“Parcel” aims to mediate between shipper, carrier and customer

Posted on September 7, 2014 by aviyer2010

An article in Mashable.com (February 12,2014) and available at http://mashable.com/2014/02/12/parcel/  describes the company Parcel (https://fromparcel.com/) that permits customers to have their online packages delivered to a Parcel shipping address.  Customers then provide details such as preferred delivery time, doorbell ring or not etc so that the packages arrive when customers are available to receive. The service costs about $5 per package.  Is a disintermediated supply chain with shipping efficiency and speed focus by ecommerce shippers, and customer convenience outsourced to Parcel, the optimal solution for providing deliveries to customers ? Will Parcel’s last mile convenience solution be replaced by deliveries to local locker locations with flexibility for pickup any time ? Should carriers like USPS, FedEx and UPS change their delivery flexibility to adapt to consumer preferences or accept the role of companies like Parcel ? 

Posted in consumer, Cost, Ecommerce, logistics, Service Operations, Supply Chain Issues | 25 Comments

Verifying conflict-free refiners proves difficult for the US Commerce Department

Posted on September 6, 2014 by aviyer2010

An article in the Wall Street Journal (September 6, 2014) titled “Conflict Minerals Prove Hard to Track” descries the Commerce Department list of over 400 refiners with a statement that finding which smelters have minerals that can be tracked to funding militia in the Congo has been difficult. The reason is the small miners in the Congo and the untraceable sources of minerals such as gold traded in China. Given the difficulty in certifying smelters, how should US firms be expected to comply with the requirement of the 2010 Dodd-Frank act that requires firms to identify their sources and track conflict free content ? Is there an alternative to such bans of content from specific regions given the modern global supply chains where source materials are mixed ? What reasonable compliance schemes should companies be expected to have to comply with the intent of the law ?

Posted in Cost, Global Contexts, Liability, Supply Chain Issues | Tagged , , | Leave a comment

US Postal service to deliver Amazon groceries between 3 and 7 am

Posted on September 6, 2014 by aviyer2010

An article in the Wall Street Journal (September 6,2014) titled “U.S. Mail Delivers Amazon Groceries in Test” describes a pilot in which US Mail delivers containers of grocery including meat and dairy in San Francisco. The deliveries take place between 3 and 7 am when the delivery trucks are unused. Customers are offered free delivery for orders over $100 or between $8 and $10 otherwise. Will such a scheme, that does not share space with mail deliveries, be feasible in the long run ? With over 35% of Amazon’s deliveries done by the US Postal service, will such a solution that is not pooled with other Amazon shipments, enable Amazon to solve the last mile problem ? How is this a profitable project for the US Postal Service if all costs of operation, including depreciation of the trucks, have to be borne by the revenues from Amazon ?

Posted in Capacity, Collaboration, Ecommerce, Service Operations, Supply Chain Issues, truck | Tagged , | 2 Comments

Should we expect US logistics costs to increase in 2014 ?

Posted on September 5, 2014 by aviyer2010

An article in the Supply Chain Digest (September 5,2014) by Dan Gilmore lists several recent price pressures on US transportation. He lists a 22.6% cost increase accounted by a combination of a 14% wage increase due to driver shortages, a 2% increase due to Hours of service rules, a 3.3% increase as independent truckers are listed as employees, a 1% increase due to the need to have digital loggers on trucks and a 2.3% increase due to diesel tax changes.  Given the steady decline in US logistics costs, would you expect the direction to change to now generate cost increases ? Will competition between truckers and more efficient trucks as well as the decreasing cost of technology keep this increase in check ? Will this growth in costs for trucking cause a shift in mode to trains and other larger volume shipment modes ?

Posted in Capacity, Cost, logistics, Prices, Railroad, Train, truck | 16 Comments

Will the global package business model offered by “manyship.com” be sustainable ?

Posted on September 1, 2014 by aviyer2010

The website http://www.manyship.com describes a system in which individual travelers post their planned trip, shippers post their requirements and the available capacity is assigned to carry products between destinations. The company charges shippers $20 per pound and pays carriers $10 per pound. Manyship plans is to capitalize on the fact that many air travelers do not use up their baggage capacity, thus enabling them to get paid to carry 50 pounds or more per trip and earn up to $500.  Should manyship be considered the uberX for air travel, enabling better capacity utilization and thus lower costs to move small packages ? Will the liability considerations associated with this model cause carriers to withhold capacity and thus doom this model ? Is this model competitive because it shifts the cost for transport, customs clearance and responsibility for claiming the goods as personal rather than business merchandise shifted to the individual carrying the product ?  

Posted in Air, Capacity, Cost, Ecommerce, Global Contexts, Liability, Service Operations | Leave a comment

Rail delays and crop price impact

Posted on September 1, 2014 by aviyer2010

An article in the Financial Times (September 1, 2014) titled “Rail Delays Knock north US grain prices” describes speed reductions of 9% for Burlington Northern Railroad (BNSF) and 11% for Canadian Pacific causing shipment delays.  The backlog for BNSF was 16,500 movements in April and the lack of alternative access to barges or other options caused inventories for farmers in North Dakota to rise significantly.  The impending large soyabean harvest (a growth of 33%) this year is expected to add to the congestion.  Will the rising capacity crunch for rail traffic and the projected drop in prices in North Dakota to clear the market cause follow up price pressures for the coming harvest ? Is the drop in speeds the result of risk management practices to transport crude oil from the same region ? Should the rise in the premium for shuttle trains (from 0 to $2000 to $3000 per car) be controlled to assist grain movement or should it be permitted to float to a level that reflects the market capacity conditions ?

Posted in Capacity, Grain, Operations Management, Prices, Railroad, Supply Chain Issues, Train | 7 Comments

Is Amazon vulnerable because it does not control last mile delivery ?

Posted on August 4, 2014 by aviyer2010

An article in WIRED magazine (May 8, 2014) titled “Amazon Should Make the Postal Service Its Own Personal Courier” describes Amazon’s service vulnerability because it does not control outbound transportation from distribution centers, unlike WalMart. The UPS delivery slippage last Christmas and its impact on Amazon suggests how vulnerable the company is to third party transportation. But should Amazon convert fulfillment centers to sortation centers and team up with the US Postal Service to efficiently use postal carrier delivery routes ? Should Amazon create its own fleet of dedicated delivery trucks and, if so, how will it ensure effective utilization to keep delivery costs low and ensure the close to 150 deliveries per route required to be effective ? How will Amazon’s same day delivery goals match up with these realities ?

Posted in Ecommerce, Operations Management, Supply Chain Issues | Tagged , , , , , | 9 Comments

Will the SupplierPay program boost small business sales ?

Posted on July 15, 2014 by aviyer2010

An article in the Wall Street Journal (July 11, 2014) titled “Apple, Coca-Cola Among Firms Signed on to White House Plan for Small Suppliers”, describes a voluntary plan announced at the White House under which small suppliers would be paid faster, usually within 15 days of delivery. The goal is to increase access to capital at lower costs and mimics the federal government’s QuickPay program. But will the faster payment terms also mean that prices charged by suppliers will be forced to decrease, given that their costs are now lower ? Will faster payment just shift the cost from the supplier to the buyer, albeit at a lower financing rate, thus lowering supply chain wide costs ? Why are such programs not already in place driven by buyer self-interest ?

Posted in Operations Management, Supply Chain Issues | Tagged , , , , , , , , | 19 Comments

Amazon’s 1 cent shipping in France

Posted on July 15, 2014 by aviyer2010

An article in Slate (July 11, 2014), titled “France Banned Free Shipping. So Amazon made it cost 1 cent”, describes Amazon.com’s response to a new French law that bans free shipping and permits only bricks and mortar bookstores to offer the up to 5% discount on books. These laws were meant to restore the competitiveness of traditional bookstores. But will Amazon’s counter with a 1 cent shipping charge, far below the actual cost, negate the impact of the law force publishers to lower their costs to Amazon ? Will the real benefits competitive advantage to Amazon be the flexibility for customers to order at any time and access used and out-of-print books which may offer Amazon greater margins ? Will a more coordinated supply chain whereby Amazon works with local bookstores to permit ordering of brick and mortar store books (new and used) be a more appropriate resolution for customers ?

Posted in Global Contexts, Operations Management, Supply Chain Issues | Tagged , , , , , , , , , | Leave a comment

Should “pay to delay” launch by branded pharma be considered illegal ?

Posted on July 11, 2014 by aviyer2010

An article in the International Herald Tribune (July 10,2014) titled “EU fines drug makers over generics”, describes the $450 million fine levied in Servier, a branded producer of the blood pressure drug perindopril. The company is accused of buying up rights to an alternate manufacturing process after its patent expired, and paying generic manufacturers to delay production, thus propping up drug prices. Once these tactics stopped, prices for the generic drug dropped 90%. Should such tactics by patent owners be banned to increase price competition? Will prices of drugs during the patent period increase if business tactics to reduce competition after patent expiry are banned ? Should such rules consider alternative treatments as competing options or should they apply to each individual drug ?

Posted in Global Contexts, Operations Management, Supply Chain Issues | Tagged , , , , , , , , , | Leave a comment