For illustration, consider manufacturer Intel, and one of its major customers for computer chips, Dell Inc. One might observe information externalities affecting Intel when Dell makes its earnings announcements. Analysts who follow Dell probably ask questions about why the company reported lower operating income than expected. But other analysts-who don’t follow Dell-would still listen carefully because they want to pick up clues about what Dell’s news means to the companies they do follow.

What’s remarkable isn’t that humans can intuit these connections, but that the market behaves in a way that takes into account these finer relationships. Continuing the example, Zach said, consider what could happen to Intel after Dell makes its earnings statement.

“The supplier, in this case Intel, is likely to be affected when the customer announces increased revenues or decreased operating income. What’s more, the tighter the economic bond between customer and supplier, the stronger the impact,” Zach said. “Dell accounted for approximately 19 percent of Intel’s sales in 2005. If more people bought Dell computers in a given year, then Intel is going to benefit as well because Intel produces the chips for Dell’s computers.”
Not all announcements are good news, however.

“Consider the costs of the customer,” Zach said. “If Dell announces its costs have gone up, that’s obviously bad news for Dell. But it’s not necessarily bad news for Intel. Dell’s costs might have gone up because Intel was able to raise its prices. This could be a positive signal for Intel’s shareholders.”

Zach’s research examines various types of accounting announcements and evaluates whether the information-transfer flows consistently depending on the kind of news. In particular, Zach looked at earnings reports, management forecasts and conference calls—whether those calls are related to earnings or not.

Investors aren’t the only ones that can benefit from understanding the connection of supplier and customer through what Zach calls “information externalities.” If there is a lot of competition in a supplier’s industry, then any relationship the supplier has with a major customer is going to be affected by announcements of the company’s well being.

More information on the study, co-written by Zach with accounting professor Shail Pandit at The Ohio State University and Charles Wasley, professor of business administration at the University of Rochester on the study is available through www.wustl.edu.

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“Vendors and organizations alike must recognize that MEA’s are not just about mobilizing a particular application, but rather delivering a set of composite applications based on the mobile workers business processes,” said Stephen Drake, program director of IDC’s Mobile Enterprise research. “Recognizing this, the underlying platform infrastructure plays a critical role in the delivery of such MEA’s. Vendors must continue to enhance their platform or otherwise look to support other existing platforms. Organizations should seek out suppliers that offer a robust underlying infrastructure to support the applications and provide enterprise-grade scalability for future expansion.”

“The worldwide growth of cellular networks, the proliferation of handheld devices, and a general level of ‘connection’ in individuals’ personal lives are quickly finding their way into the enterprise,” said Mary Wardley, vice president of IDC’s CRM applications research. “The current trend in enterprise applications is to ‘mobilize’ the application by giving employees access to salient portions of the application’s content while working in an ‘always available’ mode with various levels of connectivity.”

IDC’s study identified several factors that are driving and impacting this emerging market:
· Varying requirements for application functionality and data based on employee role and time criticality;
· Ability for carriers, device manufacturers, ISVs, and systems integrators to provide packaged solutions to end-user organizations;
· Sophistication of organizations as it relates to mobility, and;
· Horizontal deployments across organizations that drive collaborative, customer relationship management (CRM) applications.

More information and a copy of the study is available at idc.com

Oracle Production Scheduling helps manufacturers to optimize process, semiconductor and discrete manufacturing shop floor operations through out-of-the-box integration with Oracle Discrete Manufacturing, Oracle Process Manufacturing, and Oracle Shop Floor Management. Customers can create highly detailed shop floor schedules that automatically detect floating bottlenecks, simulate corrective actions and measure shop floor performance improvements. This gives companies the ability to pre-empt supply chain disruptions and maximize shop-floor efficiency and throughput while minimizing cost.

Oracle Production Scheduling and Oracle Strategic Network Optimization can be leveraged as part of the Oracle E-Business Suite or as a stand-alone product.

Source: Oracle 27-NOV-2006

http://www.supply-

chain.org/page.ww?name=Events+Calendar+Detail§ion=Events+Calendar&id=75
.
SCC was incorporated in 1997 as a global, not-for-profit trade
association with membership open to all companies interested in improving
supply-chain efficiencies through the use of SCOR(R), the supply-chain
diagnostic tool that enables users to address, improve, and communicate
supply-chain management practices within and between interested parties
from the customer’s customer to the supplier’s supplier. The Supply-Chain
Council’s members include Fortune 500 companies from industries worldwide,
consulting firms, computer systems and solutions providers, and educational
and nonprofit institutions. There are currently more than 800 corporate
members.
For more information on the Supply-Chain Council, SCOR(R), its members,
and its activities, please visit http://www.supply-chain.org; or contact
the Council Headquarters at +1 202 962 0440, SCC-E at +32(0)2-627.0160
(Brussels, Belgium); or email info@supply-chain.org. Registration for all
SCC educational seminars and sessions is available online.
(R)SCOR is a registered trademark in the United States and Europe.

SOURCE Supply-Chain Council

When it comes to taking a disciplined approach to reducing defects in manufacturing, many companies may say they are practicing Six Sigma, yet few are actually doing it as rigorously as they should be. That’s according to a new report from the Boston-based IT research firm Aberdeen Group, which also says that companies that fully implement Six Sigma produce on average 40 percent more savings than other companies, including those that say they are implementing Six Sigma.

The research group defines companies that are “truly” implementing Six Sigma as ones that have a formal Six Sigma program; have adopted Define, Measure, Analyze, Improve, and Control (DMAIC) methodology; require employees with Black Belt status to produce results for certification; and require business impact projects to be formally validated by the Finance department. Six Sigma is a disciplined approach to reducing defects and producing measurable financial results. Six Sigma is rooted in statistical engineering and is often associated with lean manufacturing, which strives to reduce waste. In fact, 37 percent of the study’s respondents said their company had both lean and Six Sigma initiatives. A common goal of Six Sigma is to reduce the rate of defects to no more than 3.4 defects per million opportunities.

The report, which examined the practices of 418 manufacturing enterprises in a variety of industries, also makes the following recommendations to improve performance:

-Implement a corporate wide training program to educate employees; implement Six Sigma throughout the organization, not just manufacturing.

-Identify employees who will be dedicated and trained as Black Belts.

-Implement DMAIC methodologies.

-Identify and prioritize business impact projects according to anticipated savings and improved throughput.

-Identify process and project owners who will accept ownership and accountability of the improvement process.

-Use flow charts to map processes.

The report also recommends companies should integrate data collection with analysis, and connect potentially disparate sources of data.

Oct. 12, 2006 — Sales of Enterprise Resource Planning (ERP) applications are expected to grow an average of 10 percent over the next five years according to a report released this week by Boston-based research and analysis firm AMR Research. As has been the case in recent years in the ERP market, the category is dominated by two companies, SAP and Oracle, at least in terms of revenue share, and AMR Research is forecasting that this trend will continue in 2006. The report indicates that SAP captured 42 percent of the ERP market’s revenue share in 2005 and that the software company’s share will increase to 43 percent in 2006. Oracle comes in a distant second, but still commanded 20 percent of the ERP revenue share in 2005, with it too projected to grow its share even more in 2006, to 23 percent. After those two companies, there is a sharp dropoff in revenue market share captured by other ERP vendors. For example, the company with the third highest revenue share in 2005 was the Sage Group (6 percent), and AMR Research forecasts Sage’s share to decline slightly to 5 percent in 2006. Microsoft came in fourth, with 4 percent ERP market share in 2005 and projected 4 percent in 2006.

Around the year 2000, ERP in general was considered by most analysts as offering substandard supply chain capabilities for managing such activities as complex warehouse management, order management, advanced planning, and more. The ERP concept originally came up through the manufacturing world, and many ERP packages were initially focused on financials with human resources, and basic (infinite, not capacity-based/finite) planning and scheduling and warehouse management. But since then, most ERP companies have improved their supply chain functionality, with some extending their reach into manufacturing execution, Customer Relationship Management, Web portals, and more. That meant the ERP vendors started encroaching into the domain of so-called Best of Breed supply chain software vendors such as Manhattan Associates, EXE, Provia Software, and others. “The integrated versus best-of-breed debate still goes on in some organizations, but the [ERP] suite advocates are clearly winning,” says Jim Shepherd, senior vice president of research at AMR Research.

Indeed, a report issued last month by AMR Research about the supply chain management application market shows that SAP was the top SCM (Supply Chain Management, which includes warehouse, transportation, network design, inventory control, and more) vendor in terms of revenue, with 12 percent of the market in 2005. Oracle was second in 2005 SCM revenue share with 10 percent, followed by i2 Technologies with 5 percent, Manhattan Associates with 4 percent, and infor with 3 percent.

ERP sales are also benefiting from a widespread acceptance of the idea that businesses must have integrated information systems to be competitive, and the most effective way to satisfy this need is to purchase an ERP package that features broad functionality and pre-built integration. AMR Research forecasts that the global ERP market revenue will reach $29 billion in 2006.

After the successful bid for the Olympic Games, Beijing decided to launch an investment of 180 billion yuan (US$23 billion) in 142 projects on city infrastructure, including subway, light rail, expressway, airport and stadium. These projects have created a great demand in Beijing for special transport vehicles such as self-dumping vehicles, concrete mixers, bulk cement trucks, emergency vehicles, sweepers and fire-fighting vehicles.

According to the Research Institute of Highway under the Ministry of Communications, the overall ownership of special vehicles in China were 3.5 million units in 2006. The Chinese market demanded 605,000 special vehicles and needed to upgrade 120,000 units. In 2008, the overall ownership and demands will rise to 4.62 million units and 732,000 units respectively. A total of 140,000 special vehicles need to be upgraded.

The full text is available in the November Issue of Logistics China.

Mexico’s position as a world-class manufacturer of moderate to high value-added goods continues to strengthen. Mexico offers a strategic competitive advantage over other Low Cost Countries in the world. It shares a 2,000 mile border with the U.S., offers a highly developed logistics infrastructure that facilitates global trade, has 12 free trade agreements with 42 countries, a stable currency and economy, a healthy climate for investment and a strong competitive labor force. These factors make Mexico a logical choice for sourcing and OEM outsourcing supply chain strategies.

Logistics infrastructure

Mexico’s logistics infrastructure has improved significantly over the last 10 years due to the privatization of maritime ports, railroads, airports and toll highways. Foreign Direct Investment (FDI) by global logistics companies has played a major role in these developments. Most of the world’s largest logistics companies already have significant assets and operations in Mexico. This competitive environment has served to reduce the costs of transporting goods.

Free trade agreements

Mexico has signed 12 free trade agreements with 42 countries over three continents. Well-known NAFTA covers the U.S. & Canada, while LAFTA covers Latin American countries, and FTA covers the European Union. These FTAs offer companies that source from and/or have operations in Mexico preferential access to 870 million consumers worldwide. Mexico has become one of the world’s primary trade hubs.

Global production and quality standards

Mexico’s increasing productivity, efficiency and quality standards have transformed the country into one of the world’s leading manufacturing nations. Manufacturing labor productivity has averaged 4.98% during the years 1987–2005. Productivity growth in 2005 was 4% according to Banco de Mexico.

Stable economic and political environment

Economic figures indicate a well established and sustainable economic program aimed at growth. Mexico offers a liberal government policy toward FDI, while macroeconomic policies provide a stable economic, social and political environment sought by investors worldwide. Mexico received over $18 billion in FDI in 2005, making it the number-one recipient of FDI in Latin America.

Skilled workforce

Mexico’s labor forces is young (60% under age 25), abundant, skilled and well educated (90% of the population is literate). The working population has consistently demonstrated that it can perform any job it has been asked to perform by foreign investors. The Mexican government is committed to satisfying industries specialized needs by structuring and funding training programs and working in close coordination with businesses.

Source: SupplyMex, Inc. an International Trade consultancy

RedPrairie Corporation, the world’s leading consumer-driven optimization company, announced today that it has taken a leadership position in Europe, the Middle East and Africa (EMEA), and is a finalist for the Best IT Supply Chain Solution in China award by the China Supply Chain Council.

According to Greg Aimi of AMR Research, “After returning from RedPrairie’s first international user conference in Brussels where more than 200 companies from across the globe convened to discuss topical supply chain issues and present technology-enabled improvements, it was apparent that, with the acquisitions of Alta A/S, LIS, MARC Global, and RangeGate, RedPrairie has taken a leadership position in EMEA, given the number of existing installs and local presence there.”

RedPrairie was selected as a finalist for the second annual CHaINA Awards by the China Supply Chain Council. Finalists were selected based on outstanding performance for supply chain practitioners operating in China. The awards will be presented on November 9, 2006, during China’s largest supply chain event, the CHaINA Summit, taking place in Shanghai.

Comments John Jazwiec, RedPrairie Company Leader, “RedPrairie has a long legacy of international success, which has been enhanced by the acquisition of LIS in 2004 and the more recent acquisitions of Alta A/S, MARC Global and RangeGate. We offer a true end-to-end solution that can carry companies from the initial order all the way to end consumer delivery. The fact that we’ve grown to be the premier SCE solution provider in EMEA and China is a testament to our E2e supply chain capabilities and proven technologies.”

Martin Hiscox, President and Managing Director International, adds “Our local EMEA and Asia Pac presence provides service and support in over 26 different languages and in 35 countries which allows our customers to execute flawlessly in an ever expanding global trade economy.”

About the China Supply Chain Council
The Council promotes the growth and success of supply chain management by connecting ideas, knowledge, technology and people in China. With a community of over10,000 supply chain, manufacturing and logistics professionals, the CSCC aims to become the point of reference and the center for supply chain knowledge, resources and contacts in China. Visit www.supplychain.cn.

About RedPrairie Corporation
RedPrairie is the world’s leading consumer driven optimization company. Built on an advanced Service Oriented Architecture (SOA) developed over the past 10 years, the RedPrairie integrated suite of end-to-end (E2eTM) solutions offers on-demand capabilities to over 25,000 sites worldwide for many of the world’s largest companies. With 21 global service sites and standard service methods that have been validated over the last 30 years, RedPrairie provides unparalleled service and support.

There were no surprises in AMR’s latest revenue rankings. SAP AG was once again the top SCM vendor in 2005, chalking up 6-percent market growth. Its revenue share notched up from 11 percent to 12 percent, the same number that AMR is forecasting for SAP in 2006. In second place was Oracle Corp., growing its market share from 5 percent to 10 percent, where AMR expects it to remain for the rest of this year. The last three of the top five vendors were more closely bunched: i2 Technologies, holding steady with a 5-percent market share; Manhattan Associates, with 4 percent, and Infor, going from 2 percent to 3 percent. This year, AMR expects i2 to drop to a 4-percent share, equal to the projected shares of Manhattan and Infor. The top area of growth within SCM in 2005, according to AMR, was the inventory configuration and policy technology category, which posted a 35-percent growth in licenses. That was due largely to the increasing complexity, interdependency and globalization of supply chains. Supply chain network design showed growth of 21 percent, AMR says. The fastest-growing aspect of SCM was application hosting and subscription, evidence of companies’ desire to shed on-premise systems and software.

Global Logistics & Supply Chain Strategies, October 2006