Key Metrics and Supply Alert
Staff -- Purchasing, 10/6/2005
- As General Motors Corp. wraps up its current three-year cost reduction program aimed at reducing its $85 billion global spend by 20%, it is launching another. The new plan, scheduled to begin in the fourth quarter, stresses that parts suppliers open factories in low-cost countries to become more price-competitive. GM's purchasing boss, Bo Andersson, admitted suppliers are already frustrated with the company's emphasis on cost reductions.
- Companies with just-in-time inventory plans are likely to be hit hardest by the effects of Hurricane Katrina, says senior economist John Robertson at the Federal Reserve Bank of Atlanta. "One of the features that allows just-in-time to work has been a smooth logistics system. Disruption to JIT deliveries is going to put stress on firms that don't have inventories in place."
- More than 80% of supply chain executives report outsourcing supply chain functions helps reduce costs, improve efficiencies, enhance customer satisfaction, increase revenues or improve competitiveness. According to research by consulting firm Best Practices, benchmarked companies outsource supply chain functions to save an estimated 10-20% of costs and enable improved customer service.
- PURCHASING magazine and Aberdeen Group are co-producing the CPO's Summit Conference at the Westin Hotel at Copley Square in Boston on November 16 and 17. The CPO Summit will discuss supply management technologies, offshore sourcing strategies, spending analysis successes and best practices in supplier development and improvement. More information and registration details are available at www.purchasing.com and www.aberdeen.com.
- Freight buyers should keep in touch with air freight providers in the wake of recent airline industry shakeouts. Cargo airline ABX Air is buying planes from Delta Airlines, which started selling off equipment prior to its Chapter 11 filing in September. ABX said it would pay $190 million to buy from Delta and modify 11 Boeing 767 planes for freight use. ABX Air, which had already bought one such plane in July, will take delivery of six of the planes this year, two in 2007 and three in 2008, paying only as the planes are delivered.
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