Technology budgets remain tight at most enterprises – though they have loosened from recent, lean years – many plan to invest soon in supply chain management solutions, according to a new study.
The annual Software Usage Study by Logistics Management is a good barometer of not only budgets but also of organizations’ thinking on emerging technologies, and the group’s 10th annual survey found significant movement into solutions that empower business through increased visibility. Some examples:
- Forty-four percent of companies plan to purchase or upgrade warehouse management solutions in the next 12 months
- Forty-one percent plan purchase of upgrade of transportation management solutions.
- Nearly 31 percent say they’ll upgrade inventory management.
- Twenty-eight percent plan to upgrade or purchase enterprise resource planning solutions, while another 27 percent plan to acquire a supply chain planning solution.
Even In Difficult Times, Companies are Investing in Visibility
So, clearly, even as companies continue to watch their software dollars carefully, they recognize that increased transparency will bring enough ROI to offset the cost of new technology.
Dwight Klappich, research vice president at Gartner, told Logistics Management that three-quarters of respondents in the survey represent companies with less than $500 million in annual revenue. In that study group, he said, only 28 percent are using an enterprise resource planning platform.
“We found over 80 percent saying that they plan to invest, albeit cautiously, and only 20 [percent] said that they would freeze spending,” Klappich told the publication.
Expectations are High for ROI
As for that return on investment, the research indicates that companies expect to get their money back quickly. About 30 percent expect ROI from supply chain software in 6-12 months. Another forty-three percent expect it in a year to 18 months.
Klappich told the publication that respondents who expect payback to take longer than a year are probably being overly conservative.
Cost savings and efficiencies from improved visibility have been known to come sooner. In fact, ROI can come on Day 1 if that’s the day visibility helps you avert a supply chain catastrophe.
A Recent Example
Take, for example, the recent case of a large British toymaker that lost millions last year because of supply chain interruptions. The company, which sells miniature trains, sources most of its products from China and India through third-party manufacturers.
Last year, the largest of those suppliers shuttered one of its facilities and transferred work to another factory that didn’t have the right experience. The result: The toymaker did not receive 10 percent of the product it ordered. The company says it is working to diversify its sourcing. However, with the right supply chain solution, the company might have foreseen and avoided last year’s disruption.
The fact is that monumental supply chain disruptions can take many forms, from natural disasters to economic crises in far corners of the world. The latest Logistics Management study shows that most businesses recognize that and, despite tight finances, they plan to invest in ways to avoid getting caught unaware.