How are US paintbrush makers globally competitive ?

Posted on June 19, 2013 by aviyer2010

An article in the New York Times (June 18,2013) describes the competitiveness of over 139 broom, brush and mop manufacturers in the US undeterred by competition from CHina. One company, Kirschner, survives by making no changes in its manufacturing and thus providing stability in its product line. Customers like the Greco Brush company supply Kirschner brushes to house painters, who demand product quality and no loose fibers, and thus trust the Kirschner brush. But other brush manufacturers like Braun Brush focus on innovation, creating new variants for each industry and dropping products for which competition emerges. Will the future of US manufacturing require small companies to be like Kirschner or Braun ? Is there room for both such survival strategies – one focused on stable use of depreciated capital equipment to make consistent product lines while the other used continued capital investment and risk ? How important is the downstream demand for brushes in understand the success of these companies ?

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Should Tesla be permitted to sell cars direct to consumer ?

Posted on June 18, 2013 by aviyer2010

An article in the Wall Street Journal (June 18, 2013) describes the electric car company Tesla’s attempt to sell direct to consumer from its own stores. The company can do so in states such as New York, New jersey, Massachusetts, California and Florida but has been blocked by North Carolina from even owning stores. Tesla claims that since it does not have any franchised dealers, they would face no harm due to its sell direct pricing. But existing dealers, aiming to protect their market access, worry about existing auto manufacturers creating new companies to leverage ecommerce for cars. The origin of the dealer laws is to prevent manufacturers from competing with dealers – a channel conflict problem. Should Tesla, which claims it will be a far more vigorous advocate for electric cars than existing dealers, be permitted to sell direct in the absence of any existing dealers ? If Tesla is permitted to sell direct, and existing auto makers are not offered that option, would the resulting supply chains result in an unfair competitive advantage for Tesla ? Should exceptions be made for emerging technologies with niche markets, such as Tesla, with small sales volumes ?

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Competition between railroads and pipeline operators to transport oil

Posted on June 15, 2013 by aviyer2010

An article in Bloombergbusinessweek (June 17,2013) describes competition between a oil pipeline owner, Kinder Morgan, and railroads to transport oil from West Texas to Los Angeles. While pipeline operates demands long term contracts to cover their capital costs, railroads can add a few miles of rail track and connect oil production locations to refineries. With railroads transporting a record level of oil despite costs for pipelines between 33 and 50% of rail transport, contract flexibility and faster ramp up times tip the scales in favor of rail. Given the long term economics of pipelines, how will the potential clash between new pipeline capacity and rail evolve, given the greater options for shippers ? Will the plan by pipeline companies to invest in rail preserve profitability by avoiding ruinous competition ? Given the flexibility to change routes, will society be better off with rail as the mode of choice to transport oil ?

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Should Europe ban the “beaching” of old ships flying the European flag?

Posted on June 15, 2013 by aviyer2010

An article in the Wall Street Journal (June 13,2013) describes a move to ban the beaching of old ships (flying European flags), a method used in India and Bangladesh to recycle old ships. Instead, recycling will require use of dry docks, increasing costs and destroying the business in Bangladesh and India. Though waters become toxic with beaching, recycling in South Asia recovers ship contents and the steel, thus pays the shipowner more than dry docks, while recycling more of the ship’s content. The livelihood of over a million workers is also at stake. Should beaching be banned by the EU given its collateral effects? Should the fraction of recycled content be included in the determination of the impact of ship recycling method used ? Or will ship owners change from the European flag on old ships to skip the ban ?

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Is blocking logistics for US coal exports good for the global environment ?

Posted on June 15, 2013 by aviyer2010

An article in the New York Times (June 15,2013) describes efforts to block train shipments and port expansion for low sulfur coal from native American reservations. Environmentalists claim that train transport will result in coal dust being blown into rivers and pollution of the port waters. They also claim that more coal available globally will decrease coal prices and lower the incentive to shift to alternate energy sources. But proponents of the project claim tha replacing China’s high sulfur coal with this coal will decrease global emissions. In addition, coal deposits in other locations, with higher sulfur content can expand if the US does not export coal. Should the battle over logistics be the strategy to contain exploration of low sulfur coal ? Should the detrimental economic impact on native American tribes be included in the calculus ? How should the US government intervene to balance the interests of stakeholders ?

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Volvo offers Dimethyl Ether (DME) as a truck fuel

Posted on June 12, 2013 by aviyer2010

An article in the Supply Chain Digest (June 12, 2013) describes the use of Dimethyl Ether (DME) as a truck fuel by Volvo, producing 95% lower carbon emissions than diesel and 70% lower emissions than natural gas. Volvo claims that small units can convert natural gas and diesel to DME and thus production can be decentralized. Storage can be at room temperature, thus reducing costs. But given its 50% energy content compared to diesel, trucks will need twice the volume, in addition to the need for special lubrication. Should DME use be encouraged given its ability to ease adoption by gas stations ? Will the environmental benefit be outweighed by the maintenance costs and slow adoption ? Given its fledgling status, what should Federal, state and local authorities do to encourage adoption ?

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Oxfam assists Unilever to assess worker conditions at Vietnamese supplier locations

Posted on June 12, 2013 by aviyer2010

An article in the Financial Times (June 11,2013) describes the use of Oxfam’s personnel by Unilever to audit its suppliers in Vietnam to assess worker management practices. Oxfam focuses on worker wages, working hours and the extent of contract labor used by suppliers. Oxfam’s reputation enables Unilever to get an independent read of its supplier’s practices, including reviews of state owned enterprises and trade union represented entities aligned with the ruling Communist party. Suggested supplier practice changes as well as showcasing of best practice supplier practices that do not compromise competitiveness are claimed to be benefits. Does the use of the Oxfam NGO to play the role of ethical supply chain practice compliance auditor increase its acceptability by the consumer ? Will Oxfam’s broader agenda be compromised given its commercial auditing role ? Or is this a unique win-win partnership to solve a business need ?

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The “build your own supply chain rule” in India

Posted on June 12, 2013 by aviyer2010

An article in the Business Standard (June 13, 2013 IST) describes a new rule in India that requires foreign retailers entering the country to create new required supply chain infrastructure and stores worth $100 million, with purchases of existing retailer assets not being permitted to be included. This rule slows both the entry of retailers and decreases the value of existing retail infrastructure. Will such a rule decrease the consumer benefit of the new market entrants or merely tilt the scale in the direction of larger retailers ? Will the demand for new infrastructure investments permit more state of the art capability than has existed in the past ? Is this rule merely a drive to create a short term jobs benefit as a result of the increased capital investments with no supply chain benefit ?

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Decreasing production to increase profits at Ferrari

Posted on June 12, 2013 by aviyer2010

An article in the Financial Times (June 11, 2013) describes a plan to decrease production by Ferrari by 400 vehicles this year, down to 6,900 cars. The plan is to continue to maintain the exclusivity of the brand, add capacity and also offer lower cost branded consumer products to maintain revenues and increase profitability. Brand exclusivity is expected to generate an interest in jackets, bathtowels and sunglasses branded by Ferrari. But use of Ferrari engines in Maseratis, another Fiat brand, are also supposed to be enabled by the added capacity. Is this focus on exclusivity the right strategy for Ferrari and does it offer lessons for other brands seeking to maintain their global cachet ? Is the spillover of the brand success to sales of the higher volume consumer items a sustainable strategy ?

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London’s port expansion and volume aspirations

Posted on June 12, 2013 by aviyer2010

A video in the Financial Times (June 11, 2013) describes the expansion of London’s port by Dubai based DP World. The new port is claimed to be the largest logistics park in Europe and appropriate for the UK, given that 90% of its world trade comes by sea. The 10 year old project is expected to enable competitive logistics for goods coming to Europe from Asia, particularly when combined with the warehousing and value added capability available on site. However, given the expansion at Rotterdam, proposed inland multi-modal ports in Turkey, and other ports across Europe, will this new capacity result in price pressure across all ports due to overcapacity in Europe ? Will the slowing European economy result in decreased trade and thus added pressure ? Will the private ownership of the port impact its success because it alleviates the pressure on the British government to take actions to ensure its profitability ? Will the proposed new airport to handle cargo etc be a necessary component for its success ?

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