Should the lower shipping prices from China to the US end ?

An article in the Wall Street Journal (October 17, 2018) titled “No More Mail Privilege for China as U.S. to end deep discounts in packages” describes the classification of China as a “tier 3” country while the U.S. is a “tier 1” country, thus permitting subsidized postal rates, from 40% to 70% reduced rates, from China to the U.S. These shipments are small packages, weighing 4.4 lbs or less,from auto parts to jewelry to housewares. Does this one way subsidy provide an unfair advantage to Chinese companies over the US or a reduction in supply costs for users of these products ? Will making the transport costs symmetric in both directions result in fairer supply chain flows ? Should similar actions be taken with Singapore and other countries too ?

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Walmart’s new technology intensive warehouse that is 40% more efficient

An article in finance.yahoo.com titled “Walmart’s grocery warehouse worker of the future will have a STEM background” discussed the new warehouse in Shafter, California that will use automation to get eggs, diary and frozen goods to warehouse employees pick rather than having workers lift over 2,000 cases per shift. The result is an estimated 40% increase in product movement, and lower costs. Will Walmart use these cost savings to decrease consumer prices or increase it thin margins for grocery ? Will the additional skill levels required to operate these warehouses result in current workers getting upskilled or a newer type of warehouse employee ?

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Preventing child labor use for cobalt mining

An article in Fortune (September 1, 2018) titled “Blood, Sweat and Batteries” describes artisanal mining by over 10,000 children using hand tools in the Democratic Republic of Congo (DRC), the source of 67% of the world supply of cobalt. With prices of cobalt rising 400% between 2016 and 2018 due to electric vehicle battery needs of 18 lbs of cobalt per battery, and demand expected to triple by 2025, the demand in the DRC is soaring. Given it’s poverty level, cobalt mining attracts children who can make $9 a day, far better than alternatives to help their families. Should end product OEMs, the makers of smartphones and electric vehicles, be held responsible for solving this problem? Or is the solution to build batteries that use much less to no cobalt? Should OEMs be responsible to train children for alternate occupations and thus prevent them from mining?

Posted in Africa, Capacity, cobalt, consumer, Cost, Global Contexts, mining, Prices | Tagged , , , , | Leave a comment

Is V-commerce by Fanatics the future of retail?

An article in Fortune (September 1, 2018) titled “Licensed to Thrill”, describes the company Fanatics that has exclusive rights to sell professional basketball and football clothing. The company describes V-commerce as a combination of manufacturing, logistics and technology capacity. Fanatics orchestrates delivery product for sale online within hours of an athletes choice of team, manages retail stores and the unique intellectual property of player content. Will the future of retail require such execution to remain relevant? Will Amazon and Walmart be expected to compete for such content? How can manufacturing speed be used by retailers to compete?

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Going Digital in the construction industry to reap $1.6 trillion in potential savings

An article in Fortune (October 2018) titled “Building with Bits and Bytes” reports that the construction industry is replacing paper with digital drawings, enabling collaboration with architects and reducing the 33 percent reported waste, totaling $1.6 trillion. The construction industry’s productivity improvement is estimated as 1 percent, vs 2.8 percent for the overall economy. Will competition across builders mean lower construction costs as a result of digitization? Will maintenance costs decrease as a result of better designs? Will construction firms devise their own proprietary software to optimize designs and construction costs?

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Reducing complexity and returning to profitability at PSA’s Opel division

An article in BloombergBusinessweek (August 29, 2018) titled “The Stunning One-Year turnaround of GM’s German castoff” describes a focus on reducing part variety. The article describes reduction of the 57 possible infotainment systems for the Corsa hatchback to 10. It also reports the number of windshield wiper options from 16 to 9 to improve efficiency. Will simplifying designs decrease spare parts revenues in the future? Will car prices be lowered to drive volume given lower costs and higher efficiency?

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Managing the supply chain when facing “Matcha Madness”

A video posted in the Atlantic (though made by AT&T to showcase its digital capabilities and available at https://www.youtube.com/watch?time_continue=129&v=u_lUD3WHz1s) describes the rush to use matcha as a food ingredient fro beverages, cupcakes and more. With harvests at select periods, volatile demand, mixes of ingredients to make specific products, the digital aspects of the supply chain ensure that the physical product is available as planned where there is demand. Given such viral surges, has food become a fashion product with trends dictating demand ? How can farmers plan for such unforeseen demand surges – will supply contracts move closer to financial instruments as a way to manage demand and supply risk ?

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