France’s laws to protect bookshops

Posted on July 11, 2014 by aviyer2010

An article in the International Herald Tribune (July 10,2014) titled “The French do buy books. Real books”, describes two French laws, the “Lang Law” that says that book prices cannot be discounted more than 5%, and a new rule that states that discounted books sold online cannot be shipped free. The two laws aim to eliminate the advantage for online booksellers like Amazon,while preserving choice for consumers. Will such price constraints, which increase costs to consumers on average, create benefits of increased book variety ? Should books be treated differently than other products in preserving their availability?

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Will the US catfish inspection program derail the TPP pact

Posted on June 28, 2014 by aviyer2010

An article in the New York Times on June 28, 2014 (“US Catfish Program Could Stymie Pacific Trade Pact, 10 Nations Say”) describes the Agriculture Department’s catfish inspection program that is being protested by Vietnam with support from Thailand, Philippines, Myanmar and Indonesia. The inspection program was setup in response to the declining US catfish industry whose volumes have dropped 60% from its peak. In addition, the US government’s General Accounting Office calls catfish a “low risk food” with inspection not changing the safety of catfish. Should the inspection be considered as a ploy to protect the interests the US catfish industry or necessary to protect the US consumer from potential unsanitary conditions at suppliers ? Given the risk to TPP, should this lower risk inspection be withdrawn or is it worth the cost ? How should consumer demand for a secure food supply chain be reflected in the product – would certification by independent third party agencies or retailers be an alternative ?

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Surging prices for railcars as demand runs up against supply shortages

Posted on May 30, 2014 by aviyer2010

An article in the Wall Street Journal (May 30,2014) titled “Driller’s Pain is Railcar Owner’s Gain”, describes 33% price increases for tank cars, 50% increases for cars hauling sand and 40% increases for grain hoppers. These price increases reflect the interaction between cars that were scrapped in 2008 and reduced capacity, delayed orders and deliveries for new railcars and large crop yield of corn and soy-beans, fracking industry shipments. Will the new railcars that hit the market be too late for the current demand surge and thus drive down prices and create overcapacity? Will the planned US and Canadian rules for puncture resistant cars justify this capacity increase even if demand drops ? Should there be some market coordination of railcar deployment to prevent hazardous cargo from being moved to trucks ?

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Volvo’s concept of “Roam Delivery” that deliveries online orders to your parked car

Posted on May 24, 2014 by aviyer2010

An article in BloombergBusinessweek (February 27, 2014) titled “Volvo wants your parked car to accept deliveries”, describes a system that would permit a one time key option to open parked cars to deliver packages to Volvos. Online shoppers would place orders and confirm access to the delivery company and deliveries would require confirmation with Volvo’s OnCall system. The report suggests that the system would be suitable for lower value services such as dry cleaning or food in safe cities. Will the flexibility to deliver to the car location make online courier deliveries efficient ? How will this technology cover cars by other manufacturers ? Will the risks of such access outweigh the customer service benefit ?

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Will drone ships become a reality anytime soon ?

Posted on May 24, 2014 by aviyer2010

A report in Bloomberg (http://www.bloomberg.com/news/2014-02-25/rolls-royce-drone-ships-challenge-375-billion-industry-freight.html) on February 25, 2014, titled “Rolls Royce Drone Ships Challenge $375 Billion Industry”, suggests that drone ships controlled by land based captains can disrupt existing maritime shipping. By eliminating crew quarters and associated services, ships are estimated to be 5% lighter and can carry more containers, thus reducing costs by 12 to 15%. Crew costs, estimated to be 4.4% of operating costs would also be eliminated. Will the economics of drone ships drive the industry to shift to use them within ten years? Given that unmanned ships are currently illegal, and the union of seafarers opposes their use, will regulations and self-interest doom their adoption ? Should the use of drone ships for hazardous cargo be banned to manage risk or are risks lower given that human error due to fatigue, the cause of most shipping accidents, would be eliminated ?

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The supply chain for cordovan leather and shoe prices and availability impact

Posted on May 24, 2014 by aviyer2010

An article in the Wall Street Journal on May 24, 2014 (http://online.wsj.com/news/articles/SB10001424052702303468704579572141307216318?mg=reno64-wsj) titled “Cordovan Shoes for Men Play Even Harder to get”, describes the over $2400 price points and six month wait times for cordovan leather shoes. The leather is obtained from the muscle near the rump of a horse, with availability tied to horse meat consumption. But lower consumption of horse meat, larger alleged volume purchases of entire horse hides by some traders, six month tanning time for cordovan leather, all are claimed to reduce availability of cordovan leather. Given the customer demand for cordovan leather shoes, which claim to retain their sheen over time, why does distributor inventory not solve the availability problem ? Is this a temporary bullwhip effect, where reduced horse meat consumption and higher retail prices will create a new equilibrium where availability issues are resolved ? What are opportunities for other supply chain entities to mitigate the supply issues ?

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Is Amazon using Pre-order levels as a tool in negotiating higher margins from publishers ?

Posted on May 24, 2014 by aviyer2010

An article in the Wall Street Journal on May 23, 2014 (http://online.wsj.com/news/articles/SB10001424052702303749904579580052135901452?mg=reno64-wsj) titled “Amazon-Hachette Dispute Heats Up”, describes a complaint that no pre-orders for books by J L Rowling at Amazon.com’s website were being taken, while other sites continue to sell the books. A lower pre-order level by Amazon would delay book availability to customers and thus hurt the buzz and possible overall sales. The publisher claims that the dispute is centered around Amazon seeking a greater margin from e-books, claiming that the publisher has lower costs for e-books. Will Amazon’s strategy to reduce book access to customers hurt Amazon or Hachette or the consumers ? Given the recent ruling permitting publishers to set prices and retailers to negotiate discounts, will such tactics make the publishers worse off (given that Amazon was key to the dissolution of Apple’s contracts that provided a fixed rate)?

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Panasonic’s plans to move production back to Japan

Posted on May 23, 2014 by aviyer2010

An article in the Financial Times (http://www.ft.com/intl/cms/s/0/b22e772a-e1a2-11e3-9999-00144feabdc0.html?siteedition=intl#axzz32YPzdZCV) titled “Panasonic considers bringing production back to Japan) describes the weak Japanese yen (which has fallen 20% since 2012 against other currencies) improving the economics of production of rice cookers, washing machines and air-conditioners in Japan. Panasonic sells 50% of its products in Japan and such changes make sense now. Will the move to raise capacity in Japan create an inflexible supply chain as import costs increase and currencies move again ? Are there strategic reasons to relocate to Japan, such as adapting to local regulations, which make it an effective decision ? How should Panasonic retain the flexibility of its local capacity so that it can be reconfigured when products or conditions change ?

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Can Walmart get store customers to deliver online orders ?

Posted on May 19, 2014 by aviyer2010

An article published by Reuters (http://www.reuters.com/article/2013/03/28/us-retail-walmart-delivery-idUSBRE92R03820130328) titled “Wal-Mart may get customers to deliver packages to online buyers”, describes an idea where store customers could sign up to deliver orders to customers in their route in return for a discount on their bill. Using in store customers to deliver during their backhaul route home would save the costs of shipping via FedEx, UPS or USPS and avoid the courier costs, while enabling quick delivery. But will such a crowdsourced delivery mechanism ensure on time delivery and quality ? Will customers need to be certified and checked to ensure logistics reliability and will that increase the costs to the level charged by independent couriers employed by TaskRabbit or Instacart? Will WalMart sacrifice customer service to its instore customers or increase store customer loyalty by offering such opportunities ?

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Will “botsourcing” bring manufacturing back to the US

Posted on May 15, 2014 by aviyer2010

An article in the Harvard Business Review Blog Network (http://blogs.hbr.org/) titled “Robots are starting to make offshoring less attractive” describes how use of automation and robots is increasing the attractiveness of US manufacturing. Foxconn’s decision to build iphones in Pennsylvania, Tesla’s plans to make batteries in the US and Amazon’s use of robots for order picking coupled with significant hiring are described as sample impacts. Will the trend, described as botsourcing, increase the outsourcing of IT while increasing the insourcing of manufacturing i.e., should the bot controller be necessarily located close to the bot user ? What impact will this ability to separate the controls from the job execution have on the nature of training required for manufacturing employees ? Is manufacturing and service productivity the real determinant of long run growth in the economy, as suggested in the article ?

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