Procurement/Mac Services Supply Chain News April 2011
April 2011
Newsletter

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Procurement Services Associates
Material and Contract Services    Website

What's Inside?

About Doug Lambert
About

Nine Critical Warehouse Success Factors
Page 2

Why Use An
Operations Audit?
Page 2.5

News From Our Southern California Office
Spotlight on Azita Ameli Page 3


SOLAR TRENDS
Commodities:
Gold and Silver
Page 4

TRENDS: Construction Pharmaceutical, Electronic
Page 5

Future of Supply Chain
Recruiters are expecting a better 2011
Page 6

Associations and Education
Page 7

Contact Us
Page 7


A Message from Dan Plute

The global economy and ongoing management pressure to streamline the supply chain and to reduce costs are challenging today's Supply Chain Professionals. Supply Chain and Contract professionals are facing a different set of challenges - a vision to expand their knowledge of a company's business, the company's marketing and manufacturing plans and to become a partner in the business processes.

A Supply Chain/Contracts Manager's knowledge base should include:
☞ Project management principles
☞ Risk management
☞ Providing an environmentally friendly
     business climate

The passive role of waiting for someone to provide guidance on the procurement needs of a department, the status of the supply chain pipeline for inventory and inherent risks from an international source is not conducive to a strong supply chain. Management expects Supply Chain Managers to become an active participant in the daily operations planning meeting. Can you meet the challenges of today's Supply Chain Environment?

Dan P. Plute

Page 1

About
Douglas Lambert

Douglas Lambert has more than 20 years of progressively responsible and diversified experience in all areas of supply chain management, operations, and logistics. Doug leads organizations to competitive and strategic advantage though solid management skills and long term commitment to the client.

✦ While running my own consulting firm I develop and implement projects and operational designs that enhanced numerous clients strategic competitive advantage
✦ Implement command control procedures for information systems, purchasing and distribution functions
✦ Design and implement automated data collection and inventory control for distribution systems
✦ Improve operational capabilities by linking all functional areas to central distribution centers.
✦ Improved manufacturing capability by as much as 50 percent.
✦ To date I have enjoyed working relationships with General Motors, Anheuser Busch, Lockheed, Raychem, Foster Farms, Interlake, Catalyst International, Tyco, Delmont Foods, NASA, DARPA, Warner Lambert, Symbol, and many others
✦ I innovated world class programs in the operations environment though appropriate methodologies such as JIT, EDI, bar code system TQM, TTM, ISO Implementation and INSTALLATION OF E-Commerce solutions

BA Rutgers
Advanced studies at University of Michigan, Bloomfield College, Litton School of Conveyor design, and various classified schools in the USN.

9 Critical Warehouse Success Factors
by Doug Lambert
Some we always want the newest and best gizmo or idea. We forget basics. Just like good football is blocking and tackling good warehouse operations are basic common sense practices. Are you practicing these basic ideas or waiting for the next big thing?

Keep it clean and organized.
Generally, you can tell a lot about the type of warehouse operation in place just by looking at the facility's overall organization cleanliness and appearance. Good housekeeping and high efficiency always go hand-in-hand!

Develop appropriate pick locations:
As much as 70 percent of a picker's work hours may be spent walking. Consider product velocity when selecting the picking slots sizes and location.

Use the cube.
The single biggest problem in optimization of any warehouse space is not adequately using all of the available cubic space. We need to look at the cube use in your picking slots and reserve locations to determine if a space reconfiguration can boost the amount of products stored and reduce labor cost.

Ensure that sufficient product is available:
When a picker needs to fulfill an order he must have the correct product location and product availability.

Take advantage of bar code technology
from the receiving through the shipping functions. Among the many reasons to employ bar codes: You can track products and orders, verify accuracy, speed processes, gain early visibility, and eliminate paperwork and dramatically reduce labor cost!

Plan for flexibility and scalability.
Any warehouse facility or system should be designed to maximize flexibility and be as scalable as possible. With increasing uncertainty about future business, it's mandatory that you remain as flexible as possible.

Use of an efficient stock-locator system.
This sounds like an elementary statement, but do you know where your entire inventory is located? One shortcoming of some management systems is that their warehouse inventory systems can show product inventory in only one location. Manual systems (spread sheets) have to be used to record other locations for the same SKU. For efficient operations, your warehouse inventory system must be able to identify what product is stored in each location, as well as the quantity of each product in every location and the date code.

Develop a vendor-compliance program.
Everything starts at your warehouse's receiving door. Moreover, every function, from put-away to shipping, is impacted in some way by your vendors. That's why it's a good idea to devise and enforce a vendor-compliance program that defines the detailed expectations and specifications required of every vendor.

Measure and report performance metrics to your workers.
"You can't improve what you don't measure", is still true in warehouse operations. The simple act of measuring operating metrics and reporting the results to your employees will result in an improvement even if you do nothing else with the data.

Why Use An Operations Audit?
When trying to reduce costs and improve profits we must first measure and analyze what's currently being done. Such an audit takes a quantitative and qualitative look at your fulfillment operation's productivity and accuracy, and does so in a systematic way. A good operations audit enables you to measure warehouse productivity and other important metrics to identify patterns and trends. It also allows you to complete both internal and external comparisons. Once you gather the data and make comparisons, you'll be able to draft an action plan for improvement.

❖ Some known Operational Averages:
When we have completed your existing operational analysis you can compare yourself to some national industry averages. Below are a few key metrics from a cross section of some of the better-run companies in the wholesale industry. Keep in mind these averages come from different-sized operations...

❖ Warehouse cost per order:
National average is around $4 per order (which includes direct and indirect labor, occupancy costs (triple net) (and packaging). Highly efficient businesses may be as low as $2.25.

❖ Order processing turnaround times:
✓ The time to pick, pack and ship an order in 24 hours is what?
✓ Returns and receiving processing turnaround times: within a 24 hour period?

❖ Orders per full-time equivalent employee per shift:
15 to 17.

❖ Maximize what you have
before investing in a new solution. If you attribute savings or improvements to a new investment when those same improvements could've been obtained with a review/modification of your existing process, the payback or justification for the investment will be inflated.

❖ Functional area productivity:
National picking averages 115 units per man-hour, and packing is 36 boxes per man-hour for conventional warehouses. But small-product picking rates may range from 275 to 800 units per hour.

❖ Orders per square foot:
6.5 is the average.

❖ Net sales per square foot of warehouse space:
$750 is the average, and varies by product size and value. This is down from $1,000 net sales per square foot 10 years ago, even though most companies' average order sizes have increased.

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Page 2
News From Our Southern California office
The PSA Southern California office has been working diligently on our marketing, employer brand awareness, and business development. We've made a conscious effort to be more visible in the Southern California marketplace with our participation at numerous marketing and networking events. We plan to have staff present at a multitude of upcoming events throughout the first and second quarters of 2011.

We have secured on average 2-3 new client relationships per month this year spanning multiple industries such as automotive, manufacturing, food, and non-profit. We are seeing companies being very selective in the candidates they are bringing into their organizations, both for temporary and direct positions. The scrutiny placed upon candidates is more evident now than we've seen in quite some time, with candidates having to shine through additional steps in the interviewing process to make certain they are the appropriate candidate for the opportunity. Such scrutiny has produced longer tenured candidates filling such positions, as evidenced by one of our client discussions recently. The current pipeline remains strong and we are cautiously optimistic about continued growth in 2011.

Chris Bravata, President
PSA Southern California Operations
Phone: 714.647.1520
Fax: 714.647.1390

Spotlight on
Azita Ameli

Azita Ameli has been a member of our team since 2004. With over 20 years of experience in Business Development, Account Management and Client Support Azita manages the business development activities for the Northern California office, and is a vital player in the day to day management of the office. Azita holds a bachelor degree in Business Administration from University of San Francisco. Prior to her employment with PSA, she worked for companies in High-Tech, Financial and Service Industries including Adaptec, Cyrus Logic, and First Data Corporation. She upholds a high standard of integrity and her goal is to "get the job done" with win-win results and client satisfaction. Azita is successfully expanding our business through development of strategic alliances, identification of new business opportunities and implementation of marketing strategies to increase visibility. Her focus in networking efforts have markedly expanded our database of procurement and supply chain professionals and strengthened our position in the market.

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Page 3

SOLAR
TRENDS
FOR 2011

The rise of the U.S. market. Given the size of the country, solar industry folks have long counted on the U.S. as becoming a dominant solar electricity generator one day. We'll likely see a particularly big upswing in that direction because of a confluence of state and federal policies. Congress just extended a popular grant program that helps to cover 30 percent of the cost of installing solar projects. The extension will end Dec. 31, 2011, and projects that start construction by the deadline will still qualify to get the money. That deadline will prompt companies to quicken their project development pace.

Factory boom. Many solar cell and panel manufacturers are expanding their factories at a dizzying pace, and the biggies will only become bigger, making it even harder for startup companies and definitely brand entrants to compete. First Solar vows to nearly double its production capacity from 1.4 GW in 2010 to 2.7 GW by 2012. Suntech Power expects its cell and panel production capacity to surge from 1.8 GW in 2010 to 2.4 GW in 2011. JA Solar already has reached 1.9 GW of cell production capacity by November of this year. Solar Frontier is building a 900-MW factory that is set to come online next year; it currently has two factories of 80 MW total.

Hybrid solar market slowly emerges. A slew of startup companies have gradually rolled out hybrid systems that generate electricity and heat to create hot water or run heating and cooling systems at homes and businesses. Cogenra Solar installed its first pilot project at a northern California winery this summer, while PVT began selling its equipment to home builders in 2009. Cool Energy lined up a Colorado utility, Xcel Energy, to help launch a pilot project this year. Chromasun plans to launch its first hybrid system in 2011.

COMMODITY TRENDS:
GOLD    Au
Gold prices have inclined by 1.72% from beginning of 2011 to end of the February month; this week's average price was 1,377 USD /t. oz - a 1.3% increase compare to last week's average weekly price of 1,360 USD /t. oz.

SILVER  Ag
Silver prices, even more than gold prices, have inclined by 5.77% from beginning to end of the February .The forecast for silver prices in 2011 is based on:
✵ the increasing global macroeconomic, currency and geopolitical risks
✵ silver historic role as money and a store of value
✵ the ever declining and very small remaining silver deposits
✵ significant industrial demand
✵ significant and growing investment demand

EMPLOYMENT TRENDS 2011:
The unemployment rate fell by 0.4 percentage point to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000),the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing and in retail trade but was down in construction and in transportation and warehousing. Employment in most other major industries changed little over the month.

              UNEMPLOYMENT RATE
☛ Marin County, California 6.6%
☛ Mono County, California 6.7%
☛ San Mateo County, California 7.2%
☛ Orange County, California 7.5%
☛ San Francisco, California 8.0%

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            Page 4

CONSTRUCTION INDUSTRY TRENDS

Construction Industry
Analysis: Prospects

T he prospects involved in the industry of construction machineries have attracted the attention of many global manufacturers and exporters. In recent years Indian producers of both heavy and light machines have performed very well both in the domestic and the world market. The reforms of the government and the trade pact with the neighboring countries have also contributed to the growth of Indian the construction machinery industry to a larger extent. With the continuation of the development process, especially in developing countries, the construction industry is indeed a growing industry. With the process of development, a migration of people takes place from the rural to urban areas. Growth is most significantly observed in the "Asian Tiger" countries, Indian and China.

Thus, the construction industry is also on a rise in such countries. Be it a large, small or medium construction firm, everyone is striving for modern technology. The most significant aspect associated with the industry is increased use of the latest technologies for pacing up the work. The construction workplace is no more a labor intensive dull setting. With the importance given on security and infrastructure, overseas job prospects in this industry are increasing day by day. Cutting edge technology is being adopted by the world's biggest industries for leveraging purposes and is mainly being used in raising the efficiency level of engineering and designing in the construction industry.

Global demand to rise 6% annually through 2011

Global demand for construction machinery is forecast to rise 6% per year to $130 billion in 2011. Product sales will be increased by healthy economic growth. Continuing industrialization efforts, rising population and higher standards of living in developing parts of the world will lead to substantial increases in construction spending. China, India, Mexico and Russia will register some of the largest sales increases, with China alone accounting for 31 percent of all additional construction machinery demand through 2011. Growth is also expected to be strong in Iran, Malaysia, Indonesia, Ukraine, Turkey, Poland and South Africa.

Pharmaceutical Industry Trends
Global Scenario

If present industry overview is taken into consideration then the global pharmaceutical market in 2010 is projected to grow 4 - 6% exceeding $825 billion. Global pharmaceutical market sales are expected to grow at a 4 - 7% compound annual growth rate (CAGR) through 2013. This industry growth is driven by stronger near-term growth in the US market and is based on the global macro economy, the changing combination of innovative and mature products apart from the rising influence of healthcare access and funding on market demand. Global pharmaceutical market value is expected to expand to $975+ billion by 2013. Different regions of the world will influence the pharmaceutical industry trends in different ways.

Asia Pacific Pharmaceutical Market

The pharma market world over will experience significant shifts. Asia-Pacific region will emerge as the fastest growing pharmaceutical market over the recent past. The reason for this positive shift can be attributed to low costs and a favorable regulatory environment. This region has experienced important developments regarding contract manufacturing especially in generics and APIs. Increased R&D activities in the region helped the Asian-Pacific pharmaceutical industry to achieve an estimated market size of around US $187 billion in 2009. Here, the pharmaceutical industry is expected to grow at a CAGR of around 12.6% during 2010-2012. It can, in fact, become the global API production hub in next few years.

ELECTRONIC TRENDS

The top trends in electronics:

❶ More tablets and portable electronics devices should make an appearance.
❷ 3D TV without glasses should be talk of the town. 3D TV should be available to the family in 2011.
❸ Penetration rate of LED TV to accelerate.
❹ Further improvements in digital TV connectivity - Silicon Image's ViaPort technology needs to be watched.
❺ Fully IP-connected digital TV platform - Inview and Trident Microsystems will be introduced by Neelix.
❻ A plethora of new DisplayLink certified devices will hit the market.
❼ E-readers will grow, but at the risk of getting commoditized.
❽ There will be more of SSDs.

SEMICONDUCTOR INDUSTRY

After two years of fast-paced growth in the semiconductor sector, companies restocked lean inventories. The industry is expected to post more modest growth in 2011 according to a research report by Ross Seymore, a Deutsche Bank Equity Research analyst.

The chip industry is more likely to see revenue growth of 5% this year compared with over 30% last year, as it faces lower average selling prices for chips and the cyclical demand for semiconductors hits a lull.

Overall, semiconductor stocks are anticipated to perform in-line with the broader market this year, rather than leaping ahead by a wide margin as they did last year, according to Seymore. He favors companies who have already taken a hatchet to inventory levels and whose valuations do not rely on specific revenue, margins and earnings growth potential. Seymore pointed to Intel (INTC), Marvell Technology Group (MRVL) and On Semiconductor (ONNN) as companies that have taken those measures and are ones to watch. The industry has indeed been on a rocket ride, with the closely watched Semiconductor Industry Association noting that the first half of last year posted more than a 50% increase in year-over-year revenue to $144.6 billion.

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            Page 5

The Future:
Supply Chain Logistics

Supply chain logistics job design is naturally multi-skilled and qualification based. This type of job design is becoming a benchmark in modern business, and it's providing a lot of job mobility for qualified people. Supply chain logistics jobs contain a lot of the fundamental requirements of a great series of career advancement options:

✰ Each supply chain logistics job's skill set directly relates to higher corporate roles and career possibilities.

✰ The supply chain is a common element in all industry sectors. This is a truly portable set of skills which can help employees find work and career opportunities anywhere.

✰ Supply chain management is an essential component of all businesses, particularly at senior management levels. That creates natural promotional opportunities.

✰ Each skill set can be developed into a professional role, direct from the baseline qualifications.

Procurement
Some of the important trends are:
✤ Global sourcing instead of local
✤ Further alimentation of non-value added resellers and so shortening the supply chain.
✤ More focus on social justified entrepreneurship and "Green" procurement (environmental issues)
✤ Further power shift from sellers to buyers
✤ More REAL value added partnerships (for example a bank that offers his clients mobile telephony together with his telecom partner)
✤ More outsourcing activities so internal employees can focus on strategy

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2010 was a solid year and most recruiters are expecting an even better 2011.

Key Findings:
♞ 64 percent report that their firms either met or exceeded their 2010 revenue goal.
♞ 91 percent believe their firm's revenue will increase in 2011.
♞ Average placement ratios decreased from 2009 (39.8 percent) to 2010 (35.6 percent).
♞ 85 percent expect social media will be an increased part of their sales or recruiting efforts in 2011.
♞ More than half of respondents said that their total compensation increased more in 2010 than 2009.
♞ 88 percent believe their compensation will increase in 2011.
♞ Three out of four firms plan to add staff to their business in 2011.

SALARY TRENDS:

★ The relatively small number of executives (CEOs, presidents, vice presidents, owners) reports a median annual salary of $156,000-$360,000 per year above what managers earn ($120,000). Supervisors earn a median of $102,000; staff members $79,000; and all others $100,000.
★ The most highly compensated job titles include attorney (median $148,000); consultant ($125,000); contract manager, supervisor, and director ($112,000); and program manager/analyst ($105,000).
★ Top earners are vice presidents who make $210,412. Compensation-salary plus bonus-for purchasing professionals rose 6.9% to $94,317, up from $88,206, a year ago.

Ref: 2010ExecSummary.pdf
http://ism.ws/

Associations:

Institute of Supply Management (ISM)
ISM Sacramento Valley:
Web: http://ism-sacramentovalley.org/home/
E-Mail: philolis.goode@na.flintgrp.com

ISM Diablo Valley Chapter:
http://www.napm-dv.org/
Contact by calling (925) 355-2492

ISM Northern California:
http://www.ism-nc.org/index2.html
E-Mail: j.hays@ism-nc.org

The Association for Operations Management (APICS)
APICS Golden Gate:
http://www.apics-ggc.org/
Chapter email address: admin@apics-ggc.org

APICS Mission Peaks:
http://www.apicsmissionpeak.org/
Contact Bruce Hoyt at bbstocker@yahoo.com

National Contract Management Association (NCMA)
NCMA Sacramento Gold Rush:
intranet.ncmahq.org/sacramentogoldrush/
Contact Cheryl Keith (VP, Membership)
310-516-7070
k2005success@aol.com

NCMA Tri-Valley:
intranet.ncmahq.org/trivalley
Contact Roberta Spalding
510-642-0847
r_spaldi@berkley.edu

NCMA Silicon Valley:
intranet.ncmahq.org/siliconvalley
NCMA Tri Valley Chapter is trying to re-organize.
Contact: Joe Tortolero
E-Mail: jtorto@msn.com

Key Contacts:
San Jose State University (SJSU)
Yasser M. Dessouky
E-Mail: Yasser.dessouky@sjsu.edu

Operation/Supply Chain Procurement Courses Contact Golden Gate

ISM Certification: Chuck Nolan, E-Mail: noland339@yahoo.com
California State University East Bay (CSUEB)
Zinovy Radovilsky, Ph.D.,
E-Mail: zinovy.radovilsky@csueastbay.edu


Contact Us

Procurement Services Associates
www.procurementservices.com
ph. 925-460-0397

Material and Contract Services
http://macservices.us/
ph. 925-460-3971

      Page 7

Supply Management
Spring 2011 Schedule

Basic Certificate

EXSP 8766-KA, Planning and Scheduling Tuesday, April 5th, 9 am - 5 pm at our Oakland Center. Instructor, Charles Noland. Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8777-KA, General Management Responsibilities Saturday, April 30th, 9 am - 5 pm at our Oakland Center. Instructor, Tab Tsukuda. Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8764-KA, Logistics Management Wednesday, June 1st , 9 am - 5 pm at our Oakland Center. Instructor, Michael Wagner. Fee: $225.00 (0.7 CEUs/7 hours)

Advanced Certificate

EXSP 8843-KA, Quality Control Problem Solving Tools Thursday, May 12, 9 am - 5 pm at our Oakland Center. Instructor, Vish Hegde. Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8819-KA, Measuring Procurement Inside and Outside the Organization, Thursday, June 9th, 9 am - 5 pm at our Oakland Center. Instructor, Jim Hays. Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8782-KA, Purchasing Law Tuesday, June 14th, 9 am - 5 pm at our Oakland Center. Instructor, M. Dean Sutton. Fee: $225.00 (0.7 CEUs/7 hours)

CPSM Study Series

EXSP 8897-KA, CPSM Leadership in Supply Management Exam Review Module 3, Saturday, April 23rd, 9 am - 5 pm at our Oakland Center. Instructor, Jim Hays. Fee: $225.00 (0.7 CEUs/7 hours)

EXSP 8898-KA, Foundations, Effective Performance and Leadership in Supply Management, CPSM Bridge Exam Review, Tuesday, May 17th, 9 am - 5 pm at our Oakland Center. Instructor, Charles Noland. Fee: $225.00 (0.7 CEUs/7 hours)

Southern California
http://macservices.us/
ph. 714-647-1520

Materials and Contracts Services Arizona, LLC Women Owned Business Enterprise http://www.macsazllc.com/
ph. 480-988-9889

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