To satisfy customer demands, companies need their fulfillment solutions to be increasingly fast, accurate, and flexible. At the same time, globalization, deregulation and tougher customs compliance are making these objectives harder to achieve. These combined pressures will certainly bring major opportunities for software vendors.
A new report reveals that the global fulfillment software market will be worth $2.7 billion in 2005.
Datamonitor’s new report, Supply chain management 2 – Fulfillment, predicts that global investment in fulfillment software applications by enterprises and logistics service providers will grow from $1.4 billion in 2001 to $2.7 billion in 2005. The US is currently the largest market, but the Asia-Pacific and European regions will both show faster growth.
The growth is unsurprising – fulfillment solutions can ensure flexible, accurate, fast and technologically advanced delivery. They can also usefully be integrated with customer relationship management (CRM), enterprise resource planning (ERP) and inbound delivery processes. Effective fulfillment can improve competitive positioning, business opportunities, and the ability to react to changed conditions.
At the moment, customer-centric fulfillment solutions are still in their infancy for many companies, leaving the focus on back-office activities. The largest segment in 2001, worth $626 million, was warehouse management: in many regions, storage capacity has reached saturation point, hence expenditure will be directed towards advanced inventory management and collaborative forecasting technology.
However, the emphasis is set to change. Transportation management solution spending will dominate the fulfillment market in 2005, rising from $564 million in 2001 to $1.2 billion. Spending on returns management and order management will also grow, as organizations look to enhance their customer relationship capabilities.
Part of the reason for the shift is September 11, which has reinforced the necessity of providing audit trails for security reasons. Increased globalization and complex customs regulations are also going to drive investment in transportation solutions that ease the transportation, clearance and delivery of goods, while order management expenditure will increase with Internet usage.
Vendors must understand the stage of the fulfillment lifecycle that customers are in, so that they can maximize their value propositions and target areas that limit the ability to fulfill orders. Increased demand for customer-centric fulfillment solutions to support the evolution of collaborative trading networks provides vendors with a fantastic opportunity to demonstrate their integration and technological expertise.