Articles

AMR Research Alert

Camstar is helping customers reduce inventory and achieve higher turns

Campbell, CA - March 23, 2001 - Projections of negative growth in PCs, slower demands in the Semiconductor industry, inventory build-ups at the semiconductor manufacturer and at the contract manufacturing level in telecommunication segments, and layoffs at leading telecommunication equipment providers are all recent activities predicting rough seas still ahead for the technology sector. But the storm is still brewing with news that rate adjustments by the Federal Reserve will not have an impact for months. What is the impact of all this on the IT organization, which grapples with integration activities inside and outside the firewall, buy­side versus sell-side e-commerce projects, and the realignment of business processes while trying to grow the business with fewer resources?

A recent AMR Research study and another by Ernst and Young, with cooperation from the National Association of Manufacturers, found that High-Tech manufacturers are devoting more energy to IT projects that can drive revenue growth than to cost-reduction projects. AMR Research has seen a higher adoption rate of Collaborative Manufacturing Execution (CME) from contract manufacturers and leading distributors in providing design to manufacturing services, with tools from Alventive and MatrixOne. Supply chain fulfillment capabilities from Optum and Descartes enable manufacturers to differentiate themselves from their competitors through logistics services, but manufacturers still need to be conscious of possible inventory build-ups if demand and supply are not synchronized. These sell-side projects are not only driving revenue, but enable the organization to provide greater customer value with fewer resources. So, in many instances, the sell-side IT priority is achieving both objectives.

"CME participants that provide manufacturing visibility, similar to Camstar, and supply chain coordination, from Ariba, Manugistics, and i2, are seeing benefits with inventory reductions and higher turns. Cisco's new eHub, a PTX, is attempting to coordinate the entire supply chain as a method to increase customer service and streamline costs associated with visibility. The value of enterprise integration and the immediate access to sales and inventory information has been noted by Federal Reserve Chairman Alan Greenspan, indicating that the economic downturn now moves at a faster speed and we are able to react to it more quickly. Users in the high-tech community should incorporate sell-side components of CME into their private exchanges as a means to achieve revenue growth through additional services, provide the necessary connectivity for external integration, and realize back-end operating efficiencies.

--David Cahn