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.
