Integration is key to global supply chain success

To find success with global supply chains, companies need to integrate operations both vertically and horizontally, a new briefing paper from the Economist Intelligence Unit has warned.

The study, which is sponsored by Oracle, highlights the problems suffered by aeroplane manufacturer Boeing, which in October announced a six month delay in the delivery of the 787 Dreamliner.

“After months of touting the benefits of its new collaborative supply chain management system . . . the company cited shortages of key materials and slow deliveries by suppliers as primary reasons for delaying initial deliveries of the Dreamliner until late 2008,” the EIU said.

The study, entitled “Global supply chains: understanding risks and rewards”, provides a tour of the key issues involved in managing risk as globalisation extends supply chains across continents. It also provides a number of case studies.

Source: logisticsmanager.com

Supply chains should be kept on a short leash

The big business idea of the last 20 years is going rancid. Last week, Boeing's embarrassed chief executive announced the third major delay to its much-hyped 787 Dreamliner project.

Unbelievably, although nearly 900 of the aircraft have been sold, its profitability is in question as the firm's global supply chain cracks up. At the heart of the problem is the 'Dell model' (after the computer manufacturer), applied to the project's funding and management. Industry researchers say that Boeing's attempt to minimise financial risks by maximising the number of development partners has had the opposite effect: outsourcing on this scale (80 per cent, including large and complicated components) has actually increased the risk of project and management failure.

Boeing should have paid heed to the experience of Dell, which posted a powerful warning on the dangers of paying more attention to the supply than the demand chain: being good at giving customers what they get is not the same thing as being good at giving them what they want. But it's not only computer and aerospace companies that are learning these lessons. One automotive component maker was shocked to discover that parts arriving for final assembly in the US had spent up to two years shuttling between 21 plants on four continents - when it had only actually taken 200 minutes to make them. Much of the work was done in China to benefit from lower labour costs, but any advantage was more than offset by the costs of managing and scheduling inventory in the tortuous supply line. With hindsight, the China move was rated 'a disaster'.

Yet undeterred, service industries are now making exactly the same mistakes. In theory, since there is nothing physical to make or transport, services are ideal candidates for disembodied processing and reassembly by low-cost labour in foreign parts. But state-of-the-art call centres and distant graduates are quite often the wrong answer to the wrong question. A friend trying to get to Norwich over Christmas spent ages on the phone to India working out how to do it without taking 24 hours. When he got to Liverpool Street the man on the spot told him: 'Go to King's Cross, mate: trains to Cambridge aren't affected, then change for Norwich.' Similarly, when your cable broadband is down, you don't need someone thousands of miles away reading from a script, but a spotty youth around the corner who will sort it out for £60 and a supply of cola or coffee.

Why do companies - and public-sector organisations - continue to get this so wrong, pursuing the will-o'-the-wisp of cost reduction with measures that end up increasing them? Aided and abetted by consultants and computer firms that should know better, they are prey to three management myths.

One is economies of scale. Manufacturers and service outfits alike think they can cut costs by mass-producing processes in vast specialist factories. They can't, because of all the unanticipated costs noted earlier: carrying and transport costs (for physical inventory) ramifying the possibility and consequences of mistakes, re-work (mopping up complaints about things not being done or being done wrongly), knock-on costs up and downstream, and finally the management costs of sorting it all out. If consumers no longer rush to pick up undifferentiated products that companies can mass-produce and toss over the factory wall, economies of scale lose their point, becoming diseconomies.

The second myth is that there's no alternative because quality costs more. Yet quality - in the sense of giving customers what they want, no more, no less - costs less, not more. This is because if you do just that, a) you don't incur the cost of giving them what they don't want, and b) indirect costs fall too, since there are fewer mistakes to rectify.

Third, browbeaten by free-market fundamentalists, companies habitually overestimate the coordinating power of markets (and thus the attractiveness of short-term outsourcing to India and China) and underestimate the role of organisation. But while the internet can undeniably cut the cost of some market coordination, for any complex task a good organisation can still out-compete what can be supplied unaided by the market - which is why we still have organisations in the first place.

For both products and services, the principles are the same. Supply chains should be as short as possible in both time and distance; small and local, from police stations and GPs' surgeries to banks and computer firms' call centres, almost always beats large and remote. Expertise should be upfront, whether on the production line or the phone, where it can respond immediately to the customer. The title of a report from the Cambridge Institute for Manufacturing, Making the Right Things in the Right Places, says it all: in a globalised, virtual world, location and supply-chain decisions are more critical, not less.

Source: guardian.co.uk

Integration is key to global supply chain success

To find success with global supply chains, companies need to integrate operations both vertically and horizontally, a new briefing paper from the Economist Intelligence Unit has warned.

The study, which is sponsored by Oracle, highlights the problems suffered by aeroplane manufacturer Boeing, which in October announced a six month delay in the delivery of the 787 Dreamliner.

“After months of touting the benefits of its new collaborative supply chain management system . . . the company cited shortages of key materials and slow deliveries by suppliers as primary reasons for delaying initial deliveries of the Dreamliner until late 2008,” the EIU said.

The study, entitled “Global supply chains: understanding risks and rewards”, provides a tour of the key issues involved in managing risk as globalisation extends supply chains across continents. It also provides a number of case studies.

Source: logisticsmanager.com

Software Provider Offers Supply Chain Guidelines

Basware, the leading provider of financial process automation software, has released guidelines designed to help companies create green supply chains. These guidelines were developed for the growing number of companies that are basing purchasing decisions not only on the value that vendors deliver but also on their compliance with green initiatives and other key corporate values.

"Companies realize that an environmentally friendly supply chain helps them to fully support their corporate values, attract and retain key talent, and create goodwill among customers and prospects," said Jari Tavi, chief technology officer, Basware Corp. "Just as vendors have been required to be compliant with Sarbanes-Oxley regulations, they will soon need to achieve a certain level of compliance with environmental initiatives and other social responsibility imperatives."

According to industry analyst firm, Gartner, Inc., "‘Going green’ is no longer just a phrase. Future suppliers will need to be certified green just to remain on shortlists for enterprise consideration. The green movement will pick up steam in 2008 and change the way businesses approach environmental conservation. Strategic Planning Assumption: By 2011, suppliers to global enterprises will need to prove their green credentials via an audited process to retain preferred supplier status."

There are several key steps to establishing green supply chains including:

• Determining your organization's purchasing strategy. Companies should first identify and prioritize the purchasing criteria that are most important to them.

• Establishing good processes that are streamlined and flexible. This will enable companies to effectively implement the green policies that they are establishing.

• Finding ways to cut down on paper. By automating your invoicing processes, you can dramatically decrease your use of paper and gain greater efficiency and environmental benefits. Invoices represent the largest number of legally required documents in a company, and for every invoice, there are typically two to 10 times that amount of supporting documents, such as goods received, contracts, etc.

• Making purchasing democratic. Any system you implement must be easy to use to encourage user adoption. It is also important to put purchasing systems in as many hands as possible so that it becomes an organization-wide initiative to support green suppliers and other favored vendors.

• Recognizing and rewarding the true value in your supply chain. Price alone should no longer be the major factor in selecting a vendor. The value a vendor provides, such as quality and reliability, as well as adherence to corporate values, are key areas that companies should consider.

Source: eponline.com

No rice supply crisis in Canada, industry says

If you're having trouble finding some specialty rices in Canada, blame flaws in the retail system, says an industry insider.

Ali Bilgen, president of A & BB Rice Inc. in Toronto, told CTV.ca on Friday that rice in general is in good supply in Canada.

Most of this country's rice -- such as the long grain typically served in Chinese restaurants -- comes from the United States, which is producing plenty of rice, he said.

But jasmine rice comes from Thailand, and reports have indicated the Asian country may have problems meeting its export obligations, Bilgen said. "They are having some serious issues."

The country's finance minister has since said Thailand can meet its contract obligations, but the price has still rocketed up to US$1,000 per tonne -- three times its January level.

"That's fuelling the frenzy a bit," Bilgen said, but his firm is having no real problem obtaining rice.

There were reports of U.S. retailers Wal-Mart and Costco limiting rice sales earlier this week, but Bilgen said, "Personally, I think they're over-reacting."

Herman Poon of T and T Supermarkets told CTV Newsnet on Thursday that his chain has no plans to ration rice sales.

If some supermarkets are running out, "to a certain extent, that's their own doing," he said.

Supermarkets require 30 to 60 days notice of a price increase. With prices rising so rapidly, importers are seeing their replacement costs go up just as quickly, Bilgen said.

"We don't have the luxury to continue supplying these supermarkets at well below the market prices for 30 to 60 days. So some of the importers may restrict quantities they are shipping to the supermarkets."

So while some supermarkets might be running out of some types of rice to sell, there is no supply issue at the wholesale level, he said.

David Wilkes, senior vice-president of the Canadian Council of Grocery Distributors, told CTV.ca that his members aren't having any supply problems.

"We are not seeing any changes in consumer shopping patterns with respects to rice at the current time either," he said.

Poon seconded that, saying some customers are stocking up, but most are not.

Difference of opinion

Wilkes disagreed with some of Bilgen's analysis, saying the importers are often buying on the futures market to protect themselves.

"Depending on your point of view, you're always going to claim you're getting squeezed on the way," he said.

Costs do get passed along in any supply chain, and everyone wants it to be orderly, he said.

"But at the same time, if there's an unavoidable change because commodities have gone up, I know that conversations go on between individual trading partners to make sure those adjustments take place in the most reasonable way possible."

The rice situation should also be looked at in the context of the apparent structural shifts going on in the global food market, Wilkes said. He listed some factors:

* Changing consumption patterns;
* Food being converted into ethanol;
* Agricultural land being taken out of production.

Foods based on the commodities being affected are rising in price as a result, he said, citing bread and pasta as two other examples.

On Friday, United Nations Secretary General Ban Ki-moon called the sharp rise in food prices a global crisis and asked for an additional $755 million in funding for the UN's World Food Program.

Bilgen said the high value of the Canadian dollar has protected consumers here. "If we still had currency at $1.30, $1.40, certainly there'd be a lot more concern."

Compared to developing nations, Canadians pay a relatively small proportion of their income on food. A price hike doesn't hurt the average Canadian consumer as much, he said.

But in parts of Asia and Africa, some poor people direct more than half their income to food, he said.

"So when the price of rice doubles, now they have to spend 100 per cent of their income on rice. Or their income is not even enough to cover their daily diet," Bilgen said.

Source: ctv.ca/servlet

Trimble First Quarter 2008 Revenue Up 24 Percent to $355.3 million

Sunnyvale, CA, - Trimble (Nasdaq: TRMB) today announced results for its first quarter of 2008 ended Mar. 28, 2008. In the first quarter of 2008 revenue was $355.3 million, up approximately 24 percent from revenue of $285.7 million in the first quarter of 2007.

Operating income for the first quarter of 2008 was $58.0 million, up 48 percent from the first quarter of 2007. Operating margins in the first quarter of 2008 were 16.3 percent, compared to 13.7 percent in the first quarter of 2007. Amortization of intangibles increased from $7.9 million in the first quarter of 2007 to $10.8 million in the first quarter of 2008. The impact of stock-based compensation expense was $4.0 million in the first quarter of 2008, compared to $3.4 million in the first quarter of 2007. There were no in- process research and development or restructuring expenses in the first quarter of 2008, while there was a $2.1 million in-process research and development expense and a $2.7 million restructuring expense in the first quarter of 2007. In addition, amortization of acquisition-related inventory step-up was $0.2 million in the first quarter of 2008, compared to no amortization of acquisition-related inventory step-up in the first quarter of 2007. Excluding these impacts, non-GAAP operating income of $73.0 million grew by 32 percent compared to the first quarter of 2007. Non-GAAP operating margins were 20.5 percent in the first quarter of 2008, up from 19.4 percent in the first quarter of 2007.

Net income for the first quarter of 2008 was $40.1 million, up 40 percent compared to net income of $28.7 million in the first quarter of 2007. Diluted earnings per share for the first quarter of 2008 were $0.32, up 35 percent from diluted earnings per share of $0.24 in the first quarter of 2007.

The tax rate for the first quarter of 2008 was 33 percent, compared to 32 percent in the first quarter of 2007. Trimble's tax rate was lower than forecasted due to the implementation of a global supply chain structure which is expected to result in a structural tax rate of 33 percent for fiscal 2008 and beyond.

Adjusting for the amortization of intangibles, in-process research and development, the impact of stock-based compensation expenses, restructuring, and the amortization of acquisition-related inventory step-up, non-GAAP net income of $50.1 million for the first quarter of 2008 was up 26 percent compared to non-GAAP net income of $39.6 million in the first quarter of 2007. Non-GAAP earnings per share for the first quarter of 2008 were $0.40, up 22 percent from non-GAAP earnings per share of $0.33 in the first quarter of 2007.

"The first quarter of 2008 emphasized the growing diversity of the Trimble business portfolio. Although E&C continued to be impacted by slow U.S. economic conditions, we saw strong growth across all other geographies. In addition, we experienced almost 75 percent growth in our TFS segment, driven by strong agriculture product sales," said Steven W. Berglund, Trimble's chief executive officer.

"While monitoring the continuing uncertain economy, our view for revenues for the entire year remains generally unchanged with an expectation for higher earnings per share than previous guidance."

Trimble Results by Business Segment
Segment operating income is revenue less cost of goods sold and operating expenses, excluding general corporate expenses, amortization of intangibles, amortization of acquisition-related inventory step-up, and in-process research and development. In addition, for each segment, non-GAAP operating income excludes the impact of stock-based compensation expense.

Engineering and Construction
First quarter 2008 Engineering and Construction (E&C) revenue was $194.2 million, up approximately 11 percent when compared to revenue of $175.6 million in the first quarter of 2007, with strong international sales.

First quarter 2008 operating income in E&C was $37.0 million, or 19.0 percent of revenue compared to $42.2 million, or 24.0 percent of revenue, in the first quarter of 2007.

Non-GAAP operating income in E&C was $37.9 million, or 19.5 percent of revenue, in the first quarter of 2008 compared to $43.0 million, or 24.5 percent of revenue, in the first quarter of 2007. The decline in operating margins resulted primarily from unfavorable foreign currency exchange rates, the impact of recent acquisitions and product mix.

Field Solutions
First quarter 2008 Field Solutions (TFS) revenue was $88.0 million, up approximately 73 percent when compared to revenue of $51.0 million in the first quarter of 2007. Sales were strong across all geographic regions and product lines, with the majority of the increase coming from the agriculture business.

First quarter 2008 operating income in TFS was $35.1 million, or 39.9 percent of revenue compared to $16.6 million, or 32.6 percent of revenue, in the first quarter of 2007.

Non-GAAP operating income in TFS was $35.3 million, or 40.1 percent of revenue, in the first quarter of 2008 compared to $16.8 million, or 33.0 percent of revenue, in the first quarter of 2007. Operating margin expansion was due primarily to higher revenue.

Mobile Solutions
First quarter 2008 Mobile Solutions (TMS) revenue was $44.0 million, up approximately 47 percent when compared to revenue of $29.9 million in the first quarter of 2007.

First quarter 2008 operating income in TMS was $2.5 million, or 5.6 percent of revenue compared to $1.0 million, or 3.4 percent of revenue, in the first quarter of 2007.

Non-GAAP operating income in TMS was $3.9 million, or 8.8 percent of revenue, in the first quarter of 2008 compared to $1.8 million, or 5.9 percent of revenue, in the first quarter of 2007. Operating margin expansion was driven by higher subscription revenue and operating synergies which were partially offset by higher new product development costs.

Advanced Devices
First quarter 2008 Advanced Devices revenue was $29.1 million, approximately flat when compared to revenue of $29.3 million in the first quarter of 2007.

First quarter 2008 operating income in Advanced Devices was $4.7 million, or 16.1 percent of revenue compared to $3.3 million, or 11.4 percent of revenue, in the first quarter of 2007.

Non-GAAP operating income in Advanced Devices was $5.0 million, or 17.3 percent of revenue, in the first quarter of 2008 compared to $3.7 million, or 12.6 percent of revenue, in the first quarter of 2007. Operating margins improved due to product mix.

Stock Repurchase Program
In January, Trimble announced a stock repurchase program for up to $250 million. As part of this program, in the first quarter of 2008, Trimble repurchased approximately 968 thousand shares of Trimble stock at an average purchase price of $26.71.

About Trimble
Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location-including surveying, construction, agriculture, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978 and headquartered in Sunnyvale, Calif., Trimble has a worldwide presence with more than 3,600 employees in over 18 countries.

For more information visit Trimble's Web site at http://www.trimble.com.

Integration Point Expands Presence in Asia

Global Trade Management Software Provider Continues Successful Growth

Integration Point, a provider of real time global trade management solutions, announced its expanded Asian presence with the opening of a new office in Gujarat, India. Integration Point is conducting this expansion in response to the continued market growth in the Asia region.

Integration Point provides a web-based Global Trade Management (GTM) system which allows users to securely access up-to-date global trade content, compliance and connectivity at each point of the supply chain transaction. By integrating critical information from otherwise separate systems such as logistics, ERP, warehouse management and local country databases, Integration Point creates a global trade network connecting multiple members of the trade community electronically to regulatory agencies around the world.

“Web-based Global Trade Management technologies provide a lot of potential to help companies improve efficiency and reduce costs in the global supply chain,” noted Integration Point’s Senior VP of Global Markets, Clay Perry. “There is a clear increase in the demand for our products in Asia, and we are responding to that demand with an increased local presence.”

About Integration Point, Inc.

Integration Point®, Inc.’s Real Time Global Trade Management helps many of the best known companies import and export goods more effectively by providing up-to-date international trade compliance. Integration Point’s solution is a comprehensive suite of fully integrated, web-based software products that provide consistent and secure access to information around the clock including: Import/Export Management, Global Classification, C-TPAT, AEO, Denied Party Screening, Free Trade Agreement qualification and Duty Deferral Program participation. Companies dependent on efficient import/export of goods rely on Integration Point to help them quickly and accurately navigate through the often complex and dynamic requirements of global trade. Contact Integration Point at www.IntegrationPoint.net or 704-576-3678.

Xterprise Announces Clarity-CCITM Cold Chain Integrity

Ensuring Safe Shipment, Storage and Handling While Increasing Yield, Quality and Accountability in the Cold Supply Chain

DALLAS, TX - Xterprise Incorporated, the leading global supplier of Solutions for the High Definition Enterprise ™ and a Gold-Certified Microsoft™ ISV partner, announced today the general availability of its Clarity™ CCI - Cold Chain Integrity solution. The solution addresses the need to ensure safe handling, storage and shipment of pharmaceuticals, engineered materials, produce, foods and beverages, and volatile raw materials by continuously monitoring and analyzing various environmental variables that affect the integrity and quality of these products.

"The risk is real and the stakes are high. Whether your industry is pharmaceutical, healthcare, food, beverage, specialized material, or logistics providers to these industries, the loss of a single shipment can range from tens of thousands to hundreds of thousands of dollars," said Jim Caudill, SVP of Marketing and Strategy at Xterprise. "The Clarity CCI™ solution minimizes this risk using Active RFID technology to continuously monitor temperature, movement, humidity, and many other variables, providing highly granular visibility and analysis of these variables across all stakeholders."

By defining the thresholds, limits, sampling intervals and transmission frequencies, the Clarity CCI™ solution can provide detailed statistical analysis, event reporting and alert triggering based on event detection. Continuous process improvements are facilitated with tools to quickly identify error and failure points, and assist with the detection of the root causes.

The solution leverages active Wi-Fi RFID tags from Tyco Electronics that use the G2 Microsystems technology, tested and field deployed by Xterprise and found to meet the unique requirements of the cold chain market. The tags communicate location, sensor measurements, and customer-specific data over existing Wi-Fi infrastructure using industry standard protocols, reducing typical upfront infrastructure investments. With highly sensitive sensory technology, the Tyco tags can accurately monitor and record temperature and humidity, and both are capable of integration to other sensors with built in IO capabilities. The tags also can store sensor data; ensuring a full tracking history of a tagged shipment is available and may be accessed whenever the tag establishes a suitable wireless connection.

For organizations with existing RFID infrastructures, Xterprise combines the Wi-Fi sensor tags with passive Gen 2 tags in the same form factor. This results in maximum reuse of existing Wi-Fi and RFID infrastructures.

Xterprise has a number of current and deployed projects and pilots using Clarity CCI™ in their cold chain supply chains including:

-- Tracking the temperature of reagents used in pharmaceutical
manufacturing from Asia to the U.S. and on to Europe, throughout the
duration of their journey;
-- Tracking temperature exposure of volatile chemicals used in the
semiconductor manufacturing process during shipment and storage.


ABOUT XTERPRISE

Xterprise Incorporated was founded in 2002 as a provider of RFID (Radio Frequency Identification) applications. Today our solutions combine Microsoft platform technology, continuous improvement and lean supply chain expertise, enterprise supply chain systems integration along with RFID technology to deliver previously unachievable levels of visibility, assurance, accuracy, process improvement and value to clients. The Xterprise customer list includes Abbott Labs, Alcon, Allergan, Chicken of the Sea, Dow Corning, Dairy Fresh, Dial Corporation, Eureaka, ExxonMobil, General-Mills, Georgia Pacific, Kraft, iGPS, Intel, L'Oreal, Nokia, Samsung, Schoeller Arca Systems, ShopVac, Continental AG, The Libman Company, The US Department of Veterans Affairs, TIMCO Aviation Services , TNT Express, Toyota Motors N.A., Wells Fargo Bank and many others. The Xterprise global headquarters is located in Carrollton, Texas (Dallas/Fort Worth) and its European office is located in Beverley, UK. For additional information call +1-972-690-9460 US, email info@xterprise.com or visit www.xterprise.com.

New courses on IIMM platter

Jamshedpur: The city chapter of Indian Institute of Materials Management (IIMM) would soon start internationally certified courses for managers and entrepreneurs of Adityapur industrial area.

The initiative comes after software giant Microsoft adopted Adityapur industrial area to develop it into an auto cluster around two months ago.

Those engaged in the supply chain management are now aiming to get certified by institutes of international repute, including World Trade Organisation (WTO), right next to their industrial houses.

The move, a joint initiative of Adityapur Small Industries Association (ASIA) and IIMM, would see the courses begin from June at the ASIA office at Adityapur.

“Last October, we had an interactive session with the small and medium enterprises (SMEs) at Adityapur. There, a need was felt for more organised courses that would help them deal better in both national and international markets. So we proposed to start the courses,” said G.D. Pandey, the IIMM course co-ordinator.

The two international courses that are on the launch pad are a six-month certificate programme in supply chain management from Institute of Supply Management, US, and diploma courses from United Nations Council for Trade and Development, which is under the aegis of World Trade Organisation.

On completion of the courses, the students would be provided with certificates not only from IIMM, but also from these global organisations.

“Today, supply chain is an important part of the entire business set-up. So these courses would be of immense help,” added Pandey.

The move also comes in wake of IIMM adopting supply chain management as its theme for the week- long foundation day celebrations that began on Wednesday.

“We had decided to adopt enhancing efficiency of supply chain management as our theme for this year. That is why, we decided to concentrate on these specific courses,” he added.

Next in the line after the international courses would a two-year MBA programme from Madhya Pradesh Bhoj (Open) University in Bhopal.

Tailor-made for purchase managers and supply chain managers, one can avail a full MBA degree for just Rs 45,000-50,000.

Apart from this, there are also regular courses in material management at both the undergraduate and postgraduate levels.

A panel discussion on the prospects and challenges in supply chain management is also scheduled on Friday.

Source: telegraphindia.com

Concern mounts as oil price nears 120 dollars

SINGAPORE (AFP) — International concern mounted as world oil prices edged closer to 120 dollars a barrel Wednesday and the world's top producer called for calm.

Analysts said a weakening US dollar, supply worries in Nigeria and the OPEC cartel's reluctance to increase output have all contributed to the price surge.

New York's main oil futures contract, light sweet crude for delivery in June, rose four cents to 118.11 dollars per barrel.

The May contract expired on Tuesday after closing at a record 119.37 dollars per barrel at the New York Mercantile Exchange, where it earlier hit an all-time intraday peak of 119.90 dollars.

Global supply jitters have seen oil contracts traded in New York spike by more than 57 dollars in the past year. Price records in New York and London have been broken almost daily over the past week.

Brent North Sea crude for June delivery rose five cents to 116.00 dollars a barrel, after settling at an all-time high of 115.95 dollars on Tuesday in London.

The contract earlier touched a record 116.75 dollars in intraday activity.

"Market sentiment is bullish in the immediate term," said Victor Shum, senior principal of Purvin and Gertz energy consultancy in Singapore.

"The weak US dollar, real supply disruption in Nigeria... are pushing prices higher".

But Shum said there is increasing concern that the rally in oil pricing "has been too much and too fast".

Ministers from 74 countries attending the International Energy Forum in Rome on Tuesday said oil prices should be at levels acceptable to producers and consumers, "to ensure global economic growth, particularly in developing countries."

US President George W. Bush expressed concern at the impact of high price levels on consumers.

Saudi Arabia's petroleum minister, Ali al-Naimi, called for calm in the face of runaway oil prices on Tuesday. He said the world is not running out of oil.

The root of the problem was primarily due to "limited capacity along the entire supply chain.... at its heart, this is not an energy resource issue; it is primarily an investment issue," he said at the Rome forum.

Saudi Arabia is the biggest producer in the Organisation of the Petroleum Exporting Countries (OPEC), which on Tuesday said that it plans to increase its production capacity by five million barrels per day (bpd) by 2012.

The cartel's secretary general Abdalla Salem El-Badri said OPEC aimed to boost production capacity by nine million bpd by 2020. Current OPEC output stands at about 32 million bpd.

Shum said OPEC's move would have little impact in the near term.

"Even though OPEC has promised to increase production capacity, the long-term supply increase does not resolve the main factors that are underpinning prices now," he said.

A weakening US dollar has spurred oil demand because dollar-priced oil becomes cheaper for buyers holding stronger foreign currencies.

The euro surged to a record 1.6002 dollars Tuesday on renewed jitters about the US economy.

Global supply worries were stoked after Anglo-Dutch oil group Royal Dutch Shell reported an output loss of 169,000 bpd from sabotage of its key pipelines in southern Nigeria.

Shell said on Monday that it might not be able to honour oil contracts for April and May after the attacks.

Source: afp.google.com/article

Supply Chain Risks Rising, Companies Not Taking Action

NEW YORK — An increasingly global corporate community is making for a higher degree of supply chain risk, but companies in North America have a shocking lack of preparation for disaster, according to a new report released last week by a prominent corporate insurance company.

The problem: Corporations have traditionally allowed risk management to take a backseat to cost, service, and other company priorities, according to Beth Enslow, senior vice president of supply chain risk management practice for insurance broker and risk advisor Marsh Inc.

According to Enslow, the problem speaks to a lack of a holistic approach to supply chain risk management on the corporate level.

“That’s where there’s been a huge black hole,” she said.

Enslow is author of Stemming the Rising Tide of Supply Chain Risks: How Risk Managers’ Roles and Responsibilities Are Changing, a report summarizing a study of 110 North American corporate risk managers conducted by Marsh and Risk & Insurance magazine.

The study asked risk managers to discuss how prepared they are for a storm, tainted product, labor shortage or other event that could disrupt their supply chains.

The results showed an awareness of danger and risk, but very little is being done about it. According to the report, 73 percent of the respondents said supply chain risk has gone up since 2005, and 71 percent of the study’s respondents said the potential financial impact of supply chain disruption has also grown.

Enslow said the increased emphasis on lean and the growing corporate globalization are contributing to the higher risk, along with high-profile media accounts of problems with products from China, such as the lead paint toy scandal or tainted imported drugs killing patients in the U.S.

Despite the increased awareness, when asked to describe how effective their companies were at supply chain risk management, none of the risk managers surveyed indicated “highly effective,” and only 35 percent called their efforts “moderately effective.”

The report also indicated 65 percent of respondents characterized their risk management practices as having a “low” or “unknown” effectiveness, or had no risk management program at all.

Right now, Enslow said, the study indicates corporate leaders prefer a reactionary approach to risk management, rather than a comprehensive plan to prepare for the worst.

“Risk is still kind of a gut feel,” Enslow said, “as opposed to something that is vigorously assessed.”

Enslow said the traditional practice of siloing puts up walls that prevent a company from working as a single unit in a time of crisis. When working on a risk management plan Enslow said management needs to take a holistic approach, using a cross-functional team to make sure everyone in the company remains in the loop.

“It’s almost impossible to assess your supply chain risks if you don’t have that cross-functional view,” she said.

The study shows companies aren’t doing that yet, with only 31 percent of respondents indicating they have cross-functional teams to manage supply chain risks, and 19 percent of respondents—fewer than one in five—from companies with more than $1 billion annual revenue indicated they used cross-functional teams.

Source: scmr.com/article

How to Find the Right Wholesaler

When you want to sell products in retail, the first thing you need to do is to find a reliable and trustworthy wholesaler. This is because there are a lot of wholesalers who do not deliver on their promise once you want to do some transactions with them. In fact, wholesalers are getting a bad reputation because of the few companies that cheat on their customers. And added to this is the fact that the inventory you will buy from these wholesalers may not necessarily sell in the market. So before you enter into the retail business, here are some tips you may find helpful. You may also have a look at one of my affiliate programs.

The first thing you need to do is to conduct market research on your target market. You need to know if the product you wish to sell will actually be saleable to them or not. This is because while a particular product may sell well in one area does not necessarily mean it will also sell well in another area. So even before you search for a wholesaler, you must know if the product you intend to introduce to your target market is actually viable because it would be a waste of time if you spend too much time searching for a reliable wholesaler only to find out that the product you want to sell is not going to be saleable in the actual marketplace.

The next thing you should consider is the product choice. Once you had determined which industry you want to enter, it is now time to know which product you need to stock up on. You should note that it is more viable to enter a niche market that will buy your particular product than enter the mass market at once.

Meanwhile, the third step is finding the right wholesaler. There are many sources and directories you can look up to find suppliers. But the advertisements and the websites you visit may not necessarily contain reliable suppliers that will really deliver the kind of product you requested. So it is recommended that you put up safety measures in place even before you pay for these products. You can find these wholesalers from online directories and even sourcing agents but always remember never to pay in advance unless trust between the two of you had been established.

It is also important to have patience in order to find the right wholesaler with the best price. However, you should not expect these wholesalers to provide unrealistically low prices. If there are establishments that offer prices that are too low then you need to conduct thorough research first before doing business with these kinds of establishments.

Then the last step you need to remember is to have faith in yourself because having confidence is important for success to be possible.

Article Source : bestmanagementarticles.com

World Wide Brands Review

One is bound to find many drop ship directories when looking into drop shipping or buying wholesale, and this fact can make choosing the right one a difficult decision. As a result, each different resource should be examined and compared in order to find the right one. While one's research may guide him or her to World Wide Brands, thus prompting a World Wide Brands review, one should consider what should be expected from any drop ship or wholesale resource. The following is a list of criteria that should be kept in mind when shopping for a quality drop ship directory. First, one should note the number of suppliers that a given drop ship directory has in its database. While some companies will brag about having thousands of suppliers in its directory, it means nothing unless each supplier is of high quality. For this reason, it is important that the company that you select investigates each of the suppliers that it provides. A directory of quality and inspected suppliers is a very valuable resource. To those new to the wholesaling world, ease of use is one of the most important features of a wholesale directory. A World Wide Brands review will reveal that one has the ability to search by category; that is, drop shipper, bulk wholesaler, liquidator, and/or overseas importer. The best wholesale directories will allow their users to search through the database by product in order to quickly find what one is looking to sell. If a large list is difficult to navigate, then finding the best prices will be a long process. Even though a World Wide Brands review demonstrates how easy it is to use, one still needs to do proper market research if he or she is hoping to turn a profit. For this reason, whatever drop ship directory you choose should have advanced market research tools. One should be able to see the demand for the product, find hidden niches, and be able to match up products to meet the needs of a certain group of people. When choosing a company to join, look for the difference between directories that connect you with the website of the suppliers versus those that connect you to a page that looks like a sign up page. While some are upset when directed to a sign up form, some research reveals that registering as a wholesaler allows even new drop shippers and wholesalers to receive the best prices. Those that simply connect you to the website of a supplier often are often either taking a cut of the sale prices or not directing users where they need to be. There are many choices for drop shippers and wholesalers when researching directories of quality suppliers. The number of suppliers, the quality of suppliers, market research tools, and ease of use should all be considered when choosing a company with which to do business. Finding the right directory can completely revolutionize a business and cause profits to soar.

Article Source : bestmanagementarticles.com

How to Choose Your Product Source

No matter if you are an ebay seller, drop shipper, sales distributor, whether you list your auctions or sale on your web site or a host site, your product source is the key of success. In other words who has lower price product is the one will grab more chances to win the game. There are tons of wholesalers and each of them claims to be the lowest price offering. Confused? You should be if you are not aware of the tricks behind how business is operated and how the cyberworld is touting itself in bursting information, technique and scams. From experience and collective knowledge, there is a three-step way to help your identify the true wholesaler, the right one fit you the most. Step one: choose a candidate list. You don't have to finish this work in a hurry. Do a widely comparison and make a candidate list that qualify your request. Those have significant advantages in scale, price and product line should earn your consideration. Step two:check their reputation and credibility. Weed out those obvious scammers and ones have negative track history. Always remember when one is too good to be true, it probably is. Search the company reputation in google to find reviews and relative information made by other individuals or organizations. Such as look up the wholesaler website history in whois.com, check google PR value and alexa traffic rank. Or you can go with relative message boards, forums to ask for decision-make help. Thoroughly inspect wholesaler's website. Search all the company information. Legitimate company will state their information clearly and fully. Pay attention to the concrete contacts like a land phone, physical location which allow your to reach them in person. The missing of any one should cause your suspect.Also legit wholesalers usual allow secure payment methods like paypal,world pay. Step three: start contact. Firstly, you can contact via email. Ask detail information about product condition, shipment and return policies if any. In most conditions your will get a prompt reply either tell you the information or refer a link of web page. Notice how long it takes to reply and what kind of manner is displayed. Still suspicious? Then make a phone call or use the live chat function. Talk about your worries and conditions and listen carefully of their response. Be wary of the company that urge your to take their services. By now you have gathered all the information necessary. Then is the final step-place a sample order . Don't be too afraid to place your first order, think it as a test. See if the goods is available as they say and will arrived within the estimated time. And most importantly check the quality according to its statement. This is the last shield of keeping you from internet scam and also serves for a potent and convincing Proof of the true wholesaler.

Article Source : bestmanagementarticles.com

B2B Integration Appliance

Covast Introduces B2B Integration Appliance to Small and Mid-Size Supply Chain Organizations at CompTIA's Annual Breakaway Conference

Covast, a leading provider of business-to-business (B2B) integration solutions, has been selected to present at CompTIA's Annual Breakaway Conference on the benefits on B2B integration appliances for small and mid-size businesses in the electronics industry. The presentation, entitled "Big Business is Knocking - Can You Answer?" will be delivered today to conference attendees at the EIDX forum being held at the Mirage Casino and Resort in Las Vegas.

Breakaway 2007 is the IT industry's premier partnering and educational event. Each year, CompTIA brings together executive-level representatives from computer industry manufacturers, distributors, value-added resellers, systems integrators, independent software vendors, service providers and consultants. The EIDX forum provides focused educational sessions for attendees interested in advancing interoperability in the electronics industry.

The Covast presentation on entitled "Big Business is Knocking - Can You Answer?" will cover the following areas:

• Why and what B2B integration challenges prevent small and mid-size electronics industry businesses from customer growth

• How B2B appliance technology immediately overcomes these challenges;

• An introduction to the Covast BBot, the world's first plug-and-play B2B integration appliance.

To learn more about Covast and the Covast BBot B2B integration appliance, go to www.covast.com.

About Covast and BBot

Covast, a leading provider of business-to-business integration solutions, is revolutionizing supply chain integration through the world's first B2B integration appliance - the Covast BBot. Requiring only a local area network with internet connection, BBot automatically enables integration between the complex B2B systems of large supply chain hubs and their smaller customers and suppliers. The result is improved visibility, compliance, efficiency and accuracy for every supply chain. Covast is a Microsoft Gold Certified Partner and an IBM Business Partner. Covast maintains its European headquarters in the Netherlands and its U.S. headquarters in Atlanta. For more information, visit www.covast.com.

The World's First Supply Chain Integration Appliance

The Covast BBot, the World's First Supply Chain Integration Appliance, Debuts at U Connect 2007

B2B appliance to be introduced to top retailers and manufacturers at prestigious industry event

ORLANDO, Fla., June 4 -- Covast, a leading provider of business-to-business (B2B) integration solutions, today introduced BBot, the first supply chain integration appliance, to the world's top retailers and manufacturers at U Connect 2007. U Connect 2007, the prestigious conference of the GS1 US(TM) organization, is the annual epicenter for supply chain professionals to debut and exchange ideas on how to build better supply chains through standards. The Covast BBot is one of the most innovative technologies to be introduced at this year's event. Attendees can learn more about BBot at Booth #519, located in the Exhibit Hall of the Gaylord Palms Resort in Orlando, Florida.

Using simple "plug and play" technology, BBot automatically enables seamless integration between the complex supply chain systems of large hubs and their smaller suppliers. BBot is virtually maintenance-free, requiring only a LAN with internet connection to facilitate immediate integration across the supply chain.

This solves a fundamental problem with supply chain integration and visibility. Most large hubs use many complex supply chain systems to conduct business, while small suppliers use less complex systems, spreadsheets or email. As a result, many of these smaller suppliers lack the technology to comply with industry-specific trading protocols and formats. BBot overcomes this challenge by offering comprehensive support for all industry protocols and formats, then automatically connecting and integrating the supply chain systems of hubs with the Microsoft Office environments of their smaller suppliers.

Built on Microsoft technology, BBot is a network appliance of pre- configured hardware and software. To work, a hub publishes a profile of its different supply chain systems and processes to the network. Suppliers simply plug BBot into their LAN and the appliance automatically configures itself to the hub profile. Using Microsoft Office, BBot instantly bridges supply chain systems, allowing real-time integration between hubs and suppliers.

The impact of BBot extends beyond supply chain visibility and integration. Other benefits include:

o Increased responsiveness to market and customer demand. Hubs can react
to market and demand changes in real-time.

o Easy supplier and regulatory compliance. BBot gives small suppliers
the integration infrastructure needed for hubs to comply with RFID,
SOX and other regulations.

o Reduced IT costs. BBot requires virtually no setup or maintenance.

o Maximized value of existing IT investments. BBot improves ERP, CRM and
other supply chain systems by giving each system consistent, accurate
and timely data.

"Supply chain integration at the flip of a switch almost sounds too good to be true. But, this is exactly what BBot delivers. It's an entirely new concept and one that we're proud to introduce alongside the world's greatest supply chain companies here at U Connect," said Daan Scheer, CEO, Covast. To learn more about the Covast BBot supply chain integration appliance or Covast's suite of B2B industry solutions, please visit http://www.covast.com/.

About Covast and BBot
Covast, a leading provider of business-to-business integration solutions, is revolutionizing supply chain integration through the world's first B2B integration appliance -- the Covast BBot. Requiring only a local area network with internet connection, BBot automatically enables integration between the complex B2B systems of large supply chain hubs and their smaller customers and suppliers. The result is improved visibility, compliance, efficiency and accuracy for every supply chain. Covast is a Microsoft Gold Certified Partner and an IBM Business Partner. Covast maintains its European headquarters in the Netherlands and its U.S. headquarters in Atlanta. For more information, visit Source http://www.covast.com/.

Supplier Relationships

Supplier Relationships

All successful companies build strong relationships with their suppliers. Companies are not isolated entities that simply purchase goods and services from individuals who happen to be able to supply them at that particular time. Companies typically make larger purchases. In reality, successful companies recognize the need to build bridges between their organization and the vendors that they work with by establishing strong buyer/seller relationships.

Supplier relationships are different from simple purchasing transactions in several ways. First, there can be a sense of commitment to the supplier.

For example, if a vendor sells light bulbs, he can feel confident that the buyer will come to him the next time the company he represents requires a new shipment of light bulbs. Another element of these supplier relationships is advanced planning. Buyers don't just communicate with suppliers when a procurement need arises; they also contact them in order to discuss their future needs and to determine how best to satisfy those needs by working together.

While both of those distinguishing features are easy to spot, a third element is also important. The company's attitude and view of its suppliers matters a lot for business success. Companies that forge supplier relationships think of these vendors as partners and not just simple commodity providers. This difference in orientation can have a profound affect on the way an organization communicates and works with its suppliers. This in turn affect efficiency an profitability.

One ramification is a vendors knowledge of the buyer's business. When vendors are viewed as commodity providers, they generally don't take the time or are not given the opportunity to learn the details of the business or its vision for the future. However, vendors that are deemed to be partners are encouraged to become knowledgeable about the company, its processes, its products, and its goals. The result is greater buyer satisfaction with the services provided by the supplier. A study of IT directors found that vendors who were considered commodity providers delivered unsatisfactory service almost half of the time while suppliers who were thought of as partners delivered excellent service some of the time and good service most of the time.

Another result of this attitude of partnership and difference in knowledge level has to do with handovers, which is a top priority among most IT directors. After all, if the handover is unsuccessful or is poorly handled, it minimizes the benefits the business hoped to achieve with the project. Businesses that viewed their suppliers as commodity partners, according to the poll, viewed the way their vendors handled this critical process as unsatisfactory nearly half of the time. On the other hand, vendors who were considered partners handled handovers excellently nearly some of the time and good most of the time. Clearly, the change in attitude does make a significant difference.

Obviously, these two examples illustrate how important it is to have strong supplier relationships, but many businesses simply don't know how to foster an environment where purchasing personnel have an attitude of partnership with vendors. The change is not as difficult as they may think. It does not have to cost them the savings they achieve by shopping around either. First, businesses need to find a small number of suppliers to work with. Companies should carefully evaluate potential vendors and their backgrounds in order to select the suppliers from the group that will best fit the needs of the business.

After they pick these vendors, companies need to negotiate contracts with the vendors and to sit down with them in order to engage in some forward planning. Both of these steps are critical in establishing the stability in the supplier relationship that is necessary for both parties to feel comfortable. Furthermore, the future planning makes it more likely that the vendor will have the resources and qualified staff available when the buying company requires them.

Overall, vendors and buyers are both better served when they come together to form strong, mutually beneficial, and secure business relationships for non-commodity type goods and services. When these relationships exist, they can drive the growth and profitability of both organization and prevent purchasing and execution problems.

Source: www.epiqtech.com

Supply Chain Planning Systems

Supply Chain Planning Systems

For many companies, putting together a supply chain can be an easy part of supply chain management. The real difficult parts often seem to come from adequate supply chain planning. The difficulties that often arise as a result of poor planning can be extremely problematic for a business. The following sections will explain some of these problems and will seek to address their root causes.

First, businesses need to understand exactly what the term supply chain planning means. Supply chain planning refers to a companies ability to make accurate forecasts regarding their demands in the near future. For example, the company may forecast X amount of sales and may order enough goods from vendors to cover those sales. However, if fewer sales are the reality, the company could end up with excessive inventory and may see a large, sudden decrease in profits. Likewise, too many sales could cause the company to need to order additional shipments of goods at the last minute which may force vendors to need additional materials and to pay overtime to their workers. These costs will usually be passed on to the buyer and will also reduce profits. Also, too many sales may mean companies cannot meet the end-user demand and distributors may be left with no product to sell to waiting customers.

Obviously, supply chain planning is important to a company's success. Poor planning will result in a loss of profits and/or revenue while accurate planning allows the company to operate smoothly and to minimize expenses. The question then is how to more effectively create business forecasts for supply chain activities.

Many companies have turned to their customers for help. By communicating directly with customers about what they want and by getting their feedback on existing products, businesses are able to more accurately understand the needs and wants of their target audiences. With this information, they can make a forecast that reflects customer reality, not the hopeful expectations of marketing and sales teams. Furthermore, improved technology has made it even easier for businesses to get their hands on customer feedback. The Internet, for example, makes it possible for companies to communicate with customers in real-time, so they can then use the data immediately in their forecasts.

Supply chain planning can be made easier by technology in other ways as well.

For example, cash-to-cash cycle time is an important part of supply chain planning because it impacts the revenue of the business. Cash-to-cash cycle time refers to the time span between the purchase of the raw materials and the sale of the finished product. The faster the cash-to-cash cycle the better. On average, 26% of businesses have been able to reduce their cash-to-cash cycle time to under 30 days thanks in part to improved technology.

Information technology advancements such as payment processing, procurement of direct supplies, and customer order entry have helped significantly reduce the length of the cash-to-cash cycle for many of these businesses. In fact, less than 25% of the businesses today have a cash-to-cash cycle time of more than 90 days.

These technology improvements along with real-time customer feedback have made it possible to more accurately predict revenue, profit, and sales in the near future. More accurate planning means that businesses can work together with their vendors and distributors to outline a plan that makes sense based on those forecasts so that no one is put into a negative situation.

Overall, supply chain planning is a critical component of any business's supply chain management. Without accurate planning abilities, businesses end up cutting into their revenue unnecessarily and possibly putting vendors and distributors into difficult situations that may strain the supply chain relationships in the long run. Only by communicating with customers directly and in real-time can businesses have a solid, reliable foundation on which to base their supply chain planning forecasts. Likewise, they need to use technology to free up revenue from the supply chain by reducing their cash-to-cash cycle time.

Source : www.epiqtech.com

Supply Chain Technology

Supply Chain Technology

With todays emphasize on cutting costs and streamlining expenses, many companies are looking to improve their bottom lines with more effective supply chains. Unfortunately, many people involved with companies don't have a clear understanding of what a supply chain is or how it fits into the companies overall strategy.

Supply chains include a company's entire manufacturing and distribution process. They involve every step of the production from planning to manufacturing to handling defective goods. The overall goal of these chains is to keep the process running smoothly at all times and to keep all of the components (i . e. vendors, warehouses, etc.) connected.

Even for business individuals who do understand the essence of the supply chain, they may not understand how it fits in or how it is different from another popular technology: ERP (Enterprise Resource Program). In fact, supply chains often work best in conjunction with an ERP system but they are not meant to replace or to use instead of such a system because ERP systems involve a multitude of business activities, including customer service and production planning that are not a part of supply chains. Supply chains are generally concerned with the flow of raw materials, manufacturing, production, and distribution. However, the ERP system does organize a lot of the information supply chains use to run efficiently and without that system most companies run into problems effectively setting up their supply chains.

Technology also plays an important role in the success of supply chain management. Even though the supply chain concept pre-dates the Internet, only through the use of web-based software and communication can it truly reach its full potential. Before the Internet, companies were limited because they were not able to receive or to send updates, feedback, or other important information in a timely fashion. Additionally, companies were limited in their ability to work with global partners because of language barriers and time differences. Using the Internet to handle most of the elements involved in supply change management, including procurement and communication, makes the exchange of data and the running of the supply chain faster.

One of the biggest benefits technology has given to the supply chain concept is the ability for companies to collaborate. These collaborations are designed for the mutual benefit of all parties. For example, a supplier of consumer goods may be linked up via the Internet to one of its distributors so that when the supply gets too low an order for more of those goods can be placed automatically. In this way, the distributor never has to worry about running out of a product and disappointing customers and the supplier doesn't have to worry about maintaining a large inventory in expectation of demand. Similar systems have also been constructed to send out multiple requests to vendors when an order is placed. Collaborating this way makes better use of existing resources and paves the way for a larger profit margin on all sides of the equation.

While the benefits of supply chain management are many, using technology to achieve those benefits does have two main drawbacks: one is resistance from vendors and the other is resistance from employees.

Suppliers of goods are often hesitant to jump onboard because of the initial costs involved in setting up their own end of supply chain management system and because most vendors do not have a trusting relationship with their buyers. To overcome this obstacle, the strong relationship must be present and the seller needs to be able to see the profit potential on their end of the arrangement. Likewise, many employees have learned to develop a hate-hate relationship with new technology.

After all, it costs them their jobs and often makes them feel that their work is more tedious or more complicated. Plus, software mistakes, which are inevitable at the beginning, may cause other employees to lose faith in the system altogether.

Employees need to trust the system, the company, and their ability to use the program if they are going to adopt the supply chain management software.

Source :www.epiqtech.com/supply_chain-Technology.htm

Siemens Global Move Points to the Supply Chain Future

World Is More Than Flat, It Is Fast, Cheap, and Out of Control; Bold New Supply Chain Strategies Required

A few weeks ago, Dan Gilmore mentioned in his excellent First Thoughts column on “The New Supply Chain World Order” (See End of a Supply Chain Era) that German industrial giant Siemens is increasingly focusing on selling new, lower price versions of its products in developing nations, and would manufacture these close to those markets.

That’s an interesting move, and worth a few comments.

I am reminded of the following characterization, which I mentioned in my keynote address at the recent International Air Transport Association (IATA) world cargo symposium:

Is the world really flat? Actually, it is fast, cheap, and out of control.

* Fast – in that connectivity makes the world smaller, yet it is more complex.
* Cheap – in that products are dropping in price, and becoming more powerful, yet global sourcing is increasing risks and other problems.
* Out of control – in that most of the world’s purchasing power now resides in the hands of customers who are empowered, demanding, and impatient. Businesses are no longer in charge.

Does this sound familiar? Does it resonate with most of our companies? Well, it does with most that I know. Now Siemens – with a very interesting and proactive strategy – is striving to respond in a positive manner, taking some control back. By targeting the growing number of underdeveloped world customers, dropping their prices, and producing locally, this progressive corporation is making a bold move with bold leadership!

Instead of only fighting against the fast, cheap, and out of control world with the normal offshoring strategies and market share battles, this company is going after new channels with its supply chains in tow. How clever: “Think global and act local” is back! And, it is back with a clever new supply chain strategy.

Time will tell if this bold move will really pay off; but, with clever execution, why would it not? Demand is growing, discretionary income is rising, and product information is expanding in these markets…..but, buying power there is not equal to that of the developed world. So, simplify the products, lower the prices, lower the costs, and respond to actual demand in short-time cycles. Sounds like history.

Most futurists and global thought leaders see the new world order developing many times faster than the old world has. We need only to look to China as the example. Why would this model not apply in other countries – not likely as fast, due to other socio-political structures, but the trends are clear.

Good for Siemens. The time is right. Innovative supply chain strategies can enable new markets to become profitable growth engines.

(Source: scdigest.com)

Supply Chain Control

Supply Chain Control

Supply chain management can be a tremendous asset for companies because it can reduce costs, improve the profit margin, and offer a better return on investments. However, those advantages do not mean there are no potential problems related to supply chain management that companies may need to deal with. Most of the problems involve a lack of control over one of more of the following three areas: data, technology, or vendors.

One of the biggest problems many supply chain management systems face is a lack of quality data. Many businesses simply fail to realize that the supply chain results can only be as good as the data the system or software is using. Obtaining and using quality data involves a few considerations that are often overlooked by those in charge of SCM. First, size does matter when it comes to data. In order to do proper forecasting, the predictions must be based on data from a large enough sample. If only one or two orders are used as the basis for the predictions, the results are likely to be quite unreliable. Additionally, many people do not realize how quickly data can change or how much that it can vary even in short periods of time. For these reasons, SCM data must be continually re-evaluated and refined so that it matches reality.

Another big issue is the technology required to bring supply chains onto the Internet. While some companies have been at the forefront of adapting integrated, Internet-based supply chains, others have been reluctant to take the next step. As a result, it can be difficult to get all vendors and suppliers on board. There are many good reasons why vendors may shy away from the new technology. After all, the installation of the necessary hardware is costly and time-consuming.

Finally, sometimes the vendors that these systems are supposed to connect with have undermined many SCM systems and implementations. The reality is that in setting up a supply chain not everyone is going to see the benefits immediately. In the long run, being a part of the supply chain will be beneficial to all of the companies involved. However, initially, not everyone will benefit equally. Therefore, some partners in the chain may feel disillusioned or may feel unimportant in the overall sequence. In fact, some companies may even be afraid of losing their overall competitive advantage as a result of joining the supply chain. For all of these reasons, many companies simply aren't jumping on the integrated supply chain bandwagon.

Obviously, all of these problems are to some extent beyond the control of supply chain managers. No matter how skilled, an individual cannot make a vendor join the supply chain if he or she is in complete opposition to joining. However, in most cases, the right approach can solve the problem. With the quality of the data, for example, employees in charge of forecasting need to be trained and need to thoroughly understand the steps necessary to ensure the quality of the information they base the system on. Good training can go a long way to improve the data and the overall effectiveness of SCM.

With the vendors, suppliers, and other necessary elements of the supply chain, companies need to take a different approach. They need to meet with the decision-makers in those companies and outline clearly for them the benefits of the technology and the supply chain for them. They should clearly discuss how long it would most likely take for them to fully achieve those positive results. Additionally, they must be able to demonstrate how the business's investment in the technology will pay off for the vendor in the long run. If companies can deliver a firm argument based on facts and accurate statistics, it is more likely that vendors will be able to buy into the argument for the integrated supply chain.

Essentially, supply chain management is a tremendous asset for businesses and it usually does help improve the bottom line significantly. But getting those positive results means overcoming some common obstacles to change in order to regain control over the SCM implementation and system.

Source:www.epiqtech.com

Supply Chain Value

Supply Chain Value

Developing an effective supply chain is not easy. A company must have the right technology and the support of the best suppliers for it to work.

However even once that obstacle has been overcome, another major issue may still loom ahead: Finding real cost-reduction in the supply chain. Unfortunately, the unanticipated costs of running the supply chain often surprise managers and force companies to make some tough decisions. Thankfully, understanding what causes or drives these costs is half the battle.

There are actually six main causes of cost problems in supply chains. Usually a supply chain will not exhibit all of these problems but they commonly do have a combination of numerous ones since many of them are related. One of those causes is simply that the business and its partners have not clearly thought about what they are doing. Anyone who has ever put together a supply chain knows that it is a truly ambitious endeavor that is truly worth doing right. However, many companies lack sufficient direction to accomplish such a goal. Along those same lines is a second cause: confusion. When so many different elements come together, confusion is almost inevitable initially, especially if there was not enough planning, training, or communication among those elements.

Another problem deals with the way supply chain success is measured. Too many companies continue to use outdated financial yardsticks as the sole indicator of the success of a project or of the business. This approach does not work for supply chains since its main goal is not necessarily to only to improve profits but to balance supply and demand among all of the chain's elements. Using profits and revenues as the main unit of success measurement means that many partners may begin to sacrifice quality or to make other drastic changes which seem to help the bottom line but which destroy the supply chain's foundation.

A third cause of extra costs involves barriers. Those already involved with supply chains probably already understand that small changes are magnified at each level of the supply chain. A minor price cut at the distributor level may be a major problem for vendors supplying the raw materials. In order to minimize these effects, businesses must be able to overcome the barriers that exist between each separate organization involved in the supply and between the different departments operating within one's own company. Unfortunately crossing these boundaries is not always as easy as it sounds. However, dealing with these situations before they arise and choosing supply chain partners who are open to that level of collaboration can help alleviate many of these problems.

Finally, supply chains often suffer because either one or several links in the chain are unable or are resistant to change or when attempts are made to make everyone involved in the link adhere to strict guidelines. Being willing to adapt and to be flexible is one of the biggest challenges supply chain partners must face. An insistence that the status quo be the way to go will ultimately cost all parties involved a great deal and might actually destroy the supply chain.

While there are a number of ways to avoid these cost problems, they all boil down to one thing: take pre-emptive action. When a supply chain waits for a problem to arise then deals with this problem, the consequences have already occurred and the damage may not be able to be reversed. Instead, companies need to sit down with their supply chain partners and discuss issues like flexibility, barriers, metrics, and direction. By going over these concepts in advance, the companies can ensure that everyone is on the same page and that anyone who is not willing to be part of the group can get out before they get too deeply involved.

Overall supply chains can be tremendous assets to companies and their vendors, but they often come with a price.

Businesses must be willing to change their attitudes, their routines, and their ideas of how things need to run. A failure to do this means that not only will the supply chain fail, but the businesses involved will likely lose a great deal of money in the process.

Supply Chain Value

Source:www.epiqtech.com

Supply Chain Management Systems

Supply Chain Management Systems

Many managers initially thought that simply implementing a Supply Chain Management (SCM) system would be enough to keep their inventories stocked with the raw materials needed to keep production flowing smoothly. However, implementation of these systems and software has helped most of those managers to realize how unrealistic their initial expectations were. The system itself can easily become overwhelmed by all of the variables involved in supplier-buyer relationships, which is why managers need to take additional steps to ensure that their SCM system stays on top of the situations.

Managers first need to address the faulty logic, which has guided many SCM decisions. Some examples of this bad logic include the ideas that lead times will never change, that suppliers' capacities are endless, and that queues must be a part of the process. None of these things are true, but most managers believe them and those ideas are reflected in the SCM system. The truth is that lead times are extremely variable and depend on both parties. First, if the buyer is not providing a prompt and reliable stream of information to the supplier, then the vendor is not going to be able to produce the necessary goods in a prompt and reliable fashion. Furthermore, suppliers do have other companies that they work with. The fact is that the larger, more profitable project is going to get first attention even if that has a negative effective on one buyer's lead times. When a SCM system isn't flexible enough to deal with these problems, then it can prevent the buyer from gaining the competitive advantage in the market that the system was designed to secure.

Another problem that has hindered many SCM systems has been a lack of manufacturing resource planning (MRP). Once most manufacturing firms relied on MRP as a guide to their purchasing decisions, but during the last two decades most managers falsely believed that they didn't need MRP anymore. Instead, most prefer to rely solely on just-in-time deliveries and pull signals, which supposedly make it possible to keep a limited and almost constantly updated inventory of the goods needed to accomplish manufacturing tasks. While MRP will never replace that newer attitude toward inventory control and purchasing, it should at least co-exist with it.

Additionally, managers need to work directly with suppliers to reduce cycle time. In fact, for most managers this step should be the most important since the less time between the initial order placements and order delivery the better. Cycle time delays can have drastic implications for companies that have not adequately prepared or planned for them. Entire assembly lines have come to a halt simply because cycle time problems have left the buyer without the raw materials needed to continue production smoothly. Unfortunately, most managers and their companies will not be in the position to order suppliers to speed up cycle times, so they need to rely on alternatives. One option is to choose suppliers whose cycle times are more in line with the needs of the buyer's business or which are more reliable. Another is simply to improve the flow of information between the buyer and the supplier. A smooth exchange of information will go a long way toward ensuring a smooth cycle time.

The biggest question most managers have about all these changes though is »Are they worth it? The answer is absolutely. An effective, realistic, and flexible SCM system can have significant benefits for any business. First, it can make it easier to manage all of the different factors that contribute to the purchasing and production cycle. Additionally, the SCM system reduces the chances of human error. Efficient SCM systems also lead to greater productivity, lower costs, and reduced inventory. Additionally, a fine-tuned SCM system delivers better communication, shorter planning times, and more reliable forecasting. The amalgamation of all of these benefits is a balance between keeping costs reasonable and maintaining production levels. This is definitely worth the effort and delivers value to businesses.

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Supply Chain - A Productive AIM of Corporations

SUPPLY CHAIN

During the last three decades, supply chain management has been both an important and a productive aim of corporations. By working to coordinate the production, shipment, and delivery of the goods required to meet their business needs, companies have been able to more easily meet the demands of their customers. However as the 21st century unfolds, supply chain management is evolving into what many experts refer to as synchronized supply chains.

With synchronized supply chains, the overall goal is the same as with traditional supply chain management. There are three key differences, however. One is that companies work with their vendors in order to coordinate their processes and to achieve simultaneous production. Another difference is that the Internet and other types of technology are incorporated into the process to make those processes run smoother and more efficiently.

Finally, the buying organization will need to hire, train, and restructure their workforce in order to be able to accommodate this type of supply chain management.

Even though most companies do realize that better supply chain management can benefit their bottom line, too many of them are leery about pursing modernization and efficiency fully.

However, the value exists for companies who wish to make the changes necessary to achieve it. Some companies that have pursued supply chain modernization and upgrades have been able to lower costs and boost profits by tens or hundreds of millions of dollars.

One way to achieve this increased value is the compression strategy. Compression allows the processes between the buyers and vendors to be streamlined. There are a number of ways this can be accomplished, and the businesses involved must do their research to determine which are most effective for their needs.

Two of the possibilities are: Allowing assemblers to be responsible for maintaining the inventory so distributors only focus on making sales, and the second is eliminating the distributor channel altogether so that the assembler would be responsible for putting together the product and for making the sales.

In addition to compression strategies, there are other steps to securing productive supply chain management (SCM). First, the business must determine the strategy it wishes to use as the SCM's guiding force. Once the company determines this, the company needs to decide which supply chain configuration will work best for it. There is a wide array of possible configurations available, so the company must again do its research.

Following those decisions, the companies must also begin to forge supplier relationships. Because the supply chain is only as strong as those relationships that bind the vendors, buyers, and other participants together, this step is crucial. Viewing these other companies and suppliers as partners in the success of the supply chain is important and should be a top priority within the buying organization.

Once all of these components are in place, the business needs to take the next step and choose the proper technology architecture to make the supply chain work well. Some large businesses opt for the full implementation of an ERP system, which can effectively automate and coordinate many of the supply chain elements. The Internet is an important productivity tool that should also be incorporated fully into the supply chain because it streamlines many of the processes involved in procurement.

Effective supply chain management solves many of the problems encountered by businesses today.

First, the vendors involved in the chain will actually have a clearer idea of what the buyer needs and can then adequately provide for these needs. Slow response times and delays in project start dates also become less frequent because the automated supply chain helps shave the time off of the order placement and fulfillment process.

Furthermore, Internet-enabled supply chains generally result in lower costs for all parties involved because when secure relationships are established and when the supply and demand for products is in alignment, the total prices paid by organizations are generally much lower.

Effective supply chain management:

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Management of Global Supply Chain

Management of Global Supply Chain
With increased globalization and offshore sourcing, global supply chain management is becoming an important issue for many businesses. Like traditional, supply chain management, the underlying factors behind the trend are reducing the costs of procurement and decreasing the risks related to purchasing activities. The big difference is that global supply chain management involves a company's worldwide interests and suppliers rather than simply a local or national orientation.

Because Global Supply Chain Management usually involves a plethora of countries, it also usually comes with a plethora of new difficulties that need to be dealt with appropriately. One that companies need to consider is the overall costs. While local labor costs may be significantly lower, companies must also focus on the costs of space, tariffs, and other expenses related to doing business overseas. Additionally, companies need to factor in the exchange rate. Obviously, companies must do their research and give serious consideration to all of these different elements as part of their global supply management approach. Time is another big issue that should be addressed when dealing with global supply chain management. The productivity of the overseas employees and the extended shipping times can either positively or negatively affect the company's lead time, but either way these times need to be figured into the overall procurement plan.

Other factors can also come into play here as well. For example, the weather conditions on one side of the world often vary greatly from those on the other and can impact production and shipping dramatically.

• Also, customs clearance time and other governmental red tape can add further delays that need to be planned for and figured into the big picture. Besides contemplating these issues, a business attempting to manage its global supply chain must also ask itself a number of other serious questions.
• First, the company needs to make decisions about its overall outsourcing plan. For whatever reason, businesses may desire to keep some aspects of supply chain closer to home. However, these reasons are not quite as important as other countries advance technologically.

For example, Some parts of INDIA have now become centers for high-tech outsourced services which may once have been done in-house only out of necessity. Not only are provided to companies by highly qualified, overseas workers, but they are being done at a fraction of the price they could be done in the United States or any other Western country. Another issue that must be incorporated into a global supply chain management strategy is supplier selection.

Comparing vendor bids from within the company's parent-country can be difficult enough but comparing bids from an array of global suppliers can be even more complex. How to make these choices is one of the first decisions companies must make, and it should be a decision firmly based on research.

Too often companies jump on the lowest price instead of taking the time to factor in all of the other elements, including those related to money and time which were discussed above. Additionally, companies must make decisions about the number of suppliers to use. Fewer supplies may be easier to manage but could also lead to potential problems if one vendor is unable to deliver as expected or if one vendor tries to leverage its supply power to obtain price concessions.

Finally, companies who choose to ship their manufacturing overseas may have to face some additional considerations as well.

Questions regarding the number of plants that are needed, as well as the locations for those plants can pose difficult logistical problems for companies. However, it often helps to examine these issues in terms of the global supply chain. For example, if a business uses a number of vendors around Bangalore, India than it may make sense to locate the manufacturing plant that would utilize those supplies in or around Bangalore as well. Not only will this provide lower employee costs, but overall shipping and tariff expenses should also be reduced.

Your path of global supply chain management:

This would then save the company money.

Source: www.epiqtech.com