QuickREAD

December 27, 2006

Some TV Manufacturing Returns to U.S. Can Other Assembly Operations Be Far Behind?
In October, Syntax-Brillian Corp. opened what is believed to be the first facility in the United States for assembling high-definition flat-panel televisions.
Located in Ontario, CA, some 50 miles east of Los Angeles, the facility spans 50,000 square feet and includes a Class 10,000 clean room. The facility is capable of producing more than 200,000 televisions annually on a state-of-the-art semiautomatic assembly line. The facility will initially employ 120 people in one shift, but a second shift is expected to be added next year.
Syntax had been making its televisions in Taiwan, where the plastic parts and printed circuit boards for the sets are made. The assembled sets were then packaged and sent on container ships to Long Beach, CA. In 2005, the company decided to shift assembly to North America, where it expects demand for wide-screen LCD televisions to soar. Locating the plant in Southern California will allow Syntax to react to changing demands more quickly, better control inventory, and save the 5.3 percent duty it had to pay on each imported set. These savings will add 5 to 7 percentage points to the company's gross profit margin, says Syntax CEO Vincent Sollitto.
"Now we don't have the inventory of completed TVs sitting on the water for three weeks," Sollitto says. "And we use about one-tenth as many containers to send the raw materials across."
While the troubles of the Big Three automakers and their suppliers have made national headlines, the opening of the Syntax facility came with little fanfare. In fact, the new Syntax facility could very well represent the comeback of television manufacturing in the United States, and it's just one example of how assemblers nationwide are still investing in new assembly technology.
Source: Assembly, http://www.assemblymag.com

The Best Companies Institutionalize Leadership Development
Growth requires more than a good strategy these days. Everyone has a decent strategy, but how many companies have leaders at all levels of the organization who have the understanding, drive and skills to execute it in ways others cannot? When Peter Drucker presciently introduced the idea of identifying leaders of "the future that has already happened," he underscored the hallmark of any effective organization: The best institutionalize leadership development.
Source: Chief Executive, http://chiefexecutive.net

Emerging Markets Increasingly Play a Role in DCs, R&D and Back-Office Activities
"You just can't ignore emerging markets if you're a global CEO who makes things," says Gary Coleman, Deloitte's global manufacturing boss.
Emerging markets are hardly a new phenomenon, he concedes; they've been around a long time, but now "the landscape is shaping up a little bit."
Coleman insists that manufacturers will continue to use emerging markets as a way to lower their overall global cost structure. "That's been around for a decade, and it hasn't gone away. There's still a lot of opportunity for global manufacturers to utilize emerging markets, to lower their overall cost structure. Cheaper raw materials and, of course, cheaper labor--not quite what it used to be, but it's still there."
But, he says, it's no longer just about production facilities. Major distribution centers, research and development, and back-office activities are increasingly becoming part of the low-cost scene too.
Source: The Manufacturer, http://www.themanufacturer.com

Will Toyota Top GM Because It's Supple, Agile, 'Ready for Anything'?
Toyota's plans project sales of 9.34 million vehicles next year, which would it put it ahead of General Motors, which has been the largest automaker in the world since 1931.
There are a lot of explanations as to why Toyota has beaten GM, but one of the pithiest came from the comments box on GM's own FastLane blog. There, user Edward Hayes wrote that "Toyota didn't know anything more than GM about what would happen, but the difference was Toyota was ready for anything." The comment was made in the context of GM's decision to move away from the minivan business, but is actually relevant on a much higher level as well.
Source: Line 56, http://www.line56.com

Don't Be Shy About Jumping Into Conversational Marketing
Conversational Marketing creates possibilities for up-selling and cross-selling, maximized revenues and profits and loyal customers. That's why all aspects of the organization must be involved in personalization and customization as viable business strategy choices. Top management must be involved and give support to the organization to accomplish these tasks.
Source: CRM Buyer, http://crmbuyer.com

Hey, Information Reality Is Complicated & Garbage In, Garbage Out.
Being able to see or figure out what is not viewable or open to understanding is a major concern today. We are faced with new challenges in information gathering, and, lacking the capacity or patience to glean the data ourselves, we look to technology to fill in the holes.
A manager treats as accurate the information given to him or her from a BI or BAM system. In fact, all of today's computer-driven reports are taken for direct reflections of actual events. And yet the quality of the information is a result of the quality of the system, the events picked, and the tools used, including sensors, barcodes, RFID tags, and reports from salespeople.
As opposed to information gleaned from direct contact -- witnessing a delivery, being part of a sale, or seeing actual bottles coming off a line, for instance -- computerized and electronically transmitted information lacks touch, smell, and other ambient considerations. Reality has varying degrees of noise, crudeness, and elegance that do not translate through barcodes or even the most sophisticated inlay. An RFID tag on a pallet of goods, for instance, might be equipped to tell me that those goods are at the proper location, but may fail to note that the packages on the pallet have been compromised by rainwater that fell through a leaky roof at the distribution center. Sensors might tell us that a package of spinach is at just the right temperature, but fail to report that it has suffered an E. coli invasion.
The point is that reality is complicated.
Source: Managing Automation, http://www.managingautomation.com

To Everyone a Different Flavor of RFID, a Different Time for RFID Return on Investment
As the cost of tags and readers continues to fall, system integration and data analytics are emerging as the top challenges in achieving total supply chain visibility with RFID.
A new Aberdeen Group report that dissects the supply chain finds that the objectives, opportunities, and best-in-class RFID solutions change as product travels from one organization to the next in the chain. This creates disparity among partner organizations and the danger that individuals will develop solutions that do not lend themselves to collaborative leveraging of the technology across enterprises. It also creates an opportunity for a new class of vendor who provides solutions suitable to every stage of the supply chain.
In "Total Supply Chain Visibility," Aberdeen Group reveals that RFID costs a distribution company nearly 30 percent more than it costs a manufacturer and more than twice what the average retailer spends. It is a rare technology that can address the myriad objectives and constraints of a cross-enterprise RFID initiative. However, the right flavor of the technology to address each of the business challenges, collecting data at key choke points, making use of that data to enable visibility, and informing business analytics applications, can make collaboration among organizations seamless.
According to the report, each supply chain company approaches the challenge with a different set of primary objectives, and each has its own expectations for the time it takes to realize positive ROI. Individual companies looking to multiple sources for ROI will find the time to positive ROI shorter, and the same is true across enterprises. When partners collaborate to develop compatible and complementary solution sets, everyone in the chain achieves positive ROI in less time.
Source: Modern Materials Handling, http://www.mmh.com

Indian IT Support Services Doesn't Seem to Have Lost Any Attraction for Some Western Companies
India's Tech Mahindra has received the largest outsourcing contract awarded to a single offshore services company to date, securing a five-year, $1bn deal to provide tech support to British Telecom and its business customers.
Under the agreement, Tech Mahindra will provide BT with internal IT support and will also act as a third-party contractor on some of BT's managed services accounts with business customers. Tech Mahindra said it plans to hire 3,000 to 4,000 employees over the life of the contract to help with the work.
BT owns a 35 percent stake in Tech Mahindra.
The deal is the latest indication that Western businesses now view India's low-cost outsourcers as viable alternatives to global giants like IBM and EDS for comprehensive services engagements.
Source: Information Week, http://www.informationweek.com

So Thousands More Low-Wage Jobs Went Overseas--That's Good for U.S. Manufacturers
A new report on competitiveness suggests that offshoring low-value production jobs while focusing on high-value services is the best strategy for U.S. manufacturers. Clearly, the Competitiveness Index (from the Council of Competitiveness) challenges the conventional wisdom that we typically hear on the evening news, or during a political campaign. The news tells us, for instance, that the manufacturing sector of the U.S. economy continues to bleed jobs, with another 15,000 jobs lost in November 2006. Is this loss of jobs in and of itself necessarily a bad thing, though? The Competitiveness Index suggests, maybe not. Maybe it's a sign that the U.S. economy is shifting toward high-value, innovative manufacturing and services activities, such as design, marketing and supply chain management. The services sector, the report notes, now accounts for 83 percent of U.S. private-sector GDP and 85 percent of private-sector employment.
Source: Industry Week, http://industryweek.com

Pros and Cons of Judgmental and Statistical Forecasting Methods
Judgmental and statistical forecasting methods each bring valuable information to the forecasting process. Practitioners often have up-to-date knowledge of changes and events occurring in their environment that can influence the forecast. This information often is last-minute and cannot easily be incorporated into the statistical forecast. While causal models, such as regression, can be developed to capture this human judgment, such refinements are impractical for making inventory replenishment decisions when there are thousands of different items to be controlled.
Judgmental (also called managerial) forecasts also have the advantage of being able to incorporate "soft" or "inside" information that can be helpful predictors in changing environments. These types of information might include a rumor about a competitor launching a new product or an impending labor strike.
Judgmental forecasts, however, often are inaccurate due to limitations in human cognitive ability. People naturally have a limited attention span and can process only a restricted amount of information at a time. Similarly, research has documented that judgmental forecasts are influenced by short-term memory and the inability of forecasters to understand causal relationships. In addition, judgmental forecasts can be biased because they are subjective. Biases include optimism, wishful thinking, lack of consistency, and political manipulation. For example, consider the manager who is optimistic one day after a large sale or highly pessimistic another day following a sales slump. Such events often lead people to inadvertently bias their forecasts, which can result in degradation of accuracy.
Unlike judgmental forecasts, statistical forecasts are based on mathematical principles and are typically generated by any one of the many software packages available. Statistical forecasts are consistent, objective, and unbiased, always producing the same forecast for the same data set. Also, statistical forecasts can process large amounts of data at one time. This is particularly effective for generating forecasts for a large number of stock-keeping units (SKUs), when managerial involvement would be time-consuming and costly.
However, statistical models are only as good as the data upon which they are based. When changes occur in the data that are not incorporated in the model, the generated forecasts can't be accurate. Statistical forecasts also are based on historical data and are ineffective when market conditions change, such as a new competitor entering the marketplace or a snow storm delaying a shipment.
Source: APICS, http://www.apics.org

Is Full Access Good Idea for Everyone Who Uses Your CRM Database? Certainly Not.
In a CRM database, each record has numerous fields that may include confidential information, not just about your customers, but also about your sales team and business operations. In the B2C world selling to consumers, confidential customer information often includes social security numbers, credit card details, and home addresses. While, in the B2B world -- selling business to business that is -- confidential information can include purchase histories that represent millions of dollars in sales, as well as potentially confidential information about your sales team, like sales commissions, sales goals, and a multitude of other strategic details.
The benefit of gathering so much information in a single database is that it can give a crystal-clear image of each customer's relationship with your company, both in terms of past behavior and potential future actions.
But is it such a good idea to allow full access for everyone who uses your CRM database -- from sales reps and support personnel, consultants and warehouse workers, all the way up to your C-level executives? Certainly not.
Source: BPM Today, http://www.bpm-today.com

Dollar General Says Sophisticated Tech Sounds Pretty Good. For the Other Guy.
Don't use complicated, expensive software when a clipboard and pencil will do. Dollar General, the $8.6bn-discount retailer, can get a new store up in eight days or fewer thanks to a super-efficient logistics process honed each time it sets up one of its 8,000 stores. Key ingredients: sweat equity and scant technology beyond PC cash registers on a satellite system.
Source: Baseline, http://www.baselinemag.com

What to Do? You're CIO at Mid-Sized Business, and Tech Vendors Don't Return Your Calls.
A CIO at a mid-sized business enjoys dealing with technology vendors about as much as the average person likes working with housing contractors: Phone calls tend to go unreturned, e-mails vanish into the ether, and the job never seems to get done. The truth is, many large technology vendors just aren't focused on handling phone calls from mid-sized businesses, which is why big tech vendors often invest in resellers and other channel partners to handle their smaller customers. But that means CIOs at mid-sized businesses are "not only trying to manage the person they're buying from [a reseller], but also trying to have some influence over the manufacturer," says Laurie McCabe, an analyst at AMI Partners in New York City. "And that's tough."
Source: CIO Insight, http://www.cioinsight.com

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2007 Supply Chain Management Resource Guide & Executive Yearbook
The annual complete source of industry suppliers of solutions, systems and services, industry conferences, exhibitions, seminars and executive education programs.
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In the January 2007 issue of Global Logistics & Supply Chain Strategies magazine.