Executive Briefings

Using the Supply Chain to Chase After Cash

Finance chiefs now study supply chains not merely with an eye toward cutting costs via layoffs and plant closings but for their potential as lucrative acquisition targets or as a way to serve a customer base that yields a better payoff. For instance, Eaton Corp., a $15.4bn industrial manufacturer, has reduced its production of basic auto components in favor of more-sophisticated engine parts that improve fuel economy and reduce emissions. "The reason to move into the higher-tech spaces is because, fundamentally, the margins are higher and that translates into more cash," says Richard Fearon, the company's vice chairman and chief financial and planning officer.

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Finance chiefs now study supply chains not merely with an eye toward cutting costs via layoffs and plant closings but for their potential as lucrative acquisition targets or as a way to serve a customer base that yields a better payoff. For instance, Eaton Corp., a $15.4bn industrial manufacturer, has reduced its production of basic auto components in favor of more-sophisticated engine parts that improve fuel economy and reduce emissions. "The reason to move into the higher-tech spaces is because, fundamentally, the margins are higher and that translates into more cash," says Richard Fearon, the company's vice chairman and chief financial and planning officer.

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