Not a Chain of Fools

Supply chain services predicted to total $83 billion by 2005

Framingham, MA  Jun 19, 2001  Supply chain services are in high demand. According to IDC, the worldwide market generated $23 billion in 2000 and is on a pace that will bring it near $83 billion by 2005.

"The use of the Internet as a communication medium and the increase in business-to-business e-commerce are fueling supply chain services growth," said Ting Piper, program manager for IDC's Supply Chain and eLogistics Services research. "B2B e-commerce spurs the need for automation of supply chain processes among multiple parties and increases the need for timely supply chain implementations done by specialized providers."

According to IDC, North America and Western Europe represent the largest opportunity for supply chain services. Together, they generated 95 percent of the market's worldwide revenues in 2000. In 2005, they will still hold a commanding 88 percent share. "Because North America was the first to embrace B2B e-commerce, it's no surprise that the majority of supply chain services projects were executed there," Piper said. "Additionally, both North America and Western Europe have strong traditions of outsourcing their supply chain implementations to third- party vendors, whereas in other regions of the world, organizations rely on their own IT departments."

IDC expects other regions of the world will increasingly turn to supply chain service providers through 2005. Revenues in Asia/Pacific will increase at an impressive 53 percent compound annual growth rate (CAGR) through 2005, compared with a 29 percent CAGR for the overall market.

Industry-centric and enterprise collaborative supply chain projects will also present increasing opportunities in the near term. "Industry-centric supply chain projects are a natural extension of e-marketplace projects because they involve the redesign of relationships among multiple parties in the industry as well as the creation of open IT standards for the interoperation of the participants' systems," Piper said. "Supply chain services firms competing for these projects should develop strong industry knowledge and systems integration capabilities."

IDC's new report, Worldwide Supply Chain Services Market Forecast and Analysis" analyzes market trends, drivers and inhibitors on a worldwide and regional basis and predicts future market trends. The report forecasts revenues through 2005 by region and further segments the North American market by type of service activity and industry. The report concludes with recommendations service providers can implement to increase their share of supply chain services revenues.