QuickREAD

September 27, 2006

As a Company's Customers Evolve, Today's CIO Is a Change Agent and a Solutions Person
Jeff Neville, chief information officer of Eastern Mountain Sports, the $200m Boston-based outdoor clothing and gear retailer, says the CIO is becoming more of a change agent — “a solutions person.” He notes that management led a buyout from American Retail Group in 2004. “Right now our company is going through a transition. Five years ago, IT was told stay out of the way. We weren't a strategic function at all. Now, after the buyout, we have a new CEO, a new board, and a new vision. There is recognition now that for us to succeed as a business, we need to invest strategically in IT. Meanwhile, our target customer is changing. Baby boomers had been our bread and butter for years, but now we are moving more toward the X or Y generation. Those people are obviously far more comfortable with technology, and that forces us to provide the kinds of technology they want. So we started doing simple things like RSS feeds from our web site to notify customers about sales and other events on our site. We are also doing podcasts with outdoor enthusiasts like rock climbers and kayakers. It's a way to drive traffic and get to know our target customer. We want to build a community on our site, a destination. Our future customers have an expectation of community—just look at MySpace.com.”
Source: CIO Insight, http://www.cioinsight.com/

At Weapons Manufacturer's Plant, Lean Is Going to the Dogs—and Other Kinds of Animals
An easy-to-implement lean manufacturing technique is to color code tools, fixtures and machines. Match the color of the tool or of the fixture to the color of the machine and neither should end up in the wrong place.
But what if some of your employees have trouble distinguishing between colors? Bring in the animals.
At least that's what Lockheed Martin successfully did at its Critical Machining Center at its Camden, Ark., operations. Lockheed Martin builds military missiles, rockets and launchers at the facility, and the Critical Machining Center is where tooling, fixtures and machines come together to produce complex components. There's no room for error, specifically installing the wrong tooling or fixture on a precision machine.
To meet the needs of several skilled employees whose vision made it difficult to distinguish between colors, each machining center and corresponding piece of tooling now bears a unique and large animal picture to precisely identify the specific piece of tooling that can be used on a specific machine. This animal coding system also allows for an at-a-glance check of stored tooling that is available for use.
Source: Industry Week, http://industryweek.com/

Goldman Sachs: The Philippines Runaway Success at Attracting Outsourced Business
Economists and analysts are startled by the Philippines' runaway growth in the outsourcing sector. "The pace of development of the BPO [business-process outsourcing] sector in the Philippines has been impressive," says a recent report by U.S. investment bank Goldman Sachs. "Three years ago there was a question mark whether Philippines could develop some [outsourcing] momentum. Now it's a $3bn industry."
Goldman's report also notes the outsourcing industry has begun to expand beyond the capital Manila into university towns such as Baguio, as well as Clark (the former U.S. military base), Cebu, Dumaguete and Davao. "It is clear that Philippines is now very much on the global map for outsourcing," the Goldman report says.
Source: CRM Buyer, http://crmbuyer.com/

With Symbol Purchase, Motorola Looks to Move Further Into Mobility Market
Motorola has emerged as the maker of some of the coolest mobile phones on the market. So popular are these phones that Motorola, long a distant No. 2 in global share to Nokia, has begun to close the gap on its rival. On the other hand, Symbol Technologies' gear is less slick than it is rugged. The company makes barcode scanners, such as those found in supermarkets, as well as heavy-duty handheld devices for computing. Its products use radio-frequency identification tags that store product information in tiny microchips which when scanned allow employers to track inventory.
So just what was Motorola thinking when it decided to buy Symbol for the better part of $4bn?
The gear gives Motorola the sort of product portfolio that will help it land corporate customers — from big-box retailers to airlines to hospitals. It's a great revenue opportunity in the enterprise market.
Wall Street cheered the deal as a long-term play that could help Motorola forge a whole new platform: marrying cellular network capabilities with product scanning and tracking anywhere in the world.
Source: CRM Daily, http://www.crm-daily.com/

Outdated or Inconsistent Master Data Can Result in Poor Decision Making
Mentor graphics was one of thousands of companies that, taken together, invested billions of dollars on software and implementation of enterprise resource planning systems. But like many of those companies, the manufacturer of electronic design systems couldn't always be sure that the information in its SAP order system was identical to what was contained in its Callidus sales commission system.
"If your order management system rolls up sales differently than the system that handles commission payments, you've got a problem," says Jan-Willem Beldman, team leader for analytical applications quality at the Wilsonville, Ore., company.
Such anomalies and inconsistencies of the same information contained between and among various systems—information that is generally referred to as master data—are common in corporations. While no one has tallied revenue lost due to conflicting, inaccurate or outdated information upon which business decisions are based, observers say inconsistent information is a costly spike in the ribs of corporate America.
Source: Baseline, http://www.baselinemag.com/

For U.S. Automakers, Moving to China May Be Job. 1
DaimlerChrysler hasn't committed to building the subcompact car it plans for North America in China yet. But if such a plan is announced in the next several weeks, it will likely be the first of at least a few more such arrangements, as automakers take advantage of China's low-cost manufacturing to put more small, fuel-efficient vehicles into U.S. and European garages.
The automaker's Chrysler Group has been saying for months that it's trying to find a manufacturing partner to build a small car for North America at a profit. Because of the high cost of running plants manned by the unionized United Auto Workers, combined with the low profit margins on small cars, U.S. automakers haven't been able to manufacture small cars profitably in the U.S. in decades.
And with their profitability under siege, Chrysler, Ford, and General Motors aren't keen to increase their footprint in manufacturing. Still, the companies see a need to market smaller, fuel-stingy vehicles in the U.S. as demand wanes for big SUVs and pickup trucks.
Source: Business Week, http://www.businessweek.com/

Logistics Service Providers Largely Responsible for Boost in Sales of TMS
The transportation management systems (TMS) market grew to over $989m in 2005. TMS sales to logistics service providers (LSP) grew by over 11 percent last year, significantly outpacing sales growth to manufacturers and retailers.
According to Adrian Gonzalez, director of ARC Advisory Group's Logistics Executive Council and author of the new study Transportation Management Systems Worldwide Outlook, “While you can't place too much significance on year-over-year results, the data, nonetheless, suggests that logistics service providers are finally beginning to take a strategic view of their IT requirements and infrastructure. The success of TMS in the LSP sector last year was enabled by the fact that vendors are adding LSP-specific functionality, such as freight forwarding capabilities, to their solutions.”
ARC is forecasting the market to exceed $1.3bn by 2010, representing a compounded annual growth rate of 6.9 percent.
Source: ARC Advisory Group, http://arcweb.com/

Skype Says It Will Attract Business by Making Its VoIP Telephony More Secure
Skype Ltd. is working to make its internet telephony service more enterprise-friendly and expects to introduce a beta version of its software with support for enterprise management functions within weeks.
The update will allow systems administrators to use standard Windows management tools to set how the Skype software connects to the internet, or to disable any of half a dozen functions, including file transfers, says Skype's vice president of telecommunications and Skype for business, Michael Jackson.
Use of Skype in business is widespread, according to Jackson. Of Skype's 113 million registered users, 30 percent say they use it for business, Jackson says.
The proprietary and hard-to-block connection protocols used by Skype's peer-to-peer communications system have raised concerns about security in some businesses.
Source: Computer World, http://computerworld.com/

U.S. Manufacturing's Sweet Spot: Location Near Where Innovation Occurs
Given the purportedly dire straits of the manufacturing industry in the U.S, what is one to do? Hang it up? Whine about U.S. manufacturing policy, or the lack thereof?
However, there are ways in which U.S. manufacturers can compete, thrive, and win in the global marketplace. First, U.S. manufacturers must find their sweet spot. What is the sweet spot for U.S. manufacturing? It is the location in the global manufacturing value chain where U.S. manufacturing processes are relatively close to research and development and design: upstream in the process, where innovation occurs.
Source: Managing Automation, http://www.managingautomation.com/

Integrated Cost Reduction Process Takes Broad, Fundamental Approach
Over the past decade, nearly every Fortune 500 company has embarked on a supply-chain cost-reduction program. Most savings reported come from commodity-leveraged negotiations or sourcing from low-cost countries.
The Integrated Cost Reduction process uses a broader, more fundamental approach to cost that takes into consideration such factors as engineering, supply, design, marketing, and production. Especially important to the ICR process is how it integrates the proven best-of-the-best business improvement processes: Six Sigma in quality, value analysis/value engineering in design and purchasing, Lean in production, and supply chain management and e-procurement tools in procurement, production, and logistics.
Source: Purchasing, http://www.purchasing.com/

Perhaps It's Time for the CEO to Measure His or Her Own Performance
Performance improvement is on every CEO's agenda and most reckon they have a clear idea about how best to pursue it. Details in the playbook may differ from company to company but the broad strokes are familiar to most leaders. Every now and then a CEO will reach a critical point in his or her career where he must decide whether or not to throw out the playbook and start again. But in doing so sometimes a leader must also re-examine the standard playbook in his own head—the assumptions, ideas and received truths that have filled his or her mind over many decades of experience that have served the leader well. After all, it's probably what brought him to the corner office in the first place.
Source: Chief Executive, http://chiefexecutive.net/

If RFID Isn't Quite Ready for Prime Time, What Should Companies Do About It Now?
As with every major technological upheaval, innovation is realized through an evolutionary process. Most would agree that RFID has the potential to advance and streamline the handling of data within the supply chain, a need that has sorely gone ignored. Due to the amount of training and infrastructure needed to make RFID a reality (i.e., remember how big computers used to be?), RFID is going to face longer deployment times across the industry than what proponents initially believed. Until customers and suppliers revamp their business model so that it fits comfortably with a RFID infrastructure, companies will have to remain in a holding pattern yet still prepare themselves for the next step in the RFID evolution. So the question is, what should companies do now?
Source: Line 56, http://www.line56.com/

It's Not Wise to Separate Financial and Operational Planning and Analysis
The line between financial and operational planning and analysis has blurred. When you analyze a profitability shortfall, the root causes may lie anywhere from macro-economic market conditions to competitive actions to problems with a compensation plan, vendor pricing, or production delays. The boundary isn't drawn around the analysis of the numbers on a P&L statement.
As the quality of available tools increases and end users grow more sophisticated, users are increasingly demanding the removal of the barrier separating financial planning and analysis from operational planning and analysis. For example, if a business unit's profitability dips below a targeted level, managers within that business unit want to know the cause immediately — regardless of whether the source of the problem is internal (poor alignment between financial objectives and the sales team's compensation plan, for example) or external (a new overseas competitor has entered the market). The sooner managers gain that knowledge, the sooner they can identify solutions to the problem.
Source: CIO Today, http://www.cio-today.com/

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