Changing Spending Patterns

By Jacqueline Emigh  |  Posted 2005-02-16 Print this article Print

Yet analysts stress that spending patterns can change quickly within the perpetually evolving supply chain. In the inventory management arena, analytical tools are particularly popular with retailers right now, Boyanowski told For the moment, big store chains are snapping up most of these tools. But over the next 27 to 29 months, "the smaller guys will be looking to close the gap."
Last year, however, retailers responding to the NRF/BearingPoint survey cited "cost reduction" as a big priority, as opposed to supply chain optimization.
"A year ago, [supply chain spending] was all about a problem fix," concurred the Meta Groups Killpech. "The scope was very narrow, [as in] I think Ill fix my warehouse system." IT customers in a variety of verticals had grown risk averse, largely due to the economic downturn, according to Killpech. Unsatisfactory experiences with other IT implementations, such as ERP and CRM, often added to the problem. "Customers thought they could manage risks more effectively by focusing on specific executions in warehousing or transportation, for example. And in many cases, [existing supply chain systems] had been heavily customized, or they simply werent supporting current business practices." Yet at this point, supply chain spending is less about "building a better mousetrap" than about "developing a well-run business," according to the Meta analyst. Killpech credited the Sarbanes-Oxley Act—and other regulations requiring "consistency in financials"—for some of this change. Although Killpech didnt help conduct Metas benchmark report, he consults for about 250 supply chain users a year, ranging from consumer goods companies to industrial firms that sell their products to other manufacturers. For its part, Metas benchmark study breaks out areas such as e-procurement—sometimes thought of as part of SCM—as a separate spending category. In a total of seven different industries, more than half of the companies surveyed planned to increase spending on e-procurement by 50 percent or more between 2003 and 2004. These industries included consumer products; banking; energy; federal government; metal/natural resources; retail; and telecommunications. Only a handful of other technologies—Web application development, business intelligence, and storage—got expectations of this spending level across eight or more industries. In the supply chain-related area of ERP, five verticals intended to raise spending by more than 50 percent. Specifically, they included pharmaceuticals; consumer products; federal government; retail; and telecommunications. Metas benchmark study took a look at 32 different IT areas and 24 vertical markets, all told. Check out eWEEK.coms for the latest news and analysis of enterprise supply chains.


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