July 2013
President jobs plan may aid manufacturing cost reduction, industry growth

The new jobs plan announced by President Barack Obama has the potential to reduce manufacturing costs and create new jobs. A large portion of Obama's Pro-Growth Tax Reform and Jobs Package outlined his administration's plan for the growth of manufacturing jobs. As part of the plan, the Obama Administration hopes to streamline business tax code and promote industry innovation to aid manufacturing cost reduction.

Job growth through tax cuts and investment

After giving an economic address in Illinois, Obama released his plan mainly consisting of initiatives for tax cuts for businesses and job investments, according to The New York Times.

"If folks in Washington really want a 'grand bargain,' how about a grand bargain for middle-class jobs?" Obama said at a rally in Chattanooga, Tenn. "If we're going to give businesses a better deal, we're going to give workers a better deal, too."

Through a proposed new business tax system, the plan discusses giving businesses "a better deal" through tax reform that would result in some businesses paying less and some corporations paying more.

"The transition revenue would support much-needed investments such as modernizing our infrastructure; creating new manufacturing hubs; and training our workers with the skills they need for the jobs of today and tomorrow," A White House press release said.

Investing in manufacturing innovation

The plan calls for the tax rate for manufacturing to be limited to 25 percent. It also detailed using savings from the tax deduction to be put into research and development. By investing in dozens of new manufacturing innovation institutions, the President hopes to increase the industry's competitiveness through technological advancement.

Another part of the jobs creation framework would have Congress secure Trade Promotion to increase exports and support workers via the Authority Trade Adjustment Assistance program

New AMTech program grants aim to strengthen domestic manufacturing

Congress is funding plans that will help manufacturers achieve operational excellence through research development. Through the help of technology advancing supply chain optimization, manufacturers may improve their productivity and output, which could lead to spurring economic growth. The National Institute of Standards and Technology announced it will award $4 million in funding for research plans to improve domestic manufacturing.

AMTech funding manufacturing research

Newly established by the NIST, the Advanced Manufacturing Technology Consortia (AMTech) Program will award successful applicants grants worth $250,000 to $500,000. AMTech aims to identify projects that will address issues of the industry and provide resources to support basic and applied research for further development of manufacturing, according to its webpage.

"AMTech is designed to address an economically damaging weakness in the nation's so-called innovation ecosystem, an issue identified by the National Science and Technology Council (NSTC), the President's Council of Advisors on Science and Technology, and other bodies," NIST said in a press release.

Public, private industries encouraged to collaborate

AMTech grants are split between two categories: planning awards and implementation awards. For 2013, only planning awards will be granted with the potential for funding to advance research. Planning awards are given to proposals that meet criteria including but not limited to: facilitate the development of knowledge, identify key problems or gaps common in the industry or certain sectors and create a guide for new research to address these problems.

Organizations eligible to compete for grants include industry associations, nonprofits and higher education institutions, state, tribal and local governments. AMTech encourages collaboration between the private and public sectors in preparation for their proposals, with the expectation that all parties will participate in research activities or combine their resources.

Increasing manufacturing's strength in global market

Grants will fund two-year plans that address manufacturing issues, such as the growing trade deficit due to lack of technological innovations.

"According to the NSTC, there is a gap between R&D activities and the deployment of technological innovations in the domestic production of goods, which is contributing significantly, for example, to the growing trade deficit in high-value-added, advanced-technology products," NIST stated.

Through technology-driven research, the program hopes to increase the nation's competitiveness in the global market as well as increase investment in research that will transform the industry. Other goals include strengthening small- and medium-sized companies and translating research into commercial success for manufacturers.

Applications should be sent to grants.gov and are due by October 21.

Fed Banks of Chicago, Dallas report domestic manufacturing strength gaining

Two separate reports of manufacturing data released by the Federal Reserve regions in the Midwest and South showed optimism for the growth of domestic manufacturing. The Federal Reserve Bank of Chicago released its Chicago Fed Midwest Manufacturing Index indicated slight production gains for Midwestern states while the Fed Bank of Dallas released the Texas Manufacturing Outlook Survey, which revealed higher labor and raw materials costs for the state.

Midwest production surpasses national output

The Chicago Fed Midwest Manufacturing Index (CFMMI) expanded to a seasonally adjusted level of 96.0 on a scale of 100, an increased rate of 0.4 percent in June after decreasing half a percentage point in May.

The Federal Reserve Board's industrial production index for manufacturing increased slightly to 0.3 percent in June. Compared to national output, which increased to 2.1 percent, Midwest regional output surpassed this with 3.5 percent. Despite the overall Midwest Economy Index (MEI) staying in the red with -0.13 in June, this is a slight improvement from -0.16 in May, indicated in a separate economic report. The Midwest is described as the five Seventh Federal Reserve District states: Illinois, Indiana, Iowa, Michigan and Wisconsin, according to the Chicago Fed. The strength of Midwest output seemed to wane as manufacturing added less to MEI in June at a rate of 0.06 than with previous month with 0.15.

Regional resource production for Midwest

While output for the national resource sector increased 0.2 percent in June - up 2 percent from June 2012 - the Midwest's output climbed slightly by 0.4 percent, an increase of 3.3 percent year-to-year. Sectors that increased their production include the food and nonmetallic mineral subsectors​, while output for others declined, such as wood, paper and chemical subsectors.

Steel and auto sector production both showed small improvements in June after recent declines in May. Steel sector output increased 0.3 percent in June after experiencing a 0.8 percent decrease in May. Also bouncing back from recent declines is the Midwest's auto sector production, increasing 0.1 percent after decreasing 1.4 percent in May National auto production overshadowed this number with an increase of 0.3 percent in June.

Texas manufacturing outlook remains positive for July

In the Texas Manufacturing Outlook Survey released by the Federal Reserve Bank of Dallas, July manufacturing activity continued to expand but just slightly compared to the previous month. Declining 5.7 points, the production index dropped from 17.1 in June to 11.4 in July. The survey of 85 Texas manufacturers showed that despite the slow growth, industry outlook remained positive. For the third consecutive month, the new orders index revealed gains despite declining down to 10.8 in July from 13.

"Expectations regarding future business conditions remained optimistic in July," the Dallas Fed said. "The indexes of future general business activity and future company outlook fell five points but remained in strongly positive territory. Indexes for future manufacturing activity also remained solidly positive."

Labor, raw materials costs increase

Manufacturers were spending more on labor costs and raw materials costs in July than they were in June. The price index for raw materials increased 1.6 from 14.3 in June to 15.9 in July. When asked to predict raw materials prices for the next six month, 37 percent of survey takers said they expected prices to increase.

In maintaining optimism for economic growth, hiring surged to its highest level in almost a year. The employment index improved to 9.3, with double the amount of firms (18 percent) hiring than laying off workers (9 percent). The wages and benefits index showed a decrease from 20 to 16.4 despite manufacturers stating they had no change in wages. The index showing hours worked was also positive in July.

New Sustainable Purchasing Leadership Council focuses on green procurement

In a new effort to develop green procurement standards, private and public organizations formed a new partnership called the Sustainable Purchasing Leadership Council, according to the Sacramento Bee.

"Procurement is a tremendous point of leverage in our economy," said Kevin Lyons, supply chain management professor at Rutgers University.

After having its official launch on July 23, the Sustainable Purchasing Leadership Council currently has a membership incorporating state and government organizations, higher education institutions and businesses.  The Founders Circle of the council are divided into purchasers like the State of California Department of General Services and the U.S. Department of Agriculture, suppliers like Dell and Office Depot and finally, market advisors like the CIPS Sustainability Index. The council kicked off with a webcast presented by Jason Pearson, executive director of the council.

"Consumption, that is purchases of goods and services, is the demand engine that drives our economy . . . [and] that [engine] drives all of the social and environmental impacts of that economic and industrial activity," Pearson said.

The nonprofit said its mission includes raising awareness of purchasing leadership and supporting related efforts that achieve sustainability goals. The council hopes to build its resources from grants, membership dues and meeting revenues and in turn it hopes to provide members with guidance related to spending analysis and services for a sustainable future.

Currently, purchasers in the market use a mix-match of standards and measurements for green products as well as different sustainable ratings systems. This could be confusing in determining whether products are actually environmentally or not depending on the outcome.

As a potential counterpart to the LEED U.S. Green Building Council, instead of LEED procurement, the council will focus on green procurement. The council plans to provide its members with Refined Action Planning guidance, a guide for common product and service categories and a pilot-ready version of a purchasing rating system.

Retail buying, consumer confidence expected to improve in 2013

The amount of retail buying depends on consumer demand and purchasing power. With changes in consumer confidence, merchants may have to adjust their retail logistics to reflect an increase or decrease in spending. With the influx of positive economic news about employment, consumers more willing to buy and retail sales are projected to improve in 2013, according to Industry Week. A different report by The Conference Board shows consumer confidence dropped slightly in July but is still expected to pick up.

"We expect that warmer temperatures ahead may increase consumer activity and thus purchases from retailers, providing a boost for nondurable goods wholesalers through the summer of 2013," Alan Beaulieu, president of ITR Economics, said in Industry Week.

Growth in employment levels results in boost in confidence

Beaulieu said consumers' disposable incomes are rising at an annual rate of 1.8 percent, in pace with inflation and retail sales, not accounting automobiles, are peaking. Growth in payroll numbers, with 2.1 million jobs added last year, may have led to increased consumer confidence.

Employment levels grew most in construction, followed by the healthcare and retail industries compared to last year. Construction gained 2.1 percent in hiring while healthcare gained 2 percent and retail showed a rate of 1.5 percent. Beaulieu said that although the job market will continue to pick up, it will not reach its pre-recession numbers.

Report shows consumer confidence will improve despite slight decrease

Consumer confidence was shown to have dropped slightly in July, according to Bloomberg. The Conference Board announced the Consumer Confidence Index is down from 82.1 in June to 80.3 in July.

While consumers see increasing home prices and employment gains as positive for the economy, fluctuations in the financial markets may have harmed consumer confidence, Ryan Wang, an economist at HSBC Securities, said to Bloomberg.

Despite the slip in confidence, consumer outlook continues to recover post-recession. Director of Economic Indicators at The Conference Board Lynn Franco said in the report that while July was shown to have weaker numbers, consumer expectations are improving overall. According to the Consumer Confidence Survey, 20.9 percent of respondents said economic conditions were "good," a 1.5 increase from 19.4 percent. The number of survey takers who described conditions as "bad" decreased from 24.9 percent to 24.5 percent.

"Consumers' assessment of current conditions continues to gain ground and expectations remain in expansionary territory despite the July retreat," Franco said. "Overall, indications are that the economy is strengthening and may even gain some momentum in the months ahead."

National Association of Manufacturers calls for IP protection against cybercrime

As an unconventional approach to manufacturing cost reduction, leading professional organizations are calling for increased protection against cybercrime, through hacking or data breaches, for the protection of their intellectual property (IP). The National Association of Manufacturers (NAM) released a statement saying that it supports the Senate Committee on Commerce, Science and Transportation's commitments to combat online criminal activity and IP protection.

NAM highlights need for more cybersecurity

NAM Vice President of Tax, Technology and Domestic Economic Policy Dorothy Coleman testified before Congress on the issue of "The Partnership Between NIST and the Private Sector: Improving Cybersecurity." She highlighted the importance of guarding the manufacturing industry against criminals who aim to devastate economic and national security.

"Defending against cyber threats is a top priority for manufacturers," Coleman said. "As holders of the world's leading IP, including designs, patents and trade secrets, manufacturers are consistently targeted by cyber thieves. The NAM has called for an effective public-private partnership that permits information sharing between the government and businesses to better ascertain and protect against these threats."

Loss of billions of dollars each year to online crime

Hundreds of billions of dollars are lost every year to cyberthreats, according to a report on the economic impact of online criminal activity by software company McAfee. The McAfee study done by the Center for Strategic and Internal Studies reported that global cybercrime and espionage may cost individuals and private and public sector organizations at least $300 billion or 0.4 percent of global gross domestic product. The report measures the economic losses from online crime by different cyber activities such as loss of "sensitive business information" and "reputable damage to the hacked company." One category, loss of intellectual property, is especially important to manufacturing companies and other industries that rely on technological patents and innovations. 

For expenses related to cybercrime that affected only the United States, the estimated costs are between $24 billion to $120 billion. The study accounts for lost of intellectual property, which may include the valuable patents to machinery and other technology that manufacturing companies hold.

"The Senate Commerce, Science and Transportation Committee is taking steps to address this critical issue without adding burdensome and repetitive regulation that would defeat the purpose of cybersecurity efforts," Coleman said. The committee's work reflects a thoughtful step forward toward shoring up our cybersecurity so that manufacturers in the United States may continue to grow and lead our economy through innovation."

The role of market research in increasing profit margins

As the importance of market research grows, companies can utilize sales analysis to increase profit margins, according to Industry Week. Using market research, company executives can learn more about the purchasing decisions of their customers to improve their sales volume.

For businesses to optimize their profits, they need to meet their profit goals within the whole customer base instead of only select sections. Through giving products and services prices that each customer will be willing to pay, companies can accomplish their revenue targets.

Pinpoint the most profitable customers

With the role of market research in pinpointing their most valuable customers, companies can analyze which customers will provide them with the most revenue.

"Company executives can identify the most profitable customers or products through an analysis of the company's sales. This analysis usually will find that 80% of a company's sales are driven by 20% of its customers, or what is known as the 80/20 rule," according to a representative from Crowe Horwath in Industry Week.

Using criteria, such as volume of customer sales and frequency and stability of orders, businesses can gauge what strategies they should undertake in their marketing to best influence their ideal customers. These can include designing effective content marketing, as CMS Wire suggests. Content strategy involves finding out the best way to deliver information to the individuals who need it. For example, advertising a price cut on a product will signal to customers who are willing to pay less than full cost that now it is the best time to buy.

Discontinue underperforming products

Before businesses can strategize for their marketing or analysis processes, CMS Wire stated  the first step is setting goals that will match up with content strategy. If the marketing message does not fit with the company's strategy, it can readjust its communication efforts or eliminate it altogether and create a new one. Using the same type of thinking, companies can also determine whether products and customers are not helping to meet their goals using analysis and decide whether they should cut out those under-performing elements. 

"In addition to being relevant regarding customers, this analysis can be applied to a company's products or services. For example, a product's sales volume may be high but its profit margins low, and unless these margins can be improved, executives may choose to discontinue the product or sell the product line," Crowe Horwath staff said.

FDA proposes new risk assessment procedures for imported food

Part of the risk management process is monitoring suppliers and ensuring that their safety standards comply with the laws of the importing nation. The Food and Drug Administration recently announced it would obligate businesses to ensure their suppliers follow American food safety guidelines, impacting risk assessment procedures, according to The New York Times.

New guidelines would force suppliers to follow domestic food safety rules

Enforcing the Food Safety Modernization Act (FSMA), the FDA proposed two initiatives that would require organizations that import food from other countries, like Walmart and Cargill, ensure their suppliers follow the same safety measures required for domestically grown food. Under the new guidelines, importers would require their suppliers to implement "prevention-oriented food safety practices," the FDA press release said.

"We must work toward global solutions to food safety so that whether you serve your family food grown locally or imported you can be confident that it is safe,"  FDA Commissioner Margaret Hamburg said. "Today's announcement of these two new proposed rules will help to meet the challenges of our complex global food supply system. Our success will depend in large part on partnerships across nations, industries, and business sectors."

FDA's plan to actively prevent food contamination

By holding food importers and suppliers accountable for their food-related risk management procedures, the quality and and transparency of global food supply chains would improve. While 15 percent of the food Americans eat come from foreign countries, the FDA ensures the safety of approximately 80 percent of food consumed in the United States. With Foreign Supplier Verification Programs, the FDA states importers must have a plan for determining likely hazards associated with the food that is brought into the country and provide measures to make sure that these potential dangers are controlled.

The cost for holding importers accountable would range from $400 to $500 million, FDA Deputy Commissioner for Foods and Veterinary Medicine Michael Taylor said in the NYT. In the past, critics of the FDA have said that the federal organization has been slow to take action to enact the law since it was passed by Congress in 2010.

"Less than 2 percent of import shipments are physically examined, and we're up to around 10 million food products annually," he said. "We all realize we need to do more."

Taylor said the aim of the recent measures is to prevent food contamination rather than being forced to react.

The news is occasionally scattered with reports of working condition violations by Foxxconn, the leading Chinese manufacturing conglomerate. New claims have recently emerged at another supplier that exceeds anything ever levied against Foxxconn.  Pegatron, a notable Apple supplier is being criticized over workers’ rights violations and environmental mismanagement. The China Labor Watch group provided a report that included 86 labor rights violations, including underage labor, excessive working hours, health and safety concerns, and environmental pollution. Pegatron’s RiTeng and AVY facilities were found disposing waste water into the sewage system and polluting the local waterways.

A frequent user of both Foxconn and Pegatron is Apple, and the latest allegations against Pegatron are increasing scrutiny of the Cupertino powerhouse’s supply chain. China Labor Watch’s Executive Director, Li Qiang said in a statement, “Apple has not lived up to its own standards. This will lead to Apple's suppliers abusing labor to strengthen their position for receiving orders. In this way, Apple is worsening conditions for workers, not improving them."

Apple published a Supplier Responsibility Progress Report earlier this year and it was an industry leading exercise in transparent reporting, detailing each of the company’s hundreds of suppliers. The report also admitted that 150 of its suppliers had failed to comply with the correct protocols for managing hazardous materials in addition to labor rights violations. As a result of the audit, Apple is now working with numerous suppliers to improve their performance on these, and other important metrics, and ensure they are compliant with its code of conduct. 

"Apple is committed to providing safe and fair working conditions throughout our supply chain," a spokesperson for the company said. "We lead the industry with far-reaching and specialized audits, the most transparent reporting and educational programs that enrich the lives of workers who make our products ... As a part of our extensive Supplier Responsibility program, Apple has conducted 15 comprehensive audits at Pegatron facilities since 2007, covering more than 130,000 workers making Apple products including annual audits of Pegatron's final assembly locations and surprise audits at both RiTeng and AVY within the past 18 months."

Jason Cheng, Chief executive of Pegatron, said that the firm would take immediate steps to investigate the allegations.

First it was Foxxconn and now it’s Pegatron, maybe Apple doesn’t fall far from the tree after all.

Higher copper trading prices may increase direct materials costs

The trading prices of industrial metals like copper are often used as an economic indicator for the cost of procurement and production in the manufacturing industry. After growth reports from the sector came back positive, copper futures were trading for higher than expected on Thursday, according to Bloomberg. September copper futures remained at $3.1855 a pound, after increasing by 0.2 percent for its fifth consecutive gain.

Copper prices trade above economists' expectations

"We have a weakened dollar and a good durables report, and that's bullish," Michael Smith, president of T&K Futures & Options, said to Bloomberg in a phone call. "Copper reflects the economic outlook, so the market is paying attention to news like this."

Since the price of copper is determined by the strength of the dollar, a weaker dollar is seen by foreign investors as an opportunity to buy more copper. Previously copper futures were projected to have lower trading prices because China began to slow its purchasing.

Prices advanced after manufacturing goods report released

Prices saw a boost after signs emerged that showed the manufacturing industry was gaining back its strength. The Department of Commerce recently reported new orders for manufactured goods increased 4.2 percent to $244.5 billion in June, according to The Wall Street Journal. Economists originally projected new orders grow only 1.7 percent.

"Durable goods orders beat forecasts, which caused a turnaround in prices," Matthew Zeman, senior market strategist at Kingsview, said to the WSJ.

Copper futures with increased demand

With these positive economic reports, the price of copper might grow as demand for manufacturing goods grows since copper is considered one of the most valuable metals. Manufacturing heavily incorporates the material in its production supply chain, including in electrical wires, tools and pipes. The direct materials cost for copper might increase as a result of expanding demand for more goods.

State of manufacturing for July considering production supply chain

As a crucial part of production supply chain, the state of the manufacturing sector provides insight into the health of the economy as a whole. The industry gained a more positive outlook after the release of the U.S. Census Bureau's Manufacturers' Shipments, Inventories and Orders (M3) survey that showed gains in manufactured goods in June. With some growth in manufacturing, hiring in the job market as well as capital spending is also expected to pick up for the third quarter, according to Reuters. In addition to the U.S. Census Bureau's survey, the Department of Labor and Federal Reserve Bank of Kansas City recently released statements that indicate the economic future of manufacturing in the last half of 2013.

Census Bureau's M3 survey shows some growth

Manufacturing gained a needed boost as new orders for durable goods experienced a 4 percent increase, or $9.9 billion, to grow to $244.5 billion, according to the research. The M3 survey compiles statistics on the economic activity of the manufacturing industry including value of shipments, new orders, unfilled orders and end-of-month inventory using data from 4,300 manufacturing units.

The 4 percent surge was due in main part to transportation equipment, which was up 12.8 percent to $87.1 billion. Increases in new orders for defense capital goods substantially surpassed nondefense capital goods. Defense new orders jumped 35.2 percent in June to $12.0 billion while nondefense goods grew 6.3 percent to $91.6 billion. With the increase in production of capital goods, economists predict the third quarter to expand.

"It appears from the four-week average of claims that there is no evidence of a pickup in job losses in July," John Ryding, chief economist at RDQ Economics, said to Reuters.

However, even with the huge increases in new orders across the board, shipments of manufactured goods were down to $229.8 billion in June after a slight increase in May.

Jobless claims rise, some states report less manufacturing layoffs

While jobless claims increased by 7,000 in the week ending July 20, according to the Department of Labor's Unemployment Insurance Weekly Claims Report, state supplied comments showed manufacturing layoffs in some regions decreased. While claims were up overall nationally, with initial claims of 343,000 surpassing last week's revised figure of 336,000. For states that had a decrease of more than 1,000 initial claims, Minnesota led drops in claims with -11,969 for the week ended July 13.

The state said it experienced fewer layoffs in the manufacturing industries while Ohio also reported the same reason for less initial claims, saying it had a change of -2,501. For some states, the manufacturing workforce was actually downsized. The highest number of layoffs for the week ended June 13 was in Georgia with an increase of 7,027 from last report. It said that it had layoffs in several industries including manufacturing, construction and trade. Other states listed as firing workers in the manufacturing sector were mainly located in the South, including Alabama, South Carolina and Virginia.

Kansas Fed Bank's July survey shows production index up

Also announcing its report on the state of manufacturing was the Federal Reserve Bank of Kansas City with its July Manufacturing Survey. Manufacturing costs were reported as having reductions as future materials prices dropped and future selling prices had a slight expansion.

"We saw several positive things in this month's survey. Production and shipments rebounded after being disrupted by storms last month," said Chad Wilkerson, vice president of the Fed Bank at Kansas City. "And while some firms remain hesitant to expand, overall capital spending and hiring plans remain positive."

Reaching its highest number since June 2011, the production index rose to 21 from -17 while the month-over-month composite index also bounced back from being in the red. The index, which accounts for manufacturing performance including production, new orders, employment and raw materials inventory indexes, was 6 in July compared to -5 in June.

Source One Management Services, LLC will be presenting a quarterly webinar series through CFO.com, in a series titled "Bridging the Finance-Procurement Gap".

The first of these webinars, and Source One's second with CFO.com, will air on Friday, August 2nd and is titled "Spend Analysis: Understanding What You Pay For, When, and Why". Given Procurement's in-depth involvement in most spend analyses conducted by organizations, this webinar allows Finance personnel a window into that world -- to better understand what goes into these reports and the necessary steps to get a better grasp on their organization's spend distribution.

In a larger sense, this webinar series will provide Finance personnel with a chance to see business interactions through the eyes of Procurement across a number of traditional practices and parameters, as well as business practices and strategies that are becoming increasingly important in the changing world of business. To that end, the next webinar in the series, airing in December, will provide a detailed glimpse of category management.

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Sugar cane-based textiles promote LEED procurement

Exemplifying sustainable product sourcing, Carnegie Fabrics introduced its innovation of plant-based interior textiles through its new Xorel line, Green Biz said. In an interview with the Carnegie's president Cliff Goldman, the publication detailed the seven-year ordeal that the company underwent to source BioBased content and textile products from sugar cane.

"We achieved this while keeping the price, aesthetics and performance exactly the same," Goldman said to Green Biz. "We were not willing to make any compromises, and that is why it was a seven-year process. We were careful to make sure that the new material would still meet all the high expectations that both the company and our customers already have for the brand."

While the federal government dictates that products labeled as BioBased must have been made by at least 25 percent of biocontent, Carnegie textiles exceed that number. Carnegie's Xorel product is billed as "the world's first Bio-based high performance interior textile," according to its site. Instead of being manufactured from fossil fuels, the various Xorel patterns are composed of 60-85 percent polyethylene made from sugarcane.

Incorporating natural, raw materials like sugar cane in its production of textiles allows the company to continue its sustainable sourcing for years to come.

"Using a rapidly renewable material reduces our company's dependence on the planet's finite fossil fuels resources," Goldman said. "I have seen estimates that manufacturing ethylene with sugarcane uses 60 percent less energy and generates 40 percent less greenhouse gas emissions when compared to making petrochemical ethylene. Furthermore, growing the sugarcane plant naturally captures carbon dioxide."

In its effort to make ensure its materials were approved for LEED procurement, Carnegie said Xorel textile products are certified by Cradle to Cradle guidelines and attribute up to 4 points under LEED v4 requirements for building manufacturers, including for indoor air quality and material optimization.

Automaker Nissan commits to green logistics in sustainability report

Japanese automaker Nissan released its 2013 Sustainability Report, announcing it is committed to sustainable sourcing by increasing its manufacturing of electric vehicles.

In its description of green logistics in the Environment section of the report, the company said, "Our goal is to reduce the environmental impact caused by our operations and Nissan vehicles throughout their lifecycle to a level that can be absorbed naturally by the earth by promoting effective use and recycling of energy and resources."

Emphasizing that the automaker was dedicated to providing sustainable mobility, Nissan CEO Carlos Ghosn said, "Whether we're taking steps to conserve resources, enhance safety and fuel-efficiency or expand our philanthropic investments, we are working to create economic value and making a positive, lasting impact in every market we serve."

Ghosn said there are approximately 1 billion vehicles globally and may double by the middle of the century, which could introduce new challenges involving carbon emissions and sustainability. In its effort to follow the core principles of the United Nations Global Compact and reach its objectives reducing its environmental impact, Nissan has worked with French automaker Renault, in a partnership known as Renault-Nissan Alliance. Nissan announced it will try to meet a goal of lowering the CO2 emissions of its new vehicles by 90 percent between now and 2050.

"To reach this objective, we will continue to lead the industry in advancing zero-emission technology," Ghosn said. We were early investors - and we remain profound believers - in this technology. We also recognize the importance and potential of zero-emission efforts, for the auto industry and the planet."

Ghosn predicts Renault-Nissan Alliance will make 10 percent of the electric vehicle market share in 2020. Recently, the partnership made its 100,000 sale of electric vehicles, with Nissan LEAFs making up two-thirds of those sales, according to InsideEvs. To meet this increased demand of electric vehicles, Nissan is rolling out thousands of quick-charging stations to power their cars, including in Japan.

Merchant accounts partner with eBay for same day delivery

Online retail giant eBay announced it was changing the face of retail logistics with its eBay Now local shopping and delivery service. Merchant accounts that partner with eBay will be able to have their products shipped from physical stores and delivered to nearby customers in as fast as one hour using eBay's new same day shipping service, according to Supply Chain Digest.

Retailers that have signed up for the service include Best Buy, Home Depot and Macy's. After its beginnings as a test for select cities Manhattan, San Jose and San Francisco, the company made its delivery program available to metropolitan areas surrounding those test sites, including Brooklyn and Queens. It plans to expand to the Midwest in Chicago and Dallas.

"The strategy can almost be seen as a hybrid between what Amazon.com is doing versus Walmart and Macy's," Supply Chain Digest noted.

Similar to Amazon's strategy, by having eBay distribution centers (DCs) centered around major, populated areas such as New York's boroughs and the San Francisco Peninsula, eBay can delivery goods from store to customer faster.

"As we've seen mobile really take off at the consumer level it is really blurring the lines between offline and online commerce," said Dane Glasgow, vice president of mobile and local at eBay. "The fact that you always have a connected device with you is having a huge influence on how people shop and buy, both at home and when they're out on the street."

For eBay's same day delivery service, shoppers can view the stock of retail stores around their location through GPS detection on their mobile device, IP address or shipping addresses listed on their eBay accounts. The page for eBay Now describes charging customers who wish to order from brick and mortar retailers $5 per store when their order totals a minimum of $25.

UPS plans cost reduction after second quarter losses

United Parcel Service may have to reduce its operating costs as it continues to face worldwide competition from low-priced shipping services, according to The Wall Street Journal. The cost reduction is described broadly as "an across-the-board tightening up of expenses" by Kurt Kuehn, chief financial officer of UPS, but he insists that it is "certainly not a restructuring."

UPS has lower than expected earnings for second quarter

In reporting second-quarter losses, UPS experienced a lower number of flights, including internationally in Europe and Asia. While operating expenses for the shipping company increased 1.8 percent, operating margin fell slightly from 13.4 percent to 12.9 percent.

UPS mentioned in the WSJ it would have lower than expected earnings, saying "overcapacity in the global airfreight market, increasing customer preference for lower-yielding shipping solutions and a slowing U.S. industrial economy."

Domestic package volume up, international shipping down

While daily package volume in the U.S. market grew 1.9 percent year-to-year, as more domestic shoppers purchased items online, international shipping was down. Manufacturers and retailers around the world were planning to reduce costs by cutting down on UPS-provided services like express shipping, reported Reuters. These businesses have opted to plan their shipments with their supply chains to eliminate the need to hire companies like UPS for faster shipping. Its rival FedEx has also been reducing its amount of cargo flights out of Asia

"The art of this business is adjusting for current conditions but not overreacting," Kuehn said.

The result of this shift to other low-priced shipping services is profit dropped 4 percent as the expenses of UPS surpassed its revenue and earnings were down to 1.07 billion this year from 1.12 billion year-to-year. Revenue decreased by 3.2 percent in the company's supply chain segment.

Facebook has taught its fair share of lessons since taking over the world social media space in 2009, from "you quit talking to people from high school for a reason" to "don't pass out at a party". From a business innovation perspective, however, it's been a run-of-the-mill organization for the most part. It's business strategy of offering a free service so that it can turn around and market the users and their data to advertisers was well beaten by tech giants before it and television and radio long before the Internet even existed.

That's about to change, however. As discussed in a BusinessWeek article regarding Facebook's mid-year reports, the social network spent $606 million in the first six months on capital expenditures -- largely data centers and the servers they contain. That's $350 million less than the company spent over the same period of last year, a savings they've accomplished while 1) continuing to grow and 2) actually making money (the article states they showed strong earnings in the mobile space).

So how are they buying enough equipment to keep up with growth and increased user demand -- Facebook is reportedly adding several petabytes of data capability per day -- while spending less? It turns out, they have a really good plan for this. Key elements of the plan?

Build Big - Facebook operates three data centers -- two in the U.S. and one in Sweden -- and is soon to open a fourth in Iowa. These centers are designed with growth in mind, as the Swedish facility is only at half capacity right now. The other half is barren.

Don't Pay For Things You Don't Need - Facebook has its servers, switches, and storage devices specially built in Asia, avoiding the big names like Dell & HP (and the unneeded markup that comes with them). This equipment is also built with only the components needed for their operation, eliminating costly (and mostly superfluous) items normally found on general-purpose equipment.

Modular Design - The specially built equipment is completely modular, meaning the company can scale practically on-demand. The BusinessWeek article mentions that the server/storage/switch arrays arrive to facilities pre-assembled in refrigerator-sized units. Using the Swedish facility as an example, the article notes that, upon a servers arrival, a team of three workers can have the equipment unpacked and functional within a span of minutes.

Not impressed? Consider how long it takes the average organization to adapt to a new coffee machine in the break room.

Who knew Facebook could teach you anything other than "all my friends' children are ugly"?
Domestic manufacturing optimism and hiring pick up

While domestic manufacturing has been slow at the beginning of 2013, a majority of U.S. manufacturers are reported to have gained a heightened sense of optimism. Despite viewing operating costs related to energy prices as obstacles, manufacturers expect more growth in revenue and hiring this year, according to Industry Week. In a PwC study of manufacturers, about 63 percent of respondents said they are "optimistic about the U.S. economy," an 8 percent increase compared to the first quarter of 2013 and higher overall than 2012.

With the economy improving, an overwhelming majority of manufacturers (82 percent) said they predicted revenue gains in the next 12 months. Average revenue growth is expected to be 4.6 percent over the same period of time, which is a 0.3 percent increase from the last quarter.

Compared to previous years, manufacturing spending levels were down but 75 percent of survey takers intend to boost their operating spending, up from 71 percent in the first quarter. Operating costs expected involve new product or services (surveyed at 45 percent) and research and development (38 percent). Less respondents (22 percent) said they saw costs related to oil and energy prices as an obstacle to growth compared to last quarter, which was 35 percent.

Manufacturing jobs are also projected to pick up overall with 42 percent of manufacturers saying they plan to hire workers in the next 12 months, which is a decrease from 45 percent reported in the first quarter. While the majority, 53 percent, said their workforce numbers will remain, 5 percent said they may downsize their staff.

Manufacturer News reported hiring in Georgia industries for transportation equipment increased by 6.2 percent and is projected to continue picking up, according to the 2014 Georgia Manufacturers Register and Manufacturers' News, Inc.

"Georgia's industrial climate continues to improve," said Tom Dubin, president of MNI. "The state's reasonable labor costs and friendly business environment continue to result in many companies investing in its manufacturing sector, particularly those in the auto/transportation equipment industries."

Creating green data centers through sustainable sourcing

As the globe shifts toward more technology consumption, the information and communications technology (ICT) industry strives to meet demand through sustainable sourcing of energy. In the effort to cut down on fossil fuel usage, researchers have set their sights on making data centers more energy efficient, which could in turn reduce business overhead costs, according to Green Biz.

Data centers themselves consume 1 to 3 percent of electricity in the United States while the devices connected to their infrastructure contribute much more energy consumption, according to a study on the growth of data center electricity use from 2005 to 2010 by Jonathan Koomey, a professor at Stanford University. Research shows data centers worldwide increased their electricity use by 56 percent between 2005 to 2010, with U.S. increasing by 36 percent. With their huge potential for energy consumption, data centers are the focus of more state and education institutions in the effort to become powered by renewable resources.

As a shift toward sustainable sourcing related to data center management, professors at the Rocky Mountain Institute (RMI) and Clarkson University developed the idea of distributed green data centers (DGDCs) and performance-optimized data centers (PODs).

"Imagine many small, geographically distributed performance-optimized data centers (PODs) that can operate either with the electricity grid as an interconnected resource or as an off-grid electrical island," RMI principal Kendra Tupper and Clarkson University assistant professor Stephen Bird wrote in Green Biz.

As an alternative to diesel generated power used by many third world or underdeveloped countries with unstable power grids, PODs offer more flexibility and control. PODs are more energy efficient because its power source can come from different forms of renewable energy, like wind and solar. One POD can transfer its computing load to another for a more productive system.

"The DGDC concept - as realized via PODs - can eliminate a significant amount of wasted energy, primarily by reducing transmission and distribution losses, but also through best practice cooling methods and other efficiency gains," Tupper and Bird said.

By using more sustainable data center systems like PODs, companies can reduce their kilowatt-hours billed as part of business overhead costs.

Survey reveals weak risk assessment procedures for majority of businesses

When there are disastrous events like fires or power plant shutdowns, the danger of an interruption in supply due to lax risk assessment procedures becomes greater. A recent survey conducted by APQC revealed insight on risk management process for 195 companies that participated in the study, according to the Harvard Business Review blog. Of the companies, 75 percent experienced a major supply chain disruption in the previous two years. These disruptions involved critical interruptions that caused businesses to fail to fulfill customer expectations or promises.

Minimizing risk in business is important to securing a company's financial and operational stability, Forbes described. For risk management involving supply, the site suggests companies contact suppliers to assess their solvency. However, in the APQC survey, business leaders were shown to have struggled to properly assess the financial strength of suppliers, revealing the lack of attentive enterprise risk management.

"The important thing is to figure out what might be a severe disruption and to do this you have to look down into the different tiers of supply. People at the top need to ask: 'What might be out there that we are not currently aware of,'" said Dr. Paul Walker, an ERM expert at St. John's University.

The survey showed the relationship between companies and their suppliers have changed during the recession and after. Over the previous five years, 70 percent of respondents said they decreased their number of suppliers to save money.

In an effort to reduce costs, companies also tended to hire suppliers based in inexpensive areas. Despite being cognizant that these suppliers were in disaster-prone zones, 63 percent of companies continued to use their services, undeterred by the extreme weather or political instability those supplier locations may have encountered.

To combat risk, almost half of companies said they were strengthening their risk assessment procedures.

Billabong on road to recovery

Australia's largest surfwear company Billabong is receiving financial help after struggling to manage its growing retail supply chain, Businessweek reported.

After peaking in 2008 with $1.2 billion of revenue, Billabong sought to expand its product line in a rapid pace. It soon acquired DaKine, a fashion and accessories retailer, and numerous other ventures including an e-commerce site and small retail stores. While it expanded its list of assets in its retail procurement, Billabong discovered it was difficult to manage 500 different suppliers and about 600 stores operating under its brand name.

"They're at the firesale point where they need to refinance the balance sheet. They're going to have to take massive writedowns," Evan Lucas, market strategist at Melbourne-based IG Markets, said to Bloomberg. "They grew too fast and leveraged themselves too hard."

Most of its acquisitions have not proved profitable. Its financial statements revealed that one-third of its retail products amounted to only 1 percent of revenue. Billabong also faced growing challenges from its competitors PacSun, which entered the market with its own line of swimwear, and Topshop leading its customers astray.

Billabong said it was estimated to be worth A$30 million, a fraction of what it was worth in December 2011, valued back then at A$435 million. However, there are signs of efforts to rebuild the brand, including discussions of the company repaying its loans through refinancing and asset-sale deals with Sycamore Partners Management and Altamont Capital Partners. The company has $651 million in debt that is projected to be repaid by July 2014.

In a step towards the company's transformation, Billabong will have Jesse Rogers from Altamont join its board of directors, Altamont announced in a press release.

"We see real potential in Billabong," Rogers said. "Despite all the company has been through, the brands are still strong and the business has the potential for significantly improved performance. Removing the uncertainty caused by the unending deal talk and financial stress helps tremendously."

The world has moved on from Google Reader. For some, this move came about because a change in the way they read news -- they left the world of ticker-style RSS feeds months or years ago, getting information from social media news feeds or sites like Reddit. For others, this move was much more mandatory -- Google killed the service at the start of the month and stripped the archives two weeks later.

The product's death was a strange one. Google Reader was widely used and much beloved (in my prior life in journalism, Google Reader was the way I stayed sane trying to organize hundreds of potential news sources) up until the point it was unceremoniously taken out back and put down by big G execs. The official reason given was that there was a decline in usage. A Buzzfeed story, however, puts a darker and much more relate-able spin on it: Google execs didn't like it, so they killed it.

Old Yeller went out with more dignity.

According to the BuzzFeed article, Google Reader sat in purgatory for quite some time. Because the executive team didn't like it and didn't find it relevant to the company's future goals, once the existing project manager moved on to other work, the Reader team had no management and Google didn't concern itself with finding a new one. Management's indifference certainly didn't inspire anyone to step up and take the reins -- there was nothing to gain. Reader was wandering the Google desert, with no manna to sustain it. The development team let the product become stale and had no guidance or motivation to approve it due to senior leadership's disdain for it.

In short, the project had no backing, stalled, and died. Sound familiar?

One of the key drivers for future procurement success is getting stakeholders on board and getting procurement's goals and projects centric to those goals of the organization. Google Reader wasn't centric to Google's goals, had no support, and got killed. Getting stakeholder support -- and, to a greater extent, leadership's support -- is such a hot-button topic, many seem to gloss over how difficult it is to get.

Procurement departments seemingly have to prove their worth before every project and win over category stakeholders to get access to the data and personnel needed to conduct any initiative. Because so many category stakeholders are very reluctant to let someone else "tell them what to do or how to do it", resistance is all but expected. While stubbornness is expected, and often unavoidable, there are strategies that procurement departments can take to ease this internal tension, namely marketing their department, marketing their successes, and building up support for their group internally.

The most common way for procurement departments to market themselves internally is through reporting. We've talked about this. This step is so critical to a procurement department's success, however, that it really shouldn't be considered optional or a marketing measure by any department. It should be considered mandatory. Still, there's a lot that can fall under the "reporting" label, and there are some measures that are more effective and time consuming than others. For example, a mass-mailed spreadsheet with a bunch of figures in it is technically a reporting technique, just not a very good one.

In next week's newsletter (sign up if you aren't already receiving it), we will be discussing marketing strategies at length, and Source One offers a good bit of help in internal marketing should your group require it. Stay tuned.

Image courtesy of DreamWorks Pictures' Gladiator
New LEED requirements promote green logistics

Requirements surrounding LEED procurement and materials have been recently updated by the U.S. Green Building Council (USGBC), contributing to the advancement of green logistics in purchasing materials and resources deemed sustainable or eco-friendly. With a vote of 85 percent, the USGBC decided to include another set of scoring criteria called Cradle to Cradle certification in its latest version of LEED guidelines, known as LEED v4, according to Sustainable Business. The purpose of the update is to ensure the impact of materials used for green buildings is minimal to the environment.

LEED v4 to implement Cradle to Cradle certification

After Cradle to Cradle certification was introduced in 2005, it has set a standard for products and buildings earning points toward being approved for LEED. These qualifications include using recyclable or compostable materials or manufacturing that utilizes renewable energy and carbon management.

"We salute the USGBC's courageous leadership in making material health a priority in the face of immense challenge from industry," said architect Bill McDonough "The stand they have taken will help continue their meaningful input as an agent of market transformation."

Green logistics advances LEED requirements

In satisfying the green building requirements described by USGBC on its website, commercial and residential sites can be credited as improving water efficiency and energy savings and using sustainable materials. With the new standards, products can also be certified by the Forest Stewardship Council.

"With the debate over LEED v4 standards now settled, we expect companies in the FSC marketplace to benefit from a new level of certainty and demand in the green building sector," said FSC on the Sustainable Business site. "We also know there are businesses, including forest landowners, mills and lumberyards, that have been waiting on the sidelines to see how the debate would resolve before committing to FSC certification."

The enforcement of the new LEED requirements implementing Cradle to Cradle certification will begin in November.

Proposed tariff bill to boost domestic manufacturing jobs

A new bill introduced in Congress for suspending tariffs may expand domestic manufacturing, according to the National Association of Manufacturers. In a statement, NAM said the Miscellaneous Tariff Bill introduced in the House of Representatives is integral for manufacturers to obtain raw materials and other proprietary inputs that are only available abroad.

"The MTB is commonsense legislation Congress can act on to keep manufacturing in the United States strong," Linda Dempsey, vice president of International Economic Affairs for the NAM, said.

It has been over 200 days since an MTB has been passed, which has led to an increase in procurement costs and a reduction of payroll hours and job layoffs. The bill is intended to reduce production expenses for manufacturers, including raw material costs, in order to keep them competitive in the global market. The bill has the power to suspend duties on specific inputs used in the manufacturing process.

"Each day that passes without an MTB hurts manufacturing in the United States and threatens jobs," Dempsey said. "Failure to act will result in a whopping $748 million tax on manufacturing in the United States and economic losses amounting to $1.857 billion over the next three years."

As another organization that benefits from the passing of the bill, the Society of Chemical Manufacturers and Affiliates also praised the MTB for its potential to expand jobs in chemical manufacturing in a press release. The last MTB bill passed in 2010 contributed to $3.5 billion of the nation's gross domestic product, according to SOCMA. It also supported more than 90,000 manufacturing jobs.

"The MTB allows SOCMA members to continue to support American jobs, reinvesting in innovative businesses and workers," Lawrence Sloan, president of SOCMA, said. "With the majority of our members being small and medium sized, this represents one to two jobs at any given facility."

Google Glass technology can reduce costs of manufacturing

Developments in new augmented reality technology have the potential to reduce costs of manufacturing, according to industry magazine Automation World. While buzz around the advanced features of Google's wearable computer named Google Glass is generated mainly by consumers, this AR tool can also benefit manufacturing companies in decreasing costs related to operating equipment and training employees. Previously named Project Glass, Google's new piece of technology is innovative in its ability to allow users to search for information using a computer they can wear on their heads.

"We started Project Glass to build technology that's seamless, beautiful and empowering," the tech giant said on its Google+ page. "To share the world through your eyes. To get answers and updates, instantly. To be there when you need it, and out of your way when you don't."

Manage manufacturing processes with new technology

With its features of searching for answers online in real time, Google Glass is already a powerful device, but paired with an app called MTConnect, it leads the way for the future of manufacturing productivity. By itself MTConnect lets industry professionals like factory managers see machine controls and access equipment information using their mobile phones and tablets, making it easy to manage the manufacturing process.

When used with Google Glass, MTConnect is even more powerful by streaming information directly to the headgear display to see manufacturing data in real-time. The app could allow users to view manuals when working on machines or parts, facilitating the training and productivity of employees. Used by machine operators, wearable technology can allow them to monitor individual machines and their controls, such as their path feed-rate and axis positions using Google Glass. Advanced features can these can lead to less costly errors when producing and manufacturing.

These progressive technologies can also help maintenance technicians view locations of machines and parts as well as their power status or part status. By using these tools, manufacturing companies can contribute to their overall manufacturing cost reduction.

Upon visiting Source One’s website, one will notice that our company offers a variety of solutions and services. To capture the multi-dimensional nature of our day-to-day responsibilities, I use words like “consulting” or “subject matter experts” when explaining to others what we do. Never have I heard of my work being described as “Vegetarian Haggis.”

As far as I know, the entire country of Scotland has never offended me before, so I will leave out any comments on haggis until I try the dish. However, due to the nature of haggis being a hearty and meaty dish, Rob Guenette’s comparison of procurement to a vegetarian version* humorously captures the common frustration and ambivalence agencies often feel towards the division that handles the RFP, negotiation, and contracting processes. A common point of contention appears to be the perception that all procurement cares about is lowering costs, regardless of the shop’s creative ingenuity or type of work; in other words, as AdvertisingAge points out, parties often do not have reasonable expectations of themselves or their partners. On the other hand, Digiday’s interview with two executives from digital agencies discusses how negotiations with shops are natural and are like any other business transactions. Their greatest concern, rather, is the idea that procurement departments have scorecards and “scientific systems” to evaluate shops and disqualify candidates for “the wrong reasons,” and that generally, those in procurement often do not have a clear enough understanding of the industry to make the best judgment calls. These impediments are only exacerbated by the fact that pitch processes are lengthy and costly, and according to PRWeek, increasingly drawn out thanks to the procurement department’s growing involvement in marketing-related decisions. When considering those factors, it’s no wonder procurement is as appealing to the agencies as vegetarian haggis is to Sean Connery (or anyone else for that matter).

Nevertheless, it is unlikely that marketing teams will exile the procurement division any time soon. Putting aside company regulations and bureaucratic hurdles, procurement is, as discussed by Alan Wexler, EVP of SapientNitro, and James Gross, co-founder of Percolate, utilized as the “investigative layer that takes the workload off the buyer when making a purchasing decision,” and helps add accountability and structure to a company’s buying decisions. This is especially important when large firms with a multitude of divisions and products seek marketing services from a variety of agencies.

To allay the headaches of the agency-procurement relationship and to strengthen the benefits that such a relationship might bring, I conclude with a few notes on best practices observed in the business. All paths point to how clear communication is integral to the process. Forbes’ recent exposition on the 2013 ANA Advertising Financial Management Conference in Scottsdale Arizona illustrates the gap as well as constructive links between procurement, agency, and marketing teams. The Good Pitch provides six useful principles to make the most out of an agency pitch. The lesson to be mastered sounds simple enough: procurement, agency, and marketing teams should work together to ensure that there is effective communication and transparency among the three parties. Collaboration is important to understanding the ultimate objectives and nuances of selecting an agency that fits well, in terms of capabilities and chemistry, and to avoid using the RFI/RFP as a blunt instrument. As they say, “Quality, not quantity.” And perhaps then procurement will be analogous to a Boston cream cake to more of our compadres in advertising.

 *A note on vegetarian haggis: according to The Guardian, it’s actually pretty good, all things considered.

Photo credit: http://latimesblogs.latimes.com/jacketcopy/2011/07/american-writers-haggis.html
Domestic manufacturing output climbs for second month

As a sign of the overall economy recovering, domestic manufacturing is continuing its climb up in output. Manufacturing output increased for the second consecutive month, according to Manufacturing.net. After the recession, manufacturing has been slow to bounce back. In the past 12 months, manufacturing output has only increased 1.8 percent. But the recent surge in production shows signs of a "modern recovery" for U.S. manufacturing, according to industrial professionals.

Moderate recovery on track for manufacturing

The "report confirms the picture of a moderate recovery in the manufacturing sector," said Annalisa Piazza, senior economist at Newedge Strategy.

Manufacturing production increased 0.3 percent in June from May, the Federal Reserve reported. May had previously experienced a boost of 0.2 percent from the last month. Total industrial production had grown 0.3 percent in June, accounting for factory, mine and utility production. Output in the mining industry expanded 0.8 percent, while utility output decreased 0.1 percent.

Increase production output sign of strengthening economy

Despite the jump in production the previous two months, it is not enough to counteract declines in production numbers after they slumped in March and April. However, the improvement in manufacturing numbers is a sign that the overall health of the economy restoring, The Los Angeles Times reported.

"Clearly, manufacturing production growth significantly outpaced overall economic growth early this year and has recently been correcting to the relatively slow pace of growth in the overall economy," said Daniel Meckstroth, chief economist of the Manufacturers Alliance for Productivity and Innovation.

Factory activity increased in June after hitting a record low in four years, The Institute for Supply Management said. Offshore manufacturing has also signaled gains in production with European countries like Britain and France showing improvement. With output numbers picking up, there is hope that production could continue to climb into the second half of the year for the United States.

Ford developing advanced manufacturing technology

Ford is creating a new advanced manufacturing process that will lead to cost reduction and decreased time of production, according to a company press release. The technology will enable the company to quickly form sheet metal parts used in low-volume production, and the prototype time will speed up to three business days from two to six months. 

In the advanced process, a piece of sheet metal is clamped and pressed into a 3D shape by stylus tools on either side of the metal blank. Current stamping processes are energy-intensive and can take several months from concept to production. Traditional stamping is still the most effective technique for high-volume items, but Ford's new technology will reduce energy use for small quantities of specialized parts. 

The new manufacturing technique costs less than traditional stamping because it does not require geometric-specific forming dies or the high manufacturing costs. The process will allow for more flexibility when it is fully developed, and Ford will be able to improve vehicle research and development. Creating a prototype die can take up to two months, and generating a full vehicle requires several months and hundreds of thousands of dollars. The advanced stamping process will create sheet metal parts in a few days for a very low cost. 

Recently Pacific Standard reported that Swedish furniture giant IKEA currently consumes one percent of the globe’s entire commercial wood supply -- roughly 17.8 million cubic yards -- to produce their furniture. IKEA, along with Home Depot and Lowe’s, is currently one of the three biggest consumers of commercially used wood in the world.  Although one percent may seem trivial, the impact of this number on global resources is huge. 

While it’s difficult not see red over the fact that such a vast portion of the world’s forests are being utilized for cheap, disposable furniture, IKEA is doing its part to stay green.  In the last year, IKEA has put forth serious efforts to source more sustainable materials and improve their supply chain in order to help offset their massive global resource consumption. In the beginning of 2012, IKEA began replacing its wooden pallets with corrugated cardboard. Corrugated cardboard is a highly recyclable material and has no impact on wood resources. The company’s chief sustainability officer, Steve Howard, also noted in their 2012 Sustainability Report that twenty-five percent of the wood currently utilized by IKEA for their furniture is certified by the Forest Stewardship Council (FSC), which supports forest management improvement. The company has also noted that they are currently aiming to double that percentage in the next five years.

In addition to promoting sustainable sourcing practices, IKEA has recently implemented a number of programs aimed at furthering their green initiatives and improving the company’s environmental impact. Last October, IKEA kicked off their "People and Planet Positive" strategy, the goal of which is to utilize 70 percent of the company’s energy needs from renewable resources by 2015. As of 2011, the company leveraged wind farms in 6 countries throughout Europe to generate a total of 152 gigawatt hours of electricity, or roughly 12 percent of its total electrical need. IKEA also recently completed its first round of solar initiatives, which originally began as a solo project in October 2010 at a store in Tempe, Arizona. The installation of these solar panels turned out to be so effective at keeping energy costs down at the test location that IKEA made it their goal to install solar panels at as many locations as possible. Currently 39 out of 44 IKEA stores in the U.S. are now utilizing solar panels to generate electricity.

While IKEA’s massive consumption of a single global resource is less than ideal, their commitment to help offset this intake is commendable.  Not only has the company helped to improve their environmental impact, they’ve also benefited financially from their sustainable efforts.  IKEA’s has set an exemplary model illustrating that going green can be easily achieved no matter how large, or small, the business.