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