Globalization and the move to e-commerce have challenged logistics with demand for smaller loads, more shipments and faster delivery. At the same time, technologies such as business analytics, global positioning systems (GPS), decision support, biometrics and online collaboration have opened up new opportunities to increase shipping efficiency and reliability, while maintaining requirements for controlling and safeguarding shipments. The key to success for retailers, manufacturers and others that depend on shipping will be integration of systems along the supply chain continuum and the ability to both collaborate and outsource.

According to Forester Reseach, contract life-cycle management (CLM) applications will experience rapid growth of 40% in demand in 2005, driven by the growing desire of enterprises to manage contract creation, negotiation, and compliance on an enterprisewide basis, to help ensure compliance with Sarbanes-Oxley and to capture savings buried in contracts with suppliers and sales or licensing revenues in contracts with customers or licensees of intellectual property.

While supplier relationship management (SRM) and customer relationship management (CRM) vendors will make inroads with process-specific contract management modules, specialist vendors who offer enterprisewide CLM solutions will experience the strongest growth. Attracted by the strong growth in CLM, enterprise content management vendors will make their first forays into CLM but will experience little success in 2005 until they build up adequate capabilities through acquisition and internal development.

Having looked into its crystal ball, the analyst group Manufacturing Insights has released some predictions for manufacturers in 2005. Two caught our eye in particular.

To begin, the group says that productivity will become the supply chain priority. The most successful companies will find ways to improve supply chain efficiencies beyond the four walls without sacrificing cost, quality and timeliness.

The group estimates that as much as 15% of revenue “is wasted in unnecessary supply chain transaction costs.” Global manufacturing execution, supply chain visibility and supplier relationship management will all play a large role.

The second key trend is the emergence of demand information management. The idea is to better attract and service customers by collecting and managing information about demand and its cycles.

The key here is to integrate that data with operations. Leaders will move to a “sense and respond” model that “calibrates the supply chain to actual demand signals.”

Software in the emerging product information management (PIM) category offers widely varying

feature sets ? the products come from dissimilar vendors with backgrounds in various disciplines.

Extensive analysis of 13 PIM vendors reveals that the top five products come from FullTilt Solutions, i2 Technologies, IBM, Global eXchange Services, and SAP. During the next five years, FullTilt will likely be acquired and Oracle will join the leaders? circle.

According to Forrester the market is still dominated by SAP en IBM, but other parties are coming up very fast.

The PIM software category was born in 2002 when Web catalog management and print catalog management products merged. Today?s PIM solutions:

? Extract and transform product data.

? Integrate structured product data with unstructured content.

? Output product information in multiple formats to various destinations.

? Synchronize with other systems.

? Offer end users tools like search, workflow, and auditing/reporting.

Until early this 2004, customer adoption was paltry and the PIM market languished. PIM solutions are expensive, costing hundreds of thousands of dollars to implement, and vendors had trouble convincing customers of a positive return on investment (ROI).

But now customer adoption is on the rise because of retailer mandates, messy internal PIM processes, and a shift in perspective toward treating product information as a strategic asset.

An estimated 250 firms in industries ranging from automotive parts to consumer packaged goods have purchased PIM solutions to date. Will this number rapidly increase in the comming years?

At the close of the market on March 30, i2 Technologies made an announcement to cut up to 15% of current head count. This is the most recent of a number of head-count reductions since i2?s employment high of nearly 6,500 employees in 2001. The announcement came at the end of the newly appointed CEO Michael McGrath?s thirtieth day at i2.

McGrath emphasized that the resizing plan is unlike the company?s previous cost reduction efforts because it is primarily focused on reducing i2?s organizational structure and overhead to make the company more efficient for today?s marketplace.

?It is my goal to make i2 one of the most productive software and solutions companies in the world, and this is the first step. Our next step will be to seek significant improvements in some of i2?s core business processes to enable greater productivity with a lower cost structure.?

A lot of buzz surrounding the RFID-enabled new passports coming soon in the US:

USA Today (via SmartMobs, Picturephoning) writes:

[…] Blue-jacketed tourist passports, as well as the maroon-and-black-covered ones used by diplomats and others on government business, are being redesigned and going electronic. The goal is to make it harder to copy or tamper with them, just as currency has been redesigned to fight counterfeiting. […]

What’s generating controversy is a computer chip that will be in a passport’s back cover. It will contain all the information now printed on the first page of the passport, including name, date of birth, place of birth, nationality, passport number and a digitized photo.

[…] Bill Scannell, who has a Web site called RFIDkills.com says a terrorist could use a high-powered machine to scan a cafe and determine how many Americans were inside.

Wired reports: Passport Chip Criticism Grows:

Business travel groups, security experts and privacy advocates are looking to derail a government plan to insert remotely readable chips in American passports, calling the chips homing devices for high-tech muggers, identity thieves and even terrorists. […]

The State Department is also adding technical features to prevent the radio-frequency identification devices, or RFID chips, in new passports from being “skimmed” by unauthorized readers, according to Frank Moss, the deputy assistant secretary for passport services at the State Department.

“We will not issue passports to the American public without mitigating the risk of skimming,” Moss said, calling the issue both a technical and a political problem.

The 64-KB chips will include the information from the photo page of the passport, including name, date of birth and a digitized form of the passport picture. The chips include enough space so that fingerprints or iris prints can be added later.

Border agents, using special readers, will be able to call up all the passport information included on the chips on a computer screen. They will also use facial-identification software and a digital camera to verify that the person presenting the passport is the person who was issued the passport.

As Forrester Research pointed out in one of their reports, the ability to increase inventory turns is a key differentiator between highly successful and more poorly performing companies (e.g., Wal-Mart vs. Kmart; Dell vs. Compaq).

Managing inventory can be a daunting task for an enterprise with tens of thousands of products that are located in hundreds of locations. The challenge is even greater when the locations are situated in different tiers or echelons of the enterprise?s distribution network. In such multi-echelon networks, new product shipments are first stored at a regional or central facility. These central facilities are the internal suppliers to the customer-facing locations. This is a common distribution model for many retail chains as well as for large distributors and manufacturers.

Managing inventory in a multi-echelon network vs. a single-echelon network presents major pitfalls. One is the failure to achieve true network inventory optimization, because replenishment strategies are applied to one echelon without regard to its impact on the other echelons. A network view of inventory usage up and down the demand chain is absent when you are only dealing with a single echelon of locations. Another pitfall is to base upper-echelon replenishment decisions on specious demand forecasts. These pitfalls can create substantial negative consequences.

Dr. Calvin Lee, a 25-year veteran of the transportation and wholesale distribution and retail industries, examines the pitfalls and alternative approaches for tackling the thorny problem of managing inventory in a multi-echelon network, and present a method for optimizing inventory across the network while simultaneously meeting all customer service goals.

From a supply chain technology perspective, is there any subject as contentious, interesting, and important as the major battle that clearly rages in the software space ? and within corporations ? between ERP and ?best-of-breed? solutions?

Anyone who follows the software industry knows it is a huge issue for the vendors. ERP solutions are really the major competitive threat to most best-of-breed players, and the rapidly shrinking number of players in the ERP space have unquestionably put some marketing and product muscle behind their solutions, usually with some built-in advantage at the CXO level based on their relationships.

Within several companies there are currently major internal disputes over which way to head ? it?s like a broken record, the same story over and over again. In each, IT is pushing for the ERP modules, while supply chain and logistics managers want best-of-breed.

In fact, getting a little ahead of myself, I think it is fair to say that the operations/business side of the house never wants the ERP solution. At least, I haven?t met one yet that did.

SCDigest is the first organization to comprehensively address the ERP versus best-of-breed supply chain execution software decision environment. Based on substantial and detailed survey data and one-on-one interviews.

Managers have an opportunity to apply a very different approach to the management of business processes, especially as these processes span multiple enterprises. The orchestration of process networks offers a much more flexible way of managing business processes. Traditional approaches require a process manager within the company to tightly manage the activities of participants within the business process who are also within the company.

Business Process Networks are expanding groups of companies organized by an orchestrator across multiple levels of activity in a business process. These loosely coupled business processes make it easier to tailor a business process to the needs of specific products, customers, or transactions. But that is only the beginning.

The real power of this orchestration approach will be to foster opportunities for specialization and rapid performance improvement among the participants. To exploit this potential, managers will need to develop a different focus on business processes, understanding that the processes do not begin and end at the boundaries of the enterprise, but instead reach out to encompass and mobilize a very diverse set of enterprises.