The holidays are right around the corner, and Kristen Onken knows just what she wants: better visibility across the supply chain and paper-thin inventory. Not exactly Irving Berlin territory, but most CFOs can relate. December is a crucial month not only for makers of toys and molders of cheese logs but also for virtually every industry sector — particularly this year, when managers at many companies are praying for the first signs of an upswing in the fourth quarter.
The executive wish list hasn’t changed much from years past, but the means for achieving it have. Onken, the CFO at computer peripherals maker Logitech Corp., headquartered in Fremont, California, and Romanel-sur-Morges, Switzerland, says a new E-business architecture that links Logitech to major retailers enables the company to see just how many units it has on store shelves. “We now see what we have out there weeks earlier than before, which helps us avoid stock-outs and keep our own inventory levels down,” she says. The system can track about 70 percent of the company’s sales in the United States and 50 percent in Europe. Logitech believes those figures will improve next year, but Onken admits that the company is limited to some degree by the technological capabilities of its retailers.
A year ago, such limitations seemed as quaint as a Currier & Ives print. E-business was hot, and few doubted that business-to-everything connectivity was about to write a new chapter in American business history. But now Logitech and other companies that invested heavily in E-business systems may have to wait longer than expected for their partners to catch up. And companies that launched major E-business initiatives on several fronts may have to scale back, putting some efforts on hold as they devote dwindling resources to the projects most likely to provide immediate payback.
The reversal of fortune for E-business has been dramatic. Or has it? Research firms and professional organizations have spent the past several months frantically taking the market’s pulse, and in the process have produced a rash of contradictory findings: spending will drop, rise, or stay flat, depending on whom you talk to. Ditto for managerial commitment. Infrastructure is the hottest area. No, wait, it’s customer service. Make that transactional systems. On the positive side, no one can say a herd mentality prevails.
Given the confusion, one could almost envy Gary Darst. He doesn’t have to worry about setting E-business priorities, because he doesn’t have any. Twenty months ago, Darst graced the cover of the first issue of eCFO for our story on “Internet Explorers.” As director of financial planning at Litton Electron Devices, he led an effort to reduce that company’s DSO (days sales outstanding) by adopting new Web technology designed to automate the many manual processes that surround cash management.
Now, as vice president of finance for Filtronic Solid State Inc., a Santa Clara, California-based wholly owned subsidiary of the U.S. holding company for Filtronic Plc, the British electronics manufacturer, Darst would love to do the same. Instead, he’s forced to play a waiting game. With orders suffering (the company’s primary client base is in telecommunications) and its stock share price down about 75 percent from a year ago, Filtronic is in no position to invest in much of anything. “We’re handcuffed,” says Darst. “We know that we have to pursue the potential of E-business, but in our business the fixed costs are huge, and we need to manage our way to profitability before we can extend our IT capabilities.”