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Supply chain management (SCM) systems are no longer just for your daddy’s distribution firm. Both adoption and investment rates are accelerating in 2018 across multiple industries, and the SCM footprint is expanding. Even though SCM is still largely a sector-specific technology, it is growing in fields you wouldn’t necessarily correlate with supply chain management.
The percentage of IT organizations adopting SCM is up in 2018, as shown in the blue bars in Figure 3 from our full study, Supply Chain Management Adoption Trends and Customer Experience. The 35% adoption rate is an increase from the 27% in 2017, and a quite a jump from 21% in 2015. The adoption rate is only moderate compared with the other technologies in our annual Technology Trends survey, but both SCM adoption and investment have risen due to the increased capabilities of SCM offerings (and other reasons). The investment rate shows similarly strong increases, rising from 11% in 2015 to 28% this year.
“SCM is spreading beyond its bread-and-butter industries such as manufacturing, retail, and distribution,” said Tom Dunlap, director of research for Computer Economics, based in Irvine, Calif. “And even though investment rate is still what we call relatively low, we appear to be in the midst of a rapidly expanding role for SCM.”
SCM systems manage the planning, movement, and storage of materials from the earliest stages of procurement through intermediate stages of production to final distribution to the end customer. Whereas ERP systems focus primarily on the internal operations of the business, SCM looks outward to encompass the activities of suppliers, customers, and partners, as well as internally to the movement and storage of materials within the organization’s operations.
Although SCM adoption is currently implemented most widely in the manufacturing and utilities sectors, SCM is expanding to other sectors because of the use of planning software, artificial intelligence, and machine learning. One prime example is healthcare providers, which often have complex logistics requirements in their shared services organizations, where shelf-life considerations play an important part in managing and replenishing stocks of pharmaceuticals and medical supplies.
The full report quantifies the current adoption and investment trends for SCM technology, as well as the benefits driving companies to expand their implementations. We assess these trends by organization size and sector and look at the ROI and TCO experiences of organizations that have adopted SCM. We conclude with practical advice for those planning new investments in SCM.