This week's edition of Business Week has a cover story on outsourcing. As part of the extended story they have a sidebar called the Modular Corporation where they use IDC estimates to look at the size of the outsourcing spend in 2005. Some interesting numbers:

• Logistics and Procurement $179 billion
• Manufacturing (electronics only) $170 billion
• IT $90 billion
• Customer Service $41 billion
• Engineering $ 27 billion
• Finance & Accounting $14 billion
• Human Resources $13 billion
• Analytics $12 billion

...and growing.

The Supply Chain Management Review's recent Global Survey of of Supply Chain Progress shows continued progress of supply chain related activities. According to the article, many companies are moving up the ladder from internal supply chain practices to greater collaboration throughout the supply chain. Where does your company fit on this scale?

Read the article in Supply Chain Management Review.

If at all possible, take a trip to Chicagoland in March (21-23) to National Manufacturing Week. For factory junkies, there are great opportunities to see the latest in from factory floor automation to the latest in hand tools. Supply chain and logistics folks will also find all of the logistics and e-commerce suppliers all in one place.  

I was fortunate to go five years ago and participate in the show by having the dreaded "booth duty" for the company I was working with. We had 8000 registered visitors in our booth over a 4 day period. The days were long, but the nights were full of great Chicago food. As it was a dot com company with seemingly unlimited budgets, we ordered both the shrimp AND the cracked crab at dinner.

Sorry to see the show move out of the city to the 'burbs near the airport. Certainly more convenient, but the local flavor of the city and McCormick Place will be missed.

By now I'm sure that you've heard that Ford will cut 30,000 jobs and close 14 plants as they try to get their mojo back. I am a proud owner of several Ford cars and will continue to buy their products during what they are calling "Way Forward". Good to see their earnings were up this past quarter, as well as today's stock price. 

What worries me is the impact on the supply chain. While 30,000 employee cuts is nothing to sneeze at, it will also be a devastating shock through their supply base. Less factories will undoubtedly mean less parts...and less suppliers. Look for the ripple effect on supplier layoffs also, as well as the impact in the community where the plants will be closing.

ThomasNet.com and Google's survey on industrial buying and selling behaviors shows some interesting trends when it comes to doing business online: 

• 70 percent of buyers expect to find detailed information on product applications and uses, but only about half provide it.
• 58 percent seek CAD drawings and plans, but only 13 percent provide them.
• 74 percent expect to find product prices, but only 23 percent of companies provide them.
• 67 percent want to see shipping information and costs, but only 17 percent provide it.

How do you get your suppliers to have better information on their sites? Demand it. They are worried about losing the relationship (the sell) if more information is provided on the web. The can offset this fear with good performance and value.

Courtesy of ISM

Producer Price Index (PPI): A measurement tool compiled by the U.S. Bureau of Labor Statistics reflecting the average change in prices charged by producers during a given time period, compared to those charged in a base year. The PPI measures inflation at earlier stages of the production and marketing process than does the Consumer Price Index.

Consumer Price Index (CPI): Compiled by the U.S. Bureau of labor Statistics, the CPI is a monthly measure of changes in the prices paid for goods and services by urban consumers. The relative importance given to individual items in the index's basket is based on periodic surveys of consumer expenditures. The CPI is computed for a nation as a whole, for each of seventeen large metropolitan areas, for individual items, and for commodity and service groupings. It is commonly used a a measure for inflation.

ISM

Sorry for the economics lesson, but your suppliers look at these numbers all of the time to figure out your pricing. You need to be aware of them.

I received my ISM 91st Annual International Supply Management Conference and Educational Exhibit brochure in the mail the other day. I cannot attend again this year, but I've attended and spoken at eight of them over the years. Glad to see some of my old friends still adding value to the profession with their presentations and subsequent networking sessions. 

The keynote speaker list is kind of interesting:

• Dr. Steven Covey from Franklin Covey (The Seven Habits person)
• Lou Dobbs from CNN
• Marilyn Carlson Nelson from Carlson Companies
• And many other economists and speakers.

Contact ISM for a brochure.

Hey, the New Yorker Magazine has a sophisticated caption contest...why can't I?

Please hit the comment button and do your best. I keep telling my non-supply chain friends that we all have a great sense of humor. We may curse a lot and speak loudly on the phone...but deep down we are really nice, fun loving people. Aren't we?

Cartoon courtesty of Selling Power.

The Consumer Price Index has hit a five year high, driven by the high cost of fuel oil, gasoline, natural gas, and electricity. The CPI rose 3.4 percent last year, which is the fastest rate increase since 2000. 

Keep in mind that many contracts have CPI kickers filed away in the small print. Some suppliers often use the CPI, and its cousin, the PPI (Producer Price Index) as inflation checks just in case the economy gets out of whack. They are often not acted on, as the CPI has behaved in the past several years.

Best to review any pricing triggers in your contracts. Many don't, as they don't want to wake a sleeping tiger. But I feel it is best to head these potential price increases off at the pass.

Read the article.

Shameless self-promotion. Please read my article in The Manufacturer Magazine titled "We Are the Champions".  

It is about how most lean manufacturing initiatives need a champion, or an internal sponsor, to make them work. I have interviews with General Electric and The Royal Canadian Mint, among others.

Read the article. (Please!) Let me know what you think. This month's assignment is on TPM, or Total Productive Maintenance, and the resulting barriers to its implementation. Contact me if you care to contribute.

Pfizer has begun to ship Viagra with RFID tags in each package, case, and pallet. It is to protect patient safety and cut down on pharmaceutical counterfeiting. RFID tags will allow pharmacies and wholesalers to verify the EPC. It was selected, as it a major target of counterfeiters (and spammers!).  

Pfizer says that the current RFID application is not capable of tracking and tracing the drug through the distribution system, and does not allow for the collection of any patient data. There is currently a big push industry wide to establish policies for the widespread application of RFID in the industry.

Still, Viagra and RFID. There has to be a joke in there somewhere.

Courtesy of Inbound Logistics, here are 10 tips for locating a European distribution hub.  

1. Analyze your company's needs.
2. Become familiar with the European Union's demographics and currencies.
3. Check out national employment laws.
4. Make sure you understand the country's planning laws.
5. Learn the EU transport initiatives.
6. Examine transport connectivity and infrastructure.
7. Know your potential exit strategies.
8. Ask about available grant incentives.
9. Understand the European drive time directives.
10. Check out property pricing and local taxes.

Looks like many of the things that we need to look at for domestic hubs as well.

Jerry was one of the best drafters and designers I had ever met. He would work, fast, accurately, and he had an innate understanding of simple and functional designs. Interestingly enough, Jerry was also had the use of only one hand. Still, he was great. 

Back in the day, drafters were the web designers of today. They were independent, could be a bit quirky, and often moved from one company to another at the drop of a hat, a higher hourly wage, or being ticked off at their boss. This was, of course, before the full scale implementation of CAD.

The large drafting boards that were prevalent in the manufacturing plants are hardly seen anymore. And like those actors that could not make the transition from silent to talkies, many drafters just rode away into the sunset.

If they only had access these cad drawings from CadRegister.com, more might still be around.

Sort of like getting a copy of the play book from the other team, here is a link to Industrial Distribution's 59th Annual Survey of Distributor Operations. This detailed document includes an overview of the distribution market, economic analysis, demographics, sales growth, supplier relationships, and a whole bunch more. It also includes compensation studies so you can know what your opponent is making.

Interesting reading that will help you craft the best negotiating strategy. You might even want to share the link with your industrial distributors. I'll be they have not even seen it.

The Supply Chain Management Review, excerpting from the new book Straight to the Bottom Line (Rudzki, Smock, Katzorke, and Stewart), asks the following questions as it relates to your current supply management process. Provocative and worthy of discussion at your next staff meeting.

•  Are your supply chain goals integrated into the strategic plan?
• Can you identify yourcheif purchasing professional? What is their relationship to you?
• Does your procurement team have top and bottom line objectives?
• Do you have the right leadership in your procurement function?
• What is the interdisciplinary relationship like in your company?
• What are the opportunities for training and personal improvement in your organization?

 Read the complete article