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That's It! Information Analytics Makes You a Successful Competitor!
Who says IT is no longer a source of competitive advantage? Netflix, Amazon.com Inc., Capital One Financial Corp. and Harrah's Entertainment Inc. have all become industry leaders by finding new ways to use information--and the technology driving their strategy is analytics, according to Thomas Davenport and Jeanne Harris, coauthors of Competing on Analytics: The New Science of Winning. Davenport, a professor at Babson College in Wellesley, Mass., and Harris, director of research for the Accenture Institute for High Performance Business, in Boston, say that an "analytical competitor" is an organization that uses analytics extensively and systematically to out-think and out-execute the competition.
"Among the firms we studied, we found that the most analytically sophisticated and successful had four common key characteristics:(1) analytics supported a strategic, distinctive capability; (2) the approach to and management of analytics was enterprise-wide; (3) senior management was committed to the use of analytics; and (4) the company made a significant strategic bet on analytics-based competition. We found each of these attributes present in the companies that were most aggressively pursuing analytical approaches to business."
Source: CIO Insight, http://www.cioinsight.com
L.L. Bean's Inventory Process Just What Xerox Needed
A classic example of so-called benchmarking outside the box involves office products manufacturer Xerox Corp. and L.L. Bean, the clothing store catalog retailer. Xerox was dissatisfied with its fill-order rate, so it benchmarked L.L. Bean.
"In fact, L.L. Bean was three times as proficient as Xerox in moving requested items from inventory to the customer," according to "Benchmarking Best Practices," a report from the Government of Alberta, Canada. "A fact-finding team from Xerox visited L.L. Bean's facility and found out why. The secret to the cataloger's success was an inventory system organized not simply by general categories but by frequency of sales. Under that system, the most-frequently ordered items were also the ones most accessible."
Source: Industry Week, http://industryweek.com
Penske Truck Outsources Back-Office Processes, Saves $15M
Several years ago, as it was purchasing rival Rollins Leasing, Penske Truck Leasing executives knew their back-office processes needed a total makeover, not only to increase its own efficiencies, but also to better absorb Rollins' data management and customer-care units.
At the time, Penske's primary customer-service operations were in four different US cities which, according to CFO Frank Cocuzza, were becoming more difficult to justify from a cost perspective. In addition, they didn't offer consistent service levels. "We needed to transform this portion of our leasing operation," he says.
But he quickly grasped the fact that it would be better to outsource to a provider in a low-cost nation such as India to help renovate and then manage Penske's new back-office operation rather than do it internally. "I couldn't have centralized all these functions as cost-efficiently in the U.S.," Cocuzza says.
General Electric owns 70 percent of Penske, which leases over a quarter million trucks in over 1,000 locations in North America, South America, Europe, and Asia. At the time, GE owned another firm that turned out to be Cocuzza's solution--an Indian provider named GE Capital India Services (now Genpact after GE spun off the unit in 2004).
Today, the relationship involves well over 30 different business processes for the now seven-plus-year-old partnership between Genpact and Penske. The engagement to date has saved the leasing giant an average of $15m annually in direct cost savings.
Source: Outsourcing Journal, http://www.outsourcing-journal.com
These RFID Tags Are Made for Walking
One of Europe's largest shoe companies plans to embed wireless chips in shoes sold at hundreds of stores across the continent.
Under a deal announced recently, Checkpoint Systems will provide Reno with radio frequency identification tags and store tagging systems.
The tagging specialist will deliver wafer-thin RFID chips designed especially for shoes from its Asian production facilities, in addition to systems that allow checkout clerks to quickly and easily deactivate tagged products.
By having the tags integrated into its shoes, Reno aims to curb theft for both boxed products and those on display, as well as shoes customers try on in the stores.
Source: CIO, http://www.cio.com
Many Tech Managers Say It's Smart to Use BI Tools
Business intelligence vendors--there are dozens of them--have been snapping up each other over the past few years in an attempt to round out their product lines and acquire customers. Why the frenzy? The BI market--including everything from data extraction middleware to desktop data analysis tools to data warehouse servers--is in the neighborhood of $50bn a year and growing at a percentage rate in the low teens, says Ben Barnes, Hewlett-Packard's general manager of business intelligence. BI ranks near the top of many companies' technology purchase plans. When InformationWeek asked 300 business technology managers about their project plans for 2007, 44 percent had data warehouses on their lists and 43 percent had data analysis tools.
Source: Information Week, http://www.informationweek.com
User Interface: Why Does It Have to Be So User Unfriendly?
George Stelling has a dream. Stelling, the chief information officer at graphics semiconductor maker Nvidia Corp., wants to enable just about everyone at the $3bn company to become a confident and productive user of the company's increasingly strategic SAP ERP system.
Stelling's goal -- which he has identified to his organization as a key objective for 2007 -- is not surprising. Like many manufacturers, Nvidia has spent the past few years investing heavily in the ERP platform by expanding its footprint inside the company to encompass supply chain management, supplier relationship management, customer relationship management, business intelligence, and human resources management, as well as traditional finance and materials management functions. It's gotten to the point, Nvidia officials say, that 70 percent of tasks and decisions at the Santa Clara, Calif., company rely on information and transactions managed by the SAP system.
The problem is that while the ERP system has become more pervasive and important, a large percentage of Nvidia's employees would rather eat worms than log onto SAP for even the simplest task. Why? "Accessing data is just not that easy," says Mouctar Diallo, Nvidia's senior director for IT architecture and development. "The look and feel isn't intuitive, and it takes too many clicks to find what you are looking for. Many people hate using it."
So Nvidia has come up with a plan. Working with SAP and outside consultants, the company is developing a series of tight integrations between specific SAP modules and desktop applications that are familiar and easy to use for most of Nvidia's employees, including Microsoft's Excel, Outlook, and Project. In this way, Stelling and Diallo hope, most Nvidia employees will become productive SAP users without even knowing they are tapping into the ERP system to get their work done. And Nvidia won't need to spend lavishly to train all of those new users.
Source: Managing Automation, http://www.managingautomation.com
MRO Procurement Gets New Respect in Today's Economy
Having squeezed many costs out of their direct-materials spend, companies now are turning to the maintenance, repair and operations (MRO) buy for the savings that can lead to competitive advantage.
In his work with purchasing professionals and suppliers, Tim Underhill, of Strategic Business Solutions, says both parties are working together to improve efficiency. "They want to drive costs out of their operations and are looking to MRO as an area where they think there are some tremendous opportunities."
Long seen as labor intensive and mired in paper, MRO purchasing has increasingly become more strategic. It's an evolution that started in the 1990s, when many corporations deployed e-procurement systems and purchasing card programs that significantly streamlined processes and generated data for spend-analysis initiatives.
Source: Purchasing, http://www.purchasing.com
Have You Asked Yourself Why Your Data Searches Are So Useless?
A company that employs 1,000 information workers can expect more than $5m in annual salary costs to go down the drain because of the time wasted looking for information and not finding it.
A recent survey of 1,000 middle managers found that more than half of the information they find during searches is useless.
There seem to be no shortage of enterprise search applications that help companies find information hidden within their networks. So why are searches so ineffective?
It turns out, analysts say, that most enterprises are not using the most up-to-date search applications. Not only that, enterprises aren't using the applications they have as effectively as they should.
Source: CRM Daily, http://www.crm-daily.com
Who Says Complexity Has to Be a Bad Thing?
Complexity is unavoidable in today's business world, so it's no surprise that concern about product, process, and systems complexity in extended value chains appears to be on the rise.
Most operations managers know first-hand that the wrong sort of complexity can grind even the smoothest running value chain to a halt. Findings from a recent AMR Research benchmarking study affirm that higher-complexity product portfolios, for example, can translate to as much as the following:
80 percent higher direct supply chain cost
53 percent increase in forecast error (mean average percent error)
40 percent greater manufacturing schedule variance
But the converse can also hold true. Complexity of the right type can be an organization's strongest source of brand distinction.
Source: AMR Research, http://amrresearch.com
The Entrepreneurial Buzz These Days Is About Libya. Really.
Entrepreneurs in Libya? Isn't this the pariah state where everything is run by so-called people's committees and until recently private property was severely restricted? The answer is that Qaddafi has wised up--at least partly. He began changing course a few years ago when oil prices were low. The Libyan economy was close to collapse after more than a decade of U.S. and U.N. sanctions brought on by his reckless actions, such as the 1988 bombing of Pan Am Flight 103 over Scotland. After the U.S. invaded Iraq and toppled Saddam Hussein in 2003, Qaddafi settled his differences with Washington and abandoned his weapons of mass destruction programs.
Since then, foreign oil companies have been piling into Libya, and Tripoli has started to revitalize the economy. Much of the progress is due to an unusual partnership with Harvard Business School professor and competitiveness guru Michael E. Porter, who is advising the Libyans through Boston consultancy Monitor Group. For the past two years, more than a dozen Monitor consultants have been working in Libya, studying the economy and running a three-month leadership program intended to create a new pro-business elite. So far, 150 Libyans have graduated. The people in the course "were real role models, starting businesses, contributing to society," says graduate Yazid el Shaari, an engineer at Canadian-Libyan joint venture Veba Oil Operations.
Porter was persuaded to take the job by Qaddafi's son, Saif al Islam. The former London School of Economics graduate student is a lean man who favors expensive European suits and Western-style economic reform. Since first meeting Saif at several dinners in London, Porter has traveled to Libya three times and met top government officials, including the elder Qaddafi. "I didn't take this on because this is a big economy," Porter says. "It was very symbolic. If this can be successful, then other countries will be able to change."
It's a monumental task. Libya is behind the curve in just about everything. Moreover, the country's economy is more dependent on oil and gas than just about any other. The industry, which employs only 3 percent of the workforce, accounts for over 60 percent of gross domestic product--a higher share than in either Saudi Arabia or Kuwait. Even though Qaddafi, who has ruled since 1969, is taking the chains off the private sector, unemployment is still estimated to be as high as 35 percent, and the streets of Tripoli are filled with loitering young men.
Yet there's a buzz in the Libyan capital these days.
Source: Business Week, http://www.businessweek.com/
More CEOs Realize that Supply Chain Management Is Strategic Imperative
When CEO Andrew Liveris talks about restoring a long-term luster to Dow Chemical, he predictably ticks off objectives concerning product innovation, joint ventures and financial discipline. But in the same breath, he'll also mention the company's value chain--maybe his delight at Dow's growing footprint in China, its selection to construct a world-scale new complex in Saudi Arabia, or even the company's new project to help build a safer railroad car in the U.S.
Liveris leaves no doubt that the management of its global value chain has moved front and center for Midland, Mich.-based Dow. It's "critical," he says, to "proactively use the supply chain to advantage by being the best in class and setting the new standard, or the new regulation, or being the best supplier to a customer and getting a premium for that--or, at a minimum, not losing business."
Of course, pioneers such as Dell and Wal-Mart have parlayed their value chains into market domination--fortifying, streamlining and integrating the company's sourcing, transportation, logistics and delivery to add and extract value throughout the entire enterprise. Such value-chain leaders gain an advantage over rivals that alone amounts to a whopping 4 to 6 percent of revenues, according to Korn/Ferry International, a leading executive-recruitment firm.
For that reason, more CEOs are upgrading value- chain management from a transaction oriented afterthought to a strategic priority. Whether they call it supply chain management, building a global value chain, or something altogether different, these CEOs are embracing the strategic imperative of extracting value from these complex networks at every step along the way and from every node and connection.
Source: Chief Executive, http://chiefexecutive.net
Key to Web Analytics Success: Know Your Company's Unique Goals
Here's a critical point in Web analytics: Enterprises could be leaving money on the table -- or losing out on opportunities -- by focusing on the wrong metrics. Of course, there is no formula, per se. Deciding which metrics to act on can vary from site to site and from industry to industry. However, there is a rhyme and reason to choosing metrics. The key is understanding your organization's unique goals.
If you are just getting your feet wet with Web analytics, there are some industry-specific metrics you could start with. For example, if you are trying to generate sales leads, then metrics such as leads generated, lead conversion ratios, cost per lead, number of Web inquiries, and Web inquiry failure rate would be important to track. By contrast, if you are running a financial services firm and hope visitors will submit electronic application forms, then you'd want to measure metrics like completed online applications, application conversion rate, number of self-service transactions, self-service failure rate, and self-service penetration.
Source: CIO Today, http://www.cio-today.com
Speech Recognition: No Longer Just for the Contact Center
A growing number of companies are deploying speech recognition technology in areas of the enterprise, outside the contact center, in environments where costs can be reduced and worker productivity enhanced through the use of speech. One of these growth areas for speech is in enterprise mobility for field services.
While enterprises have long focused on the benefits of streamlining internal operations, the deployment of field force automation solutions has lagged. Now, consumer adaptation to speech as an interface is laying the groundwork for even greater expansion of speech's role in the enterprise. This is helping drive investments in speech-enabled field service applications.
Research shows that customer service is just one high-growth area for speech recognition technology.
Source: CBR Online, http://cbronline.com
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Supply Chain Technology's Most Wanted
How are companies investing their supply chain technology budgets and what tops their 'wish lists'? Our second annual Technology Survey, conducted with the Aberdeen Group, answers these questions, providing a benchmark to help readers assess their own technology road maps.
In the April issue of Global Logistics & Supply Chain Strategies magazine
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