In The Headlines
Machine Tool Vending Machines Come to the Shop Floor
An episode of The Office involved a prank by co-workers on a hapless colleague. The victim’s desk contents—his stapler, pencil cup, plate, even his wallet—were stashed inside the office vending machine. Now an industrial supply company has turned that prank into a new business model.
MSC Industrial Supply is one of the country’s largest suppliers of what are called “indirect supplies,” manufacturing tools and materials that do not end up in the final products: drill bits, safety helmets, wrenches, clamps, saw blades, and the like. MSC will sell you a stapler, but most of its clients are not companies whose workers toil in cubicle farms. They are manufacturing plants that cut steel or process foods or produce paper.
Over the past few years, MSC has started offering those clients the option of installing special vending machines on their shop floors. Some look like tool chests with touchscreens; others look a lot like snack machines. Workers who need supplies can skip the stockroom and go to the MSC machine, swipe an ID card, and choose whatever they need.
As MSC Chief Executive Officer Erik Gershwind sees it, his company’s vending machines bring a measure of order and transparency to a realm that, despite the focus on cost cutting and efficiency in the supply chain has remained enormously wasteful. He says the majority of indirect supply inventory never gets used.
“Picture a plant that has machinists and operators spread out all across the plant, and a centralized storeroom that houses lots of tools,” Gershwind says. “You’ve got to make sure your production line is up and running. So what ended up happening was, we go visit our customers and go around the floor, and each machinist is hoarding their own supply, hoarding their own stash.”
The MSC vending machines allow companies to keep a closer eye on how much of each part a plant needs and how much individual workers use. If there is someone who seems to be going through a lot of supplies—either because he is using machinery in such a way that causes it to wear out prematurely or because he is taking stuff home to furnish his basement workshop—that can be addressed through education, a talking-to, or perhaps something more punitive. And the machines can be programmed to only release certain items to certain workers. The keys to a truck, for example, might only be available to someone who has a license to drive it.
For factory workers, there is an obvious loss of control that comes with these sorts of systems. For companies like MSC, meanwhile, there is a potential loss of business. After all, the more efficient its customers get at buying only the supplies they need, the fewer supplies they will presumably buy. Gershwind believes, however, that the company can counteract this by garnering a larger percentage of the shrunken pie. MSC’s vending machine business, he says, is growing “orders of magnitude higher than the company average.”
You Scream, I Scream, We All Scream for . . . Frozen Yogurt?
In recent years health-conscious Americans have turned away from ice cream in favor of frozen yogurt. Don’t count on the trend to last. The quintessential American dessert that has long been the stuff going on top of that pie is ice cream. The frozen treat evokes timeless summer rituals—jumping through sprinklers, running barefoot on the lawn, and chasing an ice cream truck down the street.
In the U.S. last year, people spent $13.7 billion on ice cream, not including restaurant sales. In any given two-week period, according to research by NPD Group, 40% of Americans will eat ice cream—that is nearly as large a share as will drink coffee (47%). But for some time now, the iconic double-scoop cone has been facing a cold shoulder from consumers. While the average American will consume ice cream a prodigious 28.5 times this year, according to NPD Group, that is actually down 45% from the level it was in 1989.
Blame the country’s health-conscious consumers, industry analysts say. The sweet indulgence is taking its licks from a public that is increasingly seeking lower-fat, lower-sugar treats, and topping that list, it would seem, is ice cream’s trendier, slimmer cousin—frozen yogurt. In comparison with ice cream’s slow decline, frozen yogurt has been booming of late, with more shops popping up all over the country. At the end of last year, there were an estimated 2,582 frozen yogurt stores, according to IBISWorld. That is more than twice the number (1,018) that existed in 2008. Sales, meanwhile, have soared an average of 21% a year over the same period vs. almost no growth for ice cream. So does this mark a coup d’état in the icy dessert realm? Hardly—indeed, we have been here before, and history does not bode well for frozen yogurt.
America got its first taste of frozen yogurt in 1981 with TCBY. The soft-serve yogurt craze rose to its peak in 1992, says Harry Balzer, the food trend guru at NPD Group, and then steadily waned. The number of TCBY stores has declined from some 2,800 outlets in the mid-1990s to about 650 today. Even at its height, though, frozen yogurt’s popularity never came close to that of ice cream. And the current boom in frozen yogurt sales numbers, says Balzer, is due more to rising populations and higher prices for frozen yogurt than it is to changing habits. All signs, in fact, point to a bubble. According to IBISWorld research, frozen yogurt sales in the U.S. will grow more slowly in the coming years, and by as early as 2019 begin to shrink. Says Technomic’s Chapman of the current frozen yogurt hype, “I’m actually surprised it has lasted as long as it has.”
Red Mango, a frozen yogurt franchise, is not waiting to find out. Last December the chain introduced new products, including sandwiches and snacks. “We were really surprised,” says Nicole Taub, a Red Mango franchise support manager, of how quickly the franchises adopted the new products. Within a few months yogurt made up less than half of sales in some stores. Thanks to all the new product offerings, the kitchen of the Red Mango shop now looks like a produce warehouse, with stacks of carrots and buckets of kale. “We’ve gotten really creative about storage,” says Taub of the expanded menu.
There is one big silver lining for both frozen yogurt and ice cream, and that is the market everywhere outside the U.S. Ice cream sales shot up 13% last year in Turkey, for instance, and 19% in Brazil, according to Euromonitor. Chinese consumers alone bought $5.4 billion of ice cream in 2013—a remarkable and fast-growing share of what today is a $77.3 billion global business. So even if America’s summer classic is taking it on the chin at home, it is comforting to know that “à la mode” is still in style overseas.
Sources:
1. http://buswk.co/UuehpT – BusinessWeek
2. http://bit.ly/1t9oZRE – Fortune
The Good News Is . . .
• Orders for long-lasting U.S. manufactured goods rose more than expected in June, pointing to greater momentum in the economy at the end of the second quarter. The Commerce Department said durable goods orders increased 0.7% as demand increased from sectors like transportation, machinery, computers and electronic products. Increased business investment bodes well for stronger economic growth in the second half of the year.
• Ryder Systems, Inc., a commercial transportation, logistics, and supply chain management solutions company, reported earnings of $1.44 per share, an increase of 15.2% over year-ago earnings of $1.25. The firm’s earnings topped the consensus estimate of analysts by $0.04. The company reported revenues of $1.7 billion, an increase of 5.0%. Management attributed the company’s performance to improved used vehicle sales, and growth in its commercial rental, and full service lease market segments.
• Predicting higher battery sales worldwide, the specialty chemical maker Albemarle said on Tuesday that it had agreed to acquire its rival Rockwood Holdings in a cash-and-stock deal worth about $6.2 billion. The deal would combine two of the world’s largest specialty chemical companies, producing four main types of chemicals: lithium, catalysts, bromine, and surface treatment chemicals. Albemarle, based in Baton Rouge, La., will pay $50.65 in cash and 0.4803 of an Albemarle share for each share of Rockwood Holdings.
Sources:
1. http://bit.ly/1rJsnRa – International Business Times
2. http://www.cnbc.com/id/18080780/ – CNBC
3. http://bit.ly/1tNMA7K – Ryder Systems, Inc.
4. http://nyti.ms/1z2Jks4 – NY Times Dealbook
Planning Tips
Understanding How Remodeling Affects Homeowner Insurance
Summer is the season when many homeowners choose to remodel or renovate. Home improvement projects can have implications for your home insurance. Some projects can make your home a more attractive risk to underwriters, and this may lead to cheaper home insurance premiums. Some changes may result in higher premiums. Below are tips for understanding how home remodeling projects can affect your home insurance coverage.
Occupancy during renovation work – Unoccupied properties are generally considered as high risk by insurance underwriters. Most home insurance policies allow for a property to be left empty for thirty days, but coverage may be excluded or reduced after this period. Check your policy wording or contact your broker or insurance provider if you will not be living in your home during the period work is carried out. Specialist coverage is available for properties undergoing long-term renovation, and you may need to cancel your existing insurance and arrange a new policy.
Contractors liability insurance – If you hire contractors to work on your home, always check that they have liability insurance. Damage caused by faulty workmanship is generally excluded from house insurance contracts. For example, if a shower fitted by a plumber leaks and causes water damage your policy may not cover the cost of repairs. If a contractor has an accident, such as smashing a window, you may have to fund the replacement cost.
Non-standard materials – Most insurance underwriters assume that homes are constructed from bricks, stone, slates and tiles unless told otherwise. Felt roofs are an example of non-standard construction, and it is important to check with your insurance company if any extensions to your home use unusual materials or designs. Underwriters may apply special terms to your policy as a result of these types of changes to your home.
Home improvements may mean you need to increase your coverage – Failing to insure your home adequately can have serious implications in the event of a claim. The building sum insured on a home insurance policy is the amount required to rebuild a property if it is completely destroyed. If renovations or extensions to your home mean that the total cost of rebuilding it increases, make sure that you advise your insurance provider of the new level of building insurance required.
Adding a pool or hot tub – A pool may make your home riskier from an insurance standpoint. The standard policy usually comes with $100,000 in personal liability protection, which would cover medical costs for a person injured in your pool and any legal expenses if you are sued. However, an insurer may recommend that a pool owner opt for at least $500,000 in liability coverage, which would cost more. The insurer also may require a fence around the pool with a lock to cover the new liability. If the pool has a diving board or slide, it will be considered an even greater potential hazard. Hot tubs bring added danger, too, but the risk can be mitigated with covers and locks. Also, do not forget to increase your homeowner coverage amount to compensate for the added value of the pool.
Sources:
1. http://bit.ly/1rzVzsY – TheMotleyFool.com
2. http://bit.ly/1oWcPER – US News & World Report
3. http://bit.ly/1mrMVHE – Investopedia
4. http://abt.cm/1sAS6wN – About.com
5. http://bit.ly/1n4jtvB – Kiplinger
6. http://bit.ly/1k38zaS – Zacks.com
