Imagine if all aspects of business operations—from inventory management to customer relations to financial reporting—could function like a symphony orchestra, harmoniously coordinated under a single conductor. Enterprise Resource Planning (ERP) systems serve as this conductor, integrating various business functions into a unified platform that optimizes processes and facilitates information sharing, making them indispensable tools for modern enterprises.
However, ERP vendors have set their sights beyond traditional boundaries. Industry leaders like SAP, Oracle, Infor, and NetSuite are quietly extending their reach into Supply Chain Management (SCM), aiming to build more comprehensive enterprise ecosystems. This expansion poses new challenges for specialized SCM solutions such as Transportation Management Systems (TMS), Warehouse Management Systems (WMS), and Global Trade Management (GTM) platforms.
The Allure of "One-Stop Shopping": ERP's Supply Chain Expansion
According to Gartner's latest research, nearly 58% of enterprises have adopted or prefer to use a single primary ERP platform vendor. These organizations tend to favor SCM solutions offered by their ERP providers unless the vendor lacks relevant products or fails to meet critical business requirements. What drives this preference for one-stop procurement?
Gartner Research Vice President Dwight Klappich notes that companies evaluating transportation or warehouse technologies typically explore alternatives before committing to ERP solutions. However, he emphasizes that many enterprises already deeply embedded in ERP platforms seek to minimize additional systems. In other words, businesses aim to simplify IT architecture, reduce integration costs, and enhance operational efficiency.
Among companies with strong ERP dependencies, 65% exhibit a "strong preference" for using their platform's SCM offerings. The remaining 35% prioritize selecting best-fit SCM solutions, only considering ERP options when functionality fully meets or exceeds requirements.
Klappich identifies an "adequate enough" mentality as key to ERP vendors' SCM expansion. As ERP systems incorporate more SCM capabilities, growing numbers of enterprises adopt these solutions—even when specialized alternatives might offer superior functionality. He compares this phenomenon to car audio systems: while aftermarket options may deliver better performance, most consumers find factory-installed systems sufficient.
"The market has matured to where existing customers aren't necessarily the most sophisticated or demanding," Klappich observes. "Their needs can be met by large suite vendors without requiring additional solutions."
Specialist SCM providers face challenges overcoming this mindset. Even when clearly demonstrating advantages like superior performance or richer functionality, these benefits may not prove decisive for users. Klappich cites Oracle's solutions as an example—while excelling in transportation management, they may not lead in supply chain planning or warehousing, yet remain "adequate enough" for many clients.
New Opportunities for ERP Vendors
Robert Hood, a director at Capgemini, notes significant SCM advancements by ERP vendors in recent years. Oracle's applications continue improving, though functional gaps remain. For instance, Oracle WMS (originally LogFire's cloud WMS) has undergone nine development cycles with substantial feature additions, gradually closing the gap with leaders like Manhattan and JDA.
Hood highlights how NetSuite's discontinuation of advanced WMS support created opportunities for Oracle: "Companies deploying NetSuite had to adapt, replacing advanced WMS with Oracle's solution—generating considerable activity for their WMS product."
Cloud technology adoption further drives demand for ERP-based SCM applications. Hood notes that while major suite vendors initially approached cloud solutions cautiously, they now recognize customer preferences for cloud delivery models.
"We'll see continued cloud migration," Hood predicts. "Oracle Cloud WMS will mature functionally to compete with tier-one solutions." Regarding SAP, he observes the ERP leader now competes directly with best-of-breed providers in supply chain domains: "No one gets fired for buying SAP. Now they're actively marketing multiple SCM solutions to compete with traditional best-of-breed options."
Evolving Market Landscape
ARC Advisory Group analyst Clint Reiser identifies Oracle, SAP, and Infor as the "big three" ERP vendors making greatest SCM progress. He reports particularly active WMS sector development, with most ERP vendors investing in cloud-based WMS products for existing and new clients.
"They've truly pivoted to cloud WMS," Reiser states. Infor, for example, focuses on smaller shippers naturally inclined toward cloud rather than on-premise solutions.
Reiser notes specialist vendors adopting strategies from larger competitors. European WMS providers increasingly incorporate warehouse control (WCS) and execution systems into portfolios. Inconso's logistics suite includes WMS, TMS, yard management, and network planning—sometimes combined with SAP's Extended Warehouse Management (EWM).
"This approach—offering WCS plus SAP EWM implementations—has become common in Europe, where SAP EWM emerged as a powerful force," Reiser explains.
Value Over Features
As ERP vendors enhance SCM offerings and add capabilities, they're poised to maintain or grow supply chain software market share. "Platform sales remain strong," Reiser notes. "ERP's value proposition—integrated supply chain execution lowering total cost of ownership—resonates, though best-of-breed vendors like Manhattan also consolidate applications under unified frameworks."
Hood anticipates potential mergers and acquisitions as ERP-based SCM applications evolve: "Best-of-breed providers continue investing in capabilities, but with ERP vendors' installed bases and integrated solutions, they'll likely keep gaining market share."
Klappich concludes that specialist providers must emphasize value over features: "They'll need to demonstrate overall value propositions—whether through faster implementations, lower costs, or other guarantees—rather than just adding more functionality."