BANGALORE: Sharpening focus and expertise in supply chain services (SCS)
provision as well as tightening alliances with brand name vendors will be
critical in winning supply chain projects, according to IDC in the report, "A
Services View of the Supply Chain Management Market".
"Established services vendors have evolved in their SCS business as ERP
vendors extend into supply chain management (SCM). Now, they are beginning to
realize that they are not only competing against the very partners they have
allied with, but also facing competition from emerging/niche supply chain
services and software players," said IDC Asia/Pacific, Senior Analyst,
Solutions Integration Research, Jasmine Soo. "What’s more, because
established services firms are expected to possess expertise in a myriad of
supply chain solutions, they are now challenged to develop competence in rapidly
emerging and converging supply chain technologies."
According to IDC, companies that succeed in winning supply chain contracts
tend to come from three camps: leading services vendors that are competent in
deploying a wide array of supply chain solutions, supply chain vendors (both
large and niche players) who are obviously competent in implementing their own
products, and niche services firms that excel in selected supply chain products.
"Going forward, we will see a greater level of movements among the three
camps. Niche supply chain solutions players will regroup and refocus in order to
compete more effectively, while established players will heighten their supply
chain services expertise, either vis-Ã -vis organic development, joint alliances
or acquisitions. There will also be a great level of convergence among one
another’s go-to-market offerings," said Soo.
At the clients’ end, existing supply chain application users will begin to
demand for tools that help them intelligently navigate their automated supply
chains across the extended enterprise. Despite the claims of collaborative
supply chain management that reduce operational inefficiencies and heighten
productivity, new adopters will seek for SCM solutions that work rather than
succumbing to beautiful promises that may just result in flawed implementation
and operation.
Having said that, and although SCM did not experience the ERP boom nor the
CRM rave, Asia/Pacific continues to be an attractive region for the supply chain
services market, particularly as global companies shift their manufacturing
bases to Malaysia, PRC and Korea. Indeed, IDC expects the region’s supply
chain services market to grow at a CAGR of 21 per cent in the next five years,
from US$1.1 billion in 2001 to US$2,730 million by 2006. The manufacturing,
healthcare and consumer packaged goods industries will be the key sectors
driving the supply chain services business.
From a services category perspective, IDC research indicates that
implementation services will continue to predominate, but operations management
services (including managed supply chain services) will experience the greatest
growth.