Supply Chain by the Numbers

- August 7, 2014 -

  Supply Chain by the Numbers for Week of August 7, 2014

IMF Would Like to See US Diesel Prices Rise; US Automakers Leaving Big Profits on the Table fromLack of Collaboration; Procter & Gamble to Heavily Prune Its SKU Patch; Chinese Plant Explosion Kills Many, Focus on iPhone Impact



That's the approximate increase in diesel fuel taxes that the International Monetary Fund recommended in a new book on the subject of carbon taxes released last week. In great summary, the IMF believes that energy prices across the globe are far below what they should be, mostly because the full "social costs" of using the fuels, such as global warming, health issues from the pollution, etc. are not reflected in the price. In fact, the IMF offers pretty detailed recommendations on the price of what the carbon tax should be on coal, natural gas, gasoline and diesel for a full 156 countries across the globe. “A charge should be levied on fossil fuels in proportion to their CO emissions multiplied by the global damage from those emissions,” the book argues. Interesting, just a few weeks after Australia voted to kill its unpopular carbon tax.



$1.4 Billion

We're not quite sure how they calculated it, but that's the level of improved profit the six largest US automakers would have collectively earned in 2013 if they learned how to collaborate better within their suppliers, according to a new report from consulting firm Planning Perspectives. Certainly, it's no secret that relationships between US-based OEMs and their suppliers have often been contentious and focused heavily on price. The research does say Ford, GM and Fiat Chrysler still lag well behind Japanese competitors such as Honda and Toyota in supplier relations. GM, for example, could have earned as much as $152 per vehicle and therefore put $400 million more to the bottom line from a more collaborative approach, the researchers estimate. Price versus total cost, the perennial challenge in procurement.


That's about the number of its many brands consumer packaged goods giant Procter & Gamble announced last week it would either sell off or shut down. P&G said the remaining 70 to 80 "core" brands it will now focus on accounted for 90 percent of sales and more than 95 percent of profit over the past three years. Twenty-three of those key brands have sales of over $1 billion annually. Many companies have tried unsuccessfully to reduce their SKU counts over the years - maybe the way to do it is to just axe whole brands or categories, as P&G is doing.



Number of workers killed at last count in an explosion at a metals polishing factory in Kunshan, China. Another 186 at least are injured. The tragedy prompted Chinese officials to close a number of nearby factories for immediate safety inspection. The temporarily shuttered factories include a Foxconn plant, the result of which may be a delay in the expected mid-October release of the new iPhone 6 from Apple. The explosion was believed to be the result of excess dust in the air amidst generally unsafe labor conditions. The factory is believed to be a supplier of polished wheel hubs to GM as well as Chinese automakers. Poor demand signals from Chinese OEMs are said to put great pressure on Chinese parts suppliers to keep up with purchase orders, which trumps safety. Our take: the uproar from this seems less than the apparel factory fire in Pakistan the killed 112.