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.
This year's study found the business climate ripe for investment in supply chain technologies. Figure 1 shows that some users plan 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 first 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 will increase even further, at least until 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 standalone 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, performance management, and others.
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, however, 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 onpremise 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.
ReposiTrak, a global food traceability network operator, will partner with Upshop, a provider of store operations technology for food retailers, to create an end-to-end grocery traceability solution that reaches from the supply chain to the retail store, the firms said today.
The partnership creates a data connection between suppliers and the retail store. It works by integrating Salt Lake City-based ReposiTrak’s network of thousands of suppliers and their traceability shipment data with Austin, Texas-based Upshop’s network of more than 450 retailers and their retail stores.
That accomplishment is important because it will allow food sector trading partners to meet the U.S. FDA’s Food Safety Modernization Act Section 204d (FSMA 204) requirements that they must create and store complete traceability records for certain foods.
And according to ReposiTrak and Upshop, the traceability solution may also unlock potential business benefits. It could do that by creating margin and growth opportunities in stores by connecting supply chain data with store data, thus allowing users to optimize inventory, labor, and customer experience management automation.
"Traceability requires data from the supply chain and – importantly – confirmation at the retail store that the proper and accurate lot code data from each shipment has been captured when the product is received. The missing piece for us has been the supply chain data. ReposiTrak is the leader in capturing and managing supply chain data, starting at the suppliers. Together, we can deliver a single, comprehensive traceability solution," Mark Hawthorne, chief innovation and strategy officer at Upshop, said in a release.
"Once the data is flowing the benefits are compounding. Traceability data can be used to improve food safety, reduce invoice discrepancies, and identify ways to reduce waste and improve efficiencies throughout the store,” Hawthorne said.
Under FSMA 204, retailers are required by law to track Key Data Elements (KDEs) to the store-level for every shipment containing high-risk food items from the Food Traceability List (FTL). ReposiTrak and Upshop say that major industry retailers have made public commitments to traceability, announcing programs that require more traceability data for all food product on a faster timeline. The efforts of those retailers have activated the industry, motivating others to institute traceability programs now, ahead of the FDA’s enforcement deadline of January 20, 2026.
Inclusive procurement practices can fuel economic growth and create jobs worldwide through increased partnerships with small and diverse suppliers, according to a study from the Illinois firm Supplier.io.
The firm’s “2024 Supplier Diversity Economic Impact Report” found that $168 billion spent directly with those suppliers generated a total economic impact of $303 billion. That analysis can help supplier diversity managers and chief procurement officers implement programs that grow diversity spend, improve supply chain competitiveness, and increase brand value, the firm said.
The companies featured in Supplier.io’s report collectively supported more than 710,000 direct jobs and contributed $60 billion in direct wages through their investments in small and diverse suppliers. According to the analysis, those purchases created a ripple effect, supporting over 1.4 million jobs and driving $105 billion in total income when factoring in direct, indirect, and induced economic impacts.
“At Supplier.io, we believe that empowering businesses with advanced supplier intelligence not only enhances their operational resilience but also significantly mitigates risks,” Aylin Basom, CEO of Supplier.io, said in a release. “Our platform provides critical insights that drive efficiency and innovation, enabling companies to find and invest in small and diverse suppliers. This approach helps build stronger, more reliable supply chains.”
Logistics industry growth slowed in December due to a seasonal wind-down of inventory and following one of the busiest holiday shopping seasons on record, according to the latest Logistics Managers’ Index (LMI) report, released this week.
The monthly LMI was 57.3 in December, down more than a percentage point from November’s reading of 58.4. Despite the slowdown, economic activity across the industry continued to expand, as an LMI reading above 50 indicates growth and a reading below 50 indicates contraction.
The LMI researchers said the monthly conditions were largely due to seasonal drawdowns in inventory levels—and the associated costs of holding them—at the retail level. The LMI’s Inventory Levels index registered 50, falling from 56.1 in November. That reduction also affected warehousing capacity, which slowed but remained in expansion mode: The LMI’s warehousing capacity index fell 7 points to a reading of 61.6.
December’s results reflect a continued trend toward more typical industry growth patterns following recent years of volatility—and they point to a successful peak holiday season as well.
“Retailers were clearly correct in their bet to stock [up] on goods ahead of the holiday season,” the LMI researchers wrote in their monthly report. “Holiday sales from November until Christmas Eve were up 3.8% year-over-year according to Mastercard. This was largely driven by a 6.7% increase in e-commerce sales, although in-person spending was up 2.9% as well.”
And those results came during a compressed peak shopping cycle.
“The increase in spending came despite the shorter holiday season due to the late Thanksgiving,” the researchers also wrote, citing National Retail Federation (NRF) estimates that U.S. shoppers spent just short of a trillion dollars in November and December, making it the busiest holiday season of all time.
The LMI is a monthly survey of logistics managers from across the country. It tracks industry growth overall and across eight areas: inventory levels and costs; warehousing capacity, utilization, and prices; and transportation capacity, utilization, and prices. The report is released monthly by researchers from Arizona State University, Colorado State University, Rochester Institute of Technology, Rutgers University, and the University of Nevada, Reno, in conjunction with the Council of Supply Chain Management Professionals (CSCMP).
As U.S. small and medium-sized enterprises (SMEs) face an uncertain business landscape in 2025, a substantial majority (67%) expect positive growth in the new year compared to 2024, according to a survey from DHL.
However, the survey also showed that businesses could face a rocky road to reach that goal, as they navigate a complex environment of regulatory/policy shifts and global market volatility. Both those issues were cited as top challenges by 36% of respondents, followed by staffing/talent retention (11%) and digital threats and cyber attacks (2%).
Against that backdrop, SMEs said that the biggest opportunity for growth in 2025 lies in expanding into new markets (40%), followed by economic improvements (31%) and implementing new technologies (14%).
As the U.S. prepares for a broad shift in political leadership in Washington after a contentious election, the SMEs in DHL’s survey were likely split evenly on their opinion about the impact of regulatory and policy changes. A plurality of 40% were on the fence (uncertain, still evaluating), followed by 24% who believe regulatory changes could negatively impact growth, 20% who see these changes as having a positive impact, and 16% predicting no impact on growth at all.
That uncertainty also triggered a split when respondents were asked how they planned to adjust their strategy in 2025 in response to changes in the policy or regulatory landscape. The largest portion (38%) of SMEs said they remained uncertain or still evaluating, followed by 30% who will make minor adjustments, 19% will maintain their current approach, and 13% who were willing to significantly adjust their approach.
Specifically, the two sides remain at odds over provisions related to the deployment of semi-automated technologies like rail-mounted gantry cranes, according to an analysis by the Kansas-based 3PL Noatum Logistics. The ILA has strongly opposed further automation, arguing it threatens dockworker protections, while the USMX contends that automation enhances productivity and can create long-term opportunities for labor.
In fact, U.S. importers are already taking action to prevent the impact of such a strike, “pulling forward” their container shipments by rushing imports to earlier dates on the calendar, according to analysis by supply chain visibility provider Project44. That strategy can help companies to build enough safety stock to dampen the damage of events like the strike and like the steep tariffs being threatened by the incoming Trump administration.
Likewise, some ocean carriers have already instituted January surcharges in pre-emption of possible labor action, which could support inbound ocean rates if a strike occurs, according to freight market analysts with TD Cowen. In the meantime, the outcome of the new negotiations are seen with “significant uncertainty,” due to the contentious history of the discussion and to the timing of the talks that overlap with a transition between two White House regimes, analysts said.