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Manufacturing Indexes Down in May Worldwide

by APICS Staff | N/A 2012 | 12 | 11

In May, the US manufacturing sector grew at its slowest pace in three months, Reuters reports. Markit, a global financial services firm, revealed its manufacturing purchasing managers’ index (PMI) was at 54.0 in May, dropping from 56.0 in April. The measurement represents a weighted average of five factors__orders, output, employment, supplier delivery times, and stocks purchased__and a reading above 50 represents growth. 

The American manufacturing slowdown is a result of “a near stagnation of export orders, reflecting deteriorating demand in many overseas markets; notably the euro zone, but also emerging markets such as China,” says Markit chief economist Chris Williamson.

Demand is not the only indicator falling in Europe__Markit’s euro zone PMI dropped to 45.1 in May from 45.9 in April, its lowest reading since June 2009. “The sector is contracting at a quarterly rate of around 1 percent, suggesting that manufacturing will act as a major drag on economic growth in the second quarter,” Williamson says. “All four of the largest euro zone nations are now reporting worryingly sharp downturns in their manufacturing sectors.”

Other bad news for manufacturing this month includes China’s manufacturing sector shrinkingUS factory orders falling, and JP Morgan’s global PMI dropping.

Coca-Cola Reducing Supply Chain Water Use

At Coca-Cola, a new sustainability plan, including a water stewardship commitment, is resulting in falling water use and increased production, the Guardian reports. A recent life cycle analysis reveals that 99 percent of Coke’s water footprint is in its supply chain, with 76 percent of that used in the farming and refining of sugar beets. This realization has led to a focus on solutions not only internally, but throughout the entire value chain.

Coke’s water stewardship program focuses on the following four areas. 

Protect water sources. While no Coca-Cola factories are in immediate danger of loss of water availability, the company is implementing a water source protection plan at each of its manufacturing facilities. 

Use less water in manufacturing. The company is highlighting inefficiencies in production and monitoring use. So far, this has resulted in water use dropping by 5 percent and production increasing by 12 percent. 

Recycle waste water. In 2011, Coca-Cola recycled 100 percent of its waste water, returning it to cities or treating it so it would support aquatic life. 

Replenish water where it is needed. The company invests in community water programs and is planning to work with nongovernmental organizations to further stewardship initiatives.

Logistics Capability Rivals Price in Determining Suppliers

Price is a leading factor in how companies choose their suppliers; but, for many buyers, it is not the only concern, reports DC Velocity. Often, one of the biggest considerations is logistics capability: The ability to get products to buyers at the right time.

“Where you don’t have buffer inventory, delivery is important,” says Simon Ellis, director of supply chain strategy practice at global market research firm IDC Manufacturing Insights. It is especially critical in systems where a late delivery can cause a downstream process to stop entirely, and is as important a consideration as price in these circumstances when awarding a contract. 

The type of business environment also has a hand in determining the importance of logistics to the buying decision. For example, consumer goods manufacturers usually experience customers taking control of shipments at the sellers’ docks, so buyers are less concerned with delivery. However, in other industries, logistics is critically important, including construction, food service, biotechnologies, defense, automobiles, and online retail. “We see tremendous growth in home delivery for retailing,” says Kumar Venkataraman of global management consultancy A.T. Kearney. “And, when it comes to home delivery, logistics capability can make a difference.”

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