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 ?

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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 ?

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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 ?

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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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