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Supply chain management.

CFOs Plug into Supply Chains

A majority of corporate America’s chief financial officers view supply chains as crucial to achieving corporate objectives. Yet only 33 percent say business and operational plans are well integrated and 62 percent say their companies seem capable of making only incremental improvements today, according to a survey released by UPS Consulting, the strategic consulting arm of UPS.

The survey of 247 senior financial executives also found an increasing number of CFOs determined to make improvements. In fact, nearly half of CFOs anticipate playing a vital leadership role in supply chain decisions by 2005. Currently, that figure is 34 percent.

“The supply chain is a critical and influential component of any business strategy and can impact, on average, 75 percent of operating results,” says Gene Long, president of UPS Consulting. “The role of the supply chain has long been underrated. As the chief caretakers of value creation, many CFOs are working to correct this by literally taking matters into their own hands. In the end, it’s important for a company to empower the CFO to ensure that business strategies and operational plans are well-integrated.”

The survey, conducted by CFO Research Services, a unit of CFO Publishing Corp., polled senior financial executives on their involvement in and perceptions of supply chains within their companies. Some 61 percent agreed that management of their supply chains was crucial to corporate success.

The survey found CFOs most likely to cite two key objectives in explaining the importance of supply chain management: 93 percent cited the need to reduce operating costs, and 82 percent identified the need to improve customer service. CFOs also had an opportunity to cite the weakest links within their supply chains:

--Fragmented supply chain control. CFOs are dissatisfied with traditional decentralized management of the supply chain, with 36 percent citing processes not being managed in a single location as problematic and 34 percent saying the lines of authority are unclear.

--Inability to measure total supply chain costs. Only 17 percent of CFOs say they are “very” or “completely” satisfied with their ability to measure total supply chain costs, despite the fact that monitoring inventory levels is the single-most popular metric used to assess supply chain performance.

--Numerous obstacles to be resolved. CFOs report numerous obstacles standing in the way of supply chain changes, with 58 percent citing resistance from operations or other functions as a main reason and 40 percent citing a lack of internal leadership.

Twenty percent of respondents say their company’s senior supply chain professional already reports to the CFO.

Complete survey results are available on the Web at www.ups-consulting.com/ research.

Managers Making News

Tony Mohwish has been promoted to director of commercial sales, and Brian Baker named director of government sales, at MegaStar Systems.

SATO America Inc. has announced the appointment of John Bauer as the central regional sales manager.

Steve Jones joins SPX Dock Products as vice president international sales, Asia & Australia. Diego Effio has been named manager-Latin America, with responsibility for sales and distribution activities in Mexico, Central and South America.

Exel announced that Philip S. Renaud II has joined the company as vice president of risk management — Americas.

John Hagan has joined IPL Products Ltd. in a newly created position, national SmartCrate Market Manager, to extend the market penetration of its reusable containers.

Michael Dart has joined Kurt Salmon Associates (KSA) as a principal in its North American CPG strategy practice.

Symagery Microsystems Inc. announced the appointment of Ronald W. Caines to the position of president and CEO.

Packaging Machinery Sales Increase

Manufacturers of packaging machinery shipped an estimated $5.851 billion in packaging equipment in 2002, up $26 million from 2001. With the results, U.S. packaging machinery manufacturers maintained their lead in the world’s packaging machinery marketplace, according to figures released by the Confederation of Packaging Machinery Associations (COPAMA).

The COPAMA figures, a collaborative market research effort of the world’s 13 largest packaging machinery manufacturing associations, reports shipments of packaging machinery reached $21.206 billion in 2002, a $1.343 billion increase over 2001. The six percent rise in packaging machinery purchasing represent the tabulation of 11 of the 13 COPAMA member companies, and includes the first ever report of Russia’s figures.

According to the report, U.S. packaging equipment continues to outsell packaging machinery from other markets. With shipments last year of $5.851 billion, U.S. builders enjoyed a 28 percent market share.

German manufacturers ranked second with $3.762 billion sold, moving up one rank from the 2001 announcement with an 18 percent market share. Japan moved down one spot, with $3.168 billion in sales and a 15 percent market share.

Regulation of Pharmaceutical Manufacturing

The Food and Drug Administration (FDA) has outlined new steps in its strategic initiative to modernize the regulation of pharmaceutical manufacturing and product quality.

This initiative aims at ensuring that regulatory review, compliance and inspection policies are based on state-of-the-art pharmaceutical science, and do not impede rapid adoption of new technological advances by the pharmaceutical industry.

Among other things, the agency has issued five new guides designed to enhance the consistency and coordination of its drug quality regulatory programs. These include:

--A guidance for FDA regulated industry on the use of electronic records and signatures;

--A draft guidance on a process for resolving disputes arising over scientific and technical issues related to pharmaceutical current good manufacturing practices;

--A draft guidance on the aseptic processes used in the manufacture of sterile drugs, emphasizing current science and risk-based approaches;

--A draft guidance on preparation and use of a comparability protocol for assessing chemistry, manufacturing and control changes to protein drug products and biological products; •

--A draft guidance for Process Analytical Technology — a framework for allowing regulatory processes to more readily adopt state-of-the-art technological advances in drug development, production and quality assurance.

WERC Launches On-Line Job Locator

The Warehousing Education and Research Council (WERC) launched a new addition to its Web site — the WERC Job Board. Located on www.werc.org, the Job Board is designed to connect employers with job seekers who specialize in the warehousing and distribution field.

Job seekers can:

--Search for jobs in warehousing and distribution

--Post a confidential on-line resume;

--Sign up to receive e-mail alerts about positions that match specific criteria;

Employers can:

--Post positions for a nominal fee;

--Find talented and qualified candidates using the searchable database;

--Receive candidate responses instantly online through e-mail.

Sealed Air Enhances Web Site

Sealed Air Corporation has updated its Web site, designed to be more functional and easier for customers to navigate. At the same time, the new Web site provides expanded content through extensive information about products and services, international regions and investor relations. The new interactive Web site, is located at www.sealedair.com.

The international focus of the Web site allows users to explore Sealed Air products and services available in four different regions of the world. Visitors to the Latin American section have the choice to view the site in either Spanish or Portuguese. In the EMEA site, visitors have a choice of five languages including English, French, German, Italian or Spanish. Because product categories vary slightly depending on the region, an interactive color-keyed map reminds users of the region they are browsing.

Association News

The Conveyor Equipment Manufacturers Association reports that its June 2003 Booked Orders Index was 112, up eight points. This represents an increase of eight percent from May 2003.

North American-based robotics companies posted new order gains of 34 percent in the first half of 2003, according to figures released by Robotic Industries Association. A total of 7,005 robots, valued at $446.2 million were ordered by North American manufacturing companies through June.

Correction

Our apologies to the Hyster Company for mislabeling the Model S40-65 XM Series lift truck in the Product News section of the August issue.

Ask the MHM Editorial Board

On August 14, parts of the United States and Canada experienced a huge power outage. The blackout affected businesses in different ways. Those with contingency plans were in better shape than others.

According to a Business Wire story, a survey of U.S. companies conducted by Info-Tech Research Group found that while more than 76 percent of companies said that the blackout had an impact on their organization, more than 60 percent of IT departments did not have formal plans in place to deal with the blackout. Some 82 percent of companies expect another blackout in their area within the next 12 months, and 63 percent expect to create a new disaster recovery plan, or update an existing plan. One in five companies plans to purchase a backup generator.

Material Handling Management asked members of its Editorial Advisory Board to share any lessons they learned from the outage; e.g., Did they avert a catastrophe? Did they suffer consequences that will put them in a good position to deal with this kind of situation the next time around? Their responses are below:

David Lockman, CSIT, manager of engineering distribution and returns operations, L.L. Bean, Inc.: “Good question. Here at the LL Bean Distribution facility, we own back-up power generators in case of catastrophes such as outages. Luckily, we were not directly impacted by the outage. However, living in the Northeast, we experience a myriad of weather such as ice, snow, heavy rain, and high wind (sometimes all at once!). In order for us to be sure we service our customer, we cannot allow a power outage to delay the processing of their orders. So, our back-up power source, in conjunction with controlled shut down of UPS systems for our mainframes and controls, minimizes our risk for damage to equipment as well as delayed service. These contingencies have been in place for years and have been useful in the recent past.”

Gerald Moultry, vice president, field operations, Pharmaceutical Distribution, CardinalHealth: “One of our facilities was affected by the power outage because power was out in their area; however, we were able to operate because we have a generator. We have a business continuity plan in place in all of our facilities. The plans simulate many different types of disasters and give instructions on what to do for the different scenarios. We have tested the programs several times with some of the ice storms, incidents in New York and now this power outage, and in all cases the teams knew what to do and whom to call to get the necessary support to continue servicing our customers. Within a few minutes after the power outage, our division team activated its plan and was able to provided service to all customers who were open and available for business.”

Brian O’Donnell, director of technical operations and planning, Liz Claiborne: “Your question is something we at Liz Claiborne take very seriously. In order to prepare for the inevitability of a power outage, our Distribution (as well as Corporate) systems are all protected via a UPS (uniterruptible power sysem) in conjunction with emergency generators to keep all systems up in the event of a loss of power. The UPS’s main function is to act as a filter for power quality (spikes/dips), as well as to provide uninterrupted power to all vital systems. The UPS acts as a bridge to hold power up until our emergency generators at each facility come up to full speed. A transfer switch then switches from the battery to the emergency generator. In theory, the generators could run indefinitely if we keep them full of gas. The goal is to assess the situation and to make a determination if we want to safely bring all systems down. If the blackout only lasts a short time, then all systems remain up. If there isn’t an end in sight (as in the case of the last blackout), we decide to bring all systems down. The goal is to protect the safety of our employees, as well as the integrity of the data in our systems.”

If you have a material handling problem or a question which you’d like to pose to the MHM Editorial Advisory Board, please forward it to Tom Andel, chief editor, at [email protected] We’ll print the Board’s responses in future issues.

Letters to the Editor

Hi Tom:

I just read your editorial in your August issue of Material Handling Management. I just got back from my 25th high school reunion so you and I are of about the same vintage.

I have found it interesting over the years to try to describe to non-material handling people what I do for a living and I wanted to tell you I identify with you and understand the glazed look you are talking about. Material Handling seems foreign to many people!

For example, since the material handling systems are the life blood of most our customers’ operations, used day in and day out, it is not uncommon for us to be doing weekend or holiday cut-ins, inspections, etc. It is not easy to explain to my wife why my customer needs me to give him his conveyor on Christmas day or some other holiday.

What we do affects so many people, there is almost always a conversation with anyone waiting to happen. I look at the clothing people wear that comes over our conveyor systems or the tires on their cars, the candles in the homes, newspapers, magazines, school supplies, candy, pharmaceuticals, books, movies, music, computers, electronics, toys, you name it. Almost everyone has something they own or are at least familiar with that has been transported over our systems.

Yes, what we do is important, it helps others and there is always something to talk to about with most everyone. Thanks for your editorial.

Jeff Linson

Project Manager

Mantissa Corporation

Tom,

I enjoyed your August 2003 editorial. It is nice to know that I am not the only liberal arts educated professional in the industry (mine is a BA in History, Michigan State University).

As I travel to meet with various customers and in meetings with our internal management, I routinely pull from those skills I developed in college. In my opinion, a liberal arts education provides excellent background for creating, developing, and presenting ideas to people of diverse backgrounds and interest.

Best wishes,

Matt Wilczek

Mitsubishi Caterpillar Forklift America Inc. (“MCFA”)

Business Manager

Fleet Management Services

Manufacturers Making News

Hyde Park, a company of Schneider Electric, received Ohio Governor Bob Taft’s Excellence in Exporting Award, given to companies in recognition of efforts to build export business within the state.

Sealed Air Corporation has been awarded three of the packaging industry’s most important national honors, in two categories, at the 16th duPont Awards for Innovation in Packaging. The duPont Awards recognized the following Sealed Air packages and material for their original technology: Inflatable Bubble Wrap packaging system and Cryovac Simple Steps heat-and-serve package. In addition, duPont recognized Foster Farms’ Fresh and Easy Individually Vacuum Sealed Fresh Chicken package, which was developed in partnership with Sealed Air using Cryovac T-Series rollstock material.

Robotics, Automotive & Manufacturing Industries of ABB Inc., announced the sale of certain fixed assets of its former Robot Automation Systems Group in New Berlin, Wisconsin to Rimrock Corporation.

ABB and Rimrock have also signed a partner agreement for Rimrock Automation Inc., the name of the new company. Rimrock Automation is owned by Rimrock Corporation, a foundry automation company that has been ABB’s largest system integrator in North America.

Bicknell & Fuller Corrugated Packaging, a division of Liberty Diversified Industries (LDI), has changed its name to Liberty Carton Company

Be Part of MHM’s January Issue

Material Handling Management will kick off 2004 with an industry forecast. Your company’s buying plans play a major role in assessing the material handling industry’s economic health. In addition to industry reports and input from our editorial advisory board, your responses are an important indicator of our country’s standing in global logistics. Help us, and your fellow readers, understand the material handling industry’s health picture by answering our short questionnaire. Your identity will not be part of the report. We’re interested only in statistics.

The survey should take just a couple minutes, yet can serve as an invaluable tool for industry strategists. Broad-based questions, such as what amount of money you plan to spend, assuming you do plan to spend, and the types of equipment or software you’ll be investing in, are what we’re after.

Do it now, online at www.totalsupplychain.com. Just click on the Material Handling Management survey button.

Thank you for participating.

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