January 2011
Intel works to correct manufacturing blunder Intel has a manufacturing blunder to contend with that could ultimately cost the company revenue as it works to fix its latest supply chain mishap.

Intel announced Monday that it had discovered a design flaw in a 6-series chipset that is used in its newest processor family. The chipset, dubbed Sandy Bridge, was announced at this year's Consumer Electronics Show in January in Las Vegas, where it was met with fanfare and admiration from the techies in attendance.

At issue in the manufacturing of the chips is the Serial-ATA (SATA) ports, according to Intel; the ports within the chipsets have the potential to degrade over time and could hurt the functioning or performance of SATA-linked devices, like hard disk drives and DVD-drives. Intel hopes to prevent a wave of bad publicity that has hurt other technology giants, like Dell, after the degradation of key component parts hurt functionality and cost millions in replacement parts.

Intel halted shipments of the affected chip and has corrected the design issue; moreover, it has begun to make a new, corrected version that should begin delivery shipments sometime at the end of February, the company said in a statement.

However, the company has already lost valuable time in the correction of the issue and could face cancelled orders from buyers after this latest string of recalls. Intel affirms that few companies have already received the faulty chips, though, because they only began shipping on January 9.  
U.S. manufacturers still tops in the worldThough all the talk in the media these days is seemingly centered on the might of the Chinese economy, many analysts are overlooking some key figures in manufacturing statistics, according to CBS News.

Yes, it is true that many U.S. manufacturing facilities closed during the recession, and that Chinese goods are without question cheaper to produce than their American counterparts; however, America by far remains the number one manufacturing country in the world - by a wide margin, outproducing China by more than 40 percent.

In 2009, U.S. manufacturers produced $1.7 trillion worth of goods, and that was at a time when the sector was still reeling from one of the steepest contractions in economic activity in the nation's history. U.S. manufacturers have succeeded where other countries have often failed: They generate more goods using fewer people, placing at or near the top of world rankings in productivity gains over the last three decades.

That increased efficiency translates into a leaner manufacturing force with higher productivity rates. "You can add more capability, but it doesn't mean you necessarily have to hire hundreds of people," James Vitak, a spokesman for specialty chemical maker Ashland Inc., told CBS News.

Now, as the U.S. economy expands - led in many ways by domestic manufacturers - the manufacturing sector could be poised to truly break out, adding 136,000 net workers in 2010. Manufacturers now heavily focus on products with high profit margins, eliminating goods like consumer electronics, toys and shoes, and increasing production of specialized computer chips, fighter jets and health care products.

In 2011, U.S. manufacturers hope to dispel the "common misperception" that all goods are made in China, Thomas Hook, the chief executive of medical goods manufacturer Greatbatch, affirmed. 
The usual effects of Mideast turmoil such as market volatility, spikes in crude oil, and a scrambling US State Department should come as no surprise with the current uprising in Egypt. But the revolt has global markets biting their nails over supply chain concerns by way of the Suez Canal.

Suez shippers expect delays as a result of everything from Egypt's downed communications systems to erratic office hours throughout Egypt and along the canal. Thankfully, beyond delays, most analysts agree that full-blown supply interruptions are unlikely. Revenue from the Egyptian military-controlled Suez Canal accounts for 3.2% of Egypt's GDP. Whichever government comes to power after the dust settles would be foolish to do anything that might adversely affect this important shipping artery. So while our prized Egyptian cotton is safe (cotton goods and clothing are our second-largest import from Egypt behind natural gas), the situation along the Suez Canal highlights a broader issue for supply chain managers: risk management.

Disruptions to the supply chain can increase related costs in everything from expediting, premium freight, obsolete inventory levels, additional transactions, and storage, to penalties paid to customers. Kevin Hendricks and Vinod Singhal of Management Science Journal estimate that an announcement of a supply chain disruption can cause a nearly 10% drop in a stock price, based on a sample of 500 related company announcements. Severe disruptions can have a brutal long-term effect on profitability.

Disruptions cannot ever be fully predicted, but there are a number of precautions that should be taken and built in to each link of the supply chain to limit exposure to risk factors. Risk identification, risk assessment, correction, and monitoring are all a part of our comprehensive strategic sourcing services profile at Source One. Is your supply chain at Risk?
As manufacturing firms report growth, their hiring could jump start labor marketSigns of a resurgent U.S. economy are mounting as GDP grows and companies report positive earnings; though it was hit hard by the recession, the manufacturing sector has charged back in recent months, expanding and helping drive growth.

Many U.S. manufacturing companies posted fourth quarter results recently that easily beat the expectations of economists. Aside from the rise in profits they logged, many manufacturing companies reported that they had improved margins and expected the expansion to continue as industrial demand is categorically strong - especially in emerging markets.

Companies like Caterpillar, Tyco and Eaton all had strong sales and earnings in Q4, signaling that businesses are starting to invest more as they grow increasingly confident that the U.S. economic recovery is gaining strength. Moreover, though Caterpillar was forced to cut some 30,000 full-time and contract employees during the recession, the company said it rehired about 8,200 workers in 2010.

Ultimately, the growth in the industry could help fuel a recovery in the labor market, according to Oliver Pursche, the president of Gary Oldberg Financial Services. Pursche told Reuters that as more manufacturing companies hire additional workers, confidence builds in the markets: "The more they talk about hiring, the more comfortable we're going to be with that company. If you're hiring people, your business is growing."  
Survey: U.S. manufacturers show growing confidence in economy A new report from "Big 4" accounting firm PricewaterhouseCoopers (PwC) states that confidence in the U.S. and global economies has climbed recently as solid growth and an uptick in business investment have spurred confidence amongst companies.

Of the industrial products manufacturers surveyed in the fourth quarter of 2010, 63 percent said they were optimistic about the U.S. economic recovery and for continued future growth - a significant rise from the 35 percent of respondents in the third quarter of 2010 who expressed confidence in the fledgling recovery.

Barry Mistha, the U.S. industrial manufacturing leader for PwC, said that the "major shift from uncertainty to optimism in this quarter's findings gives us good reason to be hopeful." Mistha contended that as signs of growth continue to spring up, industrial manufacturers will "start making business decisions in a less guarded, more confident manner as we move into 2011."

Moreover, 61 percent of those polled asserted that the U.S. economy is not only stabilizing, but also growing; in Q3, only 27 percent of poll participants thought that. In positive news for the labor market, nearly 50 percent of firms polled plan to hire additional workers in 2011, while 82 percent intend to augment operational spending. 
Solar company to ratchet up manufacturing, acquire companiesAfter Spanish company Solaria Energia y Medio Ambiente lost 42 percent of its market value in 2010, the solar company will this year focus on acquiring a raw materials supplier as it endeavors to shift toward more profitable businesses.

The company is currently on the market for a manufacturer of solar cells used in panels, the company's director of investor relations, Pedro Echeguren, told Bloomberg; the move is strategic as cell makers earn profit before interest, tax, depreciation and amortization of 30 percent of sales - a jump from the 9 percent at Solaria in the first three quarters of 2010.

Echeguren affirmed in an interview that the industry will "sooner or later" experience a "consolidation" of companies. "When that happens, we are going to be hunters." Many European solar equipment manufacturers are looking to keep their margins high as they face stiff competition from Chinese firms - propped up by the Chinese government - that are augmenting their own manufacturing capacity and slashing prices.

To compete with increasing competition from abroad, Solaria plans to expand its output of solar cells by four-fold to 100 megawatts annually; global demand for solar panels is forecast to climb by 15 percent this year.  
Napolitano to meet with leaders, discuss how to strengthen security of global supply chainAfter an attempted bombing of cargo destined for the U.S. last year, governments around the globe have moved to ensure that cargo is better protected and screened; this week, representatives from the U.S. and Great Britain will meet to discuss how to ensure the global supply chain functions without interruption.

On Friday, the U.S. Secretary of Homeland Security, Janet Napolitano, will travel to London to meet with the International Maritime Organization's secretary general, Efthimios Mitropoulos. During their planned talks, the two leaders will discuss how to best increase the cooperative initiatives amongst countries to safeguard the global supply chain.

According to the U.S. Department of Homeland Security, Napolitano will continue to work with the World Customs Organization and the International Civil Aviation Organization to produce more stringent cargo screening standards. Moreover, Napolitano will meet bilaterally with the UK Home Secretary Theresa May and Transport Secretary Phillip Hammond to discuss how the two nations can strengthen not only cargo screening, but also cyber and aviation security.

The security of the global supply chain is of utmost importance as even small hiccups can cause major delays in the delivery of goods around the world.  
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Bloomberg News reports that AMB Property Corp. is in merger negotiations with ProLogis, the world’s largest warehouse operator, to create a $14 billion industrial real estate investment trust, with control over approximately 600 million square feet of warehouse space around the world.

The resulting combination would likely mean reduced costs for warehouse operations as the U.S. market continues its recovery. In fact, vacancy rates in the U.S. industrial market has been dropping, which translates into an increased demand for warehouse space, according to commercial real estate broker Grubb & Ellis.

In addition, a merger of the two REITs would enable them to reduce costs by closing duplicate offices in markets around the world, thereby realizing “tremendous” general and administrative savings, Steven Frankel, an analyst at Green Street Advisors, told Bloomberg.

It could also mean an eventual demotion for one of the two entities, Bloomberg reports.

“We expect that in this merger, AMB would be the surviving entity,” analysts at RBC Capital Markets, LLC report. ProLogis, they told Bloomberg, “has been under pressure since the credit crisis to reduce leverage, cut overhead costs and rationalize its underproductive assets.”

As we know all too well, that’s not an uncommon problem in these turbulent economic times. For executives who are facing such challenges, one option worth considering is bringing on a strategic sourcing specialist to provide an objective review of potential cost savings opportunities. Often, an experienced sourcing consultant can identify and implement savings strategies faster than in-house staff who typically hold a range of other responsibilities and who require time and training to be brought up to speed.

If you would like assistance in developing cost reduction strategies for your business, contact us via our Source One website.
Threat of Somali pirates forcing vessels to take longer trips, delaying shipments Somali pirate attacks are rising quickly, raising costs for shippers and posing a serious threat to vessels carrying nearly 20 percent of global trade goods, Bloomberg reports.

There has been a 36-fold surge in ransoms in five years, ultimately resulting in higher transportation costs. To avoid the Somali presence off the coast of east Africa, many vessels are diverted onto more circuitous, longer routes, adding $2.4 billion in transport costs to shipping companies.

The average ransom payment given to Somali pirates totaled $5.4 million in 2010, far greater than the $150,000 average of 2005; moreover, attacks off the coast of the poverty-stricken country were the highest ever on record in 2010, with 49 vessels hijacked.

Shipping companies often divert vessels toward longer routes: For example, many ships are sailing around southern Africa rather than through the Suez Canal, which adds about 12 days to a journey from Saudi Arabia to Houston, Texas, according to Riverlake Shipping analyst Luis Mateus.

The longer shipping routes are causing supply chain delays and eating into corporate profits, but the threat from the Somali pirates shows no sign of letting up. In areas in Somali where pirates have bases, the hijackings are "woven into the social and economic fabric of everyday life," the UN stated in a report.  
Report: Apple ranks low in supply chain transparency, safetyApple outsources much of its supply chain to manufacturing companies in Asia, including companies in Hong Kong and China. The technology giant's supply chain, though, has recently come under fire for being neither transparent nor green.

According to a report issued by anti-pollution activists in China, Apple is more secretive about its supply chain than almost every other American company operating in the country. Though Apple is known in the industry for the secrecy it wraps around its newest product offerings, the mystery of its supply chain is more a matter of covering up than preventing leaks, the report stated.

"Behind their stylish image, Apple products have a side many do not know about – pollution and poison. This side is hidden deep within the company's secretive supply chain," the report states. There have been workplace poisonings, heavy metal contamination incidents and suicides at Chinese factories responsible for assembling the companies electronics.

The report ranked Apple at the bottom of 29 technology companies whose supply chains were examined, citing the company's hesitance to comment on supplier issues and other disruptions. For example, 62 workers fell ill last May at a factory after inhaling noxious n-hexane fumes, a chemical the factory switched to because it dried more quickly than alcohol and increased efficiency. Apple never gave an explanation as to why the chemical was used - especially because it can cause nerve damage for up to two years.

Nonetheless, there is room for improvement at Apple, Ma Jun of the Institute of Public and Envrionmental Affairs told The Guardian: "Far from being the best on planet, it is bottom among 29 IT brands. Apple should be a leader. If it can move on this, it can change the whole industry." 
Toyota's latest recall affects 1.7 million models Toyota can't seem to escape the supply chain problems it has battled over the past year: The world's largest automaker announced this week that it would recall 1.7 million cars on fears of potential fuel leaks.

The Japanese car maker said in a statement that a majority of the recalled cars were sold in Japan, but Lexus IS and GS luxury sedans sold in North America were also affected. The news is a blow to the company as it endeavors to overcome the quality-control issues that caused some of its models to allegedly accelerate uncontrollably last year.

Advanced Research Japan Co. analyst Koji Endo told the New York Times that the latest spat of recalls could cost the company $240 million; though that figure won't affect earnings too much, "there is a perception of here we go again, and that hurts Toyota's image, especially in North America," he affirmed.

Though the U.S. auto industry recovered last year after falling precipitously during the recession, Toyota's sales lagged. An Edmunds.com survey showed that only 17.9 percent of buyers in the market for a car were considering a Toyota - a 3.8 percent drop from the year prior.

Jessica Caldwell, the director of pricing and industry analysis for Edmunds, said the car company "needs to overcome not just the PR damage sustained by last year's recalls, but also the reality that many of its models are stale."  
The U.S. Postal Service, which saw its operating losses more than double between 2009 and 2010, has been cited by Wall Street telecom analyst Nick Del Deo as a role model for how to cope with online displacement of traditional Business, the Philadelphia Inquirer reports.

Thanks in large part to the growth of online mail traffic, the “world’s largest distribution system” has seen its volume of letters and shipments fall by more than one-sixth since 2004, according to Del Deo, but because U.S. law requires the Postal Service to provide mail service to new homes and businesses, its service has actually grown by six percent during the same time period.

The good news, at least from an operations standpoint, is that during that period the Postal Service laid off one-sixth of its employees (mostly managers), shut down a host of back office facilities and implemented a variety of additional measures aimed at cutting operating costs.

According to Del Deo, telecom companies may want to take a cue from that. As more and more phone customers give up their landlines in favor of wireless service, companies like Verizon and AT&T are likewise feeling economic pressures. Like the Postal Service, some telecoms have begun to cut management ranks, sell-off noncore business units and made a strong push to attract new wireless customers. But remaining costs, like maintenance, electricity and network operations “will be much more difficult to purge from the system,” Del Deo notes.

All the more reason to look for help from an experienced ally who knows the playing field. At Source One, we have spent nearly 20 years working with a wide array of organizations, including telecom companies, manufacturers, pharmaceuticals, hospitals and others to help them review their spending processes, optimize their processes and cut their non-payroll operating costs. Learn more at our Source One website.
Supply chain blunders cost Johnson & Johnson $900 million Battered by product recalls in 2010, Johnson & Johnson is facing the repercussions of its supply chain blunders as it announced its fourth quarter profit fell from the year prior. The consumer products giant also forecast 2011 earnings well below analyst' estimates.

The New Jersey-based conglomerate was bogged down in controversy last year after many of its medicine offerings, including Tylenol, Motrin and Rolaids, were recalled following consumer complaints that the products smelled of mold and in some cases, contained metal pieces.

J&J's McNeil Consumer Healthcare division was responsible for a majority of the recalls, placing warnings on 40 of its over-the-counter brands since late 2009. In total, J&J affirmed that the recalls cost it $900 million in lost sales - $300 million more than the company originally predicted in July.

J&J chief executive William Weldon said on a conference call that last year was both "difficult and disappointing," asserting that the company is engaged in an "uncompromising effort" to ensure its supply chain does not suffer the same setbacks in the future.

However, Wells Fargo analyst Larry Biegelsen wrote in a report that J&J's supplier problems could have long-term consequences: "Consumers are reluctant to switch back and are continuing to switch to other brands. If this trend continues, we believe that growing consumer loyalty to new brands or comfort with private labels could slow McNeil recovery relative to expectation." 
General Motors to add 750 jobs, boost pickup productionThe newly resurgent General Motors Corp. announced this week that it plans to add 750 jobs at its Flint, Michigan manufacturing facility so that it can increase production of its flagship pickup trucks. The move was praised by state officials in Michigan as the state has one of the highest unemployment rates in the U.S.

GM will add a third daily shift at its Flint plant and will rehire workers from a pool of about 3,000 former employees throughout the U.S. who were laid off from other plants, the company said. The extra hands on deck will help the company's Flint facility to ratchet up the manufacturing of its Chevrolet Silverado and GMC Sierra offerings.

Representing the Flint plant's hourly employees, Dana Rouse, the chairman of the United Automobile Workers Local 598, told reporters that the expanding workforce at the carmaker is surprising considering that "less than two years ago, we didn't even know if were going to have a company."

GM will start shifting workers to Flint at the beginning of its fiscal second quarter. Currently, the Flint plant employs roughly 2,100 workers, but analysts affirm that the move will have positive effects throughout Michigan as every one automotive job tends to support six jobs in the surrounding area. 
Report: to boost their value, big oil companies should split upIf oil companies want to deliver heftier returns for their shareholders, they should split up their organizations, according to a leading industry analyst.

Christopher Swann affirms that while still profitable, large oil companies have experienced big hits to their price-to-earnings multiples over the past 10 years. They have fallen from the high tens in the early 2000s to the seven to 12 range recently – even though oil has more than tripled in price since then.

Large oil companies, like Exxon Mobil and BP, often combine their higher growth exploration businesses with their slower moving refining and marketing divisions. However, investors love simplicity and pure exploration companies in the U.S. trade at nearly 20 times per 2011 earnings – while the major oil companies are far lower at 11 times per 2011 earnings.

Oppenheimer researchers assert that U.S. major oil companies could boost their value by more than 20 percent if they spin off their refining and marketing operations.

Ultimately, splitting up major oil companies would enable investors to more easily value them and help managers to focus on one area of expertise, rather than disjointed businesses held together by bureaucratic red tape.
Supply disruptions in Ivory Coast spur cocoa's price rise Ivory Coast, the world's biggest producer of cocoa, has been embroiled in a political quagmire since the country's November presidential elections: Two rival presidents have emerged and neither will concede to the other.

Alassane Ouattara, the internationally recognized victor, endeavors to cut off funding to incumbent Laurent Gbagbo and halted shipments of cocoa from leaving the country; however, as a result of his actions, cocoa prices could hit all-time record levels, analysts say.

Ouattara ordered the halt in shipments leaving the country yesterday, sending cocoa futures up in trading. Cocoa futures have risen 19 percent since the elections were held on November 28, and nearly 10 percent this month alone.

The ban could ultimately send cocoa prices as high as $3,720 per metric ton, analysts affirm; that price would mark cocoa's highest showing since January 1979 and almost $400 higher than cocoa's current trading level. This rise in the price of cocoa will soon hit food companies that use chocolate, including food giants like Hershey, Mars and Barry Callebaut, the world's biggest maker of bulk chocolate.

Ivory Coast's cocoa production represents nearly 33 percent of the global supply, Bloomberg reports, and is projected to grow by 1.9 percent in 2011.  
Toyota introduces manufacturing tool that saves money, cuts production times Toyota recently introduced a new assembly line tool at one of its subsidiary factories that permits the world's biggest automobile maker to both save money and cut production times, according to the Asahi newspaper.

The new assembly line structure will help Toyota to shore up its supply chain and augment revenue. Installed at a new factory of Central Motor Co., the assembly machine is shaped like the letter "U" and hastens the production process by allowing multiple tasks to take place simultaneously on a vehicle. For example, Reuters reported that the tool could enable an engine to be installed in the front of a car while underbody parts are added to the back.

The new system carries vehicles on a conveyor and has a shorter assembly line than older models. Toyota is thrilled with the newest addition to its supply chain as the assembly tool has decreased the unit's factory assembly line length by over 30 percent - and in the process saved the company 40 percent on capital expenditure.

Since the yen has gained in recent months against other currencies, Toyota has looked for ways to cut costs and supply chain tweaks have so far worked. Toyota announced last month that it hopes to overhaul its domestic manufacturing processes as it works to cut costs, so similar changes to production could be coming soon to the Japanese conglomerate.  
Rock-Tenn's newest acquisition, a cardboard box maker, indicative of growing manufacturing sector Cardboard boxes often serve as the transportation module of choice for companies like Amazon, UPS, and FedEx as they are both relatively inexpensive to buy and lightweight and recyclable. One of the biggest players in the packaging business announced this week it would buy a cardboard box maker in anticipation of growing sales to consumers.

Rock-Tenn Co. is a maker of packaging for food and consumer products and per terms of the newly announced deal, the packaging giant will acquire Smurfit-Stone Container Corp. for $3.5 billion in a cash and stock.

The Wall Street Journal reported that the deal is already affecting the value of other companies in the packaging industry, sending the stocks of Packaging Corp. up 2.5 percent, International Paper 3.7 percent higher and MeadWestvaco Corp. 4 percent above Friday's close.

BMO Capital Markets analyst Stephen Atkinson said that the deal between Rock-Tenn and Smurfit-Stone is "positive for the North American containerboard industry, especially considering Smurfit-Stone's penchant for discounting."

The deal is also a positive sign for the broader economy, according to experts, as Rock-Tenn's management predicts that consumers plan to buy more goods shipped in cardboard containers in the coming months after the recession battered consumer spending in the U.S. 
Study: supply chain execs feel pressure to boost profits As businesses look for ways to augment revenue and increase their operating margins, they are increasingly looking toward their supply chain executives to boost profits, according to a recently released study.

The study was conducted in November and stated that 96 percent of supply chain executives feel they are under "more pressure than ever" to help drive profitability by not only decreasing business costs that result from supply chain disruptions, but also developing strategies that directly boost sales.

Moreover, a majority of supply chain managers affirmed that in response to the increased challenges they are faced with, they will look toward their supply chain service and solution providers for new solutions; however, 45 percent of respondents asserted that their solution providers are "not proactive enough" in proposing new solutions and strategies.

While supply chain managers have historically been charged with streamlining supply operations, the added pressure is weighing on the executives, the report declared. When asked about their priorities for 2011, most supply chain managers cited cost reduction, reducing supply chain complexity and improving visibility as their biggest goals.
Bloomberg News reports that a key commodities index, Standard & Poor’s GSCI index, rose 24 percent over the past year and is now at its highest level since September 2008, which you may recall also happened to mark the early stages of the Wall Street meltdown.

That rise is a direct reflection of the increase in prices for a wide range of raw materials including energy products, industrial metals, agricultural products, livestock products and precious metals.

At first glance, some spectators might view the situation as a sign that inflation is rearing its head, thereby threatening to undermine America’s tenuous economic recovery.

Not so, according to several analysts interviewed by Bloomberg. Michael Darda, chief economist for Stamford-based MKM Partners, notes that commodity prices tend to move comparably with U.S. production, personal income and the stock market, so that the long-term outlook is really cause for optimism. He told Bloomberg that he expects the U.S. economy to grow by about four percent this year (compared to 2.9 percent in 2010) and for the S&P 500 Index to reach 1,425 this year from its current 1,282 level.

Likewise, Nariman Beharavesh, chief economist at HIS in Lexington, MA, and a former Fed official, explains that rising commodity prices are an indicator that U.S. economic growth continues to gain steam.

Meanwhile, companies that rely on raw materials for their production facilities have several avenues available to offset the increase in prices: by locking in prices through hedges, by increasing worker productivity and by reducing other operating costs.

With such market volatility, outsourcing one or more of these options makes the most sense.

Outsourced strategic sourcing consultants can provide cost reduction and hedging strategies without the ongoing expense required when hiring dedicated resources. Further, experienced resources can often identify and implement savings strategies faster than new resources that require time and training to get up to speed.

If you would like to explore potential cost reduction strategies for your business, contact us at our Source One site.
Increased car demand spurs luxury car makers to increase manufacturing capacity In an effort to keep up with surging global demand for automobiles, the three biggest luxury car makers in the world, Bayerische Motoren Werke AG, Daimler AG and Audi AG, plan to expand their manufacturing capacity this year.

Owned by Volkswagen, Audi hopes to eclipse BMW as the globe's largest maker of premium vehicles within four years and plans to produce more vehicles than the 1.15 million it built in 2010; however, BMW and Mercedes-Benz also plan on ratcheting up their manufacturing facilities in the U.S. and Germany to maintain their market share in the increasingly lucrative luxury car market.

The three luxury car makers contend that the "momentum in luxury markets will continue this year and also in 2012," spurring them to "take steps to address this," analyst Bankhaus Metzler told Bloomberg. "The top three are poised for further growth."

Worldwide sales of luxury automobiles recovered last year as demand from China, the world's largest automobile market, and the U.S. increased. Audi plans to spend $15.7 billion through 2015 on the construction of new manufacturing facilities and new car models, while BMW has already spent 1.5 billion euros on upgrading its plants in Germany; Daimler is currently building an 800 million euro small car manufacturing center in Hungary. 
Alibaba to reshape China's logistics marketChina's largest e-commerce firm, Alibaba, announced plans this week to construct a network of supply warehouses throughout the world's most populous country as it endeavors to win market share in China's growing online shopping industry.

Alibaba's executives told reporters on Wednesday that the company will spend anywhere from $3 to $4.5 billion over the next three to five years to build manufacturing warehouses and support logistics firms; Alibaba's enhanced supply chain will enable the company to more quickly deliver goods to consumers, giving it a leg up on its competition.

UOB Kay Hian analyst Victor Yip told Reuters that Alibaba's supply chain investment "will help give clients some reassurance that the things they buy will not be damaged by a third party along the way, and will help improve client stickiness to the Alibaba platform."

Alibaba's chief executive, Jack Ma, asserted that the logistics market in China is in dire need of infrastructure upgrades. "Hopefully within 10 years' time, anyone placing an order online from anywhere in China will receive their goods within eight hours, allowing for the virtual urbanization of every village across China," he said. 
Slow shipping vessel speeds cause supply chain headachesThe steady rise in fuel prices recently has prompted container vessels to sail at their slowest speeds in at least two years as they endeavor to cut fuel costs; these cost-cutting measures, however, ultimately drive up freight rates and the shares of shipbuilders, while simultaneously hurting consumers.

There are roughly 4,660 carriers globally and in the month of December, they moved an average speed of 11.44 knots - down 7.4 percent from the year prior and the slowest average speed since data was first kept back in May 2008. While slowing the speed of the vessels saves money on fuel costs, it also cuts the availability of ships and ensures owners reap hefty profits.

Moreover, the Hamburg Shipbrokers' Association reports that container costs increased by more than 100 percent over the last 12 months. According to experts, these slow rates could persist as oil is trading 16 percent higher than last year and the International Monetary Fund has forecast lower trade growth this year - both of which give owners little incentive to speed up.

In many instances, these slower vessels translate into goods reaching U.S. shores after they are scheduled to arrive. Unless economic variables start to realign, nonetheless, these slow shipping speeds could be the new normal for 2011. 
Supply chain disruptions damage Johnson & Johnson's 100-year-old reputationConsumer products giant Johnson & Johnson was besieged by product recalls during 2010 as some of its flagship offerings, including Tylenol, Mylanta, Pepcid AC and Motrin, were recalled after manufacturing blunders. Can the company recover from the string of supply chain disruptions and subsequent bad press?

While the company's products have long been synonymous with quality, there are concerns that J&J has inked too many supply deals with suppliers it did not properly vet; last year, J&J's McNeil Consumer Healthcare unit recalled 288 million items for various reasons, including pieces of metal some consumers found in its Mylanta products.

The recalls spanned various product lines and multiple factories, according to the New York Times. Moreover, the U.S. Food and Drug Administration affirmed recently that it has increasingly paid special attention to J&J products as it has received myriad complaints from consumers over moldy smells emanating from its medicines.

David Vinjamuri, a former marketing employee at the company, said that the company's continued product recalls could signal the end of the company's dominance in the market. "It looks like a plane spinning out of control," Vinjamuri said of J&J's blunders.

The biggest hurdle J&J faces in the coming year, according to analysts, is how to convince consumers to pay a premium for their products - especially since many pharmacies have increased the marketing behind their generic offerings as their name brand counterparts are off the shelves. 
After 3 years of supply chain disruptions, Dreamliner scheduled for Q3 first deliverySupply chain disruptions and technical errors have plagued Boeing's long-anticipated 787 Dreamliner for the past three years; however, the world's biggest aeronautical company just announced that its first delivery of the jetliner would come in third quarter of this year.

Boeing has faced myriad setbacks during its design and construction of the 787, including an electrical fire on board a test flight back in November that cast further doubt over the plane's delivery. Nonetheless, Boeing said that the Dreamliner will be delivered in November of this year.

RBC Capital Markets analyst Robert Stallard affirmed that though the supply chain setbacks hurt the company's stock in the past - it fell by 9 percent after the November 9 fire - it shouldn't affect the company going forward: "If Boeing can avoid further 787 issues, we think improving airline and industry fundamentals will continue to benefit the stock and potentially move its valuation higher."

Boeing executives assert that the November delivery date for its first round of Dreamliners reflects the time it will take to produce, install and test updated software on the planes. Scott Fancher, vice president and general manager of the 787 program, said that the "revised timeline for first delivery accommodates the work we believe remains to be done to complete testing and certification of the 787." 
NYT: G.E.'s supply chain deal with Chinese company a China's unprecedented transformation over the past decade into an economic superpower has led the country to increasingly look toward advanced industries to expand in. China views jetliners, according to the New York Times, as an industry it hopes to one day dominate - and it is doing so with the help of General Electric, an American company.

Chinese president Hu Jintao is scheduled to arrive in the U.S. this week for meetings with President Obama. During his visit he will meet with executives from G.E. to sign a supply chain agreement that is representative of the global focus many businesses are taking as they look to expand into the world's fastest-growing economy.

Per terms of the deal, G.E. will partner with a state-owned Chinese company and share its most advanced technologies in airplane electronics - in a telling example of why doing business in China is not a zero-sum game for U.S. companies. However, although it must give away company secrets to China, G.E. has a booming business in the country and sells many of its jet engines to Chinese companies that are looking to rival global powerhouses Boeing and Airbus.

Even though the supply chain deal is not without its faults, "this venture is a strategic move that we made after some thought and consideration, with a company we know," vice chairman of GE John G. Rice said. Chinese businesses, he declared, have "every probability of being successful. We can participate in that or sit on the sidelines. We're not sitting on the sidelines." 
Uptick in U.S. exports drives domestic manufacturing growthThere have been positive economic reports out of the U.S. in recent weeks, led by robust manufacturing data out of most parts of the country; most of that growth, though, has been fueled by strong sales overseas.

This surging demand has propelled U.S. exports to expand at a pace nearly three times faster than the rest of the economy, according to NPR; moreover, federal data released last week showed that U.S. exports rose for the third straight month in November, clocking in at $160 billion.

What is driving the growth? Overseas customers are purchasing more U.S.-made airplanes, pharmaceuticals, foods and commodities, like cotton. Emerging world economics, like Brazil, China and India, are driving the growth and could help the U.S. reach President Obama's stated goal of doubling exports by 2015. President Obama has extended credit to small businesses and has orchestrated big ticket deals between Pakistan and GE, for example, to increase the competitiveness of U.S. goods abroad.

In an effort to spur further exports, President Obama has championed free trade agreements between the U.S. and South Korea, Columbia and Panama, though their passage is not a done deal. Tom Donohue, the head of the U.S. Chamber of Commerce, affirmed that those free trade agreements must pass to ensure the U.S. manufacturing industry continues to grow.

"The administration must work urgently with the new Congress to approve the South Korean, Colombian and Panama agreements," Donohue asserted. 
Australian floods hurt global wool supplies Australian has battled unusually terrible weather in recent months as record rainfalls have ravaged crops in the country. As a result of the massive flooding, a wool shortage could result as the country's production falls amid burgeoning worldwide demand for the good.

Last month, the Australian Wool Production Forecasting Committee cut its estimate for wool output for the 2010-2011 season, attributing the decline to "worsening seasonal conditions" in the state of Western Australia that ultimately reduced fleece weights. Flocks in Queensland state, which has been besieged by an onslaught of wet weather in recent months, have particularly suffered during the inclement weather.

Andre Strydom, general manager at Cape Wools SA, told Bloomberg that the wool shortage could cause supply chain disruptions worldwide: "There is a significant worry developing among users of wool that there will be a shortage of supply." Moreover, these worries, he asserted, have been exacerbated by global cotton shortages.

According to Strydom, the wool shortage could drive up prices for clothes, among other goods, in the short- and long-term as it could take "about two to four years before we see an appreciable increase in Australia's wool production."

Australia is the world's biggest producer of wool for textiles. 
New Postmaster General hopes to improve efficiency, cut costs at USPSAs consumers frequently email and Facebook message instead of sending traditional "snail" mail, the U.S. Postal Service has looked for ways to improve its business efficiency and shore up its supply chain. The newly sworn in Postmaster General, Patrick R. Donahoe, said this week that the USPS will move to expedite wait times at its stores as it endeavors to win back customers.

While in the past postal clerks would ask a laundry list of questions to those looking to mail a letter or package, those questions are now eliminated for the most part, Donahoe said. "Lines at post offices are a major issue for me," he told the crowd at his swearing in. Likening the litany of questions to a fast food chain employee asking if a customer "wants fries with that," Donahoe said he aims to bring greater efficiency to the USPS while simultaneously cutting its business costs.

Moreover, Donahoe hopes to encourage people to do more postal business online or at retailers to free up wait times, he said that currently 35 percent of the business at the USPS is done online, but he wants that number to grow during his tenure. He is also, much to his chagrin, planning to cut some 7,500 jobs from the organization as it struggles to fill an $8 billion budget deficit.
Solar supply chain deal to spur U.S. installations The solar power industry in the U.S. is set to take off in 2011 as states increasingly set aggressive renewable energy goals. In an effort to spur solar panel installations and improve its business efficiency, Premier Power Renewable Energy recently announced that it entered into a supply chain agreement with JinkoSolar Holding Co. to supply solar modules.

The deal is a major breakthrough for the domestic solar power industry and ensures that Premier Power's business operations do not suffer because of supply chain disruptions. JinkoSolar, based in China, will supply the solar company with crystalline solar modules that are more efficient and lighter-weight than most models on the market; JinkoSolar is known for its streamlined manufacturing operations and maintains it will ensure prompt delivery of the solar panels.

Yvonne Young, the head of investor relations for JinkoSolar, said that the deal would help the U.S. solar market: "In combination with Premier Power’s strong system integration service, this project will help to contribute to the growth of the U.S. solar market in 2011." JinkoSolar is currently a solar leader in its native China, along with countries throughout Western Europe and the move will help it to establish a solar presence in the world's biggest economy.
Over the last several years Pennsylvania has been opening up the various electricity markets to competition with alternate suppliers. A little background on this is explained in an article on pennlive.com: In an effort to move from nine entrenched regional monopolies to a competitive electricity market, lawmakers implemented a transition period that included rate caps for consumers and recovery of "stranded costs" for providers, ostensibly to pay for previous infrastructure investments.

Rate caps were instituted to protect customers from unpredictable price fluctuations during the transition period.

In return for the loss of their monopoly status, utilities were allowed to collect a surcharge above the price of electricity, otherwise known as stranded costs. Rate caps already have expired for six utilities statewide, and the transition period will end for all state utilities in 2011 -- ending the rate caps and the collection of stranded costs.

Well, as most of us have realized by now, its 2011 and Peco’s rate cap has officially ended as of January 1st. Since then Peco has lost more than 10% of their customers and continues at a whooping rate of about 20,000 customers per week, according to an article on philly.com. But don’t worry, Peco won’t be panhandling anytime soon. The utility company still collects on the distribution of the electricity; they are just losing the portion that generates the power through their wires.

Residents and businesses now have the option to get better pricing on basic the basic necessities. Consumers are realizing that with the 20 plus new suppliers in the market it’s worth the time and research to switch for a cost reduction in their electricity bills.

So what information do you need to understand to source your electricity supply? Your bill should indicate the price-to-compare which tells you what you are currently paying. Compare this to what the alternate suppliers would charge and go with the most savings. You also want to compare variable versus fixed rates and determine what will work best for you in the long run. If you want to further understand how all of this works check out this very informational blog: "Regulatory Rundown Deregulation of PPL"

For all you Pennsylvania businesses out there, We can help in sourcing your electricity supply!
Starbucks inks supply chain deal with Indian coffee heavyweight As Starbucks Corp. looks to extend its business operations into India, it has tentatively signed a non-binding supply chain deal with India's Tata Coffee Ltd. for sourcing coffee beans.

Tata Coffee is Asia's largest publicly traded grower of coffee beans and Starbucks hopes to collaborate with the coffee giant to procure and roast premium green coffee beans from the Indian company's estates. Moreover, the two companies will look for ways to develop the American coffee chain's retail outlets at Tata-owned facilities and hotels, according to Bloomberg.

Howard Schultz, the chief executive at Starbucks, said that the supply chain deal would help the company adapt its business to the world's second-most populous country. "This memorandum of understanding is the first step in our entry to India," Schultz asserted.

In the past decade, India's consumption of coffee more than doubled to 100,000 metric tons; Starbucks hopes that by entering into an agreement with an Indian company that understands the domestic market, it can more easily establish a presence in the burgeoning industry.

Furthermore, according to a statement the two companies released they will also explore jointly investing in roasting facilities for exports of India.
Health care companies must cost costs to spur growth, says expert While the heath care industry expanded even during the recession, it is beset with inefficiencies that threaten its profitability and investors' profits. Leading health care fund managers, however, say that some health care companies are improving their business efficiency and are good bets to invest in.

Health care experts assert that companies that offer strategies to contain soaring health care costs are best positioned to achieve robust profits in the short- and long-term. These strategies vary across the industry, but some include insurance providers offering incentives for patients to shift their care from high-cost hospitals to lower-cost rehab facilities and pharmacy benefit managers (PBM) that are in charge of prescription drug plans.

According to Edward Yoon, a manager at Fidelity's Select Medical Equipment and Systems Portfolio, one of the top-four health care funds, improving business efficiency and eliminating waste in supply chains can help health care companies to bridge the gaps they face between costs and income. Yoon told Bloomberg: "We want to own companies that are going to solve these problems and will help bend the cost curve by not just slowing the rate of health-care costs but helping them decline."

Moreover, Yoon asserts that health care companies can achieve cost reductions through the implementation of information technology services, like electronic medical records. Such moves can reduce wasted time and augment efficiency. Ultimately, the fate of the health care industry depends on the implementation of cost-cutting measures and improvements to business efficiency.
Boeing debates overhaul on its 737In a decision that's sure to reverberate through its supply chain, Boeing Co. is currently debating whether to offer a new engine for its 737, or wait to focus on developing a brand new jet instead, according to Jim Albaugh, the head of Boeing's commercial jet unit.

Many airlines have pressed Boeing in recent months to come out with upgrades to the 737, one of the most ubiquitous aircrafts in the world. Boeing, however, has been loath to upgrade its engines as the company weighs the cost benefit of such a restructuring to its planes versus its planned redesign of airplane in the next few years.

"We have had a very difficult time making a compelling business case for why we should re-engine," Albaugh affirmed in an interview. "At the same time, we continue to study the subject and we'll announce our decision sometime in the middle of the year."

However, Airbus SAS, Boeing's biggest global competitor, just announced that it signed a deal valued at $15 billion to supply the Indian low-fare carrier IndiGo Airlines with 180 of its A320 jets, which compete with the 787. That deal puts pressure on Boeing to make a decision as to whether it will upgrade the engines on its planes or simply wait to develop an entirely new jet.
Target to acquire 220 Zellers stores, enter Canadian market In a move that the New York Times affirms "promises to reshape Canadian retailing," the U.S. retailer Target Corp. announced that it would acquire up to 220 Zellers department stores in a deal worth an estimated $1.8 billion.

The deal helps Target to move into the Canadian market for the first time and will eventually lead to a phasing-out of Zellers, the last major discount chain based in Canada. Wal-Mart entered the Canadian market in 1994 and has experienced solid growth since, and Target hopes to follow in its footsteps.

Target has long harbored a desire to grow into the Canadian market, but had a difficult time procuring retail space; the deal with Zellers will ultimately give the retailer prime access to the Canadian real estate market which was significantly less affected by the recession than the U.S. market.

Target will not start converting the Zellers stores into Target-branded entities until some time in 2013, according to the company; within three years, Target hopes to have 150 stores under its own name in the country. Target stores are already popular with many Canadians who shop at the U.S. stores during cross-border shopping excursions and Target hopes that goodwill extends to its Canadian stores.

Target is following the successful strategy that Wal-Mart employed when it first entered the Canadian market by acquiring an already-known brand and then expanding. Though Target's profit margin was hit hard by the recession, the subsequent uptick in consumer spending over the past few months has served like a shot of epinephrine to the retailer, effecting profit and same-store sales increases.

Goldman Sachs, the banking giant, recently upgraded Target as it expects it to continue to perform well as consumers spend more money on purchases, but still remain value-conscious. Goldman also cut its rating on Wal-Mart, however, affirming that its focus on lower-end consumers could restrict it from benefiting from an improving economic outlook.
Hotel chain improves business efficiency with supply chain software Hotels are accustomed to issuing bills. With some hotels serving hundreds of thousands of people every year, there is a lot of paperwork that goes into ensuring all outstanding bills are paid. One hotel chain recently implemented a software program to eliminate waste and improve its business efficiency.

Guoman & Thistle, a hotel chain, adopted a software-as-a-service (SaaS) billing solution that has allowed it to cut the number of invoices that were subject to error from about 20 percent a week to less than one percent. The SaaS solution, Freeway Spectrum, is offered by GXS and replaced the hotel chain's antiquated billing system.

The old system was a constant headache for the hotel chain, causing disruptions to the hotel's supply chain as it frequently broke down and displaced personnel from their duties to deal with its repeated shortcomings. Since the system's implementation, the hotel's management affirms that is has cut costs and streamlined its supply chain.

Alex Pearce, the accounts payable manager for the hotel chain, told Computing UK that the new SaaS system has cut their invoice errors drastically: "In one particular week, Guoman & Thistle transacted 1,154 invoices, and 68 failed due to various inaccuracies. These inaccuracies are now flagged to us early in the invoice cycle, meaning the problems are quickly addressed and resolved."
New IBM software improves supply chain, helps grow revenue International Business Machines recently unveiled its newest supply chain offering that can help its clients cut costs and grow revenue through improved customer relationships and supply chain analytics. The system, a Consumer Products Industry Framework, is already used by Crocs and Pepsi.

IBM affirms that the Consumer Products Industry Framework helps consumer products businesses meet the challenges they face in a crowded marketplace. For example, the system permits IBM clients to build stronger relationships with their customers by turning consumer behaviors and preferences into a more streamlined supply chain.

Moreover, the IBM system serves as a tool to predict future consumer behaviors, promoting effectiveness through the manipulation of demand data and other pertinent information to increase business efficiency. By eliminating the red tape between manufacturers and distributor strategies, the system ultimately reduces unnecessary inventory levels.

According to IBM, the system has always generated tangible results for Pepsi: After using the supply chain system, Pepsi reduced its raw material and supplies inventory from $201 million to $195 million, cut 2 percent of its total transport miles while growing revenue and added 12.3 million cases of beverages to be sold as a result of reductions taken in warehouse out-of-stock levels.

Collaboration in most instances can be very beneficial for all involved. When working with your current suppliers, collaboration can be a vital aspect in the success of cost savings opportunities for both of your organizations. This applies the good ole “don’t be afraid to ask” approach. Your organization, like most these days, is looking for ways to reduce costs and streamline processes. What could be better than working directly with the people that already provide goods and services to you?

I read an interesting article from propurchaser.com that talked about reaching out to your current suppliers to discuss ways that you can improve your business and lower costs throughout. I thought this was a great idea. In my experience with sourcing, when you include the incumbent in the process you will find that everyone can gain from it. In fact in many instances I have discovered that the suppliers might have had ideas all along for improvements in costs and processes but were either never heard or did not bother to bring it up. That may be another concern altogether in your supplier relationship, you want suppliers who are proactive with their approach to managing your account but that’s another topic.

Not only should you approach your suppliers on direct cost savings like lower product or service costs but you should brainstorm on ideas for process efficiencies. For example you might currently receive weekly invoices; this is costly for you and the supplier in both time and money. By switching to monthly, if possible, you can both reap the benefits without actually changing any prices. The article also brings up a good point, both parties should be open to receive and able to provide constructive criticism. Suppliers are most likely going to be open to teaming up in some form to not only retain the business but also to improve their practices as well, assuming they are willing to.

Keep in mind that while this idea can create a wealth of ideas and prospects, it may be difficult without the buy-in from the right people in your organization and from the supplier so make sure to take the necessary steps to sell the idea before jumping the gun.

Duke Energy to Buy Progress Energy in deal sure to mix up utility market In a deal that's sure to reverberate throughout the industry, Duke Energy Corp. agreed to purchase Progress Energy Inc. for $13.7 billion, passing Southern Co. to form the largest U.S. utility.

Based in Charlotte, North Carolina, Duke affirms that the deal enables it to further extend to parts of North Carolina, South Carolina and Florida - states where it operates, but that Progress has a stronghold in. The acquisition represents a major consolidation of the utility network in the southeast coast, with Duke taking on the 22,000 megawatts of power generation capacity that Progress currently owns.

However, one thing that consumers shouldn't expect from the deal is cost savings, according to Paul Patterson, an analyst at Glenrock Associates LLC, who told Bloomberg: "There should be no substantial cost savings with the companies being so close together."

Acquisitions are becoming increasingly popular in the U.S. power industry as companies move to augment their customer base as a means to combat falling prices. According to executives from the two companies, the deal will ensure that customers do, in fact, save money because the costs associated with building new power plants or complying with environmental regulations can now be passed across more customers.
Toyota invests $50 million in new research center After 2010 brought negative press to the company over safety recalls, Toyota Motor Corp. announced that it plans to launch a safety research center in Ann Arbor, Michigan.

Yesterday, Toyota affirmed that it will invest $50 million over the next five years on its new safety initiative, dubbed the Collaborative Safety Research Center. The plant will provide additional work for more than 1,000 current Toyota employees who already work for the car giant at its existing technical facility in the city.

Last year, the world's biggest automobile maker paid the U.S. government $48.8 million in fines related to its vehicle recalls; now, the company hopes its new safety research center will allay consumer concerns over its safety procedures.

Bruce Brownlee, Toyota's senior executive administrator for external affairs, asserts that the facility makes good on a promise the company's president, Akio Toyoda, made at congressional hearings last year: "Our president made a commitment to Congress to take a leadership role in automotive safety and this is an effort to live up to that commitment."

According to Toyota, the research center will study ways to combat driver distraction and protect drivers of all ages.
Solar company buys startup, aims to boost business efficiency As it endeavors to augment the efficiency of its business operations, First Solar Inc., an Arizona-based solar power company, recently announced that it purchased a startup, RayTracker, a maker of equipment that increases the amount of energy solar panels generate.

According to the Wall Street Journal, the terms of the deal were not announced, but First Solar affirms that RayTracker's solar tracking technology will allow it to grow its business efficiency by ultimately lowering the costs consumers pay to buy energy from its solar panels.

Currently, First Solar has some of the lowest manufacturing costs in the solar power industry and is a leading developer of large-scale solar farms in the U.S. However, the company's thin-film panels - made with cadmium and tellurium - convert less sunlight into energy than rival panels constructed from silicon cells.

With RayTracker's tracking technology, First Solar asserts that its thin-film panels will have higher energy output, lowering the costs consumers pay to buy energy from its solar farms. Alan Bernheimer, a First Solar spokesman, said that the deal will enable First Solar to boost efficiency, cut business costs and lower consumer's bills:

"By combining our systems technologies, we expect to accelerate our roadmap for lowering" the costs of energy.
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Up until about a month ago I was a subscriber of Sirius Satellite Radio. I had Sirius installed in my car once Howard Stern joined the company and never looked back. Then I bought a new car that was XM ready, and included three free months of XM. That’s fine, I thought. Since Sirius and XM are now the same company, the content should be the same. I canceled my subscription to Sirius, explaining that I was moving to XM, and they gave me a prorated credit.

Once I tuned in to XM I quickly noticed that Howard Stern wasn’t available. As it turns out, to get Howard on XM you need a “Best of Sirius” upgrade package that includes Stern, the NFL channels, NASCAR, and a few other stations. It’s odd that XM charges extra for this content when most of the music stations are the exactly the same on XM or Sirius.

Since Stern wasn’t available with my free subscription I called up to get the “Best of Sirius” package added. Because I was on a trial, it took two tries in calling customer service before I got to hear the new stations and had been properly billed for the service.

A few days later my phone rang. It was Sirius customer service asking what it would take to get me back. They were prepared to offer me a deal substantially less than my new rate for XM plus “Best of Sirius”. I explained I got an XM ready car, and simply transitioned service over, and said goodbye.

Since then I have received two emails and another call from Sirius trying to get me back. All this in less than a month.

Further, since the merger I have found that online content once available for free no longer is. The same content I get on my receiver for an annual fee requires additional charges to listen to online. Imagine paying for cable and then paying for the right to watch it over the internet (don’t get any ideas, Comcast). Right now that service is free, and it should be. After all, I’m paying for the content, not a method of listening to the content. One fee should cover any mode.

The reason why the government put antitrust laws into place was to ensure the consumer rights are not impeded due to a lack of competition in the marketplace. When Mel Karmazin lobbied for the merger of these two companies, he promised enhanced service and economies of scale. A year later, neither of these things has happened. I’ve ended up paying much more to move over to XM, yet more cars come XM ready than Sirius ready. And there is no smooth transition from one to the other, as if you are expected to retain service and buy a new receiver for your new XM ready car. It’s almost as if they never thought a Sirius subscriber might purchase an XM ready car.

Even the economies of scale of joining the two companies has gone unmet - at a minimum sales and customer service between the two aren’t talking to each other and systems are not integrated. So what was the point of the merger? It seems the only goal was indeed to have a monopoly, so Mel and the gang could nickel and dime subscribers without risk of them moving on to another competitor. Good show gents.

Unfortunately, I will continue to listen because there is no alternative, but if there was I would say “Fa Fa Fooey” to Sirius XM.