• Embedded Software is an Enabler of Demand-Driven Supply Chain Orchestration
• Matthew Davis | Ray Barger Jr. | Jane Barrett | William NcNeill | Christian Titze
• 2 December 2011
• The use of embedded software to create efficiency, grow revenue and increase customer satisfaction has spread across the discrete manufacturing industries. Gartner discusses the supply chain implications of this trend for manufacturers.

The proliferation of embedded firmware, software and applications in devices and equipment enhances product functionality, process flexibility and customer satisfaction, resulting in higher levels of demand-driven maturity. Designing an end-to-end value chain strategy for embedded software is typically not well-integrated across functions, nor do companies always maximize the opportunities that are possible. Gartner provides an overview of embedded software (ES) capabilities, business case considerations, organizational requirements and trends by industry.

• ES capabilities enable improvements in efficiency, flexibility, revenue growth, channel management and customer satisfaction, but an ROI business case is difficult to quantify, since many of these benefits are not easily measured.
• High-tech, industrial, automotive and healthcare industries are actively integrating ES capabilities into value networks, but they are not aligned organizationally to maximize the opportunities throughout the value cycle.
• The primary uses of ES in supply chains are postponement of software download, remote diagnostics, licensing, device monitoring and asset management.
• ES provides the opportunity to improve demand sensing by creating a real-time connection with customers through device monitoring.
• C-level executives, including the chief supply chain officer (CSCO), are weighing the benefits versus the costs of off-the-shelf technologies versus homegrown solutions. Sixty percent of companies use homegrown solutions.

• Ownership of ES decisions should expand beyond the product and engineering organizations to include cross-functional representation from demand, supply and service organizations. Collaboration across these groups is required to design and implement the physical network and go-to-market strategy before new product introduction (NPI).
• When creating the business case for ES, include the end-to-end value chain and extended customer value cycle impacts to revenue growth, cost optimization, complexity reduction, customer satisfaction and process flexibility.

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