Supply Chain Technology — April, 2009

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Is S&OP Still a Relevant Concept When Companies Are Focusing on Mere Survival? JDA Software Thinks So.
There has been talk recently that sales and operations planning (S&OP) software hasn't caught on with business to the degree that vendors had hoped. But JDA Software Group believes the concept still has validity. In fact, the company says, the next generation of S&OP applications can play a major role in helping retailers, distributors and manufacturers to cope with negative economic conditions.

Companies adopting S&OP today are ranging beyond its use as a tactical weapon to one that can aid in the alignment of product launches, marketing and sales programs, production plans and resource allocations, claims David Johnston, senior vice president of manufacturing and wholesale distribution with JDA. Industry leaders, he says, "understand that the optimized alignment of supply and demand can only be achieved through a formal, disciplined S&OP process that blends cross-functional collaboration, business-process integration and advanced technology into a single and comprehensive solution."

In moving away from the tactical approach, companies begin to incorporate S&OP into integrated business planning efforts. They align supply chain plans with corporate financial strategy, eliminating the corporate silos that block cross-divisional cooperation. Johnston says it's crucial to bridge gaps between the demand and supply side of operations, bringing together manufacturing, logistics, purchasing and upstream suppliers. At the same time, companies need to...
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A Challenging Economy Creates a Fertile Environment for IT and Business-Process Outsourcing
Information technology and business outsourcing are also alive and well. IBM, for one, saw a 20-percent rise in outsourcing contracts in the fourth quarter, and seems bullish on its prospects for 2009. According to the law firm of Morrison & Foerster, "the recession appears to be giving a boost to IT and business outsourcing, particularly as a means to cut core operating expenses." But businesses aren't rushing blindly into outsourcing deals. The firm's third annual review of global sourcing trends sees a heavy emphasis on cost reduction, especially with regard to current arrangements. Expect a push by buyers to do more with less. "Many companies are looking to drive further value and cost improvements on existing deals, often via renegotiation, service levels and other key terms," Morrison says, adding that the trend could make for a strong buyer's market.

Morrison does expect a slowdown in new sourcing activity by financial service firms, which up to now have been a major source of growth in that area. They, too, will be putting more pressure on the cost structure of deals. Meanwhile, the report predicts...
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New Survey Finds High-Tech Supply Chains Growing in Complexity--and Visibility Suffering
High-tech manufacturers are seeing profits dwindle as a result of increasingly complex supply chains, according to a new survey by Infosys Technologies and Microsoft Corp. KRC Research, based in Washington, D.C., polled executives from 140 companies in the U.S., Germany and Japan. Half reported greater supply chain complexity, coupled with a lack of real-time visibility. Often it took hours or longer before a disruption in the supply chain was even reported, the respondents said. "The economy may be down, but the number of products, suppliers and geographies that high-tech manufacturers have to manage has gone way up," said Tyler Bryson, general manager of U.S. manufacturing and resources with Microsoft. "This complexity has made it difficult for firms to discover disruptions and act quickly, and this is becoming an increasingly serious industry issue."

Over the past two to three years, third-parties and contract manufacturers have raised their presence in the high-tech sector, and that trend had added to supply chain complexity. During the same period, more than half of survey respondents reported increases in the number of products, stock-keeping units, suppliers, production locations, demand channels and geographies for the sale of products. And, despite the global economic slump, 40 percent said they expect their supply chains to become even more complex by 2010.

The survey's authors identify complexity as one of the culprits behind the lag time involved in reporting supply chain disruptions. Another factor is...
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Why Not Sri Lanka for Business Process Outsourcing?
Sri Lanka's budding offshore industry has inevitably been overshadowed by its larger Indian neighbor, which has been the world's leading sourcing hub for the last decade. However, the market situation is now more favorable, as vendors are increasingly looking to offer...
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Non-Asset-Based Service Providers, Cost Containment and IT

Declining international trade volumes have forced a shift in shippers' thinking, from the added value that providers can give to how they can help control costs. In such an atmosphere, customers demand that service providers invest in the information technology that will increase visibility, and improve collaboration, inventory management and transportation....
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How Much Green Does that Green Initiative Cost You?
When any for-profit organization attempts to undertake a business model that embraces social responsibility and sustainability, let's face it: There will be more than a few uphill challenges to get things off the ground. After all, a business exists to make money, and the intangibles that come from investing time, people and resources into an initiative designed to...
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Reduced IT Budgets Favor Small Projects, On-Demand Models

As the economic downturn shrinks budgets for supply chain IT investments, companies turn to smaller projects with fast implementations and on-demand delivery models.

In line with the declining economy, analysts have adjusted downward the 2009 outlook for the supply chain technology market. As recently as last November, AMR Research was predicting a 7 percent growth for this sector in the current year, but it now has reduced that expectation to a mere 2 percent.

"There are several trends driving the supply chain software market, but clearly the most prominent is that cash is king," says Greg Aimi, research director at the Boston-based firm. "Priorities will vary by company, but businesses are looking for small projects that can be quickly implemented and provide a fast return on investment."

Vendors say their market experience supports this conclusion....
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