Maintaining the Harmonized System Commodity Description and Coding System (Harmonized System) is a priority for the World Customs Organzation (WCO). This international product nomenclature developed and managed by the WCO is used as a basis for national Customs tariff and statistical nomenclatures by over 200 countries and Customs/economic unions world-wide, representing about 98% of global trade.

The multi-purpose nature of this global Customs and trade instrument has resulted in its recognition as an indispensable tool for international trade. Comprising 5,000 commodity groups, each identified by a six-digit code arranged in a legal and logical structure, the WCO maintains the Harmonized System by largely securing uniform interpretation and application of the nomenclature and periodical updates due to ongoing developments in technology and changes in trade patterns.

The Harmonized System significantly reduces the costs of international trade by contributing to the harmonization of Customs and trade procedures, and the non-documentary interchange of trade data in connection with these procedures. It is also extensively used by governments, international organizations and the private sector for many other purposes such as internal taxes, trade policies, monitoring of controlled goods, rules of origin, freight tariffs, transport statistics, price monitoring, quota controls, compilation of national accounts, and economic research and analysis.

Source: WCO

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Rapid growth in China’s radio frequency identification market continues with a Beijing firm saying second-quarter 2005 sales of $27.9 million were twice those in Q2 2004. In its recently released report, “IT product and service, Chinese RFID Market Data monitor for Q2 2005,” Analysys International said government-sector purchases are driving the product segment. The firm says the nationwide launch of second-generation national identification cards in China is the most important reason for rapid growth in 2005. ID cards and related products accounted for 38 percent of the RFID market in the second quarter.

Analysys International notes RFID applications have reached a good momentum in fields where it is currently applied on a large scale, including public transportation, the second-largest sector of demand with 14 percent of the market. School campuses ranked third with 11 percent, followed by property/residential use at 8 percent and both highway use and e-ticketing sectors each taking 7 percent.

At a time when RFID applications are starting to expand, the Beijing-based consultancy believes market development is still restricted by many factors, including sustained high costs, lack of a unified standard and immature supply chains and support links. All these problems are still unsolved, creating barriers for large-scale acceptance of RFID. Bryan Chen, an analyst with the company, believes that a series of unsettled bottleneck problems remain and that RFID product and service providers need to focus on developing closed-loop products without defined standards in order to accumulate project and product experience as well as budget resources for further development. The company considers mastery of core techniques to be a critical direction at this stage, one which will provide possibilities for further cost reduction and product differentiation in the future.

Analysys International is predicting the RFID market will grow sharply during the third quarter, spurred by more ID cards being issued and seasonal demand such as new students returning to school.

Source: United Press International

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Demand variability increases as one moves up a supply chain. The demand for finished products is less variable than for subassemblies, which is less variable than for individual components. This phenomenon is known as the bullwhip or Forrester effect. It increases inventory unnecessarily and makes managing the capacity of equipment and personnel difficult.

In 1999, Philips Semiconductors confirmed substantial bullwhip effects in some of its supply chains and began developing a collaborative-planning process and tool to reduce them. It sought to reduce inventory and increase customer-service levels by integrating its supply chain planning and control with those of its customers. By applying stochastic multiechelon inventory theory, it developed an advanced planning and scheduling system that supports weekly collaborative planning of operations by Philips Semiconductors and one of its customers, Philips Optical Storage.

The project has brought substantial savings. A conservative estimate shows minimum yearly savings of around US$5 million from $300 million yearly turnover. More important, Philips Optical Storage now has a more flexible and reliable supplier that can virtually guarantee quantities and delivery times. Philips Semiconductor is rolling out its new approach to other customers.

Source: InForms

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The World Trade Magazine annual ‘Fabulous Fifty Plus One’ (named in honor of the number on the original list) recognizes the people, companies, facilities and trends that are leading the way in world trade. The list is purely subjective, an informal polling of global supply chain ‘watchers’ like industry figures, service providers, and journalists. They tell us who or what’s caught their eye in the continuing evolution of the global supply chain. This year’s roll call is particularly heavy with technology, acknowledging the critical significance real-time’visibility’ is playing in integrating world-wide traders.

This year’s ‘Fabulous Fifty’ take their place in a sector characterized by dynamic change. For each nominee, there are others equally distinguished and primed for inclusion in future rosters. Like world trade itself, leadership is expanding on all fronts.

As international sourcing changes the whole game of land transport, UPS (www.ups.com), FedEx (www.fedex.com) and DHL (www.dhl.com) are re-writing the rules. With the trucking sector going through huge changes and consolidations, these power-houses have been deftly re-structuring their portfolios to offer ever more integrated supply chain services. FedEx’s strategy for diversifying operations through acquisitions has placed it firmly in LTL, ground parcel and contract logistics. Right in step, UPS bought Overnite this spring to offer customers added LTL, especially valuable in adding a domestic piece to its expanding global Supply Chains Solutions division (industry watchers await more such buys). DHL, meanwhile, continues aggressively marketing its profile with products like Import Express, which deploys the company’s broad international network to offer all-inclusive door-to-door service to the U.S. from foreign sources.

Express consignment carrier and global mail provider TNT’s latest product offering is next-day, door-to-door delivery service of diagnostic samples and clinical supplies for central laboratories in Asia to the United States. Clinical trial shipments from Asia to the U.S. are set to double by 2006. Currently, Asia-U.S. shipments account for about 10 percent of the industry, estimated to be worth $30 million a year, half of which originates in Singapore. Separately, the company is aggressively pursuing the pan-European postal market as market liberalization continues. TNT also has a cooperative agreement with China Post. (www.tnt.com)

The complete World Trade Management ‘Fabulous Fifty Plus One’ list

United Parcel Service (UPS) has decided to expand operations at the Clark Aviation complex inside the Clark Special Economic Zone despite a recent Supreme Court decision disallowing the granting of tax and duty free privileges to locators here. Starting on August 29, the Clark-Dubai-Cologne, Germany route, will increase from nine to 10 the daily flight frequencies from Clark. Sim added that UPS also plans to add two more flights by first quarter of 2006.

Since its establishment in 2002, UPS’s intra-Asia hub has grown into the company’s largest air hub in the Asia Pacific region. The hub is now base to 90 flights per week, a 50% increase since its opening. To meet growing demand, UPS has tripled the hub’s sorting capacity from 2,500 packages to 7,500 packages per hour.

Source: UPS

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In the past few weeks, there have been a rash of announcements as studios and publishers declare support for one of the two next-generation DVD formats: Blu-ray DVD (BD) or HD DVD (HD). While the format war seems like a technology standards battle, it is really a matter of which studio?s supply chain gets consumers the product they want when they want it.

The challenges posed by the small window of demand (up to 80% of DVD sales for a title happen in the first two weeks), the multiple channels and thousands of outlets selling the product, the high degree of impulse buying by consumers, and the need to offer the product simultaneously worldwide to combat piracy present a formidable supply chain challenge. The recent effects of DVD returns on studio earnings and the resulting informal Securities and Exchange Commission (SEC) investigations of both DreamWorks (Shrek 2) and Pixar (The Incredibles) highlight the importance of not overstocking retail shelves. The short lifecycle of these products has focused studios on attaining almost 100% product availability, but now this must be done with little or no buffer inventory. Oversupply is as much a problem as out-of-stocks.

Getting the right quantity of a DVD title to retailer shelves quickly is challenging enough, but two formats of DVD for each title may prove one too many. As a protracted period of dueling formats is predicted, retailers will need to have both the old and the new version of DVDs on their shelves for consumers. The competitive advantage for the studios in the format war is not getting the greatest number of fellow studios to choose one format; it is being able to supply two versions of one title to the right places in the right quantity. Since next-generation DVD players will only play one format, BD or HD, consumers will likely buy the player utilizing the format that they perceive to have the most available titles. This will not be determined by the number of titles produced; it is the number of titles available at the store when the consumer wants to buy that counts. In this case, availability is more important than superior technology.

Source: AMR Research - Joyce McGovern

Business leaders are showing much more interest in reverse logistics for several reasons. Regulators both in the European Union and at the state level in the United States are tightening up on product disposal. Also, landfill costs are rising. In the United States, landfill tipping fees have increased to an average of $33.70 per ton, and incinerator tipping fees now average $59.07 per ton. Furthermore, society in general has higher expectations for sustainable business practices.

Other factors are pushing companies to focus on reverse logistics. The growth of product leasing requires companies to actively manage end-of-lease products. Additionally, there has been significant growth in direct online selling, which can produce return rates of 40 percent for some catalog and online retailers. These direct vendors have no choice but to develop effective returns management processes. Thus, it has become increasingly important that logistics systems more effectively accommodate product returns, either within the existing systems or through secondary channels. Management teams must identify, track, and understand these trends so they can properly develop their reverse logistics capabilities and position their companies to enhance supply chain competitiveness.

As a first step, managers must grasp the impact of reverse logistics activities on their companies’ costs, revenues, and assets. One way to do so is to apply the classic strategic profit model in which return-on-assets (ROA) analysis considers revenues, expenses relating to net profits, and assets in terms of asset turnover. Clearly, the reverse logistics process must be recognized as more than a cost of doing business or as a cost minimization exercise.

Source: Supply Chain Management Review

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AIM Global, the trade association recognized as the worldwide authority on automatic identification and mobility, today announced that the RFID Experts Group (REG), will form an action group to provide guidance related to RFID middleware, application software, and hybrid AIDC management tools.

The work group will operate within the structure of the RFID Experts Group and will be led by Dr. Nissim Ozer, CTO and Executive Vice President of RFID platform vendor RF Code, Inc. of Mesa, AZ. Dr. Ozer is an IT industry veteran with development and executive experience in automatic data collection, client/server systems and artificial intelligence markets.

The software effort?s membership will include representatives from a wide range of leading providers and users of RFID technologies, including Michelin, the U.S. Department of Defense, Savi Technology, the University of Pittsburgh, and Intermec Technologies.

Source: AIM Global

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The Glossary of Terms in Logistics & Shipping is the most comprehensive paper-based dictionary and therefore the standard for defining terms used in the area of Logistics and Shipping. Use this powerful tool to expand your professional vocabulary and ensure that everyone on your team is speaking the same language. www.theKnowledgeTransfer.com

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Do you want to:

Stand back from day to day business pressures to consider how to improve your organization?s supply chain

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Identify priorities for improvement

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Then the Supply Chain Diagnostics Tool - an initiative of BoozAllenHamilton and Fraunhover WISA - may help you. However developed your supply chain is, this tool could help you to identify ways to improve it.

The supply chain diagnostic tool is structured around typical root causes for weaknesses in today?s Supply Chain Management, and includes questions designed to identify these root causes through their symptoms in organizations. After you complete the questions in the supply chain diagnostic tool, you will see a three stage evaluation, examining different aspects of supply chain performance, and you will see how your supply chain performs against the six principles of Supply Chain Management, highlighted against the “traffic light” scale.

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The Glossary of Terms in Logistics & Shipping is the most comprehensive paper-based dictionary and therefore the standard for defining terms used in the area of Logistics and Shipping. Use this powerful tool to expand your professional vocabulary and ensure that everyone on your team is speaking the same language. www.theKnowledgeTransfer.com

paperback student version $ 19,99 hardcover executive version $ 29,99

An AMR Research report shows that technology-related SCM spending in 2005 will reach $17.9 billion, up 30 percent over 2003 levels. Investments in third-party consulting and hardware are driving much of the increase (see chart). The study titled “The Supply Chain Management Report, 2005-2006″notes that the top five planned SCM investments are for supply chain visibility, demand planning and forecasting, supply chain analytics, RFID, and sales and operations planning (S&OP).

The growth in the market is coming despite the fact that 43 percent of the companies surveyed already have existing technologies for supply chain planning and 34 percent have already deployed supply chain execution solutions. Some of the new spending is earmarked for redeployment of existing supply chain applications, including demand forecasting and planning.

The heightened demand for supply chain analytics results from a growing need to measure, monitor and alert in order to synchronize demand. And that, in turn helps companies control costs and improve network management. RFID spending has received a boost from retailer and Department of Defense mandates. The investments in S&OP relate to a need to improve demand visibility. The biggest investors in S&OP solutions are companies involved in mergers that use the technology to synchronize operations, according to the researchers.

AMR Research notes that the spending increases reveal a major shift to more cross-application integration. Companies are now using SCM in combination with applications such as customer relationship management, ERP, and supplier relationship management. These integration activities have also prompted the need to redeploy existing SCM technologies, AMR says.

Source: Supply Chain Technology Briefing

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The Glossary of Terms in Logistics & Shipping is the most comprehensive paper-based dictionary and therefore the standard for defining terms used in the area of Logistics and Shipping. Use this powerful tool to expand your professional vocabulary and ensure that everyone on your team is speaking the same language. www.theKnowledgeTransfer.com

paperback student version $ 19,99 hardcover executive version $ 29,99