High Speed trains and productivity impact in China

Posted on September 24, 2013 by aviyer2010

An article in the New York Times, on September 23,2013, titled “Speedy Trains Transform China”, (http://www.nytimes.com/2013/09/24/business/global/high-speed-train-system-is-huge-success-for-china.html?_r=0) describes the impact of the trains that travel 186 miles/hour and connect 100 cities. For individual textile manufacturers, the fast access to customers enables quicker response to styles and thus order increases of 50%. For larger businesses, educated employees can locate in large cities and yet access production facilities in smaller towns, in addition to access to many more employees and customers, thus boosting productivity. The impact is a shift in traffic from air to rail and thus reduction in short haul air routes. Given such a significant impact of high speed rail, along with the associated lower pollution levels and fuel savings, how should companies plan location of their supply chains in China ? Will such access to inner cities enable wage increases in China to be held in check, by accessing more remote locations, without any significant logistics cost increases ?

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How should data from smart meters be used to improve the power supply chain ?

Posted on September 23, 2013 by aviyer2010

An article in the Wall Street Journal titled “Utilities Try to Learn from Smart Meters (http://online.wsj.com/article/SB10001424127887324123004579055070644003780.html) describes the continuous flow of data from smart meters in consumers homes. That data, coupled with sensors in power generating equipment owned by utilities generates a lot of real time data, that yearns for useful deployment. Audits of consumer power consumption can pinpoint faulty equipment, like a malfunctioning pool pump that caused high utlity bills for a consumers. Sensors in equipment enables utilities to do proactive repairs, thus saving downtime costs. Energy audits for retailers can result in recommendations for energy savings bulbs and a potential to cost utility costs by 50%. Will such use of data enable the industry to feed the growing power demand without adding upstream capacity ? Will consumer use of this data enable a more quantifiable analysis that will grow demand for energy efficient products ? Will the lower power bills enable a dialog with consumers to install alternate energy generating solar panels ?

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Can Uber be a hyper-local logistics provider ?

Posted on September 23, 2013 by aviyer2010

An article in Fortune magazine (October 7,2013) describes the capability of Uber, the taxi app software provider whose main capability rests on the algorithms that enable its drivers to remain utilized by matching the dynamics of the spatial demand and supply of cabs. The article suggests that the same algorithms can make local deliveries a reality, with a steady use of couriers enabling local delivery costs to be kept low enough to be competitive. But will such delivery require the ability to smooth demand using the surge pricing that Uber uses when demand for its services grow significantly ? What capability does Uber have to compete with Peapod, Instacart and Amazon in this space, or will it become a provider to these companies ? Will adjusting delivery lead times, instead of price, provide the smoothing ability that Uber needs, or will the company focus on backhauling and reducing deadhead runs using local delivery as a revenue opportunity when its cabs are idle ?

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Retail Analytics to mitigate fashion risk

Posted on September 21, 2013 by aviyer2010

An article in the Wall Street Journal, on September 8, 2013, titled “Fashion Industry Meets Big Data” (http://online.wsj.com/article/SB10001424127887323595004579062793245498838.html?mod=itp&cb=logged0.7893976105842739) describes the increasing use of analytics in the fashion industry to forecast trends. These forecasts provide estimates of demand by color, fabric and cut. The forecasters claim to use social network comments, fashion shows worldwide to generate the data. Retailers claim to use this data to be in sync with current trends, with such matching of products to current styles enabling profit benefits. As more retailers access the same data, will retailers continue to see similar benefits ? How can individual retailers maintain their unique styles even if industry consensus information is widely available ? As retailers move towards use of more current data, will manufacturers with domestic locations and thus fast delivery, become more competitive ?

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Can Instacart’s no inventory solution to grocery delivery work ?

Posted on September 21, 2013 by aviyer2010

An article in AllThingsD (http://allthingsd.com/20130917/with-webvans-implosion-as-cautionary-tale-instacart-slowly-begins-to-expand-starting-with-chicago/) describes a grocery delivery in San Francisco and Chicago offered by Instacart (https://www.instacart.com/faq), with no warehouses but with delivery from existing grocery retail stores. The company charges $3.99 for orders exceeding $35 with delivery in 2 hours. Orders are filled by independent personal shoppers who get paid based on deliveries. In some cases, customers claim to have access to lower prices than those at the store. Will Instacart’s delivery service, which requires a high volume of spatially close orders, succeed in downtown Chicago ? Will the company, that currently only offers delivery of products from Trader Joe’s, need to expand to cover other chains in order to cover a larger segment of a customer’s shopping list ? Should shoppers be allowed to select from items across chains in order to get even more benefits from such a service ? What is the barrier to entry for any other courier service – is it the low prices charged by Instacart or its possible alliances with chains ?

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Resurgence of US textile manufacturing – an automation driven solution

Posted on September 21, 2013 by aviyer2010

An article in the New York Times on September 19, 2013 (http://www.nytimes.com/2013/09/20/business/us-textile-factories-return.html?_r=0) describes a textile plant, Parkdale Mills, that makes 2.5 millions pounds of yarn using 140 workers now, compared to 2000 workers in 1980. The new plant uses automation, air cleaning, robots – all capital equipment that help increase productivity and thus make the US wages acceptable to textile buyers. As a result, sweatshirt manufacturers like American Giant can buy the fabric from Parkdale Mills in the US, leverage lower lead times, and greater collaboration. Is this the future of US manufacturing, with automated blended with flexibility as the road (with power costs a large component of total costs) to be competitive ? The article suggests that Parkdale can now offer lower risks to OEMs, who now do not have to worry about issues such as the plant catastrophes in Pakistan and Bangladesh – will the cost of this risk alleviation justify the higher manufacturing cost in US plants ?

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Will modular smartphones help reduce e-waste ?

Posted on September 21, 2013 by aviyer2010

An article in CNN.com (http://www.cnn.com/2013/09/19/tech/innovation/phonebloks-the-smartphone-for-life/index.html?hpt=hp_bn5) describes a proposal by the company Phonebloks (www.phonebloks.com) to create smartphones with a modular design that enables individual phone owners to customize the phone. With individual units such as the camera, battery, storage etc that can be upgraded as needed, the design will relegate hardware companies to become component providers, similar to audio equipment component manufacturers. The goal is to reduce the estimated 20 to 50 million tons of e-waste. But will hardware manufacturers cooperate with such a platform based product that relegates them to sell components ? Will customers embrace the ability to get the specific functionality they desire in their phones ? Is there a logic to using government regulations to demand that the industry focus on decreasing ewaste as a driver of such changes or would that result in phones that make consumers worse off with respect to innovation and functionality?

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Is P&G’s plan to cut package contents to increase prices a winner ?

Posted on September 16, 2013 by aviyer2010

An article in the Wall Street Journal (September 8, 2013) describes a plan by Proctor and Gamble (P&G) to reduce 8 diapers from a box of 140 while maintaining the price, thus raising prices by 6%. This policy follows the “de-sheeting” trend in the paper industry, which the article claims was used by Kimberly-Clark to increase prices by 13%. Will diaper buyers attribute their need for more frequent purchases to usage, rather than smaller pack sizes, and thus be unable to recognize the pack size reduction ? Are such schemes to increase prices less demand disruptive than price increases for the original pack sizes ?

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Lulemon’s CEO’s blame on supply chain issues for poor performance a stretch ?

Posted on September 16, 2013 by aviyer2010

An article in the Wall Street Journal (September 12, 2013) describes a conference call in which Lululemon’s CEO blamed supply problems associated with Luon, a stretch fabric that was the cause of see through black yoga pants that had to be recalled, for lowering earnings estimates. The company blamed its single supplier as a problem and claims it has two current suppliers with a third to be added soon. In addition, she described capacity related delays in its “commercialization” department, responsible for products from design to delivery. The result was delayed deliveries of fall products, with stores having to rely on summer merchandise to last them through August. Do these product delivery delays, the result of earlier product design mishaps, sound reasonable or a “stretch” as the reporter asserts ? Is increasing the number of suppliers the right supply chain response to product design problems or will it further delay correction in the event of a design issue that has to be corrected with new production ?

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Sarin antidote stockpiles, supply problems and extension of expired drugs

Posted on September 16, 2013 by aviyer2010

An article in the Wall Street Journal (September 13, 2013) describes supply problems for antidotes for Sarin due to manufacturing issues, that result in less than the stated dosage, in prefilled syringes made by Pfizer. The impact is possible erroneous doses in about 0.7% of the volume. Though the military has over 2.8 million doses in inventory, worries of stockouts have caused the Food and Drug Administration to grant extensions to use existing doses beyond their four year life span. Is the use of possibly expired but full dosages a reasonable option to less than the correct doses in current products ? How should stockpiles be shared between the military and civilian populations in an emergency ? How should manufacturer manufacturing be monitored to ensure quality and how should penalties be charged to sole suppliers of such critical products ?

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