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Home Industry Verticals Logistics & Transportation

Near-term critical drivers of SCM outsourcing

FutureCIO Editors by FutureCIO Editors
July 5, 2022
Photo by Tom Fisk from Pexels: https://www.pexels.com/photo/aerial-view-photography-of-container-van-lot-1427107/

Photo by Tom Fisk from Pexels: https://www.pexels.com/photo/aerial-view-photography-of-container-van-lot-1427107/

As supply chain issues hamper global economies, Everest Group predicts that the market for supply chain management (SCM) business process services (BPS) will expand at a 16-18% compound annual growth rate between 2021 and 2023, after achieving a sharp post-pandemic recovery in 2021 to reach US$2.4-2.6 billion.

Shirley Hung

“In the Everest Group 2022 Key Issues Survey, enterprises identified their top two business constraints going into 2022 as, No. 1, ‘cannot find enough talent to run the business’ and, No. 2, ‘logistics are bottlenecked,’” said Shirley Hung, partner at Everest Group.

She suggested that both of these corporate issues are contributing to rapid growth in the outsourcing market for SCM business process services.

Competitive landscape

Although the overall market for SCM BPS is expected to grow rapidly through 2023, after-sales services will grow the fastest (16-20%) as compared with other subfunctions—namely, make/manufacture (8-12%) and deliver (10-12%)—because of its direct impact on customer satisfaction, brand image, and the top-line revenue of the organisation.

After-sales services FTEs have already grown significantly (9-12% between 2019 and 2021), as buyers increased outsourcing of the management of field services, warranties, and claims. This trend is expected to continue as enterprises remain focused on improving customer experience through personalization and customised offerings.

The talent shortage will be another one of the key drivers for organisations looking to increase their SCM BPS outsourcing. According to enterprise buyers surveyed for the Everest Group 2022 Key Issues Study, 32% of buyers said they intended to move an average of 19% of their work outside of their organisation to address talent shortage issues.

Hung observed the shifts in buyers’ priorities as enterprises are more open today than ever before to outsourcing strategic, judgment-intensive supply chain processes such as supply/demand planning.

She added that enterprises are increasingly seeking third-party providers to support the adoption of digital technology solutions such as control towers and planning platforms to enable supply chain visibility and inventory planning.

“Service providers are playing a pivotal role in catering to this new demand by expanding their capabilities through in-house investments in technology and talent as well as through inorganic routes,” said Hung.

Related:  Singapore’s Temus outlines growth momentum
Tags: Everest Groupsupply chain disruptionsupply chain management
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