SupplyChainBrain: Weekly Newsletters

Now Where Did I Put My Benz?
Mercedes Benz dealership RBM of Atlanta is implementing an RFID-based real-time locating system at its newest location, opening this fall. The system, provided by MyDealerLot, is designed to help the dealership slash the time required to manage its inventory of at least 600 cars, while enabling sales associates to quickly find specific vehicles.
"For management, MyDealerLot is a great inventory-tracking tool," says Randy Powell, RBM's general manager. The MyDealerLot system, being installed now at the new location (RBM of Atlanta--North), will be integrated with RBM's data management server, from ADP, and a key-management system for storing and controlling car keys, created by KEYper Systems. Powell says the dealership is adding the system "so we can track a vehicle from the time it is released to us by the vehicle manufacturer, its location on our lot, how often it has moved--and, with the integrated key control, who moved it--and, very importantly, if it is not on our lot."
Source: RFI D Journal, http://www.rfidjournal.com

Its Market Research Done, Tesco to Open 100 Stores in U.S.
Tesco, the super retailer, will be opening 100 stores across the southwest United States this fall, in Los Angles, San Diego, Phoenix, and Las Vegas. Understanding what makes Tesco strong will make you stronger.
Tesco gathered its research into American shopping practices by literally living with consumers in California for several months. That research led to the so-called Fresh & Easy format which includes the following innovative concepts:
• Small, easy-to-shop format
• Prepared gourmet meals to go
• Health-conscious products (no trans fats, no artificial flavor or color, no cigarettes or tobacco)
• "The Kitchen Table" where customers can try new products and learn about the product, ingredients, and preparation
Format is about much more than varying your product assortment across stores. Providing shopping destinations of different sizes, experiences, and products keeps customers excited and interested in shopping your stores. Giant Eagle's new Giant Eagle Express, Safeway's Lifestyle, HEB's Central Market, or Supervalu's Sunflower are great examples of new and innovative formats developed to satisfy specific customer needs. They are all great front lines as the British invasion begins.
Source: AMR Research, http://amrresearch.com

Record Losses for Retail Despite Anti-Shrinkage Tech
As retailers continue to invest in new programs and technology to combat crime in their stores, dollar losses from theft and fraud have reached an all-time high, according to preliminary results of the latest National Retail Security Survey. It found that retail shrinkage averaged 1.61 percent of retail sales last year, nearly unchanged from 1.60 percent in 2005.
Even though shrinkage as a percentage of sales stayed virtually the same, total retail losses increased last year to $41.6bn due to higher retail sales in 2006 compared to 2005. The survey, now in its fifteenth year, is a collaborative effort between NRF and the University of Florida.
"Though total retail losses continue to rise in correlation with industry sales, it is encouraging that shrinkage as a percentage of sales has stayed flat," says Richard Hollinger, lead author of the report and a criminology professor at the University of Florida. "Retailers seem to be putting a dent in the amount of criminal activity in their stores, though they acknowledge they have a lot of work left to do."
According to the survey, the majority of retail shrinkage last year was due to employee theft, at $19.5bn, which represented almost half of losses (47 percent). Shoplifting accounted for $13.3bn, or about one-third (32 percent) of losses. Other losses included administrative error ($5.8bn and 14 percent of shrinkage) and vendor fraud ($1.7bn and 4 percent of shrinkage).
Source: National Retail Federation, http://www.nrf.com

Where Should Your E-Commerce Platform Reside?
As e-commerce momentum continues to build, many retailers find themselves enjoying success beyond their expectations. With success comes growth, and with growth comes stress on a retailer's information technology underpinnings.
Small and medium-sized retailers have successfully adopted hosted Software as a Service offerings that allow them to delegate the technology fully to a vendor and apply their focus around domain expertise--buying, marketing and merchandising goods to sell, such as apparel, electronics, sporting goods, books or real estate.
In stark contrast, large retailers have historically been unable to take advantage of commercial packages and services. The requirements for scale, legacy integration, cross-channel business processes, support for organization complexity and perhaps, most importantly, brand differentiation, have driven them to build and run their e-commerce and direct-to-consumer platforms. Even when--as is frequently the case--these systems include commercial packages, the packages become so heavily customized that the retailer is left with the functional equivalent of build and run (shorthand for you build it, you own, you operate it), and is on the hook for innovation and scale.
Source: CRM Buyer, http://crmbuyer.com

Our Software's Great--But Nobody Knows How to Use It
Sometimes in shifting to new systems as a result of an acquisition or merger, companies don't always have time to bring their users up to speed on how to make the most of the new software.
Case in point: Dade Behring Holdings, the world's largest company dedicated exclusively to clinical diagnostics. In 1996, Dade Behring (then called Dade International) purchased DuPont's diagnostic business with an eye to expanding its leadership in clinical chemistry.
That same year, the company began switching from a DuPont-developed system to an SAP Flexible Planning Module. Unfortunately, once it got off the DuPont system, Dade Behring, which offers a range of products, services and systems designed to meet the needs of medical labs, discovered there were problems in getting users to adjust to the new software. "We had our first experience with training in using the SAP module," says Bill Magagna, global instructional system design lead for Dade Behring.
The implementation was hardly a success. In fact, because it couldn't get its users up to speed on the SAP system, Dade Behring for eight months was unable to update forecasts on the system, according to an article by John Dougherty, a senior partner at manufacturing and educational consultancy Partners for Excellence who did consulting work for Dade Behring. New forecasts had to be generated manually.
Fortunately, Dade Behring managed to surmount this obstacle.
Source: CIO Insight, http://www.cioinsight.com

Trade Between India, China Becomes More of a Two-Way Street
For years, India was one of the few countries in the world that ran a trade surplus with China. It was fed by China's hunger for natural resources and the fact that, while Chinese-made goods were cheap by developed world standards, they were often beyond the means of most Indian consumers.
But all that changed last year. Chinese exports to India jumped to $14.5bn from just under $9bn in 2005 and $6bn in 2004. This growth propelled bilateral trade to $25bn in 2006, up from $13.6bn in 2004 and a paltry $1bn in 1995.
With the consumer classes in China and India growing rapidly, big investments in infrastructure and strong demand for raw materials, bilateral trade could hit $40bn by 2010.
Source: Business Week, http://www.businessweek.com

PLM Market Seen Growing at 13 Percent a Year
The product lifecycle management (PLM) market is growing at a rapid rate compared to its enterprise application peers. Growth in software license revenue (excluding maintenance) is expected to grow from $1.9bn worldwide in 2006 to $4.1bn in 2012, at a compound annual growth rate of just over 13 percent. Leading this charge will be the discrete manufacturing industry, which looks set to make significantly more of an investment in PLM than the batch and process industries.
Source: CBR Online, http://cbronline.com

Asian Cargo Looking Up, But Not for the Region's Air Carriers
These days a telescope may well be an airline manager's favorite tool to view the Pacific market. A closer perspective is far from pleasant. The traditional mini-peak associated with Chinese New Year was almost non-existent this year. Last year's peak season did materialize, after all, but two months later and much shorter than had been anticipated.
It seems the Asian Tigers are really only kittens these days and the carriers that once scrambled over each other to push freighters into Shanghai are quietly putting planes into other markets, one or two at a time.
Just look at the business from Japan to Hong Kong--once a source of strength connecting two of the Pacific Rim's strongest air cargo markets, the lane is lagging."Japan has been really slow. It's down' about 7 percent year on year," said Jim Friedel, president of Northwest Airlines Cargo.
"Korea to the U.S. has been slow. It's down 15 percent year on year," he said.
Northwest's daily freighters to Taipei are still doing okay, he said. "True, a lot of business has moved to China, but Taiwan is a robust and growing economy. It's not the roaring market that it was during the dot-com years," said Friedel.
However, Taiwan's exports grew a slower-than-projected 5.5 percent in April, as U.S.-bound shipments fell for the second consecutive month. They declined 6.7 percent in April, following a 6.1 percent decrease the previous month. In part, this is due to a growing focus on intra-Asian trade, but both the International Monetary Fund and the World Bank recently predicted a slowdown in Taiwan's exports, driven by weaker U.S. sales.
Even Hong Kong, whose fortunes are buoyed by the torrent of Chinese exports produced in the Pearl River Delta's manufacturing zone, saw a slowdown in the first quarter after 2006 had produced a record 3.58 million tons of throughput at the airport, up 5.2 percent from the previous year. In the first two months of 2007, Cathay Pacific recorded a 0.7 percent decline in tonnage, while the airport's overall total went up a modest 1.5 percent.
Source: Air Cargo World, http://aircargoworld.com

Manufacturers' IT Security at Particular Risk These Days
Life isn't easy for IT security workers these days, and it's even tougher for those who work in the manufacturing sector. Due to the expense and a lack of regulatory stimulus, Manufacturing companies have tended to lag behind the financial, health care and energy industries in the area of information security, even though manufacturers clearly have a lot to lose.
"Manufacturers are amongst the most vulnerable to attack because there is a lot at stake in terms of trade secrets and intellectual property," says Rohyt Belani, managing partner at security consultancy Intrepidus Group. For example, he points to incidents of insider theft of critical documents and drawings for sale or transfer to a competitor (as happened recently when Coca-Cola employees attempted to sell its secret formula to Pepsi).
Manufacturers are also at risk to "phishing" expeditions, in which hackers gain access into proprietary networks to obtain sensitive design data by simply tricking a naive user to divulge passwords or other security information.
Source: Industry Week, http://industryweek.com

Survey: Many Companies Unable to Notify Users of Data Breach
Nearly half of IT and compliance professionals said in a recent survey that their organizations are doing an inadequate job of lowering the rate of data loss. The survey of more than 1,000 IT and compliance practitioners also showed that 45 percent said that if they were hit by a data breach, they don't believe they would be able to notify users and customers, according to researchers at the Ponemon Institute. The same IT managers added that their companies lack the necessary security tools or internal controls to prevent, detect, and correct data security breaches. The study was commissioned by Oracle.
The findings have "disturbing implications" for any company dealing with information stores, according to the study. "It suggests that the IT and compliance practitioners who are required to deal with IT security and privacy issues see the potential for catastrophic data loss," researchers reported. "They also believe that their organizations are grossly inadequate in curbing this potential risk."
The IT managers, who included IT security professionals, interviewed for the survey also said they are much more pessimistic about their organization's ability to detect and control data risks than their compliance counterparts, Ponemon reported. Only 33 percent of the compliance group said they are vulnerable to data breaches compared with 42 percent of the IT group.
Both groups, though, told Ponemon that the situation is only going to get worse in the next 12 to 18 months.
Source: Information Week, http://www.informationweek.com

Electronics Makers Continue to Find Eastern Europe Attractive
Eastern Europe is emerging as a new global hub for the electronics manufacturing industry, according to a new report by Frost & Sullivan. Manufacturing is growing in Eastern Europe because of lower labor costs, increased foreign investment and the growth in the production networks in the region. The electronics manufacturing services market in eastern Europe will grow from about $9bn in 2006 to nearly $24bn in 2013.
Source: Purchasing, http://www.purchasing.com

Alltel Wireless Designs Its Own Supply Management Workflow Tool
Managing, tracking, prioritizing and reprioritizing the flow of work in supply management is crucial in a cutting-edge organization. That fact was clear to Scott Searls, senior vice president of the procurement and logistics group (PLG) at Alltel Wireless, who saw the need for a tracking tool that would help his organization better use its time and resources.
Over the years, Searls says his organization created spreadsheets and databases for workflow, but only one survived the test of time and became the foundation for its Workflow Management Tool. It was developed entirely by PLG employees, and without IT involvement.
Searls says before the Workflow Management Tool was designed, it was difficult for his organization and its internal customers to get the visibility they needed to assess the status of an order or see the flow of needed supplies. "Of course, every requester believes in their heart that what they need is the most important thing," Searls says. "What we found was that in many cases we would try to prioritize based on what we were hearing from customers. And, at the end of the day, we were not using our resources optimally."
All that changed when the workflow tool was designed because it quickly became the organization's "supply funnel where you can literally feel the buying pulse of Alltel," Searls notes.
Source: Inside Supply Management, http://www.ism.ws

Don't Believe Green Is Good. Just Listen to Big Oil.
How do you know when environmentalism has really gone mainstream? When the leaders of some of the nation's dirtiest industries--auto, oil, power and coal--start playing the green card.
Take the oil industry. Giants like ConocoPhillips, Shell and BP America just did what was once unthinkable: they joined calls for federal legislation requiring reductions in greenhouse gas emissions.
Source: Money, http://money.cnn.com

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