CPM Set for Rebound

Manufacturers look to collaborative production management to improve return on assets, ARC finds

Dedham, MA  November 7, 2002  Collaborative production management (CPM) may be down, but it's not out, and it may even be set for a rebound beginning this year as competitive pressures force manufacturers to concentrate on improving their return on assets, according to a report from technology consultancy ARC Advisory Group.

CPM solutions are integrated software systems that support and manage production activities by coordinating all manufacturing data related to operations. Collaborative manufacturing represents the state-of-the-art methodology for designing and implementing a production environment.

The overall market for CPM software and services for process industries was stagnant from 2000 to 2001, although that was better than many of the other manufacturing systems markets, ARC reported. The total CPM market in 2001 reached $963 million, slightly down from $969 million in 2000.

Much of the disappointing year can be attributed to the global economic conditions that prevailed throughout 2001, according to ARC. "Historically, however, the CPM market has considerably outperformed many other automation segments by experiencing exceptional double-digit growth," said Tom Fiske, ARC senior analyst and principal author of the report "Collaborative Production Management for Process Industries Worldwide Outlook."

"With a greater focus on collaborative manufacturing, the CPM market is expected to grow significantly over the next five years," Fiske predicted. After getting off to a slow start in 2002, the CPM software and services market will gain momentum and generate revenues in excess of $1.5 billion by the end of 2006. Overall, this represents a compound annual growth rate of more than 10 percent.

Marketplace challenges from intensifying global competition are forcing process manufacturers to focus greater attention on improving their return on assets (ROA), the analyst wrote. Increasing operational performance, efficiency, agility, flexibility and customer responsiveness through the use of collaborative production systems improves ROA, generates significant cost savings and results in a considerable competitive advantage. This is leading to greater demands for sophisticated CPM systems, ARC concluded.

The consultancy said that industry consolidation continues to have a profound impact upon both suppliers and users. On the supplier side of the equation, acquisitions play an important role as they enhance their solutions' scope and gain access to new customers and markets. On the user side, consolidation provides challenges as companies must integrate or migrate different suppliers' systems. All parties must understand the supplier's market positioning, capabilities and industry orientation, ARC advised.