ARC Expects 8.6 Percent Annual Growth of Supply Chain Management Market

Advisory firm says growth driven by supply chain execution segment

Dedham, MA — June 14, 2006 — Supply chain execution applications will help drive growth in the supply chain management market, according to a new ARC Advisory Group study. The firm found that the worldwide market for supply chain management is expected to grow at a compounded annual growth rate (CAGR) of 8.6 percent over the next five years. ARC added that the market was $5,507 million in 2005 and is forecasted to be over $8,304 million in 2010.

Supply chain management (SCM) applications include execution applications like warehouse and production management, which operate in near real-time, as well as planning applications that create plans to be fulfilled over longer horizons.

Whereas growth in the planning segment will be anemic, growth in the much larger execution segment will be the true market driver, according to ARC Advisory Group's new study entitled "Supply Chain Management Worldwide Outlook: Market Analysis and Forecast through 2010."

SCE Drives Growth in the SCM Market

Supply chain execution (SCE) solutions include collaborative production management, warehouse management, and transportation management. Within the SCE segment, growth is higher among the manufacturing applications than it is for logistics applications, ARC said.

"Contributing to growth is increased demand from developing regions that are constructing new plants and purchasing best-in-class solutions to achieve world-class manufacturing capabilities and have their products well accepted around the world," said Tom Fiske, Ph.D., senior analyst at ARC Advisory Group. Fiske continued: "As global competition increases, existing manufacturing facilities are under incredible pressure to improve their Return on Assets (ROA). To achieve higher levels of performance, these plants are adopting more solutions that better link manufacturing operations with business objectives, that increases their flexibility and agility, and that synchronizes their supply chain operations."

Synchronizing the Supply Chain

Efforts to synchronize the supply chain are also spurring growth, according to ARC. The role of a manufacturing plant is becoming the focal point in a supply chain network and is often the determining factor of its overall performance. While costs remain an important issue of performance in the customer-centric and demand-driven environments, other factors such as time-to-volume; determining the correct product mix; and having the flexibility, adaptability and responsiveness to exploit market opportunities are increasingly becoming important to success. ARC said supply chain synchronization depends on supply chain solutions that provide accurate real-time information from operations to enable improved decision-making at all levels of the company and for trading partners in the supply chain.

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