyond the usual suspects. Look at other parties in your ecosystem who may offer opportunities to develop symbiotic relationships — some may even be competitors. In this brave new world, don’t dismiss the possibility to explore shared value through logistical execution that doesn’t compromise commercial competitiveness and differentiation.
Prepare for the future
- Be prepared to invest. Although the focus in logistics has traditionally been on reducing costs, be prepared that elevating the role of logistics to a more strategic level will require investment. Consider options for how logistics can generate additional revenue, as well as ways to incentivise logistics to keep any future cost savings for re-investment.
- Experiment with new services. Identify and seek out niche partners and evaluate them as solutions to capabilities not yet supported in-house or by traditional logistics partners. Set up quick ‘test and learn’ pilots with a trusted partner and/or customer to assess the value to the business and build out the model. Then refine and scale to ascertain true costs and returns, pilot more widely, customising the service where necessary to meet the needs of individual customers or markets.
- Review your talent requirements. The skill profiles of tomorrow’s logistics teams will likely be very different from today. Logistics leaders are already telling us that they’re looking for people with strong analytical skills who can navigate in an increasingly business-focused environment. Equally, a shift towards a more customer-centric outlook may be required.
Prepare for the future now by identifying the types of skills you’ll need over the next few years, and work with your HR partners to develop a pipeline of fresh talent. Also, prepare a plan now to develop your existing teams and prepare the organisation for a shift towards more automation within your warehousing and distribution facilities.
Beth Morgan is a research vice president at Gartner. She is focused on supply chain sustainability and talent management. For more information visit www.gartner.com/supplychain.
Where it counts – from MHD magazine
David Gonzalez
Logistics has always been a critical component of a company’s supply chain, but it’s historically been an overlooked and underinvested cost burden in many organisations. This is now changing, as companies such as Amazon and Alibaba disrupt the logistics industry by developing the function to a point where it’s now a differentiator that drives growth and delivers customer value.
This is great news for the industry. Over the past five years, about $8 billion has been invested in the logistics sector globally by venture capitalists. In addition, the introduction of new technologies such as artificial intelligence, robotics and big data analytics has accelerated digitisation of the sector.
Logistics isn’t without its challenges. Some companies readily point to growing capacity constraints, labour and talent shortages, increasing costs and fuel price fluctuations. However, some iteration of those challenges has been prevalent in logistics for as long as the function has existed.
“Logistics is no longer just about dealing with issues such as reducing logistics costs, managing capacity constraints and closing service gaps. Today, it’s increasingly enabling positive outcomes.”
As company attitudes evolve, logistics is no longer just about dealing with issues such as reducing logistics costs, managing capacity constraints and closing service gaps. Today, it’s increasingly enabling positive outcomes. To unlock greater and more sustainable benefits, organisations need to shift focus to enabling opportunities, such as investing in third-party logistics (3PL) partnerships, evolving their logistics strategy and maturity; and investing in logistics capabilities.
Logistics leaders are working hard to change the perception of their logistics functions and to shift the conversation away from cost and toward value. There are a number of ways they are achieving this
- Supporting overall business objective delivery
It may be wishful thinking on the part of chief supply chain officers to believe that every function within their organisation is perfectly integrated, aligned and in support of the overall business objectives. When it comes to logistics, many companies rollout what has become the industry mantra of “the highest level of service for the lowest possible cost”. A leading approach to logistics, however, must be more imaginative than that.
Leaders are increasingly aligning their logistics strategies with the overall business goals, designing and deploying capabilities, processes and metrics that capture and demonstrate the logistics contribution to overall success. For example, linking how on-time and in-full deliveries contribute to growth in market share through customer experience, or how speed to market can influence long-term customer buying decisions and loyalty.
One of the world’s leading fast-fashion retailers, for example, uses air freight to transport up to 70 per cent of inventory across its global network. The logistics function understands that given the average shelf life of the company’s products is a few weeks, they cannot afford to lose six weeks moving the product by ocean freight.
By being more strategic in their thinking about air freight, this company is able to leverage the lower transit times to drive a range of benefits in other areas across other supply chain functions. The cost of air freight is more than offset by making new products available more often to customers who are willing to buy them now.
Logistics strategies are becoming more integrated as companies respond and adjust to the overall business climate. Assuming one course of action or direction is no longer good enough to support today’s changing logistics landscape.
- Going beyond responding to demands
Given the level of competition in every industry sector, companies are seeking to differentiate their offers and stand out from competitors. Companies like McDonald’s and ASOS are best-practice examples of how to leverage logistics and use it as a competitive advantage.
Expectations on the logistics organisation are so high that companies require their logisticians to think creatively about new solutions rather than simply seeking to process tasks.
A great example is an industrial manufacturing company that successfully deployed a change to the way it engaged with suppliers, which significantly improved its transportation networks and broader distribution operations, including the efficiency of its warehouses. By simply negotiating to collect orders rather than having them delivered, shifted control of the inbound logistics process. It used transport as the differentiator.
Thinking beyond what’s the traditional approach or accepted practice is critical to succeeding in logistics solution design and execution.
- Engaging logistics from the beginning
Being at the end of the supply chain process stream means that logistics is sometimes considered somewhat of an afterthought. Consequently, it’s often left with an almost impossible task to deliver on its goals of consistent and reliable service at the optimal cost.
“Empowering and engaging logistics at the start of the process saves time, effort and expense and uses logistics as the source of subject matter expertise.”
Companies that use logistics as a competitive lever start with what the customer wants, and therefore, they design into the process what needs to be made logistically possible to deliver it. They then work back along the supply chain to understand how upstream supply chain decisions can enable different logistics solutions and ultimately deliver the customer requirement.
Some organisations are fixated on designing the perfect product with the latest materials and in the best manufacturing location. However, they often neglect to consider how that finished perfect product will get to the consumer in a timely, safe and cost-effective way.
Empowering and engaging logistics at the start of the process saves time, effort and expense and uses logistics as the source of subject matter expertise that is best able to standardise or customise logistics capabilities across the organisation.
One of the world’s leading healthcare and beauty companies, for example, views logistics as a key enabler, not only of its supply chain organisation, but also of its overall business. Logistics doesn’t inhibit or constrain what the company is able to offer in terms of product portfolio or distribution services. But what it does do is set out the different possibilities and evaluates the risks associated with each one at the start of the supply chain decision-making process.
David Gonzalez is a research director at Gartner, focused on supply chain. David has more than 20 years’ experience working with international supply chains and global logistics networks within the service, manufacturing and retail sectors. For more information visit www.gartner.com/supplychain.
Supply chain management software up 13.9%: Gartner
The latest market share data from Gartner shows that adoption of supply chain management (SCM) software accelerated significantly in 2017. Total worldwide market revenue grew 13.9 per cent to reach a total of $12.2 billion in 2017.
“The SCM market’s revenue performed well in 2017, continuing the trend of accelerating growth from recent years. This is happening because SCM technologies are a key component of delivering digital business strategies,” said Balaji Abbabatulla, research director at Gartner (see Table 1.). “SCM technologies create digital value by optimising the flow of products, services and related information from source to customer and from customer to source.
“The top five vendors in the SCM market all increased revenue, but only JDA and Infor grew their market share by outperforming the total market growth,” said Mr Abbabatulla. “The ‘other vendors’ category is growing significantly faster than the top five market incumbents, but the top five rankings remained the same in 2017.”
Table 1. Worldwide SCM revenue market share, 2016-2017 (Millions of USD).
| Company | 2016 Revenue | 2017 Revenue | 2016-2017 Growth (%) | 2017 Market Share (%) |
| SAP | 2,930 | 3,257 | 11.2 | 26.6 |
| Oracle | 1,553 | 1,679 | 8.1 | 13.7 |
| JDA | 476 | 544 | 14.3 | 4.4 |
| Infor | 243 | 286 | 17.4 | 2.3 |
| Manhattan Associates | 219 | 225 | 2.8 | 1.8 |
| Other Vendors | 5,334 | 6,256 | 17.3 | 51.1 |
| Total | 10,755 | 12,246 | 13.9 | 100.0 |
Source: Gartner (July 2018)
Mr Abbabatulla continued: “Smaller cloud-native vendors enjoyed an average revenue growth of 41.4 per cent in 2017. The top five vendors are defending their market share by pivoting toward cloud-first strategies and quickly introducing new products through development, acquisition or partnerships on their cloud platform.”
Cloud offerings are driving growth in the market partly because more midsize organisations are adopting SCM software to drive digital business models. Midsize organisations help bolster revenue growth because they are net new customers of SCM products and are not bound by replacement and upgrade cycles from legacy investment.
“Cloud software typically have lower barriers to entry and are more easily scalable, and are therefore a better fit for midsize organisations looking at SCM for competitive advantage,” said Mr Abbabatulla. “We expect that vendors offering a well-defined, vertical-industry-oriented strategy for midsize organisations will grow rapidly over the next five years.”
Another source of competitive advantage for SCM vendors has been effective incorporation of artificial intelligence (AI) into their products. “While adoption levels of AI vary across sub market segments, we expect it to drive revenue growth as AI technologies and tools mature,” said Mr Abbabatulla. “This is because AI can bring productivity and user experience improvements by automating routine tasks and providing more effective support to complex decisions.”