Supply Chain Spending Spree

Supply Chain Spending Spree

If current needs translate into purchase orders, supply chain solutions will be a hot commodity in 2008.

There's at least one market that looks like it'll be enjoying a healthy 2008: supply chain technology. Based on a recent study conducted by analyst firm AMR Research, spending on supply chain technology is expected to grow by 12% this year, split pretty evenly between those manufactures who are replacing legacy applications and those who are acquiring new technologies.

In its study of 336 executives, AMR learned that the top supply chain priority for both process and discrete manufacturers is to increase productivity and output; however, the total numbers are a bit different, with 23% of discrete vs. 16% of process. For discrete manufacturers, the No. 1 driver behind supply chain investments is the replacement of older applications due to high support costs; for process manufacturers, the main driver is filling functional gaps that were not automated or optimized.

According to AMR analysts John Fontanella and Eric Klein, three-quarters of the companies studied will be replacing or upgrading their order management systems. Two-thirds indicate that their current warehouse management systems are obsolete, while 60% say they plan to replace their transportation management systems which are no longer capable of meeting customer service demands.

"Discrete manufacturers in general and companies with more than $1 billion in revenue are more likely to increase supply chain technology spending," the analysts write, "but midmarket companies won't be far behind."

Planned Application Upgrades or Adoption for 2008 (Process vs. Discrete)

Source: AMR Research

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