Green US navy and ocean fuel source impact

Posted on November 7, 2012 by aviyer2010

An article in BBC news online (http://www.bbc.com/future/story/20121019-turning-the-oceans-into-jetfuel/2) describes plans by the US navy to get to 50 % of its fleet powered using alternate energy fuel sources by 2020. One approach is to use seawater as a source of fuel, use an electrochemical reaction to split the oxygen and combine the CO2 in the water with hydrogen to form a liquid fuel. The benefit is elimination of the need to carry fuel on the ships and avoidance of the need for refueling ships. But the estimated price per gallon is between $3 and $ 6, as compared to conventional fuel costs of $ 3.50/gallon. How should the costs saved in carrying or transporting fuel be included in a full cost calculation to compare fuel costs ? Should Federal funding of such technologies be treated as an externality that can help development costs and thus enable the technology to become viable ? Would such energy cost reductions lower ocean shipping costs in the future and thus increase the level of global trade ?

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Can omni channel marketing help brick and mortar retailers compete this Christmas ?

Posted on November 4, 2012 by aviyer2010

An article in Bloombergbusinessweek (November 5,2012) describes a decision by Target, Macy’s and Nordstrom to match online prices to compete gainst Amazon, Gilt and Ebay. Offering same day delivery from store inventory, choosing unique items only made for specific retailers (such as Target’s Marc Jacobs scarf) and free family portraits at stores, these retailers are described as using omni-channel marketing that merges online and store inventory. Given the need for etailers to build more warehouses closer to customers to offer fast delivery without the prioirty cost, and laws that require etailers to collect state sales tax, will such moves make the retail space more competitive ? Will offering customers the flexibility to ship gifts to family members online and schedule shipments on specific dates help etailers ? How should manufacturers react to the upcoming clash between brick and mortar retailers and etailers to maintain their profitability ?

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Hurricane Sandy, New Jersey ports and retail supply chain impact

Posted on November 4, 2012 by aviyer2010

An article in the Wall Street Journal (November 3, 2012) describes power supply issues at the ports in New Jersey causing diversions of inbound ships to Norfolk and other locations. But shipping to Dubai from New York costs $ 3000 a container, while sending it by truck top Norfolk adds around $ 2000 to costs, thus making this new path significantly more expensive. The hurricane’s impact is expected to add 10 to 14 days to the delivery lead time if ports in New Jersey get back to normal quickly. But pressure is building on retailers who want their shelves stocked with imports in time for the holidays. Should we expect retail price increases to cover this additional transport cost and supply difficulties ? Can a closer link between supplies to stores and observed demand enable retailers to maintain service level albeit with higher coordination costs ? Is this an opportunity to move some assembly closer to demand ?

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Drug shortages and Medicare role

Posted on November 4, 2012 by aviyer2010

An article in Bloombergbusinessweek (October 29,2012) describes reasons for shortages of drugs to treat meningitis. While the branded version of the product made by Pfizer continues to be available, generic producers shut down production for several months. The associated shortage was not accompanied by prices increases because Medicare had capped drug prices to be no more than 6% of total costs. Should Medicare permit price increases during drug shortage periods to provide the incentive to use branded alternatives ? Will such pricing flexibility distort manufacturer incentives to maintain supply ? Will the current law, that requires manufacturers to forecast shortages six months in advance, alleviate such shortages by enabling alternative sourcing plans ?

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The buy “Made in France” campaign and consumer impact

Posted on November 4, 2012 by aviyer2010

An article in Bloombergbusinessweek (October 29, 2012) describes a campaign by the French Industry minister to encourage purchase of products made in France, though they are 15 to 25% more expensive. His goal is to use increased demand as a way to decrease the 10% French unemployment rate. But others claim that the higher prices for French products will hurt consumers. Should the French government spend to highlight products made in France, or focus on ways to make their costs more globally competitive? Will such move by other governments worldwide increase consumer prices worldwide ? Could domestic purchases, if coupled with fast production, permit lower prices or higher quality, that consumers maybe willing to pay for ?

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Same day delivery offered by Google in San Francisco

Posted on November 4, 2012 by aviyer2010

An article in the New York Times (October 26,2012) describes same day delivery offered by Google in San Francisco. The company coordinates with retailers to deliver products ordered following Google searches. Linking the search with purchase and physical delivery closes the customer loop for the retailer, and ensures that the retailer understands the value of the Google search ad. But will same day delivery is a threat to stores who ensure customer demand is satisfied, and may thus drive down revenues ? But will Google be able to guarantee delivery without control of inventory, as Amazon does ? And will truck routes that deliver following optimal routes decrease the environmental impact of shopping ?

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A novel solution to get pregnant women in Ghana, ready to deliver, to a hospital faster

Posted on November 4, 2012 by aviyer2010

An article in the New York Times (October 30, 2012) describes the benefit on women and children’s health if the mother delivers in a hospital. But getting the mother, who cannot afford to pay for a cab, to the closest hospital in Ghana quickly was a challenge. The solution offered by taxicab drivers was for them to take women to the hospital free of charge if they could be permitted to go to the head of the line for return trips. In other words priority access to customers for the return trip would be sufficient incentive for a free outbound trip to expecting mothers. Would such solutions work only if available taxicabs are plentiful so that priority access is beneficial ? How could the effectiveness of such schemes be guaranteed ? What other contexts could such supply chain centric solutions assist in solving problems of global health ?

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Do increases in accounts receivable by Chinese firms suggest anything ?

Posted on October 31, 2012 by aviyer2010

An article in CNN (http://www.cnn.com/2012/10/30/business/china-corporations-slowdown/index.html?hpt=hp_t3) describes increases in accounts receivable by Chinese firms – 83 % increase for machinery manufacturer Sany Heavy, 169 % increase for First Tractor, and a 69% increase for Zoolion. Some reports suggest that firms are continuing to produce and ship even when demand slackens. But banks do not seem to show any changes in credit quality. Should such dramatic increases in accounts receivable suggest an increasing risk associated with Chinese firms ? Or should they be treated like temporary inventory changes of financial flows, and thus considered irrelevant in understanding Chinese industrial supply chains ? In general, how should financial flows and the link to physical flows be reconciled across a supply chain ?

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Hospital payments linked to patient satisfaction scores a good idea ?

Posted on October 23, 2012 by aviyer2010

An article in the Wall Street Journal (October 15,2012) describes a plan to hold back $1 billion in reimbursements that will be distributed based on patient satifaction survey scores. The scores measure whether patients were treated with courtesy, whether they were treated adequately for pain etc. But hospitals treating patients who come through the emergency room or hospitals with the greatest fraction of nonpaying patients, claim they are disadvantaged and will loose reimbursements just when they need them. Should patient satisfaction be given prominence or should reimbursements only focus on health outcomes ? Will the incentive to improve satisfaction create changes that might decrease health care costs ? Will it cause investments by hospitals in measures that are now justifiable – such as more frequent nurse visits and better communications ?

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The economics of vertical farming in downtown locations in cities

Posted on October 23, 2012 by aviyer2010

An article in the Wall Street Journal (October 15,2012) describes vertical farming – growing crops in greenhouses in cities – close to customers. A twelve floor vertical farm in Sweden is the largest such effort – claimed to save transport costs, enable land to be returned to the ecosystem and that will reduce greenhouse gases. But others claim that the energy used to grow these crops outstrips the saved fuel costs from transportation. How should the benefits of vertical farming close to customers be calculated to include all costs ? Should the govenment support for insurance, fertilizer etc be counted as part of the savings from vertical farming if it is independent of weather impact ?

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