Global Supply Bottlenecks and rethinking China sourcing

An article in APNEWS titled “Shipping snags prompt US firms to mull retreat from China” (August 5, 2021) claims that firms are worried about container capacity, shipping delays and rising prices. Many manufacturers (52%) are thus considering moving production back to Mexico or the US. What will be the impact of moving to US sourcing for many currently globally sourced products – will it make manufacturers more or less profitable ? Should manufacturers consider splitting their sourcing across the US and Mexico or vertically integrate ?

Posted in Uncategorized | Tagged , , , , , | 60 Comments

Manufacturers thinking holistically about opening in the New Normal

A report published by Purdue’s DCMME ( describes an approach to leverage smart technology to enable manufacturers to operate as they open after the pandemic. The report describes process adjustments to prevent infection spread and rethinking the economics of technology adoption including cobots, sensors, video technology, cleaning robots etc.   Is fast adoption of technology to protect employees a competitive need for manufacturers ? Will technology adoption reduce headcount and thus be resisted by employees ? Will the products have to be redesigned to work in this environment ?

Posted in Capacity, manufacturer, Operations Management, Supply Chain Issues, technology, Uncategorized | Tagged , , , | 48 Comments

Benefits of customer flexibility during the pandemic

An article in ASCM Insights ( describes reasons why retail grocery customers might be stockpiling.  The article suggests that retailers should deal with each reason separately, with appropriate steps to reassure customers.    There is also discussion of smaller retailers and their opportunities to be competitive. If customers demand free delivery, due to their Amazon Prime expectation, how should retailers compete ? Who should pay for the store labor costs associated with curbside delivery to customers ? How many of these online customers will remain in that mode as the pandemic worries decrease ?

Posted in Capacity, consumer, Cost, delivery, logistics, product, retailers | Tagged , , , , | 106 Comments

Hardware Chain Growth through the pandemic

An article in the Wall Street Journal (August 16, 2020 describes the impact of the pandemic on hardware chains such as Home Depot and Lowes.   From cancelling customer attracting, but low margin, promotions to ensure social distancing, to reordering products that customers demanded to remodel, or dealing with the 35% increase in foot traffic over last year, to monitoring customer demand closely to adjust forecasts, stores are becoming more nimble in their supply chain execution.  How should stores adjust to observed store sales to reduce stockouts ? Should suppliers be asked to do vendor managed inventory at retail stores ? How should contractors be managed vs residential DIY customers ?

Posted in Capacity, competitiveness, congestion, consumer, Coordination, Cost, logistics, retailers, supplier, Uncategorized | Tagged , , , , | 49 Comments

Building resilience in supply chains

A news report ( described six ways that supply chains can build in resilience to deal with the pandemic during the early days when suppliers in China were impacted. These include adjusting shipment modes, using alternate designs, building up inventory, leveraging existing supplier capabilities etc.  How quickly can each of these alternatives be leveraged to build in resilience ? Do these suggestions imply dual sourcing ? Will costs increase as a result ?


Posted in Capacity, China, Coordination, disruption, logistics, product, ship, supplier, Supply Chain Issues, Uncategorized | Tagged , , , , | 68 Comments

The logistics of organ transplants – supply but inefficient distribution

An essay in the Wall Street Journal by David Weill titled ‘Supply Isn’t the problem with Organ Transplants” (December 6, 2019), describes the increased supply of organs in the US but an inefficient distribution of the organs to patients who need them, thus creating apparent shortages in the minds of patients and their families. He describes the organ procurement process, managed by network of 60 non-profit organ procurement organizations (OPOs), who operate under the department of Health and Human services oversight, and sets prices. He describes the increased deaths due to the opioid crisis, the eight different thoracic and abdominal organs that can be used from the cadaver, and the rush by various teams to get these organs and match it with their patients. But the matching of available organs to patients depends on the readiness to do the transplant, and delays in that stage may end up with a situation whereby 30% of lung transplant patients die because they never found a donor. What can be done to improve the logistics of supply and demand and thus provide better use of the donor organs ? Should OPOs be measured based on their success in placing organs ? Should doctor workloads be flexed to provide priority to use available organ transplants ? Can technology help improve the grim performance metrics for organ use in the US?

Posted in Coordination, delivery, hospital, logistics, Service Operations, Supply Chain Issues, transport | Tagged , , , , , , , | 55 Comments

The benefits of recycling robots to enable recycling efficiency

An article in, titled “Recycling robots raise millions from top venture firms to rescue an industry in turmoil”, describes challenges faced by US recycling companies as a result of China’s lowering of the contamination threshold for recyclable content combined with lack of sufficient labor given the healthy US economy. This has enabled the competitiveness of technology solutions using computer vision, robots, machine learning etc to identify and sort garbage into sorted piles of plastics, cartons etc. With a higher pick speed (twice as fast of humans), higher accuracy and longer working hours, automation seems to be a competitive alternative. Should landfilling prices be increased to incentivize use of automation to recycle rather then throwing all of the garbage in the landfill ? Should separation at the source i.e., moves to separation of barge by consumers be encouraged so that the robots tasks become simpler and thus improve the recycling economics ? Should greater benefits (perhaps through lower sales taxes) be provided for purchase of products with higher recylced content ?

Posted in Capacity, competitiveness, Cost, productivity, recycling, Sustainability, technology | Tagged , , , , | Leave a comment

Target claims a 90% handling cost reduction for same day shipping options

An article in titled “Target CEO says cost of handling online orders drops 90% when shoppers use same-day options” claims that shipment from stores enables retail efficiency and decreases cost by 40% associated with from a distribution center. Those costs decrease by 90% when customers pick up online orders from the store or curbside. The benefit of satisfying demand from retail locations already close to the customer provides brick-and-mortar retailers a competitive edge over Amazon. How should Amazon adjust to compete with Target – build more distribution centers ? Increase their investment in robotics at their distribution centers ? Increase Amazon lockers for customer pickup close to their offices?

Posted in Capacity, competitiveness, Cost, Ecommerce, emb2021, Supply Chain Issues | Tagged , , , , , | 21 Comments

Planning for Brexit related upheaval

An article in the Wall Street Journal (February 1, 2019) titled “Secret Truck Routes and backup Storage”, describes plans by one UK company, Heller Maschinenfabrik GmbH. The company gets 60% of its components weekly from suppliers across Europe, assembles it product and ships it to Germany. The company has purchased additional storage space, has plans to stockpile components, has plans for a secret transport route to avoid congestion in Dover and plans for additional staff. But all of this is on hold until the potential Brexit scenarios become clearer as they involve additional costs of over 150,000 pounds. Given the inability to pass on these additional costs, is Heller’s decision to stockpile components and remain in the UK the optimal decision or should the company make plans to move its assembly operations ? Should the company postpone any capacity expansion plans in the UK, as is has done in the past, until uncertainties are resolved ? Should Heller create an alternative source for assembly in Germany immediately and thus have other options to supply customers ?

Posted in Capacity, congestion, Cost, disruption, logistics, manufacturer, mgmt5612019, Operations Management | Tagged , , , , | 59 Comments

Is the inability to source custom screws a reason why it is difficult to build iPhones in the USA ?

An article in the New York Times (January 28, 2019) titled “A Tiny Screw shows why iPhones won’t be “Assembled in the USA”” describes the difficulties that Flextronics, Apple’s assembler of the high end Macbook Pro in Austin, Texas, faced in sourcing custom screws. The article describes their search for a supplier who could deliver 28,000 screws, and their option being a single supplier who could make at most 1,000 screws a week and took 22 trips to deliver the required volume. The claim is that such supply chain gaps make assembly of electronic products, which often requires design changes and quick delivery given the lean nature of the supply chains, difficult in the USA. But it also claims that availability of tooling engineers in China, and labor costs in China of $2.10 per hour, as additional reasons. Does the story of the difficulty in sourcing screws reflect poor inventory planning for components i.e., why wouldn’t Apple buy a large quantity of the required low cost components and decouple procurement from usage or is the sourcing difficulty valid given design changes ? Would assembly be easier if designers were constrained to use standard parts for low end items, such as screws, so as to alleviate the assembly bottlenecks ? Does Apple find assembling in the USA difficult because the supply chain is managed by Flextronics, Apple’s supplier, rather than Apple itself ?

Posted in Capacity, competitiveness, Cost, delivery, emb2021, Global Contexts, logistics, Operations Management, ordering | Tagged , , , , | 20 Comments