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9/20/2002
05:08 PM
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Business Technology: Failure To Communicate Or Signs Of Success?

Did you know there are 413 farmers' markets in California? Well, there might be more, but those 413 are certified. I'm not certain what that certification entails and how it might distinguish the certified from the uncertified, but that's the number, and it was mentioned in a radio report I heard late last week. The story also stated that more than 15,000 farmers' markets operate across our 50 states.

Now, who would know such a thing? What web of intelligence can harvest such things? The answer is: the U.S. Commerce Department, home to an astonishing array of details, facts, statistics, reports, surveys, and megadata. Just as its neighbor across the Mall, the Smithsonian, functions in part as America's artifact attic, so, too, is the Department of Commerce becoming our statistical storehouse.

And among its collections of numbers, the Commerce Department last week released figures showing the ratio of business inventories to sales, posted monthly, from 1993 to July 2002 (www.census.gov/mtis/www/current.html). So where do you think that ratio stands today? Businesses are missing their forecasts, layoffs are commonplace, and the stock market is taking a nosedive, so inventories are probably growing, particularly in relation to stagnating sales, right? Actually, though, the reverse is true: The ratio of inventory to sales, which could be interpreted as a sharp indicator of how closely inventory is being linked to actual demand, matched its all-time low in July (see chart).

Demand Nears SupplySo what are we to make of this? Is it another depressing sign that nobody's buying anything? Is it a harbinger of prolonged stagnation, reflecting the hypercautious attitude of businesses to avoid at all costs doing anything that would expand inventories? Or is it possible that what we have here is not a failure to communicate, but rather powerful evidence that businesses are beginning to make substantial progress in calibrating and linking supply with demand? And if that's so, then can we further speculate that the level of guesswork is diminishing and the level of intelligence about what's needed, when it's needed, and for whom is increasing?

And if you're still with me, then is it even worth pondering that maybe, just maybe, some of the blood, sweat, and tears that you've poured into supply-chain projects and CRM initiatives is finally starting to pay off? We've all taken our thrashings over the past 18 months for being too concerned with technology and not concerned enough with the business, and for buying, installing, and converting to new-fangled systems and applications and for letting the CFO give the business-technology group enough rope to ... what? Hang itself? Or has the opposite occurred, wherein the business-technology team used that additional flexibility to work seamlessly with Finance and Sales and Purchasing and Engineering and Manufacturing and R&D and Customer Service and Marketing to generate powerful and timely information that helps the business sell more stuff and keep customers happier?

If the figures hold, and next month's numbers show a similarly low ratio, then perhaps you folks in the business-technology world can take off the hair shirts for a day or two. Because it just might turn out that all this technology voodoo that has sucked up so much time and money in the past several years wasn't so silly after all.

BOB EVANS
Editor-in-Chief
bevans@cmp.com

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