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Target tests “green” refrigerant at 11 stores

May 18th, 2011 Comments off

As mentioned in class, companies are taking a close look at environmentally-friendly initiatives and sustainability.  Management accountants can help with this by identifying opportunities and measuring performance against environmental criteria.  In a local example, Minnesota-based Target was featured in a Star Tribune piece this week as testing a new refrigerant at 11 stores with the idea that it could be expanded to other stores if it is successful.  This new material is supposed to result in fewer leaks and, ultimately, reduce operating costs though I’m sure Target will play up the fact that it is using “green” chemicals and processes as well.

The bottom line is that the gas is a “high temperature” refrigerant less prone to leakage and more energy efficient. It is also used in automobile air conditioners.

“These are very complex systems,” said Target’s Dan Riley of the coolers and freezers in the chain’s “PFresh” food sections. “In each Target store there are many, many miles of coils. At every junction there is an opportunity for a leak. These [existing] gases are very leak prone. They are under pressure.”

In December, Target announced its commitment to sustainability and the GreenChill program fit into the chain’s intention to use resources responsibly and reduce the company’s carbon footprint.

Ultimately I don’t think many companies will do things like this if they don’t see a benefit in terms of reduced costs or marketing opportunities, but those opportunities exist and the planet and society can benefit as a result.  Management accountants need to be prepared for this role and to seize the opportunities.

Target tests green chillin’; The retailer is trying a new, more energy-efficient refrigerant in 11 stores around the country as it tries to go green. By David Phelps. Star Tribune. Minneapolis, Minn.: May 15, 2011. pg. D.4

Target to open smaller stores

September 24th, 2010 Comments off

In plans similar to the ones I posted last week about Walmart opening smaller stores, Minnesota’s own Target is planning to do the same.  Although the Walmart speculation made it sounds like some of their future locations might not be larger than a typical convenience store, the Target plans appear to be suited more to urban locations with the one that is planned being slated for downtown Seattle.

“We’ve never been a cookie-cutter retailer, but we are increasingly realizing that one size doesn’t fit all,” said John Griffith, executive vice president of property management at Target.

Read more at this link: http://www.google.com/hostednews/ap/article/ALeqM5gtShdCaRNm9Yybvnb_cZLvZ_TC8QD9IEIPDO0

or at this link: http://www.startribune.com/local/103711349.html

Walmart Bringing Smaller Store Format to America?

September 20th, 2010 Comments off

I posted a few months ago about Walmart’s smaller store footprint in the U.K. Today’s Financial Times reports on its front page that Walmart is lining up real estate across the US to roll out smaller format stores in its home country.  The article cites chatter amongst real-estate brokers as the source of this information and the world’s largest retailer has yet to announce detailed plans, but suffice it to say that anything Walmart does has the potential to shake things up.

“They’ve been looking at sites between 20,000 and 50,000 sq ft over the summer,” said one broker in northern California.

Garrick Brown, a vice-president of research at Colliers International, said the retailer was looking at taking over existing buildings, and that “chatter” from brokers suggested the retailer was looking for scores of sites across the US. “It is going to be huge,” he said.

Walmart lines up sites across US to roll out smaller format stores. Jonathan Birchall. Financial Times. London (UK): Sep 20, 2010. pg. 1

Walmart lines up sites for smaller stores. Jonathan Birchall. Financial Times. London (UK): Sep 20, 2010. pg. 15

[EDIT TO ADD LINK TO AP STORY]

The AP has the story now too at this link: http://apne.ws/b8nNUz or via StarTribune.com at this link: http://www.startribune.com/business/103300079.html

Vertical Integration is Back in Style

August 8th, 2010 Comments off
monopoly-outsource

Courtesy of Scott Ingram Photography on Flickr

I’ve written before about companies like Boeing and Pepsi that have sought more control over their products with the result being that they have purchased other value chain members.  Credit goes to a current (for another week) student, Kevin Hoese, for pointing out an article in today’s Star Tribune that focuses make vs. buy and vertical integration opportunities at Minnesota companies like Arctic Cat, 3M, and Toro.

Arctic has manufactured ATVs since 1995, but has been making the engines in Minnesota for only about four years and at the St. Cloud plant since 2007. The previous supplier, Suzuki Motor Corp., still makes Arctic’s snowmobile engines, but that too is about to change. Arctic has plans to move production of those engines, now built in Japan, to St. Cloud as well — a move that will add a still undisclosed number of jobs to the plant’s roster of 35 workers.

That control is even more difficult when plants are in far-flung corners of the world. “In a volatile economy like this one it is hard to be flexible when you’re sourcing things from half a world away,” Zimmerman said.

That was the case for Bloomington-based Toro Co., which used to buy wheels and tires for its snow throwers and mowers from a Chinese supplier but now produces them at a Toro facility in El Paso, Texas. “Over the past two years, with demand fluctuating down and then up, we need suppliers that are flexible and responsive in shorter windows,” said Judy Altmaier, vice president of operations. “Some of our off-shore suppliers are capable of supplying us with quality products at a competitive price, and are flexible in meeting our changing schedules. Others are not,”

Factors range from quality concerns to flexibility issues to rising costs of transportation, but whatever the reason, it seems that too many companies overestimated the ease with which they could outsource work to the other side of the globe.  Chances are that they overestimated the cost savings as well.  It will be interesting to watch the economy to see how much of this continues to happen in the next few years.  There certainly are skilled laborers in the United States that are looking for work and perhaps “onshoring” will be part of the answer to the high unemployment figures we see right now.

Of course there are some local companies that are hurt when their customers move some work in-house.  So the fact that more companies are doing work themselves isn’t the cure-all for everyone:

The move by manufacturers to do more work in-house has hurt some businesses that have been suppliers. Permac Industries, a Burnsville-based company that makes precision-machined parts for a variety of industries, saw its sales fall about 40 percent in 2009 partly because customers were doing more of that work themselves, said CEO Darlene Miller. She said she knows of other precision parts makers that experienced the same drop-off in business.

Still, for all the reasons we talk about when we discuss make or buy decisions it is important to weigh all of the factors before making business decisions about where to locate work.  For each company that has outsourced only to find that it isn’t working I suspect that there is a company doing something in-house that they really aren’t doing that well.  Sometimes it is better to focus on core competencies and let others do whatever falls outside that boundary.

Read more at:

In a shift, more companies deciding to make, not buy: Many manufacturers are reversing the decades-old outsourcing trend, preferring to build more parts in-house. Susan Feyder. McClatchy – Tribune Business News. Washington: Aug 8, 2010.

Minneapolis Superfund site gets more cleanup money

April 15th, 2009 Comments off

A local environmental issue receiving Superfund money is the topic of several news articles today.  You can choose from a few different links to get a few different angles on this story:

An arsenic-tainted neighborhood in south Minneapolis will get an injection of as much as $25 million in federal stimulus money to continue cleaning up the site.

http://www.startribune.com/local/43041332.html
http://minnesota.publicradio.org/display/web/2009/04/15/hazardous_stimulus/
http://www.cbsnews.com/stories/2009/04/15/politics/100days/domesticissues/main4946809.shtml
http://hosted.ap.org/dynamic/stories/S/STIMULUS_HAZARDOUS

Select Comfort – Debt Convenants

April 12th, 2009 Comments off

A very similar situation at Select Comfort, a local company: CLICK HERE TO READ