The document summarizes a presentation by IDC on trends for global supply chains in 2010. IDC is an advisory firm that provides market intelligence on technology and industry trends. The presentation discusses: 1) Economic conditions in 2010 showing signs of recovery from the recession. 2) The results of an IDC survey on business objectives, supply chain priorities, and technology investments of manufacturers. 3) The overall theme that manufacturers are rethinking supply chain structures from a fixed-cost to variable-cost model in response to the recession.

1. Trends for Global Supply
Chains in 2010
June 23, 2010

2. IDC Overview
 IDC is the premier independent global market
intelligence, events, and advisory firm for information
technology, telecommunications, and consumer
technology markets (ICT)
 More than 1,000 IDC analysts provide global, regional,
and local expertise on technology and industry
opportunities and trends in over 50 countries
 We have been delivering IT intelligence, industry
analysis, market data, and strategic guidance since 1964
 Our multilingual, multicultural workforce surveys over
250,000 technology users and decision makers annually,
delivering unrivaled coverage
 IDC is a subsidiary of IDG, the world's leading
technology media, research, and event company
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3. IDC’s Family of Industry Research Units
Insights: Industry-Specific Advisory Services
 Insights are a series of industry-
focused business units within IDC
 Each Insights focuses on
technology-enabled business
innovation within a single industry
 Insights leverage 40+ years of IDC
research methodologies and
processes
 An agile start up with a global
footprint
“IDC has demonstrated a solid approach for concentrating on and carving out
the Insights product lines based on a core of best practice and benchmarking
metrics. Each of the verticals products has specific deliverables that meet the
needs of that vertical industry, underscoring IDC’s philosophy that one size will
not fit all.”
Outsell Inc., “IDC Grows Vertically Through Insights Product Line”, Nov. 07
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4. IDC’s Global Network of Country Offices
• 1000+ analysts providing a global information network
• Coverage of 50+ countries around the world
• More than 40+ years experience analyzing IT and
Communications markets
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5. Agenda
1. Economic Conditions in 2010
2. The Survey Says!
3. Theme for Supply Chains in 2010
4. Trends for 2010
5. Essential Guidance
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6. Trends Palooza
Asset Oriented Value Engineering Oriented Technology Oriented Brand Oriented Value
Value Chain Chain Value Chain Value Chain Chain
Segments
Process Domains Chemicals, Metals,
Pulp/Paper…
Automotive, Aerospace,
Machinery, …
High-tech, Fashion, Food&Beverage,…
Semiconductor,…
Supply Chain
Strategies
Look at a
segment across
Product Lifecycle Strategies domains
Operations Technology
Strategies Look at a
domain
across segments
Emerging Agenda
IT Strategies
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7. Recovery Underway
2007 2008 2009 2010 (?)
DJIA on 10/9 14,279 8,579 9,865 Higher
Oil on 10/9 94.83/bbl 76.77/bbl 73.80/bbl Higher
$ to € on 10/9 .709 .732 .690 Lower
Michigan October 80.9 57.6 70.6 Volatile (but
Consumer probably
Sentiment higher)
ISM PMI for Mfg. - 50.9 38.9 55.7 Higher
October
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8. Key Points
 Industrial capacity rationalized
 Capital spending halted
 Inventory down
 R&D Shrinking
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9. Key Points
 Industrial capacity rationalized
 Capital spending halted
 Inventory down
 R&D Shrinking
 Big Cash Reserves
 Manufacturing activity up
 Volatile raw materials markets
 Inflation in our future?
 Jobless Recovery?
© IDC Manufacturing Insights Reproduction is forbidden unless authorized. All rights reserved.

10. Key Points
 Industrial capacity rationalized
 Capital spending halted
 Inventory down
 R&D Shrinking
 Big Cash Reserves
 Manufacturing activity up
 Volatile raw materials markets
 Inflation in our future?
 Jobless Recovery?
Bottom Line: All the factors in place for a major transformation of
the manufacturing industry.
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11. Asset Oriented Value Engineering Technology Oriented Brand Oriented Value
Value Chain Chain Oriented Value Chain Value Chain Chain
Segments
Chemicals, Metals,
Process Domains Automotive, Aerospace, High-tech, Fashion,
Pulp/Paper… Machinery, … Semiconductor,… Food&Beverage,…
Product Lifecycle Strategies
Supply Chain at a
Look
segment across
Strategies domains
Operations Technology
Strategies
Look at a
domain
Emerging Agenda across segments
IT Strategies
© IDC Manufacturing Insights Reproduction is forbidden unless authorized. All rights reserved.

12. Supply Chain Survey Goals
 Identify business objectives that influence IT spend as perceived by those
familiar with an organization’s supply chain (SC) strategy and operations.
 Identify top SC priorities and relate them to the business objectives.
 Given that many SC initiatives are not classified as top priorities, understand
the importance of SC initiatives, such as asset tracking with RFID, risk
management, quality, environmental sustainability, and supplier
management.
 Recognize how IT can improve the SC from a more general perspective,
such as data quality, information sharing, measuring KPIs, sense and
respond, and collaboration. Responses will help identify the core issues IT
needs to address within the supply chain and how advanced manufacturers
and retailers are improving the supply chain with IT.
 Identify top 3 IT application investments an organization expects to make in
the next 12 months, considering its business objectives and supply chain
priorities.
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13. Business Objectives
Driving IT Investments
Note: Respondents selected 3 out of 16 possible responses
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14. Top Supply Chain Priorities
Note: Respondents picked 3 out of 15 possible responses
Rating on a scale of 1 to 4
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15. Top Supply Chain Initiatives
Note: Rated on a scale of 1 to 4 where 1 means not at all important
and 4 means very important, across 13 supply chain initiatives
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16. Top 3 Supply Chain Application
Investments Over the Next 12 Months
Note: Respondents picked 3 out of 17 possible responses
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17. Overall Supply Chain Theme for 2010
Manufacturing companies are fundamentally rethinking their supply
chain structures, evolving from a fixed-cost-driven supply network to a
variable-cost-driven value network.
– IT proves itself in recession
– Supply Chain modernization accelerates out of the recession
– Uncertainty creates a need to hedge at a design level
– What is the “new normal”?
– Increasing customer segmentation will put focus on service levels
– Reverse bullwhip
– Cost versus Service – 2010 Style!
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18. Supply Chain Trends in 2010
 “Dynamic Optimization” dominates Capability Investment to Support
Redefining of the Supply Chain
– Inventory optimization
– Sales and operations planning
– Integrated quality and financial information
– Full network optimization
 S&OP is Re-emerging as the Synchronizing Process for Reconciling
Supply and Demand
– Critical in unpredictable times
– Collaborative, forward-looking process
– Integrating multiple planning horizons
– Clarity around benefits
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19. Supply Chain Trends in 2010
 Balancing Supply and Demand Across the Value Chain is Prompting a
Strategic Redesign of the Supply Network
– Profitable proximity sourcing
– Emergence of the “globally fair wage”
– Logistics versus Labor
 Supply Chain and Product Life-Cycle Management Applications are
Increasingly Converging as Manufacturing Companies Focus on
Innovation Delivery
– Pressure of private label growth
– Improve innovation delivery
– Maturity of PLM adoption across manufacturing segments
– Inevitable interaction between PLM and SCM
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20. Supply Chain Trends in 2010
 Intelligent Supply Chains Put Broader Visibility Burden on Supply Chain
Organizations, Both Owned and Outsourced
– Unsurprisingly, outsourcing persists
– Challenge of managing blended networks
– Information capture and communication
– Opportunity for network visibility and facilitating tools
 Supply Chain Organizations are Investing in Capabilities That Facilitate
Global Operations
– Supply chain is key for global competition
– Emergence of global trade tools to facilitate evolution
– Cost management/cost awareness
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21. Supply Chain Trends in 2010
 Transportation Capacity is Tightening, Causing Supply Chain
Organizations to Rethink Fulfillment Strategies
– Cheap transportation?
– Capacity glut
– Return to traditional supply/demand balance
– Sustainable practices
 The Increasing Pace of Supply Chain Outsourcing/Offshoring Will Keep
Risk Management High on the Strategic Agenda, But Investments Remain
Focused on Building Risk Awareness
– Cost versus risk
– Risk functionality built into traditional applications
– Leading manufacturers balance risk awareness, early detection, rapid
response – although minimal new IT investment, for now!
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22. Essential Guidance
 Consider supply chain as an extension of other business units: more functionally integrated
processes between supply chain and manufacturing, product lifecycle, and customer-facing
businesses.
 Think "optimization" as well as just "management," and the ability to respond quickly and efficiently
to the marketplace changes. The capability for efficient decision making is critical, both in terms of
processes like S&OP and the ability to effectively balance supply and demand decisions.
 You can’t escape the focus on cost efficiency – and a good justification for investment in strategic
sourcing and spend management – from contract compliance to spend analytics.
 If it’s truly a value chain, relationships need to be based on better supply visibility and operational
flexibility. But don’t rely too much on visibility – it’s just an enabler.
 Partner interaction can be enhanced through more effective global trade management tools, for
example, or with capabilities like better risk awareness, a clear sustainability strategy, and/or well-
defined fulfillment approach.
 Retail supply chains are only getting more complex – more channels, wider variety of global
sourcing and distribution requirements. Take the complexity out by reengineering processes,
integrating and automating processes between functional areas of the business and supply chain
partners, including everything from product design, sourcing, order management, compliance and
quality control.
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23. Thank You,
Questions?