Companies look to buy Saks Fifth Avenue as luxury sales remain strong despite recession

on Tuesday, August 31, 2010

Companies look to buy Saks Fifth Avenue as luxury sales remain strong despite recessionCompanies in both the U.S. and Britain have noticed that affluent American consumers' spending habits don't seem too disrupted by the economic downturn - and they've got their eyes on Saks Fifth Avenue as a way to take advantage of the group's resilience.

A series of major mergers and acquisitions - including Google's buyout of a number of small software companies and the Comcast-NBCU deal - has companies considering hopping on board with another major player to stay afloat in a difficult economy. According to the Wall Street Journal, this phenomenon may be responsible for a recent surge in Saks' stock.

The WSJ reports that the luxury department store's shares have jumped 21 percent to $8 a share, after having rocketed 34 percent higher to $8.85 earlier on speculation that a group of American and British private-equity houses are considering purchasing the retailer for $11 a share - or $1.7 billion.

The Journal also reports that luxury sales in general have fared well during the recession, indicating that white-collar workers - whose unemployment rate is only 5 percent, compared to the national average of 9.5 percent - are continuing to spend.

Another prominent merger, the United-Continental deal, was recently approved after a Department of Justice investigation concluded it did not raise antitrust concerns. The merger will create the world's largest airline.
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Sara Lee posts profit despite rising commodity prices

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Sara Lee posts profit despite rising commodity pricesDespite facing rising commodity and material prices, the Sara Lee Corporation posted a profit for the fourth quarter.

The company, based in Downers Grove, Illinois, is a manufacturer of a number of frozen and packaged foods and other goods, though it has recently been trimming back on some product lines to focus on its core food and beverage offerings. Recently, the prices for meat, wheat and coffee - components in many Sara Lee products - have been rising. The company has managed the price increases effectively and returned to profit in the fourth quarter.

"We showed substantial progress in developing our capabilities and laying the groundwork for future growth," Marcel Smits, the company's chief financial officer and acting chief executive, told the New York Times. "Our ongoing commitment to investing in our best brands and best ideas is paying off."

Sara Lee is now focusing on three core businesses - coffee, frozen bakery and branded meats, such as Hillshire Farms products. These three lines use a good deal of the commodities that are experiencing price increases.

Even so, the company earned $506 million in the last fiscal year. Its brands include Jimmy Dean, Ball Park and State Fair.
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Revolutionizing Data Collection through Our Eyes

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There was an article recently on http://www.fastcompany.com/ about recent developments in a technology that will change the world as we know it – iris scanning. In the article, “Iris Scanners Create the Most Secure City in the World” they interview Jeff Carter, the CDO of the biometrics R&D firm Global Rainmakers Inc. (GRI). They announced last week that they will be rolling out their scanning technology in one of the largest cities in Mexico – Leon. With a population of over 1 million people, GRI will cover the city with iris scanners and ideally make it “the most secure city in the world.”

Utilizing biometrics to link data about us is nothing new. Agencies have used such biometrics as fingerprints, facial and voice recognition. The CIA has been using voice recognition to monitor communications throughout the world. The most common, fingerprints, have about 100 recognizable data points. An iris has over 2,000 when you are born. GRI can use those points to create a unique 16,000 bit stream of numbers that identifies every human on the planet. That provides a unique reference to “connect everything you do in all aspects of life - for the first time ever.”

"In the future, whether it's entering your home, opening your car, entering your workspace, getting a pharmacy prescription refilled, or having your medical records pulled up, everything will come off that unique key that is your iris," says Jeff Carter.

The convenience to this is that you’ll never need to carry anything with you – no keys, no cards, no ID – just your eyes. They will be your keys to anything and everything.

GRI's scanning devices are currently being shipped to Leon, to begin full integration in law enforcement facilities, security check-points, police stations, detention areas, and eventually in mass transit, medical centers and banks, as well as many other public and private locations throughout the city. Once a felon is convicted, they will be able to track anywhere they go - into stores, near a school, trying to get on a plane – anywhere.

Unlike what is gruesomely seen in sci-fi movies, you will not be able to steal someone’s identity by plucking out one of their eyes. When an eye is removed and it loses blood pressure, the eye “flattens” and is unable to be scanned.

The ability to scan individuals’ eyes has been around for years – but recent developments in technology will revolutionize the way this is able to be done. Eye scans have been in airports for years; however, a person has to hold still for about 30 seconds in order for it to scan your eye properly. Current technology now allows accurate scans from over 30 feet away in motion – even at a run! Eventually it will be possible to have one sensor the size of a dime, in the ceiling, that could acquire hundreds irises in motion at the same time.

There are a ton of applications for this kind of technology – one of them being marketing. They can easily determine how many people are looking at a web site, for how long, and what they clicked on. With this new technology, they will be able to do this in a physical world. They will be able to tell where you are looking, what you focused on, and for how long.

How this information is collected, how its stored, and especially what it is used for will change the world as we know it. Will people go for this? I think it is still very uncertain whether the general public will embrace this technology or revolt against it. This is going to raise an enormous amount of ethical, political, religious, etc. concerns.

This technology could easily lead to a boom in another industry – sun glasses.
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Supply chain 'bottleneck' creates problems for electronics manufacturers

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Supply chain 'bottleneck' creates problems for electronics manufacturersThe electronics industry has been affected by a component pile-up that's made the supply chain messy and inefficient.

According to iSuppli, a look at the five largest electronics manufacturing service providers showed that components and raw materials comprised 70 percent of total inventories during the first quarter of the year, while work-in-progress goods made up about 17 percent of inventories. Finished goods accounted for less than 15 percent.

iSuppli analyst Thomas Dinges has a theory as to why the supply chain is getting so backed up.

"Given that many suppliers were shuttered during the last years because of financial distress, the shortages have resulted in supply bottlenecks in industries," Dinges told the Wall Street Journal.

Finished goods were at their lowest level since late 2008. Based on earnings, conversations with industry insiders and semiconductor companies that are citing extended lead times and parts shortages as a major problem, Dinges expects the issue to persist into the near future at the very least.

Dinges published his findings in a report entitled "EMS and ODM Inventory for 2010 Looks Like a Sequel."
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BlackBerry Torch more efficient to manufacture than iPhone 4, Android devices

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The BlackBerry Torch costs less to manufacture than the iPhone 4Research in Motion, manufacturer of the BlackBerry, has found a way to build smartphones for significantly less than the phones produced by its chief rivals.

RIM's latest installment in the BlackBerry line of smartphones, the Torch, costs approximately $183.05 to manufacture - much less than the phone's primary rivals, Apple's iPhone and Android-based devices such as those made by HTC and Motorola.

Analyst Andrew Rassweiler told the Wall Street Journal that RIM's approach was "revolutionary," adding that the phone has an "enhanced feature set that largely matches those of the BlackBerry's chief competitors," without breaking the bank.

Excluding an estimated manufacturing cost of $12, the Torch's bill for raw materials and components is $171.05 - more than $15 less than the iPhone 4's supplies and materials bill of $187.51, according to iSuppli.

On both devices, the most expensive subsystem is the LCD touch screen display module section. On the Torch, the screen and its related components cost $34.95 and represent 20 percent of the product's total bill of materials.

The BlackBerry Torch, which combines both a touchscreen and a slide-out QWERTY keyboard, is sold by AT&T.

Since BlackBerry is rapidly losing marketshare to the likes of Apple and Android (and the soon to come Windows 7 phone), reducing the costs of manufacturing is an excellent way to recover lost sales dollars. For help reducing your supply chain costs, try contacting a Procurement Service Provider.
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Continental-United merger approved by DOJ

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Continental-United merger approved by DOJThe U.S. Department of Justice has followed the European Commission's lead and approved a merger between Continental and United, a move that will create the world's largest airline.

The European Commission approved the deal a month ago, but the DOJ took slightly longer to ensure that the merger would not impede fair competition in the airline industry, where other major players such as Virgin, Delta and JetBlue compete with the carriers.

The two airlines agreed to merge in May in an all-stock deal. The new company, to be called United Continental Holdings, will be headquartered in Chicago, but will also maintain a major presence in Houston, Texas, which will be its largest hub. Together, Continental and United serve more than 144 million passengers every year traveling to 370 destinations in 59 countries. Both airlines provided domestic and international passenger and freight services, and will continue to do so following their merger.

Opponents of the deal worry the fact that there will only be four major American carriers left after the merger will lead to increased travel prices for passengers, but the DOJ believes the competition will be robust enough to keep pricing fair. In addition, the two carriers made the case that because there was little overlap between their routes, the new airline wouldn't dominate any specific area.

The merger will likely lead to some layoffs to eliminate redundancy in the new company structure, but it will also create new jobs.
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Google acquires SocialDeck in what may be a bid to rival Facebook

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Google acquires SocialDeck in what may be a bid to rival FacebookSearch giant Google has announced yet another acquisition - this one of SocialDeck, a social media and gaming platform.

Recently, Google has gobbled up a series of smaller companies in what many believe is an effort to create a social networking site that would rival the enormously successful Facebook. Earlier this week, Google confirmed an agreement to purchase Angstro;, a small startup that builds applications to integrate with social networks like Facebook and Twitter. Within the last few months, Google has also invested in social gaming player Zynga and purchased social media solutions providers Jambool, Slide and Aardvark.

SocialDeck, founded in 2008 by COO Anish Acharya and CTO Jeson Patel, creates Facebook, iPhone and BlackBerry titles enabling simultaneous play across multiple devices and social networks. The firm's platform technology also facilitates viral content discovery, distribution and monetization.

Google's acquisition of ITA Software, which designs ways to browse travel information, has come under investigation by the U.S. Department of Justice after competing firms raised antitrust concerns.
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Analyst believes oil prices are too high

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Analyst believes oil prices are too highA barrel of oil these days goes for more than $74 on the market - but Peter Beutel, president of Cameron Hanover, thinks that figure should be a lot lower.

"I honestly think that if there were no investors using oil as an asset that the price of oil right now would be $10 or $15 or $18, but it wouldn't be anywhere near where it is," Beutel told CNBC.

Oil is the world's most traded commodity and powers everything from factories to automobiles. If the commodity weren't traded as an investment instrument by financial players to safeguard against debased currencies, Beutel believes that its price could fall by $60 or more, thanks in part to an abundance of the substance - the most in 27 years.

"Why is it 27 years? Because that's how far our records go back. It's probably the most in 50 or 100 years," Beutel added. "We've got 50 million barrels of crude more than we had two years ago. We have 176 million of distillate. When I started in the business back in 1980 we used to think to ourselves: 'Gee, we would love it if we had 140 million barrels of distillates to start the winter.'"

Of course, Beutel's view is challenged by many other analysts. Jonathan Barratt, managing director at Commodity Broking Services, thinks that the price of crude should actually rise to around $85 per barrel.

In 2008, oil prices reached a record peak of $145-150 a barrel, according to government figures.
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Google's acquisition of ITA to be investigated by DOJ

on Monday, August 30, 2010

Google's acquisition of ITA to be investigated by DOJGoogle's acquisition of ITA Software has raised a few concerns at competing travel sites, and now the Department of Justice is probing the merger to make sure it doesn't violate antitrust laws.

Google's senior product manager, Andrew Silverman, is confident that the acquisition will go through, though the investigation may cause delays. In an official blog post, Silverman wrote: "While this means we won't be closing the deal right away, we're confident that the DOJ will conclude that online travel will remain competitive after this acquisition closes. In fact, over the past few weeks online travel companies have noted that they have alternatives to ITA's product."

Among those alternatives are Expedia's Best Fare Search and Worldspan's e-Pricing search technology, both of which offer a service similar to ITA's fare finder.

"While we think this acquisition will benefit travelers as well as those seeking their business, we know that closer scrutiny has been one consequence of Google's success, Silverman continued, "and we said that we wouldn't be surprised if there were a regulatory review before the deal closes."

The acquisition of ITA, a 500-person firm based in Cambridge, Massachusetts, cost Google $700 million.

Contact Source One for help reducing your corporate travel expenses.
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Supply chain indicates weak demand for PCs

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Supply chain indicates weak demand for PCsComputer chip producer Intel has cut its revenue outlook for the third quarter based on weak demand for consumer PCs.

The company noticed that various elements of the consumer PC supply chain had indicated a drop in demand, likely based on consumers cutting back on luxury purchases in the downtrodden economy. Even the typical back-to-school computer rush doesn't seem to be buoying the market.

"Revenue is being affected by weaker than expected demand for consumer PCs in mature markets," Intel said. "Inventories across the supply chain appear to be in-line with the company's revised expectations."

According to a company statement, expected third quarter revenue is about $11 billion - down from previous estimates of $11.2 billion and $12 billion. Wall Street was expecting $11.52 billion with earnings of 53 cents per share, a figure not likely to be met.

Analysts had been expecting a downturn in the American PC supply chain for some time. Based on Asia's shaky PC supply chain and revised third quarter predictions for companies stateside, Wedbush analyst Patrick Wang said that the firm came away "incrementally more negative on the PC supply chain, in light of lowered 3Q forecasts for both Intel and AMD as well as an expectation for softer DRAM pricing and questionable demand."
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New Continental-United logo has purists angry with merger

on Saturday, August 28, 2010

New Continental-United logo has purists angry with mergerMajor business mergers can cause a number of gripes - everything from antitrust concerns to fair stock pricing can become a topic of debate. However, sometimes the argument is a little bit more pedestrian. In the case of the impending Continental Airlines and United Airlines merger, it seems the biggest complaint is how the two companies will combine their logos.

Branding is a complicated process, and consumers can become quite attached to a brand's symbol - consider, for example, the Nike "swoosh" or the McDonald's golden arches. United has long been known for its tulip-shaped stylized "U" logo, and many purists would like to see it stay that way.

The merger between the two brands is meant to be one of equals, rather than a buyout - which is why United's decision to create a hybrid logo incorporating Continental's globe has some brand loyalists up in arms. In fact, a Facebook page called "Save the Tulip" has been formed, calling United's logo "an iconic part of aviation history" that deserves to be preserved.

"You can't think of United without 'Rhapsody in Blue' and the tulip," Timothy Jasionowski, one of the instigators of the "Save the Tulip" effort, told the Chicago Tribune.

The outrage is just another example of how, no matter how much companies prepare for a merger, resistance can sometimes come from the most unexpected places.
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Canadian dollar's value drops in U.S. marketplace

on Friday, August 27, 2010

Canadian dollar's value drops in U.S. marketplaceForeign currency is weakening as signs of a slowdown in the global economy have some investors trimming back on higher-yielding assets in favor of the perceived safety of the American dollar.

Canada's dollar - or the loonie, as it is nicknamed - is headed for a 1.1 percent loss, which will make it the second-weakest currency commodity among the U.S.'s 16 most-traded counterparts. The Mexican peso is the weakest.

"It's been very much a case of investors looking to unwind positions in those commodity-bloc currencies and moving back towards the traditional, safer havens," Jeremy Stretch, global head of foreign-exchange strategy at Canadian Imperial Bank of Commerce, told Bloomberg. "It's going to be tough to buck the trend of negativity and nervousness regarding the global economy in the short term of probably the next seven days or so."

Other popular currencies traded on the U.S. market include the Japanese yen, the British pound, the Euro, the Australian dollar and the Swiss franc.

Meanwhile, Canadian commodity producers are investing at the fastest rate since 2007. According to Bloomberg, this pace signals that resource companies will provide a floor to slowing economic growth, even as homebuyers and consumers continue to show signs of restraint.
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Jefferies analyst downgrades Corning stock over supply chain concerns

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Jefferies analyst downgrades Corning stock over supply chain concernsSome market analysts are downgrading their rating of Corning stock this week from "buy" to "hold."

Corning, a producer of specialty glass and ceramics used in consumer electronics, has been rated as a buy by many stock analysts for months. However, some analysts are now concerned that a supply chain correction will soon drive down the price of the company's stock.

Jefferies analyst George Notter has reduced his target on the stock from $24 to $18.25. In his report, Notter writes that "based on anecdotes and conversations with industry contacts, we now believe there's too much inventory out there at the TV manufacturer and panel supplier levels."

Corning has acknowledged supply chain concerns, but Notter believes "the weight of the evidence shows a more significant inventory issue than Corning is suggesting."

But investors shouldn't be overly worried.

"We recognize that current supply chain issues are shorter term in nature," Notter continues in his report. "Moreover, our larger thesis on Corning still hasn't changed - based on our prior analysis of global TV penetration rates, we believe that the size and trajectory of the LCD TV market will ultimately be larger than investors expect."

In addition to LCD TVs, Corning also produces components for a number of other consumer electronics. Recently, the company's "Gorilla" glass was chosen by Samsung to be used in the touchscreens on its Galaxy S line of smartphones.
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Copper prices, home sales fall

on Thursday, August 26, 2010

Copper prices, home sales fallA decline in the price of copper and the U.S. housing slump may be related.

Copper fell to its lowest price in two weeks amidst reports that the real estate market was experiencing a major slump in home sales, Bloomberg reports. Purchases of previously owned homes fell 27.2 percent to a 3.83 million annual rate, according to figures from the National Association of Realtors. In contrast, the median forecast of economists surveyed by Bloomberg was 4.65 million. Meanwhile, copper futures for December delivery fell 5.05 cents, or 1.5 percent, to close at $3.262 a pound.

"The economy is stumbling," Lannie Cohen, the president of Capitol Commodity Services in Indianapolis, told Bloomberg. "The copper picture is all about demand."

The United States is the second-largest consumer of copper in the world, second only to China. The metal is used in everything from electronic wiring to plumbing, roofing and cadding. It also has anti-microbial properties that make its use popular in hospitals.

The slump in home sales may account for much of the decline in demand for copper. Building and construction account for nearly half of copper demand in the U.S., according to an estimate by Bank of America Merrill Lynch.
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Dollar Thrifty and Hertz merger problematic for shareholders

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Dollar Thrifty and Hertz merger problematic for shareholdersA proposed $1.2 billion deal that would see the Dollar Thrifty rental car agency acquired by rival Hertz Global Holdings may not be the best option for Dollar Thrifty stockholders.

Attorneys for the shareholders of Dollar Thrifty have asked a Delaware judge to delay a vote regarding the merger. The goal is to allow more time for Dollar Thrifty to consider counteroffers from Hertz's rival, Avis Budget Group. Avis initially tried to buy Dollar Thrifty out from under Hertz by offering $1.3 billion in cash and stocks - an offer that Dollar Thrifty turned down.

Dollar Thrifty shareholders claim in a class-action lawsuit that the company's directors agreed to an inadequate offer from Hertz without exploring other bids.

The plaintiff brief asserts that "unwarranted deal protections" between Dollar Thrifty and Hertz are "impeding an open bidding contest between Hertz and Avis," a contest that would ensure that shareholders get the most out of the merger.

In the opinion of Steven M. Davidoff of the New York Times' DealBook blog, the argument won't hold water.

"The problem with the plaintiffs' legal brief is that it lacks a motive," Davidoff writes. "What is the private, extraordinary gain that the Dollar Thrifty board and its executives are obtaining that would justify taking an inferior offer?"
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ZF establishes American supply chain for wind turbine components

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ZF establishes American supply chain for wind turbine componentsGerman mechanical engineering firm ZF has announced that it will begin building a wind turbine production facility on American soil, reports GreenTech.

Wind power in the United States has been gaining popularity for years, but the supply chain has relied largely on components manufactured overseas. ZF's facility, which will be located in Georgia, will bring the manufacturing process closer to home - making the turbines more affordable and creating jobs in a sluggish U.S. economy.

"We're in the process of building a new production facility to produce gearboxes for wind turbines in Gainesville, Georgia," Bryan Johnson, ZF's marketing/communications manager for North America, told GreenTech. "It's a brand new business for us."

In recent years, ZF has begun manufacturing various parts and performing service and maintenance on wind farms in Europe. Now the company will be putting its century-long experience with mechanical engineering to a new use by making turbine gearboxes at the new facility.

The need for a U.S.-based supply chain for wind power is evidenced by the willingness of other companies to jump on board with ZF. Danish company Vestas, the world's biggest wind turbine provider, has chosen ZF's Gainesville facility to supply it with the gearboxes it needs to power its windmills.

"Vestas' suppliers are selected based on a combination of price and quality. The goal is to increase business-case certainty," Aili Jokela, Vestas' American Wind vice president for communications, wrote in an email, the website reports. "The gearbox is a major component in achieving this goal."

Earlier this year, Wired magazine reported that current wind technology in America could generate as much as 37,000,000 gigawatt-hours of electricity per year.
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Monks Have To Eat Too

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A recent article in the WSJ discussed the topic of competition with a high margin product group…coffins. Monks in Louisiana have been in a battle with the state’s funeral regulatory board over distribution of their handmade coffins that sell anywhere between $1,500 - 2,000. According to the LA law, only a licensed parlor can sell “funeral merchandise”. Advocates for the Monks have made attempts to broaden the distribution channel of caskets in the state unsuccessfully. Only a few states have similar laws as LA. The federal law does not allow funeral parlors to refuse coffins from third party suppliers.

The monks continue to run their business through these issues. They are a small piece to the supply chain selling only 60 coffins since 2007. Although I am unaware of their sales in this product group, even Costco and Wal-Mart are in the casket selling business. I would bet they are probably a slightly larger player in states that allow competition. The funeral directors on this board should really be ashamed of themselves. Are these monks really hurting your margins that significantly? If the funeral directors feel that threatened by the monks trying to make some income, figure out how to market your product better.
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Price of iron ore leads to dispute between steelmaker and supplier

on Wednesday, August 25, 2010

Price of iron ore leads to dispute between steelmaker and supplierArcelorMittal, the world's largest steelmaker, and its supplier, Kumba Iron Ore, have been in the midst of a bitter commodity price dispute for almost half a year - and now a task force has been called in to investigate the issue over the next two months.

In March, the iron ore provider canceled a nine-year deal with ArcelorMittal so it would be able to raise its prices. The South African steelmaker is challenging that decision, demanding that Kumba provide the company with fairly-priced materials. ArcelorMittal is concerned that the termination of the pricing agreement, which had stood since 2001 and which provided the steelmaker with most of the ore it needed at 3 percent above what it cost to produce, will raise steel prices and hamper efforts to expand manufacturing in the country.

After the government intervened last month, the two companies agreed to interim prices for ore from the Sishen mine, which is one of the largest open-pit mines in the world and produced 34 million tons of iron ore in 2008 alone.

"The mandate of this inter-departmental task team is to make recommendations on appropriate policy tools to ensure" that the steel industry remains competitive, Nimrod Zalk, a deputy director general at the Department of Trade and Industry, told lawmakers in Cape Town, Bloomberg reports. "The focus is not on how should the spoils be shared of this iron-ore arrangement."

The government is seeking “developmental” steel prices, Zalk added, meaning that manufacturers should not pay more for the material than their rivals abroad.

ArcelorMittal has operations in more than 60 countries and is the leader in all major global steel markets, including automotive, construction, household appliances and packaging.
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Alibaba buys Auctiva to create 'global supply chain' for online businesses

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Alibaba buys Auctiva to create 'global supply chain' for online businessesChinese auction site Alibaba.com has announced that it will buy Auctiva, a company that makes tools for small online businesses, as part of a plan to build what its CEO termed "a global supply chain" for small merchants.

Alibaba has more than 53 million users, and the company is only looking to grow.

Currently, most of Auctiva's 170,000 customers sell their wares through eBay - a relationship that Alibaba wants to keep intact. However, the auction site hopes that the buyout will encourage some small businesses to begin partnering with Alibaba to gain access to a new customer base. In addition, the acquisition of Auctiva will help Alibaba build its brand name in the United States and other countries far from China.

The merger is good news for Auctiva, as well.

"With more than 10,000 new users joining Auctiva each month, we are constantly looking for new ways to serve our customers and drive value for them," said Auctiva CEO Jeff Schlicht. "Joining Alibaba.com and connecting our buyers to the vast supplier base on Alibaba.com and AliExpress.com is the perfect way to help them grow and thrive in an increasingly competitive environment."

While both companies declined to name the price of the sale, Alibaba has said that the acquisition is part of a $100-million plan to provide a bigger internet presence for small-sized merchants, particularly those selling discounted and close-out merchandise.

David Wei, Alibaba's CEO, said the company still recognizes the value of the middleman to small businesses.

"Wal-Mart can source directly from China," Wei said. "With us, small sellers can compete."
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Report finds problems in Ugandan healthcare procurement methods

on Tuesday, August 24, 2010

Report finds problems in Ugandan healthcare procurement methodsAn investigation has revealed that one of Uganda's most important providers of medical supplies has a severely flawed supply chain that could be causing hundreds of the country's citizens to die unnecessary deaths.

According to The New Vision, an investigation by the Audit General found that the National Medical Stores were over-importing some medications while remaining severely understocked on others. For example, the NMS had stocked enough Ranitidine, a drug used to treat ulcers, to last 27 years - despite the fact that the drug expires after less than four years, meaning that as much as 85 percent of the medication could go to waste. However, the NMS still does not stock enough quinine or other anti-malarial drugs to handle outbreaks of the devastatingly common disease.

The report blames NMS for using flawed techniques to estimate medical needs. As a result, the suppliers order too many of some medications while not ordering nearly enough of others. In addition to inefficient and error-ridden procurement methods, some drugs are also believed to have disappeared along the transportation chain. Further compounding the problem is the fact that the NMS is mandated by law to be the only supplier of medicines to government hospitals and dispensaries.

"There is also wastage of financial resources in the storage and destruction costs," the report continues. "An effort to coordinate procurement with third parties has been advocated by the NMS but the health ministry only promises to take it up."

According to the CIA World Factbook, Uganda is home to more than 32 million people - thousands of whom die every year from treatable or preventable diseases such as HIV/AIDS, malaria, bacterial diarrhea and sleeping sickness. If the Ugandan health ministry makes good on its promises, improvements in the medical supply chain and procurement methods could significantly improve healthcare in the African nation.
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Rising price of pig feed supply chain components means meat could be more expensive this autumn

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Rising price of pig feed supply chain components means meat could be more eFarmers have always been in a delicate economic position, constantly being asked to produce more meat, vegetables and dairy more quickly and with less cost. Particularly difficult is the plight of the pig farmer, who could be facing a very tough autumn as the prices of his supply chain components rise.

Buying feed accounts for roughly 60 percent of the cost of raising pork. This summer's rise in the prices for many of pig feed's key components, including wheat, soya and barley, could mean it will be especially difficult for pig farmers to make ends meet this fall.

Perhaps nowhere else in the modern world are the prices of various supply chain components so quickly and obviously reflected in the price of the objects that consumers buy. Though most pork eaters have never fed a pig, consumers will be paying for the extra cents tacked onto all that barley, wheat and soya when they buy pork loins and other cuts of meat at the butcher counter this year. However, in order to stay competitive, farmers won't be able to raise pork prices high enough to cover all their expenses - which means that they could be falling into the red, after only a very brief spell of improving returns.

"Even if producer prices maintain their current value, the industry is forecast to be making a loss by the final quarter of 2010," James Park, a pig market analyst with Britain's Agriculture & Horticulture Development Board, told Farmers Weekly.

"Buyers must be in no doubt about the significance that their pricing policies for pigs, poultrymeat and eggs will have in the coming weeks and months," added Philip Sleigh, a representative of NFU Scotland. "Continued failure to recognize current rising production costs would have very serious implications for the future supply chain in both directions" and in countries ranging from Australia to the U.S.
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Why Are Base Oil Prices Going Up?

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Base Oil prices are on the rise again which in my mind begs the question, “Why, exactly?” We know that oil prices are low and have been declining over the last few months. In addition, the latest edition of “Lubes ‘N’ Greases” Magazine comes with an analysis of total U.S. lubricant sales over the last four years, and as you might have guessed, demand has consistently declined over that period. Abe Podolak, a major buyer of base oils in North America was quoted as saying “I just don’t need as much lubricant as I used to.”

So oil prices are low and demand is lower than it has been at least five years. How did we end up with a price increase? Well, as it turns out, as demand weakened, producers cut capacity to keep prices at preferred levels. Recently demand had a slight uptick (although levels are still lower than a year ago) and that increase has caused prices to rise. I suppose if this trend were isolated to one or two producers I wouldn’t be too concerned, but watching the demand and feedstock curves dive down while the price for finished product skyrockets makes me raise an eyebrow. Could all the producers have such similar pricing strategies even if they aren’t talking to each other?
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Coffee prices rise in anticipation of bad Brazilian harvest

on Monday, August 23, 2010

Coffee prices have reached a 12-year high.Caffeine junkies, beware: coffee is about to get a bit more expensive.

The price hike on this age-old commodity is the result of coffee prices hitting a 12-year high this week. The price of high-quality Arabica, the most popular bean variety used for making espresso and other coffee drinks, is up 1.9 percent to $1.8865 a pound for December delivery. This is the highest it's been since September 1997.

As a result, coffee chains such as Dunkin Donuts and coffee retailers, including Kraft, have had to raise prices. Dunkin Donuts has stated that a 9 percent increase will be effective immediately, while Kraft's popular Maxwell House brand has become slightly more expensive.

"At present, the New York futures market is heavily dominated by non-commercials, who are attracted by the bullish story behind Arabicas and the declining ICE stocks," Kona Haque, agricultural commodities analyst at Macquarie, told the Financial Times.

A disappointing harvest last year in Central and South America, along with the anticipated impact of the weather phenomenon known as La Niña in Brazil - the world's largest coffee grower - could be responsible for the change.

"With prices likely to start anticipating Brazil's 2011-12 'off' year within a few months, and with the stock cover situation much less than comfortable, prices are likely to remain supported for a while still," Haque added.

Coffee, which grows in 65 countries, all located between the Tropics of Capricorn and Cancer, is the second-most traded commodity in the world. Oil is the first.
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DOJ and FTC introduce new merger guidelines

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The Department of Justice and the Federal Trade Commission have issued new antitrust guidelines.The Department of Justice's Antitrust Division and the U.S. Federal Trade Commission have issued revised guidelines for horizontal mergers and acquisitions that are not quite as harsh as some companies had feared.

The changes - which are the first alterations in 18 years - were first discussed nearly a year ago, in September 2009. The guidelines describe how federal agencies will evaluate the possible competitive impact of mergers and whether those mergers comply with U.S. antitrust law. Still, the new guidelines shouldn't be cause for alarm.

Any company considering a deal should not worry about a "sea-change" in how the merger or acquisition will be addressed by the FTC and the DOJ unit, said David Wales, who in 2008 and 2009 was acting director of the FTC's Bureau of Competition. He is now partner at the law firm Jones Day. The new guidelines are meant to address whether entry into the market is easy enough to prevent mergers from enhancing market power, and whether coordinated and unilateral effects include conduct that is unlikely to be outlined in other antitrust legislature.

Generally, the 2010 guidelines outline the proper techniques, practices and enforcement policies the two political entities will use to analyze horizontal mergers. Merger analysis should not use a single methodology in addressing antitrust concerns.

"The revised guidelines better reflect the agencies' actual practices," said Christine Varney, assistant Attorney General in charge of the Department of Justice's Antitrust Division. "The guidelines provide more clarity and transparency, and will provide businesses with an even greater understanding of how we review transactions. This has been a successful process due to the commitment of the talented staff from both agencies and the excellent working relationship with the FTC led by Jon Leibowitz."
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Wireless Coverage Solutions or Stop Gaps?

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All wireless providers struggle to provide congestion-free coverage to customers in certain areas, though some are more notorious for it than others. While the true solution would be for the carriers to invest in their networks, the solutions being offered by providers appear to be more like band aids on broken bones.

I've written before about femtocells, but for the uninitiated, it's a technology that allows users' mobile devices to connect to an access point inside their home or their place of business which will then connect phone calls via the customer's Internet connection. Verizon, Sprint, AT&T all have femtocell technology available while T-mobile accomplishes the same result via wifi. But why should customers have to compensate for their carrier's poor coverage by offloading it onto their broadband connection and using up their precious bandwidth? Net neutrality conversations aside, I'm sure the broadband giants are asking the same question.

Recently, AT&T has been rolling out metro wifi in regions where 3G congestion and network availability have been issues. Times Square, Charlotte NC, and Chicago have been targeted areas for the service. Whether the wifi will have any significant, positive impact on user experience remains to been seen. However, again, the bigger issue is network congestion and whether or not AT&T's network can handle the traffic its heavy users (iPhone, primarily) are throwing at it. It might just be that AT&T is opening up its network with faster wifi links further stressing its backbone.

Finally, rather than bolstering the core networks, giants AT&T and Verizon have instead turned to restructuring data plans in an attempt to stymie usage and relieve congestion. AT&T implemented its changes in June, eliminating unlimited plans. Verizon, expected to follow suit, has not yet announced an official change but has indicated that changes are forthcoming.

The underlying issue in all three scenarios is that the providers are stubbornly avoiding investing in their own networks and instead employing workarounds to address issues. Rather than embracing the growth in the mobile world, they're effectively slowing it. It's only a matter of time before something gives, especially with 4G on the horizon. The first provider to take meaningful steps towards improving its core network and expanding coverage will quickly gain a significant edge over its competitors.
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Comcast-NBCU merger raises concerns among other cable providers

on Friday, August 20, 2010

Comcast's acquisition of NBCU has some rival companies concerned.The planned merger between Comcast and NBC Universal has come under fire from its critics one again.

The acquisition of NBC by the cable provider would be the biggest media combination in recent history, which has caused some to voice concerns about monopolies and corruption. Comcast, however, insists the deal is pro-consumer, in the public interest and shouldn't raise competition concerns. And with final responses during the Federal Communications Commission's comment period due this week, the debate is getting heated.

"In many cases, the claimed harms are nothing more than preexisting or industry-wide grievances that commenters are improperly re-airing in this proceeding," Comcast, the nation's largest cable provider, said of its detractors. "Many businesses and organizations who compete with or aim to extract unwarranted concessions from Comcast or NBCU are attempting to use the commission's review process to foist unprecedented and onerous burdens on the combined entity."

Other cable firms, including DirecTV and a small cable company lobbying group called the American Cable Association, have called for conditions that would prevent Comcast from migrating NBC's content to the internet or other channels and then restricting consumer access to it.

There are a number of other suggestions for conditions that would keep the deal fair. For one, the ACA requests that Comcast-NBCU would be required to sell NBC stations and regional sports networks to other carriers on a stand-alone basis rather than as a bundle. The Writers Guild of America has also proposed that at least 25 percent of all NBC's content after the merger be produced by independent entities.
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How to Deal with Life on a Budget

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I found this helpful article and thought it would be a nice read for a Friday afternoon. With the sinking economy and ever growing personal debt I’m sure all of are looking for ways to save money while still enjoying life outside the living room. I know I am, I love hanging at the house but for sanity’s sake we all need to get out once in a while.


The article gives some tips on how to get out and not break your bank account in the process.


1. Discipline your dining out. Try not to dine out more than once a week, but make it worth it when you do go out that one time. The article mentions seeking out happy hours and dinner deals. My suggestion also is to look for sites like phillyhalfoff where nice establishments offer half price deals. I use this particular site all the time and it can definitely save you money.


2. Look for deals and freebies. This one goes along with the phillyhalfoff website and takes it to the next level with coupons and other deals. The economy is hurting everyone, including small businesses. It is fairly easy to find deals such as a free appetizer with meal purchase or no cover charge on certain nights at the bar. One tip I like to mention, don’t be afraid to use this deals to their full potential, it seems silly NOT to try to save money.


3. Be upfront with your friends. Again, a good segway from my last statement. Most of your friends are likely in the same, if not worse situation financially. Between school loans, credit card debt, poorly negotiated car loans, and so on….. you should not feel like you have to hide your need for thriftiness.

Also, as mentioned in the article, fun does not always equate to breaking out the cash. There are plenty of free activities whether you live in a city or in a more rural community. You can usually find this information by simply searching on the Internet. So basically, enjoy your time off whether you are going to the museum or spending the weekend in Paris, just do it within a budget that makes you feel comfortable on Monday morning.

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General Motors must improve supply chain to stay competitive

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General Motors is working to improve its supply chain and stay competitive.Much-maligned General Motors is making a bid to shake the "Government Motors" nickname it earned after the bailout by filing plans for an initial public offering with the Securities and Exchange Commission.

Despite a global network of more than 21,700 dealerships, the company has been struggling to compete with foreign brands that are often perceived to be more reliable, less expensive or more luxurious. As a result, GM has made a lot of changes in its efforts at rebranding and staying profitable. The company has dropped four of its brand offerings - Saab, Hummer, Saturn and Pontiac - and now only offers models under the brands Chevrolet, Buick, GMC and Cadillac. It is also betting high with its all-electric model, the Chevy Volt.

In 2009, the company sold 7.5 million new and used vehicles, accounting for approximately 11.6 percent of worldwide vehicle sales. GM is the world's second-largest automaker, and the company will need a more efficient supply chain if it wants to compete with foreign car producers. It must ensure that its size doesn't interfere with its ability to produce quality cars for reasonable prices at an efficient speed, or it will never be able to maintain its market share.

In July, General Motors announced that it would be selling its steering wheel manufacturing operation to a Chinese firm. The move, which some called the biggest move yet by a Chinese company into the American auto industry, is designed to help the company increase its efficiency.
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Agricultural commodity prices on the rise in Idaho

on Thursday, August 19, 2010

Idaho is known for its agricultural products - the prices of which are finally on the rise.Good news for Idaho - prices for four of the state's most important commodities are on the rise.

Although Idaho is the 13th largest state in the nation by square mileage, it is also one of the most sparsely populated, with only 1.5 million people spread throughout the territory. By contrast, New York City alone is home to 8.4 million people. Much of the state's economy is driven by tourism to ski resorts such as Sun Valley and other attractions, including Yellowstone National Park. The rest of the economy is largely dependent upon farming.

Last year, prices for Idaho's agricultural commodities were depressed and the state's agriculture experienced its largest decline in cash receipts in more than four decades, according to the Idaho State Journal. Luckily, that's turning around - and this year, prices for dairy products, beef cattle, potatoes and wheat were all on the rise.

"It's certainly a lot better story than last year," was the guarded response of Greg Andersen, co-owner of Seagull Bay Dairy, a family-owned dairy that has 600 milking cows.

According to a study by the University of Idaho, agriculture generates $12 billion annually in sales - 11 percent of the state's total - and employs 17 percent of Idaho's workforce. The agricultural commodities that the state produces are essential the United States' food supply chain.
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AHA encourages industry-wide healthcare standard

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A recent letter encourages integration of the medical supply chain to prevent errors.In a recent letter to national health IT coordinator Dr. David Blumenthal, the Health Industry Group Purchasing Association and the Association for Healthcare Resource and Materials Management - which is part of the American Hospital Association - have teamed up to encourage federal officials to integrate two standards from the healthcare supply chain into electronic healthcare records and supply-chain management systems. The move would further protect against medical errors.

The two organizations argue that adopting an industry-wide standard regarding EHR and supply chain components would improve conditions for physicians and patients alike. Using systems like the Global Location Number to track the location of a product or service, along with the Global Trade Item Number, which identifies specific products and services, would also help speed the process of eliminating potentially harmful products from the supply chain in the unfortunate event of a recall.

"Today, manufacturers, wholesalers/distributors, suppliers, group purchasing organizations, hospitals, and physicians each record and track product information differently, opening the flood gates for medical errors that severely impact patient safety and the quality of care," the letter states. "Without data standards in this area, it is virtually impossible to efficiently recall devices and other supplies, and that can lead to grave injury and even death."

The letter goes on to call the adoption of industry-wide standards a "matter of great importance."

"Adopting these standards will ensure that medical products, services, and locations all have unique identifiers. The resulting supply chain improvement will translate into the delivery of improved clinical services, creating a tracking system for healthcare products and devices that will be traceable from 'product to patient,'" the letter continues.
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Coca-Cola names new leadership in the wake of bottler buyout

on Wednesday, August 18, 2010

Coca-Cola will buy its bottler in order to condense its supply chain.Earlier this year, Coca-Cola announced its intention to buy its largest North American bottling operation in order to streamline a complex supply chain and compete more effectively with soda rival PepsiCo.

In August of last year, PepsiCo announced its plan to incorporate its own two largest bottling operations for $7.8 billion. Even so, Coca-Cola remained staunchly opposed to such a merger, publicly stating its commitment to remaining separate from the other components of its supply chain.

Now, in what CEO Muhtar Kent called not a reversal but "an evolution" of strategy, changing consumer tastes have caused the soda giant to change its mind. Coca-Cola has recognized the need for cost-saving measures in a struggling economy where people are skipping luxury purchases like soda and those who still have disposable income are switching to healthier alternatives such as juice and tea in the wake of the health food craze.

Coca-Cola's deal will require the company to cash out its 34 percent stake in bottler Coca-Cola Enterprises, worth $3.4 billion, and assume $8.9 billion in debt by acquiring the company. The takeover, however, will allow the company more control over where its products appear and how much they cost, since it will control more than 90 percent of the bottling done in North America. PepsiCo's deal allows it to control only 80 percent of its own bottling.

Earlier this week, the Atlanta Journal-Constitution revealed Coca-Cola's plans for its new 30-person leadership structure in the wake of the merger, which will include 23 top Coca-Cola executives and six employees from Coca-Cola Enterprises.

The deal with Coca-Cola Enterprises, which Coca-Cola called "cashless," is expected to be completed by the end of the year.
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Handling challenges in the sustainable agricultural supply chain

on Tuesday, August 17, 2010

Sustainable agriculture relies on a sustainable supply chain.The agricultural supply chain that stocks the shelves of our grocers, feeds us in restaurants and puts food on our tables is one of the most complex and multifaceted in the modern world. This supply chain must handle the challenge of feeding hundreds of millions of hungry people every hour of every day without destroying the earth is relies on to grow - that's no small undertaking.

Unfortunately, in recent years, the techniques that were able to feed a smaller America can't cope with a global marketplace, expanding population and increasingly adventurous popular taste. Consumers have gotten used to eating fresh corn in the winter, apples in summer and lamb in fall - impossibilities in a local agricultural supply chain.

What's more, the agricultural supply chain has wreaked havoc on the natural order of our world. Commercial fishing has left the oceans depleted, crowded feedlots promote the spread of diseases such as e. coli and bovine spongiform encephalopathy (more commonly known as "mad cow"), the clean water supply continues to shrink and our current supply chain can't cope with a population that's expected to double by 2050, to name only a few of the issues.

The Sustainable Agricultural Partnerships conference, hosted last week in San Francisco by American Business Conferences, heralded a long-awaited shift in the agricultural supply chain. Growers, processors and suppliers are increasingly recognizing the need for a sustainable system. But how can they provide one to a public that expects to find fully-stocked supermarket shelves year-round?

"The agricultural system is not a factory," warned Kevin Rabinovitch, director of sustainability for Mars - manufacturer of M&Ms, Orbit Gum and Pedigree dog food, among other products. That means consumers may have to get used to seasonal products that can only be produced during certain times of year.

Getting competitors to come together to accept regulations that will likely slow their production and increase their costs is one of the most difficult challenges faced by proponents of sustainable agriculture. After all, modern agriculture - with all its machines, pesticides, carbon emissions and antibiotics - developed because it was the most cost-effective way of producing food. But agricultural businesses - and consumers - must accept that environmental sustainability could mean paying a little bit more for goods that are produced in such as a way as to leave a minimal mark on nature.

One way sustainability is being encouraged is through careful monitoring of carbon emissions, energy use and animal welfare, among other indicators of farm health. Keeping a close watch over the supply chain's various components can encourage different suppliers to band together to stay within acceptable limits for environmentally harmful emissions. When every company must conform to standards, no company can cut corners to get an edge.

Businesses should also recognize, however, that sustainable brands have a certain appeal to consumers. After all, thousands of shoppers pay more every day at chains such as Whole Foods for chickens raised humanely, produce grown without pesticides and herbs sourced from local producers. Promoting sustainable practices encourages grocery shoppers with disposable income to spend a bit extra on a product they know isn't damaging the world.

The biggest problem with the agricultural supply chain is the relative lack of flexibility for the farmer. Grain farmers, for example, make about the same amount of money on a bushel of corn than they did 30 years ago. While other components of the supply chain can adjust their prices to account for inflation and other factors, farmers simply can't. They rely on subsidies and cost-reducing measures to turn a profit.

In addition to industry-wide efforts to help small farmers, many major corporations have also independently reached out to the "little guys" in their supply chains. Dole, for example, has invested in helping to teach its banana growers new driving techniques, resulting in a 10-percent reduction in fuel consumption. Not only is this good news for the environment, it's great news for the banana growers: Dole's smaller suppliers have increased their margins, creating stability in the supply chain.
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Commodity prices could rise at the end of 2010

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Materials and Commodity CostsCommodity prices could be set for a major rise in the fourth quarter of 2010 that could last through 2012, reports the Financial Times.

According to Michael Shillaker, a metals and mining analyst at Credit Suisse, the rise could last two years or more and is likely to push mining shares higher. Evidence indicating that the Chinese economy has bottomed out could be the catalyst to drive commodity prices higher - similar to the improved performance of mining shares seen in 2001, 2005, 2007 and 2009.

Shillaker added that a rebound in China's economy in 2012 would likely be followed by growth acceleration and demand normalization in the rest of the world. As a result, commodities markets should remain structurally tight and prices high even after normalization.

Commodities including iron ore - a key component of steel manufacturing that is used in everything from motor vehicles to corporate structures - and coal - found in many medications such as aspirin and a major source of fuel - could breach all-time highs. In particular, copper, which is used in many electronics as a conductor, could see major gains.

"We still think that copper will reach $10,000 a tonne by 2012 and relatively simple supply-demand analysis supports this," Shalliker told the Times.
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Apple supply chain manager charged with accepting $1 million in kickbacks

on Monday, August 16, 2010

Apple's Paul Shin Devine is charged with 23 counts after accepting kickbacks from iPod part manufacturers. An Apple executive charged with managing the company's supply chain in Asia has been charged with accepting kickbacks.

Paul Shin Devine, Apple's global supply manager, has been arrested on charges of accepting more than $1 million from various components of the company's supply chain. The kickbacks allegedly came from a half-dozen suppliers of iPod and iPhone accessories, mainly based in Asia, who paid Devine to reveal confidential company information that helped them win Apple business.

The suppliers include Kaedar Electronics in China, Creslyn in South Korea and Jin Li Mould Manufacturing in Singapore.

Devine - along with Andrew Ang of Singapore - is charged with 15 counts of wire fraud, five counts of money laundering, one count of wire fraud conspiracy and one count of monetary transactions with criminally derived property.

For its part, Apple is independently suing Devine in U.S. District Court in San Jose, California.

"Apple is committed to the highest ethical standards in the way we do business," Apple spokesman Steve Dowling said. "We have zero tolerance for dishonest behavior inside or outside the company."
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Procurement costs must be cut as corporate spending dips

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Businesses look to cut procurement costs in a tough economy. If figures from Cisco Systems and IBM are any indication, the corporate spending that has driven the economic recovery in the United States could be headed for a slowdown.

Corporate investment is one of the few remaining sources of growth in the economic sector, as unemployment remains at its highest point in decades and government stimulus measures are quickly being drained of funding. According to President Barack Obama, 72 percent of the $862 billion stimulus program funds have been spent or obligated. The unemployment rate has remained steady at 9.5 percent.

"It's been business investment, particularly technology, that's been in the driver's seat" of economic recovery, said Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh. "Unless something else picks up the pace, it means the outlook for the economy is going to be that much dimmer."

Continuing the popular car metaphor, John Chambers, CEO of Cisco, told Bloomberg in a television interview that when high-level executives see mixed economic signals, "they're a little bit slower to put their foot down on the gas pedal, and they pick their foot off the gas pedal a little bit faster."

The decrease in spending means that companies will need to put more effort into sourcing their product components in a cost-efficient way. Cutting supply chain and procurement costs is one of the quickest and most effective ways that corporations can reduce costs and stretch available funds further.
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Japanese laptop and electronics manufacturer Toshiba has announced its intention to vastly reduce its procurement costs.

on Friday, August 13, 2010

Toshiba will reduce procurement costs to stay competitive.The company - which makes everything from computer chips to nuclear reactors - will reduce its procurement costs for various electronics components by 1 trillion yen, or $11.6 billion, over three years by switching to overseas providers. Toshiba is under intense pressure to cut costs in order to remain competitive with its Korean and Chinese rivals, as well as other Japanese technology companies with similar brand strength, such as Sony.

Overseas suppliers currently account for approximately 57 percent of Toshiba's manufacturing components. In order to cut costs, the company will source more than 70 percent of its supplies from abroad starting in April of 2010.

Cost efficiency is essential to electronics manufacturers, especially those selling to emerging markets in Asia. The Wall Street Journal also reports that Hitachi, another Japanese manufacturer, will compete with Toshiba by increasing dependence on overseas suppliers as well - reducing its own per-unit production costs by as much as 40 percent.

Toshiba is currently the world's second-largest manufacturer of NAND-type chips - used in televisions, computers, gaming systems and other consumer electronics - trailing only Samsung.
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UK Defense Secretary announces need for supply chain reform in government

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Defense spending will be cut in the UK by making changes to the supply chain.UK Defense Secretary Liam Fox issued a warning earlier this week stating that Britain will need to reduce defense spending by changing industrial supply chains and procurement methods.

"There is no doubt that in the past there has been a culture of mutual over-optimism on costs, timing and performance," Fox said. "We need much more hard-headed assessments in future programs."

Fox stated that constraints on public financing will likely limit the amount of money available to be spent on defense supply procurement, meaning that costs need to be cut somewhere in the supply chain. The Ministry of Defense, Fox added, will need to undergo drastic structural changes in order to find sustainable, less expensive procurement methods. A new defense industrial strategy is expected to be published later this year after the strategic defense and security processes are reviewed.

"The current defense programs are entirely unaffordable and the unavoidable reality is that change is coming," Fox stated.

That change is expected to be slowly implemented over the next decade. Some suggestions to reduce cost include improving the government-industrial relationship, increased outsourcing and programs that would help break the barrier between buyers and manufacturers.

According to Michael Burkett at AMR Research, the United States' aerospace and defense supply chains could also be affected by the aftereffects of the economic recession, although no official announcements have been made concerning efforts to reduce costs.

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To get help with reducing the costs of your supply chain, contact Source One.
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The butterfly effect of Steven Slater's JetBlue rant on 'personal supply chains'

on Thursday, August 12, 2010

Personal supply chains, like business ones, can get thrown off by one disruptionBy now, most people have heard about Steven Slater - the JetBlue flight attendant who unleashed a profanity-laced tirade on a rude passenger via the plane's intercom system, then grabbed two beers, deployed the emergency chute and slid to freedom. In fact, Slater has become something of a hero to frustrated blue-collar workers nationwide. And while JetBlue is undoubtedly breathing a sigh of relief that Slater's actions are being so positively received in the media, the effects of a "dramatic quit" like Slater's can be enormous for a supply chain.

Much like a business supply chain, a "personal supply chain" requires that a large number of separate components work together to create a desired outcome. For example, in order for a businessman to travel successfully, several things must go right. First, the traveler's car must start in the morning so that he can drive himself to the airport. Once he arrives, he must check his bags at the counter and print his tickets. Then he must wait for the aircraft to arrive, hope that the pilot can deliver him to his destination in a safe and timely manner, and hope that his rental car is ready. If any one of these elements fails to work, his trip will not be successful.

This supply chain is what some believe Steven Slater's rant disrupted.

One flight attendant, who asked to remain anonymous, spoke to Spend Matters' Sheena Moore. While the anonymous attendant didn't take issue with Slater's rant - or even the fact that he took a couple of alcoholic parting gifts with him - she called Slater's decision to deploy the emergency slide "indefensible."

The reason, she said, is because it creates a "domino effect" for other travelers' personal supply chains.

"There are all kinds of dangers associated with launching one of those slides, not the least of which is to the people on the ground. Someone on the ground could have been severely hurt, even killed, if they happened to be under that slide when it deployed," said the attendant.

More irritatingly, however, the deployment of the slide also forced the plane to be taken out of commission for at least a day, possibly longer.

"That plane was supposed to go places, people had tickets and schedules," said the attendant, and the slide's deployment meant that the plane was grounded for hours, even days or weeks.

"At a busy airport like Kennedy, that's a huge issue that creates a domino effect," she added.

The consequences could also be enormous for JetBlue. Unhappy customers may turn elsewhere to keep their personals supply chains from getting muddled, which may result in decreased revenues for the airline. Or, perhaps, the cult-hero status of Slater will encourage more passengers to fly with JetBlue. Only time will tell.
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Expanding wind farms present a sourcing challenge in the UK

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Wind farm supply chains can get complicatedThe supply chain was one of the most important issues discussed at the UK's Offshore Wind conference earlier this summer - specifically, how can the supply chain be adjusted and improved to provide all of the components necessary for increased wind turbine production?

Earlier this year, the UK government gave the go-ahead to begin developing some areas of the seabed for wind farms in the UK Crown Estate's Round 3, the third and most aggressive phase of land-leasing for alternative energy projects on the seabed, reports RenewableEnergyWorld.com. The result is a need for increased production of the various elements that make up the wind turbines - without sacrificing the quality that makes these energy sources so valuable and durable.

“Ramping up the supply chain with the necessary quality is going to be a challenge,” said Richard Reno, a senior executive at General Electric.

In order to produce the 32 GW of new offshore wind capacity licensed by the government, the supply chain will encounter new and unprecedented difficulties. Items will need to be sourced in higher numbers and faster than ever before. In addition, there are concerns about the readiness of the on-shore grid for the new flood of wind energy. Even so, speakers at the event expressed optimism concerning the positive impact of the new turbines.

Despite the popularity of wind energy in the UK, costs for developing wind farms have remained stubbornly high. As a result, supply chain concerns are further complicated by the need to reduce costs. However, a number of ideas are being tossed around that would help keep wind energy production profitable, reports RenewableEnergyWorld.com.

According to National Wind, a single wind turbine can produce approximately 2 megawatts of energy - enough to power 500 to 600 average-sized homes.
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Proposed law would give the FDA greater supply chain authority

on Wednesday, August 11, 2010

A proposed law would give the FDA more power to monitor the sources of drug componentsA new law proposed by Senator Michael Bennet of Colorado would increase the Federal Drug Administration's power over pharmaceutical manufacturers - but the bill's effectiveness could be undermined by the complexity of the drug supply chain.

The Drug Safety and Accountability Act of 2010, introduced earlier this month, would allow the FDA to issue recalls on drugs that it determines are dangerous or harmful. Currently, the FDA can only issue a warning concerning a drug's safety and recommend that the manufacturer issue a recall.

The bill would also permit the FDA to track increasingly intricate pharmaceutical supply chains and keep tabs on different drug component suppliers.

Complicated pharmaceutical supply chains mean that harmful or counterfeit ingredients can sometimes find their way into prescription drugs. For example, contaminated Heparin used as an anticoagulant slipped through the FDA review processes and killed 100 people in 2007 and 2008. Last year, there were a record 1,742 drug recalls - a 400 percent increase from 2008.

Bennet also states that up to 80 percent of the active components of U.S. medications are manufactured outside of the United States, where they may not meet American safety standards.

According to the Pew Prescription Project, nine out of 10 people would prefer that the FDA have greater power to recall potentially unsafe medication.
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New law works to eliminate conflict metals and create clean supply chains

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A new law aims to stop the flow of metals from conflict zonesA provision buried deep within the 2,300-page financial reform bill signed by President Barack Obama earlier this month will require private-sector companies to file an annual report with the Securities and Exchange Commission detailing the sources of their raw minerals - an effort to ensure "clean supply chains" for America's major manufacturing companies.

The provision is aimed at halting the flow of "conflict minerals" from the Democratic Republic of the Congo, a nation still suffering the effects of spillover from the Rwandan Civil War and a series of internal conflicts made worse by an inept government. Minerals that can be sourced from the DRC, such as tungsten, tin and tantalum, are commonly found in everyday objects, from cell phones to aircraft engines.

The law is taking aim at the supply chains of large companies, which sometimes choose to source minerals from nations like the DRC because the prices are so low. The goal is not to end the importation of minerals from the DRC, but rather to stop the demand for items mined in conflict zones, thereby putting an end to the human rights abuses that make those minerals so inexpensive.

For consumers that wish to avoid conflict metals, many electronics may now be labeled as "DRC conflict free" when their supply chains are certified clean.
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Hanesbrands shortens supply chain by acquiring GearCo

on Tuesday, August 10, 2010

Hanesbrands' acquisition of GearCo will allow the company to focus on outerwearHanesbrands has announced the acquisition of GearCo, a manufacturer of licensed apparel in college bookstores, for $55 million.

GearCo, known as Gear for Sports, sells logo apparel under several brand names - one of which is Hanesbrands' Champion label. In 2010, Gear for Spots had approximately $225 million in sales and a profit margin of more than 11 percent.

The acquisition is expected to spur an immediate increase in the value of Hanesbrands shares.

"We have significant growth synergies in both the collegiate bookstore channel and our existing retail channels and can take advantage of our low-cost global supply chain," said Hanesbrands CEO Richard A. Noll.

The company has recently renewed focus on its outerwear segment, including the Champion activewear brand, which has high profit margins. After the acquisition, approximately 20 to 25 percent of Hanesbrands' sales will be graphic apparel.

Based in Winston-Salem, North Carolina, Hanesbrands was spun off from the Sara Lee Corporation in 2006. The company manages several brands in addition to Champion, including Playtex, Barely There, Wonderbra and Bali.
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Department of Defense supply chain may be vulnerable to imitation technology

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Some counterfeit electronics may be slipping into government supply chainsGovernment supply chains may be vulnerable to infiltration of counterfeit parts, according to a letter written to Ashton Carter, the Undersecretary of Defense for Acquisition.

Senators Sherrod Brown of Ohio and Tom Carper of Delaware stated their belief in a letter dated August 6 that the Pentagon's supply chain is not secure enough to fully protect against imitation supplies. The counterfeit supplies, if used, could jeopardize the safety of American soldiers and undermine the effectiveness of American weapons.

Many of the counterfeit supplies that have been confiscated were electronic components, items such as circuit boards, chip sets and microcircuits.

"Counterfeit parts manufactured offshore not only hurt American manufacturing and competitiveness, but in this case, have the potential to put our military at risk and jeopardize our national security missions," said Senator Brown.

Although the Department of Defense has a procedure for eliminating defective supplies which do not conform to government standards, this system does not always spot counterfeit products. The Senators have urged the Department of Defense to keep closer tabs on its supply chain to prevent fake electronics from finding their way into American military products.
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Recycling Farmland for Electricity

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I recently read an article in the NY Times demonstrating California’s ability to take the lead in a green solution that can benefit homes and businesses. California has taken the initiative to take unusable farmland and convert the land to solar “farms”. For example, farmers and a public agency that supplies the water to farms have agreed to provide land for one of the world’s largest solar energy complexes. The EPA and other states are also considering using landfills and other toxic sites for renewable energy programs to avoid pushback from developers and environmentalists.

Utilizing the land for solar panels benefits the farmers. In some areas of California there is not enough water for all the farmers, so by leasing their land for solar panels they can transition their crops to other parts of their farm, reduce the amount of water needed, and lessen some of their debt load. The solar farms have the attention of large solar panel manufacturers hungry for the business. According to the article, if CA transitions 9,000 farm acres to solar panels that would generate 600 to 1,000 megawatts of electricity. To put that in perspective the article indicates that one megawatt is enough to power a Wal-Mart Supercenter. Of course this transition does not come without costs, and to accommodate the maximum usage from the solar panels private and public sectors should be prepared to contribute to make this a success.
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Toll Booths on the Information Superhighway?

on Monday, August 9, 2010

Google and Verizon have teamed up on a new proposal for the FCC being referred to as “Net Neutrality”. This proposal states that the government would have the power to enforce a kind of bill of rights for wired broadband users. Basically what they are trying to accomplish is to ensure that all Internet users have the freedom of access to any and all legal content on the Internet. This article from CNN Money indicates that providers such as Verizon, AT&T, etc. would not be able to put limitations on access to certain content. The proposal institutes a system of fines if violated.

What does this mean to the user? More costs of course! Providers would have to pay into the Federal Universal Service Fund to allow rural communities to have Internet access. Suppliers also have concerns that rising costs will inhibit their ability to upgrade their networks as needed. As consumers we know that when the suppliers’ costs rise, ours will as well. While we may or may not realize additional fees to access the Internet at home, this will permit small business owners more freedom from limitations to their websites. The ultimate goal seems to be aimed at providing for a more consumer driven Internet environment.

Of course nothing is in place yet, basically just food for thought!
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Supply chain concerns prevent Boeing from increasing aircraft production

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The Boeing 737 can't be produced at faster rates because of supply chain constraintsAs demand remains enormous even as ticket prices and fuel costs rise, aircraft manufacturer Boeing is looking to increase its monthly production of the 737 model airplane from 31 to 35. The company would like to produce even more, but is limited by the constraints of its supply chain.

According to Boeing CEO and president James McNerny, market research indicates that there is a clear upside to increased 737 production, but "the supply chain is the key question."

"If the supply chain is committed and capable [to build more 737s] you will see further movement," he added.

Boeing's suppliers face a number of issues in attempting to ramp up production of the commercial aircraft. Some would need to invest in more tools or larger facilities, others would need more training for employees and others would require new or edited contracts with the company.

Boeing's supply chain was further complicated earlier this year after one of its Japanese suppliers, Koito, admitted it had fabricated test results on as many as 150,000 seats on 1,000 aircraft.

The Boeing 737 has sold more than 5,000 units, making it the most popular commercial passenger jet airliner of all time.
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