According to IDC's report China Logistics Industry IT Solution 2007-2011 Forecast and Analysis, overall IT spending in China's logistics industry is estimated at RMB1.34 billion (US$167.3 million) in 2006. IDC forecasts that by 2011, overall logistics industry IT spending will reach RMB2.53 billion (US$314.9 million), with the 2006-2011 CAGR calculated at 13.5%.
"Reducing cost and increasing capital efficiency are key drivers to IT deployments in logistics enterprises. Companies in various industries are starting to outsource their logistics operations, and they expect their logistics service providers to have the necessary IT infrastructure to help them achieve the main goals. Most of the IT systems developed in logistics enterprises are driven by such demands," says Freda Tong, Senior Analyst at IDC's China Vertical Research.
Large domestic logistics enterprises in China have achieved a fairly high level of IT adoption. They have implemented a comprehensive and uniform logistics information platform and management system, which transformed their organizational structure and business processes using technology innovation. Their information systems generally enables collaboration with upstream and downstream partners, and includes an Enterprise Resource Management (ERM)-based system for internal information integration and sharing.
China's logistics industry is currently in a state of consolidation. The strength of domestic logistics enterprises lies in their network coverage and human capital cost. While foreign logistics enterprises have a competitive advantage in corporate management, they have to rely on M&As with local partners to compete in the China market. "IDC expects that M&As by foreign logistics enterprises will increase. Leading state-owned logistics enterprises, on the other hand, will focus on operational scale and profitability and expand overseas. The small and medium sized logistics enterprises will differentiate themselves by offering customized and professional services in different industries, and expand by joining industry alliances," added Freda.
According to IDC, Warehouse Management System (WMS), Transportation Management System (TMS) and ERM are the top three IT solutions implemented in China's logistics industry in 2006. WMS and TMS are currently used by many warehousing or transportation service providers to help reduce costs by cutting down on losses and maintaining efficiency and precision in the storage, transportation and delivery of goods. As larger logistics enterprises mature, they will shift their focus to enterprise management systems, which will increase the market size of ERM software.
Enjoy curated articles directly to your inbox.