Your Plant is Lean, But Is the Rest of Your Enterprise?
Ok, so you're a disciple of lean manufacturing, and your plant reflects that. But that's enough if the rest of your organization operates in functional silos. As it happens, lean initiatives such as standard work and quality at the source are as important to the company's engineers and accountants as they are to the assemblers in the plant. Just-in-time delivery is determined by more than a card system in the plant. Everyone in the organization has a role to play. To create lean energy around their core value streams, organizations need to embrace a cultural shift to become a lean enterprise.
Source: Industry Week, http://industryweek.com
What's the Value of Info on RFID Tags? Generally, Not Much.
Security holes in radio frequency identification tags are real, no doubt about it. But unlike internet threats that could affect every person using the Web, RFID security holes are only truly dangerous if the information stored on these tags is valuable. In most enterprise applications of RFID today--many of which are still in their early phases--that's not the case.
Nutritional product maker Schiff Nutrition launched an RFID pilot about three months ago to tag cases and palates of supplements and energy bars with basic information--what the product is, where it was manufactured, and what kind of item it is. Security has not yet factored into the project, says Rod Farrimond, manager of business analysis, because that data alone isn't valuable.
"How we're using this is almost just like the barcode, and in the same sense that people can spoof a barcode, people will figure out how to spoof RFID, but the question is why?" he says. All of the valuable information about the company's products are stored on a Web server that is password protected, Farrimond explains, so the data on the RFID tags only serves to identify the items.
Source: Mobile Tech Today, http://www.mobile-tech-today.com
Learn to Shape Demand--or Even Turn It Away
Sometimes you just have to say no. That's called demand orchestration, and it's characterized by the following: The choice to accept or decline orders based on profitability and the alignment with business strategies The use of demand-shaping levers across functions to improve value The redefinition of the customer experience to improve demand through new business platforms and innovation
Demand orchestration means minimal latency of demand in a network, with companies having visibility into the network and active demand translated into improved value. Boeing illustrates demand orchestration.
The aircraft manufacturer is slowing the orders it's taking for the 787 and other commercial airline products. Why? To prevent a repeat of the troubles it ran into a decade ago. In 1997, when demand for commercial aircraft escalated, Boeing tried to ramp up production to meet the market demand. But suppliers couldn't make parts fast enough.
The result: Waiting for parts, Boeing was forced to shut down 737 and 747 factories for a month as unfinished airplanes sat on the production floor. The cost: a $2.6bn charge against earnings over two years.
Flash forward 10 years--Boeing is again in a boom cycle after two years of record orders. But this time it is being more selective, orchestrating demand in its highly complex supplier network, with the goal being to figure out the most profitable demand response.
To do this, instead of taking orders that the supply network cannot support, it is focusing on a leaner manufacturing process that can turn out airplanes more quickly while paying attention to demand to reduce waste and latency .Since 2003, Boeing has boosted its jet output by 41 percent, delivering 398 airplanes in 2006 with projections of 520 deliveries in 2008. Capacity is sold out until 2011.
Similarly, Boeing is rethinking sales processes to maximize profitability on constrained resources. In 1997, salespeople were rewarded for increasing revenue; selling more planes was the method. Now potential sales are carefully reviewed by a sales and operations planning team to ensure the order reflects the right balance between price, customer relationship, and supply capacities.
Source: AMR Research, http://amrresearch.com
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No IT System Is an Island. You Need Good BI to Stay Afloat.
Let the politicians debate ad nauseam whether isolationism works in the global arena. The argument's been settled on the business-infrastructure front: No information system is an island, and he who depends on outdated data loses market share. Business intelligence vendors must release products that mesh with these realities if they expect to expand their empires.
And the territory is certainly there for the grabbing: A recent poll showed nearly half of the 500 IT professionals surveyed plan to increase spending on software for viewing and analyzing business information from 2006 levels).
Forrester says BI platform revenues will reach $7.3bn by 2008, and CIOs surveyed by Gartner identified BI as their No. 2 technology priority last year, up from No. 10 in 2004. Despite this, analysts have long puzzled over the relatively low penetration rate of BI tools, generally pegged at less than 20 percent of potential customers.
Why the disconnect? After all, BI suites provide the platforms from which critical data is aggregated, searched, presented and analyzed. Sure, it's a complex process. Data must be pulled from disparate sources, such as ERP, order entry and inventory management. But up-to-date information is the lifeblood of business. How can four out of five not be buying in?
The answer may be that too many BI platforms are mired in historical analysis across siloed back ends. The action is in a new, more integrated world of dynamic, real-time information that's emerging from BI vendors. These suites empower real users--not IT pros drafted into duty--and let them draw valuable data from processes, events and other sources beyond conventional data warehouses.
Source: Intelligent Enterprise, http://www.intelligententerprise.com
You're Mid-Market, and Every IT Vendor Wants to Be Your Friend
If you fit into what enterprise software vendors like to call the mid-market, every vendor on the planet is after your budget whether you've noticed or not.
While it's nice that everyone is paying attention to your needs, the variety of offerings, incentives, programs, and systems will quickly become confusing, to say the least. And it's going to be hard to sort out the offerings that make the most sense for you from the ones that make the most sense for the vendors.
Part of the problem is that very few vendors present a truly clean set of messages and products for the mid-market. It's enough to drive a customer mad. Which, in a way, is how you should feel about this frenzy. Because there is a cynical component to this mid-market froth that is all about reviving those fabulous growth rates and revenue surges that many vendors and their investors got addicted to in the run-up to saturating the global enterprise software market. With the big game all hunted out, everyone is thinking that their revenue dreams can be fulfilled by creating a volume market out of the literally millions of companies worldwide that fit into the mid-market space. And yet, maybe they have something that can benefit you.
Source: Managing Automation, http://www.managingautomation.com
Where's the Competitive Advantage if Everyone Has RFID?
New technology does not, by itself, solve any of our problems. New technology, after we climb the learning curve, does stimulate new creative thinking--probably one of the most valuable commodities any business needs and can't buy at any price. Before you dismiss RFID as just a "mandate with no ROI", or, the "next big cost with no return", ask yourself a few simple questions: Why is Wal-Mart convinced that this thing called RFID can produce dramatic cost savings? What business processes is it attempting to improve? Could my company benefit if we focused on improving the same processes--with or without RFID?
The Wal-Mart motto is "Always the lowest prices--ALWAYS!" How does it believe RFID is going to help sustain this corporate culture? Understanding the assumptions that support this initiative is far more important than finding out what the lowest price is for an RFID tag or dismissing RFID out of hand because news reports insist the technology "isn't mature yet." Of course it isn't mature yet! If RFID were mature, like barcoding, then everyone would be using it, and there would not be the potential for a competitive advantage, only the chance to maintain your current position.
Source: Manufacturing.net, http://manufacturing.net
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China: Second-Highest Investor in R& D, and Growing
Though exact numbers are not easy to pin down, the Organization for Economic Cooperation and Development (OECD) estimated last year that China in 2006 would become the world's second-highest investor in R&D after the United States.
Today's China is the center of an economic maelstrom that grows larger and more powerful (and increasingly complex) every day. R&D centers originally set up to support product localization for the Chinese market are now going full force in developing new products for the global market.
These rapid changes, which will continue to accelerate, mean that many Western companies have to rethink their global procurement operations. The announcement that IBM is moving its global procurement headquarters to Shenzhen is the most visible sign that China is becoming the global center for procurement.This is especially true for electronics, where the combination of low cost R&D capabilities, and deep multi-layer networks of electronic suppliers clustered together, has turned China into the dominant global electronics hub. IBM is not an isolated case. In the automotive industry, for example, General Motors has relocated its power-train electronics procurement offices to China. Other companies and industries will follow suit.
Source: Business Week, http://www.businessweek.com
Get This: Oxley Doesn't Like Sarbanes (The Act, That Is)
Michael Oxley has been guaranteed immortality--and perhaps a degree of infamy--since his name was affixed to the Sarbanes-Oxley Act of 2002, the most comprehensive set of corporate rule changes since the 1930s.
Earlier this year, Oxley retired from Congress after serving 25 years. However, the 63-year-old Republican from Ohio is not ready to fade from the scene. In the past month, he has picked up two new jobs: as counsel for the Cleveland-based law firm Baker Hostetler and as non-executive vice chairman of Nasdaq. The act that bears his name missed unanimous passage through Congress by a mere three votes in the House of Representatives, and initially received grudging lip service from a shaken Corporate America. But a little-noticed section, just 168 words long, soon changed the debate from whether Sarbox was essential to restoring confidence in the U.S. capital market to whether it was destroying it. Section 404, which requires companies and their auditors to examine and report on the processes behind their financial reporting, quickly became the most expensive and hated provision of the act.
Today Sarbox, and particularly Section 404, are under heavy attack, as are many of their accessory creations, most notably the Public Company Accounting Oversight Board. The President and many in Congress have said the act was poorly implemented, a criticism that deflects the blame from Congress to the Securities and Exchange Commission.
In his final months in Congress, Oxley took to the hustings to defend his creation, but he has since joined the chorus of voices who say the act, if not wrong itself, was poorly implemented.
Source: CFO, http://www.cfo.com
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Lean Isn't Just About The Factory Floor Anymore
"Previously, you needed to make a huge investment to take advantage of supply chain systems. But the technology is now readily available and it's cheap: all your trading partners need is e-mail and a spreadsheet," says Howard Joseph, sales director at Syspro ERP developer McGuffie Brunton.
Lean supply chain--taking out cost and time from all the operations that come before production and after it--needs to be today's big focus for manufacturers.
"Manufacturing has had such a tough time that most of the waste and cost has already been stripped out of factory floors," insists Joseph. "Now lean is going into these other areas--and it's getting cheaper, easier and more pervasive."
Joseph says that five years ago the spotlight was on shop floor scheduling, advanced planning and scheduling, reducing inventory and work in progress. "Now, we're talking to manufacturers about getting orders in more quickly and goods out faster by working more closely with their customers and suppliers, and getting warehousing and distribution slicker."
Source: CRM Buyer, http://crmbuyer.com
Mideast: Air Bridge to World, and Market for Airfreight in Itself
Express freight carriers have plied their trade in the Middle East long before the two Iraq wars, long before there was the infrastructure to support the business, long before Dubai was dubbed a global center of commerce. Consider DHL, which entered the Middle East market in 1976.
"We continue to regard the Middle East as one of DHL's most important markets," says David Wild, DHL commercial director for the region. "Currently, we're experiencing record growth in most markets."
That should be no surprise. The booming oil-driven economies and significant investment throughout the region, particularly in Dubai, set the foundation for continued growth of express carriers and their partners.
The region led the world by far in freight growth last year, expanding 16.1 percent over the year before, according to the International Air Transport Association.
Recent infrastructure developments make it possible for the Middle East to serve as a bridge to Africa, Asia and Europe. But the growing story is that of growing domestic, consumer-driven economies that are helping drive more express business within the region.
Source: Air Cargo World, http://aircargoworld.com So Much Information, You Don't Want to Think About It?
The numbers are barely comprehensible. The amount of digital information "created, captured, and replicated" last year was equal to 161 billion Gbytes, according to a recent IDC report, roughly equivalent to the contents of 12 stacks of books extending from the Earth to the sun. In 2010, IDC estimates, the info flow will reach 988 billion Gbytes.
OK, numbers are easy to exaggerate in the computer industry. And infoglut isn't a new problem. But the proportions today--from sources as disparate as blogs, wikis, instant messages, e-mail, spreadsheets, RFID tags, video, e-commerce transactions, help desks, supply chains--are intimidating. This year, for the first time, the amount of digital information generated will surpass the storage capacity available, IDC estimates. "When it reaches a level that it's become a palpable threat," says IDC analyst Susan Feldman, "then it's time to do something about it."
Source: Information Week, http://www.informationweek.com
In Emerging Markets, Do You Plan to Export or Produce for Local Consumption?
Where are today's emerging markets? Executives cannot ignore such places as South Africa, Brazil, Vietnam, Bangladesh and Ghana. For many reasons, these regions are becoming attractive hotspots for multinationals in a variety of industries. The one commonality among them is their infrastructure challenge--underdeveloped supply networks. However, the differences in levels of infrastructure within emerging markets gives the perception of a country within a country. Segments of emerging markets that are clustered around ports or urban centers have a reasonable level of infrastructure abilities; however, as you move away from those pockets, most of the infrastructure is not developed. This is a challenge when examining emerging markets, in that areas within the same market may have completely different profiles.
Depending on the level of existing infrastructure, companies will have a different supply strategy if their goal is to establish production capacity in an emerging market for export-oriented production versus domestic-oriented production. An export-oriented initiative will require a much larger scale of operations. Companies will likely choose a "follow-sourcing" strategy--encouraging current suppliers to establish operations in the region--because the existing market's infrastructure cannot support the initiative. The same strategy may not work for an operation aimed primarily at the domestic market. If you're producing for the domestic market, you're going to have smaller volumes and more customized products, thus a different supply strategy is called for.
Source: Inside Supply Management, http://www.ism.ws
Retail, FBI to Combat Online Theft and Others Types of Crimes
Two retail trade groups are linking hands with federal law enforcement officials to create a database designed to help fight retail crime.
The National Retail Federation (NRF), the Retail Industry Leaders Association and the FBI have introduced the Law Enforcement Retail Partnership Network (LERPnet) system, a Web-enabled database that will allow retailers and law enforcement agencies to securely share information about organized retail crime. The effort targets burglaries, robberies, counterfeiting and online auction fraud.
"Organized theft rings steal billions of dollars of merchandise every year, which victimizes retailers, endangers the safety of retail employees and raises the price of consumer goods," Joseph LaRocca, the NRF's vice president of loss prevention, said in a statement. "With this system, retailers are banding together with law enforcement to send a clear message to criminals: We will not tolerate your behavior and we will stop you."
Source: Computerworld, http://computerworld.com
The Top 25 Global 3PLs
Top logistics providers continue to grow in size and scope as current and potential customers look for partners who can do it all. Will these expanding 3PLs be able to meet their customers' far-reaching needs or are they in danger of becoming lumbering giants?
In the May issue of Global Logistics & Supply Chain Strategies magazine.
