An ongoing challenge for many strategic sourcing and procurement selection teams is coming up with an objective process for weighting the alternatives for pressing business process change with technology choice options.  The challenge often comes down to the options for selecting additional available functionality in a resident ERP system, the good enough option, or selecting a best-of-breed vendor offering.  To that end, we want to alert our Supply Chain Matters readers to a newly research document produced by our research arm, The Ferrari Consulting and Research Group, which I have personally authored.

The title of the document is: When it Comes to ERP Systems- Is Good Enough’ – Good Enough? and this document is now available for free download in our Supply Chain Matters Research Center. We only request that you provide basic contact information. After you provide contact information, an email will be sent that contains the web link for downloading the document. Please note that it is a Supply Chain Matters policy to not sell access to our email distribution listings nor subject your email address to a constant blasting of promotional emails until you have no choice but to scream and unsubscribe.

In this research, I uncover the challenges occurring among technology selection teams in balancing the needs for more responsive and cost effective business and supply chain management processes with those of balancing the needs for IT efficiency and utilization of resources.  The paper provides teams with some helpful methodology along with aides and templates for the objective weighting of business process requirements and IT system selection criteria that can aide in the evaluation process.

If your organization is either thinking of investing in advanced sourcing and procurement technology or is currently bogged-down in the overall selection process, we believe that you will find the content and methodologies provided to be very helpful.

As always, after reading and adsorbing the content, we encourage your feedback, viewpoints as well as your experiences regarding the challenge of weighting ERP vs. best-of-breed choices.

Bob Ferrari

With the bulk of Q1 earnings reports being publicly announced, we thought it would be interesting to take a snapshot of the downstream, upstream and transportation component areas of global supply chains. The goal of this three-part series to assess trends and determine how major supply chain participants are currently experiencing and viewing 2010 business levels, and how the general post recessionary recovery is manifesting itself among industry supply chains.

We certainly do not pretend to be trained economists, and please do not view these postings as a basis to plan for the remainder of the year. It is, however, interesting to put information points into a context, and begin a commentary on what lies in store for the remainder of 2010.

Since many of these companies represent the initial stages of supply feeding multiple industry supply chains, we will snapshoot what can be considered downstream bell weather companies for important signs of recovery,

In reporting of quarterly results from the March ending period, companies in chemicals, metals and semiconductor seem rather positive in their perspective for a much improved 2010.  Many of these reported results reflect that companies have clearly begun a renewed production cycle, and these are all strong indications that supply chains are replenishing inventories or increasing production levels from that of a year earlier.

Let us review the following highlights:

BASF

Revenues up 26% to $20.6 billion, up from $16.1 billion a year earlier

Profits considerably improved- $1.36 billion vs. $495 million a year earlier

Positive but cautious outlook for the remainder of 2010

Demand increased across all regions, particularly Asia

Renewed demand from almost all customer segments particularly automotive, electric and electronic instruments

Chemical sales rose due to significantly improved demand and higher prices, and earnings were significantly higher due to improved volumes, high capacity utilization and improved costs.

Plastics is steadily recovering on higher volumes

The Oil & Gas segment saw lower sales and earnings during the quarter, weighed by significantly lower natural gas prices

Agricultural solutions earnings declined from a year earlier due to negative currency effects.

Baosteel (China’s largest steelmaker)

Revenues up 37.1%

Profits of 3.93 billion yuan compared to 88.98 million yuan a year earlier: Reported as best quarterly profit in two years

Production volumes of iron up 22%, steel up 28.4%

Indicated that first half profits may surge sis to tenfold as Chinese demand for metal used in autos and appliances rebounds

Dupont

Revenues up 23% to $8.5 billion on 19% higher shipping volumes

First quarter profits doubled on higher selling prices

Asia Pacific sales up 65%

Raw material, energy and freight costs were 2% lower vs. prior year and are expected to increase to 5% for full year

Sales in performance electronics sector up 73%, performance materials up 63%, performance chemicals up 32%

Increased full year earnings and profit expectations

Nucor

Revenues up 40% to $3.65 billion

Profit of $31 million vs. loss of $189.6 million a year ago

Capacity utilization improved to 73% compared to 45% a year ago

Reduced total energy costs by $10 per ton from a year ago

U.S. Steel

Revenues increased to $3.9 billion, up 16% from Q4

Total steel shipments of 5.4 million tons vs. 3.23 million tons a year earlier. December quarter shipments were 4.65 million tons

Loss of $157 million, significant improvement from $267 million loss in Q4, and $439 million loss a year earlier

Flat roll steel shipments up 12% in the quarter, up 68% from a year earlier, an indicator of demand from automotive and appliance sectors.

Intel

Revenue surged 44% to $10.3 billion from $7.1 billion a year earlier

Profits quadrupled to $2.44 billion compared with $629 million a year earlier

Strongest Q1 since the company was founded in 1968

Little slowdown in Q1, which is traditionally a slow quarter

Plans to hire 1000-2000 new workers, first substantial hiring increase in five years

Demand improved in all regions of the world

TSMC

Sales revenue $92.19 billion Taiwan dollars vs. $39.50 billion a year earlier. Expects current quarter revenues to hit an all-time high

Profits increased to $33.66 billion Taiwan dollars vs. $1.56 billion a year earlier, the highest since Q4 of 2007

Gross margin impact of .9 percentage point due to the damage effects of Taiwan earthquake on March 4th

Total wafer revenues by geography: North America 68%, Asia Pacific 15%, Europe 11%, Japan 4%, China 2%

Consumer segment had strongest sequential growth, 9%; Communication and Industrial both grew 2%; Computer-related declined 3%

Expecting global semiconductor industry to grow 22% in 2010

If this representative sample is any indication, overall in Q1, the downstream supply chain is doing just fine.  This reflects what I believe to be a somewhat positive, but cautious outlook for 2010.  Semiconductor stands out as the most optimistic reflecting consumers still want their new smartphones, HD TV’s and other electronic gadgetry. There may be many causation factors, the most significant being the continued effects of governmental stimulus programs effecting certain industries, as well as some consumer buying resurgence in consumer electronics and automobiles.  Geographic factors can certainly be noted, as Brazil, China, India and other Asian regions continue to stand out as leading the way toward recovery. The important take away is to determine if this current downstream momentum translates to upstream results by the end of 2010.

In our second posting, we will focus on a brief snapshot of major industrial manufacturing companies, the middle layer of global supply chains.

In the meantime, feel free to add your own observations.  How is your organization viewing current business conditions?

Bob Ferrari

I want to thank “the doctor” over at Sourcing Innovation for his unsolicited kind words in his recent posting, What About Bob?. 

In his posting, Michael makes some very astute observations regarding lots of movements in the so-termed Analyst 2.0 arena, and the emergence of many new supply chain oriented industry analyst models predicated with a web presence or sponsored research. In regards to this evolving landscape, Michael has posed the question- What About Bob? 

Here is the response.  Michael as usual, has astutely pointed out the ‘wheat’ from the ‘chaff’.  Substance and quality will often prevail over flash.  For my part, I am ready, willing and able to provide clients with my multifaceted and versatile consulting experience in global supply chain business process and information technology. I will continue to do what I do best, which may not necessarily be lots of flashy hype, but certainly experienced, honest and substantive insights when they truly matter.

By the way, if you are in need of someone with an absolute and unequivocal technology understanding behind supply souring and supply chain applications technology, Michael Lamoureux is your person.

 Bob Ferrari

Many Supply Chain Matters readers are familiar with our ongoing blog commentary on the most important developments and strategies related to global supply chain business process and supporting technology needs. While I serve as the Executive Editor and most frequent contributor to the thought content appearing on this blog, I also provide individual consulting services to companies and supply chain technology providers through our consulting arm, The Ferrari Consulting and Research Group LLC.

We provide consulting services to manufacturing and services companies in global supply chain business process strategy and technology deployment.  Other services include assisting in reengineering, business performance and change management initiatives, identification and training in supply chain risk mitigation, or wider adoption of existing supply chain technology.

Consulting services are also provided to supply chain technology and software providers in product strategy, positioning and go-to-market messaging, and the development and integration of Web 2.0 and other social media tools that can leverage product marketing programs.  Custom consulting is available for market research, alliance or acquisition strategy, or media / industry analyst and blogger partnership development.

If you have specific consulting or external viewpoint needs, let us provide you with proven and pragmatic approaches.  You can obtain more information and assistance by sending an email including your name, firm, and contact information to supplychaininfo@ (at) theferrarigroup (dot) com, or by filling out a request on our Contact Us page.

 Bob Ferrari

Vice President and Managing Director