When I say “casino”, what’s the first thing that comes to mind?
Probably for most of you, it’s money. Actually more like MONEY. Money being spent, won and lost at breakneck speed. And although you’ve possibly had trips to Vegas where you were up against The House (and ask a gambler, and they’ll always tell you [...]
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While making fun of the way governments purchase has long been a good source of humor in spend management circles, the deficit news coming out now leads one to believe that it is now time to really make something happen.
What do you think? How would you make this happen? Is it a lost [...]
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The ISM’s PMI came in at 58.4 for January, which is significantly higher than I expected (I was thinking it would be around 55). This is the highest number in five years, and it is a clear indicator that the recovery we started seeing in the fourth quarter is showing signs of sustainability. [...]
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Coming out of the global economic crisis, a new business climate is taking shape that will permanently change the way organizations need to deal with Buyer-Supplier Relationships. The old normal was a world where credit was freely available. In the new normal credit will no longer be easy and we’re going to face an inflation risk. This has driven many suppliers to choose which customers they want to serve. So now is the time for many Buying organizations to become a “Customer of choice” since it might be too late when markets become tight and are forced to line up with other buyers to get suppliers attention.
Best-in-class companies leverage collaborative Supplier Management as a means to mitigate Supply Chain Risk and also use as a competitive differentiator to drive substantial bottom-line revenue growth and profitability. But the path to a success Supplier Management initiative requires not only a world-class web based technology and tools but also structured processes, expertise and access to a networked community to succeed.
Top “Lessons Learned” for enhanced Buyer-Supplier Relationships in the “New Normal”:
Sundar Kamakshisundaram is a Senior Solutions Marketing Manager for Ariba, a global provider of spend and supply risk management solutions.
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In the context of last week’s surprisingly positive job numbers (so surprising in fact that President Obama had to do a last minute rewrite to his speech Friday), two news stories have shared additional good news for US manufacturing. They’re largely anecdotal evidence, but perhaps they show a return of manufacturing jobs to the US for a number of reasons, including hedging against currency fluctuations and utilization of manufacturing capacity.
First, there was news that Daimler AG is moving some production of US bound Mercedes C-class cars from Germany to Alabama. Citing currency fluctuations as the key driver, Daimler officials plan to shift 20% of the production of their most popular model in the US to this Southern US state that is gaining traction in the automotive manufacturing industry. Interesting, the NPR report also points out that Alabama is a “right to work” state that requires far less vacation and other benefits than the 1,800 Stuttgart employees who are losing their jobs enjoyed.
The second story covered the emerging trend of jobs returning to historic manufacturing counties in the US. The AP article focuses on the furniture industry in western North Carolina. The industry has seen a drastic turn-around in the last 6 months, with companies going from layoffs to aggressive hiring to keep pace with demand. In fact, it’s that demand and the lack of a ramped up workforce that proves to be the underlying lesson of the article. Were companies too quick to shed jobs in the last 18 months? Can they ramp up quickly enough or will their customers see shortages in their supplier’s capacity? And is that excess capacity in manufacturing centers enough to draw renewed hiring from domestic, foreign and globally based companies?
These stories probably stir up more questions than answers about the future of manufacturing in the US. For starters, are these just a nice anecdotal case (Daimler) and a statistical blip (manufacturing jobs) rather than the start of a strong, lasting trend? Will the new normal – in regards to global risk from currency fluctuations, shipping/commodity costs, and consumer demand – lead to more jobs being “onshored” to the US and other countries that had fallen out of favor for low-cost countries in recent years? And if we do see more manufacturing jobs in the US, will they last?
What do you think? Where are we headed? Insights, anecdotes and questions are welcome in the comments (leave them anonymously if you must).
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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In recent months, the liquidity crisis that left companies with little cash for the last year has eased somewhat. Today the Huffington Post reported on a benefit some small companies and their employees are seeing as cash flow improves; the return of company bonuses.
For example, the owner of a logistics company in Michigan who was interviewed for the article, said she had no choice but to do away with the bonuses last year since her customers were extending their DPOs and ”it was really very frightening.” This year, the company has been able to give $700 bonuses to their employees since they are beginning to see improvements in their business and cash flow.
The article also points out how bonuses help companies maintain morale and good employees:
“Owners who believe in paying bonuses are looking to foster goodwill with their staffers, and, if the money is based on performance, give them an incentive to keep working hard. In the current economy, these owners say they have even more reason to show gratitude to their workers.”
Given yesterday’s report on surging worker productivity, it’s possible that bonuses, as well as improved process efficiencies and technology, are helping. And when the economy AND employment picture rebound at some point, companies with happy, productive, agile workforces will be the ones poised to rise the fastest.
None of this is to say that liquidity for many companies is back to the level they’d like to achieve. In fact, we’re still seeing regular reports about companies stretching out their payables in order to hang onto more of their cash – regardless of the risk and strain this puts on their supply chain. But as we’ve stated here many, many times before, there are options for gaining liquidity. In fact, sometimes cash is less than 24 hours away … just in time for some stocking stuffing bonuses for the employees.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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Today the Institute for Supply Management (ISM) released their report on manufacturing activity in November. A few of the highlights:
Overall, I see these numbers as a relatively positive sign that the recovery in the manufacturing sector is continuing. Most analysts had expected the overall index (PMI) to come in around 55, but I was expecting a number closer to 50 due to the expiration of some government incentive programs such as cash for clunkers. 53.6 still indicates that the market is expanding, so people should not over-react to the drop from October to November. Furthermore, the increase in the New Orders Index and the drop in Inventories indicates that production should increase in December. I expect that December will have another index reading in excess of 53, marking the 5th consecutive month of expansion.
The one area of concern is the employment numbers. The drop to 50.8 indicates that manufacturing managers are being extremely cautious on hiring, waiting to insure that the recovery has firmly taken hold. Again, the growth in bookings should result in an increase in production in December, which should result in an improved employment picture. Look for the employment index to tick back up in December.
The Services Sector numbers are due out on Thursday, so we will report back then. The next big piece of data we are watching for manufacturing is the Fed’s report on Industrial Production and Utilization, which is due out in a few weeks.
Pat Furey is a Senior Category Manager in Ariba’s Global Sourcing Organization. Pat leads the team of global category managers covering direct materials and indirect goods and services.
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The next few weeks will be full of interpretation of holiday retail numbers. Are they up, down or flat? How about online sales? And the big, BIG question … what do the numbers show us about the state of the economy, consumer confidence and the prospects for a 2010 recovery?
The early returns are positive (if only slightly by some surveys) for Black Friday. And online sales over the weekend were up, leading to hopes that Cyber Monday will provide another bump today. But with per person spending averaging down, consumers may be bargain hunting more than usual. Case in point are the Zhu Zhu Pets, this season’s must-have toy, that cost under $10 (just for the record, you could buy an actual hamster on Craigslist for $5).
Georgetown University Professor Prashant Malaviya warns that any uptick in consumers spending may actually be the result of “frugal fatigue”, meaning people are simply tired of cutting back and have been lured by out of their spending slumber by deals and clever marketing.
Obviously with the massive role that consumer spending plays in the economy, a rebound in their confidence is key to the economic recovery. However if the operative terms for the holiday season are “frugal fatigue” and bargain hunting, it’s another sign that consumer confidence and the economy are not out of the woods yet.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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While there may be some early signs that the global economic recovery has begun, we’re not out of the woods just yet. The “Great Recession” has fundamentally changed the way businesses organize and measure success. and recalibrated supply markets, introducing new cost and operational risks that businesses cannot overlook. It has also created new state of normal for business — one in which supply volatility, capacity constraints, and global uncertainty will be commonplace and must be carefully managed.
The concept is now beginning to enter the broader public dialog. Recently, there have been multiple references to the New Normal in both the mainstream and business media:
European Spend Management professionals have been learning to cope with (and succeed in) the New Normal for some time. Examples are numerous:
To prosper in the New Normal with its reduced resources, increased reliance on partners, and lower tolerance for error, organizations need to be able to more rapidly respond to changing situations without the typical lead times and permanent investments. They will do this through on-demand access to the capabilities, technology and community they need to serve their customers that can scale with their needs.
Agility is the key to surviving the current downturn and thriving in the post-recession European business landscape.
Ted Kondis is Vice President of Services for Ariba’s European operations.
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Like other sectors of the economy, news from the credit markets are a mixed bag of good and bad news. On the one hand, you have signs that consumer credit is loosening, which obviously helps the consumer driven US economy and possibly indicates loosening of business credit as well. But then on the other hand, you have dire news like the CIT bankruptcy.
While things may be headed in the right direction, companies may still face challenges with credit and liquidity for quite some time, especially with companies continuing to extend their payments. As Drew Hofler recently noted, 70% of companies are currently or are planning to delay payments to suppliers. And yesterday, a BusinessWeek contributor actually recommended you “never pay your vendors on time.”
While cash is king … yet hard to find, you have to know your options. We’ve had quite a bit of coverage on the topic in recent months, so I thought it would be helpful to highlight some supply chain finance videos from the vault…
Drew Hofler outlines many of the liquidity options on the table:
Procurement Leaders’ Mark Perera shared his insights on supply chain finance in this 2 part interview:
We’re out of the woods yet, but there are options out there.
Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.
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