Save Money - Call Jenny!

on Wednesday, November 30, 2011

Supermarkets offer great deals for people who sign up for their (usually free) loyalty programs. Despite these programs being around for over 25 years, retailers are still tapping into the value that this customer-related data holds. The info they get from these loyalty programs have become increasingly invaluable and they have only reached the tip of the iceberg. The most basic benefits they are able to pull from tracking customers’ behavior are: acquiring new customers, retaining current ones, increase spending of customers, and shift spending to higher margin products.

Nevertheless, nearly all of us have signed up for one these programs at some point and many have a multitude of cards in our wallets or on key chains. Based on customer feedback, more and more retailers now allow you to enter your phone number into the credit card machine to access the program’s “savings” so you don’t have to carry your Neiman Marcus card, Shop Rite card, Best Buy card, Giant card, and the 15 other places you spend money. It’s very easy to end up with a George Costanza wallet.

However, with today’s thieves finding new and creative ways to steal whatever they can, it is becoming more and more common that your phone number is ending up in the wrong hands. Armed with just those 10 digits, a skilled hacker can use software to pull your full name, home address, e-mail address, as well as personal messages and pictures (thank you Scarlett Johansson) from your phone. Thieves can even track your current location via GPS from your wireless network. As smart phones become more popular, we are utilizing them to store all kinds of info (like passwords) and thus providing thieves with a lot more opportunity.

So what do you do if you want to protect your personal info while still realizing the savings at your favorite retailers? Call Jenny! Many of us couldn’t forget Tommy Tutone’s catchy 1982 hit “8675309” despite how hard we tried. There is a very likely chance that at some point, someone used that number to sign up for a rewards card that didn’t want to provide their personal info. At checkout you can simply use your local area code and 867-5309 then boom – savings! No more carrying around that Petco Card rewards card.

It’s also very convenient while traveling. Do I want the savings of buy one, get one free containers of hummus? Yes. Do I want to waste my time signing up for a Winn Dixie rewards card for the one time a year I’m in Florida? No. I’m calling Jenny for a good time instead.
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How Costly is a Company’s Tarnished Reputation?

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Clear Channel Radio recently found out that a company’s reputation is extremely important, and a tarnished one can definitely impact a company’s bottom line. Popular and controversial radio personality, Tarsha “Jonesy” Jones, was fired from her Philadelphia morning show on “Power 99” according to the Philadelphia Daily News. This came in the wake of two separate lawsuits against Jones and parent company, Clear Channel Radio.

In a separate article by the Philadelphia Daily News, they reported that in early October, there was a fight between teenage girls in the Philadelphia area, where allegedly, one of their mothers had physically assaulted one of the girls. The lawsuits states that on October 14th, Jones defamed Philadelphia businesswoman, Tracey Parson, after callers called into the morning show mistakenly identifying her as the mother engaged in the fight between the teenage girls. As a result of this, she claims that she lost business after parents pulled their children out of the four Kiddie Kare daycare centers that she owns in the city. The lawsuit triggered Clear Channel’s decision to terminate Jones

This is not the first time that Jones, also known as “Miss Jones”, had been fired from a radio show. In 2004, she was suspended and later fired from a radio show in New York, after her morning show aired a song that made fun of the Tsunami tragedy in 2004. She was also fired from rival Philadelphia radio station in 2008, after her comments had created problems for the station. With all this surrounding the self-proclaiming “controversial diva of radio”, it’s hard to imagine which radio station would be the next to take on such a liability. The presence of Miss Jones on their disc jockey list could be potentially lucrative, but all that is a non-factor if her negative reputation overshadows the dollar signs.
This is the same with sourcing initiatives. When going to market, the main goal is to find a company that overall can create cost savings for your client, but the reputation of a company must also be taken into consideration. For instance, if a construction company is seeking a new supplier that could provide materials significantly cheaper than its current supplier, it would seem like a no-brainer to switch over to the new supplier. However, if the new supplier is known for having material of bad quality, poor customer services practices, or even missed deliveries, the construction company would be more inclined not to switch over their business. Yes, in terms of money, the construction company would be saving a lot, but the faulty products and bad reputation of the new supplier poses a huge risk to the company that surely outweighs the cash savings. By using defective materials or having to push back the finish dates of projects, the construction company is not adequately fulfilling service level requirements and is in jeopardy of being sued, which in turn, would more than likely negatively affect its reputation and decrease business and sales.

Reputation is everything. It is a crucial factor, whether you are the “controversial diva of radio” or a supplier trying to gain new business. Companies must be aware of this in order to ensure their own good reputation.
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Prepare to shop smart!

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There are times in our lives and society that we often depict as defining moments. These are events where we seem to garner the direction which eventually moves us into other areas of eventual future potential. Sometimes these occurrences happen and we do not realize until later in life when we take a moment to look back. In this case, we have all grown up in a world of wanting specific objects whether luxury items or necessities. We see objects that appeal to our desires, whether we need the item or not, and we are driven to purchase the item because we have the power.

With the holidays coming up I thought it would be appropriate to take a minute to identify one of the most exciting activities, well for most women at least. There are certain questions every shopper must ask themselves. Whether they need the item, the amount they are willing to travel to obtain this item, and the importance of having this specific item. Shoppers gain a sense of power through shopping. Having the latest item such as the newest smartphone or designer bag, gives us a feeling of power and accomplishment. Having these material objects may make individuals feel they have gained an acceptance from peers to achieve a certain position in society. Shopping is a very responsible job that requires careful planning on how to spend your income and satisfy those close to you with the correct purchases. I mean, do people really want gifts they don’t like? Research has shown women are more likely to be the head shopper of a household. When I go shopping, I tend to search for the best price and be able to bargain before I make purchases. It is very rare for me to make a purchase without it being on sale.

When purchasing an item, you have to be sure you know what you are purchasing and critically think through your purchase. The marketing industry has developed ways to influence our decisions in a specific direction when buying a product. For example, the market has to appeal to both male and female shoppers. When a male goes to purchase an item such as a new car, they may look for which car has the most power or features, while some females may not even know what 300 horsepower means. While creating car ads and commercials, to appeal to both male and female, they must identify safety and reliability, but also power and class.

Christmas time has evolved into a celebration of family and of caring for one another, and presents seem to be a way to express our gratitude towards one another. Shopping is at the center of this holiday, which requires shopping either in stores or online. It is estimated that Americans spend on average $850 to $1,150 on Christmas gifts. This surge of buying not only helps the economy, but this is the time out of the year that stores depend on in order to gain the bulk of their income. Although giving and receiving gifts during Christmas is an extraordinary time, Americans could not afford to have it last all year.

Today many people seem to have busier lives and no time for shopping. Shopping is all about convenience. Finding the product the fastest way and purchasing it is the key to successful shopping. With the busier lives people have, less and less time goes into shopping for that perfect gift. Online shopping has become an easier way to make shopping more convenience, being able to purchase anytime, whether at work or sitting on the train. Online shopping sites such as Groupon and LivingSocial, have created a way to offer marketing strategies for companies and bargains for consumers. Most deals on these sites are offered at half-price of retail. For example, you can spend $25 on Groupon for a local store or restaurant, and receive $50 worth of store credit.

Shopping today has evolved dramatically over the past decade providing easier and more efficient ways to shop. Everyone is looking for the perfect sale or bargain in order to obtain the greatest amount of savings. The outcome of each shopping trip should produce realistic cost savings and the satisfaction each shopper is longing for. So next time you go out to find that perfect gift, always keep the possible end savings result in the back of your mind to avoid overpaying for any gifts.

If you’re looking for a great gift for that special procurement person, Source One's book Managing Indirect Spend on Amazon is the perfect present!
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Advancements in Artificial Wave Technology May Impact Sporting Good Consumerism

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The economic climate has certainly taken its toll on the sporting goods world. Key retailers in these relatively flat markets are continually promoting unconventional equipment and are pushing the limits of design to drive emerging interest to their category. Surfing has certainly not been excused from the attempt to steer thrill seeking baby boomers into its sport by creating new equipment that cuts the learning curve for any entry level participant. The recent stand-up paddle board phenomenon (that holds a lofty $1600 price tag) is a clear example that has attracted consumers back to the board shops. A group of Spanish engineers have taken a new approach to recent economic pitfalls by shifting the focus from re-engineering boards, to re-engineering waves. Wavegarden, out of San Sebastian, Spain, has provided new opportunities to landlocked consumers by creating an artificial wave technology that can be implemented in lakes, lagoons or ponds.

The sport of surfing has developed in countries on six continents, but remains a privileged sport for those that are coastally located. The Wavegarden artificial wave has a vastly improved form that may make current wave pools a thing of the past. The macro implications of this design beg the question: What will happen to the surfing population? With massive growth potential, this technological advancement has the possibility to revive the surfing consumer market and introduce the pastime to water sport enthusiasts around the globe. In years to come, we may just see surfing World Champions from the flat lands of Indiana.

With the possibility of new pockets of surfing goods consumers manifesting in non-coastal regions, the resulting migration of retailers would be soon to follow. Though major surfboard companies would be the first to generate business from this new consumer group, the subsequent growth of local retailers and local surfboard shapers would be inevitable. Since the 2005 closure of Clark Foam (the world’s largest manufacturer of surfboard blanks), the surfing consumer has reinvested in the local board shapers to create surfboards from non-conventional materials. With larger companies like Homeblown and Patagonia researching green alternatives, local shapers are looking to new suppliers for cheaper alternatives. By expanding the consumer market to new geographic regions, the raw material supply base may take on a much larger scope. Local shapers could purchase and experiment with cost effective
alternative materials from regional manufacturers. Corn based plastics and soy based foams might have the chance to replace fiberglass and epoxy surfboard materials. Though the successful growth of the artificial wave remains to be seen, a new consumer base and unorthodox supply-chain will be hungrily awaiting its arrival.
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Bullish analysts bet on commodities in 2012

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Bullish analysts bet on commodities in 2012 Raw material prices are on pace to beat equities for the fifth consecutive year, underscoring the strength of demand from emerging economies, analysts say.

Stock exchanges around the world were rocked by political and economic volatility this year, as rapid gains were followed by huge losses. The finance sector, which helped drive overall growth during the boom years, was besieged by worries emanating from Europe and the continent's sovereign-debt crisis.

Though the stock market has historically outpaced gains in other sectors, raw materials have continued to gain in value over the past few years. The U.S. economy, along with those in Western Europe, has experienced only tepid growth, but the rapid expansion in countries such as Brazil, Russia, India and China (BRIC) has remained strong, helping to drive demand for commodities.

Bloomberg reports that the MSCI All-Country World Index of equities has fallen 13 percent this year. Moreover, yields of Treasuries also dropped as they touched record low levels. Standard & Poor's GSCI Index of 24 commodities, on the other hand, has climbed 2 percent. Analysts from Goldman Sachs - known for their accurate prognostications – project commodities to return roughly 15 percent over the next 12 months.

Demand from China will largely drive demand for commodities, according to economists and other experts. Many economists are betting the U.S. will experience moderate growth in 2012, and a growing number contend Western Europe could slip into another recession. However, demand from China could counteract the drop in demand from such countries, according to Wells Capital Management chief investment strategist James Paulsen.

"The odds favor that the emerging world has succeeded in producing a soft landing rather than a crash landing," he said. "A crash landing would make it more like 2008 for commodities, but a soft landing means we probably are in an ongoing recovery, which makes it very likely that commodities go onto new highs."

Copper demand, for example, is largely tied to economic activity and future growth prospects, as the metal is primarily used in construction and manufacturing. Copper prices have swung precipitously over the past few years, and values have eroded since February. Though short-term factors have contributed to the decline in copper prices, a number of experts remain bullish on future prospects.

Still, some experts asserted raw materials could decline in 2012 if Europe's sovereign debt crisis continues to spread to other countries. Economists worry if Greece defaults on its debt obligations – especially after European leaders have worked strenuously to prevent the Southern European nation from doing so – the effects could spark a global financial crisis.

Public officials and economists fear the continent's sovereign debt woes could send shockwaves through the global economy, triggering a panic much like the one prompted by the 2008 failure of Lehman Brothers.

Even amid such worries, analysts and investors are still eying commodities. Hedge funds and other large speculators are holding net-long positions on raw materials, according to Bloomberg, indicating that large investment houses are confident booming population growth and dwindling stockpiles will sustain high raw material prices.

On Monday at midday on the New York Mercantile Exchange, future contracts of gold, silver and copper also climbed higher. Gold futures were up 1.6 percent, while silver futures logged a 3.6 percent uptick. Copper futures for December delivery, meanwhile, jumped 2.7 percent.

 
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Toyota mulling overhaul of strategic sourcing as yen appreciates against U.S. dollar

on Tuesday, November 29, 2011

Toyota mulling overhaul of strategic sourcing as yen appreciates against U.S. dollar As it works to increase manufacturing capacity, Toyota is struggling to increase profits as Japanese yen gains in value.

Japan-based Toyota has faced myriad hurdles on its rocky road to recovery. In March, the 9.0-magnitude earthquake and subsequent tsunami that battered Japan caused significant damage to the automaker's domestic manufacturing facilities. In the wake of the natural disasters, the world's biggest carmaker struggled to restore domestic production to pre-crisis levels.

However, Toyota weathered that crisis, overhauling its strategic sourcing as it endeavored to achieve procurement cost reductions amid such a backdrop. Now, Toyota – along with other carmakers based in Japan – is mulling how to contend with a rapidly appreciating yen.

The Wall Street Journal reports Toyota president Akio Toyoda affirmed this week the company is considering whether to move some of its compact car manufacturing offshore. Toyoda said the automaker is also deciding whether to seek alternative suppliers, which could help drive business cost reductions.

The yen, which is trading at record high values against the greenback, is hurting Toyota's ability to increase its profit margin in Japan. Toyoda conceded it "doesn't make sense" for the car company to continue to export compact cars to other nations because they are already less profitable than the firm's other vehicle offerings.

Precarious market conditions are spurring Toyota to make some difficult decisions, Toyoda asserted.

"That is why we might take various steps such as shifting [production] overseas, using different suppliers and increasing local procurement," he said.

As a result of the ever-evolving global market, Toyota could also renege on its pledge to produce at least 3 million vehicles per year in Japan. Toyoda said the figure is not a definite number, but that officials are rather endeavoring to ascertain whether offsetting domestic manufacturing could improve efficiency and augment profits.

Toyota is also developing plans to use its factories in foreign countries as a means of improving manufacturing efficiency, according to Toyoda. For example, Toyota could use some its plants in the U.S. – including a newly opened facility in Mississippi – to produce Corollas. The carmaker would then ship them to nations with which the U.S. has favorable trade agreements.

Toyota's willingness to shift production and overhaul its strategic sourcing illustrates how the carmaker is struggling to retain its market dominance amid mounting competition and unforeseen economic phenomena.

 
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Risking lower profits, discount stores attract shoppers with sales – but luxury chains opt for full-price

on Monday, November 28, 2011

Risking lower profits, discount stores attract shoppers with sales – but luxury chains opt for full-price Retailers across the U.S. rolled out their most enticing deals to lure consumers to stores this weekend, and their strategies largely paid off. How they will fare throughout the remainder of the biggest shopping period of the year, however, is still in doubt.

Over the past decade, U.S. consumers have increasingly used the internet to supplement their in-store shopping experiences. Following Thanksgiving, Cyber Monday has become an important revenue driver during the holiday shopping season.

This year, sales on Black Friday rose precipitously from 2010. Retailers such as Target and Wal-Mart endeavored to lure additional shoppers into their stores by opening their doors on Thanksgiving, drawing the ire of employees. The strategy paid off, The New York Times reports.

Yet, even with the strong Black Friday earnings, many retail chains are working to buttress Cyber Monday sales. Last year, sales on the Monday after Thanksgiving surpassed $1 billion, and analysts assert this year the trend could continue, as more U.S. consumers opt for online deals.

In fact, online sales rose on Black Friday, with shoppers shelling out more than $816 million, jumping 26 percent from 2010. Many stores are offering aggressive deals through their online outposts, but those deals will not be available at their physical locations. This trend, according to analysts, underscores how businesses can improve performance and buttress earnings by reworking strategic sourcing and overhauling purchasing services.

What's more, the divide between high-end retailers and their low-cost counterparts has become even more pronounced, especially in terms of their approach to attracting business this holiday season. The period between Thanksgiving and Christmas is the most lucrative time of the year for nearly every retail chain, but companies that cater to high-end customers are benefiting from the relative strength within the luxury sector.

For example, Toys "R" Us, Wal-Mart, Macy's and Target opened many of their stores on Thanksgiving, as they worked to draw shoppers by offering steep discounts. The average customer of such stores is more budget-minded – particularly this year, analysts say – and they are loath to spend their money on fully-priced items. 

Shifting their strategy from prior years, executives at companies including Wal-Mart and Target are hoping to drive revenue higher through steep discounts. Economists affirm while this has helped to drive traffic at stores, it could also have a number of deleterious consequences. Stores are relying on robust sales because they are potentially losing money on sale items.

With their margins squeezed, low-cost stores are supporting profits through procurement cost reductions, improved retail sourcing and enhanced spend management. Analysts will not know whether the tactic pays off, however, until they report their quarterly earnings.

On the other hand, many high-end stores such as Nordstrom and Saks Fifth Avenue – which were battered during the recession – are not offering shoppers the great deals they can find at other retail outfits. Executives at high-end companies contend they are now attracting more shoppers willing to pay full price than in the boom years leading up to the economic contraction.

"We're now into a less promotional environment than we were before the recession," Saks chairman Stephen I. Sadove said.

Nonetheless, retail analysts are expecting overall holiday sales to rise slightly this year, with many forecasting a 3 percent uptick from 2010.

 
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General Motors plans to use former Saturn production plant to boost capacity

on Wednesday, November 23, 2011

General Motors plans to use former Saturn production plant to boost capacity U.S.-based automaker General Motors said this week that it would reopen a Tennessee manufacturing facility, a move that would enable the company to rapidly boost production if necessary.

Officials from GM, which has battled back from insolvency, affirmed Monday the company would reopen a production plant in Spring Hill, Tennessee. The automaker once used the manufacturing facility for its discontinued Saturn brand, but now the plant will help to augment production capacity when needed, according to The New York Times.

The announcement from GM surprised analysts, as carmakers rarely utilize manufacturing plants in such a manner. Nonetheless, GM asserted it would invest more than $61 million to upgrade the plant. In a statement, company officials said they hope to transform it into "one of the world's most flexible manufacturing facilities capable of building any GM car or crossover based on customer demand or manufacturing need."

Reopening the shuttered factory will also help inject life into the local economy, according to GM. The carmaker plans to hire 700 workers to staff the facility, and executives said they would use the plant to produce parts for the Chevrolet Equinox, which is one of the firm's best selling vehicles.

"Spring Hill has a history as one of GM's most innovative and flexible plants," GM labor relations vice president Cathy Clegg said in a statement. "We're pleased that, working together with the UAW, we were able to build on that history and develop a plan to resume production at Spring Hill."

Interest in the Chevy Equinox has soared over the past year. In October, Equinox sales surged 18 percent compared to the same period in 2010, prompting GM to increase output of the crossover three separate times since it went into production in 2009.

GM ultimately hopes to add about 1,200 additional jobs at the manufacturing plant, according to The Times. If the initiative is successful, the automaker said it would invest $183 million in the facility and use it to build a new midsize vehicle offering for the 2015 model year.

GM manufactured cars under its Saturn brand at the Tennessee production facility from 1990 to 2007.

 
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Hewlett-Packard's profit plummets 91 percent, beating analysts' expectations

on Tuesday, November 22, 2011

Hewlett-Packard's profit plummets 91 percent, beating analysts' expectations Amid burgeoning competition and dwindling market share, Hewlett-Packard (HP) hired chief executive Meg Whitman to turn around the company's moribund earnings and ignite growth. The company reported its fourth quarter earnings and yearly financial results this week, underscoring the obstacles Whitman must overcome in her quest to drive the company toward profitability.

Palo Alto, California-based HP said on Monday net revenue in its fourth fiscal quarter hit $32.1 billion, representing a 3 percent decline from the same period the year prior. For the year, HP logged revenue of $127.2 billion, which was a scant 1 percent higher than the $126 billion in revenue recorded in 2010

HP's net income tanked in its latest fiscal quarter, as profits dropped to only $200 million - 91 percent lower than the same period in 2010. For the 2011 fiscal year, HP's profits fell 19 percent to $7.1 billion.

The lackluster revenue and net income figures were expected, with analysts largely forecasting the company would report lower earnings as it carries out an ambitious business cost reduction program and works to gain back market share lost to rivals including Apple. Analysts were pleasantly surprised with the firm's net income, illustrating how far the company must climb in its push to increase profitability.

The New York Times reports Whitman endeavored to remain positive when she delivered the technology giant's earnings report to investors this week. Whitman, who successfully guided EBay from a fledgling startup to an international powerhouse, has focused her creative and managerial faculties on HP's internal development.

Whitman hopes to drive future earnings and more effectively compete with rivals by reworking HP's businesses, which include its personal computing, servers, printers and data management divisions. Whitman asserted she would buck with her predecessors – including her immediate forerunner Leo Apotheker - by pursuing growth from within. Under Apotheker, HP acquired Britain-based Autonomy for $11.7 billion in a move that investors and analysts largely derided.

"HP has a great opportunity to build on our strong hardware, software, and services franchises with leading market positions, customer relationships, and intellectual property," she said in a statement. "We need to get back to the business fundamentals in fiscal 2012, including making prudent investments in the business and driving more consistent execution."

HP is the world's biggest technology company by revenue, but it has struggled as the economy soured and business costs soared. Whitman said in an interview that the company would grow in 2012, but she cautioned that its expansion would mimic that of U.S. gross domestic product (G.D.P.).

"We will grow at G.D.P.-type growth rates, maybe faster," Whitman said.

Nevertheless, Whitman allayed investor concerns, affirming the company planned to drastically augment profits through improved internal operations. Moreover, though revenue declined in HP's usually profitable printing division in the fourth quarter, Whitman contended it was not prompted by customers shifting their business elsewhere, but rather, by weak economic conditions and poor management.

Still, HP faces an uphill battle as it works to reignite earnings and growth. The company faces a myriad of challengers in nearly all of its core business units, including its personal computing sector. On Monday, analysts from the research firm Canalys further sparked worries, projecting Apple to surpass HP in 2012 as the world's biggest seller of personal computers.

Nonetheless, though the Silicon Valley powerhouse is down, many analysts are warning investors not to count it out – especially with Whitman at the helm.

 
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Toyota shifts manufacturing to compensate for Thailand flooding

on Monday, November 21, 2011

Toyota shifts manufacturing to compensate for Thailand flooding  The world's biggest automaker, Toyota, announced this week that its domestic manufacturing output has nearly returned to pre-crisis levels.

Japan-based Toyota has struggled this year in the wake of the 9.0-magnitude earthquake and subsequent tsunami that battered the island nation in March. Many of the factories operated by Toyota – along with rivals Honda and Nissan – were severely damaged when the tsunami struck, as a majority of the country's car making is centered in the hard-hit Northeastern regions.

On Monday, Toyota said Japanese manufacturing had hit "near-normal levels." Company executives have been loath to move production offshore, as they are endeavoring to implement business cost reductions, even in the face of mounting cost constraints.

The BBC reports that partial production at three of Toyota's factories in Thailand also resumed this week. Aside from their domestic manufacturing woes, Toyota and other Japan-based automakers have struggled to keep costs down as the yen, the nation's currency, has appreciated over the past year. As the yen continues to gain value against the greenback, it costs Japanese carmakers a substantial amount of money.

Toyota's manufacturing facilities in Thailand were affected by record flooding that struck that country last week, according to the news provider. Flooding in Thailand was the most severe in decades, officials said, forcing many other businesses to completely shutdown production in the Asian nation.

The slowdown in manufacturing this year has eroded Toyota's earnings. In fact, Toyota's profits between July and September are down more than 18.5 percent from the same period in 2010, as the company has been forced to shift manufacturing to its plants in other countries.

To compensate for its reduced production capacity in Asia, Toyota ratcheted up manufacturing at its North American factories, Bloomberg reports. Its manufacturing plants in North America are currently running overtime to help make up for the reduced output in both Japan and Thailand. Still, Toyota executives said the supply constraints were more limited than they initially projected.

"Early on we didn’t know how bad it could be, but it ended up being a false start," Toyota U.S. sales president Jim Lentz said. "Whatever impact it had is behind us."

As a result of the shock to its supply chain, Toyota executives were forced to withdraw the company's yearly sales and profits forecasts, according to the BCC.


 
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Copper futures headed for decline, survey of analysts finds

on Friday, November 18, 2011

Copper futures headed for decline, survey of analysts finds The sovereign debt crisis currently plaguing the European Union is sending jitters through the global market and has driven the price of copper down.

Copper traders and analysts, who not long ago were bullish on the commodity, have quickly shifted their view. The ongoing tumult in Europe has spurred contagion fears throughout the world, with investors wearily eyeing the U.S. and other markets as they fear the crisis will consume economies outside of the EU.

Bloomberg reports 11 of the 23 analysts surveyed by the news agency project the metal to decline over the coming weeks. Their negative assessment of the worldwide copper market could indicate it is poised for even further falls, according to experts.

Since hitting a record in February, copper futures have declined by more than 20 percent. The metal is used in construction and is a key component in many appliances and other products, and its fate is directly tied to the global economy. Economic stagnation has wrapped its tentacles around the European economy, as both Germany and France are not entangled in its nefarious clutches.

"There's a strong chance of Europe going into a recession," Basemetals.com research head William Adams told Bloomberg. "Asia is getting more worried that the slowdown in Europe will mean demand for their exports will be hit and therefore that's going to impact demand for their industrial production."

On the New York Mercantile Exchange on Friday, copper futures for December 2011 delivery climbed 0.58 percent to close at $3.40 per pound.

Lingering economic woes in Europe are driving demand for copper down, but other countries are also contributing to the drop. China is the world's biggest copper consumer, and the government has enacted a series of increasingly stringent regulations as officials worked to quell a speculative real estate bubble and runaway inflation.

The measures appear to working, economists say, but they have also resulted in a reduction in new construction projects in the world's second biggest economy, further depressing demand.

According to data from the Commodity Futures Trading Commission, speculators in U.S. copper futures have bet the metal would fall since mid-September.


 
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The Perfect Pair

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When choosing the “perfect” drink to balance a meal, one must assess taste, texture, and how the drink will affect the entire meal experience. This is not so different when a business is looking for a Strategic Sourcing partner.

The perfect drink can enrich the choice of food and add to the overall bite! A New York City beer sommelier, Hayley Jensen, is quoted in the Wall Street Journal; “Oysters work well with creamy stouts, as the smooth feeling of the beer complements the buttery mouth feel of the oysters.” Business managers want a partner who has experience in sourcing specific commodities but who will work well with their team members in a collaborative effort and produce a result.

Before Hayley starts eating, “Ms. Jensen always pauses to have a little taste of the beer first. ‘You need to let it penetrate your palate,’ she says.” Business managers should always understand their partner’s code of ethics, their sourcing strategies, and what their process is when going to market and working with suppliers. The customer should feel comfortable with the companies approach and have positive expectations that a savings result is achievable.

Depending on the choice of beer, the glass should be chosen carefully and be presented at the right temperature. You do not want a glass that is hard to manage or affects the taste of the beer. A Strategic Sourcing partner should be sensitive to the customer’s needs, goals, and requirements for each initiative they are engaged in. The outcome of the experience, although may produce a cost savings, should satisfy the customer, educate them on decision making when purchasing a product or service, and encourage them to continue to engage the Strategic Sourcing company.
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British government sells Northern Rock to Virgin Money, logging loss on deal

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British government sells Northern Rock to Virgin Money, logging loss on deal The British government, which nationalized Northern Rock during the financial crisis, agreed this week to sell the bank to Richard Branson's Virgin Money.

The newly announced agreement will result in a loss to British taxpayers, according to The New York Times. Virgin Money will purchase Northern Rock for $1.2 billion in cash. Total proceeds, however, could climb more than 20 percent higher if a number of certain conditions are met.

The British government paid roughly $2.2 billion to purchase Northern Rock at the height of the financial meltdown. The bank was on the cusp of insolvency, and required the capital infusion from the government. The deal represents the first such sale of banking assets that the British government acquired during the crisis.

The British government still owns a stake in the Royal Bank of Scotland and Lloyds Banking Group, which officials said they are still hopeful to sell at a profit.

"The Northern Rock sale is a very good result for the government because losing the risk is better than going for profit," BGC Partners strategist Howard Wheeldon said. "But it was the relatively one for the government to get off its back. The real test is going to be R.B.S. and Lloyds."

The Washington Post reports the government was eager to reduce its stake in the mortgage lender, especially as some officials feared taxpayer losses could have climbed even higher over the coming year. Virgin Money promised it would not lay off workers to achieve business cost reductions, and Branson agreed to maintain the bank's full branch network for at least three years, further sweetening the deal for the government.

"It was clear to us that this was the best deal for the British taxpayer, we were getting more money back than any other deal on the table," Treasury head George Osborne affirmed.

Moreover, Osborne asserted the sale would help to increase the competitiveness of the U.K. banking sector, which is currently dominated by four large financial institutions.

Critics, however, argued that the loss of taxpayer money was tantamount to a betrayal of public confidence.

"I'm very concerned about whether we are getting really good value for the taxpayer," Conservative Party lawmaker Mark Field said.

The sale of Northern Rock includes 75 branches, 2,100 employees and 1 million customers, according to the Post.

 
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Iconic Sears struggles, but executives promise future growth

on Thursday, November 17, 2011

Iconic Sears struggles, but executives promise future growth Retail chain operator Sears Holdings Corp. announced its third quarter earnings this week, delivering weak results that missed analysts' expectations and placed additional pressure on executives to institute a turnaround.

Sears reported a net loss when it announced its third quarter results on Thursday. The Illinois-based chain said that it logged a loss of $421 million net loss in the quarter. That figure was lower than the $218 million loss the company reported in the same period in 2010.

Hedge fund manager Edward Lampert now controls Sears, but the company has failed to institute a successful business cost reduction program. What's more, sales at the retailers' Canadian stores were down in its latest fiscal quarter, exacerbating worries that Target and other retailers have usurped its business.

Though Sears was once a popular and trusted brand, its reputation has eroded over the past few years, according to marketing analysts. Target and Wal-Mart have succeeded in branding, as they appeal to the same demographic that Sears once dominated.

Sales during the company's third fiscal quarter fell 1.2 percent to $9.57 billion. Analysts had projected the company would log a loss, but Sears surprised with the hefty reduction in revenue as well. Bloomberg reports the retail chain has reported 19 consecutive quarterly declines in revenue, underscoring the seriousness of the troubles that plague its business model.

In an effort to drive business higher, Lampert and other executives are working to emphasize the chain's smaller stores. Moreover, they are hoping to attract shoppers to the company's online site and have licensed the Sears' brands to other firms in an attempt to bolster earnings.

The company's stores in the U.S. fared better than their counterparts in Canada. Sales at U.S. stores fell by 0.7 percent; while sales at U.S. Kmart stores – which Sears also owns – dropped by 0.9 percent. In Canada, comparable store sales declined by 7.8 percent in the quarter, according to the company.

"While we are not satisfied with our performance, we saw improvement in some core areas. Sears Full-line Stores saw improvement, as Sears apparel achieved both comparable store sales and margin rate increases in the quarter," Sears chief executive Lou D'Ambrosio said in a statement.

"We also saw nearly 20 percent growth in our domestic online business, and while appliance sales declined in the quarter, we improved our market leadership positions in overall appliances and Kenmore. Despite improvement in these areas, our overall results were down, led by declines in Sears Canada, consumer electronics and Kmart apparel," he added.

D'Ambrosio's background is in technology, as he has held positions at International Business Machine Corp. (IBM) and Avaya Inc. He is endeavoring to drive Ecommerce sales higher, and has succeeded thus far, as revenue from the company's online site continues to soar.

However, he and Lampert are also trying to ratchet up earnings in the company's core assets. Executives are also working to institute business cost reductions as they fight higher raw materials prices, and analysts said they could be mulling whether to close a number of underperforming stores both in the U.S. and Canada.

After Sears announced its earnings, shares of the company declined by 6.3 percent, according to Bloomberg. The shares had dropped as much as 9.1 percent earlier in the day, representing the steepest intraday fall since early August.

 
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Hurt by volatile markets and enhanced regulations, banks cutting jobs to increase profit margins

on Wednesday, November 16, 2011

Hurt by volatile markets and enhanced regulations, banks cutting jobs to increase profit margins  The worldwide finance sector is still reeling from the effects of the recession, which eroded equity and prompted the sovereign debt crisis currently plaguing European nations. Large banks are cutting workers as they work to achieve business cost reductions, with some of the world's biggest financial institutions announcing a fresh wave of layoffs.

Wall Street continues to draw the ire of its critics, as protests throughout the U.S. and across the world increasingly target such institutions for the central role they played in the 2008 financial meltdown. Still, banks are struggling to offset a fall in revenue prompted by newly enacted regulations, and they are laying off workers as they endeavor to return to pre-recession profit margins.

The New York Times reports Citigroup - a bank that had more than 400,000 employees only five years ago - plans to reduce its payroll by an additional 3,000 workers. That figure represents roughly 1 percent of its current global workforce, which has been reduced to only 295,000 people as the bank suffered under the weight of bad investments it made on the U.S. housing market.

French banking giant BNP Paribas is also significantly reducing its worldwide payroll, announcing it would cut 7 percent of its staff, or about 1,400 jobs. Four hundred of the jobs that BNP Paribas plans to cut will affect French workers. An additional 1,000 workers will be let go at the company's international locations.

Citigroup has not announced a final figure of how many workers will lose their jobs, but it could exceed the 3,000 figure, according to The Times. The timing of the layoffs is also unknown: Citigroup has informed some workers, but executives are still mulling what departments should be downsized - and to what extent.

Shareholders have increasingly lobbied banks to increase profitability, as many are accustomed to the substantial margins logged both before and in the immediate wake of the financial crisis. Goldman Sachs and JPMorgan Chase, for example, reported robust earnings in 2010, as the financial giants profited from global economic uncertainty.

However, banks are currently facing hefty regulations that have eroded former revenue channels. Bank of America reneged on plans to begin charging customers a $5 monthly debit card fee, but company executives said the Dodd-Frank financial overhaul bill has eaten into revenue. The lower debit card fees banks are now allowed to charge merchants will result in more than $6 billion in lost revenue, according to analysts.

In total, banks plan to cut more than 120,000 jobs this year, according to Reuters. Though they are reducing their workforces in varying ways, nearly all banks assert the stringent financial regulations and volatile trading environment have hurt earnings over the past six months, magnifying the need for business cost reductions.

Italy's UniCredit will give more than 6,150 workers pink slips over the coming months. The bank has been especially affected by the continued sovereign debt woes plaguing the continent. Yields on Italian-issued debt have risen above the critical 7 percent threshold over the past week, the same level that prompted governments in Spain, Ireland and Greece to seek bailouts from the European Union.

Banks throughout the world are implementing employee reduction plans as they seek to return to profitability, with many major players announcing measures that will gradually lower workforce figures over the next three to four years.
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Profits jump at Target, surprising analysts

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Profits jump at Target, surprising analysts  U.S.-based retail heavyweight Target announced earnings from its latest fiscal quarter this week, delivering solid results that surpassed analysts' expectations.

Target, which is the second largest discount retail chain in the U.S. after Wal-Mart, reported Wednesday its third quarter profit climbed significantly from the year prior. The news comes on the heels of Wal-Mart's earnings release, in which the Arkansas-based retail chain said while revenue had climbed, higher business costs affected its profit margin.

Target, on the other hand, said profits increased by 3.7 percent in its third quarter, which ended on October 29. Company officials attributed the positive profit growth to strong earnings from its credit card division, as well as a number of new initiatives launched this year. The Italian fashion house Missoni crafted a lower-priced line of clothing for the Minnesota-based firm, and Target said sales were exceptionally strong, with many stores selling out within hours of unveiling the collection.

MarketWatch reports the company's earnings topped forecasts. Target said its profit climbed to $555 million from $535 million in 2010. Moreover, the company said sales jumped to $16.1 billion, representing a 5.4 percent uptick from the same period in 2010. Analysts had projected Target to log profits of 74 cents per share, but actual figures showed the company's profits hit 82 cents per share.

"Target reported impressive (third-quarter) results, with robust performance by the retail segment driving much of the earnings upside," Sanford C. Berstein & Co. analyst Colin McGranahan affirmed. "The company’s fourth-quarter guidance leaves ample room for further earnings upside."

Target also benefited from increased consumer spending. U.S. shoppers dug deeper into their wallets in October, as spending climbed by 0.5 percent from September. Confidence, however, is still tepid, and economists asserted the uptick in sales at stores was likely prompted by consumers reaching into their savings to fund new purchases.

Though revenue at its credit card segment declined compared to the same period the year prior, Target has aggressively marketed its branded card to customers, offering 5 percent discounts on purchases made with them. The division's profit increased 10 percent during the third quarter, bolstered by a reduction in bad debt expenses.
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Wal-Mart faces uphill battle as sales rise, but profit margin sinks

on Tuesday, November 15, 2011

Wal-Mart faces uphill battle as sales rise, but profit margin sinks  The steep discounts Wal-Mart offered customers in an attempt to entice them to spend more money at its stores helped drive revenue higher, but the retail giant said its profits fell when it reported its third quarter financial results on Tuesday.

Sales at Arkansas-based Wal-Mart remained tepid in the company's latest quarter, which ended on October 31. Wal-Mart executives said net sales for the quarter rose 9 percent from the same time the year prior, hitting $109.5 billion. What's more, the company asserted $2.1 billion in net sales in the quarter resulted from acquisitions the firm made in both the United Kingdom and South Africa.

Company officials have worked to reverse lackluster sales at U.S. stores open at least a year. Wal-Mart's customer base has struggled in the wake of a recession that spurred widespread foreclosures in the U.S. and has thus far resulted in the loss of more than 8 million jobs. A decline in confidence prompted reduced consumer spending figures, as Americans scaled back their purchases of everyday items including milk.

The recession incongruously affected low-income earners, negatively impacting their disposable income. Wal-Mart's higher sales in the quarter largely resulted from its slashing the prices of many popular consumer items. The sales and markdowns drove earnings higher, but the company's profit margin suffered, with business costs eating into the added revenue.

The New York Times reports while low-income consumers have cut their purchases of even basic items, luxury shoppers are increasingly paying full prices for designer shoes and handbags and expensive automobiles, among other items. Sales at Saks Fifth Avenue, the upscale department store, surpassed levels logged before the recession hit, underscoring what company chairman and chief executive Stephen I. Sadove described as a "bifurcated market."

Overall U.S. retail sales in October climbed 0.5 percent from the month before, according to Commerce Department data. Economists are forecasting consumer confidence will slow over the coming months, as consumers stop dipping into their savings and opt instead to use their personal income.

Wal-Mart's fortunes are tied to the broader economy, and analysts are projecting the company will suffer a hit in the next quarter, especially following the holiday shopping season. The soaring prices of many raw materials has driven business costs higher, and Wal-Mart is loath to raise prices, as executives contend it would likely cause sales to dip.

"Our customers are still feeling pressured to reduce expenses wherever they can," Wal-Mart chief executive William S. Simon said. "Cost increases in numerous categories were not passed on to our customers in the form of increased prices."
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An Ever Widening Generation Gap

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One topic that I like to touch upon more often than most is money, it is certainly a more popular topic in general these days.  People spend so much time worrying about it, earning it, spending it, and least of all, unfortunately as this blog will get into, saving it. As I mature and become more developed as a sourcing professional I have discovered a much more heightened sense of costs, budgets, and the direction of our economy.  That is particularly why I find studies like the one referred to from CNNMoney regarding the wealth gap between the older and younger generations.  This article indicates that the 65 and older generation of today, as noted in 2009, has wedged a gap of up to 47% greater in wealth than the 35 and younger generation.

So why is this happening?  There are several theories, one at the heart of them is obviously the economy.  The younger generations are still pursuing these $40K a year educations in our finest educational institutions to emerge four or more years later hundreds of thousands in debt with fewer opportunities than ever before to not only overcome that debt but to even build a career.  Another theory is around the housing market, in the past you could buy a home at one price and see a considerable increase the equitability of it through renovations or emerging markets in the area.  Nowadays you buy a home and are lucky if you can make back what you paid for it in a 10 year period let along any renovations or improvements you have made.  More and more people are getting trapped and the “buy it and flip it” scenario is certainly one of the past, come and gone as a not so quick money maker. Of course home equity is only something you have to worry about if you can afford to purchase a home.  As stated in the article, young adults are living at home longer and putting off careers, marriage and other key milestones. Think back to 25 years ago and it was 18 and out the door, now you’re lucky if the kiddies are gone before they hit 25, the cost of living has just increased so much.

Most of all I think this gap has a lot to do with the “live for today” spending attitude that the younger generation has.  We rely so much on credit cards and living paycheck to paycheck that we just don’t have the capability or know-how to properly save.  Maybe we need to spend a little more time with the older generation and sop up some wisdom and tips on financial savvy!  Regardless of how it is done, we need to start thinking more about our long-term futures and less about this weekend.
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First the Toyota Prius, now the Chevy Volt —So What Comes Next?

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The answer is “I don’t know yet, but I can see a trend”. You see, a couple of days ago I was just thinking about how important the “how many miles per gallon?” question is these days. Ads and commercials drive the consumer’s attention to this performance indicator more than ever before, because manufacturers understand that car efficiency translates into money in the eyes of the consumer. Even when the vehicle’s intended purpose goes beyond mere transportation, such as with utility trucks and luxury cars, I have yet to find an ad that does not include that “efficiency note” next to the price tag. I may be stating the obvious when saying that fewer miles per gallon means less money in my pocket, but this particular line item has become so important for many people that the decision on selecting the right car is no longer a matter of engine power, features or design but a matter of size, dependability and most importantly efficiency. In today’s economy people understand that in the long term, efficiency equals savings, especially when gas prices have become so volatile. Moreover, for many of us, the MPG out weights the HP or RPM when selecting a new car these days. I’m sure this wasn’t the case decades ago when the common conception was “the bigger the engine, the better the car.”

Car manufacturers understand this so well that they have reached a point where increasing the efficiency of a combustion engine is not enough to overrun competitors anymore, and they have pushed their R&D departments to switch to alternate technologies and implement them into their newer models. Whereas many people may not see it this way, I believe this switch is not a minor tweak but a major overhaul to their manufacturing processes and their supply chain overall instead. We are witnesses of the beginning of a major revolution in the development and design of the automotive industry. In a similar fashion to what steam power represented to the transportation industry late in the 18th century, new electric powered vehicles have the potential to not only affect the consumer’s behavior but redesign economies of scale as well. Ultimately, if these new designs continue to observe the same success they have over the last five years, several market commodities may be affected, from fossil fuels used to power internal combustion engines to metals used to create Lithium-ion, NiCd or NiMh rechargeable batteries of larger capacity.

Over the past years, this transition has been relatively smooth, steady and slow enough so that markets have had a good chance to properly target it to consumers and consumers have been able to absorb and embrace the technology quite well. The first approach to this technology was provided by the hybrid model that combined a small electric motor with a larger combustion engine (like the one on the popular Toyota Prius) that proposed relying on the electric system when the car was stopped or moving at a slow pace to reduce the use of the regular fuel engine and therefore maximizing MPG, this technology later served as the prequel to the newer and current design which introduced a second generation of hybrids mainly powered by electricity and backed up by a small gasoline engine that powers the battery not the wheels (which is exactly what the Chevy Volt is all about).

So what comes next? – A vehicle that needs no gasoline and can perform in the same way as any other medium size sedan perhaps? Well, that may be the counterintuitive response, but it may take many more years until we see something like that. However, the trending path is clear now and the market is responding well, while giving other commodities sufficient room to adapt and transition to alternative uses and allowing companies to naturally evolve into the industry.

In addition to this, many of these new vehicle designs will also promote business development in other areas. Electronic Manufacturing Services (EMS) companies all over the world will compete for a piece of the market and to become the source and supply of high-tech rechargeable batteries for car manufacturers, it already being the case that several battery assembly plants have been designed and some have initiated operations many of them to the benefit of GM.

Markets obey the needs and demands of the consumers, and the reality is that fossil fuels are less abundant and getting more expensive every year (I firmly believe that will be the overall trend in coming decades). In addition, there is a spike in interest by today’s generation on green initiatives and the prioritization of eco-consciousness on everything that’s new (recyclability, use of renewable sources or energy, lower ecological toll and impact, etc.) which has been fed by the overall natural and organic evolution of our technology to be focused on making things more user friendly, practical and versatile.

So what does the Chevy Volt have to offer to this trend? As a concept, the answer is simple — it is the confirmation of that trend, a re-assurance that technology has taken a next step and a clear indication that it will take many more steps toward maximizing vehicle efficiency. Consumer markets have clearly embraced the concept of cleaner technology; now it is just a matter of who will offer it more competitively in the coming years. As a product, the Chevrolet Volt is radically innovative, practical, ecofriendly and technologically sophisticated and on top of it all, has great design. A great part of the perception of a car’s efficiency is really put to the test by this vehicle. The car has an equivalent of 161 horsepower engine and capable of going from 0 – 60mph in just over 8 seconds, with the ability to reach a test-track speed of 100mph. The Volt can be charged with a conventional 120V home outlet and go up to 35 miles on a full charge and 375 miles with a tank of gas, and for those App-junkies out there, you can monitor the charge of the battery and verify if your car is plugged for charge with your iPhone or Droid.

With all this said, answering the question of “what comes next” really becomes the reflection of what’s happening today. Toyota, GM, Nissan, Ford, etc. have realized there is a new market with different needs and demands; hybrid vehicles are just a small piece of the complex puzzle of consumer markets. How versatile and ever changing the corporations have become and how adaptable, ambitious and ever demanding the markets have grown are the source of these technological improvements and the main drivers of the future economies. Let’s think about other topics that are governed by the same rules for a second now: like those new genetically modified crops that produce twice the amount of food than a regular crop, or the cutting edge cloud technology, or the new trends on currency and monetary unions, or the highly intricate digital money markets like the bitcoin, or the Mars Exploration Rover Mission, or the thousands and thousands of new ideas that make our daily lives simultaneously simpler and more complex every day , these events cause me to actually start wondering, “What Comes Next?...
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Wheat prices fall, worrying France

on Monday, November 14, 2011

Wheat prices fall, worrying France  The prices of many commodities have soared over the past few years, but an increasing number of wheat exporters is changing the worldwide market.

France is currently the world's second largest wheat exporter, but the Western European nation is facing mounting competition from countries across the globe as it works to shore up contracts with buyers elsewhere. Russia, Ukraine and Kazakhstan, among others, have ratcheted up their own production of the grain, and excess supplies are starting to affect prices.

Bloomberg reports France recently failed to secure more than 10 tenders in Egypt, which is the world's biggest buyer of wheat. France's position as top producer of wheat is threatened, according to analysts, because of burgeoning competition from countries in Eastern Europe.

Egypt is opting to purchase wheat from producers surrounding the Black Sea, as officials work to keep costs low. Wheat produced in France is more expensive, experts say, and its grain shipments have suffered as a result of the increased business on the other side of the continent.

In fact, government data indicates that wheat shipments emanating in France's Rouen, which is Europe's wheat export hub, will fall this year. Analysts project France's wheat shipments will plummet by more than 23 percent in the 12 months ending next June, underscoring how mounting competition is affecting the country's former stranglehold on the wheat market.

The reduction in shipments from France is especially surprising given data from the prior year. In 2010, inclement weather in Russia prompted Egypt and other countries to increase wheat purchases from France, driving them up by 16 percent. The contraction in world supplies was exacerbated as Russia and Ukraine stopped international shipments as officials in those countries worked to augment domestic stockpiles.

Wheat prices surged as a result, but they have fallen over the course of this year. After hitting record levels in February, wheat futures have dropped significantly, according to data from the Chicago Board of Trade. On Monday, wheat futures for March delivery declined by 1.2 percent, or 7.75 cents, to close at $6.38 per bushel.

Wheat futures have fallen 20 percent on the Chicago Board of Trade this year.
 
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Disney reports magical 2011 earnings

on Friday, November 11, 2011

Disney reports magical 2011 earnings  Though it was one of the last major players in the business world to unveil its quarterly financial results, Disney did not disappoint. As a matter of fact, the world's biggest theme park operator dazzled with magical results founder Walt would be proud of.

The Burbank, California-based media titan announced its quarterly earnings this week, on the heels of positive reports from Viacom and Time Warner, two of its rivals in the cable television space. Disney's fourth fiscal quarter ended September 30, and the company reported a 7 percent jump in revenue compared to the same period in 2010.

Moreover, officials said operating income climbed 23 percent compared to last year, and that net income rose 30 percent. Investors were impressed by the exceedingly strong report, especially as some had projected the company would miss expectations, given a tepid economy and sinking consumer confidence.

However, Disney managed to avoid the fate of some of its peers. Bloomberg reports the firm's 30 percent surge in profits handily beat the consensus estimate among analysts. Like Viacom, Disney benefited from higher fees from its pay-TV customers. Its advertising revenue also jumped during the quarter, fueled by the strength of its television networks, which include ABC, its branded Disney Channel and ESPN.

ESPN's performance was especially strong, as viewership increased by more than 13 percent in the quarter. Its theme parks also reported brisk business, as higher ticket prices and new attractions helped to drive robust attendance levels, company officials said.

"Fiscal 2011 was a great year financially and strategically, demonstrating the strength of our brands and businesses with record revenue, net income and earnings per share," Disney chief executive Bob Iger said in a statement. "We are confident the Company is well-positioned to deliver long-term value for our shareholders with our focus on quality content, compelling uses of technology and global asset growth."

Disney has been a perennial powerhouse since it went public. Though the company sputtered at the end of former chief executive Michael Eisner's tenure, it has thrived under Iger, even amid the effects of a significant global economic contraction.

The company also released its year fiscal results this week. For the full fiscal 2011 year, Disney reported that revenue at its parks and resorts climbed 10 percent to $11.8 billion. In the fourth quarter, revenue grew by a slightly higher 11 percent, hitting $3.1 billion. The company's Hong Kong Disneyland Resort performed well, according to Iger, as more visitors flocked to the park.

Investors said Disney's earnings were strong, especially as all of its major divisions delivered upbeat reports.

"You had solid results in all of the segments that really matter," Janney Montgomery Scott analyst Tony Wible said. "The underlying trends look fairly healthy in the two most important segments - media networks and parks."

Nevertheless, Disney did report that its studio entertainment revenues fell by 5 percent in 2011, dropping to $6.4 billion. The company said it failed to implement business cost reductions in the segment, and that higher technology infrastructure spending ate into the division's profit margin. The company expects the investment in technological equipment will help drive growth in the future, however, and it is bullish on 2012, as analysts said its movie lineup is stronger than this year's.
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Viacom's profit surges

on Thursday, November 10, 2011

Viacom's profit surges Media titan Viacom surprised investors by reporting upbeat earnings on Thursday.

Viacom, which owns CBS Corp., said it benefited from an uptick in its television advertising division. The company said higher cable fees and box office receipts for the latest iteration of the popular "Transformer" movie series also helped to buttress revenue during its fourth fiscal quarter.

The company said its profits surged 33 percent from the same period in 2010, underscoring the strength of its lineup of media offerings. Company chairman Sumner Redstone, famed for his assertion that "content is king," affirmed efforts to achieve business cost reductions and the strength of its brand helped drive growth.

"Viacom's performance in fiscal 2011 once again illustrates the value of our focused strategy and strong leadership," he said. "Viacom's powerful brands are enhanced by operational and financial discipline, which continues to drive our results and build value for shareholders."

The New York Times reports analysts were largely enthusiastic about the company's quarterly earnings. Some had feared the tepid economic climate would contribute to lower revenue growth, but the positive report allayed their concerns.

Advertising revenue at Viacom's cable networks – of which Nickelodeon and Comedy Central are included – jumped by 7 percent. The strength of that sector, coupled with increased fees from its domestic and international affiliates, is helping augment the firm's profit margins.

"2011 was an outstanding year, highlighted by significant creative milestones, strong topline growth and expanded profitability across every division of Viacom. Creatively we are at the top of our game, powered by unique audience insights and connections, coupled with consistent investment in innovative programming at our marquee media networks, including MTV, Nickelodeon, Comedy Central, and BET," Viacom chief executive Philippe Dauman said.

Viacom's fiscal year ended on September 30, and the results represented its fourth quarter in the 2011 fiscal year. For the full year, revenue climbed 12 percent to $14.91 billion, operating income increased 13 percent to $3.85 billion and full-year net earnings surged 22 percent, hitting $2.25 billion.

Viacom's impressive earnings followed a robust report from industry competitor Time Warner. The companies are increasingly focusing their efforts on trimming business costs as they work to improve efficiency and drive future earnings growth.

 
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GM earnings draw mixed reviews, as company executives vow to cut business costs to improve performance

on Wednesday, November 9, 2011

GM earnings draw mixed reviews, as company executives vow to cut business costs to improve performance The resurgence of the U.S. automobile industry has been one of the few bright spots in the nation's lopsided economic recovery. Still, though General Motors has fought back from insolvency, the company announced quarterly earnings on Wednesday that disappointed investors.

GM reported its seventh consecutive quarterly profit this week, but executives from the company said they planned to institute aggressive plans to trim business costs. GM officials affirmed the long-term success of the firm is reliant on improving efficiency and keeping down costs, which have ballooned.

The soaring prices of many raw materials have begun to eat into GM's earnings, analysts said. This prompted company officials to address the effects of the precipitous rise in commodities, driven upward by burgeoning worldwide demand and rapidly eroding stockpiles.

The New York Times reports GM is still 26 percent owned by the federal government, having been bailed out by taxpayers in 2009. Through the first nine months of this year, GM has earned $7.1 billion, but anxious investors are calling on company executives to further buttress earnings by achieving business cost reductions.

"GM delivered a solid quarter thanks to our leadership positions in North America and China, where we have grown both sales and market share this year," GM chairman and chief executive Dan Akerson said in a statement. "But solid isn’t good enough, even in a tough global economy. Our overall results underscore the work we have to do to leverage our scale and further improve our margins everywhere we do business."

During its latest fiscal quarter, GM said its net revenue increased $2.6 billion from the same period in 2010, hitting $36.7 billion. However, the company's diluted earnings per share was $1.03, a drop from the $1.20 GM reported the year prior.

Shocks to the global automobile supply chain affected GM, but company officials said they were on course to deliver on plans to increase profitability.

"GM continues to execute the plan we outlined for investors in 2010," affirmed Dan Ammann, the firm's chief financial officer. "That includes investing in our products, further strengthening our balance sheet, generating cash and profits each quarter, and maintaining our low break-even level. The next level of performance will come as we systematically eliminate complexity and cost throughout the organization."

 
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Kyocera’s Public Service Announcements about Strategic Sourcing

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Recently Steve Belli, the CEO of Source One, gave a presentation to a roomful of financial executives about the benefits of strategic sourcing.  He began by asking, “How many of you have strategic sourcing initatives in place at your company, or even know what strategic sourcing is?” Amongst the 200 participants, only one hand went up.  This outlines the challenge before Source One and other strategic sourcing and supply chain management consultants: a very steep learning curve that has to be climbed before discussions can even begin on how strategic sourcing initiatives can help any given company.

Fortunately, Kyocera has come to the rescue.  They are currently running a series of ads for their line of copiers, featuring renowned University of Maryland Professor of Economics Peter Morici. Obviously, Kyocera is trying to sell copiers, but strip out the specific references to products, and these ads actually serve as good public service announcements (PSAs) to introduce the concept of strategic sourcing to businesses.

In one ad, Professor Morici is “shocked, no, outraged” about bad spend category management (in this case, of course, printing). He then goes on to tell us that no one is tracking or managing service costs or supply costs, and that Kyocera can manage a company’s whole fleet of printers to keep costs down.

Translated into generic terms, this is a core principle of strategic sourcing. Doing a proper spend analysis of a given category to know where all the money is being spent, then negotiating service level requirements with vendors, then monitoring vendor contracts for compliance, are all at the core of strategic sourcing best practices.
In another ad, Professor Morici addresses total cost of ownership (TCO).  In the Kyocera example, he illustrates how companies often opt for the initial low-cost solution, but then end up paying two or three times as much as necessary for service and supplies.  He makes the (rather lame) joke that that is “bad fiscal policy.”
That is true, once again in generic terms. A spend category like printers should not be judged on entry cost alone, because there is an ongoing cost for service and supplies.  Also, printers are not a commodity, especially considered in their role in a company as a part of document management services. Therefore, as the professor points out, initial or lowest cost should not necessarily be the deciding factor in making such purchases. There is a TCO factor that must be considered. This is true of many other spend categories besides printers.

Kyocera’s two ads featuring Professor Morici just barely begin to scratch the surface of what companies and budget managers need to know about strategic sourcing. Again, of course, they are trying to sell their printers and copiers, but they recognized the need to first engage in end-user education and get their target audience to begin to scale the learning curve of strategic sourcing. Kudos to them for creating these tongue-in-cheek ads to begin that process, which ultimately amount to public service announcements to begin to educate business leaders on the basics of strategic sourcing. As Professor Morici emphatically declares at the conclusion of each ad, “It’s really not that complicated.”
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As he did with the Red Sox, Epstein looks to drive revenue for the Chicago Cubs

on Tuesday, November 8, 2011

As he did with the Red Sox, Epstein looks to drive revenue for the Chicago CubsTheo Epstein recently left his position as general manager for the Boston Red Sox to take over as team president of the Chicago Cubs. Officials from the Cubs affirmed they chose Epstein because of his ability to not only produce winning teams, but also derive additional revenue from ballparks.

To say that the 86-year interim between the Red Sox' 1918 World Series win and its 2004 victory frustrated Boston's rabid sports fans is a gross understatement. In fact, the decades of disappointment, anger and disbelief became defining characteristics of the city's sports fans, signs of their unwavering – and fanatical – support of the Sox.

Under Epstein, the Red Sox were able to break their infamous losing streak in 2004 when they defeated the St. Louis Cardinals. Epstein was a major architect of the team's victory, and his ability to help the club recapture its position atop the highest rungs of Major League Baseball was spurred by his eye for talent and his ability to cut business costs and improve efficiency.

Teams hire general managers to run their operations, and overseeing a successful baseball franchise is a lot like managing a company. Epstein was charged with acquiring big name talent and creating additional revenue streams for the team. He was ultimately able to accomplish the former because of his prowess in the latter.

The New York Times reports that while Epstein served as general manager of the Sox for nine years, he produced two World Series championships and helped significantly augment revenue at Fenway Park. As the nation's oldest professional baseball park, Fenway has long been a fan favorite, but Epstein turned it into a cash cow that enabled the Sox to sign some of the biggest and most talented players in the league.

The Red Sox poured more than $280 million into renovations of Fenway, giving the facility a much-needed facelift. Additional seats were installed, the park's luxury wing was upgraded and a host of other features were implemented. The results were staggering, as Fenway's capacity since 2001 surged by 3,500 seats.

In fact, data compiled by Forbes indicates the Red Sox experienced a surge in growth, revenue and total value during Epstein's tenure. In 2011, Forbes ranked the Red Sox as the second most valuable MLB team, with its total worth estimated at $912 million. Forbes affirmed the team logged revenue of $272 million the year prior, with its total value climbing 5 percent from 2010.

Annual revenue jumped under Epstein, while the upgrades at Fenway helped to trim some of the facility's operating costs. By increasing its investment into the facility, the Red Sox were able to drive earnings higher and acquire some of the talented players – David Ortiz, for example – that were critical in winning titles.

The Chicago Cubs hope Epstein can accomplish a similar feat in the Second City. Like Boston, Chicago has a storied ballpark in Wrigley Park. Also like Boston, Chicago is suffering from a 103-year World Series drought, and fans in the city are voraciously seeking another title.

Tom Ricketts, the Cubs' chairman, acknowledged that the team hired Epstein as much for his ability to sign top players as his overseeing the transformation of Fenway. Ricketts was asked whether Epstein was more attractive to the team because of his business acumen and his ability to implement business cost reductions and drive profitability.

"The answer is yes," he replied.

Nevertheless, Epstein has his work cut out for him in Chicago, as he faces a depleted roster and circumstances that differ from those in Boston. One thing that remains the same, however, is the pressure from both management and fans to generate a World Series title.

 
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Hammers and Nails: Using SaaS Sourcing Tools Effectively

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An article in the October issue of CFO Magazine entitled "Why CFOs Should Police SaaS Deals" discusses the challenges of acquiring and managing Software-as-a-Service (SaaS) technology. While all the points in the article are valid, one consideration was glossed over, especially as it relates to procurement, and which no doubt applies to other operational aspects as well, whose functions are assigned to SaaS implementation through the information technology (IT) department.

The article addresses the core concern of a CFO in acquiring such software. "The larger lesson for the CFO is to approach SaaS as one would any business investment. As Mark Linden, CFO of Intacct, a cloud-based provider of accounting and financial-management tools, says, ‘You’re buying software to automate some business process, so you’ve got to understand the changes to the process and the benefits you’re looking for…. You have to focus on the business benefit. Are you achieving it or not?’ "

This is well stated, and eminently true when using SaaS electronic sourcing tools. While there are many excellent e-sourcing tools available, ranging in cost from free through a rather significant investment, nothing replaces the effectiveness of the human in the loop. Many SaaS solutions are highly appropriate for routine, normalizable, standardizable functions, but operations which have many variables and qualitative elements resist being stuffed into that standardized box. Strategic sourcing is one of those operations.

Source One, a consultancy that offers strategic sourcing services, has created a free set of e-sourcing tools called WhyAbe.com, which has about 80% of the electronic functionality that can be expected to be relevant to most sourcing initiatives, including RFx management, reverse auctions, and a contract repository system. Source One, individual companies and even other consulting firms use WhyAbe.com on a regular basis for a huge variety of sourcing projects. Source One publishes the tools for free in order to maintain and augment procurement standards, and to provide, for any companies who have the will and the bandwidth to take on their own procurement challenges, a robust tool to accomplish those goals. In exchange, Source One maintains its market-leading status and increases its brand awareness.

Counterintuitively, Source One is not competing with itself, or giving away any "tricks of the trade" by supplying the market with free electronic sourcing tools. The toolset must be accompanied by best strategic sourcing practices to be optimally effective. As Steven Belli, CEO of Source One, likes to say, "Just owning a hammer does not make a person a carpenter." Moreover, as the old saying goes, if all you have is a hammer, every problem starts to look like a nail.

Many procurement professionals come to over-rely on their SaaS e-sourcing solutions to do the sourcing work for them, and become complacent or generate excuses on why they aren’t more actively involved in the process, in the misguided belief that the tool by itself is a comprehensve solution to the sourcing task.

However, an essential component of strategic sourcing is the strategic element. As the CFO Magazine article aptly states, it is crucial that you’ve got to understand the changes to the process and the benefits you’re looking for, and focus on the business benefit. If you haven’t developed that understanding before you begin a project, a high-tech SaaS hammer isn’t going to be much use to you. That strategic knowledge and capability is the added value that Source One brings to every project in which the company engages, and why it is willing to offer access to a quality high-tech e-sourcing hammer free of charge. Companies who have been through a sourcing cycle or two with Source One have learned how to properly use the tool to enhance their own strategic efforts, and are ready to try to go it alone. Other companies who understand the combination of a robust e-sourcing tool with a well-designed strategic approach will experience success as well.

CFOs and supply chain professionals who understand the business dynamics outlined in the CFO Magazine article are going to be much better positioned to make effective decisions regarding SaaS as an effective integrated component of a well-planned business strategy. The article closes by recommending a steering committee approach to evaluating and implementing SaaS solutions, and not placing all the acquisitional and operational burden on the IT department. This is wise advice, because any tool, no matter how high-tech or low cost, is just that: a tool, which still requires the skillful use by a competent manager with a well-conceived plan in mind.
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