Competition in supply chain services market heating up: IDC

Sharpening focus and expertise in supply chain services (SCS) provision as

well as tightening alliances with vendors will be critical in winning supply

chain projects. This was highlighted by IDC in its latest report, "A

services view of the supply chain management market".

"Established services vendors have evolved in their SCS business as ERP

vendors extend into supply chain management (SCM). Now, they are beginning to

realize that they are not only competing against the very partners they allied

with, but are also facing competition from emerging/niche supply chain services

and software players," said Jasmine Soo, Senior Analyst, Solutions

Integration Research, IDC Asia-Pacific.

According to IDC, companies that succeed in winning supply chain contracts

tend to come from three camps: leading services vendors that are competent in

deploying a wide array of supply chain solutions, supply chain vendors (both

large and niche players) who are obviously competent in implementing their own

products, and niche services firms that excel in selected supply chain products.

"Going forward, we will see a greater level of movements among the three

camps. There will also be a great level of convergence among one another’s

go-to-market offerings," said Jasmine.

Although SCM did not experience the ERP boom nor the CRM rave, Asia-Pacific

continues to be an attractive region for the supply chain services market,

particularly as global companies shift their manufacturing bases to Malaysia,

China and Korea.

Indeed, IDC expects the region’s supply chain services market to grow at a

CAGR of 21 percent in the next five years, from US$1.1 billion in 2001 to

US$2,730 million by 2006. The manufacturing, healthcare and consumer packaged

goods industries will be the key sectors driving the supply chain services

business. From a services category perspective, IDC research indicates that

implementation services will continue to predominate, but operations management

services (including managed SCS) will experience the greatest growth.