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Smartphone Suppliers Struggling to Keep Up with Demand

by APICS staff | N/A 2013 | 0 | 0

Disruptions of smartphone supplies may be becoming the norm, as surging demand means manufacturers are straining to increase output despite increasingly sophisticated components, the Globe and Mail reports. Both Samsung and Apple have experienced inventory challenges in the past year, particularly with high-end phones that include features such as five-inch, high-definition screens; 12-megapixel cameras; and 16-gigabyte internal storage cards.  

“The overarching issue is that product innovation from the handset makers, whether it’s Samsung or Apple, has not kept pace with the slower rates of suppliers … to adapt changes into their manufacturing processes,” says Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. He adds that materials shortages can put suppliers in a position to increase prices, eating into the margins of the big smartphone companies and potentially lowering share prices.

David Yang, industry analyst at market research firm IBISWorld, says that supply constraints will pressure companies to better manage public relations and consumer expectations about their devices. Increased inventory volatility and supply bottlenecks also will likely rise, he says.

US Factory Orders Down in March 

US factory orders fell 4 percent in March after going up 1.9 percent in February, the Associated Press reports. It was the biggest drop in seven months, with commercial aircraft the biggest contributor to the decrease. However, a 0.9 percent increase was seen in core capital goods, which is a category considered a marker for business investment.

Commercial aircraft orders fell 48.3 percent. Auto demand also saw a slight drop, but analysts expect this to recover quickly. Overall, durable goods fell 5.8 percent after a 4.3 percent increase in February. Nondurable goods were also down 2.4 percent, potentially a reflection of falling energy prices.

One piece of good news for the United States was that employers added 165,000 jobs, bringing unemployment to a four-year low of 7.5 percent. However, manufacturing employment remained relatively flat.

Target Traces Supply Chain for Source of Disputed Cosmetics

Target is finding itself in the middle of a supply chain mystery, as a US company supplied its Australian stores with allegedly counterfeit cosmetics and then vanished, the Sydney Morning Herald reports. Now, Target is seeking access to court documents to expand its search for the cosmetics’ origin and potentially prove the products were genuine.

The story began in September of last year, as Target Australia stripped its shelves of MAC cosmetics after owner Estée Lauder reported they were fake. Leaders eventually traced the supply chain back to an Arizona wholesaler known as Get Your MAC On, which this year closed its doors after operating for only 18 months. The company, in turn, was sourced by Mudd Puppy Cosmetics__which was created only a few weeks before the products began being sold on shelves.

While Target says the products were tested and verified by an independent lab, Estée Lauder is moving forward with various trademark lawsuits. Target’s hope is to go further back in the supply chain and uncover its suppliers’ suppliers back to the source.

Popularity of Hummus Spurring Chickpea Expansion

Sales of hummus are booming, and its largest US manufacturer is seeking to boost domestic supplies by planting new crops in the heart of tobacco country, the Wall Street Journal reports. Sabra, which is co-owned by PepsiCo and Israel-based Strauss Group, is cultivating crops of chickpeas, the main ingredient of hummus, in Virginia__quite a way from the Pacific Northwest, where the majority of chickpeas are grown.

The benefits of expanding farming operations to different areas include protecting against supply disruptions and crop failures, lowering shipping costs, and developing new varieties of plants. However, one risk is that Virginia’s higher summer humidity could potentially damage the crops.

Demand for hummus is pushing up the price of chickpeas, and farmers across the globe are increasing production. Washington farmer Pat McConnell says he will double his chickpea crop this year. “They’ve become a pretty lucrative option,” he says.

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