Netflix officials said that an uptick in the company's subscriber base in its latest fiscal quarter helped fuel earnings.

California-based Netflix reported robust quarterly earnings this week, surprising analysts' expectations. Netflix said that it signed 220,000 domestic streaming users in its last fiscal quarter, bringing its U.S. userbase to 21.7 million. The company noted, however, that it continued to lose customers in its mail order segment, affirming 2.8 million people ended their subscriptions, bringing that division's total to 11.2 million.

Last year, Netflix went from a Wall Street darling to the scourge of shareholders, announcing that it planned to offer a more intricate pricing plan that separated its streaming and mail delivery segments. Company officials argued that the move would help increase profit but customers revolted, canceling their subscriptions in huge numbers.

Shares of the company's stock plummeted over the past six months as a result, but the company's latest financial report helped bolster investor sentiment. Netflix chief executive Reed Hastings said that the company's financial prospects were improving, and that it had successfully implemented cost reduction measures over the past few months that had increased profitability.

Moreover, he affirmed that profit margins at the company's streaming division were improving, an encouraging trend as the media firm has had to spend heavily to acquire additional content.

"Since we significantly outperformed our 8 percent domestic streaming contribution margin target in Q4, we are increasing our Q1 contribution margin target to approximately 11 percent," Netflix said in a statement.

Netflix customers are spending more and more time watching movies and television shows through its streaming service, Hastings said. During the last three months of 2011, Netflix users spent more than 2 billion hours watching content on the website and through the company's application, which can be downloaded on tablet and smartphone devices.

Netflix said, however, that it expects to post a loss in its current fiscal quarter. The company will have to scale back cost reduction campaigns over the coming months in an effort to ink new media partnerships, and that will result in a loss of between $9 million and $27 million, the company forecast.

Nevertheless, the company said its fiscal performance turned a corner at the end of last year and that it expects its streaming subscriber base could climb as high as 23.6 million by the end of the quarter. It projects its DVD userbase, on the other hand, to decline to around 9.4 million.

 

Netflix picks up 220,000 streaming subscribers

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In 2011 it seemed clear that Verizon Wireless was leading the 4G race introducing their version of 4G LTE. The big question that is arising at the start of 2012 is what other players will begin to compete in this race? And how will other carriers deliver on 4G network and devices?

Verizon Wireless started off strong last year with a powerful platform called LTE. Verizon’s LTE software includes approximately 10 equipped wireless devices, mobile hotspots, and tablet PCs. Although Verizon’s aggressive network upgrade had some unforeseen weaknesses. For several months Verizon began to experience technical problems with its 4G network. This caused several service blackouts and complaints about the network. Brian Higgins the Vice President of Product Development at Verizon Wireless state “one thing we have learned being of the first carriers to offer these 4G services is: yes there will be a couple of issues and yes we will earn from these issues.” With all new technology there will always be growing pains. It happens with a variety of services and networks; clearly the first carrier to launch a new service will be criticized for failures and hiccups in the process.

By the end of last year the AT&T and T-Mobile merger failed which some analysts say may have an effect on both companies.  Noted in a previous Strategic Sourceror blog, AT&T’s strategic sourcing of wireless technologies will benefit and affect other companies. AT&T’s decision to abandon the T-Mobile deal may lead to AT&T’s ability to focus on new services and increase the efficiency and speed of their 3G and 4G networks.

To be able to gain back the $4 billion hit for AT&T’s failure to acquire T-Mobile, AT&T must focus on their 4G network.  AT&T first deployed two different types of networks to provide faster speeds. They first focused on updated their 3G network before moving onto 4G. This updated network did not deliver to their customers as they have hoped. AT&T promoted network speeds that weren’t quite there. AT&T’s 4G network currently covers less than half the number of customers as Verizon’s network as said in an article in E-Commerce Times by Rob Spiegel. For AT&T to continue to have a competitive edge against Verizon in the LTE arena, they must rethink their strategies.

As far as the other wireless contenders, Sprint and T-Mobile they have both been dabbling in the 4G arena. Sprint was actually the first carrier to introduce their version of a high performance network in 2010, the EVO 4G was equipped with WiMax rather than LTE in 2010. This network platform did not succeed as well as others because there was not enough maturity in the market for network speeds and devices. Sprint will continue to support their WiMax devices through the end of 2012. Sprint’s CEO, Dan Heese, said that Sprint’s upcoming LTE roll out would cover 125 million people by the end of 2012, and approximately 250 million people by the end of 2012. Sprint spent a lot of 2011 focusing on an expansion of 4G products and released the iPhone to keep up with competitors. Sprint currently offers an unlimited data service plan which gives them an advantage over competitors. Although, as Sprint begins to focus on 4G they may lose that advantage due to the heavy data users and a shortage of wireless airwaves.

T-Mobile had been holding out on adapting to 4G mainly because it lacked resources that many of their competitors have. Officials from T-Mobile believe that LTE just isn’t ready and fully mature and that the quality of some devices has not been great. T-Mobile recently has announced the Galaxy Blaze 4G considered their “4G” or HSPA+ network. T-Mobile’s HSPA+ network services are available in nearly 50 major cities. This network offers 4G speeds and improved support and performance.

The question consumers have is: who will begin to lead this 4G race? How will network and wireless devices advance in 2012? While the network speeds and devices have begun to gain focus and interest already in 2012 it will be quite interesting how this 4G race will play out.

4G Race to the Top in 2012

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The airline industry has struggled over the past decade amid volatile fuel prices, but two of the largest airlines in the U.S. reported strong earnings this week.

United Continental Holdings and JetBlue Airway both posted fourth quarter results that surpassed the expectations of analysts. Experts assert that airline carriers have had to raise fees and reorganize under intense competition and a tepid economic environment. JetBlue officials noted the company's business cost reduction campaign fueled its jump in profit and revenue.

United posted a profit of $109 million in its latest fiscal quarter. JetBlue, moreover, beat analysts' expectations, posting an operating income of $23 million in its latest fiscal quarter. JetBlue executives noted the airline carrier froze management hiring and pay through a cost reduction initiative.

Volatile energy prices have eroded profit margins at airline carriers over the past decade. While carriers largely absorbed massive losses in the past, they have aggressively raised rates on customers in an effort to drive revenue and profitability. Many carriers have extended their business cost reduction initiatives throughout their supply chains, overhauling spend management and indirect spend as a means of reducing overhead.

United, the world's largest airline carrier since its merger with Continental was approved, benefited in its latest fiscal quarter from efforts to improve efficiency. The company scrapped less popular flights over the past year, which helped increase attendance on some of its more trafficked routes. The Chicago-based airline said sales in the fourth quarter jumped 5.5 percent compared to the year prior, hitting $8.93 billion.

"We made significant progress in 2011 building the world's leading airline, while running a clean, safe and reliable operation," United chief executive officer Jeff Smisek said in a statement. "I am proud of the results we achieved by working together at the new United, and I look forward to seeing my co-workers share in our success when we distribute more than a quarter billion dollars of profit sharing on Valentine's Day."

JetBlue said net income for its full fiscal year hit $86 million, down from $97 million the year prior. The company's fourth quarter profit was still strong, company officials noted, rising more than 125 percent from the same period in 2010.

"JetBlue's solid fourth quarter results capped a very good year for JetBlue," JetBlue chief executive Dave Barger said. "Throughout 2011, we executed on our network strategy in key markets such as Boston and the Caribbean, resulting in record revenue performance.  At the same time, we maintained our focus on cost control while running an efficient operation, which helped mitigate the impact of rising fuel prices."

Airline carriers have increasingly invested in oil sourcing over the past few years, as they struggled to keep costs down amid surging oil prices. Carriers are carefully eying geopolitical situations throughout the world as they work to determine whether oil prices will surge unexpectedly in 2012.

While other airlines are planning to scale back flights this year, JetBlue officials said the company would augment flight and seating capacity across its fleet. Executives said that they planned to increase seating capacity as much as 11.5 percent in the current fiscal quarter. For the full 2012 fiscal year, the airline carrier said it would expand seating capacity as much as 7.5 percent.

Delta, Southwest and U.S. Airways also beat analysts' expectations in the fourth quarter, Bloomberg reports.



 

Business cost reduction campaigns fueling airline earnings

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Time Warner Cable's earnings impressed analysts this week, as the company said its net profit surged 44 percent in its latest fiscal quarter.

Time Warner is seeking to command an ever-larger piece of the high-speed internet market in the U.S., which is exceedingly lucrative for many businesses. The company is one of the biggest cable television providers, but its march into the high-speed internet market has already begun to pay off, experts said.

The company posted a net profit of $564 million in its fourth fiscal quarter, which ended December 31, 2011. The company has implemented a successful business cost reduction campaign as a means of improving efficiency, and it has overhauled supply chain management and indirect spend as it strove to improve efficiency.

Time Warner is the second-largest cable provider in the U.S. – trailing only Comcast – and it is hoping to become the dominant firm in the high-speed internet sector. The company's revenue climbed 4 percent in its latest quarter, hitting $5 billion. The uptick in revenue was fueled by the company's rapidly expanding internet service segment, which posted an 8.6 percent rise in revenue.

The company announced earnings prior to the start of trading on Thursday. Time Warner Cable chief executive Glenn Britt affirmed the positive earnings underscored the company's successful expansion in the high-speed internet market. He said the firm is poised for growth in 2012, and that it expects earnings to remain robust this year.

"Time Warner Cable’s 2011 results demonstrate the continued strength of our business amidst rapid change in technology and the consumer marketplace. We have a full slate of strategic and operational initiatives planned for the year ahead, all designed to generate strong cash flow, enable future growth and provide attractive returns to our shareholders," he said in a statement.

Time Warner Cable also released its full-year financial results on Thursday. For the 2011 fiscal year, revenue jumped 4.3 percent from 2010 to $19.7 billion. The company's business services division also posted stellar growth, as revenue within the segment surged 32.7 percent from the year prior. The company's advertising revenue, however, remained flat at roughly $880 million.

The New York Times reports many cable companies have increasingly moved to tap into the nation's burgeoning market for high-speed internet. The market for cable subscriptions, according to experts, is largely saturated.

 

Time Warner Cable posts strong earnings on robust high-speed internet segment

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In my experience, people rarely act in their own self-interest or even logically follow what they believe to be their own core values. The easiest demonstration of this is in our political system, where the new first choice of hard-core conservatives and tea party members is Newt Gingrich, a guy who believes in global warming, wants to take a humanitarian approach to immigration reform, is for strengthening the role of the executive branch at the expense of all others, and is on his third wife. Meanwhile Mitt Romney, the guy paying a 15% tax rate (isn’t that what Republicans want?), gets booed for it during a debate last week.

Clarity – knowing what you really want and the path to get you there - doesn’t always come easy. In business, during times of recession, organizations quickly rationalize the need to cut spending, which more often than not leads to layoffs and plant closures. But in doing so they lose their best people and negatively impact morale, which only serves to continue the downward revenue spiral and puts them in a weak position when things turn favorable again.

It’s during these times that companies should really focus on their revenue models, looking for new markets to expand into and new innovations that they can take advantage of. Cost cutting should still be on the table, but with indirect spend as the primary focus. Sure it’s probably only 30% of the spend pie, but the savings dollars for these untouched categories will often be significant.

Most people (Mitt Romney aside) didn’t get into business to close plants and fire people. It’s time to get back to our core business values.

Clarity

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J.C. Penney's new chief executive, Ron Johnson, has a history of orchestrating successful retail campaigns. In his quest to reinvigorate the department store, he plans to unleash all of them.

Johnson arrived at J.C. Penney from Apple, where he oversaw the technology giant's wildly successful retail operations. Though making the jump away from technology and toward apparel may seem like a stretch, the same basic underlying principles apply. In his new role at J.C. Penney, Johnson plans to improve the company's operating margins and performance through cost reduction campaigns, among other initiatives.

At a meeting on Wednesday, Johnson told attendees that he aims to make J.C. Penney a shopping destination for just about every kind of U.S. consumer.

"We want to be the favorite store for everyone, for all Americans rich and poor, young and old. This isn't your favorite department store. Our ambitions are much higher. We want to be your favorite store."

He has his work cut out for him.

J.C. Penney's performance has lagged behind its peers over the past few years, as the mid-tier retailer has competed in a bifurcated market. Sales at its stores open at least one year fell 2 percent in November 2011, while its December same-store sales figures were hardly better, climbing only 0.3 percent.

Johnson's first order of business is to develop a new pricing model at the company, The New York Times reports. The retailer will replace its old scheme with a three-tiered system comprised of regular prices, month-long specials and clearance sales. The switch will help drive the company's profit higher because nearly three-fourths of total revenue currently comes from items sold at a discount of 50 percent or more, according to Johnson.

Many retail chains have had to aggressively reduce prices in an effort to lure cash-strapped customers, but Johnson said J.C. Penney simply ran too many ineffective campaigns last year. He plans to reduce the chain's total number of yearly sales events from an average of more than 1 and a half per day to only 12. Implementing such a sales structure will further help achieve cost reduction quotas, positioning the company for a comeback.

"So customers ignored us 99 percent of the time," Johnson said of the high number of unique sales events. "At some point, you, as a brand, look desperate if you have to market that much."

Johnson said he did not plan to close any of the company's more than 1,100 U.S. stores – at least initially.

"Why would we go close stores when we haven't gotten the whole concept right yet?" he said. "It doesn't really make sense."

 

J.C. Penney chief executive outlines company's plan to reinvigorate brand

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Apple, the world's biggest technology company, beat analysts' expectations with its latest quarterly results.

The Cupertino, California-based company said on Tuesday that its profit in its first fiscal quarter more than doubled, the precipitous uptick fueled by the strength of its wildly popular iPhone 4S. Aside from its jump in net income, Apple also posted record revenue for its latest fiscal quarter, logging $46.33 billion in the 14 weeks ending December 31, 2011.

Apple's profit of $13.06 billion – $13.87 per diluted share – was more than 100 percent higher than the $6 billion it posted in the same period in 2010. Its revenue also surged compared to $26.74 billion from the year before, while the company's. gross margin climbed to 44.7 percent, up from 38.5 percent in 2010.

Apple's stellar earnings were supported by record sales of its iPhone, iPad and Macbook offerings. The company said it sold 37.04 million iPhones in the quarter, a 128 percent surge from the year before. What's more, Apple said iPad sales jumped 111 percent to 15.43 million units, with Mac sales climbing 26 percent to 5.2 million.

Since Apple unveiled the iPhone in 2007, the company has sold more than 183 million of the devices. The success of the iPhone and the iPad has eaten into the popularity of the company's iPod, however, as sales fell 21 percent in the quarter. The tech giant reported sales of 15.4 million units.

Apple has continued to upgrade and innovate with its line of product offerings over the past decade. The company has also implemented business cost reduction measures, overhauled supply chain management and reworked indirect spend and spend management.  The strategy has helped galvanize earnings, as sales of the iPhone and iPad now account for nearly 75 percent of the company's total revenue.

"We're thrilled with our outstanding results and record-breaking sales of iPhones, iPads and Macs," Apple chief executive Tim Cook said in a statement. "Apple's momentum is incredibly strong, and we have some amazing new products in the pipeline."

Apple has hoards of cash at its disposal, money the company has famously been loath to spend. Company chief financial officer Peter Oppenheimer asserted robust earnings in its latest fiscal quarter would add to the firm's already overstuffed company coffers.

"We are very happy to have generated over $17.5 billion in cash flow from operations during the December quarter," he noted. "Looking ahead to the second fiscal quarter of 2012, which will span 13 weeks, we expect revenue of about $32.5 billion and we expect diluted earnings per share of about $8.50."

Apple has presided over one of the longest streaks of earnings growth in modern corporate history. Until its 2011 fourth fiscal quarter, the company had beat analysts' expectations since 2002. While sales did not rise as significantly as forecast in the three months ending in September 2011, Cook agued consumers delayed new iPhone purchases in anticipation of the unveiling of the 4S.

Google's Android operating system has eaten into the iPhone's dominance, but Apple has successfully chipped away at the global smartphone market over the past few years. The firm lowered prices of older-model iPhones when it launched the 4S, and it has expanded coverage across three of the nation's major telecommunications providers.

The New York Times reports that the number of Americans who reported owning an Android phone dropped last year between October and December, as more iPhone owners indicated they planned to purchase the latest iteration of the popular mobile device.

Investors were impressed by the company's earnings announcement, as shares jumped more than 8 percent in trading.

 

Record iPhone, iPad and Mac sales power Apple quarterly results

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U.S. officials are planning to close a major inspection station in Brooklyn, a move that could ultimately drive banana prices higher.

The New York Times reports that in an increasingly global trading environment, the transportation of goods is an exceedingly complicated endeavor. Delivering a piece of fruit from Latin America to New York is a calculated affair, as companies strive to drive profit margins through enhanced logistics tools.

Customs officials have thrown a proverbial wrench into that finely tuned machine, however, announcing their plans to shutter an inspection station in Brooklyn's Red Hook terminal. Companies that ship and transport food products and other items through the port are scrambling to respond to the news, as they team with supply chain management and procurement consultants in an effort to rework their global logistics operations.

By closing the Red Hook terminal, U.S. Customs and Border Protection will effectively require companies to unload myriad containers each year and subsequently transport them by truck to another terminal capable of inspecting their cargo. Moving thousands of container vessels each year is challenging in and of itself, but businesses are worried they could lose money and time as they truck goods to New Jersey or Staten Island, where the closest customs inspection stations are located.

Port operators contend that the additional transportation could ultimately drive up the cost of bananas for consumers. While companies will likely endeavor to implement business cost reduction programs as a means of offsetting the uptick in transportation costs, such initiatives – unless executed without error – are unlikely to depress fuel costs in the long-term.

Bananas are not the only items whose price would likely rise as a result of the closure: the Red Hook terminal processes approximately 15 percent of all beer delivered to the region, meaning prices on a 12-pack could jump 75 cents or more, according business officials. Executives from food and beverage companies are hoping to find an alternative solution, but their options are limited.

"Basically you're just taking beer on a ride to Staten Island, and right back from where it came from," Phoenix Beverages vice president Greg Brayman asserted. "It's a huge deal."

U.S. Representative Jerrold L. Nadler said that companies are going to struggle to contend with the additional costs associated with the closure of the inspection center. Nadler noted that Brooklyn's ports are an important economic driver in the region and that the move could ultimately kill jobs and increase traffic along the Verrazano-Narrows Bridge.

"It's a tremendous incentive for these shipping companies to say, 'Why bother with Red hook?' " Nadler told the Times. "It's imperative to the economy that we have a port on both sides of the river," he added, referring to the Hudson.

Moreover, other state lawmakers said they feared the closure of the inspections station would increase security risks in the state. Representative Michael G. Grimm asserted thousands of uninspected containers would be transported throughout New York City, which could potentially be targeted.

"Over my dead body are they going to be sending trucks through my district," he exclaimed.

For its part, customs said that it extensively studied whether or not to close the Red Hook inspection station. After a thorough review, officials determined that the total amount of goods that were inspected each year did not warrant the agency's expansive presence in the port. A spokesperson for the federal organization also noted that goods would first pass through a security screening before they are transported to either Staten Island or New Jersey.

 

Customs to shutter inspection center at Brooklyn port, potentially driving up costs of bananas, beer

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Though floodwaters have receded in Thailand, businesses across the globe are still struggling to contend with the resulting shock to their supply chains, The New York Times reports.

Flooding in parts of Thailand last year affected technology companies throughout the world, prompting executives to overhaul supply chain management as critical manufacturing facilities were damaged. Makers of computers and other electronic equipment struggled in the wake of the serious floods to secure new suppliers, which affected many such firms' earnings.

Though the floods that swept throughout Thailand in 2011 have largely retreated, they inflicted so much damage in the Southeast Asian nation that many businesses are still struggling to resume production. Thai companies play a critical role in the supply chains of companies such as JVC, Panasonic and Hitachi, and the flooding is continuing to cause headaches for executives.

Of the 227 factories authorized to operate in Khlong Luang's industrial zone, only 15 percent have restarted production, according to Nipit Arunvongse Na Ayudhya, a director at a firm that manages a large industrial zone just north of Bangkok. He said that the nation has faced myriad obstacles in its quest to emerge from the devastating effects of the historic flooding.

"The recovery has not been that easy," he noted.

For technology companies, the slow recovery is a continual source of anxiety. Thai companies supplied critical electronic components for products ranging from televisions to tablets. The abrupt halt in production there left foreign businesses with little choice as to where they could potentially secure new supplies. Some firms have worked with procurement consultants in an effort to improve performance, while others have instead reviewed supplier contract negotiations, searching for potential third party manufacturers.

Even when placed on a global scale, Thailand's woes are substantial. Prior to last year's unprecedented flooding, the country was responsible for the production of 40 percent to 45 percent of the world's hard disk drives. While corporate executives had hoped for a speedy recovery, the bleak reality of the nation's troubles is exacerbating concerns at computer companies.

Ultimately, consumers will likely face the ramifications of the country's dilapidated manufacturing sector. For businesses, hard drive sourcing is rapidly becoming the buzz word de jour, as prices of the important technology equipment have surged more than 40 percent in the wake of the floods. Such steep prices could remain until the end of 2012, according to HIS iSuppli analyst Fang Zhang.

"By the end of the year, [hard drive prices] could come back to preflood level for certain drives," he contended.

Statements from some of the biggest players in the hard drive market corroborate such an estimate. Manufacturing capacity at Western Digital, for example, was severely hampered by last year's floods. Western Digital chief executive and president John Coyne asserted that the company's factories – responsible for more than 30 percent of the world's hard drives – would not return to preflood output until September.

Moreover, Coyne affirmed that more than 60 other companies that manufacture hard drives in Thailand were also significantly impacted by the storm. Other firms are still struggling to sort through piles of rusted equipment and damaged factories. Their options are rather limited, however, as many such companies do not have enough funding to fix their facilities.

While firms such as Western Digital are endeavoring to find a way out of the crisis, their purchasing services departments are struggling to secure new component suppliers. The Thai crisis shows no signs of abating, and experts assert affected companies will likely have to wait for their suppliers to come back online.

 

 

How flooding in Thailand is making hard drives more expensive

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Natural gas prices have plummeted over the past decade, prompting at least one large U.S. producer to drastically reduce output of the hydrocarbon.

U.S. natural gas production has soared over the past decade, helping drive prices to exceedingly low levels. The biggest contributor to falling gas prices has been a surge in hydraulic fracturing, more commonly known as fracking.

Fracking is an exceedingly controversial issue in the U.S., as the federal government has thus far allowed states to enact and enforce laws governing the practice, in which thousands of gallons of water and chemicals are blasted thousands of feet beneath the ground's surface, which helps free natural gas stored in shale formations.

Public health and environmental scientists' assessments of the potential deleterious medical and environmental threats of fracking differ from those of oil engineers. Moreover, experts argue about the dollar value on total natural gas reserves in the U.S. Some oil engineers have pegged the figure at more than $4 trillion, while others have offered far more conservative estimates.

Nonetheless, the U.S. has rapidly become the world's biggest natural has producer on the strength of domestic fracking operations. The price of natural gas, which is considered to be a cleaner fuel than oil, has declined substantially. This has helped businesses trim operating budgets and rework spend management and indirect spend. It has also allowed companies to reallocate resources, as natural gas sourcing has become simple amid a glut of supplies.

However, Oklahoma-based Chesapeake Energy announced recently that it would reduce its natural gas drilling and production, citing the drop in prices. The decision from the energy firm underscores that while falling natural gas prices may be benefiting businesses and consumers, they are hurting drilling companies.

The Associated Press reports that Chesapeake officials decided to reduce natural gas output because low prices made some of its drilling and production wells unprofitable. The energy giant said it plans to cut production 8 percent, which would essentially leave its output in 2012 unchanged from 2011 levels. In total, Chesapeake produces about 9 percent of U.S. natural gas.

Chesapeake's announcement could trigger a ripple effect among natural gas producers, according to some analysts. As the biggest natural gas producer in the world's largest generator of the hydrocarbon, Chesapeake holds an important position among energy firms. Its decision to scale back production, meanwhile, varies significantly from past years when it ratcheted up extraction amid a fracking boom.

While cold winters in 2010 and 2011 helped fuel natural gas price gains, this year's mild winters – especially in the Northeast and Midwest – spurred an uptick in supplies. In trading on Monday, natural gas prices hovered near $2.46 per 1,000 cubic feet. The hydrocarbon approached $2.30 late last week, its lowest level since 2002.

Though a boon for businesses and homeowners, lower natural gas prices have eroded profit margins at major energy companies, prompting Chesapeake to change course. Between 2010 and 2011, the energy giant increased natural gas production 13.5 percent. In 2011, it spent more than $3.1 billion on natural gas regions. However, the cut in output will enable it to implement a business cost reduction program, as it intends to invest approximately $1 billion this year.

Chesapeake executives affirmed the company would reduce production 500 million cubic feet of gas per day in specific drilling outposts in Texas, Arkansas and Louisiana. While the move is aimed at removing a glut of supply, experts said energy companies often reverse such plans at the behest of shareholders.

 

 

Chesapeake Energy to cut natural gas output, as hydrocarbon nears record low prices

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Another new whitepaper came across my desk recently, written by Michael Lamoureux, Ph.D. (or as many know him, the doctor). After being pleasantly surprised by the content of the last whitepaper, I wanted to dig in a little quicker on this one. This paper, “Top 10 Technologies for Supply Management Savings Today” was sponsored by BravoSolution. A quick glance at the layout of this research paper will have you thinking that it is just a pure marketing brochure, but there really is some good content in there, and it was an easy read.

Aside from the random photos of models pretending to be excessively happy business people, the paper does a great job of jumping right into the topic at hand.

“With the right systems in place, the average company can tap cost reduction and savings opportunities that could collectively add up to 30%, or more, of spend across major direct and indirect categories”.

So what are those systems? I’m glad you asked…

The paper lists the top ten technologies for supply management savings as:

10.) Electronic RFX

9.) Electronic (Reverse) Auctions

8.) Procure-to-Pay (P2P)

7.) Contract Management

6.) Global Trade Management (GTM)

5.) Supplier Information Management (SIM)

4.) Supplier Performance Management (SPM)

3.) Spend Analysis

2.) Decision Optimization

1.) Integrated, Collaborative, Sourcing

In my view, if you want to nitpick, there really are only 9 items on this list, because the number one item on this list is in fact a proper combination of all of the technologies and tools listed above it (hopefully in a singular solution). Truth be told, the #1 item is segue to mention the paper sponsor, BravoSolution, which offers an impressive full-suite of integrated sourcing and procurement tools and services.

In reality, as a spend management consultant, I would say that utilizing every single one of the 9 tools listed (or a master tool that does them all) is not feasible or recommended for many businesses, particularly smaller companies. Reaching item #1 on the list (an integrated & collaborative sourcing solution) is about finding the right combination of the highlighted tools to fit your business. So, GTM may not be important to your small domestic services shop, but contract management may be critically important to you. Similarly, reverse auctions may not ever be right for your business, but standard eRFX tools might need to be implemented in every sourcing event. And even though this was not specifically discussed in the document, I would imagine most readers know that no solution is really one-size-fits-all. Of course a proper provider will help you decide which tools are right for your strategy.

This report is a quick reference tool to understand what a fully optimized supply chain sourcing solution would look like for your business, even if you don’t need every tool that was outlined.  Each item in the list is detailed in easy to read language and even discusses where it belongs (at what stage) of implementing a best-in-class-solution.  If nothing else, it acts as an excellent quick reference glossary for procurement and finance professionals when some of the relatively new abbreviations and buzzwords start getting tossed around the conference room table.

The concluding statements of this paper do a wonderful job of providing concise examples of many things we talked about in the market intelligence and supplier collaboration chapters of our book. The summary highlights the importance of building a collaborative supply chain with your suppliers, rather than simply asking them to place bids, and stresses the importance of market intelligence, and how that intelligence will help achieve the best results.

The entire document weighs in at a brief 14 pages, and after removing title/index/marketing, it is about half that, which makes for a very quick read. It is definitely worth your time. This report does require registration to download, which I am not a huge fan of, but it is not an excessive registration form, so you can get through it fast.  Get the report directly from BravoSolution: here

Quick Review: "Top 10 Technologies for Supply Management Savings Today"

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U.S. industrial engineering giant General Electric impressed analysts and investors this week with its latest quarterly and yearly financial results.

Connecticut-based GE, which manufactures products ranging from gas turbines to airplane engines, said that its profit rose in its latest fiscal quarter. GE's net income climbed 6 percent from the same period the year before, hitting $4.1 billion. The strong profit came during the company's fourth quarter and was buoyed by strong orders for jet engines, according to chief executive Jeff Immelt.

The financial crisis significantly impacted GE, with its finance division suffering under the weight of bad loans. However, the biggest industrial company in the U.S. has fought back from the depths of the recession, posting seven consecutive quarters of robust earnings growth. GE has benefited from brisk international demand, according to analysts, and its business cost reduction measures have helped boost operating margins.

"GE's portfolio demonstrated strength and resilience, delivering earnings growth for the seventh consecutive quarter while also generating substantial operating cash flow to support investment in our business and dividend growth," Immelt said in a statement.


 

GE's fourth quarter profit rises 6 percent

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