IBM reported today that it has closed its acquisition of Emptoris. The link to the press release is noted below:

http://www-03.ibm.com/press/us/en/pressrelease/36637.wss

A rather quick closing by technology company standards.

Bob Ferrari

I would like to share a postscript to our December 15, 2011 commentary, specifically Johnson & Johnson and its contract manufacturing challenges related to the supply of Doxil.

As of this writing, J&J reported an 89 percent drop in fourth quarter profits. In interviews related to the earnings announcement, J&J CEO William Weldon indicated that the company learned a “painful lesson” from the supply shortage for Doxil, and will try to have a better contingency plan to avoid such disruptions in the future. U.S. sales for Doxil fell a whopping 82 percent during the fourth quarter.

It indeed seems that a painful lesson has been learned, namely the lack of active supplier monitoring or backup contingency plans.

Bob Ferrari

A timely update regarding our Supply Chain Matters commentary related to Kraft’s re-organization and how it will effect supply chain strategies. The Wall Street Journal reported yesterday that Kraft plans to eliminate about 1600 positions in North America as it moves into its split companies. The WSJ reports that about 40 percent of the job cuts are related to realignment of the sales teams, with remaining North America sales people shifting to the snacks company where a direct-to-store distribution strategy is featured.

As for distribution, The Kraft grocery business will now outsource distribution of Maxwell House coffee, Philadelphia cream cheese and other brands to Acosta Sales and Marketing for grocery store distribution while Crossmark will continue to support distribution to the convenience store channel. Kraft Grocery in essence is increasing its outsourcing profile.

This may explain why the position of EVP of Integrated Supply Chain for Grocery remained open at the time of the prior re-organization announcement.

Bob Ferrari

-Samantha, Community Manager
BlueGrace Logistics

Why- because these capabilities and processes take time and change leadership to build, and cannot be achieved with instant fix solutions. Leaders like P & G , Cisco and others spent 15 years plus building their Integrative Improvement System capabilities or integrated high Performance Work Systems as they call it ………these IIS framework initiatives build unconscious competence operating process capabilities and organizations that integrate people, processes and systems to do the right things at the right time, but this requires forward looking vision, commitment, change leadership, and perseverance. That’s why we don’t see these leaders in frequent recall notices.

These leaders have systematically built the capabilities in place over many years to ensure that the right things happen at the right time because the organization, systems and processes are capable and appropriate; and when they don’t work to plan, they have the processes and leadership to respond appropriately and detect and fix the problem.

You bet that in the current situation there is a a deluge of consultants rushing to the business and SC leadership in these companies to sell instant “rectification” projects ; the problem is that the outcome of these projects will last for as long as the current market scenario persists and then dynamics will change the rules and force them to respond tactically .projects don’t deliver sustainable performance improvement capabilities !

When will manufacturers learn to spend the time to embark on an end to end transformation journey that builds the process and organization capabilities that prevent these events from happening in the first place, and then when they do happen; make sure they have the skills and processes to respond quickly and appropriately.

Roddy Martin
Competitive Capabilities International, Inc.

This is an update to our December 15th commentary regarding Johnson & Johnson and the supply of the Ovarian Cancer drug Doxil, supplied by contract manufacturer Ben Venue Laboratories.

At December 24 article published in the Wall Street Journal now indicates that J&J does not expect to receive new supplies of its cancer drug Doxil from Ben Venue until late 2012 at the earliest.

The latest setback results from a decision by the contract manufacturer to extend the suspension of manufacturing at the Bedford Ohio facility further than originally expected.

J&J indicated that it will continue to pursue other options to make Doxil available including shifting production to another supplier.

Bob Ferrari

I wanted to provide a further update to this Boeing commentary.

Boeing’s Machinist union agreed to ratify the four year extension of the labor agreement and the NLRB withdrew its objection to Boeing’s opening of a second final assembly production facility in Charlstown SC.

Regarding Southwest Airlines, Boeing’s largest existing customer for the 737 aircraft series, it indeed announced its order for new aircraft. Southwest placed a firm order for 150 of the new 737 Max as well as 58 next-generation 737′s. With the newest Southwest order, Boeing now has customer commitments amounting to 900 737 aircraft from 13 customers.

Boeing does indeed need to move on to the next phase of production and supply chain execution.

Bob Ferrari

A further follow-up to our commentary relative to Boeing dealing with production backlog realities and solidifying its long-term labor agreements.

The Wall Street Journal reported today that Southwest Airlines is nearing a preliminary deal to order more than 100 Boeing of the new 737 Max aircraft. The paper reports that the deal, if consummated, would not be a firm order, but rather an action by Southwest to hold production slots for the new model 737.

Availability of capacity and timely delivery dates are indeed becoming a concern for existing and future aerospace customers.

Bob Ferrari