Supply chain execution sector extends 10% annual growth run

August 28, 2007

It's difficult for large, multi-billion dollar markets to grow rapidly, but the Supply Chain Execution market will achieve this feat. Supply Chain Execution includes Collaborative Production Management for Process (CPM-P) and Discrete (CPM-D) industries, Transportation Management Systems (TMS), and Warehouse Management Systems (WMS).

The worldwide market for Supply Chain Execution is expected to grow at a compounded annual growth rate (CAGR) of 9.9% over the next five years. The market was $4.6 billion in 2006 and is forecasted to be over $7.4 billion in 2011, according to a new ARC Advisory Group study.

"It is surprising how fragmented this market remains," according to Steve Banker, Service Director for Supply Chain Management at ARC Advisory Group. "There are over 250 suppliers. In 2006, the top 10 supplier's shares of the total market had barely changed from 2003, despite the fact virtually all of the top 10 suppliers had made Supply Chain Execution acquisitions", adds Banker one of the principal authors of ARC's report, "Supply Chain Execution Worldwide Outlook: Market Analysis and Forecast Through 2011".

Supply Chain Execution is a diverse market, composed of Enterprise Resource Planning (ERP), best of breed, and automation suppliers. Automation suppliers mainly offer production management applications. An analysis of market share gains and losses among the top ten vendors by type of supplier shows that ERP and Automation companies have gained market share at the expense of best of breed suppliers.

ARC contends the largest automation suppliers have done well with the most successful suppliers providing total solutions capabilities that include consulting and technology which span across hardware automation to consulting services with deep domain expertise in core manufacturing verticals.

The largest best of breed suppliers, particularly suppliers of best of breed logistics applications, have also continued to thrive. While there continue to be a surprising number of young best of breed entrants, often focused on very specific niches, mid-sized best of breed suppliers with revenues of over $35 million have been disappearing.

Source: ARC Advisory Group