Good News: Durable Goods Up 1.8%

Hey, here’s some good news:  durable goods orders were up 1.8% in May.   New orders for non-defense goods actually rose 5%.  This is the third increase in the last four months, so I’d call that momentum.

You can read more here, but here are the highlights:

“The May durable goods report adds a persuasive component to a growing body of evidence that U.S. economic activity is beginning to stabilize after a deep contraction,” said Cliff Waldman, Economist for the Manufacturers Alliance/MAPI. “Stripping out either transportation or defense, two volatile categories of demand, new orders were up over 1%. And ‘manufacturing with unfilled orders’ had a sharp increase for the second consecutive month, indicating that demand is beginning to make a positive contribution to future production.

“The industrial composition of orders was mixed in May, although soaring demand for machinery is a positive sign for a broad U.S. economic recovery,” Waldman added. “Further, new orders for non-defense capital goods excluding aircraft, a proxy for business equipment spending, rose by nearly 5% after a deep fall of nearly 3% the prior month, an indication that business confidence in future economic activity is starting to improve. Nonetheless, the still sharp declines in year-over-year activity across all categories of demand is a reminder that the U.S. factory sector still has a long way to go and is facing the headwind of one of the deepest global contractions in a generation.”

Are you feeling the positive momentum in your company/industry?

Amitive Cloud Computing – a Second Opinion

I’ve spewed plenty of propaganda about the Amitive SCM in the Cloud initiative.  I’m obviously biased as 1) I’m an Amitive executive, and 2) I’m a SaaS bigot and firmly believe that the Cloud is the future of computing (beginning today).  So if you want to read about the initiative from Bob Ferrari’s perspective, it’s certainly worth a read.  If you’re not familiar with Bob, now’s the time to catch up as he is supply chain smart and does a great job of capturing and dissecting supply chain news on his blog Supply Chain Matters.

So click here and read for yourself.

Risk Defense in Outsourced Manufacturing?

Two stories today caught my eye.  Both stories consider the impact of in-house vs outsourced manufacturing.  Steve Banker, ARC analyst, considers how outsourced manufacturing and supply chain management is faring in the down economy.  He rightly points out that the greatest risk here is on partner viability.  I can’t over-emphasize the importance of nurtuing sustainable relationships with suppliers even if that means direct investment as a the bridge to ensure future collaboration beyond this recession.

From an indirect point of  view, Bob Ferrari has noted the challenges and subsequent downfall of SONY.  He smartly points out their supply chain challenges and the rigidity they brought upon themselves by relying on in-house manufacturing.  Contrast that to the cost efficiency of Apple and their strategy of in-house design and outsourced manufacturing, and you can see two great brands heading in different directions.  Apple views their supply chain as a critical differentiator.  No wonder they were ranked #1 by AMR in their annual Supply Chain Top 25 study.

Two studies have examined the impact of outsourced manufacturing and it’s resilience in the recession.  What’s your point of view on this subject?

Federal Budget Hastens Cloud Adoption

The Cloud Opportunity is Coming Quickly

Yes, you read that correctly.  The federal government is presenting a tremendous cloud computing opportunity and it is coming fast.  You can read a smart synopsis of the opportunity here.  A lot of detail, but an interesting opportunity for a novice to gaze at the cross-cutting initiative in depth, here’s the full report from OMB.

I want so badly to make a comment on government being on the leading edge here, but I know that would come back to bite me.  Regardless, you can see the cloud is gaining momentum as the trusted way of the future.  By many accounts, that future is coming much faster than most estimated.

If you’re new to this, you’d better learn about the cloud fast.  While cloud computing is surely the future, many mistakes will surely be made along the way.  Learn now so you’ll be one of the success stories in the coming history books.  Fail to prepare and you’ll be one of the victims in the “disasters’ section of those same books.

True Cloud Computing (Part V in the SCM in the Cloud Series)

The supply chain is already in the cloud, now the cloud is ready for SCM

The promise of cloud computing is flexibility of IT service delivery.  Oddly enough, most self-proclaimed cloud computing vendors are actually committed to a single service provider.

At Amitive, we believe in true cloud computing for flexibility that provides the great leap forward, not simply an incremental step.  As such, Amitive is the first SCM provider that provides product companies with a choice of cloud computing style that best matches their IT requirements and readiness now – and provides a seamless path to alternate computing as a company changes their IT portfolio or delivery structure, grows in size, or increases sophistication.  Amitive offers customers the choice of Our Cloud, Your Cloud, and Any Cloud environments.

Our Cloud

Amitive Unity can be delivered via our private cloud. In this model, Amitive manages a customer account via our multi-tenant servers in the secure datacenter of our world class infrastructure partner.  This offering is on-demand and delivered in a Software as a Service (SaaS) model.

Your Cloud

Amitive recognizes that there are product companies that prefer self-management of their IT infrastructure. Amitive enables in-house management, inside your fire wall, of Amitive Unity (we call that Your Cloud).  In this, the system can be managed in-house, in a customer’s data center, with the added benefit that Amitive can still provide implementation, support, and seamless upgrades through the cloud.

Any Cloud

Amitive Unity can also be delivered via your cloud of choice (such as Amazon’s EC2, Go-Grid or any similar cloud environment), providing superior cost, flexibility and enhanced scalability.  In Any Cloud, in addition to that provider’s service capabilities, Amitive can also provide dynamic server resource management based on schedule and utilization to optimize hardware utilization, maximize performance, and minimize cost in the cloud computing datacenter.  Now you can scale seamlessly through the dynamic ebb and flow of corporate activity without the traditional need for dedicated computing capacity.  By scaling through shared community hardware resources, the Any Cloud option provides high performance, low cost, and green enterprise computing.

Any Cloud—What’s the Amitive Difference?

While more companies are claiming cloud delivery, their service is not significantly dissimilar to the traditional ASP model.  While they may differ with multi-tenancy on servers, they typically still use dedicated hardware without dynamic server resource management; thus missing the true cost and performance advantages of cloud computing.  You might think of that type of service as Cloud Service Provider (CSP) and therefore an incremental step forward from the dated ASP environment.

So that’s where we’re headed.  We believe this strategy will help deliver product companies from the constraints they’ve been bound with by traditional SCM and archaic delivery models.  We expect adoption to come as companies evaluate new systems and strategies– we don’t see an immediate, mass move toward cloud computing simply for the technology breakthrough.  So this will probably be a 10 year transition, but the clock has started ticking and the move is on.

At Amitive, we’re believers– how about you?  Want to learn more about our approach?  I’ve written a whitepaper outlining our offering now and plans for the future.  Feel free to download this free whitepaper.

Business Benefits of SCM in the Cloud (Part IV in the SCM in the Cloud series)

The supply chain is already in the cloud, now the cloud is ready for SCM

While the IT benefits of Cloud Computing present shear advantage, anyone worth their salt evaluating this strategy wants to know the business benefits of cloud computing and the potential for improvement of financial performance.

Cloud Computing enables today’s supply chain business operating model – the multi-enterprise business network – with a simpler, more flexible platform for real-time, cross-community visibility.  Now processes can be conducted seamlessly and efficiently and individual and community decisions can be made faster based on a single source of truth.  Add to these operating improvements the benefit of lower costs and greener operations of leveraging shared services.  And now a supply chain community has the flexibility to grow and contract to match the timely needs of an entire business community, depending on activity level, transaction volume, present product mix, market conditions, etc.  Like clouds themselves, the shape of the community can morph as well with the flexibility to frequently and easily change the shape of business processes supporting products, partners, and geographies.

These operating improvements contribute to a company and its trading community’s ability to:

• Cut costs and go green
• Free working capital (reduce inventory via collaborative processes, cross-community visibility)
• Speed innovative products to market, and ensure product velocity across the supply chain
• Change quickly to the volatility of energy, demand, and credit complicating our already complex world of supply chain management.

Sounds good right?  Of course it does, but who’s doing this?  Tell us about leading companies you see advancing on these fronts.

You can learn more about the Amitive approach on our website.  You can also download and share our whitepapers on SCM in the Cloud.

Is Today’s Cloud Supply Chain Ready? (Part III in the SCM in the Cloud series)

The supply chain is in the cloud, now the cloud is ready for SCM

Supply chain business experts are rightfully questioning if the Cloud is really ready for these complex, mission critical communications and transactions required by supply chain management. After all, the first cloud applications were suitable for standardized types of activities – e.g. movie selection or purchasing books on the consumer side, and payroll, small business accounting, sales lead management, word processing and spreadsheets on the business side. These basic processes don’t change much from user to user or company to company, and typically don’t require high service levels.

But today, SaaS-based CRM, HCM, and ERP vendors such as Salesforce.com, SuccessFactors, and NetSuite, have been successful in delivering appropriate levels of processes, customization and security, all at a lower cost, thus paving the way for move into mission critical, multi-company SCM.  According to IDC, multi-enterprise organizations that have limited IT resources, massive amounts of data, variable processing loads and capital constraints have a pronounced affinity for cloud computing. Not surprisingly, the business process management needs and financial/human resource constraints of mid-tier manufacturers map directly to IDC’s assessment.

A variety of analyst reports now allay the most common concerns of whether Cloud-enabled SaaS applications are really ready for prime time because they are at least (if not more) scalable, reliable and secure than traditional software applications. For example:

• Internet business is more mature than at the time of the rise– and fall– of B2B exchanges:  performance, security, adoption
• Communication standards have advanced (e.g. industry standards for web services)
• Integration standards, development tools have advanced and standardized (though still not the ideal of plug and play)
• Open systems are becoming more of a reality via SOA
• Interoperability among applications (SaaS), platform (PaaS), infrastructure (IaaS) is advancing rapidly
• Regulatory is accepting the internet for mission critical, cross border activities.

Looking for tangible evidence of business value? In one case, a government agency moved to Google docs and reported a decrease in spend from $4 million to just over $400,000 due to dollars saved on software purchasing and licensing fees.[1]

Indeed, technology vendors like Microsoft, Google, IBM, AT&T, Salesforce.com, NetSuite and Amazon are already leading the way in Cloud Computing. And according to industry analysts, Cloud Computing is here to stay:

• By 2012, net new IT growth in spending will be $30.8 billion, 25% of which will be IT Cloud Services [2]
• “Cloud services will be essential tools for addressing the biggest business demands of IT: speed, cost, scale, rich variety of solutions.”[3]
• Of the companies using cloud computing services to enable accessibility from anywhere;  83% are specifically using cloud computing services for software as a service.[4]

So the Cloud is ready for SCM and supply chains are certainly hungry for the flexibility and benefits of the Cloud.

What are your concerns?

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[1] IDC Reference.

[2] IDC report Clouds and Beyond, Frank Gens, IDC 2009

[3] IDC report Clouds and Beyond, Frank Gens, IDC 2009

[4] The Yankee Group Anywhere Enterprise – Large:  2008 U.S. Mobility and Business Applications Survey, Sheryl Kingstone, Yankee Group

The Great Leap Forward (Part II in the SCM in the Cloud series)

The supply chain is already in the cloud, now the cloud is ready for SCM

Now that we have established what Cloud Computing is, that it is here to stay, and that it is enterprise ready, the question remains – is it ready for Supply Chain Management? My answer, of course, is “yes.” And more importantly, SCM is primed and ready for Cloud Computing.  The time is now for this shift, and while developing the right cloud application presents clear challenges for traditionally-minded software vendors, it will be neither as difficult, dramatic, nor costly for SCM-users as previous paradigm technology shifts.

The time is right and the market is hungry because gone are the days of vertically integrated supply chains in which design, manufacturing, and distribution is overseen and managed by a single organization.  Today, more and more companies are partnering closely not just with suppliers and distributors, but with third party contract manufacturing resources as well. This multi-enterprise model is based on a community of trading partners playing roles in planning, sourcing, inventory and product fulfillment.  It requires multi-company, multi-national communication and collaboration to manage the movement of goods across both corporate and national borders.

This new approach, called Community Supply Chain Management (or C-SCM) demands a new technology model, and Cloud Computing is a natural fit for today’s C-SCM model.  Intercompany supply chain communication, collaboration, transactions and movement of goods are like the cloud itself: distributed, shared, in constant flux. Like a community of supply chain partners, the cloud’s shape and size changes frequently and dynamically with the fluid business environment it supports.

The elephant in the room is that while supply chain communities are rapidly advancing with the new business model of multi-enterprise business networks, supporting technology provided by traditional supply chain software vendors (e.g. SAP, Oracle, i2 and the like) has lagged in its ability to support this community model.  The reality is that supply chain trading partners work on different SCM software, ERP, and CRM systems.  Because of this heterogeneity, their collaboration mechanisms are mostly Excel spreadsheets, phone, fax, and e-mail.  Clearly, trading partners would prefer a homogenous way to work together across companies and borders. In the new C-SCM model all business process data needs to reside in a distributed format across manufacturers, supply partners, logistics providers and end user customers.

Today’s Cloud Computing model goes far beyond the finite “point to point” connectivity of EDI, and it is far easier for all parties to run and maintain than either EDI or a corporate portal (which may be tied to a vendor, or home-grown) which typically focuses on merely exposing information in a secure manner, rather than actually managing an inter-company transaction. And, unlike the B2B marketplaces in which low cost and speedy delivery was intended to trump long-standing business relationships, today’s cloud-enabled SCM lets companies define a unique business style and partner set, while for the first time facilitating the right exchange of data and transactions within the context of this new peer to peer C-SCM approach over the crushing master/slave relationships still prevalent.

I’ve laid more of this out in a white paper.  Click here if you’d like to download and read it.  If you want more baseline information on SCM in the Cloud and Cloud Computing I’ve posted a lot of information on the Amitive website.

SCM in the Cloud (Part I in a series)

Most of us use so-called Cloud applications every day. Whether it’s on-demand movie viewing, Google Docs or online banking, or booking an on-line business meeting with WebEx, many of the applications we already use take advantage of a cloud environment.  You do not need to be an IT expert to grasp the core business value: access for thousands or millions of people anywhere, at any time, through an intuitive front end, pay only for what you use, those using it need not worry about software installation or maintenance, and it works with little to no IT expertise.  Sounds like nirvana to an executive, right?

There’s a lot of talk around the promise of “Cloud Computing” for business, and many companies are successfully using internet-based applications for their sales force, HR, or finance applications, even an alternative to Microsoft Office is now available “in the cloud.”   Does this IT model have applicability for supply chain professionals, or is it just a lot of marketing hot air? If yesterday’s industry portals and exchanges fell short of delivering on the promise of collaborative computing, why will Cloud? With shrinking budgets, should you justify another investment?

The answer is this: Cloud computing is not another hollow tech term. The cloud approach is both mature and functionally deep enough to drive a significant level of IT success for today’s new generation of supply chain experts. The Supply Chain world is now experiencing a major structural shift as more companies rely on a community of partners worldwide to carry out the complex dance of designing, manufacturing and distributing products.  As a result, so much of supply chain already takes place in a virtual, “cloud-like” environment – that is, outside the four walls of one company, across a global web of trading partners – making the Cloud approach a perfect fit for SCM.

Amitive is the first Supply Chain Management software solution to fully embrace and leverage cloud computing.  Amitive has embraced the Cloud to enable a community of business partners to work together seamlessly on a real-time, common platform.   By overcoming internal and partner fragmentation, supply chain communities can make smarter decisions faster with the holy grail of clear lines of cross-community visibility.  You can click here to learn more about Amitive’s leadership in SCM in the Cloud.

I also encourage you to read industry guru Katherine Jones’ insightful article in IndustryWeek on cloud computing and the opportunity it presents for companies that depend on outsourced manufacturing.

Stay tuned for the second installment of this five part series:  Part II – The Great Leap Forward.

Individual or Group Risk?

The bulk of the supply chain risk articles recently written, and there have been a lot of them, have focused on assessing the risks faced by individual stakeholders in a supply chain.  The truth is that the supply chain team, or community, really is vulnerable as a whole to risk.   This recent story published on SupplyChainBrain focuses on this broader, shared risk and both the effects it can have and also ways to mitigate that risk on an individual and community basis.

Here’s an excerpt from the article, “Today’s supply chain reality of increased reliance on outsourced manufacturing and inherent indirect relationships requires a different approach to management, management by influence, to mitigate supplier risk. To ensure high product quality, ethical labor practices and market regulatory compliance within a globally dispersed, dynamic supply base, brand owners need to manage partners indirectly through contractual obligations, but even more importantly, through cultivating relationships that build trust and commitment.  A system of shared risk/reward helps unify players to achieve these.”

Are companies you working with assessing supply chain community risk or just their individual risks?