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Supply Chain by the Numbers

- May 24 , 2012


Supply Chain by the Numbers for Week of May 24, 2012


US Factory Utilization Almost All the Way Back; SAP Reaches Deep in Wallet for Ariba; TVs being Made Again in America; Amazing Level of New Truckload Fleets



The level of US manufacturing factory utilization in April, according to the Federal Reserve late last week. That was up another three-tenths of a point over March, and now leaves the utilization level at just nine-tenths of a point below the long run average of 78.8%. It has been a long but slow climb from the bottom in June of 2009. (Note: this is for manufacturing only, not the overall number for industrial capacity utilization, which includes mining and utilities, though the trends are quite similar for both metrics).




Roughly the multiple of procurement vendor Ariba’s revenues, not profits, that SAP will pay to acquire the company, in a deal that will value the Ariba at about $4.3 billion dollars (versus Ariba’s 2011 revenues of $443 million). The move was a bit surprising to us, but is consistent with SAP’s recent focus on cloud-based solutions, as virtually every software company has jumped on the cloud bandwagon.


The projected price for a new television that – believe it or not – is being made in the US. That is the first time TV assembly has been done since the last major TV major factory in the US was shuttered about five years ago. The new 46-inch flat screen will be sold initially at Target stores, and is the result of an unusual alliance between a US brand-focused company (Element Electronics of Eden Prairie, MN) and a Chinese supplier of many of required components (Tongfang–Global). The “labor cost differential isn’t as great as it once was,” said the head of the Consumer Electronics Association.


The incredibly low average age in years of the fleet of truckload carrier Knight Transportation, according to its recent Q1 earnings call. Knight is among several major TL carriers that haveturned over a huge percent of its existing trucks in the last two years. Those moves have been driven by new environmental requirements and the opportunity for improved fuel mileage. Just a couple of weeks ago, for example, Schneider National said it would acquire 3000 new tractors in 2012, replacing one-third of its fleet.

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