Amazon’s “Flow” tool and potential impact

Posted on February 9, 2014 by aviyer2010

An article in the Wall Street Journal titled “Amazon’s Flow Image Recognition beats Barcode Scans” describes an app that enables Amazon’s customers to use their smartphone cameras to identify objects without the need to scan the barcode. This increases the speed of capturing objects e.g., entire carts, rather than individually identifying items by barcode. Does the use of the camera to identify items based on their markings intensify the competition between Amazon and traditional retailers ? How should grocery retailers react to such technology ? How might this technology increase the growth of private label, retailer exclusive products ?

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Delivery, fashion tips, payment collection and returns by Lamoda’s couriers

Posted on February 9, 2014 by aviyer2010

An article in Bloombergbusinessweek titled “Where the Deliveryman Gives Fashion Advice” (February 10, 2014), describes the ecommerce website Lamoda in Russia. The internet fashion retailer offers home delivery of fashion that customers can try on and decide within 15 minute whether to purchase or return. Payments can be made to the courier as cash or credit card. The courier is a sales assistant who delivers items the next day and delivers items including 900 brands. The ecommerce company, operating in Russia, solves the problem of the current unreliable Russian postal system and reluctance to hand over payment, while delivering high margin fashion items whose sales are growing rapidly. What is the barrier to entry for competitors to Lamoda and how much of the benefit comes from fashion advice vs logistics convenience ? How important is the exclusivity of brands offered and how should Lamoda enable stores and brands to treat the echannel as profit improving rather than cannibalizing their sales ? Would you see a benefit to offering such options in the US or Europe?

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Foxconn’s plans for a US manufacturing location

Posted on January 27, 2014 by aviyer2010

An article in the Wall Street Journal titled “Foxconn Weighs Plan for US Plant” (January 27,2014) describes a statement by Foxconn’s chairman that the company would invest in capital intensive manufacturing in the US. He claims that the company plans to push in the direction of “automation, software and technology innovation” with the US plant being used to generate TV screens larger than 60 inches. Does the rising labor cost in China or a need to create a diversified global production footprint justify this decision ? If growth of the company in new medical products and sustainable products is important, does US manufacturing enable such growth ? Is the US a low cost producer if environmental compliance is a key requirement during production ?

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“Anticipatory Shipping” ideas from Amazon

Posted on January 24, 2014 by aviyer2010

An article in the CBS News website (http://www.cbsnews.com/news/amazon-files-patent-for-anticipatory-shipping/) titled “Amazon files patent for anticipatory shipping” provides an outline of the idea. The key is that goods would be shipped out before the customer places the order so that the deliveries are closer to order placement. Data regarding customer searches, purchase history, shopping cart contents etc would be used to initiate shipments before orders. But details of the idea also suggest that while the product is shipped, the delivery address would be specified later, after the item is in transit, to enable lower customer lead times. Given the forecasting models of customer purchase intent, and the goal to speed up shipments, does this new idea merely mimic the goal to move goods to warehouses closer to customer locations ? Should customers be provided some products free if their actual purchase decisions do not match the forecasted intent, with the delivered items being treated as promotions ? Will such moves increase customer loyalty or have other unintended consequences e.g., worries that Amazon has access to a lot more information than the customer intends ? Will such moves enable Amazon to increase its margins because it can provide lower lead times without using premium transportation ?

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The many reasons for Christmas delivery delays by UPS

Posted on January 18, 2014 by aviyer2010

An article in Supply Chain Digest (Jan 6, 2014) available at (http://www.scdigest.com/ontarget/14-01-06-2.php?cid=7717) discusses reasons for the delivery delays of Christmas orders handled by UPS. While UPS anticipated an 8% increase in shipment volume, and added 55,000 employees and 23 aircraft, ecommerce volume surged 63% with many merchants shifting to air shipments due to their own fulfillment delays. The mix of air and ground hurt UPS because of their inherent lead time differences – with UPS having a a smaller fleet size than FedEx. Finally retailer offers to customers to place orders as late as 11 pm on Dec 23 and receive delivery by Christmas is also identified as a reason for delays ad lack of air capacity to complete deliveries by Christmas. What should UPS do to plan for such uncertainties next Christmas ? Should UPS check against available capacity before accepting order so that customers are aware of order delays before they place orders ? Should retailers be offered the option to shift to other delivery providers once UPS’s has reached its capacity ?

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Why are Chinese and Indian yarn manufacturers opening US plants ?

Posted on January 18, 2014 by aviyer2010

An article in the. Wall Street Journal (December 21,2013) titled “A Good Yarn for US workers” describes decisions by the Chinese yarn manufacturer Kerr to open a plant in North Carolina and the Indian Shrivallabh Pitte group to open a yarn plant in Georgia. These yarn producer decisions are impacted by US “yarn forward” rules that provide breaks for apparel that is made by yarn sourced within countries with duty-free deals with the US. But the Indian producer also benefits from low energy costs in the US, and uninterrupted power supply, along with low borrowing costs and tax breaks. Will the US production costs, which are cheaper than Turkey, Korea and. Brazil, suggest a movement of manufacturing back to the US from China and India for other benefits ? Given the available of cheap uninterrupted power in the US, compared to energy shortages in emerging markets, will that be a driver for a US manufacturing renaissance ? Or is the yarn forward rule making the difference ?

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Centralized vs decentralized last mile delivery models in New York City

Posted on January 18, 2014 by aviyer2010

An article in the Wall Street. Journal (December 21,2013) titled titled “Delivery goes Hi-Tech” describes Hobsons, a delivery service with its own vans that does 300 trips a day currently, and Postmates, a decentralized service provider that broadcasts request to couriers and picks the best one for delivery. Pricing at Postmates adjusts to congestion and delivery conditions. Each of these services also faces stockouts at designated retail locations which may require them to pick up from alternative locations. Given the pressure for ontime delivery, do you expect one or the other model to dominate ? Will product characteristics dictate which one would be preferred e.g., individual items vs baskets of items ordered ? How will ontime delivery guarantees be expected to differ across the models ?

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The Jones Act and its impact of shipping between US ports

Posted on January 18, 2014 by aviyer2010

An article in Bloombergbusinessweek titled “Lots of Oil, Not Enough Ships ” (December 16, 2013) describes the Jones Act, a 1920 US law that restricts ships that ply between US ports to be US carriers with a US crew. Given the small number of such ships (32 tankers and 42 barges) and the substantial domestic oil production (8 million barrels per day), shipping from the Gulf Coast to The East Coast costs three times as much as shipping to Canada (which does not have such restrictions). Similarly ships from China cannot stop in Hawaii, they deliver goods to the West Coast and then need a separate trip back to Hawaii. Should the Jones Act and its costs be tolerated given that it creates volume for rail lines and work for US ship owners? Will the increased US oil production, and its need to be distributed, suggest the need for an exception to the. Jones Act for oil, as a starting point? Are there other such old laws that are a detriment to logistics costs?

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Should the US government track the working conditions at its apparel suppliers ?

Posted on December 23, 2013 by aviyer2010

An article in the New York Times titled “Buying Overseas Clothing, US Flouts its own advice” (December 22, 2013) describes the $1.5 billion in clothing purchased by the US government and working conditions at its suppliers. Contracts for clothing for the Marines was being made at a Bangladeshi plan that used child labor. Defense officials blocked plans to require their suppliers to follow recommendations by the labor department regarding factory conditions, claiming that costs would go up by over $500K. Should the US government be required to adhere to supplier audits that guarantee ethical sourcing ? Should the higher cost of such ethical sourcing be accepted as a necessary condition for sourcing ? Should manufacturing locations for all US government purchases be required to be made transparent ?

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Tracking consumers and adjusting inventory locations to improve retail performance

Posted on December 9, 2013 by aviyer2010

An article in the Wall Street Journal titled “Hot at the Mall:Heat Maps to Track Shoppers” (December 9,2013) describes heat sensor technology and cell phone tracking software used by retailers to identify shoppers routes through the store, bottlenecks, and products picked up. One store claims to have moved candles and perfumes from low traffic to high traffic locations, reduced bottlenecks by shifting popular items to less trafficked areas of the store and reduced wait times by getting customers to shop online when queues become long. Another store owners claims to have moved scarves to the back of the store after finding customers congregating there. Can brick and mortar retailers justify such tracking as a necessary competitive response to generate efficiencies to compete with online retail tracking ? Should customers be asked for permission before they are tracked in a store, even if their individual data is masked ? Does the additional information significantly increase privacy concerns over the use of store video for security in the past ?

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