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June 2009 |
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| Featured Topics: Financial Risk |
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| CFOs Are Ignoring Supply Chain Risks as Cost Cutting Tightens |
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| Chief financial officers are shunning risk management in favor of cost cutting, and are failing to treat supply chain dangers seriously enough, according to a recent study by Basware. Only 28% of CFOs interviewed believe procurement has a significant impact on financial risk exposure. |
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| Supply Chain Risk and 2010 Financial Planning |
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| The months of June and July are typically when many large corporations initiate efforts to refine or develop their business plan outlining their goals and associated actions for the next few years. Depending on the company this may be called the "Fall Plan," the "Annual Strategy" or something similar. More often than not it is really just a budgeting exercise with a set of assumptions determined by a person or group somewhere high in the corporate bureaucracy that are passed down to the operating units. |
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| Financial Risk and Return across the Grocery Supply Chain |
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| This paper studies the performance of the grocery sector’s supply chain on stock markets in the USA, UK, and France over the last two decades. Using Total Shareholder Return (TSR) as an evaluation criterion and applying state-of-the-art financial valuation models, it shows that the grocery sector’s supply chain outperformed the stock market in all three countries, and this was driven by the larger players in the supply chain. Both retailers and their suppliers contributed to this abnormal return without one of them dominating the other in this regard. The positive abnormal return could be the result of efficiency gains, innovation, or technological threats to the sector. Although retailers allegedly have increased their power in the supply chain relative to suppliers, we don’t see this power increase reflected in stronger stock market performance, at least in the US or in the UK. |
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| Today's Oxymoron: Risk Awareness Up, Risk Management Budgets Stagnant |
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| We all have our favorite business oxymorons –you know, sayings like “A verbal contract isn’t worth the paper it’s written on,” or “We’re overpaying him, but he’s worth it” (both of which are attributed to Samuel Goldwyn, by the way). And, I’m thinking about oxymorons today because I just ran across something of a new one in a headline over at OpRisk&Compliance: “Risk management awareness improves, but budgets static.” I read that, and I was struck by the contradiction. Yes, we understand more than ever that risk management is important to the future success of our company. But, no, we’re not going to increase expenditures in our risk management strategies. |
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| Does Lower Cost Always Come With Higher Risk? |
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| In the current economic environment, all of us are feeling a squeeze to reduce cost. As a result, companies are resorting to a variety of creative tactics, including increased business process outsourcing, sourcing from lower cost countries, migrating to leaner and flexible manufacturing, and implementing vendor managed inventory. Invariably, though, many of these approaches can lead to higher supply risk. But, do we always have to choose between lower cost and lower risk? |
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| Are Your Suppliers Contributing to the Deforestation of the Amazon... or Worse? |
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| Earlier this month, Greenpeace released a new report on the destruction of the Amazon, the world’s most important forest carbon store. “Slaughtering the Amazon” shines a spotlight on the cattle sector in the Brazilian Amazon, which according to Greenpeace, is the largest driver of deforestation in the world, responsible for one in every eight hectares destroyed globally. In addition, the report also alleges that some leather sourced from Brazil originates from illegal cattle ranches that contribute to deforestation. |
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When GE wanted to transform their supplier information management processes across all business units worldwide, they turned to
Aravo SIM. |
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| "GE is now managing over 500,000 suppliers and their data in Aravo SIM. We are live in six languages with suppliers around the world. We expect Aravo SIM will deliver significant cost savings while improving data accuracy, compliance and productivity." |
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Gary Reiner
SVP and CIO of GE |
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