The internet of things and supply chain impact

Posted on November 23, 2012 by aviyer2010

An article in Wired magazine (December 2012) describes the low price points to make physical objects wen enabled. A WeMo switch enables an outlet to be controlled through the internet, thus enabling a temperature triggered adjustment of cooling. Decentralized Geiger count readings in Japan provide an internet database of radioactivity measurement. Can such internet based visibility of inventory at stores or customer locations enable more sustainable supply chain designs ? Will the lowed cost of information flows allow proactive replenishment and trend detection by coupling real-time data with cloud computing power ?

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Higher fares, fewer flights, poorer service – what is the solution for passenger air transport ?

Posted on November 23, 2012 by aviyer2010

An article in the New York Times (November 21, 2012) describes a 14% drop in flights, a 10% increase in fares and longer lines faced by passengers this Thanksgiving. But the US domestic flights continue to be off limits go foreign airlines. Should low cost airlines like Ryanair and full service airlines like British Airways be permitted to offer domestic US flights ? Will increased flights, even restricted to airports with significantly reduced service, enable lower fares and higher service ? Will similar changes across the world make air travel demand increase while improving service ?

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The elections, toy introduction delays and preorders this holiday season

Posted on November 23, 2012 by aviyer2010

An article in the New York Times ( November 20, 2012) describes the increased media buys by candidates this election and thus delays in advertising toys. The focus on detecting hits by manufacturers and retailers is thus claimed to require pre-orders and layaways as predictors of holiday trends. But an attempt to sway pre-orders pushed promotions back to May of this year. Given the short season post-election, and the danger of too much inventory, how should the supply chain manage inventory this holiday season? Will a move to e-commerce lower retailer risk by consolidating stocks ? Or will customers face stockouts as trends emerge or higher prices for air shipments from manufacturers ?

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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 ?

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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 ?

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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 ?

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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 ?

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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 ?

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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 ?

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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 ?

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