Research never places 'reducing supply chain costs' lower than second place in the reasons why companies invest in supply chain technologies. But in better times, organisations have placed ?meeting customer mandates? in the top slot; reflecting a more positive ambition to improve their service, competitiveness and growth over mere cost reduction exercises. But that was then.

A recent survey revealed some very interesting findings about investment trends in the UK and European markets, with supply chain emerging a key focus area across a range of industries.

The findings show that in recent times there had been an increase in the amount invested in IT (Information Technology) - with more than half of the respondents stating this to be the case. In addition, nearly more than half of the respondents in the foreseeable future hope to further increase their IT investment.

In terms of where this investment is going, there is a strong emphasis on improving the value chain components of the supply chain ? forecasting, planning, warehouse management and transportation. As such, supplementing this is increasing visibility of the financial health of a business, through better analytics and reporting, and financial tracking and measurement.

What's more, the findings from the study illustrate some key points in the quest for improved productivity by better management of performance.

1. Overall, firms are directing much of their investment towards manufacturing activities and finance.

2. Large firms are directing IT investment towards supply chain management and demand forecasting. This is driven, at least in part, by the need to manage a more dispersed customer base.

3. The need to combine responsiveness and flexibility into the production process requires a more sophisticated approach to managing manufacturing operations. Flexible production runs and the ability to customise to individual requirements are two routes that UK manufacturers can take to defend their competitive position.

4. Three-fifths of companies are investing in IT to improve the planning and scheduling of manufacturing operations.

5. As manufacturing has become more capital intensive, decisions on optimising production operations are increasingly critical in realising returns on investment in capital equipment. Indeed, for some companies, adopting a more analytical approach to operations management can also guide decisions on where best to locate production. The survey results also revealed that companies of all sizes and in all sectors are prioritising investment in IT across these functions.

Furthermore, the survey observes that in the event of a significant change in the structure of demand, IT solutions may prove to be the most appropriate solution to forecast demand or mange supply chains. And this is particularly useful in the event of the current economic difficulties, or alternatively when a major customer moves overseas.

In terms of the forward investment outlook, it was concluded that software for new product design and development will become increasingly important. This is in addition, to providing solutions that will help ensure that there is an improvement in quality and customer service, whilst also having the ability to support the monitoring of a business and their financial performance. Furthermore, supply chain management and demand forecasting will prove to be a very likely investment for the larger companies.

In all, the report indicates that organisations are continuing to plan for forward IT investment, specifically directed toward improving their supply chain business processes and supporting technologies, as a means of lowering costs and improving their competitive position.

However, there are a couple of interesting areas that have formed very real barriers to investment and sound a note of caution to IT enterprise providers.

Firstly, it has been revealed that the lack of skills from employees is a major obstacle to the successful implementation of IT solutions. What's more, such IT solutions are being targeted across the entire business rather than one specific department. As a result, this makes the coordination and implementation of workforce training very difficult. Indeed, this is particularly true of supply chain improvement projects, which necessarily cross functional, departmental and geographical boundaries.

Secondly, it has also been revealed that there tends to be a lack of understanding involved with the potential benefits of IT investment, amongst the larger companies. This is an on-going concern. With tighter fiscal constraints in all businesses, senior executives will demand evidence that the investments they are making in IT are delivering the returns promised.

Whilst project tracking the precise improvements attributed to specific IT investments may be difficult, especially in complex business process improvement programmes. However, recent studies did reveal that there was an improvement in the rates of stocks of finished goods and raw materials, levels of wastage and on-time delivery; when a company invested in improving supply chain management, and demand forecasting.

In the economic climate expected over the next 2 years, it may well pay for organisations and enterprise vendors to focus further attention on the return on investment case for their IT investments. And when it comes to choosing a supplier of solutions, it may prove beneficial to address all of the above issues, and provide business-specific applications. Overall, it is possible to turn great software into outstanding business performance.