Motorola's Battle with Supply and Demand Chain Complexity

[From iSource Business, April/May 2003] Motorola, now entering its third year of battle with the complexity in its supply and demand chain, scored solid victories in 2002. Its Personal Communications Sector (PCS), responsible for 41 percent of the firm's $26.7 billion in annual sales, launched the lion's share of its supply and demand chain initiatives. PCS also reported the firm's highest operating earnings, helping propel the entire company into fourth-quarter profitability in 2002. Coincidence? Not a chance, say the folks responsible for PCS' supply and demand chain revolution. And with third-quarter 2002 global market share of approximately 15 percent, compared to mobile phone industry leader Nokia's whopping 36 percent, No. 2 Motorola hopes 2003 spells c-o-m-e-b-a-c-k. (Please see the sidebar titled "Cell Phone Industry Leaders.")

Founded in 1928, the Schaumburg, Ill.-based company claimed 50 percent of the global handset market during high-tech's heyday of the mid-1990s, then stumbled dramatically in the new millennium. In 2001, Motorola's market share slid to 17 percent, and sales fell to $30 billion, a 19 percent drop from 2000; chairman and CEO Christopher Galvin announced a $4 billion loss. Motorola also eliminated more than a third of its workforce in August 2000.

By year-end 2002, however, a leaner Motorola saw the fruits of its restructuring materialize. While it only recorded fourth-quarter sales of $7.5 billion a modest 3 percent increase from fourth-quarter 2001 sales of $7.3 billion its net earnings reached an impressive $174 million. Not bad for a company that stomached a net loss of $1.2 billion in the same period a year earlier.

How did Motorola get back in the black? Mike Zafirovski, Motorola's president and chief operating officer, attributes two consecutive quarters of profitability to "our focus on customers, coupled with the aggressive and timely restructuring of the company that began two years ago."

Something else happened to Motorola just over two years ago: Zafirovski, then president of PCS, lured supply chain guru Theresa Metty from IBM to work her magic as the sector's senior vice president and director of the worldwide supply chain; she has recently been promoted to chief procurement officer. The rest is history, as successful supply and demand chain projects flow from two Metty themes: "War on Complexity" and "Next-generation Supply Chain," which are also the key tenets of her business strategy. And Libertyville, Ill.-based PCS, the largest of Motorola's six business sectors, serves as the predominant backdrop for these projects.

With 2002 net sales of $10.8 billion and approximately 17,800 employees worldwide, the sector has its hands full, designing and manufacturing not only cellular phones, but also digital-radio telephones, paging and wireless messaging devices, and two-way radios. Its large, complicated global composition makes it ripe for supply and demand chain innovation.

The Strategy

Its strategic direction for supply and demand chain enablement, however, couldn't be simpler, say company executives and outside consultants, and can apply to any size firm. "Begin with the end in mind," advises Quentin Samelson, director of eSupply Strategy for PCS, quoting from author Stephen Covey's 7 Habits of Highly Effective People. "The end" covers a lot of territory. It defines goals, ultimate project scope and return on investment (ROI), Samelson explains. But, above all, it focuses downstream on customer needs and requirements.

"While strategic sourcing and procurement are basically internally oriented initiatives, best-in-class organizations start with the customer and then design their products and associated supply chains around customer fulfillment," says AMR Research Vice President Pierre Mitchell. "All supply management activities from total cost modeling to component sourcing to supply chain network design including transportation, capacity and inventory strategies only exist to serve the customers well and serve them profitably."

Forrester Research Director Laurie Orlov adds, "For smart firms you're focusing on supply chain execution versus planning in order to ensure that you are delivering an optimal level of service to your very precious customer base that you don't want to lose."
In other words, you're effectively feeding customer needs by shipping products to them correctly the first time, thus minimizing returns and maximizing serviceability of your products. And by placing more emphasis on the "demand" side of the product development chain as opposed to the "supply" side, you are tapping into consumption at the point of sale, which gives you an accurate picture of what is selling and what isn't. This eliminates the need to build inventory and then hope to sell it, explains Orlov.

In general, you're "thinking big," say both Samelson and Orlov, but you're "biting small." You're developing a comprehensive road map, they say, but you're executing locally and scaling fast. At Motorola, this means viewing the supply and demand chain holistically, then tackling individual links based on two criteria, according to Metty:
" "What functionality needs to be delivered first because it's a prerequisite to functionality that will be delivered later?" Metty explains that, in particular, Motorola uses this as its rationale for defining the specific sequence of projects it plans to roll out in the future.
" "What functionality can we deliver that will generate the payback needed to fund the next phase? So it's a self-funding, pay-as-you-go model," she says.

Pay-as-you-go models appeal to today's cost-conscious business leaders who can't stomach the traditional, big-bang supply chain management (SCM) project. According to Forrester Research's November 2002 report "Navigating the Supply Chain Project Maze," such large projects cost companies approximately $6.8 million and last an average time frame of 1.6 years. Lean times call for "bite-sized" initiatives, says report author and Forrester Analyst Jennifer Chew. "No single project should cost more than $500,000 or last longer than six months," she advises.

Furthermore, Forrester recommends that firms prioritize projects using a structured supply chain mapping process. (For insight into a clear supply and demand chain mapping model, see version 5.0 of iSource Business' Global Enabled Supply and Demand Chain in the February/March 2003 issue or go to iSourceonline.com.) "Instead of prioritizing based on the executive flavor of the week or perceived low-hanging fruit," Chew writes in her report, she recommends that companies identify the longest chains and shorten them; and identify the most complex chains and simplify them. With process mapping, the longest and most complex chains are easy to identify, Forrester says. The longest chains represent the greatest time lags between operations. "As the length of time increases, the amount of buffering inventory required to make up for the time lag also increases," Chew writes.

Complexity is also easy to identify, comprising the greatest number of steps to get from point A to point B. "The more difficult [a chain] is the more chances there are for excess inventory to accumulate, correcting for disconnects like late shipments or faulty demand signals," writes Chew.

Not surprisingly, she adds, projects targeting the longest and most complicated chains "are generally the projects with the greatest potential ROI."

The Initiatives: Complexity

Motorola has devised its own unique method for uncovering and debilitating complexity in the supply and demand chain, and its $4 billion impact on PCS' bottomline is noteworthy. In 22 months (as of December 2002), say Metty and Samelson, the sector has achieved the following cost and efficiency improvements:
" $2.6 billion reduction in operating/materials costs
" $1.4 billion inventory reduction
" Tripled inventory turns during 22-month period
" 40 percent capacity reduction, fewer factories/distribution centers
" 30 percent delivery performance improvement
" 44 percent reduction in cost of poor quality
" Up to 40 percent reduction in complexity at product level
" 25 percent reduction in product complexity at portfolio level

These improvements in customer responsiveness, total product cost and asset utilization flow from the two high-profile business objectives Metty brought with her to Motorola and that have gained strong executive-level support: winning the war on complexity and building a next-generation supply chain.

As far as Metty is concerned, objective No. 1 represents PCS' "single greatest opportunity for supply chain efficiency." At its core is her brainchild, "The Complexity Index."

Metty recalls that when she joined PCS two years ago she was immediately struck by the complexity of the sector's products and product portfolio. (Please see the sidebar titled "What is Complexity?") The most telling signs of the cumbersome processes were unsatisfactory inventory levels and delivery responsiveness numbers. "It was clear what the opportunity was," Metty says. "The problem was getting the entire company energized around it, as well as talking about complexity in terms that everyone could understand.

"In my fourth staff meeting I posed this challenge to the product launch team, which works hand-in-hand with engineering when they're designing a product: Can you come up with an index that tells us how complex every product is relative to other products in our portfolio and relative to competing products?'"

The end result was "The Complexity Index," which for each product measures and monitors several complexity-associated factors, like average part count, test time, assembly time, mechanical and/or software postponement, use of industry standard parts and component reuse.

Metty explains that each factor carries a various weighting, depending on the kind of impact it has on Motorola's key business drivers, like the ability to be responsive, leverage the bill of material or utilize assets. The heavier the factor's average weighting, the more of an impact it will have on the entire supply chain.

"With each product we measure the complexity on those factors, weight them, add them up and that's the index for that product," Metty says. "A product that has an index of 1.7 is not great; we don't want products like that. An index of 1.0 is best-in-class by our competitors, and products rated at a 0.7 or 0.8 are better than the best out there. We want all of our products to come in under a 1.0 complexity index that way we'll know they are truly best-in-class."

The Initiatives: Next-generation Supply Chain

Motorola's war on complexity dovetails nicely with its next-generation supply chain initiatives.

To understand the communications company's strong commitment to supply chain revolution, one must first understand its definition of "supply chain." For Motorola it means everything from engineering and design collaboration with engineering to strategic sourcing and procurement, to manufacturing and distribution to materials management and logistics to customer fulfillment.

Furthermore, Metty adds, "It extends beyond that at both ends as we tap into our suppliers' supply chains and, increasingly, into our customers' supply chains through our collaborative planning, forecasting and replenishment [CPFR], as well as our vendor-managed inventory [VMI] initiatives." Motorola's broad definition of "supply chain" correlates with the magnitude of this business objective, which is to roll out a series of 30 global projects within a two-year time frame.

Now more than a year into the two-year road map, which kicked off in February 2002, PCS has launched more than half of its projects. Ultimately, Metty's "next-generation" initiatives, which have been co-defined and closely watched by supply chain leaders in Motorola's other five sectors, will be rolled out companywide. The final, fully automated, customer-focused supply and demand chain will achieve the following goals:
" "Try-for-fit" simulation capability
" Portability of systems for maximum supply chain flexibility
" Global information warehouse and data repository
" Point-of-sale and point-of-distribution data links
" Move from a "push" to a "pull" demand-fulfillment model

Taken together, the overlapping business objectives of "the war on complexity and the next-generation supply chain are what I call the grand-slam home run," Metty states. Their successful melding can be told from the story of the C330, a wireless phone, and from the mouths of leaders representing nearly every link of its product life cycle.
Now iSource Business takes a look at Motorola's PCS supply and demand chain as it relates to the iSource Business model of the Global Enabled Supply and Demand Chain. While Motorola's model has clear distinctions, this in-depth view serves as a battle plan for how competitive supply and demand models are built.

The Links and Their Leaders

Technology

PCS' Technology and Product Realization group works hand-in-hand with Metty's organization to battle supply and demand chain complexity. Senior Vice President and Chief Technology Officer, CTO Leadership Team, PCS, Ralph Pini explains, "We impact the complexity index and efficiency of the supply chain in three key areas." Those are: use of industry standard parts, scalable platform strategy (reuse), and hardware/software postponement.

Other areas, he adds, deal with manufacturability of the product, assembly and test times, and systems integration. "You need a certain level of integration to reduce overall part count," he says. "The less parts you have the simpler your supply chain is, because you're managing less inventory. The use of industry standard parts also helps to reduce part count. Combined, the benefits quickly multiply."

For example, Motorola produces the C330 that is made with 150 parts and is an entry-level wireless phone geared toward personal, everyday communication. In comparison, the V60i, PCS' previous technology darling targeting a high-tier segment, contains 400 parts. Since pursuing the strategy of integration for the past two years, PCS has seen the successful migration of the C330 to a single platform for all its new development in 2003.

"With the 330 product," Pini says, "we saw a step function improvement from the V60i a three-time improvement in part count, two-time improvement in [integrated circuit] count, and a significant improvement in postponement of the product." According to Pini, postponement allows PCS to add individual customer design and software features to a highly customizable endoskeleton or engine at the tail end of the supply chain. Customers can differentiate, he explains, "but, in turn, the parts are identical and highly re-useable."

Product Management

Reusability is the realm of PCS' Product Portfolio Management group. Vice President and Director, Business Operations and Development, PCS Mike Gaumond says his department attempts to leverage the volume of existing assets to deliver supply chain economies, accelerate time to market and delay personalization.

These three goals "are critical to us from a product line management perspective and have dramatic impact on the supply chain," says Gaumond. The department works closely with engineering and other supply and demand chain links to coordinate product creation and distribution. Its decisions impact:
" Overall platform critical dimensions in definition of the product
" Physical platform hardware, chip set, size, resolution, color
" Digital platform software that runs the phone, user interface, applications that reside on the phone
" Design platform industrial design, look, finish, ability to change design in pre- or post-manufacturing

In a perfect supply chain world, the end product suits everyone's needs, and it's all based on one phone, according to Gaumond. It's a balancing act between "no variability," appealing to engineers, designers and the corporate purse and "ultimate predictability," appealing to marketing, sales and customers. And it's the art of balancing these conflicting goals that allows PCS to get to market quickly with differentiated offerings.

Today, PCS has five key platforms, down from nearly 100 two years ago. Gaumond wants to see just two or three tops this year. "I like to use the analogy of golf and hitting off the tee into the fairway or hooking it off into the woods," he says. By striving to keep the ball in the fairway, PCS can spin new products off of the existing platforms rather than starting from scratch. "We glue together what's possible from design, what's important from a consumer standpoint and what's economical from a funding standpoint," he says. "We can impact the supply chain by a huge order of magnitude when we make the right decisions."

Design

Decisions by Tim Parsey, vice president and director of the Consumer Experience Design group, also dramatically impact Motorola PCS' supply and demand chain. "The market demands differentiation and a level of object lust, which is a lot about jewelry, decoration and rich materials on a physical level. If we didn't behave properly we would really cause too much complexity in the system," Parsey says. "To play an adequate, important role in the supply chain, design needs to understand how to differentiate in a massively leveraged way. There is a science behind creativity that makes or breaks the supply chain."

Parsey explains that his department partners with other links in the supply and demand chain to understand where costs lay and to achieve a product that balances competitive sales with low levels of complexity. As in PCS' other supply chain links, successes in design boil down to multi-layered platforming, according to Parsey, as well as being able to postpone aspects of unique features and applications.

The C330 is a perfect example, he says, with a single global platform enabling myriad, last-minute design options for carriers. Co-designing products helps carriers to build unique brands while promoting the Motorola brand as well. Additionally, cost savings from fewer platforms and postponed features have "in a huge way helped us pass on reduced costs to carrier relationships," Parsey says.

Customer Relationship Management

Motorola and its carrier partners have also benefited from vendor-managed inventory (VMI) to support customer relationship management (CRM).

"We reduced channel inventory and were better able to predict supply demand," says Mike Tatelman, vice president and general manager of PCS' national accounts, North America region. "We reduced customers' carrying cost of capital, which is table stakes now in managing customer relationships in our region."

He says PCS' next step is systems integration for instance, integrating customers' promotional activities into the division's supply chain management processes. The company hopes this will provide another win-win for PCS and its customers, which in North America include such wireless communications giants as Verizon, Cingular and AT&T Wireless. "The customer benefits with higher inventory turns and resulting lower channel inventory while Motorola benefits from enhanced ability to predict product demand and greater precision in how we load level our factories," he says.

The gold standard for customer relationships, Tatelman adds, would be where Motorola could replenish warehouses or retail locations based on electronically signaled sell-through data. This would enable customers to manage inventories using a just-in-time or consignment model. "We would be able to set a minimum-maximum level and replenish based on electronic notification. The levels would be tied to key promotional and/or seasonal strategies at the customer level. Motorola will test this inventory-management system with particular North American wireless operators (this year)," he says.

Supplier Relationship Management

Also vital to PCS' supply and demand chain success are tight linkages with its suppliers. Motorola's Semiconductor Products Sector (SPS) works collaboratively with PCS as SPS does with other key accounts via conjoint business processes and systems, and data sharing, according to Steve Foster, director of business planning for SPS' Wireless and Broadband Systems group. "It's important to note that we do not have business with Motorola PCS as an entitlement or birthright. We have to earn every single opportunity in the open market. We have to nurture and protect that opportunity by execution," he adds.

He explains that SPS engages with PCS during the product definition stage, from the very ideation of what a product might look like. By the time they reach the phase of making the physical product, they are well prepared from a resources point of view. For example, he says, low complexity in the C330 begins with low complexity in its key semiconductor components, which SPS sells as a compete package. "We've migrated to a strategy of selling total platform solutions," Foster says. "This lowers the number of vendor interfaces PCS has to manage." Fewer suppliers and fewer parts translate to lower costs.

The simplified, reusable platforms also facilitate the rapid production of differentiated products for our customers, Foster says. "At a macro level, the most important metric in our collaboration with PCS is the fact that they're gaining market share in a flat market."

In the future, Foster's group would like to better anticipate market direction. "If this were a perfect world, when my customer sold to a customer the transaction at the point of sale would ripple back through some traffic mechanism that recognized whether this was an event," he says. Better point-of-sale information a key, long-term goal for SPS is vital for a consumer industry where vagaries in demand are extreme, according to Foster.

Sourcing and Procurement

Supplier-related initiatives play a substantial role in Metty's two-year supply and demand chain roadmap. Not surprisingly, PCS' sourcing and procurement departments are hotbeds of innovation.

For example, says John Miller, the sector's corporate vice president and director, worldwide strategic sourcing: "We implemented a strategic cost reduction process that is a structured and collaborative process with our suppliers to identify opportunities to remove cost from the supply chain and follow through to execution. Cost reduction generated is $16 million against a cost of $300,000." Savings from the group's strategic cost management program were used to help fund other initiatives that involved an investment, Miller says.

Additional accomplishments in the procurement arena include:
" Establishing an approved supplier list, which directs the development community to use suppliers that have been fully evaluated by a cross-functional team and have a history of acceptable to world-class performance in meeting Motorola PCS' requirements.
" Organizing platform commodity teams to partner with development engineering and, ultimately, with key suppliers. "These teams are co-lead by a technology expert in the commodity from engineering and the sourcing global commodity manager," Miller explains. "Their responsibilities are to create and manage the approved supplier list, approved parts list and to work with suppliers on future technology requirements."
" Creating an approved parts list that emphasizes the use of industry standard components. The list aims to reduce cost, lower inventory and reduce overall complexity of PCS' products. Additionally, measurement of these criteria enables performance assessment of product development teams.
" Developing a skills and knowledge area assessment tool for all strategic sourcing associates and mapping it to training/development activities to improve the overall performance of the organization.
" "Creating a sourcing market intelligence team that provides our cross-functional commodity teams (with) market, supplier and competitive intelligence," Miller says. "It also tracks market pricing against Motorola pricing to ensure us a competitive advantage."

e-Negotiations

Another sourcing accomplishment, worthy of its own subsection, has created further cost-reduction improvements. Through e-sourcing and Internet negotiations, Motorola has generated substantial cost savings, says Rob Harlan, director of Motorola Internet negotiations. For a one-year period alone, beginning in August 2001, the company ran 70 e-auction events for $1.3 billion in volume negotiated online. Total savings amounted to $250 million. The company expects continued and greater savings as online events gather steam this year, Harlan says.

All e-requests for information and quotes, and e-auctions for production and non-production sourcing are managed via a third-party application provider. Benefits of the new system include:
" Greater than 5 percent incremental gains above expectations for every dollar of spend via e-negotiations
" 25 percent sourcing cycle time reduction via e-negotiations
" Scenario analysis provides commodity managers with a strategic sourcing award tool
" Suppliers have more flexible bidding, smooth data importing/exporting and improved reporting
" Ability to instantaneously track savings
" Increased visibility to upcoming negotiations across the corporation
" Enhanced supplier relationships

Furthermore, the online environment forces suppliers to become more competitive in their pricing, in addition to creating new sourcing opportunities, according to Harlan.

Further Supply Chain Spotlights

Here are some additional functions in the supply and demand chain that Motorola has been bringing under control.

Materials replenishment

This completed project involved fine-tuning vendor-management practices and redefining bad inventory, says Samelson, PCS' director of e-supply strategy. "Instead of saying bad inventory is inventory I will never use, we said bad inventory is inventory we won't use very, very soon. That allowed us to reduce a substantial amount of inventory in piece parts," Samelson explains. "We also standardized processes across the world so that each facility was using the same practices, same processes and even the same reports."

Collaborative planning, forecasting and replenishment (CPFR)

This ongoing initiative, which electronically links supply and demand processes, enables PCS and select carriers to collaborate on supply requirements while PCS continuously replenishes and manages carriers' inventory. "We absolutely knew what the benefits would be to us in terms of lower levels of inventory, more linearity in our facilities, longer-term planning and better on-time performance," Metty says. However, the added customer benefits have actually surprised many participants. "Their management operating costs have come down, and their inventories have definitely come down & operating costs are significantly lower," Metty says. "We even have one carrier who's been able to close a distribution center."

Common item master

As of 2002, when the project went live, PCS had a common item master for all of Motorola's sites worldwide. Previously, however, procurement and engineering had to peruse half a dozen distinct databases for part numbers. In addition to efficiency improvements, Metty adds, "since you're no longer unnecessarily managing part numbers that really are the same thing, you can flag preferred parts,' the parts you want engineering to use in their design. And that's what really helps us. It's the foundation in the war on complexity. You want to make it easy for the engineers to pick what you want them to pick, which are the less complex parts."

Global planning project

Currently on the drawing table is a plan to facilitate direct shipments worldwide, according to Metty. For example, when a customer in North America orders a product manufactured in China, rather than having to route that through a distribution center in North America, PCS can bypass that activity and ship directly to customers anywhere in the world from anywhere in the world. "This ability, which requires different systems than we have today, will make us truly a global supply chain," she says.

Supply chain simulation

Another year-end 2003 project will simulate the path of a product through the proposed supply chain and then test it for certain conditions, Metty says. "For instance," she explains, "if product volume were tripled, could we handle it, and, if not, how long would it take for us to be in a position to handle that kind of volume?" Samelson asks another question: What if a product sold better in a different part of the world than expected? Addressing potential bottlenecks prior to product launch helps mitigate risks in the real world, he explains.

Fulfillment

In the fulfillment arena, Motorola is developing a global data warehouse to store historical financial and transportation carrier performance data in a central location. Additionally, the company is beta-testing a transportation management system (TMS) that, if successful, will be implemented at all major shipping locations around the world. The TMS system will provide better inbound and outbound visibility of shipments.

Payment

Closing the electronic loop with accounts payable has proven challenging for Motorola. "We've been able to automate completely in the United States because we're allowed to," says Samelson. Some foreign countries have taken longer due to local legal framework, for instance requiring paper invoices. "So, where we can or have been permitted by law to automate payment, we have," he states.

The Future

"I think there's a tremendous amount in the supply chain that can be automated or digitized, where human beings don't need to be involved in the transaction," Metty concludes. "The beauty of it is that you not only have a more efficient supply chain as a result, but you can remove the field resources that performed non-value-added, routine things and replace them with people who are managing strategic supplier relationships, looking for the technology leaders, creating technology road maps and making sure our product road maps complement our suppliers' component road maps."

The goal of ongoing supply and demand chain innovation and automation at Motorola, according to Metty, is to "free up really smart supply chain people to do the things that really, truly make a difference in the business. And we have some really smart supply chain people."

And how is business going?

Speaking at Lehman Brothers' Telecom Trends and Technology Conference in December 2002, PCS Executive Vice President and President Tom Lynch says: "(PCS has) half as many people as two years ago, and half as many vice presidents. Big fundamental changes have made us a lot quicker, a lot more flexible and a lot more nimble, because to win here you have to have low cost and you have to be fast. We think we have a pretty compelling strategy. We have lots of opportunity to gain [profitable market share growth]."

Motorola remains a distant contender in Europe, Finnish giant Nokia's home territory, but the company runs neck-in-neck with Nokia at home. According to president and COO Zafirovski, in the fourth quarter of 2002, "We remained No. 1 in Canada and we believe we became at least a co-leader in the United States."

The company is also poised to gain market share in Asia this year, where Lynch says Motorola wants to be No. 1. It already leads sales in China. "We manufacture half of our phones for the world in China," Lynch explains, "but in Southeast Asia we have weak market share," relegating Motorola to the No. 2 spot for the region overall. The company hopes to change its No. 2 status in Latin America as well.

Motorola's high expectations for market share growth are in line with optimistic analyst projections for handset sales industrywide. After suffering a 4 percent drop in global handset sales in 2001, the industry's worst year ever, followed by a 1.8 percent increase in 2002, Framingham, Mass.-based IDC says the future looks brighter, to the tune of 9.5 percent growth. The research firm projects worldwide handset shipments to increase from 400 million in 2002 to 600 million in 2006.

How much growth is there going to be for Motorola? "We're bullish," Lynch says. "Profitable market share growth (at Motorola) is sitting at 18 percent (worldwide, including iDEN/Integrated Digital Enhanced Network handset sales). Our goal is still to get into the 25 percent range in the next several years, and to drive to 15 percent operating income levels."

Metty's optimistic too: "It makes any supply chain leader feel really good when he or she can deliver $4 billion in savings to the corporation." She expects more of the same this year as she continues to roll out initiatives, and as existing projects continue to pay dividends.

It's also important to note, Metty adds, that more than half of PCS' employees are active participants in the supply chain team, and each is committed with a tangible financial stake to its success. "It takes a lot of effort, she says, "but if you can get 10,000 human beings all headed in the same direction, you can move mountains."

SIDEBAR: Supply and Demand Chain Realities

Where do companies stand in their supply and demand chain efforts? Forrester's November 2002 report "Navigating the Supply Chain Project" surveyed 124 North American executives in businesses ranging from $500 million to more than $10 billion in revenue.

What were the entire costs (including external services) of your project?
Less than $500K: 5 percent
$500K to less than $1M: 14 percent
$1M to less than $10M: 55 percent
$10M or more: 26 percent
Base: 42 supply chain executives at $1 billion-plus companies

How long do you expect to take to fully complete your project?
Less than 1 year: 24 percent
1-2 years: 53 percent
2-3 years: 15 percent
More than 3 years: 9 percent
Base: 34 supply chain executives at $1 billion-plus companies; percentages do not total 100 because of rounding

Source: Forrester Research Inc.

SIDEBAR: What is Complexity?

As defined by Motorola supply and demand chain executives, product and product portfolio complexity affect a company's ability to:
" Be flexible (elastic)
" Leverage costs
" Ramp up quickly with high quality
" Utilize assets (inventory and capital)
" Be responsive to customers
" Manage product life cycles

Source: Motorola

SIDEBAR: Cell Phone Industry Leaders

In 2002, mobile phone sales weren't too shabby, given a shaky economy. Approximately 423.4 million units were sold worldwide, a 6 percent increase from 2001 according to Gartner Dataquest, a unit of Gartner Inc.

Industry leaders, based on estimates by Gartner Dataquest, were:
Nokia: 151.422 million units, 35.8 percent of market
Motorola: 64.640 million units, 15.3 percent of market
Samsung: 41.684 million units, 0.98 percent of market
Siemens: 34.618 million units, 08.2 percent of market
SonyEricsson: 23.113 million units, 05.5 percent of market
Others: 107.941 million units, 25.5 percent of market

Note: Table does not include Motorola's iDEN (Integrated Digital Enhanced Network) handset sales

Source: Gartner Dataquest

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