Supply Chain Architecture: A Blueprint for Networking the Flow of Material, Information, and Cash applies five crucial business principles to solve network problems for geographically separated workers who must team together to deliver products and services.

These five principles ‘Velocity, Variability, Vocalize, Visualize, and Value’ simplify the design and operation of complex, real-world supply chain networks for broad use throughout the manufacturing and service sectors. Written by an accomplished practitioner in common sense language, this

‘how to’ book provides a complete blueprint for transforming marginal business relationships into exceptionally competitive networks.

The author clearly explains how a supply chain network’s competitiveness is defined by the integration of network design, the product Bill of Materials, and the network operations, not by a particular technology solution. This volume inspires you to see beyond the confines of your organization to unlock the competitive energy of end-to-end supply chain networks. It offers complete coverage of important topics that have previously received little attention, including the implementation of global performance measures, planning at the interface between push and pull operations, minimization of velocity traps, and paralleling cash-to-cash cycles.

Aresurgent world economy fuelling demand for goods made in the Far East has underpinned the boom in container shipping in the last three years. And for the manufacture of many consumer products, the Far East is becoming synonymous with one country: China.

Volumes on the main eastwest trades from Asia to North America and from Asia to northern Europe increased by 14.3% and 16.5% respectively last year, according to Drewry Shipping Consultants. It predicts growth will continue in double-digit figures this year and next.

To be service oriented does not simply imply offering support or field services around your

tangible products. It requires from manufacturers a change of structure ? one could even say a

change of culture.

To be service oriented, your organization must simultaneously:

1. Hire, Train and Reward Service People.

2. Install Communication between the (Customer) Service Department and the rest of the company.

3. Invest in Service Information and Communication Technologies.

4. Treat the Customer right.

Being service oriented starts as early as in the recruitment process and finishes only when the service is well delivered to the customer.

In a study under 151 companies carried out by the Eindhoven University of Technology, there were some interesting findings:

- Service oriented organizational behavior in the manufacturing sector does lead to higher non-financial performance.

- Internal arrangements help support different service strategies of a company. This is an indication

to manufacturing firms that the presence of a service director in top management is crucial.

- By having a large customer base, emphasizing and proactively offering services, manufacturers can develop relationships and retain their customers.

- Customer orientation does not directly impact the service orientation of service strategies.

- Manufacturers implement Service Suporting Client Actions strategies under pressure of competitors. It even could be that manufacturers are quickly reacting to each other’s strategies without truly developing their strategy sufficiently?

- Technological turbulences do affect all three measures of service orientation. This tells manufacturers in a turbulent market place that their competitors will focus on services and will utilize this approach and strategy to differentiate themselves.

- Manufacturers should focus on service rewards, service training and cross-functional communication of the service department.

Interested in the complete study?

?Vendor-Managed Inventory (VMI), introduced by Kurt Solomon Associates in 1992, is perhaps the most widely known system for managing supply chains. Under VMI, the buyer authorizes the supplier?to manage the inventory of stock-keeping units (SKUs) at the buyer?s site(s) under agreed-upon parameters.

The buyer provides the supplier with sales and/or inventory-status information; and the supplier makes and implements decisions about replenishment quantities and timing. VMI provides the supplier with the opportunity to better manage its own production, inventory and transportation costs. In exchange, the buyer typically receives price discounts or improved terms of payment

This paper will deal with some of the insurance issues associated with this expanding business practice.

LOGISTICS IS one of the oldest and also the newest activitives of business management. It involves combining diverse functions and service providers who may be culturally and objectively different.

Logistics is about moving materials, information and funds from one business to another or from a business to the consumer. It is an important part of the business economic system and is a major global economic activity. In fact 10-15 per cent of product costs is logistics related. Worldwide, logistics constitutes about $2 trillion a year. For any country, the logistics cost is estimated between 9 and 20 per cent of its GDP.

Logistics was defined by the Greeks as “the science of correct reasoning by means of mathematics”. The first modern use of the term was in the military to identify the process of planning and co-ordinating the movement of army and weapon support systems. Good logistics brings out the ability to move faster and accurately to the battle front. If one applies the same to the business organisation, it is one’s ability to reach the product to the consumer at the right time, right place , right quantity and at the lowest cost. On similar lines, supply chain management will mean the network of organisations involved in the process by which goods are moved from producer to consumer and the counterflow of information, to manage the supply chain as a single entity.

A prominent application of logistics was in World War II where weapon movements were coordinated to ensure success. A recent instance of massive logistics initiatives is in the Gulf war. With increasing competition in the market place, managements started focusing on customer services in the early 1950s in developed markets such as Europe and the U.S. In late 1960s some of the logistics concepts were tested. Following the oil crisis of the 1970s and the concept of just-in-time in manufacturing customer servicing standards were given more importance and new integrated logistics models and solutions were born. The emergence of organised distribution system by department stores and superfast courier service organisations gave a boost to logistics concepts and strategies. Today all businesses are looking for seamless transaction systems to co-ordinate their information and material requirements along the value chain.

At the micro level any manufacturing and marketing company spends 5 - 35 per cent of sales on logistics. The major cost components are transportation, warehousing and inventory carrying cost. Improvements in logistics get reflected in a reduction in inventory levels, shorter delivery schedules, improved servicing standards with significant savings in total costs.

At present, companies specialising in logistics operations use traditional technologies and cater to stand alone services like transportation, warehousing, clearing and forwarding. There is tremendous scope to upgrade the technology, integrate the entire supply chain, improve productivity levels and bring down operating costs. Any technology that can improve productivity in transportation operations will be a great boon to the economy both directly and indirectly with opportunities for 10-12 per cent reduction in costs. Besides the savings on downstream users of transport will be much higher and the cost multiplier effect on the economy will be reduced to that extent.

Intermec Technologies hit back in an ongoing dispute with Symbol Technologies (Profile, Products, Articles), suing the wireless technology vendor for alleged infringement of several Intermec patents.

At March 10 (2005) Symbol filed a claim against Intermec. Symbol charged that the company infringed Symbol patents related to IEEE 802.11 wireless LAN technology. It also is seeking a permanent injunction and unspecified damages. The widely used 802.11 standard is based in part on Symbol patents, which the company licenses on reasonable and nondiscriminatory terms, Symbol said.

Now Intermec is seeking unspecified damages and a permanent injunction against Symbol to prevent further infringement, according to an Intermec statement. The company alleges Symbol infringed six patents that cover a wireless data capture system capable of distributing data over a network, battery-powered data processing devices that can run a multitasking operating system and handheld data capture devices with graphical user interfaces and the capability to use handwritten input, the statement said.

Both Intermec and Symbol make bar code and RFID (radio frequency identification) systems, which can be used for point of sale, inventory and other applications. And both companies hold numerous patents centered on RFID technology, making them the two companies with the most IP at stake in the RFID tag and reader market.

The clash follows a long but unsuccessful series of negotiations toward a cross-licensing agreement for the technology each brings to the table.

As the litigation continues, the inevitable question becomes whether contention between these two important players will undermine customer adoption of RFID technology. For sure, if the battle drags on for long time, it will have significant impact on RFID adoption because companies don’t know who they’ll have to pay for certain kinds of technology, and end users know whatever cost goes into the technology side will be passed on to them.

The Supply-Chain Operations Reference-model (SCOR) is a process reference model that has been developed and endorsed by the Supply-Chain Council as the cross-industry standard diagnostic tool for supply-chain management. SCOR enables users to address, improve, and communicate supply-chain management practices within and between all interested parties.

[img=550,200]http://www.process-wizard.com/files/images/valuechain.gif[/img]

SCOR is a management tool. It is a process reference model for supply-chain management, spanning from the supplier’s supplier to the customer’s customer. The SCOR-model has been developed to describe the business activities associated with all phases of satisfying a customer’s demand. By describing supply chains using process building blocks, the Model can be used to describe supply chains that are very simple or very complex using a common set of definitions. As a result, disparate industries can be linked to describe the depth and breadth of virtually any supply chain. The Model has been able to successfully describe and provide a basis for supply chain improvement for global projects as well as site-specific projects.

Vendor-Managed Inventory (VMI) is thoroughly tried in North America and Europe as one of the best ways to build transparency and visibility between a manufacturer and a supplier in the management of raw materials. Transferring this to China is not so easy.

The Bottom Line: Companies must consider three major issues: inventory ownership, location, and customs compliance. Each must be worked through before a successful supply program can be initiated. If these are not managed appropriately, neither side will see the traditional benefits of VMI.

You must keep an eye on the following three considerations:

To own inventory in China, a company has to be a legal entity there. For suppliers without a Chinese legal presence, VMI is simply not possible.

[u]The Takeaway:[/u] Before establishing a VMI relationship, check if the legal status of your supplier is as a legal entity. If your supplier is not a legal entity, help suppliers navigate the Chinese system by using your influence to help establish presence for them.

In China, VMI becomes much easier if you locate the supply network within one of the 15 free-trade zones, which offer tax and process efficiencies for both parties.

[u]The Takeaway:[/u] Locate free-trade zones and areas that minimize the handling and logistics for the materials. Logistics infrastructure is being upgraded, but will remain significantly complex.

Up until recently, the lengthy time for customs compliance negated the efficiency of a VMI program; now some brand owners are managing customs compliance electronically using Electronic Data Interchange (EDI). The rules are complicated and vary at three levels: national, provincial, and city. If the operation is located within one of the free-trade zones, it becomes much easier.

[u]The Takeaway:[/u] Staff a full-time, senior-level relationship manager to work with customs authorities.

Conclusion: Working with suppliers that have presence, and are well-versed on how to navigate these three considerations, is best if pursuing a VMI relationship. If you cannot navigate through these three issues, the barriers defeat the benefits of VMI.

The chief executive of SAP AG, the world’s biggest maker of business software, told a German business magazine he’d be open to a merger with rival Oracle Corp. if company head Larry Ellison were to raise the idea.

“I would listen to him,” SAP CEO Henning Kagermann told German business weekly Wirtschaftswoche, published Thursday. The Walldorf-based company confirmed Kagermann’s remarks. Oracle spokesman Bob Wynne declined to comment Thursday. Kagermann said his company’s executives would consider any merger proposal, provided it was in the best interest of the software maker’s shareholders, something a German company is required by law to do.

Oracle and SAP are the world’s two leading makers of business applications software - the computer coding that automates a wide range of administrative tasks. SAP has long been the industry leader, but Oracle has recently been closing the gap with several high-profile acquisitions. Kagermann told the magazine that the company is also looking at new acquisitions, but didn’t cite any specific companies.

SAP shares fell 0.4 percent to euro119.00 (US$153.64) in Frankfurt trading. Oracle shares slipped less than 1 percent to US$12.25 (euro9.49) on the Nasdaq Stock Market.

source: ITB Supply Chain Knowledge Base

In 2002 Gillette knew it had a problem. Service levels were low, supply management was spotty, and customers were angry.

The solution: reengineer the organization based on the premise that the value chain begins and ends at the retailer’s shelf.

The results to date have been impressive?customer service levels up by 10 percent, inventories down by 25 percent, costs cut by 3 percent.