WHAAAAA???? Deloitte Research Study Shows Connecting With Suppliers And Customers Over the 'Net Can Improve Manufacturers' Profits by 70 Percent, But Few Show Interest...HUH????

Uncovers Significant Competitive Advantage for Manufacturers, But Most Prefer
To Focus Internet Strategy on Less Impactful Supply Chain Issues

    DETROIT, Jan. 30 Manufacturers can be up to 70 percent
more profitable by connecting with all trading partners through the Internet,
as shown in a global study released today by Deloitte Research, the thought
leadership arm of Deloitte Consulting and Deloitte & Touche.  According to the
study of 850 manufacturing executives in 35 countries, manufacturers typically
focus on supplier integration alone, which is resulting in an enormous amount
of value destruction.  The problem is that most companies don't know where
they destroy value.
    "Today's manufacturing executives were raised in a product-centric era in
which competitive advantage was achieved through product branding, quality and
cost," says Dick Gabrys, vice chairman of Deloitte & Touche LLP.  "Improving
supply chain performance with a focus on the supplier is more natural for them
because that is what they know.  However, in this Internet era the power has
shifted dramatically to the customer, and those companies that are able to
integrate their supply chain and their customer strategies will achieve
breakthrough performance."
    The study, "Digital Loyalty Networks: e-Differentiated Supply Chain and
Customer Management," supports this assertion.  Only about one in 10 companies
have established Digital Loyalty Networks, integrating efficient supply chain
processes with effective customer relationship management by leveraging new
technologies to differentiate in real time the response to individual
customers and segments.  Companies concentrating exclusively on improving the
supply chain or customer relationships are faring well, and the few that
integrate both enjoy much greater shareholder value -- 54 percent and 19
percent higher, respectively.  In addition, it is generally believed that cost
reductions achieved by linking supply and demand in online marketplaces can
reach five percent or more of total purchases, which can amount to as much as
$2.5 billion for large manufacturers such as Boeing.  Such savings could also
have a dramatically positive impact on the company's earnings per share.

    The Customer is Not Always Right
    Without strong, integrated links between suppliers and customers,
manufacturers will face serious threats as globalization and deregulation
alter previously protected markets and networks of businesses.  Well-
implemented digital loyalty networks allow companies to differentiate between
customers and prioritize them so that the most valuable customers are being
served first.
    "Automotive manufacturers such as DaimlerChrysler, Ford and General Motors
are in the forefront of this movement, streamlining their supply chains
through Internet trading exchanges, such as the newly established Covisint
exchange, and investing heavily in customer relationship technologies," said
Gabrys.  "This will eventually enable these companies to better manage the
entire order-to-delivery process and differentiate offerings to customers
according to their value."
    "Over the past five years, many companies have invested heavily in getting
their CRM, ERP and supply chain houses in order.  This investment is yielding
unprecedented enterprise-wide access to information about customers'
requirements, profitability and cost to serve.  Digital Loyalty Networks are
the next frontier of competitive excellence.  They leverage these data across
the enterprise, from the demand chain through the supply chain -- all focused
on maximizing the lifetime value of customer relationships," said Gabrys.

    New Rules
    The Deloitte Consulting study outlines some basic concepts for
manufacturers to effectively integrate suppliers and customers:

    *  Differentiate -- Abandon the traditional one-size-fits-all supply chain
that yields similar lead-time and service levels for all customers.
    *  Prioritize capacity -- Commit resources on a priority basis for the
best customers.
    *  Prioritize orders -- Fulfill orders on a priority basis.  Not all sales
are necessarily valuable sales; focus on the most profitable orders from the
most loyal customers.

    The long-term value to establishing Loyalty Networks will prove increases
in marketshare by having a stronger base of loyal customers over multiple
customers with widely varying demands.

    Deloitte Consulting is one of the world's leading e-Business consulting
firms, providing services in all aspects of enterprise transformation, from
strategy and processes to information technology and human resources.  The
firm's e-Business professionals help clients create, defend and/or reinvent
their business and economic models by guiding them through the complexities of
the evolving digital economy.  Deloitte Consulting is part of Deloitte Touche
Tohmatsu, one of the world's leading professional services firms, which
provides assurance and advisory, tax, and consulting services through more
than 90,000 people in over 130 countries.  Deloitte Touche Tohmatsu serves
nearly one-fifth of the world's largest companies as well as large national
enterprises, public institutions, and successful fast-growing companies.
    Deloitte & Touche, one of the nation's leading professional services
firms, provides assurance and advisory, tax, and management consulting
services through 30,000 people in more than 100 U.S. cities.  The firm is
dedicated to helping clients and people excel.  Known as an employer of choice
for innovative human resources programs, Deloitte & Touche has been recognized
as one of the "100 Best Companies to Work For in America" by Fortune magazine
for four consecutive years.  Deloitte & Touche is part of Deloitte Touche
Tohmatsu, one of the world's leading professional services firms, with more
than 90,000 people in over 130 countries.  For more information, please visit
Deloitte & Touche's web site at http://www.us.deloitte.com
    The Great Lakes region includes Deloitte & Touche offices in Detroit, Ann
Arbor, Grand Rapids, Lansing and Midland, Mich.; and Cleveland and Akron,
Ohio.