SCM Software Market Growing but Security Risks May Limit Growth

by Ruth Seeley

Supply chain management (SCM) software provides the tools and techniques businesses need to reduce errors and costs while optimizing the entire supply chain. By managing the flow of products and information across the supply chain, it strengthens an organization’s supply chain operations and brings equilibrium between supply and demand by improving business processes and planning future needs using algorithms that provide consumption analysis. 

According to a report released by The Business Research Company, the supply chain management software market is expected to reach $10.57 billion by 2022.

The global SCM software market was valued at about $7.3 billion in 2018 and is expected to grow to $10.57 billion at an annual growth rate of 9.7% through 2022. SCM software can manage the complexities of the modern-day supply chain. With businesses going global and increased competition, the supply chains are getting complex. The number of suppliers, orders received/completed, variety of product offerings, information generated etc. all have increased substantially. Through the use of SCM software, the complexity can be reduced along with cost and resource savings. The need for companies to remain relevant in the market amid highly competitive conditions is a crucial driver for the growth of the SCM software market. 

Major players in the global SCM software market include SAP, Oracle, JDA Software Group, Inc., Infor Global Solutions, and Manhattan Associates.

Implementation of SCM Software by Home Depot

Home Depot, one of the biggest retailers selling home improvement and construction products and services, used to have separate logistics management departments in every single physical store to utilize replenishment and store management-related activities. This was costly as each store had to process the replenishment orders to get the required materials from the suppliers separately. After realizing that the de-centralization of its logistics management was a major issue, Home Depot decided to centralize at its corporate headquarters. With the help of technology and right SCM software solutions, Home Depot’s new centralized inventory and replenishment department’s overall performance improved the demand forecast accuracy and decreased the cost of operations for the replenishment orders.

Data and IT Security Risks May Limit SCM Software Market Growth

Supply chains are continuously evolving with data at the center of every stage in the value chain. With a huge amount of data generated, there is an enormous challenge in the form of data and IT security risks. Protecting the privacy and still sharing data across the supply chain is a major challenge which could become a roadblock for the SCM software industry. The 2014 Target breach was caused by lax security at an HVAC vendor wherein personal information of as many as 70 million people was compromised. The information stolen included customer names, credit or debit card number, the card’s expiration date and CVV number.

Data Protection and Privacy Regulations in the SCM Software Market

The General Data Protection Regulation (GDPR) 2016/679 is a regulation in EU law on data protection and privacy for all the individuals within the European Union and the European Economic Area. It also addresses the export of personal data outside the EU and EEA areas. It was implemented May 25, 2018, and replaced the Data Protection Directive. For now, protecting internal data while still sharing product and consumer information with partners across distributed supply chains is a challenge that comes up with the GDPR regulation.

Source: The Business Research Company 


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