Security has been more than just a business buzzword for the last five years; threats as varied as hackers and viruses to crooked bookkeepers and bombs have driven major advancements in business processes. Supply chain management is no exception. Adrian Gonzalez, director of the logistics executive council for the ARC Advisory Group, recently published a report about "risk management" driving growth in the global trade management (GTM) solutions market.
As businesses become more involved in international trade, "the supply chain becomes more fragmented and dispersed, and the risk for terrorism, theft, smuggling, counterfeiting, and other issues also increases," explains the report. Management has been slow to realize the important role of GTM solutions as they relate to financial fitness and the overall functionality of the business, typically dismissing the market as paperwork, but Gonzalez sees this changing. He believes some of the security--and risk-management initiatives implemented since Sept. 11, 2001 have helped raise awareness of GTM's crucial relationship to the bottom line. Initiatives such as the container security initiative and the customs-trade partnership against terrorism are accountability measures that require companies to ensure greater visibility along every stage of the supply chain. Implemented essentially to reduce the risks of international trade, these initiatives up the complexity level of an already complex situation and often drive up costs.
"Start peeling back the onion and you see that measures like these are about a company getting a handle on its financial situations," says Gonzalez.
All this translates to an increased interest in supply chain management by the upper echelons and a cumulative annual growth rate of 12.8 percent for the GTM solutions market. ARC predicts the market to reach $405 million by 2010, up from $222 million in 2005. "Companies are becoming aware of the need to get a handle on end-to-end GTM processes," explains Gonzalez. "Businesses need to be aware of all the black holes in any business process." Mobility comes into play in many of these solutions in the form of how to increase visibility along the distribution lines. Because many of these security measures require better tracking of goods in transit, collecting and verifying information along the route requires employees, processes and technology that are road-ready. Although vendors in the space are approaching the problem from different angles, Gonzalez mentions SAP, JP Morgan Chase Vastera, Management Dynamic, Descartes and Trade Beam as the top vendors to watch in this space.
--Teresa von Fuchs