This means war.

on Tuesday, May 31, 2011

The Pentagon has officially warned the rest of the world that they will take real action against cyber attacks on mission critical targets in the U.S. This comes after an infiltration was reported at Lockhead Martin, a major military defense contractor for the U.S. and recent attacks on Iran's nuclear power plant. A military official had this to say "If you shut down our power grid, maybe we will put a missile down one of your smokestacks."

This will undoubtedly be the topic of heated debated for some time to come. The U.S. will not only be tasked with conclusively proving a foreign cyber attack has occurred but prove that a government or organization was behind it. This will not be an easy feat, especially since the most recent wave of cyber attacks against Visa, Amazon and Sony have been collaborative efforts of hackers across dozens of countries.

We will have to wait to see if this is a fear tactic to discourage terroristic activity or this is the new "biggest" threat to homeland security.

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Rising costs in China put pressure on businesses around the globe

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Rising costs in China put pressure on businesses around the globeChina's economy has been the envy - and object of attention - by policymakers and analysts throughout the globe over the past three decades. With a torrid pace of growth, it has long been assumed that China will surpass the U.S. as the biggest global economy within the next 20 years. However, surging business costs and persistent inflation are leading some to wonder whether the Asian giant's new signs of weakness will hurt growth domestically - and abroad.

The New York Times reports that wages are rising quickly this year in the world's most populous country, which is benefiting workers who often face harsh working conditions and minimal to no benefits. This, however, is putting pressure on companies to achieve procurement cost reductions, among other areas.

What's more, manufacturing costs are soaring in the country as energy costs skyrocket. Many businesses that have shifted a majority of their manufacturing to the country are feverishly working to make manufacturing cost reductions, but little hope is in sight.

Companies are now scrambling to find procurement consultants and other strategic sourcing experts to find alternative suppliers in the wake of the price hikes.
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Zoom Zoom....Shroom!

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Besides being delicious marinated on a grill and the ability for certain ones to cause hallucinogenic episodes, mushrooms can now also be used as highly functional car parts. In a recent article from CNN Money, Ford announced they are working with an eco-design company to develop fungus-based, biodegradable foam for automotive bumpers, side doors and dashboards.

Started in 2007 in New York, Ecovative Design produces eco-friendly materials for use in organic packaging and insulation. They utilize fungal mycelium, which are the roots of mushrooms, as a resin to hold agricultural byproducts, such as corn and oat husks, together to create a rigid material. The result is a solid, foam-like material that the company has already begun marketing for packaging (with companies like Dell) and furniture.

Ecovative technicians combine the husks and the mycelium in trays of various shapes and sizes. The trays spend five days in a darkened warehouse, long enough for the mushrooms to work their magic, before the rooted mixture is cooked and dried. This results in a fireproof, waterproof foam solid, which will decompose in one month buried in soil.

There could potentially be a large number of other applications for this material because it can be grown in any size or shape. Furthermore, it costs about as much as Styrofoam. Hopefully in the near future, it could replace the Styrofoam packaging materials that are used in way too many consumer products and take up a ridiculous amount of space in landfills. You could be drinking your morning coffee from a mushroom cup.

If Ecovative can grow their material to be uniform enough to satisfy safety requirements of the car industry, it could replace petroleum-based plastics that are currently used for car parts. The damaged or used car parts can then just be buried. Ford is hoping to replace around 30 pounds of the petroleum-based foam in each car with eco-friendly alternatives.

Ecovative Designs is researching more applications for mycelium. Their newest crops of clients include two computer manufacturers, a cosmetic maker and a wine distributor.

How about a mushroom helmet? One step closer to being a Super Mario Bro’s character…
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The Boston Globe Joins the Group

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A few weeks ago, I decided to end my four and a half year relationship with my flip phone. I upgraded to an iPhone 4 and have not looked back since. One of the many benefits of having a smartphone, as I’m sure most people know, is downloading applications. One of the first applications I downloaded was Groupon. Groupon is currently the leading player in the group-buying market. Other sites that exist include LivingSocial, BuyWithMe, and Eversave. These three sites are currently based in Boston or started there and therefore, The Boston Globe, having not offered a group buying service in the past, lost some advertising revenue to these popular sites. The saying goes, “if you can’t beat ‘em, join ‘em” and so The Boston Globe recently launched Boston Deals through its site Boston.com.

Investopedia.com’s Porcshe Moran explained “The Economics of Group Buying Sites” earlier this month. Group-buying is a pretty simple concept. Consumers visit the site of their choice (e.g. Groupon.com) and sign up for free, providing an email address and the city they live in, and all subscribers then receive daily emails detailing the deal of the day. The deals are localized, and each one is usually at least 50% off the regular price. However, the deal is only made available if a certain number of people purchase it within a certain timeframe. Therefore, if not enough people purchase the deal, no one is able to realize the savings. You are able to share the deal and encourage others to take advantage of it through the use of email and social media. For example, today’s deal on Groupon for the Philadelphia area is “$25 for $50 worth of classic American fare at Mile High Steak & Seafood in Glen Mills.” The deal is on because enough people have purchased the coupon, about 240 so far. Mile High better gear up for an influx in business between now and October (when the coupon expires).

To demonstrate how popular group buying sites have become, at the end of last year, Google attempted to purchase Groupon through a $6 billion buyout. Groupon rejected the offer and Google is now rolling out its own site called Google Offers, which is “currently in BETA, and only people in New York City, San Francisco, Portland, and Oakland can subscribe,” according to Investopedia.com.

Boston’s NPR news station WBUR, 90.9 FM, is one of the news outlets that reported the launch of Boston Deals and explains that “despite the crowded group-buying market, the Globe has something many of its competitors don’t: a built-in customer base: Globe subscribers.” Also, Chief Advertising Officer for the Globe, Lisa DeSisto, says that the Globe is going to tap into those businesses that have been advertising in the Globe or on Boston.com for years and will also be reaching out to new advertisers to increase their network. Peter Krasilovsky, an analyst at the media research firm BIA/Kelsey, also says that “other newspapers have been successful at group-buying. The San Diego Union-Tribune outsells Groupon and LivingSocial in its market; however, the California paper got into the game much earlier than this one in Massachusetts.”

If you currently reside in the Boston area, have family or friends that live there, or happen to be traveling there for vacation this summer, check out Boston Deals. You may find the perfect gift for a loved one or a great new restaurant to visit. The Boston Globe’s client network may be more appealing to you than Groupon’s.
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A Recipe for Road Rage

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Remember when you were in high school and all you could think about was getting your driver’s license? The mere thought of the freedom that it was going to bring you was enough to study your butt off for that written exam and harass your parents every day to practice for the road test. But how many of us actually retain all those rules and regulations the minute we finish that test and walk out of the room? Well, according to a recent study done by GMAC Insurance reported on cnnmoney.com, not many of us! “More than one in five Americans -- some 36.9 million -- are not fit to drive and would fail a driving test if asked to take one today.”

I’m sure this is not surprising considering what we see on the roads today between people speeding (12,545 deaths were attributed to increases in speed limits across the US between 1995 and 2005), running red lights (factors into more than 800 deaths annually), and don’t get started with the cell phones while driving (crash risk is four times higher when driver is using a hand-held cell phone). And I don’t believe that it really has to do with the fact that we don’t know the rules, well at least most of them anyway, I think we just ignore them. Apparently more so in the Northeastern portion of the US than anywhere else because the survey indicated that, “drivers in the Northeast scored lowest, while respondents in the Midwest fared best. The worst place, no surprise to anyone who drives there, is Washington, D.C.”

In my opinion people should have to be re-tested every few years to retain the right to drive. I know this approach sounds like a pain in the neck but consider the fact that, according to the Insurance Institute for Highway Safety, 33,808 people died from car accidents in 2009 alone. So just try to think about some of these stats the next time you get behind the wheel or pay your ridiculous car insurance premium!
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Food Supply Prices Climbing

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If you are finding the increases in food costs at the grocery store troubling in recent weeks, you may be in for some bad news. Oxfam, a UK charity and hunger aid group estimates that food prices could double in the next 20 years. There are a number of factors that are contributing to the price increases from biofuels displacing food production to increasingly disastrous weather events. One of the most notable and controversial factors pointed out by Oxfam is financial speculation, which continues to drive price volatility in the commodities market. For example, three companies control over 90% of the grain trade. Any period of financial downturn or market distress for these companies immediately affects grain prices. As the world population surges, sustainability in agricultural practices has come to the forefront of the conversation in debates on meeting hunger demand in the future.

Significant market risk is affecting pricing in the food supply chain across the globe. These risks are not as easily visible as a supplier side risk. Many buyers and planners do not have the time to develop a sourcing strategy which satisfies cost reduction or budget goals, satisfies servicing requirements, and includes the added step of protecting against market risks. In many smaller food manufacturers and further-processors, this risk may go unaccounted for. If commodity market volatility is affecting your supply chain, Source One can help.
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Verizon Following in AT&T's Footsteps: Offering Less for More in Wireless Data

on Monday, May 30, 2011

The wireless world appears to be taking a step backwards as Verizon recently confirmed they will be offering tiered pricing on data plans and doing away with unlimited plans. AT&T made the same move last year. While one might expect both carriers to nurture usage dependence and innovation in the world of mobility by continuing to offer unlimited data to their users, the lack of competition leaves them with no incentive to do so.

Once Verizon makes the shift to tiered data, Sprint will be the only major provider offering unlimited data. With such limited competition following the AT&T/T-Mo deal, Verizon can offer less for more and consumers will continue to pay.

It is frustrating to watch this happen as 4G continues to roll out on both Verizon and AT&T. Now you can use up your monthly data allocation faster than ever! Instead, if Verizon invested in their network to provide faster, unlimited connectivity, they could create a world where living without their service becomes less of an option for more individuals. We are in the midst of significant changes that would make this realistic, such as pay-by-phone systems and e-reader popularity for news/books, both bolstered by fast, available wireless connectivity to the Internet.

Instead, we are seeing carriers push out network investment by limiting their service offering while they rely on the market to push new users to them. Something is going to give, but carriers in a low competition market will fend it off as long as possible. It will be interesting to watch the market change as competition continues to dwindle at what appears to be the same rate that wireless data adoption continues to grow.
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Comcast is going digital...again.

on Friday, May 27, 2011

Comcast is pioneering yet another business venture, internet protocol television (IPTV). IPTV will allow the full features and benefits of having a cable box without one. All the information is delivered over the internet so any compatible web enable TV or laptop will have full access to Comcast content with the familiar menus. Comcast is currently testing this technology at MIT. Students and faculty simply connect to the schools network and have instant access to live TV along with video on demand.

This is a clever move to keep customers that are contemplating switching off their cable because of travel and has the potential to penetrate new markets. These services will not replace cable boxes anytime soon but is another example of developing technology to reduce overhead; in this case infrastructure, equipment and installation/repair technicians.

Is your company still innovating?
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With coffee supplies falling, consumers can expect to pay more for that morning cup of joe

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With coffee supplies falling, consumers can expect to pay more for that morning cup of joeThe price of coffee beans has been rising steadily over the past year - along with most commodities - as supply interruptions have caused global stockpiles to plummet. According to a newly released report, consumers are beginning to feel the price increases at the cash register as companies move to raise prices as they endeavor to make business cost reductions.

Bloomberg reports that Colombia, which is the world's second-biggest maker of mild arabica coffee, said that consumers will have to adjust to higher prices as burgeoning global demand continues to outstrip inventories. Companies like Starbucks and Nestle, which heretofore have absorbed the rising prices, will soon offset them onto consumers as they look to improve their profit margins amid heavy investor scrutiny.

Colombian National Coffee Growers Federation (CNCG) chief executive officer Luis Munoz said that the group forecasts next year's production to fall short of consumption, keeping the cost of arabica coffee between $2 to $3 per pound for the next 12 months.

As a result of the increasing costs, Starbucks, an expert in strategic sourcing, said Wednesday that consumers will see a 17 percent price hike for its packaged coffee offerings at its U.S. retail stores starting July 16. CNN reports that the move was the first time the world's biggest coffee company has raised packaged coffee prices since September 2009.

Over the course of the last 12 months, coffee futures have jumped more than 95 percent in value as supply and demand fundamentals sparked a run-up in prices. Aside from Starbucks, a cavalcade of other coffee sellers have started to offset higher coffee bean prices on consumers as they endeavor to achieve procurement cost reductions.

J.M. Smucker, which owns Folgers, Dunkin' Donuts and Millstone, has raised prices more than three times this year alone. This week, the company said it will raise prices by an additional 11 percent for most of its coffee products, following a 10 percent hike it made in February and another 10 percent increase it levied on consumers in August.

Kraft Foods, which owns Maxwell House Coffee and Yuban, has likewise increased coffee prices a number of times since the beginning of the year, adding roughly 70 cents per pound to its ground coffee offerings.

What's more, Green Mountain chief executive Larry Blanford said earlier this month that the company, which commands a strong market share in the increasingly lucrative packaged coffee cup sector, will have to raise prices to combat tight supplies.

"In an attempt to offset rising green coffee costs as well as increases in other input costs we are currently in the process of raising prices for all package types," Blanford said on the company's earnings conference call.

Currently, CNCG projects the Colombian coffee harvest will improve during the second half of the year. Coffee harvests were hit hard by inclement weather that caused flooding and destroyed crops throughout the South American country. Munoz said that CNCG analysts peg 2011 production at about 9.5 million bags, representing a slight rise from the 8.9 million bags recorded in 2010.

Still, U.S. consumer spending improved only modestly in April, inching up 0.4 percent. Analysts have largely attributed the weak increase to the higher energy and food prices that consumers are being forced to absorb, but some industry watchers question how much longer the nascent economic recovery can be sustained if consumers are spending significantly more to buy the same amount of food and gas.

On the New York Mercantile Exchange on Friday at 12:25 p.m., coffee futures for July delivery were up 1 percent, or $2.75, to trade at $2.6835 per pound.
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Making a Supply Chain Sustainable

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Today, there is a growing need for transparency in all areas of the supply chain. Businesses are evaluating their risk in a variety of areas including finance, labor, and sustainability. An issue with evaluating risk is the lack of clarity of what to assess and how to accurately measure risk. A recent study indicated the top 3 challenges associated with a supply chain risk assessment are as follows:

1. Lack of good data on vendors
2. Poor visibility into the use of subcontractors
3. mitations in the ability to compare risk vendors

While trying to find ways to get beyond these issues with assessing risk, businesses also must look at the sustainability of their supply chain. Evaluating sustainability is more than just indicating you are “going green” but it’s a matter of being sustainable at economic, financial, social, and environmental levels. This includes looking at your supplier base and being proactive about the relationship instead of reacting when there is a supplier failure. Industry Week provides some steps you can take in the short term to help you evaluate and ensure supplier viability. The steps include evaluating your supplier base (critical and non-critical) based on financial and corporate responsibility metrics, and then developing and implementing a program to accurately report the metrics. Following these steps will create transparency in your supply chain and mitigate risk.
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UPS to test plastic trucks in cost reduction experiment

on Thursday, May 26, 2011

UPS to test plastic trucks in cost reduction experiment  Energy prices have soared since the beginning of the year, with the price of oil jumping precipitously. Businesses like UPS are constantly searching for ways to achieve business cost reductions, and the logistics company recently introduced a lightweight delivery truck that could help achieve cost reductions, according to a new report.

Popular Science reports that the company recently showed off its latest delivery truck prototype, which is made from a high quality plastic. The trucks are scheduled to undergo testing throughout the remainder of the year to determine how well they hold up, but company executives are hopeful they will result in procurement cost reductions.

According to The Atlantic, UPS is testing five of the trucks, made from ABS plastic instead of sheet aluminum, at five of its most demanding routes, including some in New York and Arizona. UPS said the trucks are 1,000 pounds lighter than standard models, are 40 percent more fuel efficient and can run on a smaller engine.

Moreover, light-emitting diodes (LEDs) were incorporated into their design. LEDs consume less energy than standard light bulbs and have a longer lifespan. UPS executives assert that if the testing goes well, the plastic trucks could be incorporated into the company's 70,000 truck lineup as early as next year.
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UN report concluded more metal recycling needed to prevent shortages

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UN report concluded more metal recycling needed to prevent shortages  According to a new report from the United Nations, the used metal recycling rate is too low to support the growing production of electronic goods and it could lead to shortages if it is not increased. 

The report, released by the UN Environment Program (UNEP), found that a "very large" number of metals are not being recycled around the world. The report concluded that more than 60 percent of 60 metals used in the production of products as varied as smartphones to construction equipment have recycling rates below 50 percent, Bloomberg reports.

Moreover, if the recycling rate is not improved, it could lead to significant problems for companies looking to achieve manufacturing cost reductions as a large swath of metals are currently in short supply, the report stated.

"In spite of significant efforts in a number of countries and regions, many metal recycling rates are discouragingly low, and a 'recycling society' appears no more than a distant hope," the report reads.

Business cost reductions and strategic sourcing improvements are among other benefits of metals recycling, as companies can more quickly and adeptly procure the vital metals if recycling rates improve, according to analysts.
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New Boeing 737s to help American Airlines cut costs, boost efficiency

on Wednesday, May 25, 2011

New Boeing 737s to help American Airlines cut costs, boost efficiency  As energy prices soar, airlines are doing all they can to cut business costs and improve efficiency. According to a recently published report, American Airlines will benefit from the arrival of new Boening 737s that were designed to optimize energy efficiency. 

Tulsa World reports that AA took delivery this week of its first Boeing 737 with the new Boeing Sky Interior. In an effort to streamline its operations and rein in soaring costs, AA invested $5.5 billion to upgrade its aging fleet of aircrafts over the next five years.

The Boeing Sky Interior features, among other aspects, programmable and long-lasting light-emitting diodes (LEDs), larger overhead luggage bins, more headroom and larger windows. Further, the overhead lighting can be adjusted to provide various effects during flights, including a soft blue sky and a vibrant yellow hue.

American Airlines chief commercial officer Virasb Vahidi said the new aircrafts would increase customer satisfaction and help the company's bottom line.

"American Airlines has made a significant investment to enrich the flying experience for our customers through the purchase of new aircraft and the refurbishment of our existing fleet," Vahidi affirmed. "The delivery of the first 737-800 with the new Boeing Sky Interior is our most recent step to deliver on this commitment." 
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April U.S. durable goods orders sunk most since October

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April U.S. durable goods orders sunk most since OctoberThe U.S. manufacturing sector has helped propel the nascent economic recovery, but according to newly released data that expansion could be starting to slow.

A Commerce Department report issued this week stated that orders for U.S. durable goods fell more than forecast in April. The fall, however, was largely attributed to a decline in demand for aircrafts and supply chain disruptions emanating from the crisis in Japan.

Still, the 3.6 percent fall in bookings for goods meant to last at least three years represented the largest drop since October. In March, the index jumped unexpectedly by 4.4 percent, beating expectations.

Though Boeing and carmakers showed declines in the month, John Deere and General Electric experienced an uptick in overseas demand, leading many industry watchers to assert that the manufacturing industry will continue to lead the overall economic recovery.

"Manufacturing is likely to moderate from the explosive pace of growth in the past few months," said Pierpoint Securities chief economist Stephen Stanley. "Consumer demand and investment demand are both doing well right now."

A Bloomberg Survey of analysts had forecast a 0.5 percent rise.
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Hack the Planet

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I am sure most Strategic Sourceror readers are aware of the recent security breach issues Sony has been experiencing, their PlayStation Network being hacked and effecting millions of accounts. And so it continues in Canada and overseas.

It has been reported via computerandvideogames.com that, “hackers have targeted Sony Ericsson Canada's online store, stealing users' personal data in the process. More than 2,000 consumers have had their personal data stolen from the site, including their e-mails, passwords and telephone numbers.”

Other sources report that hackers in Thailand, Indonesia, and Greece are luring people to upload personal information including credit card numbers to similar game and music sites. No one is sure or will admit if these occurrences are at all related to the recent attack of Sony’s online Play Station game.

Holding our breaths waiting for resolution, these reports continue to discourage my use of these types of services and sharing any personal data online. Sony may take some of the hit but what about the consumer?

Impact on Sony: loss of some money and a few customers. They will continue to develop new services, games, and equipment for the consumer world. They continue to grow, be profitable, and move on.

Impact on end users: potential loss of money, identity theft, credit damage, computer virus attacks and the list goes on.

I would expect an industry leader such as Sony to have it together and invest some of their $$$$$ in better security measures. Also, when this occurs, websites are shut down and you cannot use the service. By then, the customer may move on and look for another source to play with; Peter Cohen of zdnet.com is quoted in this article, "In the interim, more and more gamers will likely do what I’m doing –– playing their Xbox 360s using Microsoft’s comparatively much more robust Xbox Live service."

For me it would my Wii Just Dance!
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Panasonic very concerned about supply chain disruptions this year

on Tuesday, May 24, 2011

Panasonic very concerned about supply chain disruptions this yearThe world's largest manufacturer of plasma televisions, Panasonic, said recently that supply chain disruptions that are continuing in the wake of the Japan earthquake and tsunami will ultimately have an "extremely severe" impact on its business.

The company's president, Fumio Ohtsubo, recently told a group of reporters in Tokyo that the firm believes its revenue will be adversely affected during the first half of the fiscal year. According to estimates from analysts fielded by Bloomberg, the company's net income could decrease by 29 percent in the year ending in March.

"Supply chain hasn’t recovered fully," admitted Ohtsubo. "For the third quarter and fourth quarter, I’m still not so sure if the reconstruction demand will be so strong."

The timing of the supply chain disruptions could not be much worse for Panasonic, which posted its first annual profit in three years last year. As a result of the natural disasters in Japan, the company has been forced to scale back production of its digital cameras as well, according to The Wall Street Journal.
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IPad factory explosion in China highlights risks of supply chain disruptions

on Monday, May 23, 2011

IPad factory explosion in China highlights risks of supply chain disruptionsA recent explosion at one of China's two factories responsible for manufacturing Apple's new iPad 2 underlines the substantial risks of supply chain disruptions with production of materials occurring in only a select few locations.

According to The Associated Press, Taiwanese company Foxconn Technology Group, which manufactures the iPads, said production had been suspended as a result of the explosion but would not detail potential consequences to the supply of the tablets.

The explosion is just the latest incident to demonstrate supply chain risks, after the earthquake and subsequent tsunami in Japan derailed the manufacturing of a number of products.

"If you are trying to do as much as you can in one place to reduce the risks of an overextended supply chain, then you are very dependent upon the safety of those one or two factories," David Dayton, owner of Silk Road International Inc., told the news source.

According to Reuters, three workers were killed and another 15 were injured in the blast.  
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Delta-Northwest merger serves as example for, against complex acquisitions

on Friday, May 20, 2011

Delta-Northwest merger serves as example for, against complex acquisitions  Acquisitions and mergers are supposed to help businesses cut business costs and grow revenue - when they're executed correctly. That's what Delta endeavored to do when it announced it would buy Northwest Airlines in 2008, but the company has struggled to grapple with the challenges the merger presented, according to a new report.

Companies often expand by strategically targeting other businesses to acquire, usually by choosing companies that either complement or augment their product or service offerings. Google's acquisition of YouTube in 2006 serves as an example of a successful merger, but for every Google/YouTube deal, there are scores of unsuccessful acquisitions.

The New York Times reports that the Delta-Northwest merger presented company executives with a complex set of issues - some expected, some not. The vast scope of challenges they faced prompted concerns over the long-term viability of what currently ranks as the world's biggest airline.

The myriad of tiny details that passengers may not notice but that sometimes mark the difference between a successful merger and a failed one have plagued the Delta-Northwest merger since its infancy. The airline industry is heavily regulated in terms of safety and labor issues, and as a result many airlines have very specific working rules, flying procedures, maintenance schedules and computer programs, analysts assert.

The differing corporate cultures at Delta and Northwest - the former considers itself "gracious," while the latter is more practical - also emerged as roadblocks to a smooth transition. For example, Delta flight attendants pour drinks for passengers, while Northwest attendants simply handed over the cans.

While it is a seemingly innocuous difference in policies, the sheer number of what were formerly perceived as non-issues left company strategists scratching their heads as they struggled to merge not only flight plans and fleets of planes, but also varying corporate cultures and labor policies.

Still, a number of industry watchers contend that the merger is a success and that it spurred other deals within the industry, including United Airlines' takeover of Continental and Southwest Airlines and AirTran's merger.

"If you look at the history of mergers, the assumption was that you couldn’t do them successfully," Delta chief executive Richard Anderson said during an interview with The Times. "Everybody had come to the conclusion that these things are too big, too complex and too unwieldy to manage."

Illustrating the length of time it took for company executives to solve such problems, it took 14 months for the airlines to fly as a single carrier after receiving regulatory approval to merge in October 2008.

Analysts lauded Delta's successful contract negotiations with its pilot unions that were finished before the deal closed. A number of industry watchers assert that by having the crucial labor group backing the deal from the start, Delta had a critical advantage.

However, critics point toward the fact that the company's flight attendants still work under separate contracts - each with its own work rules - and that they can't fly on the same airplanes as a striking example of the failure of the company to account for such potential obstacles as it mulled the deal.

The company was successful in its integration of the varying technological systems that each airline used prior to the merger, according to Delta chief technology officer Theresa Wise. Delta engineers faced the challenge of merging 1,199 computer systems down to roughly 600, and had the added pressure of doing so without passengers noticing that such steps were being taken.

In an effort to seamlessly transition the newly formed company's computer system, computer engineers performed 8,856 steps over the course of several days when it came time to cancel all of Northwest's bookings and transfer them to the newly created Delta flights portal in January 2010.

"This sounds insane," Wise said of the company's transition plan, "but each reservation system has its own personality."

Though Delta posted its highest profit in more than 10 years in 2010, it still has one of the worst records of on-time arrivals and accounted for more than 30 percent of all customer complaints.

Nonetheless, the merger has served as a lesson for airlines mulling deals, both as a cautionary tale against a merger, and an example of the benefits such a move can achieve. 
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The End of the World As We Know It

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The headlines are screaming: Prepare, for the end of the world is at hand, tomorrow, May 21, 2011.
This is the latest in a long and rich history of such predictions, reaching back to when humans started making predictions in the dim fog of prehistory.
A quick Googling reveals these fascinating predictions:
• Many Europeans expected the end of the world in the year 1000. Many people gave away all their possessions, or fought wars to try to convert as many people to Christianity before it was too late.
• Paul Ehrlich’s 1972 book The Population Bomb predicted that there would be worldwide famines and massive die-offs in the ‘70s and ‘80s. In fact, world population has steadily increased since then, in large part due to more effective supply chain management of food and other resources.
• In 1997, 39 members of the Heaven’s Gate cult committed group suicide, so they could somehow reach the spacecraft which was following comet Hale-Bopp, which was nearing Earth. They did this because they thought the Earth was about to be “recycled” by the aliens, and everyone was going to die.
There are countless other examples from across the millennia. Everyone wants to believe that his or her time on Earth is special, significant, and momentous.
So here we are on the eve of yet another prediction of Doomsday. Who knows? This one could be right. But if we wake up on Sunday, we can all gather in the streets and celebrate our continued existence by loudly singing together that famous REM song: “It's the end of the world as we know it, and I feel fine.”
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Thermo Fisher to buy Phadia for $3.5 billion

on Thursday, May 19, 2011

Thermo Fisher to buy Phadia for $3.5 billion  In yet another example of the ongoing consolidation of the biotechnology and pharmaceutical industries, Thermo Fisher Scientific said this week it will buy Phadia in a deal worth a reported $3.5 billion.

According to a press release from the companies, the deal will improve efficiency and cut business costs in the long-term. Sweden-based Phadia specializes in the development of blood test systems that monitor and diagnose allergy and autoimmune diseases like arthritis and lupus. The company is one of the biggest providers of the testing systems in the world.

Phadia will be absorbed into Thermo Fisher's Analytical Technologies division and will also help the company to grow its speciality diagnostics offerings, according to Thermo Fisher president Marc N. Casper.

"The acquisition of Phadia is a major step forward in our strategy to enhance Thermo Fisher's global presence in specialty diagnostics, one of our key growth platforms," Casper said in a statement. "This transaction is another great example of our acquisition strategy to strengthen our position in growing markets, expand our customer offerings and create value for our shareholders."

The deal is expected to close during the fourth quarter of this year.
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Toyota to increase workdays following manufacturing slowdown

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Toyota to increase workdays following manufacturing slowdown  Toyota Motor has witnessed its automaking business suffer in the wake of the 9.0-magnitude earthquake and subsequent tsunami that battered Japan on March 11, causing widespread destruction. Though the company has had to scale back production, it plans to increase the number of workdays, according to a recent report.

Reuters reports that the Japanese automaker plans to add about two production days to its monthly operating schedule, totaling 10 to 15 workdays for the year. Further, the company is endeavoring to augment output by 150,000 vehicles as production plants come back online and critical component deliveries resume over the coming weeks.

According to Japanese business daily Nikkei, Toyota executives plan to present the proposal to its labor union for approval. Thus far, the Japanese crisis has reduced Toyota's domestic production by more than 550,000 units, according to estimates.

In the immediate aftermath of the devastation, Toyota engineers scrambled to find alternate suppliers for more than 500 critical components. However, that figure has fallen to roughly 30 parts this month.

Toyota, which assembles a majority of its vehicle offerings in Japan, is currently operating at roughly 50 percent capacity; in June, the company projects it will increase manufacturing capacity to about 70 to 80 percent, after which it will raise it incrementally.
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Supply chain disruptions cause "dismal start" to May U.S. car sales

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Supply chain disruptions cause The automaking industry was hit especially hard by the natural disasters that battered Japan on March 11. A recently released report illustrates how the supply chain disruptions emanating from the crisis have eroded revenue at a number of carmakers.

J.D. Power and Associates released a report Thursday that states May automobile sales are off to a "dismal start" as lower sales incentives, high gas prices and dwindling inventories coalesce to suppress demand. Carmakers like General Motors, Toyota, Nissan and Honda have all had to grapple with components shortages and decreased manufacturing capacity following the shock to the Japanese infrastructure.

Industry watchers had expected car sales to slow as global automakers reported slowdowns in production capacity, but the disappointing news worried analysts who fear sales will continue to decline.

J.D. Power said North American automobile production will be reduced by roughly 400,000 vehicles in the short-term, with total U.S. sales expected to hit 11.9 million light vehicles during the month of May - only a 6 percent increase from May 2010. In April, 13.2 million cars were sold, illustrating the overall contraction the sector experienced.

Nonetheless, J.D. Power projects car sales during the second half of 2011 to continue at the brisk pace they showed prior to the crisis.
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Rising milk, food prices worrying analysts

on Wednesday, May 18, 2011

Rising milk, food prices worrying analysts  An uptick in the price of milk is bringing added revenue to dairy farmers, but is squeezing profit margins at businesses like Wal-Mart that sell it, according to a recently published report.

U.S. dairies are currently in the midst of a record run in production as they work to keep pace with burgeoning demand for milk. Though the rise in price has helped farmers to recoup some of the losses they have absorbed over the past few years, the quick jump is boosting costs for shoppers and has directly hurt profit margins at companies like Starbucks, Bloomberg reports.

The rise in the price of milk is indicative of the overall uptick in food and energy prices, according to Reuters. Over the past few years, commodities have surged in value as global demand - especially from emerging economies like Brazil, China and India - has far eclipsed supply. Though the rise has been a boon for farmers, it worries analysts and policymakers who fear the price jumps will spur a wave of riots like those that occurred in 2008 during a similar run-up.

In fact, the Arab Spring, as the wave of revolutions that spread through the Middle East and North Africa this year has been dubbed, was partly spurred by surging food costs. According to industry watchers, unrest in Tunisia and Egypt, where both governments fell under intense pressure, was initially prompted by the steep cost of grains and other food sources.

Still, though the U.S. Department of Agriculture last week forecast that U.S. farmers will produce record amounts of milk this year, prices have surged 24 percent since the beginning of the year. What's more, the retail price of dairy products is expected to climb as much as 5.5 percent this year, which is a much faster clip than overall food costs are projected to rise.

U.S. farmers have "every incentive to keep producing and expanding supplies whenever they can," Wells Fargo economist Michael Swanson said in an interview. "With the weak dollar and growing Asian demand, we can sell all this milk that we're producing at these prices or even better."

Economists worry that the price raises will prevent consumers from opening their wallets as they have expressed tepid confidence in the nascent economic recovery. Kurt Salmon retail strategist John Long said coming price hikes at the supermarket could cause consumers to tighten their belts - and put the economic recovery on hold.

"We're already starting to see a little bit of margin pressure," Long told Reuters. "And we think that as we get into the summer and fall, when we see bigger price increases … that may cause some consumers to pull back." 
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Canon expects $600 million boost in revenue from supply chain

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Canon expects $600 million boost in revenue from supply chain  On the heels of an announcement from Nissan's chief executive that the company will achieve full production capacity ahead of schedule, Japanese camera and copier maker Canon announced its supply chain - similarly hit by the crisis in the country - will recover more quickly than earlier projected, according to a recently published report.

Reuters reports that Canon has had to adjust its supply chain following the 9.0-magnitude earthquake and subsequent tsunami that battered the country on March 11. Since the natural disasters struck, Canon chief executive Fujio Mitarai affirmed that the company has considered expanding a factory currently under construction in the southern part of Japan as it looks to diversify its production of critical components.

Last month, Canon told investors that the complexity of its supply chain and the hit to infrastructure sustained during the natural disasters would leave the company without a streamlined procurement strategy until June or July. However, the improving supplier landscape led the company to reassess its supply chain projections.

"As those involved in parts production have been giving it their best, we expect supplies to arrive sooner than we had predicted," Mitarai said in an interview on Tuesday. "We now forecast [production] to return to normal by the end of June."

As a result of the company's nimble supply chain moves, Canon now expects sales to beat prior estimates. The company is now projecting revenue of nearly $46 billion this year through December. According to Mitarai, the quick supply chain turnaround could contribute as much as $600 million to the company's bottom line.

Businesses across the globe have been affected by the natural disasters that hit the island nation. According to analysts, Japanese companies supply more than 20 percent of the critical electronic components that companies as diverse as Apple and General Motors rely on to assemble their own offerings.

Still, Mitarai said Canon is now focusing on trimming business costs in China and improving efficiency as it contends with a growing middle class that is demanding higher wages.

"We must gradually adopt a more efficient system in China that saves manpower, and change our product line up to one with more added-value," he said.

Canon is also aggressively looking to acquiring companies that can help it to expand while keeping business costs low, Mitarai asserted.
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Office Supplies Indicator?

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Staples earnings fell short of estimates and the stock is off 15% today. Office Depot, OfficeMax and Avery Dennison also had lackluster earnings reports. Office Depot reported a loss and declining sales.


Are these financial reports from the office supply companies a crystal ball to the direction of the economy? Are we really in a recovery as government reports indicate? Government stimulus is ending in June. Federal, State and Local budgets are strained. GDP would have been negative since 1980 without the growth in government debt. Republicans are threatening to shut down the Federal Government unless there are huge cuts in spending. Housing and construction are in the dumps. Consumers are strained with the added burden of high gas prices. Where will the future demand come from to grow the economy? We’ll know by the end of the summer if Office Supplies are an indicator for the overall economy.
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Latest ISM report points toward strengthening U.S. manufacturing

on Tuesday, May 17, 2011

Latest ISM report points toward strengthening U.S. manufacturing  The Institute of Supply Management released its spring 2011 Semiannual Economic Forecast this week, and according to the organization economic growth is projected to continue throughout 2011.

The ISM's report stated that expectations of an improved economic landscape have improved among executives in both the manufacturing and non-manufacturing sectors. The report, which surveyed the nation's purchasing and supply executives, found that 68 percent of respondents forecast revenues to be 13.2 percent higher through the end of the year.

Moreover, manufacturers' net revenue is expected to climb by 7.5 percent by the end of the year, which reflects a strengthening confidence in the economic recovery. In December 2010, when the ISM last released the semiannual report, respondents said they expected net revenue to rise by only 5.6 percent.

Nortbet J. Ore, the Chairman of the ISM manufacturing Business Survey Committee, said the survey illustrated that the manufacturing sector continues to drive U.S. economic growth.

"Much of manufacturing has emerged from the economic downturn and is experiencing significant growth," Ore said in a statement. "Capacity utilization is back to typical levels and manufacturers are significantly investing in their businesses."
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Report highlights businesses' susceptibility to supply chain disruptions

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Report highlights businesses' susceptibility to supply chain disruptions  With the growing interconnectivity of businesses across the globe, potential supply chain disruptions present one of the most formidable challenges that companies face, according to a recently published report.

A recent study conducted by BDO USA, "2011 BDO RiskFactor Report for Technology Businesses," surveyed over 100 of the largest publicly traded technology companies. According to the report, 86 percent of respondents affirmed that supply chain concerns relating to supplier relations and distribution and material costs ranked as the top risk factors to performance. .

That figure represents a 15 percent uptick from the prior year's survey, illustrating the growing importance of logistics and supply chain planning, according to BDO USA's Aftab Jamil.

"Concerns over the ability to executive corporate strategy have more than tripled in the past two years as companies are under pressure to get back into the game and stay ahead of the competition," Jamil said in a statement.

Companies like Apple, which is the world's most valuable tech company with a market cap at $208 billion, have struggled to overhaul their supply chain models in the wake of the natural disasters that battered Japan in March, bringing the country's infrastructure to a standstill. The increasing complexity of global supply chains has prompted many businesses to reassess their current procurement policies, according to the report.
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Nissan CEO: Full production will resume in October

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Nissan CEO: Full production will resume in October  Japan-based carmaker Nissan has struggled to overcome the disruptions to its manufacturing practices following the 9.0-magnitude earthquake and subsequent tsunami that struck Japan on March 11, battering its production facilities. This week, however, the company's chief executive said it had completed repairs at its most-damaged plant ahead of schedule.

The Wall Street Journal reports that Nissan chief executive Carlos Ghosn said the repair of the plant in Iwaki, Fukushima Prefecture, represented the last of the company's Japanese factories to go back online following the extensive damage inflicted by the natural disasters. Still, Ghosn acknowledged that component shortages would prevent the automaker from resuming full production - at least right away.

Ghosn told reporters that the company now projects full production capacity to be achieved by October, roughly one month ahead of rival Toyota Motor's planned start date. Carmakers were especially hurt from the natural disasters, as Japanese automaking is located primarily in the northeast part of the country, where the majority of the destruction occurred.

The news comes on the heels of an assertion from Honda chief financial officer Fumihiko that Japanese carmakers would inevitably lose market share as a result of the supply chain disruptions.

Ghosn asserted that Nissan planned to reinforce existing factories with upgrades that could help them to better withstand a similarly-powerful natural disaster. He said the company's vehicle production in May would be about 50 percent of the year-before level, compared with just above 40 percent in April. 
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RIM recalls 1,000 PlayBooks

on Monday, May 16, 2011

RIM recalls 1,000 PlayBooksResearch In Motion (RIM), the maker of the Blackberry smartphone and PlayBook tablet, has faced an uphill battle as it works to regain market share it has lost to rivals Apple and Google. This week, however, the company faced a setback, announcing it would recall about 1,000 of its tablets, citing a software glitch.

The recalled PlayBooks have a problem in their operating systems that could prevent them from properly loading software, according to Bloomberg. Still, the manufacturing defect is relegated to a small percentage of the company's tablets, and a majority are still in the hands of distributors and have not hit retail stores yet, lessening the blow of the announcement.

RIM had put a lot of faith in its PlayBook device as it hopes to steal some of Apple's market clout. The iPad is the undisputed leader among all tablets, and some analysts project it to sell more than 40 million units in 2011.

"Usually product recalls don't make it into the headlines when it's less than about 100,000 devices," MKM Partners analyst Tero Kuittinen told the news service. "It shows that people are using a magnifying glass when looking at RIM." 
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Reduced business costs help JC Penney's fiscal quarter profit jump

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Reduced business costs help JC Penney's fiscal quarter profit jump  As retailers across the U.S. have reported quarterly earnings for the last fiscal quarter, there have been mixed reports as some businesses like Macy's have succeeded in bolstering sales, while others have lagged. This week, retailer JC Penney beat analysts' expectations as it cut business costs to increase its net profit.

JC Penney announced this week that its profit rose six percent from the same period the year prior thanks to an aggressive push to reduce its business costs amid a tepid economic environment. Further, the company successfully unveiled an exclusive merchandise collection that helped boost sales.

The retailer earned $64 million, or 28 cents per share, during the quarter. During the company's first fiscal quarter, revenue rose to $3.94 billion, while revenue at stores open at least a year - a key gauge used by the industry to determine strength - jumped 3.8 percent.

"We are successfully implementing our merchandising initiatives, with strong gains in both our men's and women's apparel businesses," JC Penney chief executive Myron E. Ullman III said in a statement. "Additionally, the steps we have taken to manage our expenses position us to increase the flow-through of sales to the bottom line."
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Chrysler to idle three plants ahead of schedule following supply chain disruptions

on Friday, May 13, 2011

Chrysler to idle three plants ahead of schedule following supply chain disruptionsThe U.S. automaking industry has worked through the supply chain disruptions emanating from Japan, shifting its suppliers when needed. This week, Chrysler said it is moving its normal summer factory shutdowns ahead of schedule as it grapples with parts shortages.

According to Chrysler, it will move the summer shutdowns at three of its manufacturing facilities from their planned July closings to June. The move comes in response to the unexpected disruptions the Big Three automaker has had to adjust to in the aftermath of the 9.0-magnitude earthquake and subsequent tsunami that struck Japan on March 11, causing significant damage to the country's infrastructure.

The New York Times reports that Chrysler will idle its pickup truck plant in Warren, Michigan, along with its Toledo, Ohio, North assembly plant during the weeks of June 20 and 27. The company had already planned to close the plants during the weeks of July 11 and 18, according to the news service. An additional Toledo facility will shutter its doors the week of June 20 - earlier than the July 11 planned closing.

Chrysler said its other manufacturing facilities will undergo normal summer shutdowns in July and August.
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Firms' new strategic partnership to aid hospitals in boosting efficiency

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Firms' new strategic partnership to aid hospitals in boosting efficiencyHealthcare providers are striving to cut business costs and improve efficiency and patient care as they await an onslaught of new patients over the next decade. This week, CareLogistics announced it will partner with Perkins+Will in a move that should help hospitals increase their efficiency.

According to the companies, the strategic deal will utilize Perkins+Will's hospital design credentials and CareLogistics' care coordination experience to increase hospital capacity and flow, resulting in lowered business costs. Moreover, the partnership will help hospitals to increase patient flow and cut the costs associated with patient delivery, according to a statement from the two firms.

"Design is not only for aesthetic appeal. Just as other industries have learned the importance of designing work space so that operations flow smoothly, hospitals are learning that combining design and operational considerations can support total hospital efficiency, reduced costs and improve quality," CareLogistics president Karl Straub said in a statement.

With an emphasis on hospital design, the joint-venture between the two companies will also help hospitals to implement other cost-cutting measures like healthcare IT upgrades and improvements to care methodologies. 
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GM adeptly navigated Japan crisis with adaptive supply chain model

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GM adeptly navigated Japan crisis with adaptive supply chain model  General Motors surprised analysts with its first quarter earnings, reporting a $3.2 billion in revenue. According to a recently published report, GM has adeptly adjusted its supply chain in the aftermath of the Japanese crisis, impressing analysts.

The New York Times reports that GM, which has battled back from the brink of destruction to reemerge as a major global player, has suffered less from supplier disruptions than Japanese automakers. According to the news service, American and European carmakers have mostly passed the difficult period following the crisis, while Japan-based auto manufacturers are still in the throes of the crisis.

GM spends only 2 percent of its parts-buying budget in Japan. Further, of the 118 components it said it needed to monitor for shortages, it has resolved problems with all but five. GM chief executive Daniel F. Akerson also said last week the crisis was unlikely to seriously impact the company's earnings moving forward - a vast departure from the immediate aftermath of the natural disaster.

"It was pretty tense," Akerson said of the period directly following the March 11 events.

Though GM has contingency plans in case of manufacturing disruptions of supply delays, the extent of the damage in Japan was unlike anything the company had prepared for, said GM vice chairman Stephen J. Girsky.

Dubbed "Project J," GM engineers and executives worked in the weeks following the events to secure alternate suppliers and overhaul the company's supply chain strategy. GM briefly idled two manufacturing facilities to conserve auto parts, but found alternative suppliers quickly enough to keep a majority of its production plants running.

Nonetheless, some issues still plague the company, including a dearth of semiconductors and other electronics that are for the most part manufactured in Japan only.

"We still have issues," GM's vice president for global purchasing and supply chain, Robert E. Socia told the Times. "The issues we have now are getting tougher to solve.'

Still, by extensively monitoring their suppliers and the status of their supply chain, GM officials were able to adeptly tweak their manufacturing practices when necessary. Ultimately, GM was able to help its suppliers resume production quickly instead of hunting for new manufacturers, which saved the company valuable time and money.

"Our objective was to help the suppliers get back into production, not to re-source the parts somewhere else," GM executive director of engineering Ronald Mills said in an interview. "We like the parts we had." 
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Corn futures decline on improved supply forecast

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Corn futures decline on improved supply forecast  Commodity prices have surged over the past year as global demand eclipsed stockpiles. However, over the past few weeks analysts have grown more bearish on certain commodities as improving inventories have caused prices to decline. Corn prices have tumbled in trading this week after the U.S. Agricultural Department said supplies would grow by September.

According to the USDA, for the 2010-2011 marketing year ending August 31, corn ending stocks will hit 730 million bushels. That figure represents an eight percent increase from the group's April 8 estimate of 675 million bushels. Further, it surprised analysts who had projected the government to cut its outlook to 665 million bushels, Market Watch reports.

Moreover, the USDA forecast that during this year's corn-planting season, which runs from mid-April until the end of May, there will be 92.2 million acres planted - up from 88.2 million acres in the year prior. The government also expects higher corn yields per harvested acre, with production at a record 13.5 billion bushels. Analysts, however, said the government could still change its estimates.

"A lot can change from now until harvest," American Farm Bureau Federation crops economist Todd Davis said in an interview. "We still don't know the impact late planting in Corn Belt states east of the Mississippi will have on this year's corn crop. We're going to need a warm summer with timely rains to realize this 13.5 billion bushel corn crop."

Grain prices have soared over the previous 12 months as farmers around the globe had to combat inclement weather that damaged crops. What's more, surging demand for corn - especially from emerging economies - has grown at a torrid clip, while farmers have struggled to keep up with the soaring demand.

On the Chicago Mercantile Exchange on Thursday morning, corn futures for July delivery sunk 1.5 percent, or 10.25 cents, to trade at $6.67 per bushel. Over the past year, corn futures have jumped 80 percent in value on record use by ethanol producers and increasing demand from livestock farmers, Bloomberg reports.

Corn is the biggest U.S. crop. In 2010, it was valued at $66.7 billion.
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GM to invest $2 billion in U.S. manufacturing facility upgrades

on Wednesday, May 11, 2011

GM to invest $2 billion in U.S. manufacturing facility upgrades  In the aftermath of its near collapse, U.S. automaker General Motors has roared back to profitability. This week, the carmaker said it would work to implement infrastructure upgrades to a number of its domestic manufacturing facilities.

The New York Times reports that the Michigan-based company will invest $2 billion to further develop its U.S. factories as it works to keep up with growing demand for its vehicles. In total, GM will upgrade 17 plants in eight different states. According to the company, the improvements will create or save more than 4,000 jobs.

"We are doing this because we are confident about demand for our vehicles and the economy," GM chief executive Daniel F. Akerson said at a transmission plant in Ohio.

GM has begun a new strategy as it courts an increasing number of consumers across the globe. While the carmaker was known for its sport utility vehicles and larger vehicles in the past, it has aggressively moved to design and market small to mid-sized cars, with an emphasis on fuel efficiency. The gamble has seemingly begun to pay off: The company said it earned $3.2 billion in the first quarter of this year.
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Toyota earnings sink on supply chain disruptions, stronger yen

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Toyota earnings sink on supply chain disruptions, stronger yen  The earthquake and tsunami that struck Japan in March have caused supply chain disruptions to businesses based in the island nation and throughout the world. As a result of manufacturing delays, Toyota Motor delivered quarterly earnings this week that missed analysts' expectations.

Toyota, which is the world's biggest automaker, said its net profit in the January through March quarter plummeted 77 percent from the year prior as a result of supply chain disruptions and the relatively strong yen. Further, the company didn't release an earnings forecast, a production plan or other guidance for this fiscal year through March 2012 because of the uncertainty over whether production will be back at full capacity by year's end, Market Watch reports.

Nonetheless, Toyota did affirm that its output would begin to recover about two months ahead of schedule as its supplier facilities go back online. Situated mostly in the northeast part of Japan, the country's automaking industry was hard-hit by March's natural disasters.

Toyota also said that the strengthening yen had cut into its profit margins. According to the company, it needs the dollar at 85 yen or weaker to break even in Japan; the dollar is currently at 80 yen. Toyota produces a majority of its cars in Japan. 
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Price hikes help Tyson to offset rising commodity costs

on Tuesday, May 10, 2011

Price hikes help Tyson to offset rising commodity costs  Commodity prices have surged over the past year as farmers have struggled to keep up with burgeoning global demand. Tyson Foods, which hiked prices of its foods to contend with the rise, said those price rises were working, helping it to post second quarter earnings that mostly beat Wall Street expectations.

The Chicago Tribune reports the company said high costs for grains, which are used in feed, squeezed its profit margins. However, the company had previously moved to raise consumer prices as it looked to ensure it maintained profitability going into the new year. That move helped lower business costs and improve efficiency, and helped revenue rise 15.7 percent to $8 billion, beating the $7.54 billion many analysts had expected.

Now, Tyson said it expects its full-year sales figures to rise to more than $32 billion thanks to the price hikes. Tyson raised its chicken prices by 3.7 percent, and said its chicken sales climbed by 10 percent in the quarter to $2.74 billion. Even with the price increases, though, its operating margins in that unit declined to 1.4 percent from 4.6 percent.

Prices in its beef unit were raised by 19.6 percent, but sales rose 18.9 percent to $3.33 billion.
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Nvidia to buy Icera for $367 million in cash

on Monday, May 9, 2011

Nvidia to buy Icera for $367 million in cash  Nvidia announced this week that it has agreed to acquire Icera in a deal worth upwards of $360 million.

In a statement, Nvidia said it would buy Icera in an all-cash deal. Icera specializes in the development of baseband processors for 3G and 4G cellular phones and tablets. Icera, which has more than 550 patents granted or pending around the globe, has an array of products approved to work in over 50 countries, increasing its value, Nvidia executives affirmed.

Nvidia said it will buy Icera for $367 million, pending regulatory approval. The decision to purchase Icera is strategic as the newly formed company will offer the two main processors used in smartphones, enabling it to improve its market share and more readily deliver equipment to consumers.

According to Nvidia chief executive Jen-Hsun Huang, the newly formed company will be a global powerhouse within the industry.

"This is a key step in Nvidia's plans to be a major player in the mobile computing revolution," Huang asserted. "Adding Icera's technology to Tegra gives us an outstanding platform to support the industry's best phones and tablets."
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Michael Dell: Healthcare IT improvements can help boost revenue, efficiency

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Michael Dell: Healthcare IT improvements can help boost revenue, efficiency  According to Dell chairman Michael Dell, improvements in healthcare IT directly aid patients by increasing hospital efficiency, among other benefits. 

At the recent Health Evolution Partners Leadership Summit, which was held in Dana Point, California, Dell affirmed that a more streamlined healthcare IT approach would directly benefit patients, resulting in improved healthcare and innovations in prevention and wellness. The company plans to aggressively move into the industry over the next few years, Dell affirmed.

During his speech, Dell asserted that healthcare organizations should increase the digitalization of data and the ability to share information among providers. By doing so, Dell contends they could boost productivity and increase patient care, all the while keeping costs low. Moreover, Dell said that healthcare technology progress would boost revenue at hospitals and clinics, giving a jolt of revenue to some beleaguered institutions.

"Today, Dell is providing EMR solutions to 40,000 clinicians through 20 hospital-affiliated programs," Dell said. "Seventy percent of the hospitals who have achieved the highest level of EMR deployment are Dell customers."

Along with its enterprise solutions, Dell has moved to utilize its software on emerging technologies like tablets and smartphones.

 
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The Truth behind “Cinco de Mayo” and the best business opportunity in the history of Beer

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This morning one of my friends said to me: “I have been celebrating Mexican Independence Day since Thursday night and my head is killing me today”. I though he was probably still intoxicated as Mexican Independence Day is not until four months from now; nevertheless, after associating his drinking behavior with this particular date, I realized there is some historical significance that goes beyond Mexico and explains the reason behind his drunkenness today.

Last Thursday was May 5th, 2011, also known as “Cinco de Mayo”, the day millions of people around the world gather to celebrate one of the most important days on their calendar. There are big parades on the streets, festivals and celebrations of the Mexican heritage, except of course, that most of these people aren’t Mexican and they are not commemorating heroes who fought for their country’s independence. Thinking that May 5th is Mexico’s Independence Day is a common misconception of the nature of this day. Regardless, the day presents the perfect excuse for drinking Mexican beer despite the reasons behind the celebration.

The truth is that on May 5th streets in Mexico look the same as they do any other day, no parades take place and no humongous flags are displayed. It is in fact a holiday, but only regionally; celebrated only in the Mexican state of Puebla where a battle took place in 1862 in which 8,000 heavily equipped Frenchmen were crushed by 4,000 really angry Mexican soldiers. The victory had little impact on preventing the French from establishing an Empire in Mexico, but it is in fact significant in the way that it was the first defeat suffered by the French army (the strongest at the time) in over 50 years and marks the milestone that no country in the Americas has been invaded from an European army ever since.

The reason behind how that isolated battle became such a big celebration every year in the U.S. goes back to the Chicano movement, which initialized the modern “Cinco de Mayo” celebrations back in the 40s and 50s and was later popularized by beer companies in the 80s who seized the opportunity to market themselves and capitalize on the nature of the day. Since then, beer companies have promoted the celebration in order to spike their sales. Their influence has been so powerful during the last decades that in 2005 the U.S. Congress issued a concurrent resolution to observe over a hundred official celebrations across the country.

A very interesting fact today is that breweries realizing better sales during these celebrations are not necessarily Mexican; for the Latin American community in the U.S., popular Mexican beer brands are premium beers that come at higher prices; imported Mexican beers are most commonly purchased by non-Hispanic Caucasians, whereas “substitute” local beers are taking over the Latin American communities due to lower prices and similar taste.

But during the 80’s the story was different, “Grupo Modelo” (makers of Corona beer) was the leading promoter of the celebration in Texas and California. By using catchy slogans such as “The Drinko for Cinco”, the company raised its sales from 1.5 million cases a year in the mid-80s to over 12 million only a couple of years later. Grupo Modelo positioned itself as a leading brand and consolidated a competitive position in the American market within the next decades. Today Corona beer alone stands in fourth place in global sales, and Modelo Group has come to compete head to head with the Belgian giant InBev and provided advice to Anheuser Busch while the company was unsuccessfully battling the foreign takeover.

Cinco de Mayo to Mexican breweries and particularly to Grupo Modelo is a reason to celebrate, as in the same way the Mexican army defeated a foreign army, Grupo Modelo has taken over international markets coming from a disadvantaged position and pleasantly surprising even its own executives. Cinco de Mayo will continue to be an increasingly important celebration in the U.S and a clear opportunity for Mexican breweries to rebrand their products, market their companies and takeover foreign competitors.
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Manufacturing hiring drives job growth

on Friday, May 6, 2011

Manufacturing hiring drives job growth  In April, the U.S. labor market added 244,00 jobs, beating economists' expectation of 175,000 new jobs. The manufacturing sector added jobs for the sixth straight month - its longest straight streak since 1998.

Manufacturing has been one of the bright spots in the nascent U.S. economic recovery. Since the depths of the recession, the sector has recovered to boost productivity and drive the uptick in U.S. exports. In the past 13 months, manufacturers in the U.S. have added a net surplus of workers 11 times, showing the strength of the industry, the Wall Street Journal reports.

Manufacturing employment, in fact, is up 1.9 percent from a year earlier. According to the Labor Department, that figure serves as the biggest year-to-year percent change in hiring activity in the sector in 13 years. Following its December 2009 low, U.S. manufacturers have added 250,000 jobs.

What's more, the uptick in manufacturing employment is different from the success of other industries, which have hired a high number of temporary workers. Manufacturing workers are getting 3.3 hours of overtime per week, and production workers are getting 41.4 hours of work per week, which is typical of an economic expansion, economists assert.

Still, though the sector has made great strides over the past two years, overall manufacturing employment is down 32 percent from 2000. 
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Supply chain, quality-control issues spur Lexus' fall as top U.S. carmaker

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Supply chain, quality-control issues spur Lexus' fall as top U.S. carmaker  Lexus has commanded the biggest U.S. market share among luxury carmakers for the past decade. However, supply chain disruptions emanating from Japan will likely lead the automaker to lose its position to BMW, according to a recently published report.

In 2010, Lexus was the top luxury carmaker in the U.S. However, all but one of the company's cars are manufactured in Japan, which has had to grapple with the effects of the 9.0-magnitude earthquake and subsequent tsunami that battered the island nation on March 11. Since then, Lexus has had to trim back manufacturing by more than 50 percent.

Increasing competition from Mercedes-Benz and BMW has also hurt the Japanese carmaker, whose parent company is Toyota Motor. Lexus trailed both of the German car companies during the first four months of 2011. Further, it trails both of its rivals in U.S. shipments this year.

"The house was on fire at Lexus before the earthquake hit," Car Lab president Eric Noble told the news service. "If the current situation wakes them up to that, then some good may come from it."

Analysts affirm that a spate of recalls last year also hurt Lexus' market share, as consumers started to shift their attitudes about the company.
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Soaring commodity prices spur restaurants to hike menu prices

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Soaring commodity prices spur restaurants to hike menu prices  The rapid rise in commodity prices over the past year has spurred concerns that businesses would soon need to raise prices to help offset those added business costs. According to a new report, restaurants are beginning to hike prices as surging food prices eat into profit margins.

Analysts had speculated whether restaurants would raise fees, especially with the tepid economic growth the U.S. has witnessed over the past year. However, restaurants are now raising prices on menu items as they bet that consumers will pay more to eat out, Bloomberg reports.

Restaurants are taking a cue from airlines, which added a wide swath of fees following hikes to oil prices, according to Barclays Capital chief U.S. economist Dean Maki. "The fact that the airline industry was able to pass along cost increases signals that the pricing environment has become somewhat more favorable than it was during the heart of the recession," Maki said in an interview. "It's more likely restaurants will be able to pass along price increases now relative to the last few years."

The added business costs have spurred calls for the Fed to control inflationary pressures. While Fed chairman Ben Bernanke publicly said he thinks higher inflation is "transitory," some analysts worry that the Fed isn't taking the threat of quickly climbing consumer prices seriously enough.
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