Dedham, MAJune 18, 2002The overall market for Collaborative Production Management (CPM) software and services in discrete industries topped $425 million in 2001. This market is forecasted to grow at about 13 percent a year to just over $800 million by the end of 2006, according to a newly revised study by the ARC Advisory Group, Collaborative Production Management Systems for Discrete Manufacturing Worldwide Outlook (CPM-D).
CPM-D is a highly fragmented market with the top two suppliers having a combined market share of 30 percent, and all of the other suppliers having only a few percent each.
The CPM market is no longer dominated by independent software suppliers targeting specific industries and jostling for Best-of-Breed (BoB) recognition, according to ARC Director of Collaborative Manufacturing Research Greg Gorbach, the study's author. Some of these suppliers still exist, but they now compete with two significant camps that have joined the fray over the last couple years: Automation/Equipment suppliers, who are moving up from the plant floor, and ERP suppliers, moving down from the enterprise.
Both groups of suppliers have taken this step for two reasons: to expand their footprints in the face of soft sales and to address manufacturers' need for tighter coupling of manufacturing operations with the rest of the enterprise so they can respond to more demanding customers. In general, it has been an easier step for the Automation/Equipment companies to take because they have a much better feel for the realities of plant floor operations and the new offerings are compatible with their existing distribution channels. By contrast, large ERP suppliers have talked about plant floor solutions for some time, but the conventional wisdom has been that they don't get it' when it comes to production.
It's time to revisit the conventional wisdom. For one thing, it hasn't always been strictly true. Some suppliers, such as Lilly Software, have had an integrated ERP/shop floor solution from inception, based on a deep understanding of manufacturing needs instead of an analyst's categories. Today, several ERP suppliers offer at least limited functionality in the area of Production Management, and this is expected to continue to develop over time, as the need for enterprise-wide collaboration drives more connectivity and visibility at the shop floor.
Primary Beneficiaries Will Be Semiconductor, Aerospace, and Electronics Manufacturers Growth in this market has been modest in the base year because of economic weakness. The one bright spot, due to the makeup of the top suppliers, has been the semiconductor industry. Even though this industry slumped substantially in 2001, CPM revenues in the segment held up reasonably well. The contradiction is due in large part to new 300mm fab requirements. This bolstered the overall CPM picture and lead to modest growth for CPM in discrete manufacturing.
Going forward, the aerospace and defense segment is facing the strongest growth over the forecast period. A strong aerospace and defense industry also tends to pull-through electronics and semiconductor businesses, as well as other discrete manufacturing. This will lead to increased demand for CPM systems that provide traceability, efficiency, and connectivity.