Week 12 - Supply and Conquer!

Week of April 16th, 2009

We started our discussion on operations management this week. An importatnt topic to grasp is that of Supply Chain management. Sometimes, your vendor supply can have power over you because they are the only one to supply your need. Or the buyer can have control over the suppliers, like WalMart. Or if you go in the opposite direction, to distribution, your distributors can control your creative flow. For example, in the Wall Street Journal this week, Pepsi has announced that it is going to try to purchase their bottlers so that they can "test drive" new products more easily and actually market them from that distrubtion. Pepsi is not concerned about weighing down their balancing sheet with bottling assets, their growth rate will remain strong and healthy. The best part of the deal, is that Pepsi could eliminate a lot of administrative people aka "reduncancies" and save money...but also increase the unemployment rate. Thanks Pepsi!
http://blogs.wsj.com/deals/2009/04/20/why-pepsi-wants-to-buy-its-bottlers/

More dismal news in the auto industry, Chinese Auto Suppliers are expecting their bubbles to burst in the next year and a half. China is not as talented and supplying as the US, they require almost double the working capital to manage efficiently. The slow down in auto sales means a slow down in auto parts suppliers etc, and thus decreased working capital. My biggest question is how many cars do auto makers think we need? Theworld population is stabling out and the average person only owns seen cars in their lifetime. I think it's about time that we stopped over producing a lot of goods, especially outdated transportation that uses a lot of resources. I imagine that this will be society's make it or break it run. Today is the opportunity for someone to make it big by inventing a new form of personal transportation as widespread as the automobile, but safer for the environment and cheaper for the pocket books.
http://blogs.wsj.com/autoshow/2009/04/16/chinese-auto-suppliers-squeezed-by-global-car-slump/