Running the Numbers - June/July 2006

The latest facts and figures on Outsourcing, Working Capital Management, Supply Chain Visibility, Enterprise Application Integration, and Fulfillment/Logistics


Standardized functionality in enterprise applications is a myth, and many organizations are paying too much for these solutions while not using even half the full functionality of the apps that they license, according to a new report from Butler Group, a European IT research and advisory group.

The research revealed that none of the organization used more than 50 percent of the licensed enterprise application functionality, and a significant proportion of unused code was customized, unnecessarily prolonging upgrade cycles.

Butler points out that adaptive enterprises must have the ability to quickly transform business processes and must ensure that these changes are reflected in the supporting enterprise applications.

Good training is another key factor. Employees need to understand how the system relates to the tasks and processes in the broader context of the business as a whole, Butler writes.

In addition, the IT department must have an in-depth understanding of enterprise application usage and performance.

"Unfortunately, IT management tends not to spend enough time relating the organization's main value drivers to enterprise applications," said Teresa Jones, senior research analyst with Butler Group and coauthor of the study. "Too many follow a 'me-too' policy or purely a cost-saving attitude when considering investment in enterprise applications. Without strong links to business aims, it is impossible to formulate a strategy that will meet the organization's needs or get value from enterprise applications."

Fulfillment, Logistics

U.S. Air Exports, Domestic Ground Parcel Set Records in 2005

U.S. air exports shattered all-time records in 2005 for shipments, revenue and tonnage, reflecting a resilient global economy, the residual impact of a weak U.S. dollar and airfreight's importance in optimizing global supply chain performance and driving down inventory carrying costs, according to new reports from The Colography Group.

In addition, domestic ground parcel traffic set records in 2005, continuing its positive momentum since the turn of the century. Domestic airfreight and less-than-truckload (LTL) traffic, while posting year-over-year gains, have still not returned to their all-time highs set in 2000, according to the reports.

Air export shipments in 2005 approached 92.4 million, the first time shipments exceeded the 90 million annual mark. Export traffic increased nearly 8 percent from 2004 levels. Revenue of $9.5 billion and tonnage of 6.2 billion pounds were also all-time records in this segment.

Ground parcel shipments broke the four billion barrier for the first time, finishing 2005 at 4.1 billion shipments, paced by a surge in fourth-quarter volumes. Tonnage exceeded 42 billion pounds and revenue surpassed $26 billion, both all-time records and a year-over-year increase of nearly 5 percent for tonnage and more than 8 percent for revenue.

Slightly more than 2.5 billion domestic airfreight shipments moved in U.S. commerce last year, just above the 2.45 billion shipments that moved in 2004. Revenue of $33.5 billion was $1.6 billion above 2004 levels. Tonnage rose to 17.4 billion pounds from 17.0 billion.

Among other findings:

* FedEx and UPS actually saw slight declines in air export shipment share in 2005. DHL Express and the U.S. Postal Service, by contrast, saw slight gains. The air export market share held by the six major players remained steady at 76.6 percent of all shipments.

* UPS controlled 68.0 percent of the ground parcel shipment market at the end of 2005, by far the largest share. However, its share dipped from the 68.8 percent reported at year-end 2004. FedEx Ground and DHL Express gained modest share, while USPS' share declined incrementally.

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