Obama readies plan to combat drug shortages

on Monday, October 31, 2011

Obama readies plan to combat drug shortages  The medicine shortages that have plagued the U.S. for the past few years are posing a significant challenge to healthcare providers. The Obama Administration is hoping to prevent further shocks to supplies through a newly unveiled program.

President Obama planned to issue an executive order on Monday that his senior advisers hope will help to address the issue plaguing healthcare providers across the U.S. Critical drugs have increasingly become difficult to procure, leading to supply constraints that have subsequently driven prices higher.

The president's order effectively orders the Food and Drug Administration to broaden its reporting of potential shortages of certain medications and to expedite its reviews of applications to begin or alter production of such drugs, according to a report from The New York Times.

Moreover, Obama's executive order stipulates FDA officials must share information with the Department of Justice regarding possible price-fixing among drug manufacturers.

A growing number of physicians have voiced concerns about the drug shortages, which have driven up the prices of many medications. This is the first executive order from a president to directly affect the operations of the FDA since 1985, according to The Times.

 
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In cost-cutting measure, Whirlpool plans to lay off 5,000 workers

on Friday, October 28, 2011

In cost-cutting measure, Whirlpool plans to lay off 5,000 workers Soaring raw materials costs and a tepid economy conspired to drive losses at Whirlpool Corp. The company plans to lay off roughly 10 percent of its workforce as it seeks to achieve business cost reductions and stave off weak demand.

Officials from the appliance maker said this week the company would reduce its workforce by about 5,000 people, citing the mounting toll of high costs and stagnant growth. The Associated Press reports the world's largest appliance maker also missed expectations with its latest quarterly earnings, worrying investors.

The company slashed its 2011 earnings outlook on the news. What's more, unlike many other companies that have reported an uptick in business and revenue in emerging markets, Whirlpool said it is seeing slower growth in such countries, which further depressed its profit margin in the third quarter.

Company officials said they expect demand in North America to fall between 3 percent and 5 percent this year. The firm had previously forecast demand in 2011 to decline between 1 percent and 2 percent. The prices of metals such as steel and copper have surged over the past few years, prompting headaches at Whirlpool.

 
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Coventry's earnings disappoint as medical costs eat into profit

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Coventry's earnings disappoint as medical costs eat into profit The healthcare sector has experienced robust growth over the past decade, but it is not immune from surging costs. Coventry Health Care reported its third quarter earnings this week, disappointing investors as its profit dropped significantly from last year.

Officials from Coventry said this week that its third quarter profit plummeted 35 percent. Executives from the firm said surging medical costs eroded its profit margin, but they were optimistic that its yearly earnings would be less affected by the uptick in expenditures.

In its latest fiscal quarter, Coventry's operating revenues totaled $3 billion, with net earnings registering $122.7 million. Moreover, the company said medical costs climbed 11 percent to hit $2.19 billion in the quarter, outpacing the rise logged in revenue.

Compared to the same period in 2010, Coventry's medical membership edged up 3 percent in the three months ending September 30, with 3.4 million people now counted among its ranks. The rise was slightly higher than the rate at which it added customers in the second quarter as well, according to company officials.

Coventry chief executive Allen F. Wise said he was pleased with the quarterly results, and was optimistic the company would surpass expectations when it unveils its full year earnings in January.

"I am pleased with the progress the Company has made and the performance of the businesses, such that we can increase 2011 full year guidance for the third time this year," he said. "More importantly, I am optimistic about the growth opportunities for our Company. Recent examples include the pending Family Health Partners acquisition, the Kentucky Medicaid contract, and our new preferred network Part D product that was approved for 2012."

Healthcare providers have struggled under the weight of soaring business costs. Though demand in the U.S. for healthcare services has climbed precipitously over the past 10 years, healthcare companies are continuing to struggle with rising medical costs, which consistently outpace inflation.

The Associated Press reports some analysts were disappointed not only with Coventry's earnings, but also with its full-year outlook. For example, Goldman Sachs analyst Matthew Borsch said in a research note the company's quarterly report and outlook were not as strong as expected, according to The AP.

 
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Colgate-Palmolive: Business cost reductions, price increases offsetting high raw material prices

on Thursday, October 27, 2011

Colgate-Palmolive: Business cost reductions, price increases offsetting high raw material prices Consumer products giant Colgate-Palmolive reported surprisingly robust earnings this week.

The company reported net sales in its latest fiscal quarter jumped 11 percent compared to the same period the year prior to $4.38 billion. What's more, the firm said net income climbed 4 percent to $643 million, representing a slight uptick from the $619 million is reported in 2010.

Investors were expecting weaker results from Colgate, with many contending high raw material costs would prevent officials from implementing business cost reductions. Colgate executives acknowledged increased business costs and depressed earnings, but they said they had taken steps to prevent them from significantly impacting overall performance.

Colgate's gross profit margin in the quarter was 56.2 percent, declining from the same period a year earlier. Strategic sourcing and other cost reduction plans helped to ameliorate profit growth, and the company moved to offset some of the higher costs onto consumers, raising prices for a number of products.

Moreover, Colgate reported robust sales in emerging markets, The Associated Press reports. What surprised analysts, however, was the strength of sales in developed markets, where sales had slowed in the wake of the recession. Experts said the uptick in sales could indicate consumers are beginning to spend again, reversing a retrenchment in spending.

In the Europe and South Pacific region, which accounts for more than a fifth of total company sales, Colgate officials said revenue jumped by 18.5 percent. In Latin America, revenue climbed by 16 percent.

"We are pleased with our strong top and bottom line growth this quarter with worldwide net sales, operating profit, net income and diluted earnings per share all increasing versus year ago, despite very sharp increases in material costs, an intense competitive environment and challenging macroeconomic conditions worldwide," Colgate president and chief executive Ian Cook said in a statement.

Still, Cook acknowledged higher costs were affecting earnings, prompting the company to project its annual gross profit margin would decline.

"Reflecting the significantly higher cost environment, we currently expect gross profit margin for the year to decline between 150 and 170 basis points versus 2010," he added. "We continue to be sharply focused on our aggressive funding-the-growth initiatives and anticipate that the benefits from those programs, combined with our strategic worldwide pricing efforts, will help offset the impact of the strengthening dollar and enable us to achieve our profit target."

 
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Up, up and away: Delta earnings jump, bolstered by cost reductions, fare hikes

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Up, up and away: Delta earnings jump, bolstered by cost reductions, fare hikes Though consumers objected bitterly this year to rate hikes carried out by nearly every airline carrier, sales remained brisk. The increased fares helped to bolster earnings at Delta, which recently reported its latest quarterly results.

The second-biggest U.S. airline said this week net income for the September 2011 quarter was $765 million. The company's generally accept accounting principles (GAAP) net income came in at $549 million, and revenue grew 10 percent compared to the same period the year prior.

What's more, Delta's operating revenue grew $866 million in the September 2011 quarter, representing a 10 percent uptick from 2010. Still, the carrier battled volatile energy prices, doling out $1 billion to cover increased fuel prices, the company affirmed.

Nevertheless, Delta surprised investors with the generally upbeat earnings report. Unlike some of its competitors, it was able to effectively achieve business cost reductions, leading to an improved profit margin. Delta chief executive Richard H. Anderson said the company aggressively moved to raise fares to counter soaring oil prices. Though the measures were unpopular with consumers, they did not depress revenue.

"We are successfully adapting Delta to the challenging economic environment by producing a solidly profitable quarter in the face of $1 billion of fuel price pressure," Anderson said in a statement.

Delta's passenger revenue increased 10 percent in the quarter compared to last year, and cargo revenue similarly jumped, climbing 13 percent. Aviation analysts said Delta – along with nearly every other airline – had benefited from implementing fees and increasing fares, among other measures.

Airline carriers had struggled in the post-9/11 environment to attain profit growth as traffic declined. Delta cut capacity, increased fares and now charges for checked bags and other formerly free services, driving growth. The company said it would cut additional flights this year and continue the practice into 2012 as it works to strike a balance between supply and demand.

The Associated Press reports airlines were once hesitant to institute higher fares and other revenue-growing tactics. However, with nearly every airline raising fares, it appears as though they are more committed to profit growth than to potentially ostracizing consumers.

"Our September quarter passenger unit revenue increase of 11 percent from prior year, a revenue premium to the industry, demonstrates that our plan is working," Delta president Ed Bastian said. "Corporate travel demand remains strong. With continued capacity discipline, coupled with improvements we are making in our product and service, we are well positioned to deal with the impact of today's high fuel prices and an uncertain economy."

Business travel is more profitable for carriers than leisure travel, according to experts. Delta's traffic fell slightly in the quarter, but it cut flights by 1 percent in an effort to reduce overhead. Delta officials said the airline would likely reduce flight capacity by as much as 5 percent through the end of the year, and by as much as 3 percent in 2012.

The high cost of fuel continues to remain the biggest expenditure for airline carriers. Delta said it paid an average fuel price of $3.09 per gallon in the September quarter, which was up 35 percent, or 80 cents, from 2010. Delta's business cost reduction programs were instrumental in driving profitability, chief financial officer Hank Halter asserted.

"We are beginning to gain traction with our cost reduction initiatives," he said. "With the initiatives we have in place, we remain on track to bring our non-fuel unit costs modestly above 2010 levels in the fourth quarter despite a significant reduction in capacity."

 
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Source One Participates in Seminar on Top Cost-Saving Initiatives for 2011/2012

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Richard Lanza of Cash Recovery Partners LLC, in partnership with Source One, is offering a free live seminar to help you establish and optimize a set of cost-saving initiatives for the coming year.

The seminar will show how, regardless of any budget, cost savings and recovery projects can be incorporated into any organizational plan for 2011 / 2012. With past error percentages ranging from .1% to 6% (depending on the category of spend) and go-forward savings opportunities of 50% or more, companies owe it to themselves to establish and optimize a set of cost saving initiatives for the coming year.….before they disappear.

The free live event will be held in at the Marriott Saddle Brook hotel in Saddle Brook, NJ on November 17, 2011. Lunch will be served, and 2 CPE credits are available for attending.

You may also attend the webinar version of the presentation, to be delivered on December 8, 2011. For more information, view the Webinar Registration Page, or contact Richard Lanza at rich@auditsoftware.net, or call 201-650-4150
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Latest earnings report from perennial Wall Street darling Amazon shows cracks in company's armor, critics say

on Wednesday, October 26, 2011

Latest earnings report from perennial Wall Street darling Amazon shows cracks in company's armor, critics say  Investors have long grown accustomed to Amazon reporting stellar quarterly earnings. The world's largest online retailer has experienced torrid growth over the past decade as a result of its obsession with achieving business cost reductions and careful investment into emergent technologies.

Given its history of impressing shareholders, that the Seattle, Washington-based company reported earnings this week that missed analysts' expectations was all the more surprising. Amazon said third quarter sales jumped by 44 percent to $10.88 billion, but even such a significant jump could not allay concerns pertaining to the company's continued investment into its distribution facilities and recently announced Fire tablet.

Amazon has historically had a thin profit margin as the company has consistently invested in the latest and most innovative technologies on its seemingly insatiable drive to increase efficiency. While past investments have unequivocally paid off, a chorus of analysts waved a red flag at the retail giant's latest earnings, Reuters reports.

The disappointing earnings prompted analysts at six prominent brokerages - including Bank of America Merrill Lynch, J.P. Morgan Securities and Barclays – to lower their price target on the company's stock, according to the news agency.

"Fulfillment spending was higher than expected as the company works to expand the number of fulfillment centers and adds selection," Evercore Partners analyst Ken Sena said in a note to investors.

Amazon's success has largely come as a result of chief executive Jeff Bezos' business philosophy, experts say. Bezos transformed the company from a big player to an international conglomerate by taking big risks that produced big payoffs. Bezos hired supply chain and logistics experts to overhaul the company's sweeping distribution network, overhauled strategic sourcing and stressed managers to achieve manufacturing cost reductions, among other initiatives.

Nevertheless, investors and shareholders are notoriously fickle, and a growing chorus of critics said they were worried by the company's drop in operating income. Amazon reported operating income hit $79 million in the quarter, which was down significantly from the $268 million it reported in the third quarter of 2010.

Moreover, net income plummeted 73 percent to $63 million compared to $231 million in 2010, further stoking the flame of concern among the business set.

For its part, Amazon said it expects exceptionally high demand for its new Fire tablet offering. Bezos also asserted the company is aggressively expanding as it works to increase efficiency and plans to build 17 new distribution facilities this year.


 
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Cost-cutting, improved supply chain segment boost UPS Q3 profits

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Cost-cutting, improved supply chain segment boost UPS Q3 profitsUPS recently revealed that its third quarter revenue for 2011 increased 8 percent to $13.2 billion over the same three-month period last year.

The international shipping giant also said that its stock achieved a diluted earnings per share of $1.06, which represented a 14 percent improvement over the adjusted earnings for the third quarter of last year.

According to a release from the company, the earnings were largely driven by a considerably improved operating margin in UPS U.S. Domestic and Supply Chain & Freight sectors. Domestic margin increased by 13.1 percent and the Supply Chain & Freight segment went up 10 percent; both figures are in comparison to last year.

Dow Jones Newswires reports that UPS experienced a 5.1 percent net earnings increase over the previous quarter despite the fact that volume was stagnant due to lessening demand from the U.S. and fewer exports from Asian countries. Specifically, domestic shipping volume averaged about 12.74 million packages a day in the third quarter of 2011, up just a tick from 12.73 million seen in the July-September period in 2010.

Scott Davis, UPS chairman and CEO, said in the company release that the third quarter results were encouraging, particularly due to the inhospitable financial environment in which they were achieved.

"UPS produced another solid quarter of earnings growth against the backdrop of a deceleration in exports from Asia and a challenging global economic environment," Davis said. "The resilience of our global model was evident during the quarter and we remain confident in our ability to perform in both good and bad economies."

Reuters reports that another factor that allowed the Atlanta-based company to post strong quarterly results was the fact that it had not only increased its prices but also achieved business cost reduction.

According to the news provider, the company is well positioned to handle the increased shipping demands of the holiday season, which will have a "meaningful" impact on fourth quarter results, Davis told reporters on a conference call. This will be especially true if retailers with low inventories see increased demand from customers and need things shipped quickly.

"Over the last month or so, we are starting to see better economic numbers, so there is more optimism out there, and that could turn things around," Davis said in the call. "We are still expecting a slow-growth economy, but I don't think it is as negative as people were thinking two and three months ago."

FedEx said earlier in October that it expects the holiday season to see a significant rise in shipping. Specifically, the company believes that shipments will increase 12 percent in the period between Thanksgiving and Christmas, which is a crucial time for those in the package industry, according to Dow Jones.

Kurt Kuehn, UPS's chief financial officer said that the company's 2011 guidance remained unchanged, and reiterated the company's position.

"We are reiterating our 2011 guidance for UPS adjusted diluted earnings per share to a range of $4.15-to-$4.40," he said. "UPS continues to deliver strong financial results in today's global economic environment as customers benefit from the logistics solutions that only UPS offers."

According to Reuters, UPS - along with FedEx - is considered a bellwether for the economy due to the large volume of packages that the companies handle. UPS handles goods worth 6 percent of America's gross domestic product and 2 percent of the world's GDP each year, reports the news provider.
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Caterpillar posts strong third-quarter profit numbers

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Caterpillar posts strong third-quarter profit numbersCaterpillar Inc. recently announced that its profit for the third quarter of this year increased by 44 percent over its profit for the same three-month period of 2010, in part due to improved cost management.

The profit for the Peoria, Illinois-based construction equipment manufacturer for the quarter was $1.41 billion, or $1.71 per share, up from the $1.22 profit per share from the third quarter of last year, according to a release from the company.

Caterpillar Chairman and Chief Executive Officer Doug Oberhelman said that July to September period of 2011 was one of the best quarters in the history of the company.

"This was the best quarter for sales in our history, and our order backlog is at an all-time high," he said. "Excluding Bucyrus impacts, this was also our best profit quarter in history, and year-to-date operating profit as a percent of sales was higher than any full year in more
than three decades."

Caterpillar's global retail sales of construction machinery increased 31 percent in the quarter. This was despite the continuing trend of weakness in the construction industry in the U.S. as well as in Europe, reports Down Jones Newswires.

The news provider reports that it was the 17th straight quarter of sales gains for the company.

Caterpillar doesn't expect the good times to stop either, as the company improved its outlook for 2011 as a whole. It is now expected that total company sales and revenue for the year will be $58 billion, compared to the earlier predictions of $56-58 billion.

"Although there is a good deal of economic and political uncertainty in the world, we are not seeing it much in our business at this point. We believe continued economic recovery, albeit a slow recovery, is the most likely scenario as we move forward," said Oberhelman. "2011 has been an outstanding year for Caterpillar, and we are on pace for all-time record sales and profit."

Mike DeWalt, director of investor relations for Caterpillar, told analysts in a conference call that the increases in sales in developed regions such as the U.S. and Europe were due to a number of customers replacing older machines, reports Dow Jones.

The company also added about 2,000 jobs in the U.S. during the quarter, according to the release. 
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iSuccess: How manufacturing cost reductions and strategic sourcing help Apple become the world's most valuable company

on Tuesday, October 25, 2011

iSuccess: How manufacturing cost reductions and strategic sourcing help Apple become the world's most valuable company  As the world's most valuable technology company by market capitalization, Apple is the undisputed leader in the electronics sphere. Experts assert the firm's success over the past decade in streamlining its supply chain and achieving business cost reductions not only helped bolster its earnings, but also contributed to its surge in popularity among consumers.

Apple was long known for its product lineup of what essentially amounted to nifty gadgets with expensive price tags. The sleek design and intuitive interface of the company's iPhone, iPod and MacBook computers, among other electronic goods, did not come cheap – and still do not, for that matter – but prices have declined over the past decade.

Secrets of a number of Apple's successes have been elucidated with the publication this week of Walter Isaacson's authorized biography of Jobs. While analysts had long heard rumors of many of the stories presented in the book, the narrative has helped to clarify misconceptions through anecdotes splattered throughout its 600-plus pages, much like the negative of a photo brought to life in vivid color.

Prior to his death, Steve Jobs, the company's cofounder and former chief executive, hired what he considered to be one of his most trusted colleagues, Tim Cook. Cook, who replaced Jobs in August as head of the Cupertino, California-based technology giant, was armed with an engineering background and degrees in management from elite universities, a polar opposite of his predecessor who was a college dropout.

Jobs managed to persuade Cook to leave his former post at Compaq, and he arrived at Apple in 1997, where he assumed control over the company's then-fragmented and exceedingly complex supply chain. Cook's tenure as chief operating officer was marked by his fastidious commitment to overhauling and improving efficiency.

Cook's attention to detail, along with his work ethic and determination, enabled Jobs to focus his attention on the integration of design and usability in the company's products, creating what became one of the most productive business relationships in corporate history.

Cook negotiated new contracts with vendors; oversaw the creation of manufacturing facilities that could effectively generate products at a breakneck pace; shifted production to Asian markets where labor was comparatively cheaper; and significantly improved the company's ability to transport its product offerings from factories thousands of miles away to retail stores and shipping centers.

The supply chain improvements helped drive business cost reductions, while the strategic sourcing of raw materials and other components prompted manufacturing cost reductions. The efficiency gains spurred by the continual tweaking of its far-reaching supply chain helped drive record earnings that enabled Apple to lower the prices of many of its products.

The New York Times reports that although Apple products once carried some of the heftiest price tags of all its competitors, that is no longer the case. The latest iteration of the world's most popular smartphone, the iPhone 4S, is $199, but similar models from Samsung, HTC and other competitors top $300, according to Best Buy.

Apple products are by no means the least expensive on the market, but they are no longer so highly priced that they represent a fragment of the overall market.

"They're not cheap, but I don't think they're viewed as high-priced anymore," venture capitalist Stewart Alsop said in an interview.

Apple has been aggressive and at times audacious in its strategic sourcing, according to The Times. In 2005, for example, it inked a five-year deal worth $1.25 billion with manufacturers to secure flash memory chips for its devices, a risky move that paid off in the long-term as prices soared.

The company has continued to issue a competitive pricing structure for many of its offerings. The strategy has paid off handsomely for a company with more than $75 billion in cash-on-hand.

With Jobs untimely death, however, analysts are debating whether the company's decade-long winning streak can continue, especially given mounting competition and a tepid economic climate.






 
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Nissan plans to invest in environmentally friendly vehicles

on Monday, October 24, 2011

Nissan plans to invest in environmentally friendly vehicles  Japanese automakers have struggled to emerge from the post-crisis gloom that has gripped the island nation in the wake of the natural disasters that struck on March 11. The earthquake and subsequent tsunami severely damaged factories and brought Toyota, Honda and Nissan to their knees, but the automakers are facing an even more menacing hurdle on their path to profitability: The persistently strong yen.

Japanese carmakers have helped to drive efficiency gains with their commitment to manufacturing cost reductions and overall safety, but 2011 is shaping up to be a difficult year as the nation's currency continues to make gains against the U.S. dollar. The uptick in the value of the yen, which is helpful for Japanese traveling abroad as it brings improved purchasing power, is also detrimental to the domestic manufacturing sector.

Nissan, one of the nation's three biggest automakers, continues to push aggressively for profit margin improvements, even as the yen has remained stubbornly high this year. The Wall Street Journal reports the carmaker's chief executive, Carlos Ghosn, affirmed the company is moving forward with its plan to increase its midterm profit.

Nissan officials asserted the firm would spend roughly 10 percent of its research and development budget over the next six fiscal years on environmental technologies. This uptick in investment will serve to bolster its lineup of fuel-efficient and environmentally friendly automobile offerings.

The Nissan Leaf, which was launched late last year and represented the company's first foray into the electric vehicle market, garnered a significant amount of media attention and has continued to sell out at dealerships across the globe, experts say. Nissan hopes to replicate its success as it moves to design and manufacture a number of new model vehicles.

The increased investment in electric vehicle production will help to synergize its current operations, leading to long-term business cost reductions. What's more, the company hopes to tap into the emergent demand for gas-free car models, Ghosn told investors recently.

Ghosn conceded, however, the company could be forced to shift manufacturing to other countries should the yen continue to gain in value. Japanese automakers lose hundreds of millions of dollars in profits as the yen strengthens, according to experts. 


 
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Oracle positions itself for future growth with purchase of RightNow, its latest acquisition

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Oracle positions itself for future growth with purchase of RightNow, its latest acquisition Technology giant Oracle announced this week it would purchase RightNow Technologies as it works to expand through acquisitions.

The California-based company said Monday it would purchase the leading provider of cloud-based customer service for roughly $1.5 billion. Oracle's latest announcement continues the firm's trend of increasing its market share and driving revenue and earnings growth through the purchase of smaller competitors.

Unlike IBM, which plans to drive its expansion through business cost reductions and an emphasis on its services division, Oracle has been on a purchasing spree in 2011. With ample cash on hand, the company is seeking to use market clout and the overall tepid economic climate to its advantage as it works to shore up future growth potential, experts say.

Oracle stands to benefit in a number of important ways from its recent acquisition. For one, RightNow's technology will help to improve customer service, officials affirmed. For another, its cloud-based technology will help Oracle achieve business cost reductions in its customer retention department, which will free up capital and bolster its profit margin.

"Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud," Oracle executive vice president Thomas Kurian said in a statement. "RightNow's leading customer service cloud is a very important addition to Oracle's Public Cloud."

The cloud has become one of the hottest words among the tech set, as companies across a broad spectrum of industries have increasingly moved to shift varying aspects of their business away from traditional data houses and toward cloud-based datacenters run by firms like Oracle and Amazon.

Oracle has endeavored to shore up its own cloud computing services as a means of reducing overhead and cutting business costs amid a competitive climate.

"RightNow's products add leading customer experience capabilities that help empower companies to interact with and provide a consistent experience to customers across channels," RightNow chief executive Greg Gianforte affirmed.

The Los Angeles Times reports the deal still needs to be approved by federal regulators.

 
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Heavy business costs erode earnings at American Airlines

on Friday, October 21, 2011

Heavy business costs erode earnings at American Airlines Airline carriers across the world have stumbled over the past decade as volatile oil prices ate into their profit margins, prompting a consolidation that has fundamentally altered the sector. Carriers are projected to log profits this year thanks to emphasis on business cost reductions and added fees, but future growth prospects are murky, experts say.

The New York Times reports that airline carriers have successfully found ways to chart profit growth over the past few years after more than a decade of weak travel demand and heightened competition brought the industry to its knees. Even amid a tepid economic climate, airlines are forecast to have their second consecutive profitable year in 2011.

However, not all airlines have fared as well. The number of mergers and acquisitions among carriers has soared over the past few years, but some airlines have failed to participate in the trend – and it is evident in their weak growth and diminished profit margins.

American Airlines, once the mightiest U.S. carrier, is in dire financial straits after it failed to institute an effective business cost reduction program. The airline is mired in debt and announced a drop in quarterly earnings this week, bucking a trend of rising corporate profit margins.

The Dallas, Texas-based company said it lost $162 million in its third fiscal quarter. That figure worried investors, especially as the airline had logged a $143 million net profit in the same period in 2010. Officials contended the drop in earnings resulted from volatile oil prices and a strengthened U.S. dollar. Experts said the airline is failing to overhaul its strategic sourcing of oil unlike other carriers. It also failed to achieve business cost reductions as fuel prices increased 41 percent compared to the third quarter in 2010.

The airline is continuing to chart future growth, however, and officials asserted they are confident the carrier will return to profitability.

"While the third quarter was challenging for American Airlines, we are taking aggressive actions to improve the Company's performance and strengthen its foundation for long-term success," said Gerard Arpey, the chairman of airline parent company AMR. "We have put in place many of the critical building blocks for a successful future, including a strong network and alliance partnerships, accelerated fleet renewal plans and innovative products and services to enhance our customers' experience," he added.

 
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Business cost reductions help to fuel quarterly profit at The New York Times

on Thursday, October 20, 2011

Business cost reductions help to fuel quarterly profit at The New York Times The New York Times announced its quarterly earnings this week, surprising investors and analysts by posting a $15.7 million profit.

The Times had struggled to adapt to the shift in reader habits from the print to digital sphere, but company officials said that its attempts to lure subscribers to pay for content helped prompt an uptick in earnings. The Times introduced a paywall earlier in the year and said revenue increased as a result of the policy.

Moreover, The Times managed to achieve business cost reductions across a number of divisions, company officials said, helping to fuel a profit. The results were especially positive compared to the same period in 2010, when the firm reported a loss of $4.3 million.

Company officials said business costs fell by 3.6 percent in the quarter because of the increased focus on efficiency. The Times also said total circulation grew by 3.4 percent to $237 million in the quarter.

"Despite a challenging advertising environment, our operating profit grew," Times Company chief executive Janet L. Robinson said. "These results highlight the strength of The Times brand and its ability to further monetize its world-class news, analysis and commentary."

 
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When Cars Meet Chocolate

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As a purchasing professional, I obviously have my fair share of bidding initiatives and in some cases, reverse auctions. However, earlier this month, I experienced a completely different type of procurement. I drove a few hours west to the “Sweetest Place on Earth” to attend the Hershey Car Show. This car show is often referred to as the World Series of Automobiles, as people travel from all over the world to attend. Not only was I able to catch a glimpse of the workings of a car auction, I also learned firsthand how buyers and sellers negotiate the pricing of classic cars.



On the eve of the car show, RM Auctions hosted a live auction at the Hershey Lodge where antique automobiles were placed up for bid. Chocolate in hand, I tried to sneak my way into the actual auction event and ended up stationing myself behind the curtains (sad, I know) where I listened to the sales prices climb. I eventually grew impatient with “Sue on the phone” and “Number 23” and was ready to leave. The cars being auctioned off were stationed outside in one of the facility’s many parking lots and were ushered in through a garage entrance way. I left the auction room to view the other cars that would take the stage later on. It turned out to be a chilly night and so once I was outside, I was immediately drawn to what appeared to be a bonfire. Little did I know that I was making my way over to the grand finale of the auction being warmed up before it would be driven up on stage for bidding. I ended up laying my eyes on a prized treasure known as the 1884 De Dion Bouton Et Trepardoux Dos-A-Dos Steam Runabout. It is the world’s oldest running car and was sold for a whopping $4.62 million. The winning bid was actually $4.2 million and RM Auctions slapped on a non-negotiable 10% buyer’s premium which added $420,000 to the price tag. The car was only projected to go for about half the selling price. Unfortunately, I was not able to listen in on the back and forth bids, but my guess is that two individuals eventually got into a bidding war where one finally surrendered.



On the day of the actual car show, I walked around the grounds admiring beautiful craftsmanship in machines such as LaSalle’s, Packard’s, Rolls-Royce’s…basically Jay Leno’s garage. I attended the show with a car enthusiast who has enjoyed the hobby for over 40 years. We walked around the car corral which is an aspect of the show that I was unaware of until I got there. The corral is where a number of sellers bring their cars and put them up for sale. Therefore, several negotiations take place here if there are some interested buyers. These negotiations are obviously not as sophisticated as business negotiations but are pretty similar to the negotiations that take place at any basic car dealership.



These days, a classic car is a better investment than a home as certain types never really depreciate over time. However, the total cost of ownership should be considered before making this type of investment. There is a great deal of maintenance that needs to be performed in order for the car to hold its value throughout the years. I’ve grown very close to the proud owner of many classic cars ranging from a 1970 Volkswagen Beetle to a fully restored 1924 Jordan. He is more than an expert on antique automobiles having won multiple awards at Hershey and several other car shows.



And so I decided to pick his brain on the factors that impact classic cars’ pricing. Some of the factors are similar to the modern cars we purchase today, but there are others I was unfamiliar with that also play a role. Similar to commodities, there are numerous publications that provide market information, specifically antique automobile appraisals. Sellers usually try to justify the price of their car based on these published rates and stick to them. It is helpful to use them as a price guide but there are a number of other factors that dictate the price of an antique car.



In Hershey, sellers will buy a spot on the corral for about $150 which gives them access to a wide audience of prospective buyers. Most of the vehicles are overpriced, expecting that demand will be high and they might get lucky and hit a home run. Most of the time, you get what you pay for and buyers usually never purchase for the price the seller is asking for. One of the key differences that should be noted when purchasing a classic car is whether or not it is completely original or has been fully restored. The value of the car will depend on whether or not it was built with the original materials. Many car deals these days take place over eBay rather than at car shows. Having never negotiated on either platform, I cannot speak to which one makes the more sense. However, my guess is that you waste less time on eBay than at car shows, but car shows may help you identify more leverage points as you can see the car in person from the get go.



The classic car owner offered up some food for thought when I inquired about the total cost of ownership and whether or not it offsets the ROI. He referred to a personal experience when he bought a Corvette in 1972 for about $5100. About 6 or 7 years ago, he sold the car for over $30,000. The car only had about 20,000 miles on it. It would be interesting to see how far that money would have gone if it had been invested in another form such as a bond. If you take into account the time spent maintaining the car, keeping it registered and properly insured, both investments may deliver the same return once everything is netted out. Some individuals even go as far as to incorporate their automobiles into their business to cover some of the expenses as tax write-offs which then increases their ROI.



I highly encourage attending the Hershey Car Show next year and experiencing everything it has to offer. The hot dogs weren’t great, but the lemonade was refreshing. And overall, it was good, clean fun. The weekend has something to offer all ages…the show, the park, the outlets…just be aware that attendance is very high and hotel rates will be almost double the going rate, so plan accordingly.



As a company often engages Source One for strategic sourcing expertise, I engaged an individual who has been around the classic cars market for about 40 years. If I was able to follow through with an actual purchase, I have no doubt that he would have been able to identify the best deal out there for what I was looking for in a classic car. He knew the right publications to read, the car shows to attend, the mechanics to turn to for maintenance and repairs, etc. He also was a master negotiator and played all the right leverage points. Source One provides similar guidance to companies looking to achieve hard-dollar savings for the products and services they purchase to operate their business.

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Even as Google unveils stellar earnings, some analysts call for business cost reductions

on Wednesday, October 19, 2011

Even as Google unveils stellar earnings, some analysts call for business cost reductions  Google is one of the most successful companies in the world and though the bread-and-butter of its business model is its exceedingly lucrative search advertising division, the technology giant has increasingly moved to succeed in the mobile sphere, sidestepping investor demands that it cut business costs.

The Mountain View, California-based company reported its third quarterly earnings last week, surprisingly investors by blowing projections out of the water. Google, which is once again under the watchful eye of cofounder Larry Page, said revenue in its latest fiscal quarter hit $9.72 billion, representing a 33 percent jump from the same period in 2010.

Moreover, net income in the quarter registered $2.73 billion, climbing from $2.17 billion in the third quarter of 2010. The earnings report helped to allay investor and analyst concerns over the company's spend management practices, but some worries remain as to whether the search giant can continue to pull in record-setting revenue as more consumers use mobile search.

Google makes money every time a user clicks on an ad, but mobile phone users are less likely to click on advertisements. Google still derives a significant amount of its earnings from web-based searches and many analysts posit the company will not be able to sustain its stellar growth unless it harnesses the rapidly growing sector.

Nevertheless, Google has endeavored to expand its various business operations, announcing in August it planned to acquire Motorola Mobility for $12.5 billion. Like many large businesses, Google has record levels of cash on hand, but its decision to move beyond the smartphone operating system market – its Android is the most popular such system in the world – and into the production of phones was met with skepticism by some.

With its massive market capitalization, impressive earnings and dominant business model, Google has largely been able to avoid answering questions regarding its future growth plans. The company is increasingly courting smartphone users, but its Android system remains open source, and Google does not charge companies like Samsung to run it on their smartphone models.

Google does, however, make money through advertising revenue tied to Android. What's more, the Android App Store is a moneymaker for the world's biggest search engine.

However, lingering doubts remain as to whether Google can continue to dominate competition as it does now. The company has aggressively moved to hire workers as it seeks to expand at a torrid rate, but it has drawn the ire of some investors and analysts. Such critics assert the company is failing to achieve business cost reductions and are concerned about the company's bloated budget sheet.

For its part, Google contends it is simply investing a significant amount of money now to ensure it remains a dominant market force. Companies like Apple have been loath to spend the billions of dollars they are sitting on, but since Page resumed his role as CEO in January he has bet on a number of businesses and ideas he reckons could propel future revenue growth.

"That said, we must never lose sight of the fact that today’s revenues and growth serve as the engine that funds all of our future innovation," Page said in remarks to investors about the company's third quarter results. "People are a crucial part of Google’s long term success because great companies are no greater than the efforts and ingenuity of their employees."


 
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Hot off the Presses! A Few Words About Our Book

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Today marks the “official” release date for our book, Managing Indirect Spend – Enhancing Profitability Through Strategic Sourcing. The book was a nearly two year effort, led by myself and Bill Dorn, and includes content, insight and contributions from many other team members at Source One. I am proud of this book and glad I had a hand in writing it.

Whenever I talk to anyone in the industry about the book, the first question I get asked is “Why did you write it?” As consultants that focus on strategic sourcing, ultimately our experience working with customers, gaining an understanding of the differences between organizational cultures, and how advanced companies are (or aren’t) in strategic cost reduction for indirect spend categories is what led us to writing this book.

In most mid-sized and many large companies, people with backgrounds in Marketing, HR or IT have control of budgets in the millions or tens of millions of dollars and no experience or training in strategic sourcing and negotiations. This book was written with them in mind.

This book was also written for the person in Finance or the C-Suite that has been tasked with getting control of costs for indirect spend categories, without being given the resources or tools to do so properly.

We know, based on our experience, that strategic sourcing is a powerful tool that can be used to reduce costs for indirect spend. We also know that there is a fundamental misunderstanding between what strategic sourcing is currently defined as, and what it should be. Strategic sourcing is not using eRFX software to run a bid for janitorial services. It is not simply leveraging the aggregate volume of office supplies across multiple locations to gain price concessions from an incumbent. Strategic sourcing is a process that includes aspects of project management, change management, and ongoing supplier management to ensure savings identified become savings achieved.

I often tell our customers that finding savings is the easiest part of indirect spend strategic sourcing. The process is solid, market competition exists and if the spend has not been managed before, you can probably find a better price out there. The biggest challenge is getting the internal consensus to allow you to act in the own best interests of your company.

We hope you find our book to be a useful resource in overcoming this challenge and effectively manage your indirect spend categories.
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Groupon unlikely to generate blockbuster IPO, experts say

on Tuesday, October 18, 2011

Groupon unlikely to generate blockbuster IPO, experts say Startup company Groupon made waves when it announced it would forego buyout offers from companies as formidable as Google, opting instead to have an initial public offering (IPO). Analysts have increasingly turned their attention on the Chicago-based firm, but many argue it is neither financially sound nor potentially profitable.

Groupon, the group buying discount site, rose to fame last year as consumers rapidly signed up to participate in the daily deals offered by the website. Though it was initially flush with fanfare and praise from the business world, much of that early excitement has quickly turned to wariness.

Experts contend the company spends too much of its money – a majority of which was raised from venture capital funds – on marketing costs. What's more, they assert it has struggled to achieve business cost reductions, noting it lost $102.7 million in the last fiscal quarter on revenue of $878 million.

The New York Times reports many business analysts who were previously enamored with the company have subsequently moved to distance themselves from it. While some analysts said its IPO could have generated as much as $30 billion last year, it is now widely expected the company's long-delayed IPO will be worth less than $3 billion.

 
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Down to the Wire

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Economic woes are hitting closer and closer to home; as I drive down the streets I see the growing volumes of “Going Out of Business” sales more than ever before.  People say that it’s a cyclical economy in that we see these trends reoccurring in household income and employment rates over time and that it will turn around eventually….it always does they say.  So I don’t know if it’s because I’m at an age when I can really sympathize and understand the impact but it’s certainly got me thinking. 

One particular business getting closer to hanging out their sign is the U.S. Postal Service.  Of course this is one area of business that happens to be not only a victim of the economy but also of technological advances.  Email and online bill pay have become the more prominent and efficient means of transferring information and therefore someone has to pay the piper, whether they can afford to or not.  In fact the USPS has to pay a $5.5 billion bill by November 18th to its retiree health care fund and just does not have the funding to do so right now.  In an effort to save the service the National Association of Letter Carriers have hired Ron Bloom and the Lazard Group to help find a solution to the downward cycle the industry is taking.  The union intends to work with Bloom and Lazard to determine an approach that will allow them to save the business as a whole as well as avoid making any drastic changes to the business. The USPS currently employs over 550,000 employees across the nation and delivers to over 150 million homes; “drastic” cuts would be detrimental.  And while cutbacks are being avoided the USPS is likely to heed radical measures to turn things around.  Local officials as well as federal government agencies and even local residents all have their own opinions about the whole situation….my opinion… go buy some stamps!
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Where are the Oompa Loompas? A Cautionary Tale of What Happens when Government and Business Work Together

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The debate brought about by the Occupy Wall Street movement has caused many, particularly those on the right, to espouse that free market capitalism is the perfect solution; markets unfettered regulate themselves and therefore produce the optimal result. They argue that government should do as little as possible when it comes to regulating business and their primary function, on a domestic basis, should be to support business as much as possible.

This leads me to a great recent example of what happens when businesses and the government work hand in hand. According to a recent article in the New York Times, the State Department runs a summer cultural exchange program that allows students from other countries to come to the U.S. on J-1 visas, giving them the opportunity to work and travel in the United States during summer break. The idea is to give students a chance to see the country, while at the same time earning some money.

About 400 of these students got jobs working at a packing plant for Hershey Chocolates in Palmyra, PA. According to the article, the students were required to work long hours in strenuous conditions, isolated from the rest of the workforce and without the allotted vacation to tour the country. Room and board was taken out of their meager wages, a set up reminiscent of the old mining company towns, leaving them with little extra cash to spend outside of work.

When some of the students contacted the contractor running the program for the State Department to complain about working conditions, they were met with threats to be sent back home. Eventually they organized a walk out, getting the attention of the media, and Hershey and the government started to pay some attention.

Still, it makes me wonder why Hershey chose to force foreign students to learn the magic of capitalism, when they could have just brought in more Oompa Loompas.
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Nissan mulls reducing domestic manufacturing levels

on Monday, October 17, 2011

Nissan mulls reducing domestic manufacturing levels Japanese automakers' output was significantly affected by the natural disasters that struck the island nation in March. One of the country's biggest carmakers is mulling whether to reduce domestic output as it struggles to increase manufacturing capacity.

The Wall Street Journal reports Nissan Motor Co. officials are debating whether to shift manufacturing to other countries as the strengthening yen continues to eat into its profit margins. Nissan said it could augment production at its overseas facilities if the yen continues to rise in value against the dollar.

In fact, Nissan affirmed it could reduce domestic output to fewer than 1 million vehicles per year if the yen rises handily against the dollar. Increased business costs have eroded the company's profit margin over the past year, and many economists expect the Japanese currency will rise throughout the end of this year.

"We would like to keep to one million units [in Japan], but if the yen becomes even stronger it may be quite difficult to maintain," Nissan chief operating officer Toshiyuki Shiga said.

For every one yen the Japanese currency gains against the greenback, Nissan loses more than $250 million in annual operating profit, Shiga asserted.

 
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September retail sales post strong gain

on Friday, October 14, 2011

September retail sales post strong gain  Threats to the global economic recovery have mounted over the course of the second half of this year, but government data released Friday indicates the U.S. might avoid a double-dip recession.

The Commerce Department said that advance estimates of U.S. retail and food services sales for September hit $395.5 billion. That figure represents a 1.1 percent increase from levels logged in August and a jump of 7.9 percent from September 2010.

Moreover, total sales between July and September of this year climbed 8 percent compared to the same period the year prior. The Commerce Department also affirmed retail sales rose from July to August this year, upwardly revising their prior estimate to illustrate 0.3 percent growth.

Consumer spending is vastly important to the U.S. economy – and to developed economies as a general rule. Unlike in China, where consumer spending makes up less than 45 percent of GDP, it accounts for more than two quarters of total economic output in the U.S. Analysts therefore met the positive numbers with a collective sigh of relief, especially considering the flurry of negative data that has emanated from Washington, D.C. over the past few months.

September retail trade sales in the U.S. registered a 1.1 percent increase from August, and an 8.1 percent uptick from September 2010. The automobile market continued to pace gains, government analysts affirmed, as many carmakers reported brisk sales gains in the U.S.

Worldwide automobile sales have surged in the wake of the global recession, but the 9.0-magnitude earthquake and tsunami that struck Japan on March 11 spurred massive supply chain disruptions. Japanese automakers have struggled to return to full manufacturing capacity following the catastrophic damage inflicted by the natural disasters, but analysts asserted increasing sales indicate firms had largely navigated the worst of the crisis.

The Associated Press reports U.S. consumers spent more on clothes, cars and furniture in September, propelling retail sales to their largest gain in seven months. Economists welcomed the news, but warned heavy debt burdens and the nation's beleaguered housing and labor markets could stymie future growth.

Analysts said that excluding car sales growth was still impressive, registering 0.6 percent. Such a high figure could suggest sales during the U.S. holiday shopping season will be brisk, but critics are decidedly less optimistic.

The Commerce Department issued a separate report on Friday as well, one that underscores the relative optimism businesses have in the economy. September marked the 20th consecutive month businesses added to their stockpiles, the government said. Coupled with the third straight monthly rise of total retail sales, such data shows companies are confident enough to continue to stock their shelves.

The Commerce Department's initial estimates of monthly retail sales are based on a sample, however, and some analysts questioned whether final reports released later in the month would confirm the robust estimates. Nonetheless, economists asserted any rise in consumer spending – especially given the tepid economic climate – is a hopeful sign the nation will avoid entering into another recession.

September retail sales figures illustrate "households are not completely down and out," Capital Economics senior U.S. economist Paul Dales contended. He warned, though, unless the unemployment rate ebbs, it is unlikely retail sales would remain strong.

"Sales growth is unlikely to remain strong," he said. "So although a recession has become less likely, households still can't be relied on to drag the U.S. economy out of its continued malaise."

If high gas prices return, it could further hurt any fledgling recovery, economists say. September sales at gasoline stations rose 1.2 percent from August, and increased by a whopping 20.3 percent from September 2010.

 
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High demand could drive up zinc prices, survey concludes

on Thursday, October 13, 2011

High demand could drive up zinc prices, survey concludes  After surging for nearly two years, many commodity values have dropped over the past few months amid mounting concerns over future global economic growth. Zinc prices served as one of the exceptions to the commodity boom, but analysts assert the metal is poised for growth.

Fundamental principles of supply and demand are coalescing to potentially drive zinc prices significantly higher. A survey of 10 producers, analysts and traders recently conducted by Bloomberg found zinc prices could jump as much as 27 percent in 2012.

Zinc prices last reached record territory in 2006, when they totaled out at $4,580 per metric ton. A subsequent uptick in production over the next five years helped fuel an oversupply, effectively driving prices down. However, worldwide zinc stockpiles are rapid dwindling, and Morgan Stanley analysts project surplus zinc supplies to hit their lowest levels since 2007.

Experts further assert burgeoning demand in China will largely serve as the main driver behind zinc's future growth. Roughly 50 percent of all the zinc mined in the globe is used in the rust proofing of steel. China's booming real estate market has led to a surge in construction projects, and steel use in the world's second-biggest economy has reached record levels.

Analysts project Chinese demand for steel – and therefore, zinc – to remain brisk over the coming years. Though it has slowed, China's economy is still forecast to expand at nearly twice the pace of the worldwide economy, which place upward pressure on zinc prices, analysts asserted.

"I'm bullish with regards to zinc over the next two to three years and even longer," Mine Life founder Gavin Wednt asserted in an interview. "Given the level of underlying demand for zinc and at the same time the fact that new reserves are not being added, there is going to be a supply side problem to emerge over the next few years."

Still, there are other factors potentially preventing zinc prices from jumping. Recent economic reports emanating from China and the U.S. suggest the worldwide economy is slowing as depressed consumer confidence and concern over stock market volatility and the European sovereign-debt crisis have prompted an economic deceleration.

On the London Metal Exchange, zinc futures dropped in trading on Thursday.

 
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Be Careful What You Wish For: Fox News Is Outraged that Topeka, Kansas Stops Prosecuting Domestic Violence Cases Due to Budget Cuts

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Just to get my blood pumping in the morning, I occasionally tune in to the Fox and Friends, just to see what's on their minds. Better than coffee sometimes, and this morning was no disappointment. This morning they expressed disgust and outrage that, in a fit of budget squabbling, both the county and the city of Topeka, Kansas have passed votes that they will no longer prosecute domestic battery cases. Here is how Fox News reports the story:

"Due to a lack of funding in Topeka, Kansas, domestic violence will no longer be prosecuted there. Rather than increase taxes in the Kansas capital, the city made hard budget cuts, and prosecuting misdemeanors like domestic violence were the first to go. Since the debate began last month, more than 12 domestic violence suspects have walked out of jail free."

The Fox and Friends went on to castigate the politicians who would let such a heinous state of affairs come to pass. I didn't hear the rest, because I had to turn off the TV before I succumbed to my urge to pick up the TV and throw it out the window.

Actions, and the ideas behind them, have consequences. You can't beat the drum for lowering taxes, cutting debt, and balancing the budget for three years, then turn around and be outraged when the results of such actions produce real-world harm. That is the height, the definition, of hypocrisy. This is precisely why the Occupy movement is manifesting in more than 1000 cities, and continuing to grow.

As the common saying goes, "Be careful what you wish for - you just might get it." Well, in this instance, the Fox and Friends and all who listen to them have had their wish granted. Budgets are being drastically and increasingly cut at the federal, state, and local level. Are you happy now?
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Supply chain disruptions arise following floods in Thailand

on Wednesday, October 12, 2011

Supply chain disruptions arise following floods in ThailandFlooding near Thailand's capital city of Bangkok has taken a significant toll on the local area, in addition to causing supply chain disruptions for companies around the world, the Wall Street Journal reports.

According to the news source, at least 281 people have been killed in flooding-related incidents since July. Bangkok could soon be in particular danger, as the combination of seasonal high tides and run-off from flood-damaged areas in the north could cause serious problems.

Sundi Aiyer, Asia Operations Practice Expert at consultancy McKinsey & Co., told the Journal that many companies have been forced to come up with backup plans in case their suppliers are ultimately impacted by the flooding.

"Automotive and industrial manufacturers, electronics and high-tech product companies are especially vulnerable to the supply chain disruptions we are now seeing," Aiyer explained.

MarketWatch reports that as a result of the severe flooding, Honda Motor Co. is contemplating potential supply chain changes and has already decided to temporarily shut down its operations at its motorcycle and automobile plants in Thailand.  
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AT&T Says They Have Better Battery Life with LTE. RIM Says Sorry, No Email

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According to BGR, the CEO of AT&T announced yesterday that their LTE phones will be more power efficient, and ultimately thinner than the competition. Ralph de la Vega goes on to explain that the power enhancement is possible due to a single radio within the device that is able to switch back and forth between AT&T’s existing 3G GSM network and its new 4G LTE network, something that Verizon does not have available to it, as it uses CDMA and LTE. AT&T expects to be launching their 4G LTE phones as early as this year (although their commercials have blatantly already been calling their 3G network 4G).

Although increased battery life may be a selling point for the very few customers that may be in AT&T’s initial LTE coverage area; the question becomes: will AT&T ever be able to catch up to Verizon’s LTE footprint. AND, will dual radios be necessary for Verizon phones for long. Verizon announced this week that they will roll out additional coverage to 22 cities, starting in late October. Verizon will have LTE coverage in 178 markets by the end of 2011.

On a disappointing note, this announcement seems to completely solidify the fact that handsets and smartphones will likely not be cross-carrier compatible anytime in the near future.

On another note, it looks like if you use BlackBerry devices, you may not get your email regardless of how your battery is holding up. Now in day three of sporadic outages, RIM's popular BlackBerry devices are now reporting email system failures in the U.S. and Canada.
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I know there are still some loyal BlackBerry customers out there…

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Over the past few days there has been a continuing dilemma with BlackBerry outages for users in Europe, Latin America, Asia and Africa. The disruption of messaging services and emails began in Europe and Middle East on Monday, and spread into India and Latin America on Tuesday. Some reports of outages in Canada appeared Wednesday, and a few reports have been coming in about disruptions in the United States. Research in Motion, the Canadian company who produces BlackBerry believed the outages were caused by a failure with the network of back-up servers. This couldn’t come at a worse time for RIM due to their recent struggle to keep up with competition such as Apple and Android.

Now I know some of you are thinking, who still uses BlackBerry? I actually went back to a BlackBerry Bold (yes, it has a touch screen but also an actual physical QWERTY keyboard!) this week after having an iPhone for about 5 months and still not able to get used to the touch screen for sending quick texts. With the physical QWERTY keyboard, it is much easier to send quick texts without errors or your phones’ auto correct, such as changing “Autopay” to “Autopsy”.

Don’t get me wrong, Android does offer phones with an actual keyboard, but most are the slide-out keyboard style, instead of the familiar candy-bar-style-keyboard-on-bottom made famous by BlackBerry.. In my experience, it is obvious that the BlackBerry 7 OS still has ways to come to compete with Google’s Android, Apple’s iOS and even the up and coming Microsoft Windows Phone 7.5. But there have been improvements. From my past BlackBerry Curve a year ago, I have noticed (without getting too technical) a definite improvement in graphics, faster browser, and the overall appearance with the slimmer design. Although, the BlackBerry OS may still lack the ability to compete with Apps that Android and the iPhone have available.

So does RIM need a “Magic Unicorn Rescue” (as labeled on the WSJ blog)? According to comScore, RIM lost a full 5% of marketshare this past quarter when compared to the three month period prior.

From this author’s point of view, I would say the current lineup of Androids and iPhones would be a better fit for someone who uses their device frequently for Apps and multimedia, while the BlackBerry may fit better for someone on the go with heavy messaging requirements. Apple’s new Siri voice activation and control seeks to add a new alternative to conventional keyboards, but it is currently unproven technology, and still needs to move past the stigma of people talking to their electronics in public. This week, the CTIA Enterprise & Applications 2011 has been taking place and saw strong offerings from most of the major phone manufacturers, including some new physical keyboard options from Android (though it looks to be more of the same slider-style).

So BlackBerry may still be king and queen of the messaging phones for the time being, the competition is clearly gaining ground (and market share).
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Interviews with Authors of the Book Managing Indirect Spend to be Featured on Blog Talk Radio

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This evening (Wednesday October 12) inaugurates the first broadcast on Blog Talk Radio of a weekly series of interviews with the authors of the book Managing Indirect Spend: Enhancing Profitability through Strategic Sourcing.


The interview with Joe Payne, Director of Strategic Sourcing at Source One airs at 10 pm Eastern Time. It is hosted by Jon Hansen, author of the Procurement Insights blog, and covers an introduction to the concepts and implementation of strategic sourcing.


Then each week on Wednesday evening at 10 pm Eastern Time a new interview will air, discussing the details of each of the chapters in the book, for a total of 22 interviews. Among the topics to be covered are:

  • Data Collection and Analysis
  • Conducting Research
  • The RFx Process
  • Negotiations
  • The Contracting Phase
  • Implementation and Continuous Improvement
  • The Importance of Market Intelligence
  • Increasing Stakeholder Engagement
  • Supplier Collaboration
Each interview is 10 to 15 minutes in length, and offers valuable insights into the practical applications of the ideas in the book. The interviews will continue to be available on the Blog Talk Radio website for future download and listening.
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American Airlines seeks business cost reductions

on Tuesday, October 11, 2011

American Airlines seeks business cost reductions Airlines have been hard hit by soaring energy prices over the past decade, with profit margins rapidly declining amid the surging cost of oil. One major carrier is hoping to achieve business cost reductions and augment its profit margins through a series of soon-to-be implemented measures.

American Airlines officials said this week the tepid global economic climate, coupled with exceptionally high fuel costs have prompted the company to embark upon a major cost-cutting campaign in an effort to increase future earnings and streamline its current operations.

Companies across the globe have endeavored to overhaul their strategic sourcing of oil, but a number of geopolitical factors coalesced to effectively spur price fluctuations this year. The ongoing conflict in Libya, for example, has contributed to higher oil prices, as the North African nation is responsible for more than 1.5 percent of total worldwide oil production.

The Los Angeles Times reports American Airlines will cut overall capacity and retire 11 older aircraft on its quest to increase profit margins. The planes will be decommissioned next year, company officials said.

Increased competition from other carriers prompted the changes to its flight plans, analysts asserted. The U.S.-based carrier said it would cancel some of its unprofitable routes on its quest for higher earnings. Company officials said they planned to reduce overall capacity by roughly 3 percent.

Moreover, AA officials said an inordinate number of pilots retired this year, diminishing its ability to effectively staff some of its flights.

"While our advance bookings are generally in line with last year, we are taking these additional steps in light of the uncertain economic environment, ongoing high fuel costs and to ensure we run a reliable schedule for our customers given additional pilot retirements we anticipate throughout the fourth quarter," AA chief commercial officer Virasb Vahidi said.

Other airlines have announced similar cuts over the course of this year. Shocks to the global economy have posed significant problems for airlines, experts say. Critics, however, charge airlines are failing to prepare for volatile energy prices, which they contend are now the norm.

AA officials said the company is also awaiting the delivery of more than 460 new energy efficient airplane models, which will help to replace the 11 Boeings.

 
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Source One to Deliver Strategic Sourcing Webinar to Universidad La Salle (ULSA) in Mexico City

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As part of the 50th anniversary celebration of ULSA’s School of Business, Source One will explore nearshoring opportunities with students, faculty, and Mexican business leaders

Source One has been invited by Dr. Roberto Pozos, Executive Director of the School of Business at Universidad La Salle (ULSA) in Mexico City, to deliver a webinar presentation to business students and faculty, as well as Mexican business and government leaders. The webinar is entitled "U.S. Companies and Global Opportunities: A Perspective on Strategic Sourcing from Mexico", and will be delivered on October 27 at 12 pm Eastern time. The webinar is one of a series of events honoring the 50th anniversary of the School of Business at ULSA.

The webinar will cover an aspect of strategic sourcing and supply chain management known as nearshoring, which is the recent phenomenon of businesses relocating sourcing projects closer to the United States. This is being done because of rising wages and transportation costs associated with sourcing in Far East countries, along with intellectual property and cultural issues. Mexico is a popular destination for many companies interested in nearshoring, especially for IT companies, and Source One wants to help companies in all industries in both countries understand the opportunities.

Currently there is a communication gap between U.S. companies who want to find low-cost country alternatives and Mexican companies with technical and industrial capabilities, but no access to those potential customers. Creating a community comprised of academia, industry and government that understands the benefits of nearshoring can go a long way toward bridging that communication gap. Nearshoring, and strategic sourcing in general, represents a vibrant new direction for Mexican business students and faculty to direct the focus of their studies.

The webinar exploring these possibilities will be conducted by William R. Dorn, Jr., Director of Operations at Source One, and Diego De la Garza, MBA, a Project Analyst at Source One and an alumnus of ULSA. Diego, who was recently honored with the "Distinguished Alumni with a Successful Career" award from the ULSA School of Business, coordinated all the arrangements between Source One and Dr. Pozos, a former advisor to Diego.

"I am excited to be able to give back to my alma mater and my current employer in this way," said Diego. "I think it is incredibly important for students and faculty at the ULSA School of Business, as well as business and government officials, to understand the amazing possibilities that nearshoring represents for Mexican and U.S. businesses. It can help create jobs and economic opportunities for both countries."

For more information on the webinar, visit
http://www.sourceoneinc.com/downloads/La_Salle_Mexico_Source_One.pdf
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Strategic Sourcing Newsletter; Now Available Online

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October 11, 2011, Source One and The Strategic Sourceror announce an online version of the popular Procurement Newsletter "Strategic Sourcing News and Views".    

 Launched in January of 2011, the Strategic Sourcing News and View newsletter has increased its subscriber list exponentially since inception.   With topics ranging from best practices in sourcing specific commodities, to negotiation tips, to advice and recommendations from Source One's partners, the newsletter has something for just about any procurement, finance or operations professional.  Now you can go back and see what you missed online by visiting the hyperlink below.

Visit the newsletter archives: www.SourceOneInc.com/Newsletter

Never miss an issue of Strategic Sourcing News and Views, Subscribe today!
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Occupy This

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The Occupy Wall Street movement started with this decade’s version of the hippie – subtlety known as the hipster. The hipster philosophy goes beyond minimalist – their goal is to have less than anyone. The less you have, the cooler you are.

It is interesting to see how quickly the movement that started with those hipsters several weeks ago has gained momentum, due primarily to the frustration most citizens (approximately 99% last time I checked) have with the government and the institutions that run it.

It is also interesting to see how Republicans have responded to this growing despondency – protect the institutions, protect Wall Street, at all costs.

In general, I have always felt that Republicans were much more politically savvy than Democrats. When they see an issue, they always look for the way to gain the most political points from it, and their agenda is based on where they can score those points. So to see a protest gaining steam at a time when the country is run by a Democrat, and not focus on that mere fact alone is somewhat shocking to me. Instead, the confused Republicans have attacked the protesters, telling them to get a job, calling them un-American or lawless, and explaining that our country is based on a strong foundation of capitalism.

Capitalism, that sacred cow – but this is inherently flawed logic. Originally our country was based on the concept of democracy, not capitalism. Somewhere along the line the two became entwined and now many people fail to see a distinction between them, yet they are quite different. Democracy gives the individual a voice. Unregulated capitalism takes it away from them and places it in the hands of corporations.

Over the last few years the rights of corporations have begun to far exceed the rights of individuals. Corporations can contribute unlimited funds to elected officials – individuals cannot. Corporations can hire lobbyists to help influence regulation and legislation in their favor, individuals cannot afford to do so. Corporations can pollute, shift jobs overseas while seeing record profits, or foreclose on your house with no documentation in the name of capitalism, and people will accept it. That is far more than most people would accept from any individual.

All this and still, most corporations’ pay less in taxes than most individuals do.

When the Supreme Court ruled that corporations had the same rights as individuals, they forgot to also place the burden of the same responsibilities upon them. The occupiers understand that this is wrong; that we should be a free society first and a free market society second. I hope someone is listening to them.
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