Overview 1
Catalyst 1
Summary 1
Key Messages 2
Tough trading conditions leave retailers looking to improve efficiency in the supply chain 2
Consumerism is changing and customers now drive the retail supply chain 2
Inventory optimization improves efficiency in a pull allocation supply chain 2
Retailers cannot ignore the benefits of an IO implementation 2
Verticalization is the focus of SCM market consolidation 2
Table of Contents 3
Table of figures 4
Market Opportunity 5
Tough trading conditions leave retailers looking to the supply chain for value 5
Consumers are closing their wallets 6
Competition is escalating as consumers cut back on spending 7
Inefficient supply chains cost retailers money and tie up working capital 7
The tough environment is leading to an increase in insolvencies 7
Retailers are reacting by focusing on a customer demand-led strategy and driving efficiencies from the supply chain 8
Consumerism is changing: customers now drive the retail supply chain 8
More diverse customer base 8
Increasingly demanding customers expect cross channel integration... 8
...and will defect to a competitor if their required products are not in stock 9
Managing complexity and demand requires a better understanding of the customer 9
Visibility across the value chain is required for a single view of the customer 9
By better understanding drivers of demand, stock-outs can be minimized 9
Managing customer demand is about feeding information back up the supply chain... 10
...and relies on accurate and timely data 10
Inventory optimization technology improves efficiency in a pull allocation supply chain 11
Collaboration makes for an efficient supply chain 12
Efficient collaboration is enabled by technology 12
Inventory optimization determines the optimal level of inventory investment 13
Inventory optimization helps to reduce costs and improves customer satisfaction 13
Inventory optimization provides inventory visibility across the network 14
Inventory optimization is a fast growing SCM application within retail 14
Supply chain management is a solution suite consisting of many individual applications, including IO 14
Investment in SCM technology such as IO will be a priority for retailers in 2009/10 16
SCM market growth will be driven by supply chain analytics to 2012 16
Investment in new delivery models will overcome legacy issues 17
Legacy systems can be cumbersome to manage and integrate 17
A SOA infrastructure eases integration and helps retailers to reap the benefits in the long-term 17
SaaS is a low cost, hassle free delivery alternative 18
Customer Impact 19
The time is right for retail supply chain investment 19
Make better use of customer data to inform the demand chain 19
IO reduces OOS 19
Transportation, inventory and warehousing costs are all rising 19
Considerations for retail IO deployments 20
Return on investment is easily demonstrated 20
Investment costs are comparatively low 20
Returns are easily calculated 20
Product line-specific understanding is required to calculate the return 20
IO implementation is only cheap if a sophisticated IT infrastructure is already in place 20
Reduced retail technology budgets are a barrier to SCM investment... 20
...and budgets are expected to stretch 21
Managing business change is the biggest task 21
Case Study 1 - PC City 22
Background: 22
Preventing stock-outs during peak periods 22
Success 22
Case Study 2 - Army and Air Force Exchange Service 22
Background: 22
A full retail solution implementation 23
Success 23
Retailers cannot ignore the benefits of an IO implementation 23
Competitive Landscape 24
Verticalization is the focus of SCM market consolidation 24
SAP is the current SCM market leader 24
Recent consolidation has seen other vendors overtake SAP in terms of verticalization 25
SAP's current dominant position is under threat 26
SAP 26
Positioning 26
SAP should look to expand retail IO expertise to remain competitive in the coming years 26
Oracle 27
Positioning 27
Oracle would be wise to ensure acquisitions are consolidated fast for customer retention 27
JDA Software 27
Positioning 28
Easy integration platforms will help JDA to compete with enterprise vendors 28
Manhattan Associates 28
Positioning 28
RedPrairie 29
Positioning 29
Start-ups may struggle to win contracts 31
What does the future hold for the SCM competitive landscape? 31
Go to Market 32
Approach retailers carrying large amounts of inventory 32
Larger retailers will mainly look to enterprise vendors... 32
...or best-of-breed if no legacy replacement is required 33
SMB retailers should be targeted with a varied service offering 33
Key marketing messages should be the same, irrelevant of retailer size 33
Target the decision makers and communicate benefits to key influencers 34
CEO level management are key decision makers for technology implementations 34
CIOs and technology departments heavily influence the decision 35
The future of the IO market 35
Supply chain analytic technologies are expected to grow above trend 36
Recommendations 36
Target the right retailers first to achieve rapid market penetration 36
The marketing message should focus on the fast return 36
Going forward, the most successful vendors in retail will have the most verticalized offering 36
Manage business change 36
Appendix 37
Definitions 37
Methodology 38
Further reading 38
Ask the analyst 38
Datamonitor consulting 38
Disclaimer 38
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