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Supply Chain by the Numbers

- January 12, 2017 -

  Supply Chain by the Numbers for Week of January 12, 2017

Bringing Toy Producton Back to US a Tough Order; Alibaba CEO Says Tons of US Jobs Coming; Procurement Improvements Driver Major Profit Gains; Right to Work States Gain New Member



That is how much it costs to make the average toy sold by companies such as Mattel and Hasbro, according to an article this week in the Wall Street Journal. For that reason, say the toy makers, it is financially impossible to produce toys in the US. This all in reaction to looming Congressional proposals under a Trump administration for something called a "border adjustment tax", as we've reported on in Supply Chain Digest, that would put a 20% or so tax on imported goods to the US, while exported goods would not be subject to the tax. The move naturually enough is being fought by big importers such as retailers and toy makers. Roughly 95% of Hasbro products and 100% of Mattel's are made overseas, a Wells Fargo analyst says. Some toy makers warn that attempting to bring manufacturing back to the U.S. would be an expensive undertaking. Isaac Larian, chief executive of MGA Entertainment, which makes Bratz dolls and other toys, said that moving production domestically would force the company to triple its prices. "U.S. consumers will not accept it," he says.



1 Million

That’s how many mostly small business US jobs that Alibaba CEO Jack Ma thinks his ecommerce platform in China and Southeast Asia can help create over the next 5 years. So said the billionaire Ma said after a meeting last week with president elect Donald Trump. How would all these jobs be created? By making it easy for small US companies and even farmers to sell goods into those Asian markets, with Ma saying he has a goal of getting a million more US companies on Alibaba. He believes each of those business are then likely to hire an extra person to support the new business, and - voila - a million new small business jobs. Ma says there is an increasing preference for American products among the young and  the growing middle class of consumers in China and other parts of Asia, and that he has a goal of having 40% of Alibaba’s business coming from outside China over the next 10 years.


That’s the amount that total company profits on average increase if its procurement organization can move from the bottom quartile of performance to the middle of the pack. That according to the just released Return on Supply Management Assets or ROSMA report from the consultants at AT Kearney, the Institute for Supply Management and the Chartered Institute of Procurement & Supply or CIPS – basically the ISM of Europe. Companies moving from mid-level performance to the top quartile can do even better, averaging a 21% gain in earnings from the move, the research finds. It adds that currently, private equity firms are looking first to procurement versus anything else as a source of savings in mergers and acquisitions. Is procurement where the supply chain money really is?



That’s how many so-called right to work states there currently are in the US after Kentucky’s now all Republican legislature and governor fulfilled a campaign promise and quickly pushed through the measure upon taking office the first week of January. Of course, in right to work states company employees cannot be required to join a union that is in place at the firm. Kentucky Governor Bevin noted that the state had lost manufacturing plant opportunities such as a Volvo factory that went to South Carolina and "because we were not a right-to-work state we didn’t make the final cut." With the change, all of what are generally considered the Southern states now have right to work provisions. The other big bock of right to work states are in the West, but in the past few years the Midwestern states of Indiana, Wisconsin and Michigan have also adopted the rule, so that right to work states now constitute a majority. Missouri and New Hampshire may be next following the election of new GOP Governors, each with hearings scheduled soon on right to work.

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