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Start with a quantitative gap analysis expressed in terms that any executive can relate to bottom-line impact For example, research by PRTM s benchmarking subsidiary, The Performance Measurement Group, LLC, shows that best-in-class consumer products companies enjoy a whopping 55 percent (of revenue) advantage in total supply chain management cost over median performers For a $150 million company, that s more than an $8 million difference in cost savings10 Results are the ultimate attention-getter Following the gap analysis, make a change to your supply chain that delivers a sustainable improvement in costs or service and use it to get attention This is what Angel Mendez did at palmOne, Inc palmOne is one of the world s leading developers of personal digital assistants (PDAs).

Mobile Owners (Percent)

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Fifty percent of Internet users have tried streaming media. In fact, the size of the monthly Internet radio audience nearly equals the terrestrial radio audience. Thirty-four percent of all Americans over the age of 12 have watched or listened to streaming media (78 million people). Internet users are projected to spend 192 hours online annually by 2003. It is useful to examine the data for video consumption using television technology, since it can provide upper bounds for streaming media consumption. Americans rent 6 million videos a day. One-year-old children watch 50% more television than the national average, at 6 hours per day. The 2- to 17-year-old age group watches a staggering 19 hours 40 minutes a week, or 1023 hours a year. This compares with the 900 hours a year they spend in school. Spending on online digital music is $1 billion today and is projected to be $6.2 billion by 2006. Cahners In-Stat predicts that 2004 annual revenues for consumer-oriented multimedia broadband services will be about $15.7 billion, with the market for streaming media content growing to $2.5 billion by the same time. We know from the analysis of streaming media technology in this book that streaming media will only just begin to attract a mainstream audience over the next two to five years. The real gains will come over a ten-year time period. Unfortunately, few studies are willing to predict this far into the future. The only model that can inform the potential size of the market is the S-curve analysis typically applied to the life cycle of innovations. Over the next two to five years, streaming media

screen showed Citigroup s stock to have an intrinsic value of $88.03 more than double its closing price of $37.13 on December 17th. Why was the difference between market price and our calculation of value so large

When Mendez joined the company in 2001 as senior vice president of global operations for the solutions group, he was given the task of transforming the supply chain into a competitive differentiator no small task considering that palmOne had just been forced to write off nearly $300 million of inventory The first item on his agenda: educating palmOne s senior management on the critical role the supply chain plays in executing the company s strategy Before I arrived, says Mendez, palmOne had had eight consecutive quarters where it was difficult to produce enough product to keep up with demand The mind-set had always been building product, then pushing it to the channel The supply chain organization was viewed as the means to get the product made There were really no other expectations 11.

will only begin moving up its S-curve. Significant market size is not likely to be realized until the technology reaches 10 to 15 years in maturity.

Approximately 12.7 million people consumed streaming media in 2001. According to Neilsen/NetRatings, the streaming population is 40.7 million, growing at 18% per year. Compare this with the 750 million people worldwide who watched John F. Kennedy s funeral some 10 years after the NTSC television system was first deployed, or the 600 million that watched man set foot on the moon. Today there is one television set produced for every child born. A good estimate of the size of the audience that might one day be reached with streaming media is over a billion souls. Television ownership represents over 95% of households in the US; it will be quite some time before streaming media penetration is so comprehensive. During the attack and its aftermath at New York s World Trade Center on September 11, 2001, CNN s streaming media site registered 9 million page views per hour compared the usual 11 million they get on a normal day. By some estimates, 200 million stream views were generated across all the streaming news sites available. This did not fulfill demand. Hence, the potential audience that might be reached by streaming media is in the hundreds of millions. This will be limited mostly by the penetration of streaming media receiver technology.

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