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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As the transportation industry braces its self for the start of a new year, the railroad industry seems to be in an excellent position to thrive quickly. Even though The Association of American Railroads stated that mid-December intermodal traffic continues to be down year-over-year, volumes seems to be stabilizing and even seeing a few increases. [...]
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Office equipment is expected to remain a buyer’s market for the next few quarters as a result of macroeconomic conditions, which are reducing the demand for devices such as printers, copiers, fax machines, and multi-functional devices (MFDs). These conditions have caused office equipment sales to deteriorate throughout 2008 and 2009, with no upturn anticipated [...]
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As many of you know, the Category Managers who contribute to Supply Excellence also create a quarterly report called SupplyWatch. The Q1 issue is up and includes detailed category breakdowns for…
Metals
Plastics, Rubber & Raw Materials
Transportation
Electronics, Electrical & IT Hardware
Paper & Packaging
Services & Capital Goods, Construction & Engineering
In addition, there is a feature article on Cutting [...]
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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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The media buying market is has moved into unfamiliar territory lately. So unfamiliar that even the granddaddy of advertising itself, The Super Bowl, has had to resort to lowering prices. The market has softened so much that for only the second time in the history of the Super Bowl, advertisers are getting a [...]
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Innovation seems to be pouring out of the Tata Group at a very rapid clip. The Tata Nano, which relied heavily on the company’s suppliers for their cost savings and creativity, raised the proverbial innovation bar by dramatically lowering the cost of an automobile thus making them available to a larger portion of the Indian population (and perhaps the rest of the world in the future). Now the company is back in the headlines with a new, revolutionary, potentially life-saving product with huge demand. The Tata Swach is a low-cost water filter aimed at the HUGE number of people in India and worldwide who lack access to clean, safe drinking water.
I’ll let this CNBC video fill you in on the details of this low-margin, high volume (in terms of sales, not water volume) water purifier Tata want to have in 3 million Indian homes within the next 5 years.
The collaboration story thus far focuses on Tata Group companies. But I wouldn’t be surprised if the more in depth story on the life saving device (approximately 380,000 children die each year of diarrhea in India alone) actually tapped into their suppliers in order to keep costs down and innovation up. Given Tata’s success with that model in the past, it seems likely they’ve employed across much of the Tata Group, particularly when trying to achieve a game-changing design AND a low price point.
What’s the lesson here for other companies, that are striving for differentiated products at a lower cost than their competitors? Tata’s key to success seems to be … starting with a price point and product, then working backwards through the R&D process with a constant eye on the bottom line. And to get there, they rely heavily on their suppliers for innovation – in terms of specifications and process efficiencies.
Can you do the same? Are your suppliers ready, willing and able to help?
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 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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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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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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