Global Trade Management Benchmark Study; Winding back GTM
American Shipper and AMR Research have teamed up for a third year to track growth and development of global trade management. Read the executive summary in advance of a Webinar panel discussion on this topic at 2 p.m. ET, Oct. 28. This webinar is available to readers at no cost, courtesy of our sponsor Descartes Systems Group. Register now at http://www.AmericanShipper.com/GTM2009.
For three years American Shipper and AMR Research have tracked the steady increase in global trade management (GTM) adoption rates and overall interest in this technology segment.
During this time we have observed GTM mature as an important piece in the supply chain manager's tool kit beyond just traditional connectivity and compliance management functionality. In 2008 we declared that GTM had come into its own. In hindsight this was due in large part to steadily increasing global trade volumes and trade regulations.
The economic picture for 2009 is dramatically different. How will the decline in trade volumes we have seen this year impact the progress of GTM? Will GTM continue to make waves in a market frequently called the worst in generations? How have changes in the market impacted the drivers to adopting GTM technology? What are the obstacles to adoption?
In the second quarter of 2009 American Shipper and AMR Research conducted the third annual GTM benchmark study to answer these questions and more. This year's study is based on responses from 160 manufacturers, retailers, and third-party logistics providers representing all sizes and market segments. Similar to previous studies, the demographics of respondents represented in the 2009 study include:
' 48 percent manufacturing, 31 percent 3PLs, and 16 percent retail/services.
' 43 percent with $1 billion or more in annual sales, 23 percent between $1 billion and $100 million, and 34 percent less than $100 million.
' 35 percent with C-level/executive positions, 55 percent manager/director, and 10 percent other.
The results from this year's study illustrate emerging trends in spending on GTM, satisfaction levels, adoption drivers and inhibitors, supply chain risk, total landed cost (TLC) functionality, and more.
American Shipper and AMR Research will host a Webinar panel discussion on this topic at 2 p.m. ET, Oct. 28. This webinar is available to readers at no cost, courtesy of our sponsor Descartes Systems Group. Register now at www.AmericanShipper.com/GTM2009.
Software satisfaction levels dip, services rise. Surprisingly, the study shows a dip in overall satisfaction levels with GTM software in 2009. On a four-point scale (one the lowest; four the highest) 2008 respondents averaged a 2.9. whereas the 2009 average dropped to 2.69. That said, respondents remain relatively satisfied with their GTM software. Only 1 percent of respondents claim to be 'not at all satisfied.' (Figure 1).
In contrast, the average satisfaction quotient for GTM services rose from 2.49 in 2008 to 2.63 in 2009. Fifty-six percent of respondents reported they are completely or very satisfied, while only 1 percent remains unsatisfied.
GTM spending unchanged. According to AMR, spending on software across applications and segments is down measurably in 2009 as compared to 2008. GTM software, however, may be the exception to that rule. Fifty-two percent of study respondents said they will increase spending on GTM software this year and 33 percent said it will remain the same. Only 4 percent reported GTM software spending will decrease. The remaining 10 percent were uncertain. (Figure 2).
Overall, these results are comparable with those from previous GTM benchmarking initiatives. GTM remains a niche of the broader supply chain technology market, but it appears to be a favorable market for vendors looking for growth avenues as spending ' driven to a certain extent by compliance initiatives ' is not dropping off as it has in other segments.
Drivers/inhibitors to adoption. The drivers and inhibitors to adoption clearly illustrate that 3PLs and shippers (manufacturers and retailers) are of different minds when it comes to usefulness of GTM. Fifty-three percent of shippers polled said security and regulatory compliance will cause them to increase spending on GTM. Less than one-fourth of 3PLs, 22 percent, agree. Instead 44 percent of 3PLs view total landed cost capabilities as a reason to increase spending, compared to only 26 percent of shippers.
Astonishingly, 64 percent of 3PLs believe they already have the necessary systems and cite this as the largest inhibitor to increasing spending on GTM. Only 28 percent of shippers agree. On the other hand, the majority of shippers report that GTM lacks strategic importance in their organization.
Simply put, shippers will invest in GTM if they feel they have to, not because it's a strategic decision. This is reactionary behavior. On the other hand 3PLs appear to be investing in GTM more strategically, although they continue to invest in building and maintaining their own systems instead of leveraging third-party applications.
GTM as a supply chain risk manager. Respondents to this year's survey consistently agreed that GTM software and services provide a means to manage supply chain risks. Fifty-eight percent either agreed or strongly agreed, while only 4 percent disagreed to any extent.
It is important to understand that based on the demographics included in this survey 'supply chain risks' tend to be those related to the physical movement of the goods, including cost volatility, delivery timeliness, damage to goods, and non-compliance risks. These are typically considered tactical supply chain activities. In broader terms supply chain risk may apply to risks associated with contracting foreign suppliers, sourcing materials, global trade, etc. Viewed in the context of this study, GTM software and services have demonstrated their effectiveness as a tactical risk manager, but their ability to manage strategic risks remains uncertain.
Interest in TLC stalls. In previous years TLC calculations regularly appeared as a leading driver to GTM interest and spending. Moreover, its importance regularly increased from year to year.
Results from the 2009 survey showed this momentum has clearly stopped and possibly reversed direction. The number of respondents reporting that their TLC calculations are 'an activity-based estimate of all costs the product is estimated to incur from source to destination' ' widely considered the end-game for TLC initiatives ' dropped slightly while the number of respondents with 'no TLC calculation' functionality increased threefold. In addition, respondents ranked 'better control of TLC' last as a driver to increase spending.