Key Metrics and Supply Alert

Department of Homeland Security should redefine minimum mandatory security requirements for importers, says Nohan Tohamy of Forrester Research, who predicts that the next terrorist attack is likely to occur through the supply chain. The market research firm doesn't think the federal

Motorola continues to change its corporate face—downsizing its commercial, government and industrial solutions, electronic systems and broadband communications units—as it prepares to spin off its computer-chip business. The world's second-largest maker of mobile phones is trying to grow its 16% share of the global handset market that is dominated by Nokia of Finland (36%). The Schaumburg, Ill., company tells the U.S. Securities and Exchange Commission it has slashed 60,000 jobs worldwide since 2000.

Chief purchasing officers and other supply chain execs say truck transportation service levels have decreased while prices have increased. More than 500 managers polled by Cap Gemini U.S. say the biggest problems are billing error rates, freight loss and damage, and on-time delivery performance. This is pinned to tight capacity, driver shortage, rising fuel costs, frequent deliveries of smaller lot sizes, and new federal rules and regulations on hours of service for drivers.

The rail system's weaknesses have been exposed this year as the U.S. experiences all-time record freight volumes. "We're seeing 21st century freight flows trying to fit into a 19th century rail network," says Roger Nober, chairman of rail industry regulator, the Surface Transportation Board. With about 40% of all U.S. freight carried by rail, there are fears this could be a drag on the U.S. economy. Only a few railroads have invested heavily in recent years to remove logjams and hire enough crews to handle the higher freight volumes. That's why buyers are complaining about rail-delivery bottlenecks, says analyst Ken Hoexter at Merrill Lynch, who agrees rail capacity is tight.

The once-hot software niche of supply chain management is cooling, according to AMR Research. Software sales will grow only 2.5% growth next year compared to rate of 36% in 2000. But that doesn't mean that software houses will stop pushing various enterprise resource planning (ERP) programs. To try to stay afloat, software companies are deemphasizing innovation and resorting to guerilla marketing tactics.