American flagged or American controlled ships to move military cargo globally?

Posted on November 23, 2012 by aviyer2010

An article in the New York Times (November 19, 2012) describes decision by the US military to use US flagged ships to move military cargo, thus providing billions in fees for US ships. But 82% of the ships are controlled by Danish, Polish and other country owned companies. Should the US military insist on product movement to be done by US controlled corporations, even if they have higher operating costs ? Is this a national security issue that justifies higher costs or are the risks too low to be relevant ? In general, should the worries about security also extend to control of ports ?

Posted in Global Contexts, Operations Management, Supply Chain Issues | Tagged , , , , , , | Leave a comment

Setting up a supply chain of transformers to transmit power during a grid failure

Posted on November 23, 2012 by aviyer2010

An article in the New York Times (November 16,2012) describes a recently unclassified National Academy report describing the vulnerability of the US power grid. Solutions described include custom step up and step down generators to maintain transmission across the grid that can be deployed during an emergency, battery backup for traffic lights and natural gas powered backup pumps in for gas supply. But how should the supply chain for such backup transformers be designed ? How should the costs to maintain this backup be allocated ? Should the cost of these alternatives be financed by a premium charged, similar to an insurance ?

Posted in Operations Management, Service Operations, Supply Chain Issues, Sustainability | Tagged , , , , , , | Leave a comment

Will shifting designs from ODMs to OEMs improve PC industry competitiveness ?

Posted on November 23, 2012 by aviyer2010

An article in the Wall Street Journal (November 16,2012) describes slumping PC demand and a decision by OEMs such as HP and Acer to assume control of their product design details. In the past, ODMs (Original Design manufacturers) such as Wriston and Quanta, completed all design details in Taiwan in response to design direction by OEMs. But the ODMs are now observing slumping sales as design decisions get made by OEMs in response to the success of Apple and Lenovo. Will this shift in design enable more product differentiation and thus higher margins for OEMs ? Is the impact of past practices of use of ODMs for design a proliferation of me-too similar designs that destroyed OEM competitiveness ? Will a shift to electronics recycling or designs for tablets enable ODMs to remain competitive ?

Posted in Global Contexts, Operations Management, Service Operations, Supply Chain Issues | Tagged , , , , , , | Leave a comment

How suppliers sometimes overestimate their power in a supply chain

Posted on November 23, 2012 by aviyer2010

The New York Times (November 21,2012) describes the role, in 1861, of Southern US cotton growers who supplied cotton to British mills and imported household furniture, thus serving as a source of supply and demand. In April 1861, when the US Civil war started, confederate President Jefferson Davis blocked cotton supply to Britain, expecting the British textile and other manufacturing to be impacted significantly and draw Britain into supporting the South. But a mild winter, a slight price increase for cotton, shifts to imports from India and Egypt, and decreased working hours for employees was the way the British textile supply chain adjusted. Did the South overestimate its cotton supplier power falsely or was the global supply chain’s adjustment a novel business capability? How should suppliers include the possible contingent actions by buyers while assessing their bargaining power and the impact of walking away ?

Posted in Global Contexts, Operations Management, Supply Chain Issues | Tagged , , , , , , | Leave a comment

Same day delivery by the US Postal service and impact

Posted on November 23, 2012 by aviyer2010

An article in the Associated Press (November 23, 2012) describes a plan by the US Postal service to offer same day delivery – with items picked up from retailers and dropped off to customers in the same metropolitan area the same day. The hope is that the growth of ecommerce will generate up to $ 500 million in revenues for the post office. Customers have the option to order until 3 pm and receive deliveries between 4 and 8 pm that day. Will the lower USPS prices for same day delivery from local stores permit brick and mortar stores to compete with ecommerce retailers ? If USPS has to schedule a second delivery for these items that is not coordinated with the regular mail delivery, how much will this option be financially viable ?

Posted in Ecommerce, Operations Management, Service Operations, Supply Chain Issues | Tagged , , , , , , | Leave a comment

Argentina’s DJIA system for imports and supply chain impact

Posted on November 12, 2012 by aviyer2010

An article in Bloombergbusinessweek (November 12, 2012) describes the DJIA system (initials of the Spanish law) that requires each importer to compensate with an equivalent amount of exports. Thus, a bicycle manufacturer who imports parts compensates with the export of an agricultural component, a BMW importer exports processed rice, a Porshe importer who exports olives and Malbec wine etc. But exporters like Brazil who are impacted, blocked olive imports thus hurting the olive manufacturers in Argentina. The net impact is higher prices in Argentina, lower growth rates and shuffling of existing exports to link to importers without an increase in overall exports. How should importers in Argentina link with exporters to improve overall supply chain profitability ? How should this linkage be administered to prevent shuffling of exports but increase exports ?

Posted in Global Contexts, Operations Management, Supply Chain Issues | Tagged , , , , , | Leave a comment

The Mad Max Economy and supply chains

Posted on November 11, 2012 by aviyer2010

An article in the New York Times (November 11,2012) describes the Mad Max Economy that focuses on the impact of bad events such as Hurricane Sandy – when generators,kerosene heaters, radios, batteries, candles and industrial fans see demands soar. But demand increases both in regions hit as well as across the consumer base as awareness of the impact of such events increases. Generator manufacturers such as Generac, freeze dried food retailers such as Costco and Walmart, candle supplies etc are impacted by this Mad Max Economy. But will such event driven supply chains also result in more permanent demand for standby generators in houses ? Given the reluctance to raise prices during disasters to prevent a PR disaster, even if the cost of supply increases, how should such industries maintain profitability ? Should the Federal government subsidize or offer to perform part of the steps of supply for some parts of these retailer supply chains to maintain availability while preventing price increases ?

Posted in Operations Management, Service Operations, Supply Chain Issues | Tagged , , , , , , , , , , | Leave a comment

The retail supply chain impact of Hurricane Sandy

Posted on November 10, 2012 by aviyer2010

An article in the New York Times (November 4, 2012) describes the impact of hurricane Sandy on the retail supply chain, action taken by companies and the possible consequences. With fuel supply shortages, FedEx started using fuel tankers to supply its trucks. Many warehouses with inventory for the holiday season so product damaged beyond recovery. The ports in NJ remained damaged thus preventing goods from coming in. Expected damaged due to retail promotions post-Thanksgiving risked being affected by stockouts with inventory being delayed. How should retailers react to these supply chain challenges, it is better to issue rainchecks or cancel promotions ? Should customers be encouraged to shop from the website so that the pool of inventiry can be more efficiently deployed ? Should orders be placed with domestic suppliers, albeit at a higher cost, to keep supply levels ? Or should product be air shipped from global sources ? Is there time to explore these alternatives or has time run out for this Christmas season for retailers ?

Posted in Ecommerce, Operations Management, Service Operations, Supply Chain Issues | Tagged , , , , , , , , , , , , | Leave a comment

Gas shortages in New York following hurricane Sandy and reasons

Posted on November 10, 2012 by aviyer2010

An article in the New York Times (November 10,2012) describes the continued shortages of gas in New York. Should the solution be left to the free market (i.e., let prices rise), or should the government step in with odd even license plates accessing gas to smooth out the process? Is the elimination of the New York State energy office the problem ? Or is the lack of jursidiction over the Linden, NJ pipeline link that provides gas to New York from other parts of the country, which was danaged severely, the problem ? Is the lack of electricity, which made the punps difficult to operate, the source of the bottleneck ? Should pumps have a manual option or a battery powered option or is the hurricane such a rare event that such options should be considered overekill? Is the demand for gas linked to the subway being shut down or sporadic, the demand leveling off as public transport comes back online ?

Posted in Collaboration, Operations Management, Service Operations, Supply Chain Issues | Tagged , , , , , , , , , , | Leave a comment

Fresh water with mobile payments in rural Kenya

Posted on November 7, 2012 by aviyer2010

An article in BBC news (http://www.bbc.com/future/story/20121102-mobiles-call-out-for-fresh-water) describes an initiative for rural residents to get an opportunity to pay for about 4 cents for a 20 liter jerry can of water, a price claimed to be affordable to all. The company, Grundfors, gets water from underground sources using solar powered pumps and stores it in elevated tanks. Customers use money on their mobile phones to pay for water at the pump. Given that the money collected across consumers pays for all the costs of operation, the water provision is sustained. How should the pricing for such services be adjusted to reflect the lower medical costs associated with clean water provision ? How should individual entrepreneurs be permitted to play a role in maintenance of such supply chains ? How can these ideas be extended to other issues that are an issue in rural Africa, such as healthcare ?

Posted in Global Contexts, Operations Management, Supply Chain Issues | Tagged , , , , , , | Leave a comment