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In this issue: Pfizer moves to the Cloud
Colgate-Palmolive Strategy Dell’s Global Command Centers
Hershey’s Inside Outside Alignement Coca-Cola Viewpoint
Global Recovery
UPCOMING EVENTS:
“The Regulatory Wave” – Bring YOUR BOSS!
November is election month! As we learn the
state of the nation, it’s a good trigger to look at the state of our Supply Chains.
Like a change in the nation’s administration and policy – we look at our company and determine what we need to evaluate - what’s working and what’s not. What are this year’s best practices? In this issue, learn what the Top Manufacturers have on their radar. What strategies and initiative do they apply to their Supply Chain to remain competitive?
What do you do to get re-elected by your customers?
BuyLines November, 2012
PRESIDENTS REPORT
November 9, 2012
I hope that everyone who was able to attend the October
meeting enjoyed the discussion on the regulatory environment
surrounding energy production and its potential consequences on
costs and supply. Our meeting topic in September, “Managing
Transportation Risk”, also contained significant regulatory
references and implications.
At our November meeting, we will continue this recent trend of
exploring how our supply management world is being influenced
by changes in the regulatory environment.
You are also invited to Bring Your Boss to Lunch for the
November meeting to join our discussion and be recognized for
supporting the continuing education and professional
development of the supply management staff.
If you have not already registered, please visit our website at
https://ismstlouis.org and register for the November 27 meeting.
Larry
Officers/Directors
Larry Jackson, CPSM, C.P.M. Patrick Williamson, C.P.M. Melissa Orlando, CPSM, C.P.M. President President-Elect Vice President [email protected] [email protected] [email protected] Max Merz, CPSM, C.P.M., CPP Jill Willhite Dawn Fadler, CPSM Director of Finance Secretary Director of Education [email protected] [email protected] [email protected] Pat Greathouse Paula Matousek Christine Wojak Director of Membership Director of Professional Development Director of Marketing [email protected] [email protected] [email protected]
fizer moves it’s Supply Chain to the Cloud By Paul Taylor Over the past 18 months, Pfizer, the global pharmaceuticals giant, has completely re-engineered its
complex supply chain, moving it into the cloud and introducing a new virtualized layer that delivers common
information to all the participants.
Instead of operating their own systems and proprietary data, Pfizer and its external providers now use the same platform to manage the supply chain network using performance monitoring, network analysis and other tools. Pfizer describes this as connecting “supply neutral devices using an information architecture that includes cloud-based process and information layers sitting above physical assets and supply chains as a way to manage the company’s end-to-end networks in a ‘device independent’ fashion”. While the network may change over time, the “cloud layer”, which is based on GT Nexus’s cloud supply chain platform, insulates Pfizer from underlying physical changes and allows supply chain network participants to be added or removed rapidly. Jim Cafone, Pfizer’s vice president of supply network services, says the virtualization of the supply chain enables Pfizer to respond much faster to unexpected events that might otherwise disrupt its complex supply chain as well as everyday market pressures and provides Pfizer and its partners with “a single version of the truth against which all stakeholders operate”. Pfizer competes in two distinct segments: the “patented” drug market and the “generic” market. The “patented” space requires high supply flexibility and responsiveness with a willingness to invest in inventory. This market segment requires delivery strategies that allow for speed and agility that demand expedited, specialized logistics and higher cost – for example, next-day air delivery. The more commoditized “generic” space requires intensive cost management with a more highly controlled inventory investment and a focus on efficiency, with highly optimized logistics that limit the ability to fund expedited logistics and therefore favor ocean shipping. Unfortunately, markets for individual drugs are not so clearly defined. For example, Lipitor, a popular cholesterol-lowering drug, is “generic” and therefore price sensitive in many markets but patented in others. In fact, to satisfy the hyper segmented global marketplace with myriad local healthcare regulatory requirements, Pfizer is required to offer Lipitor in more than 600 specific dosage and package combinations. It was the realization that in order to compete in tomorrow’s healthcare markets Pfizer needed a highly flexible and adaptive strategy – one that easily can evaluate and respond to complex customer needs – that led to the company’s decision to re-engineer its supply chain using the cloud. Mr. Cafone explains: “After the Wyeth acquisition we looked at the complexity of our network and realized that we not only needed to manage the tapestry of internal manufacturing and logistics sites, we also needed to manage and really understand what’s going on with our external trading partners.” For Pfizer, this meant linking into the IT systems of all its supply chain partners. But rather than telling all 500 providers that they had to implement Pfizer’s enterprise resource planning software, Pfizer decided to adopt a more pragmatic approach based on cloud computing and the concept of virtualization. What Pfizer did insist on was that its partners adopt a common information exchange framework that enabled Pfizer to send and receive information from them, effectively turning each partner into a node on a virtual supply chain. “As a result we have a virtual image right now of all of our transportation,” explains Mr. Cafone. “Right now, there’s a map that shows all of our origins and destinations, and we have got complete track and trace [capabilities] over anything that is moving inside those lanes from a logistics perspective.” Not all Pfizer’s partners were happy with the plan to start with, Mr. Cafone says. “The first thing they [the providers] wanted us to do was use their systems and we told them specifically we don’t want to do that, because once we use their systems, we’re not device agnostic any more – we would be device dependent. “There were certain providers that just didn’t understand this whole world of cloud, and didn’t understand this world of device agnostic and there were certain ones that didn’t necessarily like it, but they decided that they wanted to build it with us and go along with us and our software partner.” Now however, Mr. Cafone says one of the benefits of the new system, which Pfizer calls internally the logistic delivery platform, is that “we can basically plug in anyone, and we can unplug anyone”.
P
Pfizer is also now able to prove that in transit its products meet regulators’ requirements, for example for temperature controlled conditions. “The other thing that this virtualized infrastructure has enabled us to do is to land products into portions of the world where before we and the rest of the industry were flying blind,” says Mr. Cafone. “For example, we know when a product lands in Kenya or anywhere else in the world, because we have that traceability.” Similarly, he says using a cloud computing platform provides the company with a much broader view of events and the ability, in the case of an unexpected event, to “drill down” and “to understand exactly how a product is impacted, what is the shipment that’s impacted and where is it”. In little more than 18 months, Pfizer went from what Mr. Cafone describes as “zero shipment traceability” to a device independent platform that has already handled more than 40,000 shipments. It has been an exceptionally quick ramp up time and exceptionally quick value creation, he says, one which others are likely to follow.
Colgate-Palmolive Releases Sustainability Report and Strategy Through 2015
Colgate-Palmolive has released its latest sustainability report, “Giving the World Reasons to Smile.” The new online report
details Colgate’s long-standing commitment, achievements, accomplishments and challenges to sustainability and social
responsibility. Specifically with regard to environmental stewardship, Colgate has:
Reduced per-ton manufacturing-related greenhouse gas emissions by 21 percent, Decreased water use by 44 percent, and Lowered wastewater loading by 31 percent(between 2002 and 2010)
In addition, the company requests that all key suppliers measure and disclose climate change information and overall transparency. Colgate’s Supplier Code of Conduct sets the company’s expectations for suppliers in a number of critical areas, including:
Labor practices Protecting the environment Health and safety Universal human rights Ethical dealings Management systems
The company also established a few key supply chain goals. For instance, by 2015, Colgate wants to:
Ensure that 70 percent of the company’s supplier spending in at-risk industries, geographies or environments to undergo a responsible sourcing self-assessment and/or third party audit.
Purchase only certified sustainable palm oil and derivatives from roundtable on sustainable palm oil member companies.
Initiatives like these make good business sense, as stakeholders today are looking for assurances that companies have processes in place to monitor supplier practices, minimize risks and meet compliance requirements. Kudos to Colgate for stepping up to sustainability challenges and working to integrate CSR throughout its global supplier network. “Long before many businesses began talking about sustainability and social responsibility, Colgate recognized that how we do business is just as important as what we do,” said Colgate’s President and Chief Executive Officer Ian Cook. “At Colgate, sustainability is not just a project or initiative – it’s built into and about business decisions every day.”
Inside Dell's global command centers
By
James A. Cooke
The technology giant's global command centers coordinate parts logistics
and field technicians to respond swiftly to customers' requests. They even
monitor potential problems like natural disasters and work with
customers to develop contingency plans.
When a manufacturer sells its products worldwide, its customers expect that it will also service those products on a global scale. It's not easy to meet those expectations in a consistent and timely way. But thanks to "global command centers" that oversee delivery of parts and field service, the technology giant Dell Inc. is able to ensure that its enterprise customers worldwide get the service they need when they need it.
A global command center provides companies with visibility that allows them to monitor supply chain activities and make adjustments in real time as events occur. Although command centers are a relatively new supply chain initiative for many companies, Dell opened its first one nearly 10 years ago for service parts. (Dell also operates several command centers on the fulfillment side.)
Dell, based in Round Rock, Texas, USA, makes and sells personal computers, servers, data-storage devices, network switches, and computer peripherals. The company outsources much of its on-site technical support for those products to outside field engineers; it also contracts with third-party logistics companies to handle the storage and delivery of service parts to customers.
Adopting the command-center concept for parts and service delivery has helped Dell to work more closely with its service providers and be more proactive when it comes to customer service, thereby strengthening customer loyalty. A peek inside one of the command centers shows how they work and why they've been successful.
Aligning with customers' priorities Dell reported US $61.5 billion in revenue from its operations in 2011, one of the most successful years in the company's history. The bulk of that revenue derives from product sales, but after-sale support plays an important role, as service quality has become crucial for maintaining customer loyalty.
"In the last decade the perception of [information technology] for many customers began to shift from being viewed as just a cost center to being viewed as a key strategic advantage," explains Steve Sturr, executive director of global services at Dell. "Customers expected faster response and resolution times from their vendors in order to assure the continuity of critical business processes and to manage costs. It was
What do Dell's Global Command
Centers do?
Dell's command centers are located in Austin, Texas, USA; Limerick, Ireland; Kawasaki, Japan; Xiamen, China; and Penang, Malaysia. According to the technology giant, these customer-focused command centers provide: Critical situation procedures
for analyzing and recommending solutions during major crises
Critical management teams that include Dell experts and experts from partners such as Microsoft, Oracle, and VERITAS
Mapping programs that may be used even during a natural disaster, power outage, or virus attack to efficiently mobilize and route emergency resources
Real-time tracking for management of incidents, technicians, and service parts
Live news and weather feeds to proactively identify national problems that might cause customer service delays
imperative for Dell to acknowledge the changing customer needs and align our support model appropriately. The global command centers were born from this evolution in customer priorities."
Dell's service parts command centers are located in Austin, Texas, USA; Limerick, Ireland; Kawasaki, Japan; Xiamen, China; and Penang, Malaysia. At each center, experts in various subject areas closely monitor service developments and direct Dell's service providers. The command center in Austin, Texas, for example, resembles a "war room" staffed with experts who sit at computer consoles arranged auditorium-style, so they can see an array of huge, wall-mounted screens displaying service requests, maps, news, weather, and other live information feeds. "It looks like a NASA command center," says Sturr, comparing it to the U.S. National Aeronautics and Space Administration's rocket-launch control room.
The five command centers' staffers monitor service requests from customers. In addition to offering assistance over the telephone, they route spare parts from more than 600 parts depots across the globe and dispatch technicians to a customer's site if needed. The centers, in turn, are supported by 30,000 technical experts worldwide who provide tech support to customers and the field engineers who perform on-site repair.
Given businesses' dependence on information technology, Dell's customers often need help right away. If the Austin troubleshooters, for instance, can't resolve the customer's problem over the phone, they can arrange the delivery of parts and dispatch of a technician, often within two hours.
A clear view in real time Real-time supply chain visibility plays a key role in ensuring Dell's ability to respond quickly to customers' requests. The real-time information depicted on the computer monitors and displays are enabled by Dell's custom-designed technology platform, called Clear View monitoring. That platform allows Dell to monitor service dispatch activity as it occurs.
Clear View monitoring is actually a combination of business-process management software and business-activity monitoring software. Together these applications take data feeds from Dell's partners and the company's own internal systems and then run that data through a rules engine, which has preset conditions to flag a command-center staffer about when to act on an issue. The rules engine software can detect simple exceptions in a single customer service request or recognize complex patterns emerging from multiple requests. "It establishes thresholds for when there's a problem," Sturr says.
The Clear View platform interfaces with a geographical data system. That makes it possible for the system to match a service dispatch with the optimal parts location in Dell's supply chain network. It can also take into account current weather information to determine whether an event like a storm might impact a parts shipment. The command centers also evaluate the potential impact on parts deliveries of flight delays, traffic congestion, local events, and news developments and help customers develop contingency plans.
Because the center is monitoring weather developments, Dell can, for example, forewarn a customer of an impending storm and advise precautions. Sturr cites the example of a tornado ripping through part of the U.S. Midwest. Dell could contact a hospital in that area about setting up a command center of its own to track health information for patients who are injured by the tornado. To assist the hospital during that emergency, Dell could pull computers off its factory floor and fly those machines
and a team of engineers to the hospital to set them up.
To coordinate emergency response, Dell would have to work with its network of third-party service providers. The command center plays a key role in scenarios like this one and other, everyday events because it enables data integration between Dell's information systems and those of its service partners. That's critical, Sturr says. "When you operate a heavily outsourced facility, you want visibility into what happens inside your partners' [operations]."
There also have to be flawless exchanges of information when multiple parties are involved in providing service, often in extremely short order. "There has to be real-time data feeds to make command centers work," says Sturr.
Opportunities in global trade
Many indicators show the promise of global trade: • In 1955, international trade of manufactured goods totaled $95 billion (USD). In 2005, the number grew more than one hundred times, to reach nearly $12 trillion. In effect, global trade was doubling every five or six years. If the trend continues, global trade will total approximately $24 trillion in 2015. • China’s population of 1.5 billion and India’s population of 1.3 billion — and each country’s growing middle class — represent promising markets for many industries. • In 1950, only New York and Tokyo had populations totaling more than 10 million. Today, there are 22 of these “megacities,” and by 2025, there will likely be 30 of them, primarily in Latin America, Asia, and India. Each will support highly urbanized middle classes. Consumer populations in these burgeoning megacities will create incredible new opportunities for both consumer marketers and business-to-business brands that are able to market and sell globally.
Proactive support The global command centers have enhanced Dell's customer service in a number of ways. For one thing, they enable a swifter response to customers' service needs. For another, they help to ensure that routine service calls and emergencies alike are addressed through the most effective processes. In fact, Sturr says, Dell sees the command centers as centralizing "a process-assurance capability that acts as a day-to-day process-orchestration engine." The centers' expertise also has allowed Dell to better prepare and mobilize information technology resources to support large-scale customer events such as political summits and sports competitions.
More importantly, perhaps, is that the command centers make it possible for Dell to reach out and help customers prepare for disruptions, delays, or other problems that are outside the computer maker's control. "When there's a disruption in the supply chain, we can notify customers proactively," says Sturr. "For example, if there's bad weather in the U.S. Midwest, parts won't get delivered because planes aren't flying. Customers want to hear from us first and not the next day. Customer communication is the single most important thing we do."
Along with enhanced customer service, the centers have increased supply chain efficiency through better coordination with outside vendors and reduced operational costs in Dell's parts supply operation, thus improving the company's overall competitiveness and profitability.
"We've realized significant improvements in our overall on-time-performance metric, and the process improvements driven from within the global command centers have saved Dell millions of dollars," Sturr says. "But the most unique advantage is the [centers'] ability to work across all the functional segments of our supply chain and act as a mortar that seamlessly unites each of those segments."
10 Tips to Prepare for a Tight Capacity Market
Don’t try to time the market Benchmark Conduct a procurement
exercise at the same time of year, every year
Share the truth about the business
Use a web-based bidding tool Use a constraint based bidding
tool
Hire a procurement expert Use a TMS Maintain a stable set of service
providers from year to year
Understand what drives ongoing fluctuations in the market
THE HERSHEY COMPANY: ALIGNING
INSIDE TO WIN ON THE OUTSIDE by Rick Kash
Changes in the marketplace, if not monitored, can cause serious losses in profit, market share, and in
stakeholders’ confidence. Such was the case with one of the most celebrated American companies,
Hershey’s. When the company failed to keep its ear to the ground and eye on the ball it lost touch with
consumers and retailers. A shift in the company’s focus and a re-alignment of its divisions rescued the
company and restored its luster, market share and profit. As this author describes, its example is an
important one for managers.
Thanks to an unlikely – and historically unprecedented — combination of improved productivity and flat-to-declining global
demand, businesses now find themselves operating in a world in which supply chain re-engineering has made them more
efficient than ever before. Yet finding demand to absorb the supply being generated is a growing challenge. This stunning
turnabout has affected companies both large and small, new and old, and marginal enterprises and corporate icons with a long
history of success. Almost no one has been spared, even Hershey’s, the iconic and storied chocolate company.
Hershey’s history
Founded in 1909 by Milton Hershey and his wife, Catherine, the now $5-billion company virtually invented modern candy – and
in the United States, at least, is all-but synonymous with the word “chocolate.” Hershey’s enjoyed consistently strong growth
for many years, holding or increasing market share in all of its businesses, and buoyed by people’s love of chocolate that has
held steady in both good times and bad. And the company had become so efficient at supply chain management, production
and distribution that for more than a decade it had consistently added new variations in products, pricing and packaging that
captured ever greater real estate on store shelves. In other words, by almost any traditional measure, Hershey’s should have
been enjoying some of the best years in its long history.
But despite all of these positive indicators, Hershey’s senior management had a growing sense that something wasn’t right with
the company. For example, many of Hershey’s recent strategic initiatives, especially the company’s shift to focus on pack types
rather than on brands and product proliferation, had not produced the desired results. Worse, by creating a significant number
of new SKUs based on pack types and flavor extensions, Hershey’s approach was beginning to run counter to the stated desire
of many retail customers to simplify the shelf by reducing product complexity.
External challenges
Recalled J.P. Bilbrey, president of Hershey’s North America “After years of growth and success, we had hit a difficult period.
Senior management was not aligned in how we were going to compete — and our results weren’t as good as we would have
liked them to be. While we had great brands, we had largely operated in a push mode.” It was becoming apparent to the men
and women who ran Hershey’s that in a changed marketplace, the old and proven rules for success were no longer working.
The Hershey’s team decided to investigate what was going wrong — and just as important, to identify and assess the key forces
and factors impacting the confection category in the new marketplace. The team would then determine what the implications
were for Hershey’s and how the company could drive profitable growth in a changing marketplace.
The team found three major external issues that were limiting Hershey’s success:
1. Hershey’s most important retailers and competitors had entered a phase of significant consolidation that was changing influence within the category. The era of small, independent stores was over- the power now lay with retail chains.
2. Consumers were not embracing the increased flavor varieties from Hershey’s Brands. 3. Hershey’s emphasis on pack type was being trumped by competitors’ emphasis on brands.
These external challenges could not be ignored. But they could be
identified, understood, and then managed as part of Hershey’s overall
strategic re-orientation.
What could be addressed most directly and immediately, were certain areas
inside the company whose practices no longer fit the changed competitive
reality. And the most important of these – as underscored by Bilbrey’s
comment, was alignment. Both research and employee surveys quickly
revealed that Hershey’s senior management was not aligned in their beliefs
about how the company should compete in the future, and those often-
contradictory views had begun to become evident across Hershey’s
operations.
This confusion had led, almost directly, to the rapid expansion of Hershey’s
SKUs. Marketing had not responded to retailers’ growing need for lower
inventories, better use of shelf space, and less product and packaging
complexity. In fact marketing was still driving Hershey to add new pack
types and flavor proliferations for its classic brands.
The company’s own history of success was making the problem worse.
Hershey’s supply-driven approach had worked so well over the previous two
decades that it had been years since Hershey had felt the need to assess
consumer demand for its products. Demand was just there, waiting to
purchase almost anything Hershey could put in its distribution channel.
But now the rules had changed – and Hershey needed to change as well.
Hershey was still a strong, multi-billion dollar company. Moreover, it had
faced far more challenging periods of competitive and economic pressure in
its century-long history and had survived them all, in large part because of
Hershey’s vaunted reservoirs of employee morale and pride. Best of all, the
company and its new leadership were confident that once consumer
Demand was understood, Hershey’s iconic great Brands would once again
continuously increase their share of profitable Demand.
Hershey’s new Thesis for Winning would focus on the transition from their traditional supply-driven approach to the market to
a new demand-driven model for success. Hershey would understand more about the unique demands of the most attractive
Demand Profit Pools for candy and would re-align the entire business to serve that demand profitably. To implement its new
Thesis for Winning, Hershey now had to develop a single internal Mental Model across the organization to show everyone in
the company how the organization works and their role within it. A Mental Model is the way great companies teach their
GARTNER 2012
SUPPLY CHAIN
TOP 25
Apple
Amazon
McDonald's
Dell
P&G
The Coca-Cola Company
Intel
Cisco Systems
Wal-Mart Stores
Unilever
Colgate-Palmolive
PepsiCo
Samsung
Nike
Inditex
Starbucks
H&M
Nestle
Research In Motion (RIM)
Caterpillar
3M
Johnson & Johnson
Cummins
Hewlett-Packard
Kimberly-Clark
executives, managers and employees to internalize the Thesis for Winning – so that on a day-to-day basis they can
independently make important business decisions congruent with that Thesis.
Said Bilbrey, “An important part of making the Mental Model work was that every member of the Hershey Executive team, our
leadership group, was involved in all phases of the work. Once we made the commitment to a Demand Business Model, we
were “all in.” By creating a sense of participation across our entire leadership team, we were also creating missionaries who
would go back to their own respective functional organizations and talk about the changes that were taking place on how we
would run Hershey as a company.
The results of Hershey’s transition to a demand-driven business model have been beyond expectations. At the February 2010
meeting of the Consumer Analysts Group of New York (CAGNY), Hershey CEO Dave West announced that the company had
generated record cash flows in 2009 of $1.066 billion. That was more than double its 2008 cash flow and 35 percent higher than
the company’s previous record cash flow of $788 million in 2004.
West told the assembled analysts that the transformation Hershey had just gone through constituted a “fundamental re-
grounding in the consumer.” Hershey, West said, now knows:
Who its consumers are — their demands, motivations and demographics;
Why they buy — their demand by profit pool and the need states they experience;
What they buy — a detailed understanding of the brands, tastes and textures and pack types consumers most prefer
Where and how they buy — shopper missions and channel preferences; and
When they consume: The key usage occasions for confectionary.
“The implications of all of this have been really profound,” says Bilbrey. “Our new approach has strengthened our Brands,
lowered inventories, reduced SKUs, reduced complexity, created tremendous efficiencies and generated greater cash flow. I’ve
never seen a jump in performance like this before.”
A framed copy of the report now adorns the wall of his office. At the heart of Hershey’s success is the internal alignment
created by its Mental Model. Today, everyone within Hershey is committed to the idea that you must align internally in order to
win externally.
The five mega-trends shaping tomorrow's customers Viewpoint by Muhtar Kent; Chairman and chief executive, The Coca-Cola Company
The world's consumers are changing, and businesses serving consumers must understand the drivers that will transform our industries during the rest of this decade and beyond. This week, more than 800 representatives from the world's leading retail and fast-moving consumer goods (FMCG) companies are gathering in Istanbul for the annual global summit of the Consumer Goods Forum. A more appropriate location for this year's conference would have been tough to find, with Turkey's economy growing by 8.5% last year and its retail industry expected to reach a turnover of $250bn (£160bn) by 2014. In these challenging times, as many parts of the world struggle to crack the code for growth, the insights of Turkey's home-grown businesses and entrepreneurs will be invaluable.
In fact, the situation we find ourselves in today is not altogether dissimilar to when I joined The Coca-Cola Company in the late 1970s. At the time, a lingering recession was sapping US confidence; oil prices were soaring; and US workers were worried about their future livelihoods. Many feared a rising economic powerhouse - then Japan - might leave America in the dust. In time, the worst of these worries proved unfounded, as the US bounced back by adapting and innovating. And I believe many countries and companies similarly struggling today can do the same.
To get there, however, companies have to understand the vast implications of the five mega-trends identified last year in the Consumer Goods Forum's report on the "Future Value Chain". Mass urbanization More than half the world's population now lives in cities. By 2050, this figure will balloon to 70%. This monumental shift will create significant supply chain and logistical challenges for consumer goods and retail industries. Our businesses will not only need to collaborate better with each other but also work more closely with cities as they modernize their infrastructures. We're getting older The global birth rate has been declining for 20 years, and we're living longer. By 2047, people over 60 will outnumber those under 15. This will mean new opportunities for some industries, as more mature consumers tend to have greater disposable income. Along the way, we can expect more focused marketing and greater reliance on home delivery. The middle class cometh The world is experiencing the greatest economic shift in history as the global middle class grows by another billion people in the next 10 years. With China and India leading the charge, more than 90% of the world's middle class will live in emerging markets by 2030, up from 50% today. While this new wealth represents a huge growth opportunity for manufacturers and retailers, it is also likely to create new resource stresses and cost pressures on some commodities. Consumers in the driving seat Many of the old rules and assumptions of our industries no longer apply. Consumer expectations are increasing while their tastes and preferences change at a dizzying pace. Much of this is driven by new consumer technologies. By 2013, for example, more than two billion mobile users globally will have made a purchase via their handsets. By 2020, a third of consumer purchases are expected to be made online. Ultimately, new ways of connecting offer fresh and exciting opportunities to engage with digital consumers and improve their shopping experiences. Even so, retailers and FMCG firms will need more advanced real-time insights to better serve this dynamic, fragmented market. One key will be to pick the right ways to interact with online consumers, manage these conversations appropriately, and make the best use of digital consumer data. Moreover, successful companies will need to enhance transparency and become more collaborative in their interactions with shoppers. What about the planet? Consumers today are understandably concerned about sustainability, as demands for natural resources continue to challenge supplies. By 2030, the world's population will reach 8.3 billion, boosting demand for food and energy by 50% and for fresh water by 30%. In this light, sustainability is simply smart business. At Coca-Cola, for example, we're reducing our eco-footprint and our reliance on fossil fuels with our PlantBottle - a fully recyclable plastic package up to 30% made from plants. We plan to use this technology in all of our plastic bottles by 2020, and we're working to accelerate development of commercially-scalable, bottle-quality plastic that's 100% made from plants. We're also striving to protect the resources that go into our products, starting with water. Since 2005, we've conducted 386 water partnership projects across 94 countries. These projects - which include watershed protection, rainwater harvesting and community water improvements - are good for our business and the communities we proudly serve. They are also moving us toward our goal of giving back 100% of the water we use in our products by 2020. How do we capitalize? Over the next decade, success or failure for consumer goods companies and retailers will be measured by the speed and thoroughness with which we're able to adapt to change at all levels - global, national, local and personal. With continuous innovation, companies that serve tomorrow's consumers will need to bui ld more sustainable businesses; collaborate toward better optimized supply chains; and drive brand value and sales through greater engagement with increasingly sophisticated and tech-savvy consumers.
Global economy: Who can drive the recovery? By Kimiko de Freytas-Tamura The global economy is faltering. In the aftermath of the global financial crisis, countries like Germany, China and Brazil were the engines that kept the global economy expanding, but recent evidence suggests that they are losing steam. The World Bank expects a soft recovery, with global growth of 2.5%. But within that there appears to be a clear divide between developing economies, which are forecast to grow by 5.3%, and advanced economies by just 1.4%. Here is a round-up of the conditions and prospects for the key economies around the world. Who can be relied upon to drive the much-needed recovery?
China Second-quarter GDP growth has slowed to 7.6% Annual Growth target has now fallen below 8% for the first time in almost a decade China is now trying to shore up the economy after years of uncontrolled growth. China's second-quarter gross domestic product (GDP) figure has pointed to a continued slowdown in the Asian powerhouse. Growth fell to 7.6% in April-June period, its worst pace since the depth of the financial crisis and below the 8% target that China aspires to. Considered to be the biggest export market for many companies from the likes of Burberry, Carrefour to BMW, a slow-down would hurt their earnings. Burberry, which banked on China's love of bling (it enjoyed a 30% revenue growth in the country) reported weaker-than-expected first quarter growth, disappointing investors. Cooling growth in China and neighboring India means the wider Asian region is likely to follow suit (aside from an exception or two like Thailand and the Philippines, which benefit from cheaper labor costs that have lured foreign companies). Beijing in March downgraded its annual growth target to 7.5%, the first time that's dipped below 8% since 2004. The central bank recently slashed interest rates twice in less than a month in a bid to shore up growth. China had until recently been grappling with an overheating economy driven by a property bubble and by the central government's post-crisis spending binge - much of which went into local infrastructure projects. The economy is now burdened with excess capacity and rising debt as unsold goods pile up in warehouses. Caterpillar, the US construction giant, had a drubbing from investors in April when it said sales of construction equipment in China were expected to fall this year. But analysts are hopeful that this marks the bottom for the world's second-largest economy, and that growth will pick up in the third quarter as Beijing loosens monetary policy and deregulates the financial system.
Eurozone Unemployment rate: 11.1% Over 3m people aged 15-24 are unemployed Eurozone economy set to shrink 0.3% this year German GDP expected to grow 0.7% this year Young people have been the hardest hit from the recession. The euro-sharing region has been a tale of two halves, between the relatively wealthier northerners (Germany, Netherlands, Finland and arguably, France) and struggling southerners (Greece, Italy, Portugal and Spain) that are bogged down by a range of crises (debt, property, banking). It is also a tale of much wrangling, as each camp differs on how to solve the eurozone crisis. The euro has plunged to its lowest level in two years against the dollar as investors fret over weak data and recent rescue plans for the region, including bailing out Spain's banks directly and forming a fiscal and banking union. And the ECB slashed rates for the first time below 1% recently, in efforts to encourage corporate and household borrowing. In order to reassure investors, Spain announced a fresh round of austerity measures including tax hikes and spending cuts, which is squeezing an already squeezed out economy, but they remain unconvinced.
But even Germany, which has enjoyed record low levels of unemployment thanks to its manufacturing prowess, has been unable to insulate itself from the sovereign debt crisis plaguing the region. Now, even the labor market is showing slower development. The jobless rate has risen for three consecutive months, reaching 6.8% in June. Meanwhile its double-digit exports to China have shrunk to a mere 6% (although automakers have bucked the trend, thanks to Chinese officials' love of BMWs and Mercedes-Benz cars). Commercebank, Germany's second biggest lender recently announced it was closing its real estate and ship finance units. Carsten Brzeski, senior European economist at ING Group said of Germany: "The most solid ship can capsize in a rough thunderstorm."
United States US facing a "fiscal cliff" as tax cuts end Unemployment rate of 8.2%: fears of jobless recovery GDP expected to grow 2% this year The US is divided over how to pursue recovery The US economy added just 80,000 jobs in June, a sign of persistent weakness in the labor market and a critical issue which could make or break President Barack Obama's re-election chances later this year. The jobless rate has been stuck at 8.2%, although black workers suffer more, with a 14.4% figure. Like its European peers, the US is struggling under piles of debt, which makes up around 70% of GDP. It is also staring at a so-called fiscal cliff, which refers to a combination of tax increases and spending cuts scheduled to start at the beginning of next year. The inevitable result would be an austerity-driven recession - a prospect that prompted the Senate's top tax legislator Max Baucus to warn that the economy was on a "dangerous path" that could lead to a European-style fiscal crisis. And, like much of the disagreements that have thwarted a coherent, concerted plan in Europe, both Republicans and Democrats have been unable to agree on a plan that would avoid that dismal outcome. Despite gloomy headline figures, the US economy is forecast to grow 2% this year, the best of the advanced economies - and even more than Brazil. The billionaire entrepreneur Warren Buffett said the US was still doing better than "virtually any other big economy" around the world. The US has undertaken a series of unorthodox measures to shore up the economy, its latest being Operation Twist, a bond-buying program designed to bring down mortgage and loan rates. Investors want more, but they might be disappointed, if recent noises from the US central bank are anything to go by. "There is not much to expect from economic data, there is not much to expect from earnings, so the only thing markets hope for is more quantitative easing, more stimulus from Europe - more stimulus from everywhere," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets.
Brazil Economists forecast GDP to grow by 2% this year Loan delinquencies rose to 6% in May Planemaker Embraer has symbolized Brazil's growing fortunes Government spending and exports of commodities like soy beans and metals to fast-growing countries in Asia, have propelled Brazil's economy to sixth place in the world. But red-hot growth when Latin America's largest economy clocked in a 7.5% growth rate in 2010 appears to have fizzled out. The economy stalled in May following an unexpected drop in retail sales. That heightened fears for what was one of the few bright spots of the world economy, making it the worst performer among Brics nations. Growth in Brazil is predicted to be less than 2% this year, the weakest annual performance since 2009. In response, the government unveiled the first phase of a major economic stimulus package designed to boost growth in the flagging economy. More than $60bn (£38bn) will be invested in the country's roads and railways over the next 25 years, with more than half in the next five years. This includes 8,000 kilometres of new roads and 8,000kms of railways and further investments in ports and airports are expected. The government's recent measures, such as the recent devaluation of the currency, the real, and the progressive reduction in interest rates, have so far failed to stimulate growth. Brazil's growth over the past few years has been based on the expansion of credit and on consumer spending, and is hoping for an economic boost from hosting the Olympic Games in 2016.
India
GDP grew 5.3% in the first quarter, slowest for nine years Inflation highest of Bric nations Industrial production up 2.4% in May India's chronically high inflation is tough to handle
India's economy grew at an annual rate of 5.3% between January and March, its slowest pace in nine years. Rising consumer prices have been one of the biggest concerns for India's
policymakers over the past two years. The central bank took various measures in a bid to control the rising prices, including raising interest rates 13 times since March 2010. While the inflation rate has come down slightly in recent months, it still remains higher than many of the other emerging economies. According to data released last week, India's wholesale price index, the key measure of consumer prices in the country, rose by 7.55% in May from a year earlier, among the highest of the Bric nations. Analysts say the combination of slowing growth and high inflation has made it difficult for the central bank to formulate its policies. Cutting rates would stimulate growth, but could end up making inflation worse. GDP is expected to grow by 6.5% this year, according to the Asian Development Bank. Its government has vowed to attract more foreign investment and speed up infrastructure and power projects.
Japan
Recovering from last year's major disasters Exporter worried about eurozone woes and US slowdown Growth expected to be 2.2% this year
Once the world's number two economy, Japan is still recovering from last year's devastating tsunami and nuclear crisis. Recent data have shown that Japan, one of the world's top exporters, was not exporting as much as it used to. In fact it has been massively importing -including energy, which has pushed the country's energy bills sky high after Tokyo stopped nuclear reactors. The strong yen has also hurt exporters, making their products more expensive to foreign buyers. However, sentiment is improving. The Tankan survey showed manufacturers were less pessimistic about business conditions. The Bank of Japan forecast the economy would grow 2.2% in the current fiscal year and 1.7% the following year. The rosy growth projections were enough for the central bank to hold off on further easing to boost the economy. "Japan's economic activity has started picking up moderately as domestic demand remains firm mainly supported by reconstruction-related demand" following last year's natural disasters, the Bank of Japan has said. "[But] there remains a high degree of uncertainty about the global economy, including the prospects for the European debt problem... [and] the momentum toward a recovery for the US economy."
JOB POSTINGS
BUYER Posted October 25, 2012 Employer: BASLER ELECTRIC MATERIALS MANAGER-KENTUCKY Posted October 18, 2012 Employer: BRYANT BUREAU MANAGER OF INVENTORY CONTROL AND PROCUREMENT Posted October 16, 2012 Employer: COVIDIEN
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“The Regulatory Wave” presented by Julie Wulff
NOVEMBER GENERAL MEETING
Bring Your Boss to Lunch!
Julie Wulff, C.P.M. is a supply chain management professional currently working as the
Americas Regional Category Leader-Food Chemicals & Ingredients for Associated British
Foods plc.
Associated British Foods is a diversified international food, ingredients, and retail group with
sales of $16 billion USD and 97,000 employees in 44 countries. As a regional category leader
for the Americas, Julie leads collaborative purchasing across the 8 ABF subsidiaries in North
and South America in the food ingredient category, including sourcing strategy development,
implementation, and regional negotiations. She also provides regular market analysis,
benchmark data and supplier evaluation to the region and global counterparts.
Prior to her role with ABF, she was the founder and principal consultant of Supplywise LLC and
had a successful career with Procter & Gamble for over 20 years. She started her career as a
Process Engineer and served in several areas of management, including assignments in
Production Management, Process Reliability, Quality Assurance, Purchasing, and Supplier
Development/Supply Chain Analysis.
Julie has a B.S. in Chemical Engineering from the University of Missouri-Columbia, an M.B.A.
from the University of Missouri-St. Louis, as well as an Advanced Certification in Supply Chain
Management from St. Louis University. She is a Past President of the Institute for Supply
Management –St. Louis and has attained her Lifetime C.P.M. certification through ISM.
The Fiscal Cliff Is in Your Hands
Posted by accountingweb on Nov 1, 2012 As the election nears, the US economy is taking center stage. You may have noticed that every candidate seems to have the ability to take the same numbers and present them in such a way as to make the candidate from the other party look bad. Most candidates aren't economists, and they all seem to find ways to twist the numbers so things look good for their own platforms. But that's neither here nor there. The good news is that three-quarters of US corporate financial executives – the ones who actually work with the numbers – say economic conditions are looking up and 2013 might bring some interesting surprises. On the down side, financial executives are most concerned with high unemployment numbers, which are expected to continue in 2013, the need for deficit reduction, which has been going in the wrong direction, and the fiscal cliff, which is in the hands of the members of Congress as they decide how to manage the expiring tax cuts, the impending tax increases relating to health care legislation, the alternative minimum tax, and the temporary payroll tax cuts. The good news, at least in relation to the fiscal cliff, is that the resolution of that particular issue is totally in the hands of the electorate. If you want tax cuts to expire, or if you want them to be extended, it's your call. Find out where the candidates stand and make your vote count.
Tue, Nov 27, 2012 11:00 AM Spazio Westport 12031 Lackland Road Creve Coeur, Missouri 63146
Notice of Proposed Dues Increase
At our October General Meeting, ISM-St. Louis President Larry Jackson notified those in
attendance that there would be a vote at the November General Meeting to increase annual
dues. The increase is needed to offset an increase that has been implemented by ISM National.
Your Board of Directors was notified on September 1, 2011 that ISM National had approved a
$20 annual dues increase at its August 17-18, 2011 Board of Directors meeting. Per their
bylaws, this increase became effective on September 1, 2012.
At that time, ISM Membership Dues collected nationally for new and renewing Regular
members increased from $110 to $130. What does this mean to your Affiliate? It means that
beginning immediately, for every new member, our affiliate dues have been reduced by $20;
$320 is still collected, but ISM gets an additional $20, leaving $165 instead of $185. Renewing
member dues will not be affected until June 1, 2013.
Here is a table showing the affects of the increase, and the dues increase that you will be asked
to vote on:
New Regular Members
Pre 9/1/12 9/1/12 Proposed ISM-St. Louis Dues & Fees $190 $170 $190 ISM Dues & Fees $130 $150 $150 Total $320 $320 $340 Renewing Regular Members
Pre 9/1/12 9/1/12 Proposed ISM-St. Louis Dues& Fees $175 $155 $175 ISM Dues & Fees $120 $140 $140 Total $295 $295 $315 Every year your Board plans educational offerings and professional development activities using
the limited resources of your member dues. This year was a little more difficult, as we have
absorbed a slight decline in membership. In order to maintain the programs offered, we cannot
also absorb the National Dues increase from our Affiliate Dues, and must ask you, our
supporting members, to approve this dues increase when presented at the November meeting.
Max Merz, C.P.M., CPSM, Director of Finance
