Shift in Advertising Spending Drives Growth

Catalog Sales Companies Look to Expand
Nearly half of catalog marketers already doing online advertising will decrease spending in traditional advertising channels to pay for an increase in their online ad spending this year, according to a survey released yesterday by Forrester Research Inc., Cambridge, MA. Search engine marketing is expected to fuel much of that growth.

Forrester said total U.S. online advertising and marketing spending will reach $14.7 billion for the year, up 23 percent from 2005. It also expects the category to hit $26 billion by 2010, which would represent 8 percent of total ad spending and rival spending on cable/satellite television and radio.

A prominent retail and catalog sales client has recently asked Morrison Company to help them react to growth. Two or their four locations needed expansion to meet the increased demand. These two projects were undertaken while the distribution centers were in full-time operation.

The scope of first project was to design and install a decked rack storage system for a 200,000 square foot addition to an existing facility. This storage and retrieval system was to be used to store corrugated cartons of reserve product.

The second project was to design and install staging flow rack for a 50,000 square foot building addition to their campus of distribution centers. Included in the second project was the dismantling of and moving the existing rack to the new location.

Both projects tested the expertise of the engineering and project management services of Morrison Company. Since the justification for the projects included expansion of existing facilities, it was imperative the work be accomplished at the same time ongoing storage and retrieval operations were in place.

Working with the client’s on-site management team, Morrison Company engineers devised a plan to dismantle existing racking without endangering the workers or their picking throughput. This was accomplished by simultaneously erecting the new storage locations and shifting merchandise. Maintaining a tight communication process enabled the client’s warehouse management picking software to be updated.

Installation crews were scheduled around peak picking times to allow for a safe job site, and efficient assembly of the racking components. This process repeated itself over a six week cycle culminating in an on time project completion.

For more information on this project or examples of other case studies, refer to the Morrison Company website.

US Chamber of Commerce Lobbying Efforts

Defined Benefit Pension Plans
As the Baby Boom generation begins to retire, it is increasingly important to ensure the strength of the private retirement plan system. Millions of retired Americans rely on private pensions and employer-sponsored retirement savings as their most important source of income after Social Security. In an era where life expectancy has increased dramatically, it is more important than ever those policymakers foster the growth of employer-sponsored retirement plans.

Defined benefit plans are employer-provided retirement plans that provide a guaranteed retirement income. In these plans, the employer assumes all of the investment risk and the benefits are guaranteed by the Pension Benefit Guaranty Corporation.

After six months of conference negotiations, Congress passed the Pension Protection Act of 2006. The Senate passed by the bill by a vote of 93 – 5 on August 3, 2006 and the House passed the bill by a vote of 279 – 131 on July 28, 2006.The president signed the bill into law on August 17, 2006.

The Act fundamentally changes the current funding rules by eliminating the current funding system and replacing it with new funding targets, a new interest rate assumption based upon a modified yield curve formula and a new at-risk liability category. In addition, the proposals include in various forms reforms to credit balance rules, disclosure requirements, multiemployer funding, and hybrid plan issues. The Act is a significant improvement over the Administration's proposal that was offered in January which would have been based on a pure yield curve formula with a spot interest rate, eliminated credit balances, and required companies below investment grade to make higher contributions.

In addition, the Deficit Reduction Act of 2005 included increases to PBGC premiums. Beginning in 2006, the flat-rate single-employer premiums increase from $19/participant to $30/participant and are indexed to wages thereafter. Moreover, there is a $1250/participant termination premium for companies that reorganize under Federal bankruptcy laws.

Throughout 2005 and 2006, the Chamber worked to educate Congress and the Administration on the need for reasonable and rational funding rules that support the defined benefit pension system. In January of 2005, the National Chamber Foundation co-sponsored a pension reform retreat for Capitol Hill staff. Following the retreat, the Chamber kicked off the formation of a broad business community pension coalition, The Pension Coalition, on February 17, and has been an active member of the Coalition's Steering Committee. Also, the Chamber jointly testified before several Congressional hearings on pension reform legislation and Lynn Franzoi, Chair of the Chamber Pension Subcommittee and Senior VP for Fox Entertainment, testified before the House Committee on Education and the Workforce hearing regarding H.R. 2830, the Pension Protection Act of 2005 on June 15.

The pension reform debate began with the need to replace the interest rate assumption for the determination of pension liabilities. On October 31, 2001, following a three-year program of buying back 30-year bonds, the Treasury Department announced that it would cease issuing the bonds. As a temporary fix, the Job Creation and Worker Assistance Act of 2002 (PL 107-147) increased the range of permissible interest rates for determining contributions and PBGC premiums for under-funded pension plans to 120% of the current 30-year Treasury rate. However, the temporary remedy expired on December 31, 2003. On April 9, 2004 Congress passed H.R. 3108, the Pension Funding Equity Act of 2004, which replaced the 30-year Treasury bond interest rate assumption with a composite of long-term corporate bond rates for the years 2004 and 2005. In addition, H.R. 3108 provided limited relief to the airline and steel industries from the deficit reduction contribution and provides narrowly-targeted relief to certain under funded multiemployer pension plans.

U.S. Chamber Position

The US Chamber believes that changes in funding rules should be rational and reasonable. While the Pension Protection Act of 2006 does not fully address our concerns, there is consensus that it represents a balanced compromise between the positions of the Administration and the business community. Moreover, we will continue as we work on issues of concern to our members as we address any technical corrections bills and the numerous regulations from the Treasury Department and the Department of Labor.

You Do That?

Modular Offices Adaptable to Many Applications
Change is constant. The business world today almost mandates planning that is adaptable to change. As organizations react to market conditions re-tooling, reorganizing or relocating strategies are pursued to defend market share. Are you considering a reconfiguration or expansion of your facilities?

Has flexibility been added to your organization’s set of requirements? Many times a manufactured room can be the right solution for you. Modular systems can accommodate virtually any design and are easily modified for relocation and additions. Have you looked at a modular room lately? Wall heights can be as tall as 40ft and wall thickness can be configured to 6 inches. Adding a mezzanine can accommodate multiple levels or overhead storage. Put pencil to paper – you might be surprised to discover that a modular system saves you money. Make sense out of your project ROI!

The best example of a surprising ROI is with a fully- assembled modular system providing you with complete building versatility and substantial savings in construction costs. Simply forklift the system into place and connect to a power supply. You eliminate the costs for onsite labor and the coordination of various trades – plus, accelerated capital equipment depreciation may apply. If you need to move or relocate the building, simply disconnect the utilities and forklift to a new location. It’s just that simple.

System Benefits (partial list):

• Customize floor plans to meet your exact requirements.
• Maintenance-free anodized aluminum components provide superior durability compared to rust-prone steel component systems.
• Optional panel finishes include: vinyl covered drywall, fiberglass reinforced plastic, painted steel, embossed anodized aluminum, and acoustical carpet or fabric.

Operations Manager Issues

Motivating Employees From Afar
Today more and more supervisors are given the task of supervising employees who they rarely see face-to-face. These employees may be working at home, in different states, or sometimes even in different countries.

Luckily, when a supervisor is given the task of supervising remote employees, those employees usually are fairly autonomous and self-sufficient; therefore, they are not likely to require a supervisor monitoring their every move. However, remote employees still require the same amount of motivation as office employees, and in some cases even more than what office employees require.

Tips for motivating remote employees:

• Out-of-sight should not be out-of-mind. Yes, this tip is obvious; however, it is the one that most supervisors adopt when supervising remote employees. Supervisors should not forget that remote employees should be teleconferenced in during staff meetings, team meetings, and goal setting meetings. You may also want to consider placing pictures of your remote employees in your office or cube so you and other employees will remember them.
  
  
• Remote employees should not be declassified as UNIMPORTANT PEOPLE because they do not come into the office. A supervisor of a remote employee should frequently ask for his or her opinions, and they should champion his or her opinions with their coworkers.
  
  
• Allow remote employees to built friendships with the office workers and other remote workers by using the telephone, e-mail, or by using a company based Internet chat-room. Remember, if you want "sticky" remote employees; allow them to build friendships with the other employees in the company.
  
  
• Short-term goals work best for your remote employees, and long-terms goals work best for your office employees. It is okay for office employees to have long-term goals because they frequently receive informal short-term feedback while accomplishing their long-term goals. However, remote employees frequently do not receive the same informal feedback; therefore, by setting up short-term goals it will force you to provide them with the positive feedback to keep them motivated.
  
  
• Communicate value to your remote employees by helping them understand how their work adds to the overall success of the company. Office employees require less "value" communication because they can see what they are creating, while remote employees can usually only see their own work.
  
  
• Build company loyalty with your remote employees by sending out coffee cups, hats, and shirts with emblazon with your company's logo. Instead of sending out your remote employee's paycheck in a plain white envelope, stick it inside a logo emblazon coffee cup in a nicely wrap gift box.
  
  

Business School Book Review

The Ohio State University
Are you a reader? If so this article will feature book reviews by some the county’s best and brightest business school professors. While they’re recommendations may not always be about business, the books do have something to say about perseverance and integrity. This month’s featured professor is Neeli Bendapudi, the Assistant Professor of Marketing at The Ohio State University.

Professor Bendapudi’s favorite books are:

INFORMATION RULES by Carl Shapiro & Hal R. Varian

"An accessible overview of the rules of competition and how they apply to today's economy. How to set prices in the internet economy, how to generate customer loyalty...these and other perennial business concerns are addressed from a solid foundation of economic thought."

DISCOVERING THE SOUL OF SERVICE by Leonard L. Berry

"In a sea of mediocrity, some companies seem able to stand out from the crowd as a beacon of service excellence. This insightful book examines fourteen companies that have been able to deliver excellent service over time (the average age of the companies profiled is 31 years!)and highlights the human values that underlie their success. A profitable read for anyone concerned with customers, or with excellent service, which, in this economy, should be anyone in business."

THE CONSOLATIONS OF PHILOSOPHY by Alain de Botton

"At its best, philosophy is not arcane, esoteric, or exclusive. Instead, it stimulates thought and provides consolation. In this captivating, easy-to-read book, de Botton shows how the perspectives of some of the finest minds of the ages, from Socrates to Seneca and Montaigne, can help us come to grips with the challenges of modern life. This book does such a great job of showing how these ideas are relevant today that I wish those required philosophy courses had been taught this way!"

INFLUENCE: THE PSYCHOLOGY OF PERSUASION by Robert B. Cialdini

"One of the finest accounts of the psychology underlying when we are or are not persuaded. Cialdini provides compelling examples of persuasion tactics, which will make for an interesting read for any one remotely interested in selling, marketing, or in understanding why they sometimes get roped in to say yes when they wish they had said no!"

Industry Trends

How can you better react to business growth?
The following article is submitted by Sedlak—providing independent, client-focused distribution consulting services. Find out more at www.jasedlak.com

Yes, you read the title correctly. It says react to, not prepare for growth. We’ve found very few companies over the years which have been able to accurately predict what’s in their future, especially growth. But thankfully, growth happens and there are many ways to react to it.

Make sure you know what you’re looking at

First, make sure growth is what you are looking at. Count. Measure. Do it again—over a period of time. Create graphs and charts. There are trends. Pay attention.

Make the most of what you have now

Before making drastic changes, look at how your operation looks now and think of ways of tweaking it to make do for a while. Contact experts about your equipment and systems. Ask how you can gain efficiencies from what you already own.

Build in flexibility

If you do make changes—either to equipment, systems, operations or staffing—be sure to build flexibility in your plan. You never know for certain what the future will bring.

Consider off-site possibilities

What about leasing some off-site storage area as an immediate solution to the need for more space? Sign as short as possible term lease. Again, keep the need for flexibility in mind at all times.

Optimize your distribution network

If you have more than one distribution facility, step back and examine the configuration of your network. Are those facilities in the right place and have the right product flowing through? Think about this: opening up a West Coast facility might add capacity to your Midwest facility.

Develop innovative staffing practices

We’ve seen some pretty innovative staffing or operations schedules out there. By changing yours, your staff might be motivated to become more effective and efficient. How about during a slow period throwing a surprise happy unbirthday party for all workers simply to express your gratitude for jobs well done?

Contact other companies who’ve been through it

Don’t hold back from calling a peer in a company about the size of yours which has gone through some growing pains. Most people are flattered when others ask for their input or advice. If you’re still not sure how your company should proceed, contact an objective third party. The first diagnostic consultation should be free of charge. If it’s not, contact someone else.

Good fortune!