Business Strategy Alignment — February, 2009

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Manufacturing in 2020: New Study Reveals Future Vision of the Global Manufacturing Industry
Capgemini recently launched "Manufacturing in 2020", an in-depth study into how manufacturers expect to do business in 2020 compared to today. Based on responses from over 150 manufacturing companies in eight countries, the study identifies a number of key findings about possible changes in the coming years:

1. Manufacturing will become increasingly global by 2020, with around 80 % of manufacturers expected to have multi-country operations, compared with just over half today.
2. Supply chains will also increase in complexity and consolidate. Half the companies surveyed said they will be using fewer suppliers by 2020, but 40 % said they will be using more distributors as increased competition drives them to reach new markets.
3. Manufacturers appear uncertain what actions to take about green issues, but as political and social pressure increases around emissions reduction, urgent action will be required to reach 2020 targets.
4. Differences between the manufacturing industries in developed and emerging markets will also continue to evolve.

Globalization: Accelerated competition at home and the growing sophistication of developing markets will have driven manufacturers to increasingly source, manufacture and sell internationally by 2020. There will also be a significant shift from...
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The Riddle of Supply Chain Cost Reduction: Here's a Hint--Cut, Cut, Cut is Not a Strategy
Unless you are a hermit who has been stranded on a deserted island for the past 12 months, you get it. The global economy is in a recession. The credit markets are a disaster. The real estate mess is unprecedented. The automotive industry is on the ropes. The retail industry is in upheaval. Unemployment is a major problem. You get it. Yes, you really get it!

If you are like me, you have read countless articles on the deepening economic crisis and the reality that it will get worse before it gets better. But, at the same time, if you are like me, you only read about 10% of most articles because they are all the same: They tell us about the mess, but not what to do about it. So, instead of reading more and more about the problem, what do you do?

Well, let's see what all the "smart" companies are doing. Many are cutting payroll, cutting advertising, cutting consulting, cutting strategic initiatives--cutting, cutting, cutting.

But what should you do? Follow along and also cut, cut, cut? No, in fact, you should not, because this is not a strategy that leads to success. Across the board cuts, without understanding where your company's real profitability lies, results in...
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Rolling Forecasts May Be in Your Future if Your BPM System Can Handle It
"Not to beat about the bush, but the budgeting process at most companies has to be the most ineffective practice in management. It sucks the energy, time, fun and big dreams out of an organization. In fact, when companies win, in most cases it is despite their budgets, not because of them."
These are the words of Jack Welch, the former General Electric chairman, in his best-selling book, Winning. He is not alone. More and more CFOs at American companies are reaching the same conclusion.
As a result, they are...
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An Untapped Tool for Demand-Driven Supply Chains
Most companies have yet to derive the full potential from sales and operations planning (S&OP) efforts. Hussain Mooraj, research director with AMR Research, offers tips on how S&OP can be applied across the organization to achieve demand-driven supply chains. The benefits are many: better profitability, harmonized business processes, greater operating efficiency, improved customer service. First, however, companies must unite their various internal functions with...
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Top 10 Global Supply Chain Predictions for 2009

Manufacturing Insights spoke with technology vendors, consultants, and buyers about what the coming year will hold for supply chains in the manufacturing industry. The result is our 10 predictions for 2009. Although there is no strict hierarchy, we do begin with predictions that relate broadly to supply chains (and underlying industry trends), moving then to those that look more specifically at key business processes, and ending with anticipated emerging business/technology initiatives.

Economic Woes- Looking for the 'Silver Lining': What a difference a year makes. On October 9, 2007, the Dow Jones Industrial Average reached an all time high of 14,279. One year later the index was down almost 40%, hovering in the 8,200 to 8,800 range. Stock values were not the only metric to swing wildly as is shown in Table 1.

Table 1
Sample of Economic Measures - October 2007 versus October 2008




Dow Jones Industrial Average on October 9




Crude Oil/bbl on October 9




Institute of Supply Management--PMI for Manufacturing, October




$/Euro on October 9




University of Michigan Consumer Sentiment Index--October




Source: Manufacturing Insights, 2008

Perhaps the most telling statistic in the table for manufacturing is the ISM PMI number. The October value represented the third consecutive month of economic contraction (the break-even point is 41.1%) after 83 consecutive months of growth. The sub indices for production levels, new orders, and employment all reached lows.

Earlier in the year, we wrote about being in a financial, not an economic, crisis. However, a diminished flow of credit, the grease that lubricates the gears of manufacturing supply chains, has drawn manufacturing directly into a recession. There remain several factors that indicate that the downturn may be with us for a while and will directly impact the way manufacturers run their supply chains:...
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Outsourcing Takes It on the Chin Because of Economy
The economic slump has become so pronounced that even outsourcing is getting scaled back. Executives who once relied on outside firms to handle certain IT tasks to cut costs are now reining in some outsourcing plans on concern they're too expensive. Just ask Steve Budny, director of global outsourcing at Oceaneering, a supplier of equipment and engineering services used in the offshore oil and gas industry. While Oceaneering itself has not seen a massive demand slowdown, it's nonetheless...
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Intel's Supply Chain Management Master Program

Intel's Supply Chain Master program is designed to recognize those supply chain experts who have demonstrated "deep knowledge" of their specific fields and how they relate to other company units, and to external partners. Intel's Senior Supply Chain Master Jim Kelso stresses that the initiative is not an educational tool but a career development program recognizing lifelong accomplishment in supply chain management. No longer exclusive to Intel, the program is available to supply chain professionals across the board....
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