Supply Chain Services firms need to buckle up, says report

CIOL Bureau
New Update

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-à-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