SAP is set to launch an update of its supply chain management suite, and according to industry analysts, SAP's strategy of providing an all-reaching approach to supply chain management is the software maker's strength.
Best-of-breed software vendors often offer richer, more feature-packed software for specific supply chain functions in specific industries, but for many SAP customers, the SAP SCM suite offers enough tools and features to fit their needs, according to Steve Banker, director of supply chain management at ARC Advisory Group.
"Many firms are ending up with the right set of applications needed," Banker said. "Many times, SAP looks superior to the breadth of what a best-of-breed can offer on a supply chain optimization level."
Meanwhile, SAP and Oracle continue to dominate the large enterprise supply chain management transaction market. Microsoft has its place among small and midsized businesses. While SAP is adding vertical functionality, Oracle is expanding its customer base in the applications market by acquiring supply chain vendors. By purchasing smaller SCM vendors, Oracle is trying to appeal to specific industries.
What is missing in many best-of-breed products? Supply chain execution pieces, Banker said. Production scheduling, transportation management and radio frequency identification technologies stand out, he said.
SAP made a splash two years ago with its Auto-ID infrastructure program, focusing on manufacturers and distributors trying to meet compliance mandates set by Wal-Mart and the federal government. The company has also worked with Coca-Cola to develop transportation management and production scheduling technologies, using its mobile infrastructure technologies.
Advanced Planning and Optimization, Inventory Collaboration Hub and Event, and Warehouse Management products are areas within the SCM suite slated to get feature updates, according to Banker.
Last year, SAP added response replenishment features to Advanced Planning and Optimization, allowing companies to view and update orders and customer requests several times a day.
This year, SAP is adding functionality around sales and operation planning, Banker said. It is also partnering with independent software vendors to provide inventory optimization, supply chain design and other specific features, he said.
"If a particular niche application doesn't seem like a $100 million market, it looks like SAP doesn't see it as worth its time," Banker said. "In many cases, SAP chooses partners to develop these niche solutions."
SAP service parts management, called Extended Warehouse Management, will be introduced, according to Banker. The new features were developed to enable companies to calculate warehouse capabilities by forecasting rather than relying on historical demand.
Demand planning is also being updated to allow companies to better forecast order volume and parts demand.