Over the past few years, there has been a shift in the supply chain execution (SCE) software marketplace. Or to borrow from a popular, but old automotive advertising campaign, “This is not your father’s” SCE software market.
During the 90’s, we saw the rise of the regionalized, niche application software companies, also known as “best of breed” software vendors. These niche, specialized software vendors saw a need and invested in developing robust functionality to support distribution and transportation operations. These applications became known as Warehouse Management (WM), Transportation Management (TM) and Labor Management (LM) Systems. A few of these niche SCE software vendors eventually emerged as leaders, growing both organically and strategically through acquisitions. And as they grew, they began to add to their suite of SCE applications, bringing to market Distributed Order Management, Slotting, Third Party Billing, Event Management, Dashboards and Reporting that could be used in conjunction with their WM, LM and TM offerings.
While these niche or best of breed vendors were focused on supply chain execution (SCE) applications, the Enterprise Resource Planning (ERP) software vendors were focused on developing robust functionality for running the complete, global operations of Fortune 1000 companies. Similar to the SCE market, a few software providers emerged to lead the ERP market. These ERP software companies are now referred to as the MegaSuite vendors, with “deep pockets” for R&D and strategic acquisitions.
Several years ago these ERP/MegaSuite vendors realized their customers could drive out costs and increase efficiencies through the use of tightly integrated supply chain management and execution software suites. These software offerings would also further enhance their revenue and better serve customers. So through R&D or acquisition, they developed and tightly coupled SCE applications (WM, TM, LM, Slotting, etc.) into their product suite that are on par with the leading SCE niche software vendors. Moreover, certain MegaSuite vendors have architected their entire software application platform including SCE to support the complexities of “big data” and mobility, a significant advantage now and one that will be even more important in the future.
So why is this background relevant? Many industry veterans feel the “tipping point” has been passed – i.e., the MegaSuite vendors have emerged as leaders in the SCE market. Need proof? The proof is in the numbers. ARC Advisory Group just issued a couple of research reports on the market shares in the WMS and TMS markets that documents this shift. These developments have produced a major shift in the SCE market, acknowledged by analysts and the media alike. You can read more about this shift in the recently-published Modern Materials Handling article by Bob Trebilcock.
How does this shift in the SCE market affect your search for SCE applications? The SCE software vendor evaluation process from late 90’s and early 2000’s usually consisted of a “bake-off” between the top niche software vendors and a detailed technical evaluation of the interface strategy between the niche SCE application and the “host” system. This process was long, complicated and often times just a “beauty contest” among the vendors. The shift in the market has led to a more cost effective approach by building on to the existing platform foundation for an SCE project. Yes, just as it was a decade or so ago, it is important to establish the project’s business case and document the detailed requirements. But now you can validate a single vendor’s SCE functional fit to your requirements and limit your evaluation options. In many cases this single vendor is the company’s stated corporate standard for IT platforms. This process of validation, rather than evaluation, can reduce the overall time and costs spent to make a strategic decision for your organization and allow you to hopefully better leverage your existing investments.
So, if you’re in the process of considering deployment of SCE applications in the next 18 months, remember the shift in the market and determine how you can best take advantage of it.
John Sidell is a Principal and Co-Founder of New Course, LLC, a supply chain execution consulting firm and an SAP partner. John has been active in the supply chain technology and consulting market since the late 1980’s. John is well known within the supply chain marketplace as a thought leader and active member of the speaking circuit. He has given many presentations at industry events such as DC EXPO, Frontline, MHIA, APICS, Promat, and CMSCP Annual Conference. John currently serves on the advisory board for several consulting and technology related companies as well as provides growth and exit strategy consulting services to growing companies.