Supply Chain Management
Sector Outlook, Fourth Quarter, 2003
Supply chain management systems are concerned with
figuring out the demand for items at every point in the
supply chain and then finding the optimum way of satisfying that
Some years ago, the large ERP vendors effectively froze
the market for supply chain systems by announcing that they
would create equally functional systems that were fully
integrated with their ERP application. In one case, a large ERP
company even paid an analyst firm a substantial amount of money,
and they proclaimed that the ERP company was a leader in the space
when the company did not even have live offerings in most of the
areas in the space.
Hurt most were companies like Manugistics and i2, which
focus mainly on supply chain optimization (forecasting and
planning) systems. (Manugistics also has a good, though aging
transportation offering.) Less damaged were supply chain execution
companies (warehousing and logistics companies), like EXE and Manhattan. Some
time after these announcements, a new area emerged, called supply chain
visibility; here, the idea was simply to let people know whenever
things weren't going to plan.
The overall effect of these announcements was simply
to slow interest in the systems. The companies that had
really effective products fell on hard times (much of the damage
was self-inflicted, of course). At the same time, the ERP companies never really
cracked the code for these systems. It turned out that integration
was not necessarily all that important; even if a system was integrated,
if it was not well-designed or it was not installed correctly, the
benefits of integration were lost.
What all this adds up to is that the substantial potential
benefits of supply chain management software have not been realized.
Forecasts are still done with spreadsheets. Planning is still done
with MRP. And jillions of dollars that companies can easily realize
by puting in orderly planning processes are thrown down the
drain every year.
Of course, this isn't money that is lying in the street ready
to pick up. It is by no means easy to realize the potential benefits.
Software is a start, but only a start. You need real expertise in
supply chain processes--a commodity that is still in short supply.
If you're using software, you probably need to modify it and, alas,
integrate it (even if you're getting it from an ERP vendor).
And you're going to have to teach people about these tools. It isn't
quite rocket science, making this work, but participants have told
me that it sometimes reminds them of certain painful, personal medical
At some point, we expect this market to pick up. Some of
the big vendors (like PeopleSoft) are going to put some
marketing dollars into it. The best-in-breed players
are finished staggering from the body blows, and in
some cases, have used the time to make both products
and delivery better.
B2B Analysts, Inc. has been working with companies that
have implemented best supply chain practices for many years.
We have done ground-breaking work in this area in two industries
(automotive and CPG/retail.) If you are interested in
investing in supply chain management, we may be able to help.
Our research in this area is available only to customers. If you
are interested in getting copies of the research or talking to us
about supply chain investments, please contact