South America Supply Chain Management Market Overview
South America supply chain management market was valued at $2.2 billion in 2017 and is forecasted to witness a CAGR of 8.6% during 2018–2023. Growing demand for professional services with focus on proper implementation of the solution, and increasing focus on inventory and purchase management are the factors driving the growth of the supply chain management market in South America. Moreover, increasing focus on cloud-based SCM, and growing need for demand planning solutions are leading to a growing market in the country.
SOUTH AMERICA SCM MARKET, BY INDUSTRY, $M (2013 - 2023)
Based on enterprise size, South America supply chain management market has been segmented into large enterprises and small and medium enterprises (SMEs). Large enterprises were higher revenue generators in 2017, which can be majorly attributed to growing need of large enterprises to manage and simplify their complex supply chains. E-commerce giants such as MercadoLibre Colombia LTDA, Amazon.com, Inc., B2W-Digital Company, Alibaba Group and Walmart Inc., are expected to provide huge opportunities for market players in the region.
However, SMEs are anticipated to provide the most lucrative growth potential in the market during the forecast period, due to the advent of more cost-effective cloud-based solutions. Increasing competition among SMEs has also led to a growing market for SCM in South America.
Based on industry, the market has been categorized into food and beverage, healthcare and lifesciences, manufacturing, retail and wholesale, transportation and logistics, and others. Of these, transportation and logistics are anticipated to register highest growth during the forecast period, due to increasing outsourcing of transportation and logistics, which has increased the competition among market players to provide the least expensive solution to the companies. Owing to this, the revenue from transportation and logistics is expected to reach $865.9 million by 2023.
On the basis of component, the supply chain management market has been segmented into software, hardware and services. Further, based on services, the SCM industry in the region has been segmented into managed and professional. Managed service category generated higher revenue in 2017 and is expected to reach over $462 million by 2023. This is attributed to increasing need for cloud SCM, the rising demand to decrease cost of these solutions, and reduce complexities in the supply chain. Brazil would account for the highest market share for managed services throughout the period.
South America Supply Chain Management Market Dynamics
Cloud-based deployment is exhibited as an emerging trend in the South America supply chain management market. On-premise deployment is costly, as it incurs several associated costs including periodical maintenance, installation, back-up, and scaling costs. In contrast, cloud-based deployment offers cost advantages to customers and requires minimum IT set-up, due to which its adoption is on the rise. Besides, companies providing cloud solutions offer pay-per-use licensing and provides flexibility to meet the needs of globally dispersed suppliers, while offering cost benefits. Also, the total cost of ownership, which includes IT infrastructure cost, implementation, and training costs is less in the case of cloud-based SCM.
Business organizations in South America are increasingly turning toward advanced IT solutions, including the cloud, to transform their processes and minimize operational costs. Additionally, cloud solution providers have also been upgrading their portfolio to provide cost-effective solutions to their customers. For instance, Oracle’s cloud-based SCM has gained traction in recent years, because it offers enhanced yard management for better shipment tracking to facilitate cost reduction.
Today’s complex supply chains require greater transparency and efficiency. The use of blockchain technology in SCM is expected to enhance transparency, improve scalability, and enable efficient tracking and recording of data. Blockchain creates a decentralized infrastructure by removing the central authority from the system, thus creating a more secure and error-free infrastructure.
The use of blockchain in SCM helps in reducing delays in delivery and remove human errors, which in turn, saves time and resources. Moreover, it reduces the possibilities of illegal and unethical practices, which are major challenges to the market growth in South America, owing to the high prevalence of corruption in the region. This has motivated many companies to set-up blockchain facilities in South America in recent years.
For instance, in February 2018, IBM announced that it would be investing $5.5 million to construct a blockchain solutions center in Brazil. Hence, the increasing use of blockchain is expected to revolutionize the industry and create ample growth opportunities for the SCM industry players in the coming years.
South America Supply Chain Management Market Competitive Landscape
The top four major players in the supply chain management market in South America include SAP SE, Oracle Corporation, JDA Software, and Infor, Inc. SAP SE held the highest market share in 2017. The company’s success is attributed to its leading digital supply chains and major tie-ups with leading companies such as Microsoft Corporation, Google LLC, and Amazon.com, Inc., to give their customers a multi-cloud solution based on SAP S/4 HANA, which offers SCM capabilities. Cloud users and licenses by SAP SE accounted for 80% of the company’s revenue, in cloud and software segment in 2017.
Additionally, Oracle Corporation was the second largest market player in 2017. The company is offering high quality solutions pertaining to cloud and on-premise solutions and is focusing on enhancing its product and service portfolio. In 2017, Oracle Corporation added eight products and 200 new features including maintenance and supply chain collaboration to its SCM Suite in the cloud segment.
Another major player in the South American market is Infor, Inc., that held third largest share in 2017. The company has 90,000 customers globally and obtained the highest revenue from licenses segment that includes cloud services and software. Infor, Inc. saw healthy growth in supply chain management market after expanding its GT Nexus’s cloud-based business platform for global companies to monitor and manage over $500 million in inventory per year. Other key contributing players in the supply chain management market in the country include Cisco Systems, Inc., Kinaxis, and TECSYS, Inc.