The Supply Chain Year: A Study in Contrasts

By Jacqueline Emigh  |  Posted 2004-11-27

The Supply Chain Year: A Study in Contrasts

Every industry has its ups and downs, but the supply chain business twisted and turned in some particularly contradictory ways in 2004.

Products got simpler, while customer and regulatory demands grew tougher. Big companies merged, but the overall SCM/L (supply chain management/logistics) market stayed fragmented. Many feared an outbreak of terrorism on the supply chain, yet workable standards for package tracking and security were still emerging.

Trade exchanges touted highly sophisticated back-end integration, but communications with trading partners remained very low-tech in a lot of places.

Lets look at the year in SCM/L as a study in contrasts. Here are a few of the specific highlights and lowlights.

Supply chain managers: Up against hard requirements

Supply chain managers faced difficult RFID (radio frequency identification) mandates from customers, together with tough changes in the federal regulatory climate. As the year wore on, some scurried to meet Jan. 1 deadlines from Wal-Mart and the U.S. Department of Defense, even in the face of RFID tag shortages.

To fight against drug counterfeiting, the federal FDA (Food and Drug Administration) released new policies for stimulating the use of RFID tags in the pharmaceutical chain.

Across the industry, managers worried over how proposed changes to U.S. customs requirements might impact business.

Read more here about tech companies concerns about a "safe harbor" rule.

Vendors: Bouncing back with simplified integration

As the worst part of the recent economic slump receded, traditional SCM/L vendors such as Manugistics and i2 unveiled plans for products designed to streamline integration and add new efficiencies. Unisys overhauled its supply chain strategy.

Meanwhile, with their increased penetration of SCM/L over the past few years, some ERP (enterprise resource planning) giants poured more energy into RFID. Also converging on the RFID space were big systems vendors IBM, Microsoft, Hewlett-Packard and Sun Microsystems.

Next Page: Consolidation along the top edges.


Consolidation along the top edges

Toward the end of this year, merger mania seemed to come back into style among supply chain customers and IT vendors alike. Kmart bought Sears, forming the third-largest retail firm in the United States. Oracle kept trying to acquire PeopleSoft in hopes of bolstering its position versus ERP market leader SAP.

Read more here about what the Kmart-Sears merger means for the supply chain.

Fragmentation elsewhere

But in the middle of some consolidation around the top edges, many aspects of the supply chain remained fragmented and verticalized. Opportunities heated up in SCM/L areas such as transportation and logistics and inventory optimization.

Meanwhile, some niche players—either inside SCM/L or on its periphery—got bought. IBMs purchase of Trigo and GXS acquisition of Haht Commerce Inc., another PIM (product information management) specialist, were both aimed at supply chain automation. Symbol acquired tagmaker Matrics based on its RFID strength.

Click here to read more about automating the supply chain.

Fears of terrorism on the supply chain

At industry conferences and seminars, security experts speculated that the next big terrorism incident will happen on the supply chain. Others pointed out that RFID still doesnt answer the question of "whats in the box?" New video surveillance products appeared for keeping watch over the supply chain.

Standards for RFID package tracking still emerging

For their part, customers fretted over the current lack of workable standards for package tracking and security within the United States and around the world.

The needs for standards and privacy top RFID concerns. Click here to read more.

High-tech integration of back-end infrastructures

Globalization became a stronger buzzword as trade exchanges touted elaborate plans to integrate their back-end infrastructures. In August, the UCC (Uniform Code Council), original overseer of product bar-code information, and EAN International, another international standards group, launched the Global Data Synchronization Network (GDSN).

Low-tech communications on many front lines

In the face of some continuing economic uncertainties, many companies excelled this year in managing their own supply chains.

But still, one influential study of supply chain initiatives uncovered deep differences between companies in high tech and retail, on the one hand, and less progressive fields such as forestry and mining on the other.

In another analysts survey, many respondents openly admitted that they still rely on phone and fax for communicating with suppliers.

Oh, what an interesting year it was! Dont ever get roped into believing that the supply chain is boring.

Check out eWEEK.coms for the latest news and analysis of enterprise supply chains.

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