Packaged Supply Chain Apps Seen on Rise in Automotive, Aerospace and Defense

Boston, MA — February 7, 2007 — Packaged supply chain applications are turning a corner in the automotive, aerospace and defense industries, according to a new benchmark report on 105 automotive, aerospace and defense industry companies released by technology consultancy Aberdeen Group.

According to the report, called "Globalization: The Turning Point for Packaged Supply Chain Applications," 80 percent of companies surveyed indicated dissatisfaction with their existing supply chain technology.

Nari Viswanathan, research director for supply chain at Aberdeen Group, said that part of the reason for the dissatisfaction is that the vast majority of automotive, aerospace and defense companies run major parts of their supply chain operations on custom or in-house developed technology.

"Many of these companies are now looking to their [enterprise resource planning (ERP)] vendors or other packaged software providers to help them with the technology needed to enable supply chain transformation and more flexibly adopt to changing business requirements," Viswanathan said.

Best-in-class Differentiators

Best-in-class automotive, aerospace and defense companies are much more likely than their peers to have standardized on a common supply chain platform through ERP and supply chain software, Aberdeen reported. Aberdeen defines the Best-in-class as the top 20 percent of companies with the lowest average finished goods inventory levels, lowest order to delivery lead-times and the lowest supply chain costs as a percentage of sales revenue.

Best-in-class companies were three times less likely to have manual or spreadsheet intensive supply chain processes, and two times more likely to have standardized on a common, company-wide supply chain platform, according to Aberdeen.

In addition, the consultancy reported that as supply chains become more global and dynamic, companies are looking to increase their technology capabilities. According to Aberdeen:

  • Nearly three out of 10 automotive, aerospace and defense companies are seeking to partner with their ERP vendor or best-of-breed supply chain vendor to create net new innovations for their supply chain.

  • 73 percent of companies with revenue of over $1 billion plan to spend more than $250,000 in 2007 for new supply chain technology projects.

  • Top areas of technology investment included supply chain visibility, order management, supplier collaboration and inventory management.

http://www.aberdeen.com/link/sponsor.asp?cid=3866.

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