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Gartner Reports Robust Growth in 2014 Worldwide Supply Chain Management and Procurement Software Revenues

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In conjunction with its Supply Chain Executive Conference held this week, industry analyst firm Gartner reaffirmed a rather robust year of nearly 11 percent growth for supply chain and procurement software during 2014. Gartner estimated total revenues for SCM and procurement software to be $9.9 billion last year, outpacing other software market segments. The 2014 sizing of $9.9 billion reflects a nearly $1 billion increase from the Gartner $8.9 billion number reported for 2013 performance. The current 10.8 percent growth rate compares to the 7.3 percent growth reported for 2013. The fact that the pace increased by 3.5 percentage points is by our Supply Chain Matters lens, a reflection of a stepped-up emphasis in supply chain business and procurement process support needs.

Gartner again confirmed the overall fragmentation of this market segment which has continued by this author’s perspective, for the past 15 years. The top 10 vendors currently account for 55 percent of total market share, while the remaining 57 vendors tracked by Gartner account for the remaining share of the overall market. Gartner further reports that the average growth rate for remaining 57 vendors averaged nearly 10 percent, which is again, a very healthy growth performance.

As in the past, SAP and Oracle are again reported as the overall leaders of this market segment, followed by JDA Software (current Supply Chain Matters sponsor), Manhattan Associates and Epicor rounding out the top five revenue listing. We caution our readers to not be totally enamored by the SCM and procurement revenue numbers reported by both SAP and oracle since they are often internal estimates that are generated by each of these ERP providers vying for number one bragging rights. Neither reports such breakouts in their official financial reports to the investment community.

Double digit growth for this particular software segment is not at all unusual and reflects the continued importance that industry firms place on investing in supply chain capabilities. The most recent peak was in 2011 with a 12.2 percent growth rate. In its announcement, Gartner stated that: “The SCM and procurement software market experienced solid growth through sustained application demand, as supply chain remains a key source of competitive advantage in driving business growth objectives, such as improved customer satisfaction, greater business agility and operational improvements.” That statement seems understated.

From our discussions, client interactions and travels, we believe that the overwhelming complexity that is now impacting multiple manufacturing, retail and service focused industry supply chains has prompted needs for added technology support.

Bob Ferrari

Disclosure: JDA Software is one of other sponsors of the Supply Chain Matters blog.


Supply Chain Matters Update Four- JDA Software FOCUS 2015 Conference

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Supply Chain Matters pens this commentary from JDA Software’s FOCUS 2015 conference wrapping up today in Orlando Florida. To view our prior observations and commentaries, please click on the below:

Update One

Update Two

Update Three

 

For the past ten years, in conjunction with the FOCUS customer conference, JDA’s Real Results Awards recognizes noteworthy customer demonstrations of innovation and business process excellence among six categories. The winners announced this year were:

Best Cost Savings- Edwards Lifesciences who decreased inventory by 13 percent and reduced its global expedited logistics costs by $2.8 million from 2011-2013. This customer presented its experiences during yesterday’s customer keynote sessions.

Best Partner Project- El Palacio de Heirro for its partnership with netLogistiK, a JDA alliance member to transform outdated infrastructure into a modern and robust WMS platform.

Best Collaboration- Fiat Chrysler Automobiles for improved collaboration between commercial and manufacturing teams for production planning and scheduling processes, enabling the identification of capacity issues earlier in the process, and improvements in order-to-delivery processes.

Best Result in Retail- Grupo Marti for automating its retail sports equipment replenishment processes through more accurate forecasting, factoring seasonality and sales promotional programs, while substantially improving inventory management and retail store replenishment.

Best Time to Value- Kenco for its joint efforts with JDA Consulting Services in going live with a specific 3PL customer’s JDA Warehouse Management System in just nine months, achieving full productivity within two weeks from go-live.

Best Result in Manufacturing- Tyco in its leveraged use of warehouse management applications to automate and standardize its distribution centers resulting in 36 percent reductions in warehousing costs at installed locations while dramatically improving lines shipped per hour.

Supply Chain Matters echoes our well-done and congratulations to the implementation teams representing each of these award winners. For further details regarding each of these awards, our readers can review the JDA press release related to the 2015 Real Results awards.

This year’s FOCUS indeed included a special emphasis on the needs to support Omni-channel customer fulfillment needs, especially the various aspects of JDA’s Intelligent Fulfillment and JDA’s Flowcasting applications. This year’s FOCUS included the unveiling of new capabilities to the JDA Intelligent Fulfillment and Transportation portfolios, including more granular, warehouse aware item definitions to improve load building, support for dynamic shipment splitting and prioritization, as well as other enhancements to integrated fleet and transportation management. This author had the opportunity to view sessions on each of these applications and will provide separate impressions commentaries at a later date.

Suffice to indicate that we were impressed by the depth of functionality.

We were also updated on the progress of JDA’s partnership with IBM to address the needs to process and fulfill retail industry Omni-channel orders. The partnership calls for combining the elements of JDA’s warehouse management, demand and workforce planning support capabilities with IBM’s Sterling Distributed Order Management network platform. JDA communicated to conference attendees that the initial release of this functionality will become available in June.

In our final commentary, we will summarize our overall impressions and takeaways from FOCUS 2015.

Bob Ferrari

Disclosure: JDA Software is one of other sponsors of the Supply Chain Matters© blog.


Thought Leadership Commentary Related to the U.S. West Coast Port Disruption

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There is obviously a lot of commentary coming forward regarding the recent U.S. west coast labor contract negotiations and the consequent impact to multi-industry supply chains of dysfunctional ports. Supply Chain Matters has provided its own viewpoints, but we believe it is important to share other viewpoints as well.

A thought leader that this Editor truly admires and respects in the area of logistics and transportation is Professor Yossi Sheffi, Elisha Gray II Professor of Engineering Systems and Director of the Center for Transportation and Logistics (CTL) at the Massachusetts Institute of Technology (MIT). Supply Chain Matters previously provided our review of Professor Sheffi’s latest book, Logistics Clusters.

Professor Sheffi recently posted a very timely Linked-In Pulse commentary, Lessons to Glean from the West Coast Port Dispute.

Sheffi observes how memories of the past 2002 west coast port disruption were short-lived, and apparently not carried forward by industry supply chain teams. He opines: “too many companies failed to take precautionary measures and response strategies well ahead of the stoppages. It’s not as if the disruptions were unexpected.” He further echoes that companies continue to march to Wall Street’s quarterly focused drumbeat.

Professor Sheffi further points out that relatively new shipping options will become available to U.S. companies in the coming years and that re-shoring strategies should be a further lesson in avoiding continued dependence on clogged west coast ports. He opines:

The lesson for Pacific ports is that they can either modernize or continue to fall behind and suffer the same, predictable outcome.”

Professor Sheffi argues for a longer view, namely strong investments in port modernization that will make cargo operations more efficient in the short term and could deter alternatives from developing over the long haul. He further challenges both port operators and organized labor to think in the future, rather than in the past.

The commentary is direct and insightful, and warrants reading, discussion and consideration.

Bob Ferrari


ThinFilm Electronics and Diageo- A Noteworthy and Cool Joint Prototyping of Smart Label Technology

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Today marks yet another milestone announcement concerning the development and application of next generation smart item-level labeling technology that can be applicable for either supply chain business process or product branding and marketing needs.

ThinFilm_Diageo_2

Thinfilm Electronics ASA and global alcohol beverages producer Diageo jointly announced the intent to unveil a prototype smart label that has the potential to completely change both the role of a bottle along with the consumer experience.

Supply Chain Matters readers may recall our previous commentaries related to Thinfilm’s ongoing development efforts in the next generation of smart item-level labeling.  Specifically we call reader attention to our May 2014 commentary that noted demonstration of a printed NFC-enabled smart label that demonstrated a label that combines printed electronics technology with real-time sensing and near-field communications (NFC) technology.  We were informed by Thinfilm that this new joint announcement involves a modified passive-tag application of this technology.Johnnie Walker Blue Label Smart Tag Enabled

This concept of “the connected smart bottle” will be prototyped in conjunction with Diageo’s Johnnie Walker Blue Label® brand.  The Thinfilm developed smart label will be printed with an object identifier during the bottling and labeling process. The label itself has a rather unique physical appearance that includes a narrow tail (note the photo). This tail provides the ability for the label to sense whether the individual bottle is in a sealed or opened state after the label is affixed. The breaking of the tail does not impair the label’s capability to be read or transmit information. Once encoded at the point of manufacturing, the label cannot be copied or electronically modified.

In its sealed state, the label can transmit via NFC its object identifier for supply chain physical tracking or tracing purposes. Once more, the label can provide added protection to combat counterfeiting or rouge product. When the label is triggered to an unsealed state, it provides the opportunity for the consumer to gather via individual smartphone, added information regarding the product experience.  Such information could include recommendations for further enjoyment of the product, added offers or promotions or other brand loyalty efforts.

Thus, this singular smart label opens-up the possibilities of multiple supply chain related business process and/or brand marketing loyalty use cases. Once more, the reading or sensing of the label can be accomplished with NFC enabled devices, such as smartphones or other mobile devices, which opens up further opportunities to be able to leverage such capabilities without the addition of more expensive infrastructure or proprietary networking or reading technologies as was the case with the initial phases of RFID labels.

In conjunction with joint announcement with Diageo, ThinFilm further announced the launching of its line of Open Sense ® sensor tag technology that has applicability not only within food and beverage but pharmaceutical, cosmetics, health and beauty and automotive industry areas.  As noted in the release, the interest levels and the potential use cases of such advanced smart item-level labeling technologies is rapidly increasing.

As noted in our prior Supply Chain Matters commentaries, the current evolution of smart labeling is indeed the dawning of a new era for item-level tracking, one that will harness the potential of the Internet of Things as well as the abilities to bring together the physical and digital aspects of supply chain management, and now, the added ability to enhance the brand experience.

Consider the possibilities. While some of these developments are prototype in nature they have the strong potential to be game changers in specific industry settings.

In the meantime, consumers and loyalists of Johnnie Walker Blue Label® can anticipate a really cool experience in the not too distant future.

Bob Ferrari

© 2015 The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog.  All rights reserved.


Breaking News: Tentative Agreement Reached in Labor Contract Talks Involving U.S. West Coast Ports

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To the obvious relief of many industry supply chains, an announcement that a tentative agreement has been reached among the Pacific Maritime Association and longshoremen has finally come.  The announcement came late Friday night, Pacific Time after nearly nine months of ongoing contract talks and rancor.

According to reports, dockworkers are expected to conduct normal port operations beginning this evening. This tentative agreement averts what could have been an even more disruptive scenario of a total shutdown of ports.

This five year contract agreement still needs the approval of longshoremen union members as well as individual employers.  There may also be some local port issues needing resolution.  Thus far, no details of the new contract have been disclosed including the reported final contentious issue related to the selection or elimination of certain arbitrators for work rule disputes.  According to published reports, U.S. Secretary of Labor Thomas Perez, while declining to reveal any details, indicated that employers and the union have agreed to a new arbitration system.

As Supply Chain Matters opined in yesterday’s update commentary, when contract talks were eventually resolved, it will take months before any U.S. west coast port operations return to a state of normalcy, if at all. The underlying issues of the structural impacts of unloading and loading far larger container ships, the notion of proper scheduling of now outsourced trailer carriages and the consequences of trucking lines classifying truck drivers as casual, independent contractors remain ongoing challenges to be addressed.

Gene Seroka, executive director for the Port of Los Angeles indicated to the Los Angeles Times on Friday: “more than ever, we need labor and management working together.”  Those words have special meaning for all U.S. west coast ports.

Remember this date, it will serve as the baseline indicator as to how long before U.S. west coast ports return to operational service levels meeting shipper and industry supply chain expectations.  Much work remains, not only from an operations perspective, but also from a shipping lines management planning perspective.

Bob Ferrari

 


Supply Chain Matters February 20th Update- U.S. West Coast Port Disruption

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On this Friday, February 20th, Supply Chain Matters provides another reader update and advisory on the all-important and unfortunately, all-consuming disruption occurring at U.S. West coast ports that is impacting multiple industry supply chains.

Various published reports indicate U.S. Secretary of Labor Thomas Perez has set today as a deadline for the Pacific Maritime Association and the west coast dockworkers union to end a long-running labor dispute that has clogged West Coast ports. The sides reportedly negotiated late into the Thursday night in San Francisco, but no agreement was reached.

According to a published report by the Los Angeles Times, City of Oakland Mayor Libby Schaaf, who has participated in a nightly call with Perez and mayors of other West Coast port cities, told the Associated Press that if a deal isn’t reached today, Perez plans to force the parties to Washington, D.C., next week to finish negotiations.

All reports seem to indicate that the one remaining issue of contract talks center on the union’s desire to have a unilateral say on the removal of an arbitrator called in to alleviate work disputes.  According to the LA Times, the union is focusing on one specific arbitrator who handles contract grievances at the ports in Los Angeles and Long Beach.

From our lens, most of this week’s reports indicate that the pressure for both parties to resolve this ongoing dispute has become far more intense.  We have viewed reports indicating that as of yesterday, 32 container ships were at anchor near the ports of Los Angeles and Long Beach, awaiting an available berth.  The repercussions continue to involve other West Coast ports and shipping lines with reports of on-time performance at dismal rates.

It has further become more expensive for industry supply chains to mitigate the current disruption with a new report from Drewry indicating that rates for container ships destined for U.S. East Coast ports are also skyrocketing.

The Journal of Commerce (paid subscription required) reported yesterday that even Wal-Mart is being affected, indicating that shipment delays are hurting its business and threaten its Spring and Easter holiday inventory needs.

The bitter reality for multiple industry supply chains however, remains that even if contract talks are resolved, it will take months before any U.S. west coast port operations return to a state of normalcy, if at all. As we have opined in our previous postings, the underlying issues of the structural impacts of unloading and loading far larger container ships, the notion of proper scheduling of now outsourced trailer carriages and the consequences of trucking lines classifying truck drivers as casual, independent contractors remain challenges to be addressed.

By our lens, the shipping industry is in a state of denial and blindness to customer needs for on-time reliability and effectiveness. Instead, the industry remains focused on individual interests.  That unfortunately foretells that 2015 will indeed be a year of continued turbulence for global transportation.

Bob Ferrari

© 2015, The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.


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