Enterprises Seen Increasing Technology Spending to Drive Supply Chain Innovation

As globalization, customer fulfillment mandates ratchet up pressure, manufacturers eying technology investments with rapid ROI, Aberdeen finds

Boston, MA — June 4, 2007 — With increasing globalization of supply and more customer-specific fulfillment mandates, the need for supply chain technology is accelerating year over year, according to a recent report from Aberdeen Group.

In analyzing the plans of 210 enterprises in early 2007, Aberdeen found that supply chain executives are actively seeking technology areas for getting immediate return on investment, the analyst firm reports in "The Supply Chain Innovator's Technology Footprint 2007."

In fact, the researchers found that five times as many companies are planning to spend more on supply chain technology in 2007 as were planning to spend less on such technology.

In the report, Aberdeen divides companies into one of three categories based on their supply chain ambitions and how they will be investing in supply chain technology:

  • Strivers: Companies striving to reach industry average with their supply chain technology roadmap.

  • Best Practice Seekers: Companies seeking to adopt industry best practices and supporting technology.

  • Innovators: Companies looking to create brand new supply chain innovations.
Companies defined as "innovators" were one-and-a-half times more likely than all others to indicate that globalization was their top driver for supply chain improvements, Aberdeen reported.

When compared with their peers, innovators are more likely to be prioritizing pricing optimization, forecasting systems, strategic network design, preferential trade agreement optimization, master scheduling and multi-tier replenishment planning.

"The supply chain technology priorities are different for innovators as compared to all others," said Nari Viswanathan, research director of the supply chain and logistics practice for Aberdeen. "It is important for companies to be aware of the specific actions that innovating companies are taking with respect to their supply chain technology roadmap and benchmark their capabilities against the best-in-class."

Other key findings from this report included:

  • Inventory management is the top priority for companies in 2007, while in 2006 inventory management was tied with sales and operations planning (S&OP)/demand management.

  • Supply chain visibility is the number two priority for companies in 2007 (very close behind inventory management).

  • Service oriented architecture (SOA) and radio frequency identification (RFID) in warehouse are not high priorities for 2007.

  • Supply chain visibility and transportation management are the top areas of intention to adopt on-demand applications.

  • Top areas where companies are embarking on short-term ROI projects in 2007 are inventory optimization (42 percent), transportation management/fleet management (39 percent) and supply chain visibility (38 percent).
Aberdeen has made this study available free to the public for a limited time through the underwriting of Infor, Hitachi, SoloGlobe and E2Open. The report can be downloaded (registration required) at