AMR Research expects the global market for supply chain management (SCM) software to shrink by 6% in 2009, according to Noha Tohamy, vice president of supply chain research for the Boston-based research and consulting firm. While that statistic indicates that the recession has forced companies to curtail their IT spending, it doesn't diminish the role that SCM software can play for manufacturers in today's economy.

SCM systems can help companies reduce inventory and anticipate future demand -- both of which are top of mind for many manufacturers as they try to minimize excess inventory in their supply chains while ensuring that there will be enough inventory available when the economy recovers.

While some manufacturers are making new investments in SCM systems -- particularly in demand sensing software and inventory optimization software -- many others are taking a close look at their existing investments in supply chain management systems to ensure that they're being fully utilized, according to Tohamy.

"A lot of the software typically requires an 18% or 20% annual maintenance fee, so a lot of my customers are saying, ‘OK, we paid a lot of money for the license, and we're also paying a lot of money on a yearly basis to maintain the software, so if there is a point to having it, then let's make better use of it,'" Tohamy explains.

That's no surprise to Lisa Anderson, founder and president of Claremont, Calif.-based LMA Consulting Group Inc., who asserts that she has yet to run into a company that fully utilizes its supply chain management system.

Anderson is somewhat sympathetic, as she notes that "there are so many features that you could probably continually work to fully leverage [your SCM software] and never achieve it." But she also believes that underutilizing the software starves manufacturers of valuable data that "can help them make more effective management decisions."

Lisa Anderson, founder and president, LMA Consulting Group Inc.

In her 20 years of experience as a supply chain management practitioner and consultant, Anderson has found that information technology either can "bog down" or enhance a company's efforts to manage its supply chain -- and she believes that the key to achieving the latter outcome lies in a manufacturer's ability to integrate SCM software with its people and processes.

"I've seen many examples with my clients where they think that a system alone is somehow going to save them a ton of money, and it never does -- a system alone cannot do it," says Anderson, who prior to consulting was the vice president of operations and supply chain for Attends Healthcare (formerly PaperPak), an adult incontinence and absorbent food product manufacturer. "Once you do integrate the system with the people and processes, you can achieve some amazing results."

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