SCDigest editorial staff

The News: Supply chain execution (SCE) vendor RedPrairie announced it was acquiring MARC Global, another player in the SCE market.

The Impact: Substantial consolidation continues in the supply chain software market, especially among providers in the warehouse management systems area. Companies need to consider likely further consolidation when selecting providers, and make smart choices in evaluation and negotiation.

The Story: RedPrairie, one of the largest software providers in the SCE/WMS space, announced it was acquiring MARC Global. Both are private companies.

This is just the latest in a series of acquisitions in the supply chain software area generally and warehouse management/SCE space specifically. Recent acquisitions in this area, in which the acquiring companies have been both other software providers as well as more financially-oriented investment firms, have included:

Given the growth and maturity of the market, this consolidation isn’t surprising, says Steve Banker, an analyst at ARC Advisory Services. “There are still 70 or 80 vendors in a market that is growing not much more than the rate of inflation,” Banker told SCDigest. “The market in North America, where a number of these companies are located, is especially mature. Like companies in other mature industries, I expect the supply chain software industry will continue to consolidate, to the point where we have just a handful of suppliers in each area, and the leader has something like a 35% market share.”

SCDigest technology editor Mark Fralick said “second tier” players in terms of company size have been feeling financial pressure. “The smaller players are getting squeezed by the ERP providers on one side, and the largest SCE vendors on the other,” Fralick said. “It puts them in a tough spot, so it’s not surprising that many are selling out.” The survivors outside a few leaders will likely be much newer entrants with a totally new and fresh technology approach, he noted.

Fralick, like Banker, also expects the consolidation to continue, and says buyers must be savvy about how they purchase supply chain technology. Since almost any company is potentially an acquisition target, he said, companies should look to have the rights to the source code if a change of control occurs, and favor companies with more modern, standard technologies that would more easily enable them to support and extend the application themselves if required.

Do expect to see continued consolidation in the supply chain software and/or WMS industry? What will be the impact? Let us know your thoughts.