"A Billion here and a Billion There, and pretty soon you're talking about REAL MONEY!

A Billion Dollars.  It seems that lately we don't even speak in terms of Billions anymore; it's Trillions.  I thought it would be intriguing and sobering to look into what a Billion dollars would purchase in goods and services in the Retail Sector.  That should put some serious perspective on things, next time you hear government officials tossing around the "B" word.  


Here is a random sampling of what ONE BILLION U.S. DOLLARS WOULD PURCHASE.  (Naturally, these figures are huge generalizations based on certain types of bags, fixtures, shopping carts, supplies, or labor types, but accurate enough to make you stop and think!):

• Ten million (10,000,000) shopping carts (buggies) for retail or grocery stores.
• Forty Two million case of plastic shopping bags.
• Thirty Five million cases of plastic garment hangers.
• Forty Thousand Full Time Employees, working 40 hours a week at $12 an hour for a year.
• Enough Store Fixtures (Floor Racking) to fully fixture 5,000 big box Off-Price stores
• Round Trip Airfare San Francisco to Dallas 3,875,000 times! (think of the airline points!) 
• Thirty Eight million cases of toilet tissue.

I could go on and on because the imagination soars when you start putting a calculator to it.  

I'd be interested to know what ONE BILLION U.S. DOLLARS WOULD PURCHASE in OTHER industries!  If you are reading this and would like to provide me with some feedback from other industries like Medical, Hospitality, Property Management, etc... I would love to hear from you!

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Inexperienced Procurement Departments have a Dilemma!

As we head out of this recession, there are some historical realities that will occur again in this recovery cycle, just like they have in all past recoveries. What's interesting is that our US economy has been on such a long roll that most of the teams working in Sourcing/Procurement/Purchasing Departments today have never managed their way out of a recession. They will most likely be surprised by the two big supplier responses that we'll see in coming months:

1. Even after a recession has "bottomed-out" and is headed back the right direction, suppliers tend to continue to cut production and inventories for a few quarters into the recovery.

2. Then, it could be another two quarters before most suppliers begin to rebuild the capacity that was reduced.

This means that the buyers no longer have the advantage they did a year ago when suppliers are bloated with product and capacity and need to sell "quick and cheap".

Right now in April, we are already seeing increasing costs in container fees, steel prices and corrugate prices based on supply-demand issues. Just wait another few months!

Last September, I advised my readership that the time was right to renegotiate all steel products (like store fixtures) for longer term contracts. Container costs were at historic lows, steel prices were bottomed out.  If you followed that advice, congratulations!  If your current steel product contracts are due to expire this year, you are in for a tough discussion with your CFO!

In any case, 2010 will be a great year to "Watch your P's & Q's" and play your cards close to the chest.


Phil Leichliter
President,
J. Philip Group L.L.C.
http://www.jphilipgroup.com/

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