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Beef Production Hits Record Low

by APICS staff | N/A 2013 | 13 | 15

Rising feed costs have led US beef production to a 21-year low, with record high prices for consumers and corporations alike, Bloomberg News reports. Beef production is expected to drop 4.9 percent to 10.93 million metric tons in 2014, a fourth consecutive year of decline. Meanwhile, global meat prices rose 2.1 percent to a nine-month high in June, even as overall food prices fell 0.9 percent.

Last year’s drought raised grain prices to record levels and spurred more slaughtering. Although feed costs are dropping, it takes more than two years for the supply of cattle to normalize. Overall beef shipments are down 2 percent this year thanks in part to the softening of demand.

Higher prices also mean problems for many restaurants. McDonald’s, the world’s largest restaurant chain, will pay an estimated 3 percent more for beef this year, and stiff competition and price-sensitive consumers make it difficult to raise prices. At Ruth’s Hospitality Group, which owns the Ruth’s Chris steakhouse chain, CFO Arne Haak says beef costs rose 17 percent in the last two years.

United States Unlocks Rare-Earth Supply 

The United States has resumed the mining of rare-earth metals, materials needed for many of today’s high-tech electronics, Reuters reports. The United States previously relied on imports, mostly from China for the metals. Recent shortages from China had been creating tension between the Asian nation and other countries that relied on the minerals.

Rare-earth elements, which include tungsten, molybdenum, and yttrium, have a wide range of applications in manufacturing, from mirrors and lenses to tablets and smartphones. In the 1990s, the United States sourced much of its requirement for rare earths internally. By the year 2000, it was importing 100 percent of its needs. Between 2000 and 2012, China, which produced 94 percent of all the world’s rare earths, began restricting exports.

Molycorp, a US mining company, owns the Mountain Pass mine in California, where mining production resumed after nearly a decade. Production initially stopped largely due to competition from China, which led to lowered prices. Molycorp worked for the past couple of years to ensure regulatory compliance and provide the infrastructure needed to resume production.

Building a Fast-Fashion Supply Chain

A blog post on the Wall Street Journal’s CFO Journal reports on ModCloth, an online retailer for vintage-style clothing and accessories, and its efforts to create an agile supply chain that reacts to its customer wants and needs. Unlike a traditional retail model of buying items in advance, the company uses customer data to predict supply, manage inventory, and design products that will sell quickly.

“Understanding customers and what they’re telling us is a critical area for us,” says chief financial officer Jeff Shotts. “Our analytics team is essentially looking at customer behavior, customer demographics, and customer responses. Ideally, there’s an early warning if a trend starts to deviate.” The goal is to keep inventories lean, increase responsiveness, and be able to react to changes in product popularity.

Among ModCloth’s initiatives is tracking customer comments and adjusting orders accordingly; developing a supply chain app, which enables procurement teams to more quickly make choices and supply order details to decision makers; and a program that lets shoppers vote on products they would like to be able to purchase, at which point ModCloth orders from suppliers. Shoppers participating in the voting program tend to buy twice as many items as those who don’t, Shotts says.

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