ARC Research: Software market for lean, Six Sigma to nearly double

Manufacturing News, Source : The Manufacturer US
Published : 27 Nov 2006 18:05

Earlier this month ARC Advisory Group released some compelling figures regarding IT for lean and continous improvement (CI). ARC tracked the market for CI systems, including total hardware, software and services revenues, at more than $200 million in 2005.

ARC expects that figure to nearly double by the end of 2010. Driven in large part by strong competitive pressures and successes with CI solutions, the CI market will see a strong compounded annual growth rate (CAGR) of 12.7 percent.

As ARC Research Director Ralph Rio observes, globalization is exerting extraordinary pressure on manufacturers, causing most to adopt Continuous Improvement programs. The primary CI programs are Lean Manufacturing and Six Sigma, plus both Total Quality Management (TQM) and Theory of Constraints (TOC).

But wait - aren't those all practices, versus technologies? They are, Rio told us, but the time is right for technology. "Lean really started to grow dramatically around 2002, and software applications that help out with lean are in demand, now that people are moving beyond the manual stages" of Lean, Six Sigma, etc.

"There is sometimes a rush to use the tools rather than understand the practice, and you definitely want to understand the methodology or philosophy behind the practice, then adopt the tools. "

Rio sees electronic kanban and electronic value stream mapping as two particularly high growth areas.

Rio detailed those findings as principal author of ARC’s Continuous Improvement Systems Worldwide Outlook report.

Tipping Point

The market for CI systems is diverse in terms of the quantity of suppliers and the breath of improvement methodologies that they support. ARC’s survey of manufacturers shows that 80% of them have adopted a Continuous Improvement program. Many of these manufacturers have gained the experience they need and are ready to augment their programs with CI systems. The market has recently experienced an increase in growth that ARC has forecasted to continue for at least the next five years. This is a critical time for the market suppliers as CI systems have clearly passed through the tipping point of acceptance.

Technology Enhances CI

CI programs increase business performance by involving a broad range of people, methods and technologies. Over time, a series of small improvements cumulate and compound into a huge improvement. Each program provides a focus and repeatable methodology for implementing a large number of these incremental improvements.

Many manufacturers are using technology to enhance their program’s effectiveness. Abundant, well published successes provide executives with the confidence to invest in CI systems. This study examines the market for applications that manufacturers use to bring their programs to a new level of performance. The types of applications include electronic Kanban (eKanban), Statistical Process Control (SPC), Finite Capacity Scheduling (FCS), Advanced Planning and Scheduling (APS), Overall Equipment Effectiveness (OEE), TQM, and Value Stream Mapping (VSM).

The CI systems market has a multitude of participants who range from small, start-up, best-of-breed companies to established, multi-billion dollar suppliers. ARC profiled sixty-nine suppliers in its study.

Continuous Improvement Systems Worldwide Outlook is a premium report available to both ARC subscribers and non-subscribers.

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