Volvo to cut back on smaller suppliers

on Friday, October 29, 2010

Volvo to cut back on smaller suppliersThe economic downturn is affecting everyone, and companies looking to cut costs are searching high and low for places to trim the fat. For at least one company, that may mean pruning down the size of its supply chain.

Volvo Cars, the Swedish automaker owned by China's Zhejiang Geely Holding Group, may cut its supplier base by as much as 33 percent, purchasing chief Bernt Ejbyfeldt told Bloomberg this week.

Volvo, which currently works with approximately 450 suppliers, is looking to reduce costs and simplify manufacturing by cutting that number down to around 300. The company's 20 largest suppliers, which provide it with almost 70 percent of its parts, stand to gain from the change, while smaller European suppliers will be slowly phased out. The process, which has yet to begin, is expected to take three to four years.

"We have a lot of small suppliers, and we want the right ones that will focus on us as a company," Ejbyfeldt said.

Volvo hasn't turned a profit since 2005, but recent marketing stunts in movies such as the famous "Twilight" series are hoping to reverse that trend. Volvo CEO Stefan Jacoby seeks to double sales to 800,000 cars annually over the next decade as the company rolls out new models for many of its automobile lines.
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PwC warns of pharmaceutical outsourcing problems

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PwC warns of pharmaceutical outsourcing problemsPricewaterhouseCoopers has some stern words for pharmaceutical companies looking to move their supply chain operations overseas. The practice, which is becoming increasingly prevalent as emerging economies look to purchase a bigger share of commercial medications, creates a "risky supply chain environment," analysts warn.

According to a recently commissioned study from PricewaterhouseCoopers and healthcare analyst firm Axendia, half of pharmaceutical and life sciences executives said they see raw materials sourced outside of the U.S. as the greatest vulnerability to the supply chain, with 61 percent reporting that contaminated or nonconforming raw materials are the top threat to the industry.

Emerging economies in countries such as China, India, Mexico and Brazil are becoming the most attractive places in which to sell medicines, the report found, and companies are looking to move overseas to capitalize on these markets.

"With manufacturing, sourcing and the sale of medical products expected to increase dramatically in the emerging markets, the geographical expansion of the supply chain will make it more difficult to manage, as will the industry's changing product mix," explained Wynn Bailey, pharmaceutical and life sciences advisory services partner at PwC. "In order to meet the demands of globalization, the pharmaceutical supply chain will need to become much more flexible, with different manufacturing routes and distribution channels for different kinds of products. Companies will need to implement new strategies, processes, and technology to proactively reduce and control risks."
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Some Tips for Business Relationships…and Life

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I’m sure you all get tips on relationships all the time, from platonic relationships to not-so-platonic relationships. But did you ever consider taking the advice and applying it to your business relationships as well?

An article on cnn.com talks about 5 ways to win people over. These tips are universal for business and personal relationships so I thought I would share them and my thoughts on them.

1. Puncture your own ego. This tip basically advises people to be aware of the way you treat other people in terms of modesty and knowing what skills and talents you possess. In other words, don’t walk round acting like you know it all and cannot be wrong. When working with suppliers it is important to know that in most cases they may have more expertise in the industry than you, after all they do this for a living. Always be open to learning new things but do not seem too na├»ve, it may make you appear more inexperienced than you are and lead to a loss in leverage.

2. Don't be needy. Just like it states in the article, “If I get the feeling that a person desperately wants something from me (not including one of my kids), I am more reluctant to give it up”, people will be less willing to listen or help you if you appear desperate. Obviously you can see how this would apply in your personal relationships but as far as business is concerned keep in mind that business relationships can more often than not be mutual beneficial. Suppliers want your business as much as you want their products and services.

3. Tell someone (nicely) what she/ he have to lose. Focus on the opportunities as well as the loss in opportunities when approaching a business proposition. If you go with option A you gain this but what do you lose from option B? Always factor in all sides of the equation instead of gearing towards the positive.

4. Throw a curveball in conversation. This can be taken several different ways. When you find that you are especially challenged in a business situation, or a personal one for that matter, instead of hitting the wall head on over and over, find a way around that wall (or at least that’s what I heard once from someone). There is almost always another approach to a difficult situation. Brainstorming with other team members also can be helpful. I personally find this to be one of the best ways out of a problem. Other people can see things from a different and sometimes clearer perspective.

5. Reiterate the other person's argument. By repeating what the other person has said you have acknowledged them and made them feel heard. This is important in business because when dealing with suppliers it can be easy to get lost in the process of things. Keep in mind that you are dealing with human beings and your approach should remain somewhat human while still pursuing your goals.
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Company works to reduce solar module manufacturing costs

on Thursday, October 28, 2010

Company works to reduce solar module manufacturing costsA solar manufacturing company that has contributed significantly to reducing solar energy manufacturing costs has announced that it has raised $20 million in a second round of financing.

The firm, called 1366 Technologies, developed a technique for producing crystalline silicon wafers that can drastically lower the cost of producing solar modules, making the energy-saving panels more affordable for more businesses. The company's Direct Wafer process can reduce the cost of manufacturing silicon wafers - a major component of solar modules - by as much as 80 percent, according to Greentech Media.

"During the past two years, we have kept our cash position strong and focused on solving the key manufacturing challenges in silicon photovoltaics," said 1366 Technologies CEO Frank van Mierlo. "We've managed expectations and steadily built our credibility. Now, with this investment, we're moving towards manufacturing. Our goal is to bring our transformative Direct Wafer technology into production and deliver the manufacturing innovations that will make solar electricity cheaper than coal."

Reducing the cost of technologies such as solar energy is crucial to widespread adoption of these energy-efficient, eco-friendly systems. However, the green technology industry is under siege, especially in California, where it has traditionally been a major force. A proposal on the state's ballot would suspend the Global Warming Act of 2006 and severely impact green tech companies.
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More than 70 percent of businesses experience supply chain disturbance, study finds

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More than 70 percent of businesses experience supply chain disturbance, study findsA new study has revealed that corporate supply chains may not be as secure as companies want them to be.

According to a recent report released by the Business Continuity Institute, 70 percent of companies report experiencing at least one supply chain disruption in 2010.

The survey spoke to businesses in 35 countries across 15 industries and found that severe weather was the most common cause of supply chain delays and interruptions - 53 percent of companies reported problems due to snow, rain, wind, heat or other adverse weather, up from 29 percent last year. Another common problem in supply chain operations was unexpected IT and telecommunications outages, which affected 35 percent of the organizations surveyed.

For 20 percent of these businesses, the supply chain interruptions caused damage to their brand or reputation and another ten percent suffered significant financial losses.

The study also revealed that trying to cut costs by operating in inexpensive countries was a major predictor of supply chain disruptions. Of the businesses that had shifted production to low-cost countries, 83 percent suffered some kind of supply chain problem, mostly issues with transport networks and supplier insolvency. 
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UK report identifies causes of high infrastructure costs

on Wednesday, October 27, 2010

UK report identifies causes of high infrastructure costsThe cause of high infrastructure costs in the UK may be due in part to a fragmented and inefficient supply chain.

According to the UK government, infrastructure costs in the UK are higher than most other industrialized nations and are among the highest in Europe. Now, in an update on the Infrastructure UK cost review released by the Treasury this week, government officials have identified seven reasons why the UK may be experiencing such high prices, Construction News reports.

For one thing, the UK's private sector construction industry is not structured to optimize efficiencies and maximize benefits through its current supply chain practices. This poorly-designed supply chain is responsible for at least a portion of the disproportionately high infrastructure costs in the UK.

Other issues contributing to the problem include stop-start investment, the time and planning spent on standards and regulation compliance, poor commissioning and ineffective cost management.

"The interim findings of the cost of civil engineering survey appear to be very encouraging, endorsing a number of long standing targets for change," said Rosemary Beales, national director of the Civil Engineering Contractors Association. Working to apply the changes suggested by the report "to the roads program and other areas of publically funded infrastructure should be a central proposal in the final report which we hope will be carried through into real reform," she continued.
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Supply Chain Council announces Supply Chain Excellence award winners in Munich

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Supply Chain Council announces Supply Chain Excellence award winners in MunichThe Supply Chain Council, a global nonprofit logistics group, has announced the winners of its 2010 Awards for Supply Chain Excellence at the Supply Chain World Europe conference in Munich this week.

Among the winners was Infineon Technologies AG, a technology company which received the Award for Supply Chain Operational Excellence and the Global Award for Supply Chain Excellence. Meanwhile, the Research Center on Logistics and After-Sales Service at the University of Bergamo in Italy, along with its Department of Industrial Engineering, were the recipients of the Award for Supply Chain Academic Excellence.

"As this year's winners of the Supply Chain Council Excellence awards have once again demonstrated, superior supply chain performance is essential for meeting business performance and financial goals," said Joseph Francis, the executive director for Supply Chain Council. "It takes a real team effort to make sustainable performance improvements across department and organizational boundaries. We commend the winners for their achievements and for sharing their knowledge and application of SCOR with the supply chain community."

The Supply Chain Council awards are presented with the aim of encouraging the advancement of supply chain management techniques and the sharing of that information between organizations. 
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Contract Management 101 - Why is it Important?

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Once a contract is executed and pricing is in place, sourcing professionals will often put the new agreement in a filing cabinet or pass it on to legal and move on to new projects. Time goes by and the contract gets lost in the shuffle, or the person who executed the agreement changes position or leaves the company and fails to transfer responsibility. The contract is forgotten about until the next time sourcing is discussed, or until the supplier calls and indicates the contract is set to expire next week and you will be placed onto a retail rate schedule if the agreement is not renewed by then. No one is in charge of keeping track of expiration dates or contractual obligations. In fact, in many organizations I work with, simply identifying the number and type of commercial commitments that exist can be a daunting task.

There are several reasons why buyers should keep good track of commercial commitments. If you are a publically traded company, the Sarbanes-Oxley Act passed by Congress in 2002 requires that signing officers of a company must certify they are responsible for establishing and maintaining internal controls when disclosing financial information, which makes them liable if financial information is incorrect. Without easily identifying the number and type of contracts in place, and the pricing and obligations tied to those agreements, signing officers cannot reasonably provide assurance that financial disclosures are in fact accurate and correct.

Beyond reporting to shareholders and complying with federal regulations, there are more obvious reasons why contract management is important for a sourcing professional. First, from time to time disputes may arise due to unclear scope of work or unfamiliarity with obligations. Having contracts handy and reviewing them periodically will ensure both you and the supplier are complying with all contractual obligations. Second, suppliers often fail to honor pricing commitments made in the agreement. If you do not have a copy of the contract readily available, it will become difficult to audit invoicing and verify the correct pricing is being charged.

Lastly and most importantly, contract expiration dates and renewal clauses should be closely reviewed and tracked so you can address renewals in a pro-active manner. Relying on the supplier to alert you of contract end dates puts the pressure on you for renewing the contract or falling back to retail or inflated rate schedules - this pressure works in favor of the supplier. Keeping track of end dates can help you plan sourcing initiatives and renewal strategies for the next contract term well in advance and without time constraints. Removing the pressure of time puts the leverage back in your favor, as you now have the bandwidth to request pricing and proposals from alternate suppliers, work internally to identify issues and new develop new requirements, and create a renewal based on changes in in your business needs and forecasts. Essentially, it gives you a chance to do your homework before reacting to a potential expiration.

Tracking expiration and renewal clauses can be as simple as creating a spreadsheet with start and end dates of contracts and other important terms and reviewing it on a regular basis, or putting a reminder on your calendar for the appropriate time. However, neither of those solutions will help if roles and responsibilities shift within your organization. More collaborative toolsets are available that can help you manage contracts. These tools allow you to setup rules to run reports on expiring contracts or receive emails indicating when contracts are due to expire. Some of these tools are freely available on the web, such as on WhyAbe.com (http://www.whyabe.com/contractindex.php); others may require a subscription fee. Regardless of how you track contractual obligations and contract expiration dates, contract management is essential to ensure your next sourcing initiative is as successful as your last.
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Department of Homeland Security expresses concerns about software supply chain

on Tuesday, October 26, 2010

Department of Homeland Security expresses concerns about software supply chainThe United States government could be rating software manufacturers according to the various components of their supply chains, a homeland security official said earlier this week, according to FierceGovernmentIT.

"There are suppliers in that chain who are people we would not allow into our facilities, but we're just going to take their software and install it? Anybody understand that there's a problem with that?" asked Joe Jarzombek, director for software assurance and global cybersecurity management within the DHS National Cyber Security Division, at a recent leadership conference.

Because government software handles such sensitive and private information, trust must be established with every vendor, manufacturer and parts supplier in the supply chain. However, the ratings aren't intended to blacklist certain vendors - instead, they are designed to identify the suppliers that "require a little bit more due diligence and therefore risk management," Jarzombek explained.

There are a number of security provisions already in place on government software, but John Gilligan, president of the Gilligan Group and a former Air Force chief information officer, said that many suppliers fail to comply with them and the standards are not very strictly enforced.

"Why would you ever buy a product with security features not turned on?" he said.
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ABC Fine Wine & Spirits to improve customer experience, supply chain

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ABC Fine Wine & Spirits to improve customer experience, supply chainRecently, ABC Fine Wine & Spirits announced plans to expand its wine selection and provide a better shopping experience for its customers, in part by optimizing its supply chain.

ABC is America's largest private alcohol retailer. It boasts nearly 150 locations, 1400 employees, a private delivery fleet, a 200,000-square-foot distribution center and an internet warehouse. Now, ABC will begin offering increased services, including gourmet foods, gift baskets, hand-rolled cigars, high-end spirits and even rentable wine vaults, in addition to larger stores and a greater selection of alcoholic beverages.

To deal with the anticipated increase in traffic, the beverage retailer is working on its supply chain.

"It was easy to handle just a few thousand SKUs without an optimized system, but when it goes from 2,000 to 6,000 items it gets tougher to manage," explained Joe Hults, distribution center IT and support manager for ABC Fine Wine & Spirits. "You have to have a more holistic view of inventory and new structures to support all phases of your operation." 
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Rare earths prices on the rise

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Rare earths prices on the riseChina recently reduced its export quotas for rare earths - minerals, metals and their oxides.

"Rare" earths is something a misnomer. Rather than being rare in a traditional sense, the minerals are very widely dispersed throughout the soil and require tedious, labor-intensive mining to be uncovered.

Prices are on the rise as the market responded to China's announcement by nervously hiking up costs and manufacturers that use the products began hoarding their supplies. Rare earths are crucial in the manufacturing of dozens of items, such as the magnets that go into everything from hard drive heads to smart bombs, the phosphors used in many LEDs and fluorescent lamps, the slurries used for semiconductor polishing, components that go into hybrid car batteries and the dopants that are often used in lasers and other optical components.

The market worldwide for rare earths exceeds $1.3 billion, or approximately 124,000 metric tons - and nearly all of it, 96.8 percent, comes from China. India, Brazil and Malaysia make up the remainder. The reason for this isn't that China has more rare earths than elsewhere, but that China can produce them more cheaply.

"We have allowed the Chinese to bankrupt our local rare earth industries," Tom Valliere, senior vice president at the San Francisco-based Design Chain Associates, told EETimes. "We shut down our own mine in the U.S. We can rebuild that, but it will take time."

The price hike could have serious implications for the U.S. military, which is heavily dependent on rare earths, Market Oracle predicts.
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Rise in price of plastics, oil drives up cost of non-prescription drug packaging

on Monday, October 25, 2010

Rise in price of plastics, oil drives up cost of non-prescription drug packagingKey commodity costs involved in the manufacturing of over-the-counter non-prescription medication have risen sharply over the last few years, Procurement Leaders reports.

Specifically, the cost of the plastic materials that go into making blister packs, plastic bottles and other drug packaging have risen by "double digits" over the past two and a half years, according to the consulting and research firm Kline & Company.

Data from the group's recently published report, "OTC Drugs: U.S. Competitor Cost Structures 2010," indicates that the rise in the price of oil and other raw materials that go into packaging components is driving up production and distribution costs by a significant amount.

"The decreased availability of resins has caused costs of packaging materials to increase by 10 to 15 percent since 2007. There is little room for improvement in cost structures of most branded companies, apart from international sourcing of raw materials from countries including China and India," the study revealed.

Plastics aren't the only thing driving up the cost of OTC drugs, however. The report notes that "[a]dvertising and marketing expenses continue to represent the largest cost components," although many drug companies cut their advertising budgets in the wake of the economic crisis.
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Sainsbury's invests in rural supply chain

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Sainsbury's invests in rural supply chainUK supermarket Sainsbury's is investing in rural supply chain and encouraging farmers to adopt sustainable practices.

The British grocer is investing £40 million - approximately $62.9 million - over the next three years in its farming "development groups," an initiative designed to work with farmers covering different product areas such as meat, produce, milk and grain, the Telegraph reports.

Justin King, CEO of Sainbury's, said that one of the project's goals was to disprove myths about the way supermarkets treat small suppliers. Too often, grocery chains become "convenient bogeymen" when farmers are looking for a scapegoat, King told the paper.

"Too often you will hear farmers say 'supermarkets are doing this.' But we are not," he explained. "By reaching round, we are showing farmers that we really don't have two heads."

The investment will go toward providing IT resources for farmers, ordering benefits such as vet bill payments and training courses and improving infrastructure and efficiency within the supply chain. In addition, farmers will be eligible for a cash bonus if they adopt "good agricultural practice," meaning eco-friendly and sustainable farming techniques.

Sainbury's is the third-largest grocer in the UK by sales. 
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Improved UPS supply chain leads to increase in revenue

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Improved UPS supply chain leads to increase in revenueThe United Parcel Service has revealed an increase in operating margin from 5.5 percent to 8 percent for the third quarter, coinciding with the release of an appropriate new advertising campaign with the slogan, "We Heart Logistics."

The campaign, unveiled last quarter, is UPS's first coordinated global advertising effort. According to the company, the print, television and radio ads are designed to demonstrate the power of logistics - to increase efficiency, drive up profits and cut costs - to businesses across the globe.

UPS's sales were up 19 percent to $2.23 billion, Supply Chain Standard reports/ UPS Freight revenue grew 14 percent, due to improved yield and increases in the amount of weight hauled. Overall, total group adjusted operating profit increased 77 percent to $911 million, with revenue growth of 12.7 percent.

The company's profit margin is currently 6.92 percent, according to the New York Stock Exchange.

"UPS once again exceeded expectations due to superior execution across all business units and our ability to provide solutions that create value for our customers," said the group's chairman and chief executive, Scott Davis.

Headquartered in Georgia, UPS delivers more than 15 million packages every day to 6.1 million customers in more than 200 countries and territories.
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Holiday Supply Chain - Help Wanted!

on Friday, October 22, 2010

With unemployment rates so high companies should not have too much difficulty filling those open seasonal positions. Where can you get the details? Well, apparently Twitter is joining in on the job finding fun! Companies like UPS, Crate and Barrel, and Kohl’s are advertising open positions on Twitter along with the many other job seeker sites. According to an article on cnnmoney.com, companies are having a lot of success with this new approach. In fact, they even anticipate a seven to eight times increase in traffic on the job site because of the new outlet. So get out there and follow any prospective companies you are interested in. In fact, follow Source One on Twitter for all of your sourcing needs at http://twitter.com/getsavings!
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Procurement Pitfalls

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There are myriad of statistics available to suggest that only a small percentage of projected benefits from a given procurement initiative are actually realized. Worse than this, many procurement projects are “indefinitely postponed” or abandoned altogether. From the purchase of Air Force Tankers to improving the process of buying nuts and bolts, no procurement initiative is safe from the all-too-common fate of being derailed or permanently placed on the shelf. Below are some common procurement pitfalls and tips to prevent purchasing professionals from falling victim.

Corruption
While every company will surely tell you they take all precautions they can to avoid conflicts of interest, the procurement arena is fertile ground for “gray areas”, “exceptions to the rule”, “shady business”, and flat-out kick-backs. From suppliers that will subtly wine –and-dine, to those who will lay a bribe right on the table, most procurement professionals will find themselves in some sort of compromising situation throughout their career. Having anti-corruption policies in place just is not enough. As the saying goes, “On a long enough timeline, the loser will win and the honest man will lie.” It is important that companies create a procurement infrastructure that fosters accountability, measures outcomes, and creates a system of checks and balances. Though it is a sad fact, greed will often prevail if left unchecked.

Bureaucracy
While corruption is a pitfall more malicious in nature, bureaucracy is far more common and just as nauseating. I recently had the privilege of hearing Bill Clinton deliver the keynote speech on project management at the PMI Global Congress. One of the key themes in his address was that the success of a project rests not in lofty ideas and political interests within the company, but in the ability of people to define a goal, create a plan, and execute that plan. While red tape is certainly a necessity to keep organizations in line, the “cover-yer-rear” mentality in bureaucratic organizations creates dysfunction that impedes productivity and stymies cross-functional synergies. If a procurement initiative is going to be a success, it must be given the priority it deserves across the organization from top to bottom. It is important that leaders in the organization communicate the message that the organization-wide value of the project’s success trumps any personal or departmental agendas.

Data Accessibility
When the strategy for a procurement initiative is originally developed, leaders often make assumptions about the data they will be able to gather, synthesis, and put to use. Even today, with all of the highly advanced information systems, many companies find themselves in a situation where their data cannot be as easily converted into workable information as they had originally assumed. Sometimes systems don’t speak to each other the way we’d like. Sometimes data is inconsistent, and sometimes the data just isn’t as robust as we would like it to be. To prevent this, managers making the initial strategic decisions need to familiarize themselves with their organization’s systems and its ability to manage data. After an honest assessment of an organization’s data utilization capabilities, it may prove wiser for some companies to engage in an information systems overhaul before even considering taking on a project that is data-intensive.

Sloth
I purposely left incompetence off of this list. In its most empirical form the term “procurement professional” assumes that the person in the position, at the very least, has the competence to cultivate a fundamental understanding of the things a given organization may purchase. If you ever hear a procurement guy say “it is what it is” or tell you there’s “no way of knowing”, they are really saying, “I don’t feel like understanding the nature of a situation” or “I don’t feel like coming up with a plan to extrapolate the data and make the necessary assumptions”. Too often procurement projects stall because someone makes a convincing enough case that they have tried everything they could to figure out an “unsolvable” problem. The truth of the matter is that admitting any problem within an organization is “unsolvable” is just plain ludicrous. With enough critical thought, effort, and commitment any problem can be solved.
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McDonald's to raise prices to reflect increase in commodity costs

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McDonald's to raise prices to reflect increase in commodity costsMcDonald's, a brand that's practically synonymous with value, is set to raise its prices later this month.

Joining a series of other brands, including Starbucks, Kraft and General Mills, McDonald's may need to increase the cost of some of its popular menu items in order to cope with rising commodity prices. The fast-food chain is hit especially hard by an increase in the prices of wheat, which goes into its hamburger buns, and corn, which, because it goes into cow feed, directly affects the price of beef.

Commodity prices are expected to increase by 2 to 3 percent in 2011.

The price increase will be McDonald's first in more than a year. So far, the company has staunchly refused to hike up the cost of its menu staples in order to remain competitive with rival fast-food chains, such as Wendy's and Burger King. Now, however, the giant will be forced to pass some of its rising expenses onto its customers.

Even so, McDonald's CFO Peter Benson isn't too worried.

"We'll actively look at the opportunities and with some optimism, the economy will get stronger next year and we'll get price increases," Mr. Bensen told the Wall Street Journal.
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Pfizer to acquire King Pharmaceuticals

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Pfizer to acquire King PharmaceuticalsMajor pharmaceutical provider Pfizer has announced the acquisition of King Pharmaceuticals in a deal that will streamline Pfizer's ability research, develop and deliver medicinal drugs to patients around the country.

Pfizer will acquire the Briston, Tennessee-based King in a deal worth $3.6 billion. The two parties are the midst of a "definitive merger agreement," said Pfizer CEO Jeffrey Kindler, that will allow the provider to "offer a fuller spectrum of treatments for patients across the globe who are in need of pain relief and management."

"The revenue generated by King's portfolio will further diversify Pfizer's business, while at the same time contributing to steady earnings growth and shareholder value," Kindler added.

The deal was spurred by the impending patent expiration on one of Pfizer's most profitable drugs, Lipitor. As the cholesterol-lowering medication's formula is set to become public, Pfizer is looking for new ways to generate revenue.

Pfizer will tender an offer for all outstanding shares of King later this week. 
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Supply chain students fare best in the job market

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Supply chain students fare best in the job marketRobert Mittelstaedt, dean of the W.P. Carey School of Business at Arizona State University, spoke with Bloomberg earlier this week about the prospects for business school graduates - and it turns out, studying the supply chain is one of the best ways to guarantee employment upon graduation.

According to Bloomberg, although business school admissions have become less stringent, graduates face a difficult job market. Last year, one of six MBA degree holders did not have a job by the end of the summer following graduation. However, students majoring in one very specific field - supply chain management - fared better than their classmates.

Mittelstaedt told Bloomberg that 100 percent of the supply chain management students who graduated from Arizona State's W.P. Carey School of Business found a job almost immediately after leaving school. That's especially impressive considering that Carey is the largest business school in the country by enrollment.

Even students who didn't major in supply chain management did better than students at other business schools: Carey boasts an 89 percent job placement rate.
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General Mills, Kraft forced to raise prices to offset commodity costs

on Thursday, October 21, 2010

General Mills, Kraft forced to raise prices to offset commodity costsGeneral Mills will soon be forced to raise the prices on some of its cereals and baking ingredients after a drought in Russia drove up the commodity costs of wheat and a corn shortage resulted in higher grain prices.

The company has assured customers that the price increase will be in the "low-single-digits," but it will take effect within the next couple of weeks - likely by November 15. Products affected will be some cereals and some baking necessities, such as flour and baking mixes. The company has declined to name specific brands that will be subject to the increase, although for some products, it will be the first price increase in more than three years.

Kraft Foods has also announced that some of its products will soon be getting a bit more expensive. The company said that it would be selectively increasing prices on some items - though it did not name specific ones - in order to offset rising commodity costs.

Consumers could soon be seeing an increase across the board on many of the items they purchase every day, due to increased commodity costs on everything from corn to meat to cotton. Even Starbucks has announced that it will be raising prices on some of its more "labor intensive" drinks due an increase in the cost of green coffee beans.
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Domino's Pizza reports revenues

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Domino's Pizza reports revenuesDespite increased commodity costs and higher volumes across its supply chain, Domino's Pizza is reporting an increase in revenue during the third quarter of fiscal year 2010.

The pizza chain reported a 14.8 percent boost in its revenues compared to the same period last year, even though shortages and increased demand caused price hikes for many of the ingredients required to make its signature dishes. Additionally, the company's domestic same-store sales rose 11.7 percent during the same period.

"Robust sales volume ... drove positive results in the company's domestic supply chain business," the pizza company stated, adding that revenues increased "due primarily to higher volumes and commodity prices in supply chain, higher same store sales in both domestic and international stores and store count growth in international markets."

"Despite these tough economic times, we continue to outperform the majority of the restaurant industry due to our energized domestic business and our powerful international division," said J. Patrick Doyle, Domino's president and CEO.

Domino's recently launched an aggressive ad campaign touting its new pizza recipe and encouraging skeptics to give the chain another chance.
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Supply chain efficiency more important than ever, survey finds

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Supply chain efficiency more important than ever, survey findsA recent study has indicated that efficient, lean supply chains were key in helping businesses survive the 2008 economic crisis.

According to a survey conducted among supply chain executives in more than 20 different industries this year by CSC, Supply Chain Management Review and the Eli Broad Graduate School of Management at Michigan State University, with assistance from The Council of Supply Chain Management Professionals and Supply Chain Europe magazine, businesses rely on supply chain efficiency to provide frugal customers with the most cost-effective products and to reduce their own operation costs and continue turning a profit.

When asked about the importance of supply chain management in the years since 2008, 78 percent of business leaders reported maintaining lean and efficient supplies was more crucial than ever.

"The lessons on how businesses survived a serious economic downturn are becoming more evident," said Brad Barton, CSC's supply chain practice leader. "To reduce costs, business leaders went directly to their supply chains, working with key suppliers to reduce cycle times and increase revenues with their best customers." 
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Speculation rampant about release of smaller MacBook Air

on Wednesday, October 20, 2010

Speculation rampant about release of smaller MacBook AirApple is set to make a series of announcements at its Back to the Mac conference today, October 20th, at 10 a.m. PST - one of which might be the release of a new notebook computer to complete its line-up of personal computing devices.

The Cupertino, California-based company may be adding a new computer to its line of laptops - a MacBook Air featuring an 11.6-inch display, with parts to be sourced from various supply chain components that are already instrumental in providing pieces and assembly for other Apple products, including iPods and iPhones. The smaller MacBook Air model - the line already features a notebook with a 13-inch display - is meant to fill the gap between the 9.7-inch iPad and the larger line of MacBook computers, whose top-of-the-line model boasts a screen size of 17 inches.

Sources from the notebook supply chain are speculating that the new MacBook Air, if announced, would likely be manufactured by both Foxconn Electronics and Quanta Computer, since the two firms are currently Apple's major assembly partners.

Foxconn, a subsidiary of a Taiwanese company, has been in the news recently after a rash of worker suicides at its southern China plant. The company has quoted higher prices to many of its partners, including Apple, in an effort to provide better living conditions for its employees.
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Dow establishes supply chain center in Northern Ireland

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Dow establishes supply chain center in Northern IrelandThe Dow Chemical Company has announced that it will be establishing a new supply chain center.

The Dow Design & Modify Supply Chain Center will be located in Belfast, Northern Ireland, and is designed to help the company's supply chain remain agile and respond to emerging social trends, economic changes and customer needs around the world.

Belfast was selected as the site of the new center due to its high concentration of engineering graduates, Northern Ireland's collaborative approach to government, academia and business and its centralized location relative to the rest of Europe, Africa and the Middle East, where Dow does much of its business.

"Selecting Belfast as the location for the expansion of our global supply chain organization is a meaningful example of our commitment to strategic investments that support our long-term business objectives while also enabling us to have a positive impact on a region and community," explained Andrew Liveris, CEO and chairman of Dow.

"As a world-class global manufacturing organization, having a world-class infrastructure and supply chain capability is absolutely critical to our business," added Dave Kepler, executive vice president of business services, CIO and CSO at Dow. "This Supply Chain Center in Belfast will help us continue to find ways to reduce time to market, speed delivery to our customers and lower costs. We're pleased to strengthen our presence in a community with world-class intellectual talent."

In 2009, Dow's sales exceeded $45 billion and the company employed approximately 52,000 people worldwide. Dow manufactures more than 5,000 products at 214 sites in 37 countries across the globe.
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Northeast-NStar merger will add jobs, not eliminate them

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Northeast-NStar merger will add jobs, not eliminate themNortheast Utilities and NStar will soon be merging to create one of the largest power utility companies in the United States, boasting a combined value of $17.5 billion.

Despite the behemoth that will result from the companies' merger, Michael Durand, a spokesman for the NStar, has sworn that its 20,000 customers on Cape Cod and Martha's Vineyard won't see a drastic increase on their electricity bills.

In addition, Durand added that the merger will not result in any layoffs. Rather, the increased capital will allow the companies to push forward with $9 billion in infrastructure projects over the next five years.

"The merger is about growth, not about job elimination," Durand said, adding that the proposed infrastructure projects would create jobs, rather than destroy them.

The merger could also prove to be a boon for wind farms on the Massachusetts islands, although no promises have been made. Currently, state law requires that power utilities such as NStar and Northeast Utilities get 3 percent of their power from renewable energy sources, such as Cape Wind. However, NStar has not negotiated with Cape Wind for a while, Durand stated - although he added that the renewable energy represented by hydropower it imports from Quebec does not preclude the company from entering into an agreement with Cape Wind.

The NStar-Northeast merger is not the only utility merger in the works. Allentown, Pennsylvania-based PPL has agreed to buy Louisville Gas & Electric and Kentucky Utilities in April from its German parent company E.On for $7.6 billion, in a deal expected to be completed by the end of 2010.
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Join Source One at the HFMA Institute Today

on Tuesday, October 19, 2010

The Health Care Financial Management Association (HFMA), NJ Chapter is holding their 34th Annual Institute right now at the Borgata Hotel in Atlantic City, NJ. This event runs from October 20-22 and brings in industry leaders and speakers to help find solutions to challenges faced by finance professionals in Health Care industries. To learn more, visit: http://www.njhfmainstitute.org/

If you plan on attending, please join Source One in Studio B from 3:15 p.m. to 4:05 p.m on October 20th. Speaking will be Steven Belli, CEO of Source One Management Services, and Jeffrey Blumengold of WhithumSmith+Brown, PC.
Together, they will be presenting:
    "Doing More with Less - A Financial Reality Check and Survival Guide".

A quick synopsis:
"With Healthcare Reform now passed and looming changes on the horizon, many institutions are looking for ways to continue to provide the same level of service to the community, even as revenues decline. This session will provide an overview of trends, as well as the likely impact that the impending changes will have on revenues, and provide strategies to reduce non-employee related costs. Effectively managing these costs often can provide a huge impact on bottom line growth. Two critical components to cost reduction that many organizations overlook include market intelligence and supply strategies. Market intelligence is required to develop savings targets for each spend category. There are hundreds of informational sources available to help gather the data needed to prepare a supply strategy. Different supply strategies are needed for each spend category and specific circumstance. Find out which strategy to use and the skills needed to successfully deploy the strategy."

We hope to see you there!


Click here for help with Healthcare Strategic Sourcing
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Cooking oil imports in India falling

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Cooking oil imports in India fallingCooking oil imports by India - which uses more of the commodity than any other nation except China - could be headed for a slump, as they continue to push palm oil prices much lower.

As futures climbed to a 26-month high, foreign supplies of cooking oil became more expensive than locally sold products - meaning that purchases could decline by as much as 36 percent, to 600,000 metric tons in October from 942,257 tons in September, Govindlal G. Patel, managing partner at GG Patel & Nikhil Research, told Bloomberg.

"People are not buying, as global prices are high and there is disparity," Patel, who has been trading oilseeds and vegetable oils for more than four decades, said. "Global prices are higher than local prices."

Malaysia and Indonesia are the world's two largest producers of palm oil. Bloomberg reports that India’s palm oil imports from Malaysia, the second-biggest producer, dropped 21 percent in the first half of October compared to September.
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Price of iPhone on the rise after manufacturer agrees to pay workers more

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Price of iPhone on the rise after manufacturer agrees to pay workers moreMac junkies could soon be a paying a little more for their iPhones, as Foxconn has confirmed that it will be raising manufacturing costs for its clients.

Foxconn, a massive and notoriously secretive subsidiary of a major Taiwanese technology company, is perhaps best known for manufacturing the iPhone and the iPod. However, manufacturing costs at the company are on the rise, and the company intends to pass the price hikes on to Apple.

The culprit, however, isn't the price of the raw goods that go into making Apple's popular tech products. Rather, costs at Foxconn are on the rise because the company decided to improve employee pay, working conditions and safety measures after a series of worker suicides - at least 10 - earlier this year. According to Bloomberg, Foxconn workers at a southern China plant said their "meaningless" existence prompted their desire to end their lives.

While Foxconn says that many of its buyers have already agreed to the new quote, some companies, such as Nokia and Sony Ericcson, may be less willing to accept the price hikes because they are able source from various suppliers. 
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Sri Lanka looks to join global supply chain

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Sri Lanka looks to join global supply chainThe island of Sri Lanka is working to become a part of the global supply chain.

As the country emerges from a 30-year civil war that ended in 2009, it is in a unique position to join a global "bazaar economy," where various components are manufactured in a series of different countries and various parts of the same product can be sourced from all over the world, Lanka Business Online reports. Other countries, such as China, are already benefiting from the "bazaar effect."

"We have to be part and parcel of the global production process rather than trying to produce everything ourselves," W. A. Wijewardena, a former central bank deputy governor, told the annual sessions of the Sri Lanka Economic Association. "Everyone will have to work hard - there's no substitute for hard work. This is the real driver of economic growth in the next 5-10 years. Hard work comes from hard human capital development through hard learning and facilitating capital infrastructure for people to engage in economic activity."

In addition to high-quality education, gender equality and improved research and development, the island nation of Sri Lanka will also need to learn global English, or "globish," to stay competitive in the worldwide supply chain.
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Maryland business school supply chain students name Mark Holifield "Person of the Year"

on Monday, October 18, 2010

Maryland business school supply chain students name Mark Holifield Each year, students in the Supply Chain Management Society and the Supply Chain Club at the University of Maryland's Robert H. Smith School of Business honor an influential leader in the supply chain industry. This year, the honor has gone to Mark Holifield, senior vice president of global supply chain for Home Depot.

Holifield has worked in supply chain logistics for more than 30 years, handling high-volume retail supply chain management, logistics and shipping issues. Since 2006, he has been responsible for the Home Depot's retail logistics, import and domestic distribution, delivery, transportation and inventory planning and replenishment operations.

Prior to working for Home Deport, Holifield was executive vice president of supply chain management at Office Depot, where he was responsible for the successful operation of its global supply chain, including 57 distribution centers worldwide that served all retail stores and customer delivery operations. He has also been employed by Frito-Lay, Dallas Systems Corporation and H. E. Butt Grocery Company.

"We are pleased to honor Mark Holifield for his significant achievements in the field of supply chain and logistics," said G. Anand Anandalingam, dean of the Robert H. Smith School of Business. "This chance to interact with one of the top leaders in the industry adds another element to the rich, experiential learning-based education our students are getting in supply chain and logistics, making them some of the most desirable and most successful graduates in their field."
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Indian power equipment supply chain to be revamped

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Indian power equipment supply chain to be revampedIndia has the potential to become a major hub for power equipment manufacturing, but the country will need to work on improving its supply chain.

Domestic power equipment manufacturers such as Bhel suffer a price disadvantage compared to Chinese suppliers in India because the supply chain for the power equipment industry in China much more well-developed than its Indian counterpart, which has forced domestic manufacturers to seek a customs duty imposition on imported power equipment in order to remain viable. Although the Indian government turned down a proposed 14 percent import duty, a more modest 4 percent increase in the import duty is under consideration, the Financial Express reports.

The government is also working to create improved domestic manufacturing capacity.

"This is exactly the opportunity for India to develop supply chain for the power equipment manufacturing industry," Guy Chardon, senior vice president for Alstom's thermal product business, told the paper.

India has one of the fastest-growing economies in the world. It has the third-largest economy in Asia and the 12th largest in the world.
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Walmart to create more sustainable supply chain by 2015

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Walmart to create more sustainable supply chain by 2015Walmart has announced that it will be investing $1 billion in its global supply chain as a part of its new commitment to sustainable agriculture.

The retail giant hasn't been favored among proponents of sustainable supply chains, who have accused Walmart of everything from contributing to deforestation and climate change to putting smaller stores out of business. However, the Arkansas-based company is doing what it can to change that perception by revamping its supply chain to include more local and small-scale farmers and producers and to source products in a more responsible way by 2015.

At least $1 billion worth of goods sold at Walmart stores will come from these smaller operations - a change that will increase the incomes of these small-scale farmers by 10 to 15 percent.

"More than 1 billion people around the world rely on farming and hundreds of millions of them live on less than $2 a day," said Walmart president and CEO Mike Duke. "Globally, with a booming population, food production must increase roughly 70 percent to feed 9 billion people in 2050. Through sustainable agriculture, Walmart is uniquely positioned to make a positive difference in food production - for farmers, communities and customers. Our efforts will help increase farmer incomes, lead to more efficient use of pesticides, fertilizer and water, and provide fresher produce for our customers."
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Reminder, Don't Let Your Supplier Write Your Specifications!

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Just another quick reminder, Don't let your suppliers write your RFP for you!

I recently had a conversation with a fellow sourcing consultant that owns a reverse auction company. His organization specifically focuses on procurement for local governments. He shared his frustrations with a recent project that he was "awarded". This particular project was for a mid-western County Government's Public Works Department that needed to purchase two forklifts. The procurement group engaged my associate to conduct a Reverse Auction for these forklifts, but they provided the specifications, and were unwilling to listen to him about the need to open them up to allow suppliers to present their own alternatives.

Ultimately, he went to market with a specification that literally only a single forklift fit into. The specification detailed a 83hp motor, a specific mast size and a couple of other features that were unique to one specific manufacturer's model. (I will not give away too many details as the manufacturer could easily be traced with a quick Google search). Other manufacturers submitted their bids, which in many cases detailed more robust products for lower prices, or extremely similar configurations (such as everything being the same but the motor being 82hp, or all things the same, but the mast was off by half an inch), with extremely lower prices and better maintenace plans. The Public Works Procurement Department disqualified every single bid because it did not match the exact configuration that the maintenance department put into their purchase order request form.

Upon further investigation, my associate learned that the procurement department was simply unwilling to expend political capital arguing and explaining their findings to the head of the maintenance department. The head of the maintenance department was unwilling to look at alternatives or meet with other vendors, likely because he had a prior relationship with the salesman who put together the forklift specification for him.

At the end of the day, a local government overspent, and there really is no records to show future buyers that things could have been better. Worse, the same old ways of doing things continues to be the norm and the person that is footing the bill is you, the taxpayer. Please, don't let the supplier write the specification or RFP for you!
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Yahoo stocks rise on acquisition rumor

on Friday, October 15, 2010

Yahoo stocks rise on acquisition rumorSearch engine Yahoo's stock has been climbing on the NASDAQ exchange, thanks to reports that the company could soon be acquired by AOL.

Several news outlets confirmed the story earlier this week, but involved parties stated that the deal was still under discussion and that Yahoo had not yet been contacted about the possibility of a merger with AOL.

Ever since Yahoo turned down a buyout offer from Microsoft two years ago, investors have been ripe with speculation that the search engine could soon be acquired by any one of a number of technology companies. Instead, Yahoo has been the one doing the acquiring, buying a significant stake in the shopping site Alibaba.

According to Trading Markets, the market cap of Yahoo has reached $20.56 billion by October 13. Meanwhile, AOL's market cap is one-eighth of that figure at just $2.68 billion. Potential buyers told the site that they believe that AOL's offer of $20 per share is advisable for Yahoo, considering that Yahoo's shares are closing at around $15.
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As cotton prices soar, clothing prices follow

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As cotton prices soar, clothing prices followCotton prices have continued their meteoric rise, and now some major apparel companies are announcing price hikes to cope with the rising commodity costs.

The price of the commodity soared this week following aggressive buying by China and a disappointingly small yield from many major producers, including the United States and Pakistan. As a result, some clothing companies - including UK-based Next and jeans maker Levi Strauss - have already indicated that the price rise will be reflected in the cost of their merchandise, the Financial Times reports.

Although cotton prices are at their highest since 1996, historically, the commodity isn't doing so badly. Adjusted for inflation, today's cotton prices are a far off cry from history's all-time high of more than 400 cents per pound, set in 1973. Even so, the rise is hitting manufacturers hard.

"We're just seeing blow-offs here that nobody can imagine," Herman Kohlmeyer of broker firm Michael J. Nugent told the Times.

"China panics, then New York reacts to it the next day," added Peter Egli, risk manager at Plexus Cotton.

Cotton is just one of a number of important commodities whose prices have been on the rise. Others include coffee, corn and oil.
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Falling natural gas prices mean savings for customers

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Falling natural gas prices mean savings for customersNatural gas is a commodity that powers many of our household appliances, such as stoves and heating systems, and generates electricity for homes and businesses. Now, customers in the northwest United States could be seeing a nice drop in the price of this precious resource, thanks to falling commodity costs.

Portland-based NW Natural, a provider of natural gas, has requested a 1.5 percent rate decrease for residential customers in Oregon, and 1.6 percent decrease for commercial customers. Such a price would translate into a monthly bill reduction of $1.06 for residential customer using 55 therms per month, while the average commercial bill would go down by $4.00 a month, the Oregonian reports.

Meanwhile, residents of Washington state would see a 1.8 percent rate decrease for residential customers and a 2.1 percent decrease for commercial customers.

Because the commodity price of natural gas is passed on directly to consumers without any markup, NW Natural can take advantage of inexpensive pricing and help customers save on their utility bills. 
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The Political Advertising Supply Chain (Follow the $$$)

on Thursday, October 14, 2010

There is an interesting story that is starting to pick up steam about political advertisements paid for by the U.S. Chamber of Commerce this year. The Chamber, with its very official sounding name, is not a part of the government but an independent entity that lobbies on a very important subject, “Commerce”.

This year, the Chamber has decided to put its money on Republicans and has spent heavily on advertising that supports Republican candidates. A blog called ThinkProgress noticed that the money for these ads comes out of the same 501(c) (6) that accepts donations from anonymous foreign donors.

Why is this a problem? The main reason is that it’s illegal for foreign companies to contribute to American political campaigns, directly or indirectly. Do I really care who the groups are that are donating to the Chamber? I kind of do, actually. After all, why would a Saudi Arabian or Chinese company provide money dedicated to help U.S. businesses? What are they hoping to influence?

Not to be outdone by the supply chain analysis of ThinkProgress, the Chamber and other leading Republicans have gone on Fox News (exclusively) and countered that:

1 - ThinkProgress is a liberal blog linked to The Center for American Progress which is run by John Podesta, who was the head of the Obama’s transition team. Therefore the criticism is simply partisan in nature.

2 - The Center For American Progress also accepts funds from anonymous donors which may (or may not) be foreign.

3 - The Center makes sure that their foreign donations are not used to pay for political ads.

Well yes, it’s true that The Center for American Progress and other liberal organizations also have donors. But in this particular case, those organizations are not putting out political ads, and that’s the difference. If the Chamber was so sure that foreign funds, which went into the same bucket as domestic, weren’t used for ads, why not show the documentation that proves it?

Following the money has gotten increasingly difficult, even on the domestic front. The McCain-Feingold bill was supposed to ensure that anyone running a political ad clearly spell out who paid for the ad. To get around the rule, advertisers set up phony Political Action Committees (or PACs) for the sole purpose of putting a great sounding name at the end of a campaign commercial, where someone says, this as was paid for by “such and such”. These groups form, take in tons of corporate money, place ads for or against a candidate, and then disappear, which makes tracing back funding very difficult.

Does understanding the supply chain for political advertising matter? I think it does. After all if you are trying to avoid disclosure, chances are you have something to hide.
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China proposes new supply chain regulations for pharmaceutical manufacturers

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China proposes new supply chain regulations for pharmaceutical manufacturersChina's State Food and Drug Administration has announced a proposal that would tighten supply chain security for manufacturers of active pharmaceutical ingredients.

The new regulation would significantly increase the auditing and filing processes for companies that manufacture the ingredients that go into pharmaceutical and therapeutic drugs, particularly those with addictive or harmful potential, such as painkillers and stimulants. The law represents an aggressive step for the Chinese government in preventing substandard pharmaceutical ingredients from contaminating medicinal drug supply chains, International Pharmaceutical Quality reports.

Entitled "Administration of APIs and Pharmaceutical Auxiliary Materials," the requirements in the draft of the regulation would apply to all active pharmaceutical ingredients, traditional Chinese medicine extracts and pharmaceutical excipients, as well as "raw and auxiliary materials" used for packaging and containers that come into direct contact with drug products.

The report says that it is intended to clarify the "relationship between and the respective responsibilities of the drug product manufacturers and the [active pharmaceutical ingredients] and pharmaceutical auxiliary materials manufacturers … and more clearly define the drug product manufacturers as the primary responsible persons for the product quality."

The regulation, if implemented, will apply to marketed drug products registered in China, but not to exported pharmaceuticals or excipients manufactured in China, says supply chain consortium Rx-360.
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Survey finds supply chain costs cut in the cloud

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Survey finds supply chain costs cut in the cloudAccording to a recent report from the research firm Gartner, supply chain managers are increasingly turning to cloud computing - and saving money by doing so.

In a survey conducted earlier this year on 130 companies in the retail, consumer goods, manufacturing and high-tech sectors, Gartner found that 95 percent of the respondents were either using or were considering using cloud-based supply chain applications. The research indicates that suppliers have embraced cloud-based applications for everything from ecommerce to supply chain execution to planning.

So what are companies doing in the cloud? The Gartner survey indicated that customer relationship management (CRM) software is the most popular application, with 82 percent of the respondents either using or considering using a cloud-based solution. The second-most popular use of cloud-based services were supply chain execution programs, which were cited by 76 percent of the survey's respondents.

And companies are already enjoying the benefits of being in the cloud - 38 percent of the respondents to the Gartner survey reported that they had reduced their supply chain costs using cloud-based applications. For industrial manufacturers, most of the savings came from optimizing supply chain expenses, while consumer goods producers saw the biggest benefit in reducing their costs to serve customers.

However, not every company is having an easy time translating those savings into a quantifiable dollar amount. Only 41 percent of the respondents said they were able to measure the savings they had achieved through cloud computing - but of those that cloud, nearly three-fourths had cut their information technology expenses anywhere from 5 to 20 percent.
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Boeing appoints supply chain leader

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Boeing appoints supply chain leaderBoeing has announced that Mo Yahyavi will be the new leader of its supply chain operations.

Yahyavi, the former head of the company's 747 program, has been named vice president of supply chain management. His new duties will include monitoring and improving manufacturing practices and quality assurance, as well as developing management systems for Boeing's suppliers.

One of Yahyavi's most important tasks will be coordinating with outside vendors such as Alenia Aeronautica, which is having difficulty fulfilling its obligations to Boeing's 787 Dreamliner project. Alenia Aeronautica's issues, along with the problems that other supply chain components are experiencing with trying to manufacture Dreamliner parts, are largely to blame for a delay of nearly three years in the development of the new aircraft.

Alenia had trouble with horizontal stabilizers, a component of the Dreamliner and other airliners.

Yahyavi will also become vice president and senior adviser at Boeing and will report directly to Jim Albaugh, president of Boeing Commercial Airplanes. The new position was created specifically for Yahyavi. 
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South African Wal-Mart raises food supply chain concerns

on Wednesday, October 13, 2010

South African Wal-Mart raises food supply chain concernsAs U.S. retail giant Wal-Mart prepares to enter South Africa, many local food producers are concerned about the impact that the superstore could have on their supply chains.

Notably, Wal-Mart's aggressive pricing strategy - which generally sources food and materials from the cheapest, rather than the most ethical or sustainable, sources - could drive business away from local merchants. Ecowise, a hygiene and sanitation company servicing the food sector, speculates that Wal-Mart may use its global food importing network to bring less expensive food products into South Africa, rather than purchase goods from local farmers, according to the Business Report.

Even worse, sourcing food from such distant locals could lead to contamination, spoiled products and other health and safety hazards. "As the distance that food has to travel to reach the end-consumer lengthens and the number of stakeholders in the supply chain increases, the risk of contamination multiplies exponentially," said Gareth Lloyd-Jones, managing director of Ecowise.

He added that South Africa's food safety standards are among the most developed and hygienic in the world: "South African food producers are required to show total compliance to legislation and retailer requirements through the maintenance of an International Organization for Standardization and other rating bodies, as well as being required to pass regular inspections from the department of agriculture."

Not everyone, however, is concerned that a globalization of the supply chain would result in increased contamination of South African food sources. Chris Griffiths, a professor of microbiology at the University of Wales who published research in Food Review in September and October, warned that any producer whose product has a shelf life of longer than five days should consider the risks associated with the bacteria - no matter where the food is sourced from.

"We live in the age of having global food supplies and so global pathogens and it would be unlikely if South Africa was not affected," Griffiths said.

Food-borne pathogens include listeria, salmonella and E. coli, all of which can be fatal if left untreated, but are generally curable.

South African supply chain providers also worry that overseas sourcing from massive companies able to produce huge quantities of food for extremely low prices could put them out of a job, in a country where nearly a quarter of the population is already unemployed.

On the other hand, South African shoppers may find better pricing at stores across the nation.

Credit ratings agency Fitch Ratings said the landscape of the South African retail market is likely to change significantly with the arrival of Wal-Mart.

"This is expected to lead to increased competition and margin pressure driving greater efficiencies and price benefits to consumers through increased value and choice," the agency said.

In other words, the presence of Wal-Mart will likely force many other retailers to lower their prices - with the caveat that those who cannot adapt will indeed go out of business.

"Fitch expects that this will lead to some margin pressure among South Africa's large supermarket chains, which include Pick n Pay Stores, Shoprite Holdings, Spar Group and Woolworths Holdings and would also over time present a major strategic threat to smaller retailers," Fitch continued.

Wal-Mart announced its intention to buy South African retailer Massmart Holdings for about $4.25 billion back in September. The deal is part of Wal-Mart's bid to jumpstart growth after it was largely stalled by the sluggish American economy. South Africa is particularly vulnerable to Wal-Mart's bargain pricing strategies, because despite the country's fast-growing economy, it struggles with poverty, crime and a 24 percent unemployment rate.
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FTA investigates ways to reduce transport carbon footprint

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FTA investigates ways to reduce transport carbon footprintThe Freight Transport Association is expanding its research on carbon emission reduction to include its maritime supply chain.

"Shipping is generally regarded as an environmentally sound mode of transport, with relatively low energy consumption per unit of freight moved, but with carbon emissions predicted to rise and national targets in place to reduce carbon dioxide emissions by 50 to 80 percent by 2050, it is essential that we start work on monitoring and reducing carbon emissions now," said Chris Welsh, FTA's general manager of global and European policy.

Welsh spoke at the 'Managing Carbon Emissions and Greenhouse Gases in Shipping' conference in London on October 12, addressing strategies to reduce carbon emissions in the supply chain from the shippers' perspective, Materials Handling World magazine reports.

The FTA will be assisting Heriot-Watt University with its research on the subject as a part of its Logistics Carbon Reduction Scheme, a plan designed to assess how supply chain decisions affect carbon emissions and identify ways for supply chain components to reduce their carbon footprints, the magazine continues. The initiative, which was launched earlier this year, has 40 members and is currently focused on commercial vehicle activity.
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Corn supplies expected to be tight in 2010

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Corn supplies expected to be tight in 2010It's been a tough year for food producers, as rising prices on commodities including wheat, meat and coffee have forced many retailers to raise prices. Now, extreme weather in the American Midwest has caused another major food product to skyrocket in price: corn.

Corn is a critical component of the global food supply chain, found in everything from cereal to beef (as cow feed) to soft drinks (in its sugar-substitute form, high fructose corn syrup). The United States Department of Agriculture predicts that this year's corn harvest will be 3 percent smaller than 2009's, which set a new high record. The USDA report sparked a surge in speculative prices for the grain - and as corn prices soar, prices of nearly everything else on grocery store shelves could be affected.

"We can live with high commodity prices for a period without seeing much impact at the retail level, but if that persists for several months or a couple of years, then it eventually has to get passed on" to consumers, Darrel Good, an emeritus professor of agricultural economics at the University of Illinois, told the New York Times.

According to the paper, the 2010 crop could still be the third-largest in history, but because corn is so widely used - in animal feed, in ethanol, in a number of food additives and as a global export - supplies are still expected to be tight.
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Coca-Cola acquisition deal prompts supply chain changes

on Tuesday, October 12, 2010

Coca-Cola acquisition deal prompts supply chain changesThe Coca-Cola Company's acquisition of the North American operations of Coca-Cola Enterprises will bring about some changes in the corporation's supply chain.

To best create a seamless transition, Coca-Cola North America's supply chain operations will be redefined within the corporate structure of the Coca-Cola Company. The transaction, completed earlier this week, renamed the sales and operational elements of the North American businesses Coca-Cola Refreshments USA and Coca-Cola Refreshments Canada, respectively. The new companies, which are subsidiaries of the Coca-Cola Company and led by CCR president and CEO Steve Cahillane, will integrate five formerly separate business aspects, including CCNA's supply chain division and the Minute Maid and Odwalla juice businesses, into a bottling and customer service operation in both the U.S. and Canada.

"With the completion of this transaction, we have redefined our operating model to best serve the unique needs of our flagship market, in full alignment with our 2020 Vision," said Muhtar Kent, Coca-Cola Company chairman and CEO.

Coca-Cola also announced that its Board of Directors has elected Jan Bennink as director.
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Rising commodity costs mean more expensive goods for consumers

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Rising commodity costs mean more expensive goods for consumersFor consumers who have tightened their purse strings in the wake of the economic recession, rising commodity prices are only heralding more money trouble.

"Commodities," a catch-all term for the raw materials that go into the things that consumers buy, eat and wear, have been increasing in price for decades. Previously, the world's superpowers - the U.S., Western Europe and Japan - dominated the commodities market, but the emerging economies of countries such as India and China are driving up the demand for everything from wheat to metal and causing prices to soar, the San Francisco Chronicle reports.

For consumers, the rising commodity costs will be reflected in the price of goods at supermarkets, department stores and gas stations, to name just a few places. Some companies, such as Kraft, Starbucks and Nestle, have already warned shoppers that rising prices could mean more expensive products.

Starbucks recently stated that it will be hiking up the cost of some of its popular drinks due to the rapidly rising cost of coffee beans.
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Meat supply chain must change to accommodate growing market

on Monday, October 11, 2010

Meat supply chain must change to accommodate growing marketAlthough 2010 saw an uptick in demand for meat since the industry was hit hard during the economic crisis two years ago, the supply chain still must change if the sector will continue to survive and thrive, said Richard Brown, director of market analyst firm Gira.

Speaking at the World Meat Congress, Brown stated that the United States and Brazil were in a strong position as meat producers and poised to move forward in the industry. Russia, too, will continue to important large quantities of meat. The big mystery, he continued, is China, whose growing population of meat-eaters is adding American staples such as beef to a diet that has historically included meats that Westerners shun, such as chicken and duck feet.

"China is the big question for us all to face. How much will they eat, and where will it come from?" Brown asked.

Brown also pointed out the growing number of mergers and acquisitions in the global meat industry.

"We've seen a lot of MA activity, mainly out of Brazil, and all of us need to think about the impact of that activity," he said. "However, it is difficult to see that there will be the concentration in the meat industry that will allow the companies to exert their power like the big seed companies and others. They're unlikely to ever have that satisfaction."
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