QuickREAD

— July 17, 2006

Times Have Changed: Big Used to Be Good, But Agile Is Even Better
Until the very end of the last century big meant good in the business world. B-schools taught the benefits of economies of scale. But technological advances and changing business models have diminished the importance of scale, as outsourcing, partnering, and other alliances with specialty firms (with their own economies of scale) have made it possible to convert fixed costs into variable ones. Dell, it turned out, was not an anomaly, it was just the beginning - a pioneer at all this, keeping its costs down by outsourcing disk drives, memory chips, monitors, and more, freeing itself to focus on (and clean up in) direct selling and just-in-time assembly.
Source: Money, http://money.cnn.com/

FDA Sets December Deadline to Track Drugs by RFID, But Only Costly Ones
The Food and Drug Administration will require drug manufacturers to track the distribution of high-priced drugs throughout the pharmaceutical supply chain beginning in December.
The FDA will require the use of radio frequency identification technology, but it will not mandate RFID for tracking the sale of all prescription drugs by 2007, as the FDA had planned.
The Prescription Drug Marketing Act of 1987 calls for the pharmaceutical industry to track drug shipments, but the FDA has delayed enabling regulations because of technological hurdles, congressional overseers and complaints from secondary wholesalers.
In a report released last month, the agency said it "had expected this technology to be in widespread use in the drug supply chain by 2007. ... It now appears that FDA's expectations for adoption of the technology by 2007 will not be met."
The FDA Counterfeit Drug Task Force said in a recent report to Andrew von Eschenbach, the FDA's acting commissioner, that it was time for the agency to institute regulations implementing the nearly 20-year-old legislation. Von Eschenbach approved a phased approach.
Source: E-Commerce Times, http://ecommercetimes.com/

Vendors Know CRM Often Failed in Past, But Argue That It's Effective Today
In the 1990s, many large companies bought into the customer relationship management (CRM) vision by selecting and deploying large-scale CRM systems from any number of mainstream vendors.
Implementation projects were long and arduous, budgets over-ran and many were never completed. In those halcyon days of large IT budgets and larger promises from suppliers, return on investment was more often a dream than a reality, and only about half of the systems deployed ever delivered the expected results.
The upshot is that CRM is often a dirty word in boardrooms today, even though the need for good customer relations has never been greater. Building customer loyalty means understanding customer behavior. This means analyzing data from operational systems to look for patterns in the way that people buy products or services, how they choose between suppliers, and perhaps even why they move from one supplier to another.
A main driver for change is flexibility, which is crucial to the success of any implementation, because business processes simply don't stand still. But consider your objectives carefully. Don't simply say: "I need a system that does the same as I have now, but more cheaply and with greater flexibility." Perform an in-depth review of your current CRM system and determine where it falls down.
Source: BPM Today, http://www.bpm-today.com/

A Primer from Professor Hau Lee on How Supply Chains Benefit from 'Sense and Respond'
“In the supply chain, you need to sense and know what's going on inside the company as well as what's going on outside the company, downstream and upstream, says Hau Lee, professor of operations, information and technology at Stanford University's Graduate School of Business. “You need to have much better information inside out. When you figure out what's going on, you will be able to create a plan of action and be able to execute it. The common mistakes companies make is just gathering information and having overloaded information. They try to capture signals. But when you are overwhelmed with thousands of signals, what would you do with it? You have to have a way to understand what are the reasons that caused the signals, try to create intelligence out of information. When you respond, you have to respond fast. It doesn't do you any good if you could respond, but miss the time window. The selling season is short and competitors are doing something during the same time. If you are not able to respond fast, the opportunity is gone forever. So I think you have to put intelligence in the sense and put fast action in the response part.
Source: MoreRFID, http://www.morerfid.com/

If Software Were Simpler, Business Could Be More Innovative. But It's Not Quite That Simple.
If software can be made more relevant to the ways people work and much easier to use at the same time, will businesses have a better chance to become more innovative in what they do?
An affirmative answer to this question would seem obvious, but what isn't so obvious is how to create and deploy software systems that achieve these goals. The problem is that there are inherent conflicts in these ideas that are not easy to resolve.
Source: Managing Automation, http://www.managingautomation.com/

Distributor Says It's Difficult To Demonstrate Benefits Beyond Low Price with Reverse Auctions
For those who have benefited from participating in a reverse auction—usually the customer—the determining factor has almost always been the price and nothing but the price. After-the-sale service? Value-added benefits? A personal-business relationship with a distributor? All are placed on the back burner, if they are even considered at all by the customer.
Chris Bursack, director of marketing, Industrial Supply Co., admits that he's not a big fan of the reverse auction concept for this very reason.
"I don't like them in that it's difficult to demonstrate the value we as a distributor bring to the table," he says. "It brings the process to the lowest common denominator: what price you're going to pay. And we can bring a lot of other value."
Source: Industrial Distribution, http://manufacturing.net/

Precise Price of Intellectual Theft Is Hard to Come By, But the Cost in Jobs Could Be in Hundreds of Thousands
According to the U.S. Commerce Department, intellectual property theft is estimated to top $250bn annually (equivalent to the impact of another four Katrinas), and also costs the United States approximately 750,000 jobs, while the International Chamber of Commerce puts the global fiscal loss at more than $600bn a year. But both estimates appear to be woefully underestimated; by some other estimates, there was over $251bn worth of intellectual property lost or illegal property seized in August 2005 alone.
Source: Darwin, http://www.cio.com/

Despite Security Measures, Business Computing Remains Highly Vulnerable to Attacks
InformationWeek Research's ninth annual Global Security Survey, conducted in partnership with Accenture in May and June, shows across-the-board threats to business computing environments. Fifty-seven percent of U.S. companies surveyed report being hit by viruses in the past year, 34 percent by worms, and 18 percent by denial-of-service attacks. Network attacks and ID theft were experienced by 9 percent and 8 percent, respectively. It's no wonder that 48 percent of the 2,193 security professionals and business technology managers who completed the survey say managing the complexity of security is their top challenge.
Yet when asked whether their companies are more vulnerable to malicious code attacks and security breaches than a year ago, only 11 percent of respondents at U.S. companies thought so. The vast majority, 89 percent, think their companies are no more vulnerable than before or about the same. That's an even higher level of confidence than we found in last year's survey, when 84 percent of respondents said their companies weren't at increased risk.
We thought they were overly optimistic then, and we'll repeat our warnings here: The ready-for-anything attitude prevalent among IT pros is dangerous. Despite the many defenses that have been put in place—antivirus software, firewalls, intrusion detection and prevention systems—business computing isn't invincible. Given all the data breaches and exposures we keep learning about, a degree more wariness is in order.
Source: Optimize, http://optimizemag.com/

AMR Confident That Most Mid-Sized and Large Companies in U.S. To Boost IT Spending
Companies plan to increase investments across their organization in order to expand and transform the business in the coming months, with IT spending in particular expected to increase by 19.5 percent in 2006. This is significantly higher than the prior year, which saw an average growth rate of 5.9 percent. This was the finding of AMR Research's latest Tech Trends tracking study in the manufacturing and service industries. The study of more than 200 IT and business executives from mid-sized and enterprise-sized companies within the United States shows that 76 percent plan to increase IT spending the next 12 months.
Source: AMR Research, http://amrresearch.com/

Emulating Traditional Ongoing Relationships with Suppliers, Most Small Firms Shop the Web
More than three-quarters of small businesses shop the Web for products and services, according to a recent report by New York-based JupiterResearch.
Fully 79 percent of small online firms use the Web for purchases. By comparison, 65 percent of online consumers bought products over the Web in 2005, according to the report, "Small-Business Online Shopping: Understanding Online Research and Purchase Behavior."
Supplier or brand familiarity and comparison shopping are two main factors affecting purchasing decisions, the report says.
"Traditionally, small businesses have bought from suppliers based on ongoing relationships and we have found that they are emulating this same purchasing behavior online," Sonal Gandhi, JupiterResearch analyst and lead author of the report, says in a statement. "Sixty-two percent of small business online purchases are influenced by familiarity or an existing online or off-line relationship with a supplier. Comparison shopping, however, also influences almost one-half of the online small business purchases."
Source: Computerworld, http://computerworld.com/

The 'Greening' of the Supply Chain Begins to Get Attention at Higher Levels of the Enterprise
At a time when environmental concerns loom large in popular culture, politics and business, many CIOs have yet to make being green a strategic priority. It's not that these issues aren't relevant to information technology executives; in fact, trends such as power consumption and high energy prices, as well as stricter regulations on device disposal and recycling, have real implications for both IT performance and bottom-line results. But so far, those problems have largely been left to the folks toiling further down the org chart, or in areas such as operations and compliance.
"A lot of people are living this stuff, but at lower levels," says Dave Douglas, the newly appointed vice president of "Eco Responsibility" at Santa Clara, Calif.-based Sun Microsystems Inc. Sun, like many companies that sell technology to corporations, is very focused on green issues.
Source: CIO Insight, http://www.cioinsight.com/

Should You Manage RFID Readers at Each Site or Should You Centralize Control of Multiple Sites?
Scale, or the number of locations that RFID will be installed in, has significant ramifications on network, storage and security considerations. Aberdeen finds that the leading issue that greater scale requires, whether in single of multiple sites, is finding the most cost effective way to manage, monitor and control technology and process performance.
A quarter of survey respondents say that they will continue to manage readers at the site level, but a significant minority are already planning strategies to centralize control, eliminating the expense of having skilled on-site personnel at every RFID-equipped location. This strategy assumes that the complex challenges around the physics of a large deployment can be solved as the RFID network scales up. Industry has seen this year that the trial and error method used to establish one or two points within a site is untenable when planning for 15, 50, or 500 readers that will be in close proximity. The physics issue becomes an order of magnitude within such a dense reader environment.
Source: Industry Week, http://industryweek.com/

It's No Surprise That Air Cargo Volumes Exploded at Most of China's Largest Airports
A look at cargo growth at airports around the world in 2005 shows an air freight business divided. For much of the world, last year was a relatively stagnant period for air cargo, with barely a few pallets worth of expansion at important industry hubs such as Memphis, Seoul, Los Angeles and Singapore. Some major gateways such as Tokyo Narita, Miami, New York Kennedy and London Heathrow even turned downward.
That wasn't the case in China, however.
Four of mainland China's five largest airports—Shanghai Pudong, Beijing, Guangzho and Shanghai Hong Qiao—expanded at a double-digit rate in 2005, feeding off of a manufacturing explosion in the country that is driving exports to North America and Europe and remaking air trade patterns across Asia.
The fifth of those airports, No. 37 Shenzhen, grew just under 10 percent from 2004 to 2005 as shippers and forwarders worked in the shadow of the world's busiest international cargo airport, Hong Kong.
Source: Air Cargo World, http://aircargoworld.com/

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