SCPM Set for Growth

ARC: Lack of visibility will drive market for supply chain process management solutions

Dedham, MA  June 25, 2002  The market for supply chain process management (SCPM) solutions saw strong 83 percent growth between 2000 and 2001, and the market will continue to see growth rates topping 50 percent through at least 2006, reaching just over $1.4 billion in sales, according to a new study from technology consultancy ARC Advisory Group.

In its updated study, "Supply Chain Process Management Worldwide Outlook," released this week, ARC used end-user studies to judge the potential market for SCPM solutions, which the consultancy defined as applications used to identify and proactively resolve supply chain problems in real-time.

The research, which ARC conducted in conjunction with Richmond Events, host of the Logistics & e-Supply Chain Forum, indicated that supply chain visibility is sorely lacking. Only six percent of supply chain managers surveyed thought their visibility was good across both their own enterprise (including other divisions) and for their key suppliers, implying a vast, untapped market for solutions that provide that visibility.

"The potential market is very large, almost totally unpenetrated, and the various value propositions surrounding SCPM are so compelling, that it is not entirely surprising that the market grew 83 percent year over year," ARC said in a statement.

The consultancy said the SCPM solutions market totaled $170 million in 2001 and will grow at a compound average growth rate of 53 percent through 2006, reaching $1.421 billion that year.

As defined by ARC, SCPM applications monitor the extended supply chain and provide event alerts (for example, that a shipment has not left the supplier within a preset time) and key performance indicator (KPI) alerts (for example, fulfillment throughput in distribution centers has fallen below a preset parameter) to help synchronize the supply chain. "The combination of these solutions gives supply chain managers robust, proactive visibility into the key events and trends that impact their supply chain," said Steve Banker, director of supply chain solutions at ARC and the study's author.

According to the consultancy, these applications bridge the gap between supply chain planning and supply chain execution. SCPM is composed of two types of sub-applications: supply chain event management, which is responsible for event alerts, and supply chain performance management, which aggregates event data to provide KPI alerts.