Climate neutral products from Eosta

Posted on October 23, 2012 by aviyer2010

An article in Sustainable Business newsletter describes Eosta (http://www.eosta.com/index.cfm?vid=64DD31DB-AB5A-D733-DF31869591EFD001), a Dutch company that sells fruits and vegetables claimed to be climate neutral. Use of organic fertilizer that does not release methane, avoiding mineral fertilizers and thus saving nitrous oxide and increased carbon storge due to the humus content in the soil are claimed to decrease greenhouse gas emissions across the supply chain. These reductions compensate for the transportation, packaging and cold storage related emissions to bring these fruits to market. Is it fair to count the life cycle of these products and claim that they are climate neutral ? Should avoidance of packaging, transport etc by growing close to the demand be preferred to shipping Argentinian applies to the Netherlands ?

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Will shifting patients to retail clinics for minor treatments improve service and lower costs

Posted on October 10, 2012 by aviyer2010

An article in the New York Times (October 10, 2012) describes the rise of retail clinics in Manhattan, with costs of care 30-40% below doctor’s offices and 80% lower than emergency care. The result of many retail locations is a drop in patients at full service hospitals and closure of St Vincent’s – a Greenwich Village hospital. As services provided to patients fragment, the consequent capacity realignment, along with doctor and nurse practitioner service provision locations, is uncertain. Should hospitals link up with these clinics to move care to the most effective location, increasing service quality while lowering costs ? Will the fragmentation of treatment across locations decrease visibility and increase overall costs ? How should information systems be standardized to permit seamless service to patients ?

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Intellectual property rights on visible car parts in France and rising repair costs

Posted on October 10, 2012 by aviyer2010

An article in the Wall Street Journal (October 9, 2012) describes a regulation in France that grants automakers intellectual property rights over the external looks of the car, thus guaranteeing that mirrors, bumpers, windshield wipers etc have to be purchased from the manufacturer. The result is a 30 % growth in maintenance costs between 2000 and 2010. A new proposal would eliminate this regulation and increase the participation of independent mechanics. Will the decrease in margins downstream require automakers to raise prices for new cars and will this make the French auto industry less competitive ? Will customers, who might now have to consider certification of their mechanics see a lower cost as a result or will they face more frustration as they attempt to discern the quality of repairs done ? Will automakers who offer long warranties benefit as a result ? Given the absence of such regulations in other countries, will such changes increase or decrease the competitiveness of French automakers globally ?

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Auditing conflict materials free suppliers and cost impact

Posted on October 10, 2012 by aviyer2010

An article in the Wall Street Journal (October 9, 2012) describes the number of conflict materials free smelters as 27 out of 200 to 400 worldwide. With the Dodd-Frank law demanding that companies declare the extent of use of tin, tantalum and tungsten from Democratic Republic of Congo in their supply chains, pressures to get conflict free sources are expected to cost between $3 to $4 billion in year 1 and $200 to $600 million in subsequent years in audit costs. Should firms focus on getting to conflict free or declare the audited level of conflict free sources ? Will firms that save costs and declare a less than conflict free supply chain face a competitive disadvantage even if they offer lower prices ? Should customers be allowed to choose their extent of preference (for conflict materials free supply chains) or should zero tolerance be enforced ?

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Global trade slows, but continues to be robust in pockets

Posted on October 8, 2012 by aviyer2010

An article in the Wall Street Journal (October 1, 2012) describes the slowing of global trade flows. The Los Angeles port claims a 10.5 % drop in US exports shipped, while the Shanghai port reports a 6 % slowdown. While Europe demand is dropping, demand in Latin America is growing for a toy helicopter company. The stronger Japanese yen, Chinese growth slowdown are impacting Sri Lanka – a new destination for apparel manufacturing that is a cheaper producer than China. Given the shifting demand growth locations, how should companies plan their marketing to access these world markets ? Given the shifts in production locations to keep costs competitive, how should companies plan their supply base to adjust ? The article claims that global trade growth has been faster than the global economy and that slowdowns in India and China reflect overall trends – does this suggest a different approach to thinking about global supply chain locations to adapt ?

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Ban plastic bags ? Or worry about unintended consumer costs ?

Posted on October 8, 2012 by aviyer2010

An article in the Wall Street Journal (October 8, 2012) describes two sides of a decision to ban plastic bags. On the one hand, plastic bags clog up recycling equipment, create clean up costs and add up to $ 30 a year to consumer costs in grocery stores, in addition to potentially being a bad design for the job of carrying products. But eliminating bags will require consumers to carry their own reusable bags and incur costs estimated to be $ 10 million in return for $ 300,000 in savings to water and carbon consumption. Should plastic bags be considered bad designs and banned even if their elimination increases costs to consumers ? Is the potential disintegration of bags and impact on marine life, estimated to be 3 % of marine litter, a significant enough concern to act now ? Or should the costs of alternate packaging have to drop significantly enough before action is taken ? Should consumers be charged the full cleanup costs of a bag to hinder use ?

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Will passengers bear airline fuel risk for lower upfront fares ?

Posted on October 8, 2012 by aviyer2010

An article in Bloombergbusinessweek (October 8,2012) describes an effort by Allegiant airlines, with ticket prices at $89, to share airplane fuel risk with passengers. The proposal – passengers pay a lower fare upfront and a fuel charge based on actual airplane fuel prices, or pay a higher upfront fare to lock in seat prices. The impact will be to share risk with passengers ready to accept it, thus benefiting both entities. Will such solutions be accepted by passengers as similar to baggage fees ? How can passengers be convinced of the appropriateness of the fuel charges levied later? What other service industries can use such risk sharing schemes ?

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Booming oil inventories in Catoosa, while East Coast price differences persist

Posted on October 5, 2012 by aviyer2010

An article in Bloombergbusinessweek (September 27, 2012) describes growing oil stocks in Catoosa, Oklahoma where oil generated in the Dakotas come to wait. A shortage of pipeline capacity to the East Coast means that prices in the East continue to remain high even as oil inventories grow. Some hedge fund traders are shipping oil via barge to gain in the price spread. But other pipelines are trying all other means of transport including reversing the direction of oil flow to gain outbound capacity. Even within the oil reservoirs, purchases are for specific blends – which means that matching the demand mix by mixing the appropriate supplies is a key role for the oil storage companies. Given differences in the quality of oil generated in Dakota vs that imported into the US, will refining capacity keep up with supply if pipe capacity increases ? Should the shift from pipe to barge or pipe to truck, and the consequent risk of contamination due to accidents weighed against the environmental cost of the new pipeline in judging their benefit ?

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Drug shortages and quality issues at backup compounding pharmacies

Posted on October 5, 2012 by aviyer2010

An article in the New York Times (October 4, 2012) describes an outbreak of meningitis caused a fungus that contaminated steriod solutions supplied by a compounding pharmacy in New England. Hospitals ordered the solution, which was in short supply, from the compounding pharmacy which mixed custom batches of products to compensate for shortages. But such pharmacies are not regulated as closely as manufacturing facilities because of their intermittent small lot production, thus generating quality issues. Is the real problem the low margins for generic products or the close regulation of manufacturing by the FDA that causes capacity swings ? Should regulatory oversight of compounding pharmacies be increased, even if means lower drug availability and thus higher prices for drugs ? How should penalties be structured to prevent such quality failures – is shutting down all manufacturing at the contaminated facilities the answer or are there alternatives ? Instead of compounding pharmacies, should products be imported government stocks (from Japan or Canada) to ensure quality compliance ?

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Google’s “RE < C" initiative and impact

Posted on September 22, 2012 by aviyer2010

An article in Fortune (July 23, 2012) describes an effort by Google to initiate projects to drive the cost of renewable enery (RE) to becom elower than the cost of coal (C) based sources. Server farms account for 2% of the total energy used, hence the pressure on Google to decrease its impact on coal based sources. But efforts to buy wind farms, create a server farm in Finland that uses seawater to cool etc ended up not generating the desired outcome. But new initiatives to reduce methane from landfills and hog farms seem to have generated more traction and a bigger environmental impact. How much responsibilty should search and other software companies bear for their role in using energy in the US that is generated by coal fired plants ? Will a commitment by large Silicon valley companies to shift to renewable energy provide the demand guarantee that will enable the alternate energy industry to build scale and technological advancement ? Or are these efforts distracting Google from doing what it does best – build software tools for search and mobile applications ?

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