The impact of California’s rules for a “Made in USA” label

Posted on October 1, 2014 by aviyer2010

An article in the Wall Street Journal (October 1, 2014) titled “‘Made in USA” Spurs Lawsuits” describes the California Law that even one rivet in a product with such a label that is not made in the USA constitutes false advertising.  Basketball hoops with just a few bolts and net imported, USA made helium tanks shipped with imported balloons, rubber rings and light bulbs in Maglite flashlights – are all termed a violation in California even when the Federal Trade Commission (FTC) permits the label on all products that are “virtually all” made in the USA.  Is California’s 100% requirement a reasonable requirement to ensure that the intent of the label is satisfied and the benefits accrued only to manufacturers who comply? Will the impact of California’s stringent requirement be a decrease in the number of US manufacturers if they cannot get the market benefit of such labels ? Should states be required to generate consistent requirements for labeling so as to eliminate the ambiguity in Federal labeling laws ?

Posted in California, Capacity, consumer, Cost, emb2019, Global Contexts, imm2018, labeling, Liability, Made in USA, product, Supply Chain Issues | Tagged , , , , , , | 18 Comments

Auto Demand and supply mismatch worries impact platinum prices

Posted on October 1, 2014 by aviyer2010

An article in the Wall Street Journal (September 29, 2014) titled “Platinum Skids on Car-Demand Worries” describes the recent price drop for platinum and traces the volatility of prices of the metal recently.  A strike in a South African mine created supply worries and drove up prices. But the flat to declining demand for autos in Europe and Japan, a sector that accounts for 38% of world demand for platinum, along with steady exports from Russia have created worries of oversupply, thus driving prices down. Will the low prices for platinum create a demand for the metal as investors switch from gold to platinum ? Will its use in the auto industry increase from countries like China ? Or will mines decrease their output to get the system back in sync ?

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Conscious Supply Chain Management at H&M

Posted on September 22, 2014 by aviyer2010

A report in Sustainable Brands (http://tinyurl.com/qg5gtn7) titled “H&M Unveils Conscious Denim, Signs Agreement for More Conscious Supply Chain Management” describes initiatives with the International Labor Organization (ILO), Solidaridad and Jeanologia to audit its water use, energy consumption, working conditions, fair wages, “capacity development for social organizations and skill development across the supply chain”. Garments produced will also have a Clevercare label to urge consumers to save water and energy during use. Is H&M’s focus on the entire supply chain, from production to use, a harbinger of the future for apparel supply chains ? Will the company be able to get its customers to pay a premium to cover the costs for these initiatives ? How might H&M be able to maintain a competitive advantage for its garments developed with a conscious supply chain given that the capability is obtained by working with known nonprofit entities whose services are available to all ?

Posted in Collaboration, competitiveness, consumer, Cost, Supply Chain Issues, Sustainability | Tagged , , , , , | 1 Comment

Adjusting distribution centers for omnichannel success at the retailer John Lewis

Posted on September 21, 2014 by aviyer2010

An article in CSCMP’s Supply Chain Quarterly (Quarter 2, 2014) titled “A Supply Chain Redesign for Omnichannel success” describes changes to the distribution center at the retailer John Lewis to ensure omnichannel success – a 7.2% sales increase in the 2013 season over the 2012 season with a 22.6% increase in online sales. The changes include reducing the number of distribution centers, coordinating the click and collect (at the store) with store shipments to ensure a smooth flow, and merging all items in an order to ensure the customer gets to pick up the entire order in the 41 retail locations. Given that the flows to the store are batched boxes or pallet loads while customer orders are for eaches, will the merging of these flows generate efficiency ? Should customers be encouraged get deliveries directly in their homes instead of store pickup to increase system efficiency ? Or will store sales increase as customers stop by to shop in the store when they come to pick up online orders ?

Posted in Collaboration, consumer, Cost, Ecommerce, productivity, Supply Chain Issues | Tagged , , , , | 28 Comments

The Ebola premium added to cocoa prices ?

Posted on September 21, 2014 by aviyer2010

An article in the Wall Street Journal (September 19, 2014) titled “Cocoa Prices Surge on Ebola Fears” describes concerns about the cocoa growing regions in West Africa, including Ghana and the Ivory Coast who grow 60% of the world’s supply, as the Ebola virus rages in Liberia, Sierra Leone and Guinea. Cocoa is grown in small farms and picked up by distributors in motorcycles for exports. As transport links decrease due to Ebola fears and the region get isolated, cocoa prices are expected to surge beyond the current 20% price increases. Will increasing cocoa prices cause a shift in product composition of chocolate to alternate formulations that decrease market demand for the long run ? Should local governments, who have most to lose from exports of this crop, figure out a mechanism to ensure stability of the supply chain ? Should the US air bridge that is current set up to provide assistance with treatment of the Ebola virus also be used to ensure stability of the supply chain that provides revenue for local governments or should this be the responsibility of chocolate manufacturers ?

Posted in Capacity, Cost, disruption, Supply Chain Issues | Tagged , , , , , , | 16 Comments

Did better scrubbers increase the demand for dirty coal from Illinois?

Posted on September 16, 2014 by aviyer2010

An article in Bloombergbusinessweek (September 15,2014) describers the surging demand for high sulphur Illinois coal coinciding with Clean Air rules that demanded scrubbers in power plants that even the emissions across all coal deposits. With lower costs and located closer to coal fired plants, Illinois coal demand has surged as the quality of scrubbers installed as increased. Is the use of poorer quality coal whose gases can be purged good for the environment ? Should inputs to power plants also be regulated or should emissions be checked while providing flexibility to power plants?

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Does hospital consolidation increase prices or efficiency?

Posted on September 16, 2014 by aviyer2010

An article in Bloombusinessweek (September 11,2014) describes Partners Healthcare in Boston that is responsible for 28% of physician and hospital visit dollars in Massachusetts and that has seen a 60% increase in prices charged compared to competitors. The company now owns several hospitals and coordinates across them to enable efficiency. But this efficiency has increased market power and prices rather than decrease costs. How should the market be structured so that efficiency is passed on as lower costs? Should hospitals be required to use third party information providers to standardize data so that it is easy for patients to switch providers ? Should prices for procedures be made public to enable comparison ?

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Should more livers be transported to save sicker patients?

Posted on September 15, 2014 by aviyer2010

An article in Bloombergbusinessweek (september 15,2014) describes a pln to increase the zones over which livers would be allocated to assign livers to sicker patients needing liver transplants. The estimate is that it will save 554 lives over five years but increase the livers transported from 50% currently to 75%, given the need to transplant within 18 hours. But costs are expected to decrease by $246 million given that it will save sicker patients. Will liver donation rate decrease if donated livers are assigned to patients that are not local? Is it fair to permit the factor of 10 difference in liver availability based on region to protect the volume of donated livers? How should the optimal tradeoff be determined, and should it be the decision of the donor to assign the region over which recipients will be chosen?

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Could New York city reduce its taxi fleet by 40% if its residents shared cabs ?

Posted on September 11, 2014 by aviyer2010

An article in the New York Times (September 1, 2014) titled “If 2 New Yorkers Shared a Cab…” suggests that 40% of the current 13,5o0 cabs in New York City could be eliminated, along with the associated road congestion is riders in close proximity shared cabs to destinations. The analysis was done by a team at MIT that analyzed data regarding 172 million rides collected by New York’s Taxi and Limousine Commission.  Will such efficiency generated by sharing, the associated cost benefit and sustainability impact be sufficient to get customers to share cabs ? How much additional ride time would passengers be ready to tolerate per dollar saved and energy saved ? Will riders need to be certified (rated) as acceptable or connected through social networks to increase adoption ?

Posted in Capacity | Tagged | 2 Comments

Are southern US states now the “least expensive production sites in the industrialized world”?

Posted on September 7, 2014 by aviyer2010

An article in Bloombergbusinessweek (September 4, 2014) titled “The U.S. South Rises as a Manufacturing Hub” describes an article by BCG’s Harold Sirkin claiming that South Carolina, Alabama and Tennessee represent the “least expensive production sites in the industrialized world”, with wages at around $15/hour and over 410 new projects (the highest in 20 years). The  rising Chinese wages (from 82 cents an hour in 2001 to $4.93 per hour now), rising gas prices from $20 a barrel to $100 a barrel in the same period, and strong state incentives to attract production.  Should relocation decisions for local manufacturing be driven by current economics or a longer term strategy to capitalize on local production and short lead times ? Given expanding markets in Asia, should production similarly be distributed across the world to balance economies of scale and response flexibility ? What productivity expectations should be expected to maintain global competitiveness for US manufacturing and how should local educational organizations foster skill development among factory workers to enable such long term productivity gains ?

Posted in Collaboration, competitiveness, Global Contexts, Operations Management, productivity, Supply Chain Issues | Leave a comment