Manufacturing Continues Upswing, ISM Data Show

But large enterprises continue to invest in technologies to control costs

Atlanta  June 4, 2002  The latest data from the Institute for Supply Management (ISM) show the manufacturing economy is beginning to pick up steam, but the latest supply chain technology implementations at United States Steel, Scientific-Atlanta and The Penn Traffic Co. demonstrate that large enterprise are continuing to focus on controlling costs.

Economic activity in the manufacturing sector grew for the fourth consecutive month in May, and the overall economy grew for the seventh consecutive month, the ISM reported this week upon releasing its latest Manufacturing ISM Report On Business.

ISM's purchasing managers index (PMI) hit 55.7, its highest level since February 2000. A PMI reading above 50 indicates that the manufacturing economy is generally expanding.

"May was a good month for manufacturing," said ISM Chair Norbert Ore, C.P.M., in releasing the institutes report on the month. Ore is also group director for strategic sourcing and procurement at Georgia-Pacific Corp. "The PMI strengthened as 16 industries saw improvement in new orders. This should help establish momentum in the sector that will carry forward into the third quarter."

However, despite the improved economic outlook, large U.S. companies are continuing to invest in supply chain technologies to reduce their costs. Just this week, U.S. Steel signed up to use e-sourcing tools from Procuri following a pilot with the solution provider.

"During a short pilot program, we successfully used Procuri's technology for several competitive bidding events," said John Shaver, a spokesman for U.S. Steel. "We plan to use Procuri's tools extensively to help us obtain best value for a wide variety of goods and services."

United States Steel produces and markets a variety of steel and other products, among other businesses.

Meanwhile, Scientific-Atlanta is set to use Ariba's Buyer e-procurement platform in a bid to help the company's 8,000 employees in 70-plus countries to reduce unapproved purchases across the corporation by improving the company's ability to drive compliance with negotiated contracts.

Scientific-Atlanta, a cable systems and network supplier, will integrate Buyer with its existing backend enterprise resource planning (ERP) systems, utilize Ariba's Supplier Network (Ariba SN) and put in place a process designed to reduce manual procedures and provide improved spending controls. With these solutions in place, Scientific-Atlanta will begin the process of implementing workflow controls that will allow them to better rationalize their suppliers and drive savings to the bottom line.

"The Ariba solution is one piece of an overall e-procurement strategy designed to increase process speed and reduce costs on a global basis," said Rick DeHart, vice president for worldwide procurement for Scientific-Atlanta. "With Ariba, we hope to enhance our visibility into corporatewide spending for indirect goods and services in order to reduce our costs and simplify the purchasing process for our employees."

Finally, on the non-manufacturing side of the economy, The Penn Traffic Co., a food retailer in the eastern United States, has signed up to use an e-sourcing platform from FreeMarkets following a pilot program that began in 2001.

"We are using FreeMarkets to help us reduce our costs," said Martin Fox, Penn Traffic's executive vice president and chief financial officer. "FreeMarkets will handle a series of competitive bidding events for a number of products, some for resale to consumers and others to support our operations."

Penn Traffic operates 216 supermarkets in six states, as well as a wholesale food distribution business serving 86 licensed franchises and 66 independent operators.