Supply chain execution software can expect strong sales in the next several years as companies replace aging systems and respond to new priorities prompted by the recession.
While other industries struggled during the recent recession and sluggish recovery, supply chain management (SCM) software companies for the most part were able to maintain sales. As the economy revives and companies look to increase productivity, the SCM software market will be well positioned for even greater growth.
At Gartner Research, we are optimistic about sales growth in that market for the next several years because of the results of recent user studies. For the past four years, Gartner has conducted an annual survey of the wants and needs of supply chain management organizations. That study provides a picture of the current and projected business climate facing those organizations.
The 2011 study found the business climate ripe for investment in supply chain technologies. Exhibit 1 shows that some users planned to invest in upgrades and new implementations in a variety of applications.
Changing priorities
While demand continues to be strong, it is driven by different needs than those that have influenced sales in the past. In the two most recent Gartner studies, supply chain management organizations reported that they are now making more strategic decisions about what applications to invest in. In the past, they exhibited a myopic obsession with having the latest software features. Now, they are more interested in choosing applications that target their priorities while addressing the barriers to achieving those goals.
According to the survey results, the priorities for supply chain organizations have changed during the last few years, while the barriers to success have not. Improving productivity and efficiency has surpassed reducing costs as the number-one priority for respondents. Meanwhile, demand variability, complexity, and lack of visibility were again identified as the most significant barriers to achieving an organization's goals and objectives.
Why the change in priorities? When the recession hit, many SCM organizations initially used brute force to drive down costs. Now, they hope to maintain those low costs while also growing their businesses. The only way they can achieve this, however, is by improving efficiency and productivity. For this reason, companies are expressing interest in supply chain execution technologies like warehouse management systems (WMS) and transportation management systems (TMS) that target process efficiency.
Demand for wms increases
Even through the recent recession, demand for warehouse management systems remained surprisingly strong. Demand was projected to increase even further until at least the beginning of 2012.
The majority of new WMS engagements in North America and Western Europe are replacements of aging or technologically obsolete systems. Although an added cost, these replacements are needed to improve companies' overall efficiency as well as the agility and adaptability of their systems and processes. Additionally, many WMS users need to replace their old systems because the older systems' technical architecture cannot compete in today's fast-paced marketplace. Consequently, while they could add a stand-alone capability like labor management to their legacy WMS, the desire for greater agility justifies a complete overhaul.
Our clients also state that they are looking to new systems to drive additional productivity improvements. Along these lines, there is increased interest in productivity-improving capabilities like labor management, task interleaving, slotting, yard management, dock scheduling, and performance management.
This need for system replacements and enhanced productivity is driving significant WMS sales in mature markets such as North America and Europe. Emerging markets in other parts of the world will see sales increase but at a somewhat slower pace. This is largely because the lower cost of labor in those countries creates less motivation to use technology to cut costs. Additionally, the types of applications that these companies are interested in are much different than those that are currently popular in more mature markets. In emerging markets, process control and things like order and document accuracy and on-time shipment are higher priorities than productivity.
Gartner also anticipates accelerating demand worldwide for WMS delivered through a software-as-a-service (SaaS) model, in which the buyer "rents" online use of the application. We believe that demand will increase now that the core functionality of SaaS warehouse management systems is approaching parity with on-premise WMS. In addition, since enterprise resource planning (ERP) vendors now offer credible WMS, they will benefit from global market growth, particularly in warehouse environments that are not very complex or sophisticated.
Changes in TMS market
Transportation management systems will also continue to witness growth beyond 2013. Historically, the prime justification for purchasing a TMS has been cost reduction. As the freight market shifts from favoring the shipper to favoring the carrier, however, the justification for a TMS will rest on how it can help shippers to secure capacity, handle capacity constraints, collaborate with carriers, and manage rate volatility. The paradigm must evolve from simply reducing costs to managing cost volatility in an era of scarce capacity.
Changing conditions in the marketplace will also alter what features users will be looking for in a TMS. For example, costs will be harder to handle in the near future as fuel costs remain volatile, carriers raise rates, and hours-of-service rule changes increase detention penalties. These factors will put more emphasis on rating engines, performance management, more sophisticated route-planning tools, and the ability to manage complex models like rail or intermodal freight.
TMS is also one of the strongest supply chain management markets for SaaS. Demand is already robust, and it shows signs of increasing. The need to support a carrier network and the model's total cost of ownership make SaaS an attractive option, although demand for on-premise versions remains strong as well. To date, demand has been largely concentrated in North America, but we are now seeing increased interest and growth potential across the globe.
The business challenges facing supply chain organizations require innovative solutions, and that's creating a fertile environment for investment in SCM software. Accordingly, we expect the adoption of supply chain technology to accelerate over the next few years, resulting in a projected return to double-digit growth.
Editor's note: This story first appeared in the 2011 special bonus issue of CSCMP's Supply Chain Quarterly, a journal of thought leadership for the supply chain management profession and a sister publication to AGiLE Business Media's DC Velocity. Readers can obtain a subscription by joining the Council of Supply Chain Management Professionals (whose membership includes the Quarterly's subscription fee). Subscriptions are also available to non-members for $89 a year. For more information, visit www.SupplyChainQuarterly.com.
Here's our monthly roundup of some of the charitable works and donations by companies in the material handling and logistics space.
For the sixth consecutive year, dedicated contract carriage and freight management services provider Transervice Logistics Inc. collected books, CDs, DVDs, and magazines for Book Fairies, a nonprofit book donation organization in the New York Tri-State area. Transervice employees broke their own in-house record last year by donating 13 boxes of print and video assets to children in under-resourced communities on Long Island and the five boroughs of New York City.
Logistics real estate investment and development firm Dermody Properties has recognized eight community organizations in markets where it operates with its 2024 Annual Thanksgiving Capstone awards. The organizations, which included food banks and disaster relief agencies, received a combined $85,000 in awards ranging from $5,000 to $25,000.
Prime Inc. truck driver Dee Sova has donated $5,000 to Harmony House, an organization that provides shelter and support services to domestic violence survivors in Springfield, Missouri. The donation follows Sova's selection as the 2024 recipient of the Trucking Cares Foundation's John Lex Premier Achievement Award, which was accompanied by a $5,000 check to be given in her name to a charity of her choice.
Employees of dedicated contract carrier Lily Transportation donated dog food and supplies to a local animal shelter at a holiday event held at the company's Fort Worth, Texas, location. The event, which benefited City of Saginaw (Texas) Animal Services, was coordinated by "Lily Paws," a dedicated committee within Lily Transportation that focuses on improving the lives of shelter dogs nationwide.
Freight transportation conglomerate Averitt has continued its support of military service members by participating in the "10,000 for the Troops" card collection program organized by radio station New Country 96.3 KSCS in Dallas/Fort Worth. In 2024, Averitt associates collected and shipped more than 18,000 holiday cards to troops overseas. Contributions included cards from 17 different Averitt facilities, primarily in Texas, along with 4,000 cards from the company's corporate office in Cookeville, Tennessee.
Electric vehicle (EV) sales have seen slow and steady growth, as the vehicles continue to gain converts among consumers and delivery fleet operators alike. But a consistent frustration for drivers has been pulling up to a charging station only to find that the charger has been intentionally broken or disabled.
To address that threat, the EV charging solution provider ChargePoint has launched two products to combat charger vandalism.
The first is a cut-resistant charging cable that's designed to deter theft. The cable, which incorporates what the manufacturer calls "novel cut-resistant materials," is substantially more difficult for would-be vandals to cut but is still flexible enough for drivers to maneuver comfortably, the California firm said. ChargePoint intends to make its cut-resistant cables available for all of its commercial and fleet charging stations, and, starting in the middle of the year, will license the cable design to other charging station manufacturers as part of an industrywide effort to combat cable theft and vandalism.
The second product, ChargePoint Protect, is an alarm system that detects charging cable tampering in real time and literally sounds the alarm using the charger's existing speakers, screens, and lighting system. It also sends SMS or email messages to ChargePoint customers notifying them that the system's alarm has been triggered.
ChargePoint says it expects these two new solutions, when combined, will benefit charging station owners by reducing station repair costs associated with vandalism and EV drivers by ensuring they can trust charging stations to work when and where they need them.
New Jersey is home to the most congested freight bottleneck in the country for the seventh straight year, according to research from the American Transportation Research Institute (ATRI), released today.
ATRI’s annual list of the Top 100 Truck Bottlenecks aims to highlight the nation’s most congested highways and help local, state, and federal governments target funding to areas most in need of relief. The data show ways to reduce chokepoints, lower emissions, and drive economic growth, according to the researchers.
The 2025 Top Truck Bottleneck List measures the level of truck-involved congestion at more than 325 locations on the national highway system. The analysis is based on an extensive database of freight truck GPS data and uses several customized software applications and analysis methods, along with terabytes of data from trucking operations, to produce a congestion impact ranking for each location. The bottleneck locations detailed in the latest ATRI list represent the top 100 congested locations, although ATRI continuously monitors more than 325 freight-critical locations, the group said.
For the seventh straight year, the intersection of I-95 and State Route 4 near the George Washington Bridge in Fort Lee, New Jersey, is the top freight bottleneck in the country. The remaining top 10 bottlenecks include: Chicago, I-294 at I-290/I-88; Houston, I-45 at I-69/US 59; Atlanta, I-285 at I-85 (North); Nashville: I-24/I-40 at I-440 (East); Atlanta: I-75 at I-285 (North); Los Angeles, SR 60 at SR 57; Cincinnati, I-71 at I-75; Houston, I-10 at I-45; and Atlanta, I-20 at I-285 (West).
ATRI’s analysis, which utilized data from 2024, found that traffic conditions continue to deteriorate from recent years, partly due to work zones resulting from increased infrastructure investment. Average rush hour truck speeds were 34.2 miles per hour (MPH), down 3% from the previous year. Among the top 10 locations, average rush hour truck speeds were 29.7 MPH.
In addition to squandering time and money, these delays also waste fuel—with trucks burning an estimated 6.4 billion gallons of diesel fuel and producing more than 65 million metric tons of additional carbon emissions while stuck in traffic jams, according to ATRI.
On a positive note, ATRI said its analysis helps quantify the value of infrastructure investment, pointing to improvements at Chicago’s Jane Byrne Interchange as an example. Once the number one truck bottleneck in the country for three years in a row, the recently constructed interchange saw rush hour truck speeds improve by nearly 25% after construction was completed, according to the report.
“Delays inflicted on truckers by congestion are the equivalent of 436,000 drivers sitting idle for an entire year,” ATRI President and COO Rebecca Brewster said in a statement announcing the findings. “These metrics are getting worse, but the good news is that states do not need to accept the status quo. Illinois was once home to the top bottleneck in the country, but following a sustained effort to expand capacity, the Jane Byrne Interchange in Chicago no longer ranks in the top 10. This data gives policymakers a road map to reduce chokepoints, lower emissions, and drive economic growth.”
"Shrink" is the retail industry term for the loss of inventory before it can be sold, whether through theft, damage, fraud, or simple book-keeping errors. In the ongoing effort to reduce those losses, Switzerland-based retail tech company Sensormatic Solutions has expanded the scope of its Shrink Analyzer application to shine a light into previously unmonitored parts of brick-and-mortar stores where goods tend to go missing.
The newly enhanced, cloud-based application can now integrate radio-frequency identification (RFID) and electronic product code (EPC) data from overlooked parts of the building, like employee entrances, receiving doors, "buy online, pick up in store" (BOPIS) doors, or other high-risk areas selected by a store. It then integrates that data into Sensormatic's analytics engine to provide insights into when, where, and how shrink occurs to help users strengthen their loss-prevention strategies, the company says.
Those expanded capabilities allow the platform to provide enhanced "shrink insight" at locations beyond the store's main exit, Sensormatic says. For example, strategically placed RFID scanners at employee exits can reduce internal theft while providing item-level evidence for theft investigation efforts. Likewise, monitoring online-order pickup doors can help retailers both improve in-store e-commerce fulfillment accuracy and identify employee theft events, according to Sensormatic.
A few days before Christmas as I was busy preparing for the holiday, I received a text message from my bank asking if I had attempted to purchase a $244 Amtrak ticket in Orange County, California. Considering that I had the card in my possession and that I lived thousands of miles away from the attempted purchase location, I promptly replied "No." Almost immediately, a second message informed me that my card was locked and to contact my bank.
I'd like to say this was an isolated incident, but in 2024, I had to replace the same card four times. Luckily, it just took a quick trip to my local bank to replace the compromised card, but it was still an unwanted hassle.
Fraud is a never-ending issue facing not just consumers but businesses as well—no one is immune, it seems. In its latest industry report, "Occupational Fraud 2024: A Report to the Nations," the Association of Certified Fraud Examiners (ACFE) estimated that businesses lose 5% of their revenues to fraud each year. This report focused specifically on three basic types of occupational fraud: asset misappropriation, corruption, and financial misstatement. But what about other types of fraud?
The media often report on big organized theft rings stealing goods from trailers, trains, or containerships, or on bands of thieves breaking into warehouses or retail stores—but there are so many other ways in which fraudsters wreak havoc.
For instance, another area where fraud is rampant is consumer returns in the retail industry. Software company Appriss Retail, in collaboration with business management consultancy Deloitte, recently published its "2024 Consumer Returns in the Retail Industry" report. It states that "total returns for the retail industry amounted to $685 billion in merchandise in 2024." That might seem like a drop in the bucket compared to the $5 trillion in sales U.S. retailers racked up last year, but as the report's authors note in the executive summary, "the amount of fraud and abuse remains a significant issue that should be addressed. Fraudsters and abusers are often becoming adept at circumventing retailers' controls across all channels."
So what can businesses do? According to the ACFE study, internal controls (i.e., surprise audits, management reviews, hotlines or other reporting mechanisms, fraud training, and formal fraud risk assessments) are the best defense against occupational fraud.
When it comes to consumer returns fraud, Appriss Retail's report concludes that while retailers continue to adapt and refine their fraud prevention strategies, it's a delicate balancing act. The trick is for "retailers to implement solutions that have [a] minimal impact on the consumer experience," the report noted. "Brand loyalty can be fragile and competition continues to grow, so holding onto consumers is often a key to long-term success."
Then there's security and asset protection. Last October, I attended a session at the Council of Supply Chain Management Professionals' EDGE 2024 conference that focused on security and safety. In that session, Lee Ambrose, vice president of business development for Remote Security Solutions (RSS), discussed advanced strategies and technologies for violence prevention. But he also touched on asset/transit protection and specific solutions that can help companies discourage theft.
As an example, Ambrose cited his company's transit surveillance unit (TSU)—a portable monitoring device that can be installed on trailers to protect in-transit freight. According to the company's website, the TSU uses AI (artificial intelligence) detection, security cameras, and two-way communication to deter criminal activity, providing real-time detection and notification when unauthorized persons attempt to enter the trailer. It claims the device has a deterrence rate of 98%.
In the end, sometimes there is only so much a company can do to mitigate fraud/theft. But we are fortunate to have resources we can turn to if we need help. It's an uphill battle, but one that we will keep on fighting.