As manufacturing and other industrial operations in the U.S. are bolstered by low domestic energy costs and increasing labor costs in underdeveloped markets, expect to see supply chain as service revenues grow as memories of the recession are still fresh and organizations look to decrease capital expenditures, doing more with less across all processes.
“While Moody's cautions that economic recovery in some areas remains fragile, it sees a positive overall trend for corporates, with broad shifts in relative strength to industrial from consumer-based activity and to developed from emerging economies,” said the recent Moody’s Investor Services press release.
Supply chain management software revenue is expected to grow at a rate of 12.2 percent by the end of 2014 for a total of $10 billion, according a July Gartner report. This represents the strongest growth in the sector in the last three years.
"The market for supply chain technologies is buoyant," said Chad Eschinger, research vice president at Gartner. "Both supply chain execution and supply chain planning revenues are on course to grow at double-digit rates in 2014."
As U.S. manufacturers compete in mature markets, high-mix, low-volume supply chain management will require lean planning tools to help manufacturers improve lead times, reduce waste and make data-driven decisions.
The software as a service (SaaS) model seems apt to meet the lean supply chain challenge as it promises low up-front costs, less capital expense and is capable of connecting financial data, supply chain processes, machines and people in a collaborative cloud environment.
Driven by a do-more-with-less mentality, 57 percent of businesses will deploy SaaS models by 2020, according to research published at CloudTech. This is in large part attributable to the fragile state of global economic growth which continues to make it difficult for organizations to justify large capital expenditures.
“This environment will drive many organizations to adopt solutions that are deemed ‘best of breed’ and often delivered as a subscription, which provides more focused capabilities and typically enables less expensive and quicker deployments,” said Eschinger with Gartner.
