Supply Chain Management Definition and Solutions

– Thomas Wailgum , CIO.com

March 19, 2007 

Compiled by Thomas Wailgum and Ben Worthen

Editor's Note: This article was updated on Nov. 20, 2008, to reflect changes in supply chain management technology.

• What is supply chain management?
• What does supply chain software do?
• What is the relationship between ERP, CRM and SCM?
• What is the goal of supply chain management software?
• What is supply chain collaboration?
• What are the roadblocks to installing supply chain software?
• What is the extended supply chain?
• What is the impact of globalization on the supply chain?
• How has radio frequency identification (RFID) technology affected the supply chain?
• What is the impact of responsible sourcing, environmental sustainability and the "green" movement on the supply chain?
• What effect are on-demand software and software-as-a-service (SaaS) product offerings having on supply chain management?

What is supply chain management?

Supply chain management (SCM) is the combination of art and science that goes into improving the way your company finds the raw components it needs to make a product or service and deliver it to customers. The following are five basic components of SCM.

1. Plan—This is the strategic portion of SCM. Companies need a strategy for managing all the resources that go toward meeting customer demand for their product or service. A big piece of SCM planning is developing a set of metrics to monitor the supply chain so that it is efficient, costs less and delivers high quality and value to customers.

2. Source—Next, companies must choose suppliers to deliver the goods and services they need to create their product. Therefore, supply chain managers must develop a set of pricing, delivery and payment processes with suppliers and create metrics for monitoring and improving the relationships. And then, SCM managers can put together processes for managing their goods and services inventory, including receiving and verifying shipments, transferring them to the manufacturing facilities and authorizing supplier payments.

3. Make—This is the manufacturing step. Supply chain managers schedule the activities necessary for production, testing, packaging and preparation for delivery. This is the most metric-intensive portion of the supply chain—one where companies are able to measure quality levels, production output and worker productivity.

4. Deliver—This is the part that many SCM insiders refer to as logistics, where companies coordinate the receipt of orders from customers, develop a network of warehouses, pick carriers to get products to customers and set up an invoicing system to receive payments.

5. Return—This can be a problematic part of the supply chain for many companies. Supply chain planners have to create a responsive and flexible network for receiving defective and excess products back from their customers and supporting customers who have problems with delivered products..

For a more detailed outline of these steps, check out the nonprofit Supply-Chain Council's website.

Supply chain management software is possibly the most fractured group of software applications on the planet. Each of the five major supply chain steps previously outlined is comprised of dozens of specific tasks, many of which have their own specific software. Some vendors have assembled many of these different chunks of software together under a single roof, but no one has a complete package that is right for every company. For example, most companies need to track demand, supply, manufacturing status, logistics (i.e. where things are in the supply chain), and distribution. They also need to share data with supply chain partners at an ever increasing rate. While products from large ERP vendors like SAP's Advanced Planner and Optimizer (APO) can perform many or all of these tasks, because each industry's supply chain has a unique set of challenges, many companies decide to go with targeted best of breed products instead, even if some integration is an inevitable consequence.

It's worth mentioning that the old adage about systems only being as good as the information that they contain applies doubly to SCM. If the information entered into a demand forecasting application is not accurate, then you will get an inaccurate forecast. Similarly, if employees bypass the supply chain systems and try to manage things manually (using the fax machine or spreadsheets), then even the most expensive systems will provide an incomplete picture of what is happening in a company's supply chain.

What is the relationship between ERP, CRM and SCM?

Many SCM applications are reliant upon the kind of information that is stored inside enterprise resource planning (ERP) software and, in some cases, to some customer relationship management (CRM)packages. Theoretically a company could assemble the information it needs to feed the SCM applications from legacy systems (for most companies this means Excel spreadsheets spread out all over the place), but it can be nightmarish to try to get that information flowing on a fast, reliable basis from all the areas of the company. ERP is the battering ram that integrates all that information in a single application, and SCM applications benefit from having a single major source to go to for up-to-date information. Most CIOs who have tried to install SCM applications say they are glad they did ERP first. They call the ERP projects "putting your information house in order." Of course, ERP is expensive and difficult, so you may want to explore ways to feed your SCM applications the information they need without doing ERP first. These days, most ERP vendors have SCM modules, so doing an ERP project may be a way to kill two birds with one stone. In addition, the rise and importance of CRM systems inside companies today puts even more pressure on a company to integrate all of its enterprisewide software packages. Companies will need to decide if these products meet their needs or if they need a more specialized system.

Applications that simply automate the logistics aspects of SCM are less dependent upon gathering information from around the company, so they tend to be independent of the ERP decision. But chances are, companies will need to have these applications communicate with ERP in some fashion. It's important to pay attention to the software's ability to integrate with the Internet and with ERP applications because the Internet will drive demand for integrated information. For example, if a company wants to build a private website for communicating with their customers and suppliers, the company will want to pull information from ERP and supply chain applications together to present updated information about orders, payments, manufacturing status and delivery.

What is the goal of installing supply chain management software?

Before the Internet came along, the aspirations of supply chain software devotees were limited to improving their ability to predict demand from customers and make their own supply chains run more smoothly. But the cheap, ubiquitous nature of the Internet, along with its simple, universally accepted communication standards, have thrown things wide open. Now, companies can connect their supply chain with the supply chains of their suppliers and customers together in a single vast network that optimizes costs and opportunities for everyone involved. This was the reason for the B2B explosion; the idea that everyone a company does business with could be connected together into one big happy, cooperative family.

Of course, reality isn't quite that happy and cooperative. But today most companies share at least some data with their supply chain partners. The goal of these projects is greater supply chain visibility. The supply chain in most industries is like a big card game: the players don't want to show their cards because they don't trust anyone else with the information, but if they showed their hands they could all benefit. Suppliers wouldn't have to guess how many raw materials to order, and manufacturers wouldn't have to order more than they need from suppliers to make sure they have enough on hand if demand for their products unexpectedly increases. And retailers would have fewer empty shelves if they shared the information they had about sales of a manufacturer's product in all their stores with the manufacturer. The Internet makes showing your hand to others possible, but centuries of distrust and lack of coordination within industries make it difficult.

During the last few years most companies have gotten over the trust issue. In many cases "gotten over" is a euphemism for "have been bullied into sharing supply chain information from a dominant industry player." Want to sell your goods in Wal-Mart? Better be prepared to share data and adhere to Wal-Mart's data-exchange standards. (For more on this topic, see "How Wal-Mart Lost Its Technology Edge.")

The payoff of timely and accurate supply chain information is the ability to make or ship only as much of a product as there is a market for. This is the practice known as just-in-time manufacturing, and it allows companies to reduce the amount of inventory that they keep. This can cut costs substantially, since you no longer need to pay to produce and store excess goods. But many companies and their supply chain partners have a long way to go before that level of supply chain flexibility can be achieved.

What is supply chain collaboration?

Let's look at consumer-packaged goods for an example of collaboration. If there are two companies that have made supply chain a household word, they are Wal-Mart and Procter & Gamble. Before these two companies started collaborating back in the '80s, retailers shared very little information with manufacturers. But then the two giants built a software system that hooked P&G up to Wal-Mart's distribution centers. When P&G's products run low at the distribution centers, the system sends an automatic alert to P&G to ship more. In some cases, the system communicates down to the individual Wal-Mart store, allowing P&G monitor the shelves through real-time satellite link-ups that send messages to the factory whenever a P&G item swoops past a scanner at the register. Within the last couple of years, the relationship has expanded to include radio-frequency identification (RFID) technologies to gain even more insight into ridding inefficiencies in the supply chain.

With this kind of minute-to-minute information, P&G knows when to make, ship and display more products at the Wal-Mart stores. There's no need to keep products piled up in warehouses awaiting Wal-Mart's call. Invoicing and payments happen automatically too. The system saves P&G so much in time, reduced inventory and lower order-processing costs that it can afford to give Wal-Mart "low, everyday prices" without putting itself out of business. (For more on Wal-Mart's supply chain, see "How Wal-Mart Lost Its Technology Edge.")

What are the roadblocks to installing supply chain software?

Gaining trust from your suppliers and partners.

Supply chain automation is uniquely difficult because its complexity extends beyond a company's walls. Employees will need to change the way they work and so will the people from each supplier that a company adds to its network. Only the largest and most powerful manufacturers or retailers (i.e. Wal-Mart) can force such radical changes down suppliers' and partners' throats. Most companies have to sell outsiders on the system. Moreover, one company's goals in installing the system may be threatening to their suppliers, to say the least. For example, Wal-Mart's collaboration with P&G meant that P&G would assume more responsibility for inventory management, something retailers have traditionally done on their own. Wal-Mart had the clout to demand this from P&G, but it also gave P&G something in return—better information about Wal-Mart's product demand, which helped P&G manufacture its products more efficiently. In order for a company to get its supply chain partners to agree to collaborate, business leaders and supplier relations managers have to be willing to compromise and help partners achieve their own goals.

Internal resistance to change.

If selling supply chain systems is difficult on the outside, it isn't much easier inside. Operations people are accustomed to dealing with phone calls, faxes, spreadsheets or hunches scrawled on paper, and will most likely want to keep it that way. If management can't convince front-line operations people that using the software will be worth their time, they will easily find ways to work around it. Senior executives cannot disconnect the telephones and fax machines just because they have supply chain software in place.

Many mistakes at first.

There is a diabolical twist to the quest for supply chain software acceptance among employees. New supply chain systems process data as they are programmed to do, but the technology cannot absorb a company's history and processes in the first few months after an implementation. Forecasters and planners need to understand that the first bits of information they get from a system might need some tweaking. If they are not warned about the system's initial naiveté, they will think it is useless. In one case, just before a large automotive industry supplier installed a new supply chain forecasting application to predict demand for a product, an automaker put in an order for an unusually large number of units. The system responded by predicting huge demand for the product based largely on one unusual order. Blindly following the system's numbers could have led to inaccurate orders for materials being sent to suppliers within the chain. The company caught the problem but only after a demand forecaster threw out the system's numbers and used his own. That created another problem: Forecasters stopped trusting the system and worked strictly with their own data. The supplier had to fine-tune the system itself then work on reestablishing employees' confidence. Once employees understood that they would be merging their expertise with the system's increasing accuracy, they began to accept and use the new technology.

What is the extended supply chain?

The extended supply chain is a clever way of describing everyone who contributes to a product. So if a company makes text books, then its extended supply chain would include the factories where the books are printed and bound, the company that sells the paper, the mill where that supplier buys their stock, and so on. It is important for a company to keep track of what is happening in its extended supply chain because a supplier or a supplier's supplier could end up having an impact on you (as the old saying goes, a chain is only a strong as its weakest link). For example, a fire in a paper mill might cause the text book manufacturer's paper supplier to run out of inventory. If the text book company knows what is happening in its extended supply chain it can find another paper vendor.

What is the impact of globalization on the supply chain?

Just in time manufacturing isn't the only way companies have used their supply chains to reduce cost. Manufacturing in developing countries is substantially cheaper than in the United States because of the low cost of labor. For example, the hourly wage for China's manufacturing and production workers isless than one dollar per hour. But foreign manufacturing brings with it another set of challenges. It isn't as easy to set up real-time data sharing with a factory in, say, China as it is with a factory you own in the United States. And the sheer distance that overseas goods need to travel—not to mention the number of vessels they need to travel on— to reach the U.S. increases the chance that they will get delayed. The bottom line is that foreign manufacturing brings back a lot of the uncertainty that supply chain systems were designed to eliminate. The good news is that technology capable of tracking shipments throughout the world is getting better. The bad news is that a lot of this technology is still pretty expensive, that some of the places a company would want to deploy it don't have the necessary infrastructure in place, and, well, there isn't a piece of technology out there that can make up for the whim of a Chinese customs official. Furthermore, labor costs in some places are so low that IT automation and monitoring projects may add more to costs—in terms of software, hardware and still-precious (and unreliable) bandwidth—than they save in productivity. Hence, some low-tech or commodity products may not be worth monitoring at all until they hit a ship in a foreign port.

In the meantime, the best bet for companies is to use whatever systems they can to gain as much visibility into the global supply chain as possible. It may be impossible to replicate the just in time model on a global scale, but by applying technology , and by choosing the supply chain partners who have the capability to share data with operations, a company can get many of the benefits of just in time while paying low foreign prices.

How has radio frequency identification (RFID) technology affected the supply chain?

RFID (radio frequency identification) tags are essentially barcodes on steroids. Whereas barcodes only identify the product, RFID tags can tell what the product is, where it has been, when it expires—essentially whatever information a company wishes to program. RFID technology generates mountains of new data about the location of pallets, cases, cartons, totes and individual products in the supply chain. It produces oceans of information about when and where merchandise is manufactured, picked, packed and shipped. It creates rivers of numbers telling retailers about the expiration dates of their perishable items—numbers that will have to be stored, transmitted in real-time and shared with warehouse management, inventory management, financial and other enterprise systems. In other words, as RFID technologies in the supply chain spread into the operations of more manufacturers, parts suppliers and retailers, they will transform the supply chain as we know it today.

Another benefit of RFIDs is that, unlike barcodes, RFID tags can be read automatically by electronic readers. Imagine a truck carrying a container full of widgets entering a shipping terminal in China. If the container is equipped with an RFID tag, and the terminal has an RFID sensor network, that container's whereabouts can be automatically sent to Widget Co. without the truck ever slowing down. It has the potential to add a substantial amount of visibility into the extended supply chain.

Right now, the two biggest hurdles to widespread RFID adoption are the high cost of building the infrastructure to manage RFID data and a lack of return on investment (ROI) for many midsize and small manufacturers working in today's supply chains.

What is the impact of responsible sourcing, environmental sustainability and the "green" movement on the supply chain?

If the technological side of supply chain management wasn't hard enough, the new "corporate social responsibility" (CSR) movement inside 21st century organizations and IT departments adds another layer of complexity. Broadly defined, CSR initiatives for companies include such strategies as being able to show environmental sustainability (i.e. reducing the carbon footprint), responsible sourcing from a wide range of global suppliers, and how "green" an organization is.

So how does that affect supply chain management? Visibility. In order to prove that a company has lowed its carbon emissions, isn't dumping hazardous materials into rivers and doesn't buy its materials from suppliers that employ underage workers, company leaders need to be able to gain insight into and track the actions of their suppliers, and their suppliers and their suppliers—all the way down the chain into some good and not-so-good parts of the global economy. This ability also becomes critical when tainted goods need to be identified and found quickly in a supply chain, before the goods spread throughout a country's population.

Wal-Mart announced in fall 2008 that all of its suppliers—including the thousand located in China—would have to be in compliance with laws and regulations relating to rigorous social, environmental and energy efficiency mandates. Wal-Mart's suppliers would even have to attest that their suppliers received high ratings on environmental and social practices.

What effect are on-demand software and software-as-a-service (SaaS) product offerings having on supply chain management?

On-demand and SaaS software offerings have gained marketshare in the customer relationship management (CRM) product space and are making in-roads in the enterprise resource management (ERP) arena. The reasons why companies are now purchasing those SaaS solutions rather than traditional on-premise software solutions (such as faster implementations) will be the same rationale as to why companies will purchase on-demand/SaaS SCM services in the future. In fact, many vendors now offer mature SaaS SCM offerings because of their efforts with Web-based electronic trading exchanges of the past; it's just a matter of time before companies, their supply chain managers and IT staffers feel comfortable with a SaaS package. Just as with SaaS CRM and ERP, there are important security, ROI, integration, and pricing questions that the SaaS SCM vendors need to iron out before the software delivery mechanism takes off.

GDP growth slows to 6.8% in Q4 of 2008

China's GDP growth slows to 6.8% in Q4 of 2008

China's economy is sending out mixed signals, figures released on Thursday showed, with the growth of gross domestic product (GDP) decelerating to the lowest pace in years, while several other indicators showing signs of recovery.

Related readings: Wen says toughest year ahead '09 growth to hit 8.3% - think tank UN: Global recession may drag down China's growth  'Economy to rebound in 2010'

The country's GDP, the most widely watched measure of its economic strength, grew 6.8 percent from a year earlier in the fourth quarter of 2008, said Ma Jiantang, Commissioner of the National Bureau of Statistics (NBS), on Thursday at a press conference in Beijing.

For the whole of 2008, the economy expanded 9 percent to 30.067 trillion yuan ($4.402 trillion), according to Ma, the first year of single-digit growth since 2003 and well below the average rate of 9.8 percent in the past 30 years.

Ma Jiantang, Commissioner of the National Bureau of Statistics (NBS), speaks at a press conference on Thursday in Beijing. The country's gross domestic product (GDP), the most widely watched measure of its economic strength, grew 6.8 percent from a year earlier in the fourth quarter of 2008, according to the NBS. [Xinhua]

The latest reading consolidated China's position as the world's third-largest economy after the United States and Japan.

The NBS last week revised the country's growth in 2007 to 13 percent from the original estimate of 11.9 percent, putting its GDP at $3.38 trillion. Germany's GDP stood at $3.32 trillion at the end of 2007, according to IMF estimate, and rose one percent in 2008.

In spite of a slowdown, China remained a key driver of the world economy. "China contributed to more than 20 percent of the global economic growth in 2008, according to some estimates," Ma told the reporters.

Eight-percent Growth Attainable in 2009

While some developed countries may be looking at China's growth with envy, Beijing is feeling the heat from the current economic slump. Conventional wisdom has it that China has to keep its annual expansion rate above 8 percent to create sufficient jobs for the country's labor force.

China faced huge challenges, Ma admitted, as "the international financial crisis is deepening and spreading, with continuing negative impacts on domestic economy." However, he remained confident about the country's economy in 2009 and beyond.

"China is sure to keep its growth rate above eight percent," Ma told reporters after the press conference, as long as the country implements the central government's policies, boosts domestic consumption, creates jobs and increases investment.

Professor Guo Tianyong of the Central University of Finance and Economics (CUFE) shared Ma's optimism. "We should have no problem attaining a growth of eight percent," he told chinadaily.com.cn, citing huge State investment in the pipeline.

Chinese government has annouced a US$586 billion stimulus package, as well as other measures to boost consumption and investment. The State Council decided Wednesday to spend 850 billion yuan ($124.26 billion) in the next three years on healthcare.

Signs of Recovery

Ma said his confidence was well-founded. "There have been some positive developments in December," he explained, pointing to industrial output, retail, bank lending and money supply.

The industrial output rose 5.7 percent in December from a year earlier, up from November's 5.4 percent."That is a small, but important change," Ma noted. Professor Guo of CUFE agreed, calling it a trend for the better.

Private consumption, which the government is relying on to jack up the economy, also picked up. After striping out inflation, retail increased 17.4 percent in December year-on-year, up 0.8 percentage points from the previous month. 

Bank lending and money supply jumped more than economists estimated in December. The country's lenders granted a whopping 740 billion in yuan loans last month, marking the biggest monthly increase in 11 months and a jump of 55 percent from the previous month.

The broad measure of money supply increased 17.8 percent in December year-on-year, up three percentage points from a year earlier and snapping up six straight months of declines.

"All that shows the moderately loose monetary policy has started to take effect," according to Ma.

Whether these positive developments constitute long-term trends remains to be seen, but they are very likely to be "the rays of morning sunshine before the dawn," the top statistician noted.

Professor Guo echoed Ma's points, saying the economy may have bottomed, but may need one or two more quarters to get out of the doldrums. "The downward pressure is still big."

Inflation vs. Deflation

What is also good news for the economy is that inflation continued to ease in December, giving the central bank more room to cut interest rates, the tool of choice in times of economic downturn.

The Consumer Price Index (CPI), a barometer of inflation, rose 1.2 percent year-on-year in December, after rising 2.4 percent in November, said Ma. That was a far cry from a peak rate of 8.7 percent in February 2008 after eight months of steady decline, thanks to falling prices of food and commodities.

However, the bad news is that inflation is falling too fast, giving rise to increasing worries of deflation, a sustained decrease of prices across the board.

The Producer Price Index (PPI), another indicator of inflation, fell 0.4 percent in December from a year earlier, according to Ma, the first month of negative growth in six years. The gauge, which measures factory gate prices, went into a free fall after peaking in August at 10.1 percent. It rose 6.6 percent in October and 2 percent in November.

Prices are widely expected to fall further in the coming months due to continued drops in food and commodities prices, as well as decreases in aggregate demand. The CPI will go down 1.1 percent, while the PPI may decline 3.5 percent in 2009 from 2008, forecast the Galaxy Securities in a report last week.

To avert deflation, the central bank may cut interest rates again on top of five reductions since September, 2008, experts said.

"The central bank may cut interest rates by 27-54 basis points after the Spring Festival," Professor Guo said. The Spring Festival is the most important festival in China and falls on January 26 this year.

The benchmark one-year saving rate stands at 2.25 percent, while the lending rate for the same duration is 5.31 percent.

Copyright By chinadaily.com.cn. All rights reserved

Gartner Identifies the Top 10 Strategic Technologies for 2009

Gartner Identifies the Top 10 Strategic Technologies for 2009 

Analysts Examine Latest Industry Trends During Gartner Symposium/ITxpo, October 12-16, in Orlando 

STAMFORD, Conn., October 14, 2008 — Gartner, Inc. analysts today highlighted the top 10 technologies and trends that will be strategic for most organizations. The analysts presented their findings during Gartner Symposium/ITxpo, being held here through October 16.

Gartner defines a strategic technology as one with the potential for significant impact on the enterprise in the next three years. Factors that denote significant impact include a high potential for disruption to IT or the business, the need for a major dollar investment, or the risk of being late to adopt.

These technologies impact the organization's long-term plans, programs and initiatives. They may be strategic because they have matured to broad market use or because they enable strategic advantage from early adoption.

“Strategic technologies affect, run, grow and transform the business initiatives of an organization,” said David Cearley, vice president and distinguished analyst at Gartner. “Companies should look at these 10 opportunities and evaluate where these technologies can add value to their business services and solutions, as well as develop a process for detecting and evaluating the business value of new technologies as they enter the market.”

The top 10 strategic technologies for 2009 include:

Virtualization.  Much of the current buzz is focused on server virtualization, but virtualization in storage and client devices is also moving rapidly. Virtualization to eliminate duplicate copies of data on the real storage devices while maintaining the illusion to the accessing systems that the files are as originally stored (data deduplication) can significantly decrease the cost of storage devices and media to hold information. Hosted virtual images deliver a near-identical result to blade-based PCs. But, instead of the motherboard function being located in the data center as hardware, it is located there as a virtual machine bubble. However, despite ambitious deployment plans from many organizations, deployments of hosted virtual desktop capabilities will be adopted by fewer than 40 percent of target users by 2010.

Cloud Computing. Cloud computing is a style of computing that characterizes a model in which providers deliver a variety of IT-enabled capabilities to consumers. They key characteristics of cloud computing are 1) delivery of capabilities “as a service,” 2) delivery of services in a highly scalable and elastic fashion, 3) using Internet technologies and techniques to develop and deliver the services, and 4) designing for delivery to external customers. Although cost is a potential benefit for small companies, the biggest benefits are the built-in elasticity and scalability, which not only reduce barriers to entry, but also enable these companies to grow quickly. As certain IT functions are industrializing and becoming less customized, there are more possibilities for larger organizations to benefit from cloud computing.

Servers — Beyond Blades.  Servers are evolving beyond the blade server stage that exists today. This evolution will simplify the provisioning of capacity to meet growing needs. The organization tracks the various resource types, for example, memory, separately and replenishes only the type that is in short supply. This eliminates the need to pay for all three resource types to upgrade capacity. It also simplifies the inventory of systems, eliminating the need to track and purchase various sizes and configurations. The result will be higher utilization because of lessened “waste” of resources that are in the wrong configuration or that come along with the needed processors and memory in a fixed bundle.

Web-Oriented Architectures. The Internet is arguably the best example of an agile, interoperable and scalable service-oriented environment in existence. This level of flexibility is achieved because of key design principles inherent in the Internet/Web approach, as well as the emergence of Web-centric technologies and standards that promote these principles. The use of Web-centric models to build global-class solutions cannot address the full breadth of enterprise computing needs. However, Gartner expects that continued evolution of the Web-centric approach will enable its use in an ever-broadening set of enterprise solutions during the next five years.

EnterpriseMashups. Enterprises are now investigating taking mashups from cool Web hobby to enterprise-class systems to augment their models for delivering and managing applications. Through 2010, the enterprise mashup product environment will experience significant flux and consolidation, and application architects and IT leaders should investigate this growing space for the significant and transformational potential it may offer their enterprises.

Specialized Systems. Appliances have been used to accomplish IT purposes, but only with a few classes of function have appliances prevailed. Heterogeneous systems are an emerging trend in high-performance computing to address the requirements of the most demanding workloads, and this approach will eventually reach the general-purpose computing market. Heterogeneous systems are also specialized systems with the same single-purpose imitations of appliances, but the heterogeneous system is a server system into which the owner installs software to accomplish its function.

Social Software and Social Networking. Social software includes a broad range of technologies, such as social networking, social collaboration, social media and social validation. Organizations should consider adding a social dimension to a conventional Web site or application and should adopt a social platform sooner, rather than later, because the greatest risk lies in failure to engage and thereby, being left mute in a dialogue where your voice must be heard.

Unified Communications. During the next five years, the number of different communications vendors with which a typical organization works with will be reduced by at least 50 percent. This change is driven by increases in the capability of application servers and the general shift of communications applications to common off-the-shelf server and operating systems. As this occurs, formerly distinct markets, each with distinct vendors, converge, resulting in massive consolidation in the communications industry. Organizations must build careful, detailed plans for when each category of communications function is replaced or converged, coupling this step with the prior completion of appropriate administrative team convergence.

Business Intelligence. Business Intelligence (BI), the top technology priority in Gartner’s 2008 CIO survey, can have a direct positive impact on a company’s business performance, dramatically improving its ability to accomplish its mission by making smarter decisions at every level of the business from corporate strategy to operational processes. BI is particularly strategic because it is directed toward business managers and knowledge workers who make up the pool of thinkers and decision makers that are tasked with running, growing and transforming the business. Tools that let these users make faster, better and more-informed decisions are particularly valuable in a difficult business environment.

Green IT. Shifting to more efficient products and approaches can allow for more equipment to fit within an energy footprint, or to fit into a previously filled center. Regulations are multiplying and have the potential to seriously constrain companies in building data centers, as the effect of power grids, carbon emissions from increased use and other environmental impacts are under scrutiny. Organizations should consider regulations and have alternative plans for data center and capacity growth.

“A strategic technology may be an existing technology that has matured and/or become suitable for a wider range of uses,” said Carl Claunch, vice president and distinguished analyst at Gartner. “It may also be an emerging technology that offers an opportunity for strategic business advantage for early adopters or with potential for significant market disruption in the next five years. Companies should evaluate these technologies and adjust based on their industry need, unique business needs, technology adoption model and other factors.”

Additional comments from Mr. Cearley are available on the Gartner YouTube channel at http://www.youtube.com/watch?v=-yglJUxqSCM. Additional videos are available athttp://www.youtube.com/gartnervideo.

Follow news, photos and video coming from Symposium/ITxpo on FriendFeed at http://friendfeed.com/rooms/gartner and on Twitter athttp://twitter.com/Gartner_inc.

About Gartner Symposium/ITxpo
Gartner Symposium/ITxpo is the IT industry's largest and most-strategic conference, providing business leaders with a look at the future of IT. Nearly 6,000 senior business and IT strategists will gather for the insights, tools and solutions they need to ensure their IT initiatives are key contributors to and drivers of their enterprise's success. Gartner's annual Symposium/ITxpo events are key components of attendees' annual planning efforts. They rely on Gartner Symposium/ITxpo to gain insight into how their organizations can use IT to address business challenges and improve operational efficiency. Additional information is available atwww.gartner.com/symposium/us.

The top 5 strategic technologies for 2009

The top 5 strategic technologies for 2009

Industry analyst Gartner recently released its annual report on the top ten strategic technologies for the upcoming year. The 2009 list included a variety of existing and emerging technologies that offer a business advantage for early adopters, or that have the potential for significant market disruption in the next five years.

The top five strategic technologies that are most relevant for small and mid-sized businesses (SMBs) in 2009 include:

Cloud computing. This has been the industry buzzword of 2008, and the term is loosely derived from the use of a cloud image to represent the Internet or other large networked environments. Cloud computing is about accessing resources and services on an on-demand, as-needed basis; in essence, it involves outsourcing certain IT operations and functions.

Analysts are predicting that small companies may begin to rely on cloud computing for more of their technology needs, preferring to outsource rather than deal with the costs and complexity of in-house IT infrastructure. 

In November, HP and NetSuite announced they are partnering to offersoftware as a service (SaaS) business applications to the SMB market. “SMB customers are looking for new ways to avoid up-front technology costs, and on-demand services are the ideal solution,” said Enrique Lores, senior vice president, Solution Partners Organisation and Commercial Sales, HP.

Virtualisation. In the absolute simplest definition, virtualisation enables one device to function as many. Much of the industry buzz has focused on server virtualisation, but virtualisation offerings stretch across nearly every aspect of IT, from the desktop to the data centre – storage,software, services, printing and imaging, desktop environments,communications and much more. 

While once seen as a tool only for enterprise-class environments, virtualisation can bring benefits to businesses of all sizes in the form of lowered costs and maximised space due to physical device consolidation. Plus, managing the infrastructure can be simplified thanks to the enhanced manageability that virtualisation and automation can deliver. 

Social software and social networking. Social software includes a broad range of technologies, including social networking, social collaboration, social media and social validation. Social networking through these various platforms allows smaller businesses to reach potential customers, partners and employees in new ways that are often less expensive and more effective than traditional methods. SMBs can use social networking to establish themselves on the Internet and build a customer base without ever having to implement offline tactics. 

Unified communications. Unified communication (UC) is an innovation that combines telephony and computing for real-time messaging, including e-mail, voice or SMS (text messaging), among others. UC is a concept that isn’t well understood in the SMB market, although many small and mid-sized businesses have already begun to embrace the cost saving and mobility advantages of VoIP (Voice over Internet Protocol), which is just one element of a unified communications strategy. HP offers a portfolio of solutions to meet the communications needs of enterprises and smaller businesses alike.

Green IT. As organisations face stricter environmental regulations and rising energy prices coupled with limited physical space, green IT solutions have moved from being a trendy idea to an absolute necessity. SMBs that invest in more efficient products and solutions can fit more equipment into their data centres, and enjoy reduced power bills and increased performance. 

Hardware vendors like HP are making it easier than ever to invest in green IT, with a range of products and solutions to fit every environment and budget.

For more on the top ten strategic technologies for 2009, read the full Gartner report or listen to additional comments by David Cearley from Gartner on YouTube. 

Peanut Recall Expands To Additional Products

Peanut Recall Expands To Additional Products.

USA Today (1/19, Weise) reported, "FDA staff are working to track what products contain salmonella-tainted peanut butter and paste made in a Georgia manufacturing plant. So far, 474 people have been sickened in a 43-state salmonella outbreak that may have contributed to six deaths." PCA's plant in Blakely, Ga., "believed to be the source of the contamination, distributed a relatively small amount of the peanut butter and paste used to produce snacks and treats. ... But PCA sold to at least 85 companies, some of which distributed to other food manufacturers."

        The Washington Post (1/20, Reinberg) reports the latest round of recalls followed an FDA "warning Saturday that consumers should avoid peanut butter products containing peanut butter or peanut butter paste while the salmonella outbreak probe continued. The U.S. health warning is focused on products made with peanut butter, like crackers, not jars of peanut butter on store shelves."

        The AP (1/18) reported, "Officials said new illnesses are still being reported in the outbreak investigation. Kellogg Co., which listed Peanut Corp. as one of its suppliers, has recalled 16 products. They include Austin and Keebler branded Peanut Butter Sandwich Crackers, and some snack-size packs of Famous Amos Peanut Butter Cookies and Keebler Soft Batch Homestyle Peanut Butter Cookies." In addition, "Perry's Ice Cream Co., based in Akron, N.Y., said it was recalling select ice cream products containing peanut butter because of the PCA investigation" and "the Midwest supermarket chain Hy-Vee Inc. of West Des Moines, Iowa, said yesterday that it was voluntarily recalling products made in its bakery departments with peanut butter because they had the potential to be contaminated with salmonella."

        The Wall Street Journal (1/20) reports, "Ralcorp Frozen Bakery Products Inc. on Sunday announced that it's recalling all Wal-Mart 'Bakery' brands of peanut-butter cookies, peanut-butter no-bake cookies and peanut-butter-fudge no-bake cookies." The FDA said "consumers should avoid eating food containing peanut butter unless they know it isn't linked to Peanut Corp., Lynchburg, Va." The FDA is "inspecting some of the direct distributors, including King Nut Co. in Solon, Ohio, and is following the distribution chain to figure out which companies used Peanut Corp. products. The FDA is also asking companies to check their supply chain and tell consumers if their ingredients came from Peanut Corp."

Deutschland steht vor schwerer Rezession

WIRTSCHAFT | 19.01.2009

Deutschland steht vor schwerer Rezession

 Laut Prognosen steht eine steile Talfahrt der Wirtschaftsleistungen bevor

 

Laut Prognose der EU-Kommission steht Deutschland vor dem stärksten Einbruch der Wirtschaftsleistung seit dem Zweiten Weltkrieg. Bundesfinanzminister Steinbrück bestätigte die Zahlen aus Brüssel.

Trotz der milliardenschweren Konjunkturpakete der Bundesregierung steht Deutschland ein massiver Einbruch der Wirtschaftsleistungen bevor. Die EU-Kommission teilte am Montag (19.01.2009) in Brüssel mit, sie erwartet, dass das deutsche Bruttoinlandsprodukt 2009 um 2,3 Prozent zurückgeht. Das wäre der größte Einbruch seit dem Zweiten Weltkrieg. Erst für 2010 rechnet die Behörde wieder mit einem Wachstum von 0,7 Prozent.

Die Bundesregierung legt ihre Wachstumsprognose am Mittwoch vor. Finanzminister Peer Steinbrück (SPD) teilte bereits mit, die in Brüssel vorgelegten Zahlen stimmten mit denen überein, die die Regierung im Jahreswirtschaftsbericht präsentieren wolle. 

Die Wirtschafts- und Finanzkrise beschert ganz Europa eine Rezession. Die Kommission erwartet für die Euro-Zone ein Minus von 1,9 Prozent in 2009 und eine Erholung mit 0,4 Prozent Wachstum für 2010. Für die 27 EU-Länder insgesamt wird in 2009 ein Minus von 1,8 Prozent und im folgenden Jahr ein Plus von 0,5 Prozent prognostiziert.

Deutschland verstößt 2010 gegen Defizitregeln

 Düstere Aussichten für die deutsche Wirtschaft

Als Exportnation leidet Deutschland besonders unter dem Rückgang im Welthandel, wie es in dem Bericht hieß. Die beiden Konjunkturprogramme der Bundesregierung verhinderten ein noch massiveres Minus. Das deutsche Haushaltsdefizit wird allerdings durch diese Maßnahmen und durch den Rückgang der Steuereinnahmen in diesem Jahr voraussichtlich auf 2,9 Prozent steigen. Damit wird die Defizitgrenze des europäischen Stabilitäts- und Wachstumspakts von drei Prozent gerade noch eingehalten. 

Im kommenden Jahr dürfte Deutschland dagegen erstmals innerhalb von fünf Jahren wieder deutlich gegen die Vorgaben des Stabilitätspakts verstoßen. Die EU-Kommission schätzt das Defizit für 2010 auf 4,2 Prozent des Bruttoinlandsprodukts. Nach dem 2005 reformierten Stabilitätspakt ist ein vorübergehendes Überschreiten der Drei-Prozent-Schwelle im Fall einer schweren Wirtschaftskrise möglich, ohne dass Strafzahlungen drohen. Allerdings müssen die EU-Länder die nächste Konjunkturerholung zum Abbau der Verschuldung nutzen. 

Schrittweise Erholung ab Jahresmitte

 Joaquin Almunia erwartet eine tiefe Rezession

Ähnlich wie Deutschland stemmen sich viele EU-Länder mit Konjunkturprogrammen gegen die Krise. Gemeinsam wollen sie die Wirtschaft mit insgesamt 200 Milliarden Euro stützen. Deutschland mobilisiert allein rund 80 Milliarden Euro für Steuererleichterungen und öffentliche Investitionen. Wie EU-Wirtschafts- und Finanzkommissar Joaquin Almunia erklärte, ermöglichen die Konjunkturprogramme und die Zinssenkungen der Europäischen Zentralbank eine schrittweise Erholung der Wirtschaft von der zweiten Hälfte des Jahres an.

Trotz steigender Zinsen für Anleihen einiger Euro-Länder drohen Almunia zufolge keine Staatspleiten. Es sei zwar eine Realität, dass die Risikoaufschläge für Staatsanleihen gegenüber deutschen Anleihen stark gestiegen seien. Die Euro-Länder müssten etwas dagegen unternehmen, um steigende Kosten der Staatsverschuldung zu verhindern. Es sei aber nicht zu erwarten, dass ein Euro-Land deshalb zahlungsunfähig werde. (kis)

Car sales are falling across the world

In reverse

Jan 16th 2009
From Economist.com

Car sales are falling across the world

NO COUNTRY or company has been immune from the collapse in car sales. Figures released last week confirmed that the last half of 2008 saw the most savage contraction in demand for motor vehicles since the second world war. In America sales of cars and light trucks in December fell by 33.5% compared with a year ago, and in Spain they crashed by nearly half. Even in Brazil and China, where sales increased on an annual basis compared with 2007, saw sharp declines in the last quarter of 2008. Of the world's big carmakers, Chrysler is in the most trouble, thanks to poor products and a reliance on the American market, where its sales dropped by more than any other carmaker.

AP

China Overtakes Germany As Third-Largest Economy.

China Overtakes Germany As Third-Largest Economy.

The Washington Post (1/15, A16, Cha) reports, "China leapfrogged over Germany to become the world's third-largest economy in 2007, sooner than predicted, underscoring how quickly the concentration of global economic power has shifted." The Post continues, "While earlier estimates had put growth of China's gross domestic product that year at 11.9 percent, revised figures released by the government statistics bureau Wednesday show that its economy actually expanded by 13 percent to $3.38 trillion. That compares with Germany's 2007 GDP of $3.32 trillion."

CNN (1/15) notes in its website, "Although the world's top economies, the United States and Japan, are in recession, the most pessimistic estimates for China's growth in upcoming years runs about 5 percent. That could allow China's GDP to overtake Japan's, currently $4.3 trillion, within a few years." According to World Bank estimates, "China's economic growth is about 7.5 percent. But China has seen a sharp decline in exports in November and December as other major economies struggle, and the bank's analysts say rates below 6 percent could worsen the rest of the world's slump."

According to Chinese news agency Xinhua (1/15), "The pace was the fastest since 1994 when the GDP expanded by 13.1 percent." Yet in spite of this growth, Germany is "still ahead in per capita income," Germany's Deutsche Welle (1/14) noted.

Monday, January 12, 2009

Weakened Algorithm Threatens Online Identity

How an outdated algorithm put secure Internet transactions at risk.

By Erica Naone   --- technologyreview.com

Most people know to look for a padlock icon in the corner of their browsers when banking or conducting other sensitive transactions online. In part, this means that the site has a certificate that has been verified by a higher authority to confirm its identity. Recently, however, a team of security researchers found that a critical security system can be undermined by taking advantage of the outdated algorithms that some companies used to create these certificates. A loose-knit group of security researchers from the United States and Europe presented details of the attack at the 25th Annual Chaos Communication Congress in Berlin at the end of December.

The padlock is part of the key online security protocol called SSL (Secure Socket Layer), and it appears as an assurance that a transaction is safe from eavesdropping, tampering, or forgery. A hacker can easily create a banking website that looks like the real thing, but it's much harder to forge the digital certificate that accompanies the site. This is because SSL uses a clever trick to create each certificate: two mathematically linked keys, one of which is kept secret while the other is published openly on the Internet.

Necessary firepower: Security researchers undermined the certificate system that secures sensitive online transactions. To perform the necessary calculations, the researchers used a cheap cluster of 200 PlayStation 3 machines. The multiple cores of the PlayStation 3 are particularly suited to performing the kinds of calculations needed for the attack, the researchers say.  Credit: Alexander Sotirov, Marc Stevens, Jacob Appelbaum, Arjen Lenstra, David Molnar, Dag Arne Osvik, Benne de Weger. The cluster was sponsored by EPFL DIT and by a matching equipment grant from the Swiss National Science Foundation.

A select group of trusted higher powers--known as certificate authorities--can verify the identity of a website. An authority does this by checking that the site is genuine before combining its private key with the website's public key to create the certificate. A main part of the procedure also involves applying what's known as a hash function to generate a unique signature for the certificate. Anyone who visits that site can verify that this certificate is genuine by checking the signature and referring back to the certificate authority's public key.

All this happens behind the scenes, and popular browsers such as Internet Explorer and Firefox have built-in trust for certain certificate authorities, explains Paul Kocher, president and chief scientist of the security company Cryptography Research, who was involved in creating the latest version of SSL. Any certificate that can be traced back to one of those authorities is automatically trusted by the browser. "The entire browser trust model relies on all of the certificate authorities acting well," Kocher notes.

However, some certificate authorities still use a hash function called MD5 to produce certificate signatures. Most authorities have abandoned MD5 because researchers have shown it to be vulnerable to what is called a collision: under certain circumstances, it's possible to produce two certificates that will generate exactly the same digital signature.

A hash function's value disappears if it's easy to produce two certificates with exactly the same fingerprint, explains Marc Stevens, a PhD student in the cryptology and information security group at the Centrum Wiskunde & Informatica, in the Netherlands, whose work on MD5 was crucial to the research. Stevens has been producing collisions using MD5 for several years, enlisting the computing power of 200 PlayStation 3 consoles. The architecture of these machines' microprocessors is well-suited to the kinds of calculations needed for his work. Stevens says that it would take about 8,000 PCs to equal the power that the PlayStations provide. Using the hardware, the team was able to perform the calculations needed for the attack in the space of a weekend.

To pull off the attack, the team created a normal certificate and had it signed by a certificate authority that still uses MD5. However, the team engineered a collision to create a second certificate--an "evil twin"--that matched the signature of the first and also seemed to say that the original certificate authority had delegated its certificate-signing powers to the owner of the evil twin.

The evil-twin certificate could then be used to create certificates for any website on the Internet, allowing a malicious individual to impersonate trusted banking websites, padlock icon and all, without raising any of the alarms meant to protect users.

RapidSSL, a certificate authority owned by Verisign, issued the MD5 certificates that the team exploited. Independent security researcher Alexander Sotirov, who helped turn the theoretical work on MD5 into the real attack, says that the attack was possible not only because of MD5, but because of lax security in the way that RapidSSL issues certificates, which made it easy to produce a collision.

Just six hours after the researchers gave their presentation, Verisign announced that RapidSSL had moved to a more secure hash function. Tim Callan, vice president of product marketing for Verisign, explains that the company had been working on the move since it bought RapidSSL in 2006. However, he says, the company was proceeding cautiously because it didn't want to disrupt the SSL services already offered to its partners. "If you are arbitrary or capricious with that, then what happens is that people will respond by using lower-security alternatives," Callan says.

Sotirov credits Verisign for acting quickly in response to the attack, but says that the current infrastructure for certificates "is not working very well at all." He adds, "It's worrisome that so many certificate authorities are equally trusted," particularly when different authorities use different standards to verify the identity of potential clients and to secure the certificates that they issue. He says that market forces, which reward certificate authorities for fast response times and low prices rather than for good security, are creating a "race to the bottom" that increases the chance of security issues in the future.

Sam Curry, vice president of product management for security company RSA, which abandoned MD5 in its certificate authorities about a decade ago, says that he thinks it's important for companies to stay on top of theoretical attacks before they become real ones. "I'm thrilled, in a way, when people find these theoretical weaknesses because it means that we're actually doing real testing and real, deep thinking about it," Curry says. "I'm not thrilled when the practical ones roll out, because that's when people get hurt."

But Kocher says that it's unlikely that average users will be affected. While certificate authorities should pay serious attention to the researchers' attack, he says that, unfortunately, there are much easier ways to scam users online.

Güterverkehr im Jahr 2008 auf Rekordniveau – Bahn wächst

Güterverkehr im Jahr 2008 auf Rekordniveau – Bahn wächst

Wiesbaden. Trotz der einsetzenden Wirtschaftskrise sind 2008 in Deutschland so viele Güter transportiert worden wie noch nie seit der Wiedervereinigung. Die höchsten Wachstumsraten erzielte die Eisenbahn vor allem mit dem Containerverkehr, während die Binnenschifffahrt leicht schrumpfte. Mit einem Anteil von 77 Prozent an der gesamten Beförderungsmenge blieb allerdings der Transport über die Straße dominant.

Das Transportaufkommen aller Verkehrsträger stieg laut einer Mitteilung des Statistischen Bundesamtes in Wiesbaden vom Dienstag binnen Jahresfrist um 2,3 Prozent auf 4511 Millionen Tonnen. Die Güter wurden allerdings über etwas kürzere Strecken transportiert, was sich in der nur um 1,3 Prozent gestiegenen Transportleistung von 670,2 Milliarden Tonnenkilometern niederschlägt. Zum Jahresende hat sich die Entwicklung den Statistikern zufolge abgeschwächt.

Auf der Schiene wurden nach den Erhebungen 379 Millionen Tonnen transportiert, das waren rund 4,9 Prozent mehr als 2007. Das Wachstum wurde im Wesentlichen vom Containerverkehr getragen. Auch auf der Straße nahm der Güterverkehr weiter zu: Die Lastwagen fuhren 3473 Millionen Tonnen Güter, ein Plus von 2,3 Prozent. Zuwächse verzeichneten auch Seeschiffe, Flugzeuge und der Transport durch Rohrleitungen.

Mit Rückgängen hatten die Binnenschiffer zu kämpfen: Ihre Transportmenge sank um 1,4 Prozent auf 245,6 Millionen Tonnen und ihre Transportleistung ging um 1,1 Prozent zurück.(sv)

Neuer Quergurtsorter: Flexibel sortieren mit Siemens

Neuer Quergurtsorter: Flexibel sortieren mit Siemens

Siemens hat mit dem „Variosort EXB120“ einen neuen Quergurtsorter mit elektrischem Antrieb für die Gurtbewegung entwickelt, durch den jeder Gurtförderer auf einem Fahrwagen individuell gesteuert werden kann. Durch das Siemens-Produkt „Industrial Wireless LAN (I-WLAN)“ wird die kontaktlose Echtzeitkommunikation zwischen dem stationären Steuerungssystem und dem Fahrwagen realisiert. Hierüber werden alle aktiven Signale zur Steuerung des Quergurtförderers auf dem Fahrwagen und die relevanten Daten für das Diagnosesystem gesendet.

Neuer Quergurtsorter: Variosort EXB120 von Siemens Mobility (Foto: Siemens)Der Sorter ist für Geschwindigkeiten von bis zu 2,5 Meter pro Sekunde ausgelegt. Es können laut Siemens beliebig entsprechend notwendige Steigungen, Gefälle und Kurven ab einem Durchmesser von 3,5 Metern konfiguriert werden. Die Fahrwagen sind mit Quergurten von 0,6 mal 1,2 Meter (Länge, Breite) ausgestattet, man kann sie aber auch nach Bedarf an benutzerspezifische Produktabmessungen anpassen. 

Mit dem Electrical Cross Belt Sorter Variosort EXB120 können Güter mit einer Abmessung von 0,1 mal 0,1 mal 0,1 Meter bis hin zu 1 mal 0,6 mal 0,6 Meter (Länge, Breite, Höhe) sortiert werden. Dabei kann das Gewicht des Sortiergutes je Fahrwagen bis zu 35 Kilogramm betragen. Siemens Mobility, Erlangen, präsentierte das neue Produkt erstmals auf der Messe Promat in Chicago. (pi)

What is carbon capture and storage?

The McKinsey Quarterly

What is carbon capture and storage?

Executives and public policy makers should familiarize themselves with the technologies involved in carbon capture and storage (CCS) as they work toward reducing carbon dioxide levels in the atmosphere.

January 2009

Climate change has businesses, governments, and nonprofits examining how to stabilize atmospheric greenhouse gases while still maintaining economic growth. In plotting the course to a low-carbon economy, they will weigh a number of methods for addressing the various risks and opportunities. Carbon capture and storage (CCS)—or more accurately, the sequestration of carbon dioxide—is an important topic in the emerging field of climate change. It represents one possible approach for stabilizing atmospheric greenhouse gases—although there are many economic, technical, and legal barriers to its implementation. As background for informed discussion, we offer this interactive depiction of the technologies involved in CCS.

Launch Interactive