Afternoon Coffee: Oil Supply Chains, Pepsi’s Procurement Dept Axes Ad Spend, Dangerous Prison Brews

Sporty Spend Matters!
Congratulations to Jason and Bri for successfully completing the Chicago Marathon and to Sheena for rowing 13.1 this weekend!

"...expenditure for exploration and production in 2012 was $641bn, up from $586bn in 2011."
Exploration costs: Supply chain and price pressures haunt majors -- The bogeyman of rapidly rising industry costs has returned to haunt the western oil majors. Cost inflation was a big issue for oil companies four years ago, when the price of crude rose to an all-time high of $147 a barrel and the cost of goods and services in the resources industry increased in lockstep. The majors responded with aggressive cost-cutting campaigns, and seemed to have slain the demon. But now it is back. Labour shortages, the rising cost of inputs and sky-high leasing rates for deepwater rigs are all conspiring to increase cost pressures in an overheated market.

Pepsi woes.
PepsiCo's Over-Zealous Procurement Staff Is Strangling Adspend -- At the beginning of this year, when PepsiCo CEO Indra Nooyi approved a $500 - $600 million boost to the company's ad budgets, the news should have been greeted with joy by the ad agencies handling the company's various brands: It's a rare day when a client adds half a billion dollars in spending at the stroke of a pen.
But a source tells us that the extra media muscle is withering as PepsiCo's procurement executives -- who are tasked with ensuring the company gets value for its ad dollars -- stamp out spending that already received the approval of the managers in charge of the brands.

Be sure to really know your suppliers.
Botulism Outbreak Tied To Contaminated Prison Hooch -- Behind bars, nothing says party quite like "pruno." Pruno is a kind of homebrew made from whatever prisoners can get their hands on. Some fruit, a little water and sugar are usually enough to make alcohol-producing yeast happy. But it seems a baked potato saved for weeks before it was added to a pruno batch last year at a Utah prison caused the second-largest botulism outbreak in the U.S. since 2006.

- Sheena Moore

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