SCDigest editorial staff

Microsoft warned investors last week that its fourth quarter profits could be under pressure due to the expected success of its X-box video console – since the company loses money on each unit sold. Meaning we guess another supply chain hiccup like that plaguing the original launch or Sony’s PS3 would actually bolster the bottom line….

Better not skimp on that plant maintenance.  A preliminary report from the Chemical Safety and Hazard Investigation Board suggested that staff cuts and deferring maintenance by unnamed BP execs to improve profitability at a Texas City, TX refinery may have contributed to an explosion last year that killed 15 and injured more than 100 people. BP has acknowledged some maintenance deficiencies, but blamed a small number of lower level employees. The company is naturally facing many civil claims from the tragedy, but criminal charges are a possibility….

Don’t count on lower oil prices for too long. China said this week that its imports of diesel fuel in September rose by an astounding 99%. Just how accurate the figures are isn’t clear, but there seems no let up in the growing demand by China, India and other rapidly expanding economies for more oil….

The web channel continues to grow in importance, new research finds. No surprise, of course, but Big Research and the National Retail Federation found, for example, that 39% of electronics shoppers looked first for products and prices over the web before venturing to a retail store, if at all. The figure was about 20% for consumer appliances….

Wal-Mart’s October same store sales growth of .5% was its lowest number for that closely watched metric since December of 2000, while many other retailers enjoyed much stronger results. Wal-Mart has an incredible record of 27 straight years of positive monthly same store sales growth, and to some extent is simply facing the law of big numbers, while some suggest there has been too much cannibalization of existing stores from the increasingly nearby location of new outlets. Partly in response to criticism from some Wall Street circles on that score, Wal-Mart recently announced it was significantly cutting back its capital spending, and somewhat in store expansion, both to improve cash flow from lower capital investment and reduce the negative sales impact on existing stores from new units. In 2007, Wal-Mart expects capital spending to grow between just 2 percent and 4 percent, down from the 15-20 percent growth in spending on capital improvements this year. The company said it plans to open between 265 and 270 new Supercenters, 5 to 10 discount stores, 15 to 20 Neighborhood Market grocery stores and 20 to 30 Sam’s Club warehouse stores. Total new U.S. stores will be 305 to 330 and another 320 to 330 will be added in the company’s international division.

The new store plans is down somewhat, but not nearly as dramatically as the reductions in capital spending. How the reductions in capital spending will be achieved while only modestly reducing store openings isn’t clear. One question: will spending on RFID infrastructure take any hits?...

More pressure on U.S automakers - here come the Chinese to the U.S. market. The chairman of Chinese automaker Changfeng Group was in Detroit in recent weeks gauging potential customer interest, and making plans to exhibit vehicles in a big January auto show. While some experts say the Chinese auto companies are ready for the demands of the U.S. market, it appears they are prepared to invest to gain a foothold now…

Caterpillar’s stock took a hit from too much good news – the supply chain can’t keep up with strong global demand. The supply chain constraints led the company to dampen Q4 profit forecasts, causing the stock to take a 15% plunge in one day. Caterpillar cited shortages of some key parts – such as the extremely large tires many vehicles require – and maxed out production capacity that can’t meet all the demand as key factors.

Do you have any comments on this week’s supply chain news bites? What types of news is of most interest to you. Let us know your thoughts.