Supply Chain Digitization, eCommerce Support Europe SaaS SCM Market’s Continued Growth

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Research firm Ken Research recently released a report on the European SaaS supply chain management (SCM) market and its outlook. According to the report, the SaaS SCM market in Europe is currently experiencing steady growth. As such, forecasts show that market revenue may hit a compound annual growth rate (CAGR) of 12.5% over the next five years.

The future also looks rosy for the SaaS-based SCM software and SaaS-based hybrid SCM. Specifically, forecasts indicate a growth rate of 11% in the market revenue of SaaS-deployed supply chain management tools. Meanwhile, experts expect the revenue of hybrid-deployed SCM tools to grow at a rate of 12% over the forecast period. Most supply chain management software solutions adopted in Europe offer hybrid deployment, with these software applications taking over 60% of the market.

The report also includes country-specific details on the performance of the SaaS-based SCM market in Europe. For instance, among European countries, Germany took a 27% share of the overall SaaS-based SCM market in 2021.

Drivers of SaaS SCM Market Growth

The growth of the SaaS-based supply chain management market in Europe depends mostly on the increased adoption of SCM solutions among end-user industries. These industries include the automotive industry, inventory and warehouse management, transport management, and healthcare and life sciences. The numbers consequently show that more organizations and companies in these industries having been switching to SaaS-based SCM solutions.

SaaS solutions’ ability to integrate with advanced technologies such as the Internet of Things and artificial intelligence have a significant impact on European companies’ decision to switch from traditional on-premise software. IoT and AI offer great potential for improving the efficiency of various supply chain workflows. For instance, IOT-connected devices allow companies to accurately track goods across the supply chain. Users also get real-time alerts when these devices fail, so disruptions in the supply chain are minimized.

Meanwhile, artificial intelligence also poses significant potential for resolving supply chain inefficiencies. For instance, AI-powered tools can quickly interpret huge datasets to improve forecasting for supply and demand. As a result, this also improves inventory management and warehouse efficiency.

Other drivers of the growth of the SaaS-based SCM market in Europe include the flexibility of SaaS solutions in offering hybrid and pay-as-you-go deployment models. Such models allow companies to make the most of their investment in SCM tech.

Impact of the COVID-19 Pandemic on SCM Solutions

Like the rest of the world, the COVID-19 pandemic has driven an increased demand for ecommerce. Companies looking to improve their supply chains to keep up with rising customer demand resorted to adopting automated SaaS-based supply chain systems. This is particularly true for companies industries such as food and beverage, apparel and fashion goods, and healthcare and life sciences. In turn, this meant growth for the SaaS-based SCM market.

Despite these factors that drive the increase of the revenue of SaaS-based SCM, some barriers continue to challenge the market’s growth. These include a shortage of professionals skilled in SCM technology like SaaS SCM solutions. According to experts, many end users also have doubts about the security of data in a cloud environment. As a result, this threatens the growth of the market in Europe.

Software vendors can overcome such obstacles by ensuring the SCM tools they offer provide robust security features, such as encryption, single sign-on, and automated backups. These features can keep data secure even when it’s hosted on the cloud.