Samsung vs Apple supply chains for successful cell phones

Posted on April 23, 2013 by aviyer2010

An article in Bloombergbusinessweek (April 1,2013) describes Apple’s supply chain strategy which outsources all hardware but controls software access and apps to Samsung’s strategy that produces all hardware but uses the Android open source software. Does producing components for competitors like Apple give Samsung a glimpse into market trends in advance ? Does Samsung’s hardware control enable it to experiment with different models with different screen sizes to choose the best ? Or is it the large capital investment in fabrication facilities that enables the company to be successful in being an original equipment manufacturer (OEM) of cell phones ? Ultimately is vertical integration of hardware or control of software a winning proposition for cell phone market dominance ?

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Are readmission rates a good measure of hospital quality?

Posted on April 23, 2013 by aviyer2010

An article in the New York Times (March 30, 2013) describes the impact of Medicare penalties based on patient admission rates, claiming that such schemes have resulted in decreased rates, from 19% to 17.8% in one year. But others claim that these measures are faulty because they unfairly penalize hospitals treating the sickest patients and those without appropriate after care such as housing, food and compliance with drug regimens. The penalties are set as 1% of hospital payments but are expected to rise to 3% in 2015. Should such disparities in the impact of penalties across hospitals be accepted as part of an effort to get overall cost reduction? Should there be standards regarding expected re-admits by criticality of patient to improve fairness ? Should hospitals be responsible for patient noncompliance ?

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Estimating the impact of new US sulfur limits on fuel on gasoline costs

Posted on April 23, 2013 by aviyer2010

An article in the Wall Street Journal (March 29,2013) describes the differing estimates of the proposed plans to limit sulfur in fuel to under 10 parts per million (ppm) from the current 30 ppm. Petroleum executives claim a price impact of 10 cents a gallon but the Federal government estimates a 1 cent per gallon impact. The difference lies in the government estimates that 95 out of the current 111 plants already comply or can easily be modified, the remaining plants will be given more time. Auto industry executives like the new standard because it is already enforced in California. Should industry estimates based on the largest cost to comply plants drive decisions or should standardization drive decisions ? Or should the benefit of lower sulfur in fuel aiding reduction of tailpipe emissions drive standards?

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Lack of coordination across governmental units and pollution in China

Posted on April 23, 2013 by aviyer2010

An article in the New York Times (March 24,2013) describes pollution levels in Beijing and blames the lack of coordination between the ministries managing the environment and state owned enterprises managing the oil and power. Thus, while the pollution control authorities mandates fuel standards and pollution controls for coal fired plants, those rules are ignored by the corresponding state run agencies that operate them. How should the need for low cost power and attainment of growth goals be coordinated with the public good from lower pollution ? Should downstream users of this power be charged based on their power source using a carbon tax ? How should the consumers preferences be used to impact increased coordination to reduce pollution?

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Why did J.C.Penney’s stable pricing not work ?

Posted on April 23, 2013 by aviyer2010

An article in the New York Times (April 14,2013) describes the consumer experience at retailers such as J.C.Penney and the need to enjoy the sale and anchor the value of product sold. J.C.Penney’s attempt to reduce sale items, reduce average prices and stabilize volumes and thus inventory management was expected to impact performance. But customers could not value the products objectively in the absence of a reference price against which prices we being compares, thus sales dropped. Does this suggest that stable pricing should dropped as a apparel retailing strategy? Is it only suitable for high volume low price items ? Why does it work for WalMart and not J.C.Penney ?

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McDonalds “dual point” service approach and impact

Posted on April 23, 2013 by aviyer2010

An article in the Wall Street Journal (April 11,2013) describes a new “dual point” service system that replaces the single point cashier assisted delivery. Under the new system, customers pay, receive an order number and walk over to the other end to wait for their number to appear on a screen. The order is picked up at that location, with “runners” assisting with sauces and juice boxes, thus freeing up the cashier. Does the reported feeling of better customer service match up with the specific process fragmentation with multiple touch points ? Do you expect such schemes to demand careful calibration of employees as demand levels change to maintain performance ? Will such fragmented systems assist with compensating for employee turnover, estimated at 60% across the fast food industry ?

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Natural gas use by the US trucking industry – how fast can it happen ?

Posted on April 23, 2013 by aviyer2010

An article in the New York Times (April 22, 2013) describes the growing use of natural gas in the US trucks, with the industry consuming over 3 million gallons of diesel fuel daily. Natural gas use is estimated to cut costs 30 to 40% per mile, saving $1.50 per gallon currently. But, with natural gas trucks being more expensive, federal taxes (12.5% excise tax) hit harder on these trucks and thus serve as a disincentive. If US exports of natural gas grow, then domestic prices may rise. But retailers and shippers like WalMart and Nike, like the associated carbon footprint of natural gas and thus may drive demand for its use. How should an engine manufacturer like Cummins plan for adoption of natural gas in US trucks ? How should individual transport companies plan their deployment i.e., should it be adjusted to avail of tax credits and subsidies by state to minimize overall costs ? How should investments in natural gas filling stations unfold to make them economically justified and should the state and Federal government lead by committing to its use in their vehicles ?

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The impact of sequestration on US supply chains

Posted on March 10, 2013 by aviyer2010

An article in Bloombergbusinessweek (March 11, 2013) describes the impact of the US government sequester on food and transport. Food inspector cutbacks means that meat, poultry and egg processors may have to cut back operations as the inspectors are required for operation. The projected impact is lower production and $10 billion in losses, with worker layoffs projected to have $400 million in wage cuts. Delays in processing imports due to lack of sufficient government customs inspectors or other are estimated to be modest at first, but grow rapidly as queues build up and utilization increases. How should individual supply chains compensate – should companies start boosting inventories to hedge against these delays, and, if so, will these orders increase congestion ? Will the import delays increase spending within the US and thus boost local production ? Will prices rise for items affected by the cuts and thus soften demand and resolve the mismatches in supply and demand ?

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Mexican tomato floor prices increased to please US growers

Posted on March 8, 2013 by aviyer2010

An article in the New York Times (February 4,2013) describes an agreement between the US and Mexico to raise prices for imported Mexican tomatoes by up to twice its earlier levels. The new agreement was demanded by Florida growers to enable them to compete, and also includes coverage of a larger number of Mexican farmers and greater enforcement. But will the higher prices to enable US competition to survive result in better consumer outcomes with fresher tomatoes ? Since the agreement does not cover imports for canning or juices, will it change the mix of uses for imported tomatoes ? What other products might warrant such price agreements to preserve competitiveness ?

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Can “Droptags” reduce damage processing costs ?

Posted on March 8, 2013 by aviyer2010

An article in the SupplyChainDigest(http://www.scdigest.com/ontarget/13-02-13-1.php?cid=672) describes a Droptag – a device developed by Cambridge Consultants consisting of a battery, bluetooth transmitter, accelerometer and memory chip to monitor whether packages have been dropped or mishandled. Upon delivery, the customer could detect if the package was subject to significant G-forces by getting a binary read using a bluetooth device. The hope is that refusing delivery will reduce damage processing costs and identify the reason for the damage as well as provide the appropriate data. Should such droptags be included by parcel handling companies to protect their liability during transportation ? How should pay the suggested $2.50 per tag for the trip, and could reuseable droptags make these costs affordable by spreading their costs over multiple trips ? Will such devices reduce the insurance costs for large items, such as furniture, which have high damage rates ?

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