Japanese multinationals importing back into Japan

Posted on September 17, 2012 by aviyer2010

An article in Bloombergbusinessweek (September 17,2012) describes automobiles made in Thailand by Nissan but ported back for sales in Japan. At 1 million yen, it is 65% of the price of a Japanese made car and 34 % of the small car volume sold by Nissan. The article cites “an aging population, strong yen and improved manufacturing overseas” as the driver for these flows. Given the Japanese focus on monozukuri or making things, does this trend suggest a rethinking of that focus or just a temporary economic reality? Will Japanese companies that continue to make in Japan focus on higher technology intensive but light product, or on design and technology transfer to plants located across the world ? Will increases in fuel costs or a demand for sustainable supply chains reverse this trend?

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Can faster delivery help Amazon.com compensate for state sales tax collection ?

Posted on September 17, 2012 by aviyer2010

An article in the New York Times (September 15,2012) describes the rapid pace of new warehouses opened by Amazon.com to hold inventory close to customers and cut a day out of shipping time. Next day or same day delivery will thus be possible soon, without premium shipping. Recent state decisions requiring Amazon to collect state sales tax has eroded their price competitiveness, but will faster delivery permit the company to retain its growth ? If delivery is done by couriers and not the US Postal service, how will deliveries be timed to be successful ? Does Amazon’s retail sales level, which now matches McDonalds, Sears etc, provide it the scale to be successful in this new logistics venture ?

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Content Claim Standards by the Textile Exchange and benefits

Posted on September 17, 2012 by aviyer2010

A recent announcement by the Textile Exchange of their Content Claim Standards (CCS http://textileexchange.org/sites/default/files/te_pdfs/integrity/Content%20Claim%20Standard_v1.0.pdf) suggests a scheme to verify chain of custody across the textile supply chain. The goal is to verify claims regarding specific content e.g., organic cotton, recycled material etc., based on verification of the material used by weight at each stage in the manufacturing, across the entire supply chain. Participants who subject themselves to such audits of their claims can then use the CCS standard. If the CCS label provides no demand benefit but is just an audit to ensure compliance, is it worth the cost for apparel manufacturers ? Should the audit window match the claim requirement window for each country level regulatory authority to be profit maximizing ? Should the audited information be made available to customers to increase the confidence regarding product claims ?

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Walgreen’s Jupiter warehouse controlled substances shipments shut by US agents

Posted on September 15, 2012 by aviyer2010

An article in the Wall street Journal (September 15, 2012) reports that controlled substances shipments from Walgreens Jupiter warehouse were shut amidst government claims that shipments were diverted to addicts. The government accuses Walgreens of having insufficient controls over sales volumes of painkillers, estimated to be over 7 million illegal users. But how should pharmacies detect and thwart illegal retail purchases if they are with seemingly legitimate prescriptions ? Should the claims by Walgreens that they managed to have a 35 % drop in retail sales of painkillers be accepted as evidence of their efforts to control diversion ? How should the pharmacy chains desire to sell its inventory be balanced against the need for better tracking of prescriptions to decrease drug diversion ?

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Should The Japanese and European governments assist automakers with demand growth ?

Posted on September 15, 2012 by aviyer2010

An article in the Wall Street Journal (September 15, 2012) describes a request by the CEO of Nissan, Carlos Ghosn, to the Japanese government to intervene to make the yen exchange rate more favorable to local production and encourage alternate fuel powered vehicles. Similarly, the CEO of Fiat, Sergio Marchionne, wants European governments to act in concert with automakers to reduce excess capacity. Under what conditions does it make sense to use the government to assist the auto industry supply chain ? Do governments and their desire to protect domestic employment warrant their management of regulations and coordination ? How should the possible worry of increased consumer prices with lower capacity be balanced with job growth due to a profitable industry in making such government level choices ?

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Should California pass a law to label genetically modified food ?

Posted on September 15, 2012 by aviyer2010

An article in the New York Times (September 13, 2012) describes a proposed law in California to label genetically modified foods that is being opposed by large brands while being supported by small independent organic producers. The question revolves around whether the definition of certified organic, which would prohibit genetically engineered ingredients, is sufficient. Opponents of the law claim that it will increase costs added due to the labeling requirements that will raise prices by $ 350 to $ 400 per family, while also alerting customers to a worry that is not warranted. But proponents of the bill expect it to remind consumers of the use of genetically modified foods by large producers, who may also own organic brands. When should worries of cost increases preempt the need to create markets for sustainable products that benefit from explicit labeling ? Rather than requiring all products to be labeled, will labeling by organic producers alone be sufficient to generate the required outcomes ?

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Corn trade restrictions, price increases and the impact on the urban poor

Posted on September 15, 2012 by aviyer2010

An article in the Economist (September 15, 2012) describes impact of the recent drought in the US, coupled with ethanol blending requirements for fuel on a spike in corn prices. Similar choices by other drought stricken countries and price sticker shock by importers are described as causing even further price increases. But while corn price increases help rural agricultural labor, they hurt the urban poor and increase the overall number below the poverty line. Should countries do nothing, as the article suggests, and let the market adjust supply and demand ? Should biofuel regulationa be eased to free up corn for human consumption ? Or should food be subsidized to ease trade flows ?

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A global pharma supply chain as Walgreens and Alliance Boots combine forces

Posted on September 14, 2012 by aviyer2010

An article in Forbes (September 24,2012) describes a merger between Walgreens in the US and Alliance Boots in Europe to create a global supply chain serving “170,000 pharmacies, doctors and health clinics” globally. Analysts claim that providing a supply of non counterfeit goods in emerging markets will provide healthier margins, enable private label products and hedge against margin decreases as government pressure drops prices in the US and Europe. But will scale and reach enable a global Walgreens to compete more effectively ? Will the complexity of complying with country specific rules prevent the projected efficiencies ? Will growth come from Walgreens serving as a drug wholesaler or retailer ?

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Viruses inserted during manufacturing due to insecure supply chains

Posted on September 13, 2012 by aviyer2010

An article on the BBC website (13 September 2012) describes new computers built in China with viruses already installed. These viruses crept in when the manufactruers installed illegal software with malware, thus compromising user data from the moment the machines were turned on. The discovery was made when Microsoft got permission to track computers to their source. Will manufacturers be required to track and secure the entire supply chain or incure user liability due to malware ? Given the modern fragmented supply chains, how can this need for security be contracted across all the tiers and how should liability be allocated for the cost of poor performance of the finished product ? Can technology help with tracking down to the basic steps ?

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Smuggled HCFC-22 foils ban on the refrigerant in the US

Posted on September 11, 2012 by aviyer2010

An article in the New York Times (September 9,2012) describes the smuggling into the US of HCFC-22, a refrigerant that the US has banned due to its link to global warming. As production of the product gets phased out, its prices increased in the US from $55 a canister to $140 a canister. But the refrigerant remained in abundant supply globally, thus providing an incentive to smugglers. It was either imported illegally from China, or imported by being falsely claimed to be recycled material from Wales, or re-imported back from shipments sent from the US to Mexico. How should enforcement of banned products be enforced in the US if the ban is not coordinated globally? Will monetary penalties charged to illegal providers increase or decrease the incentive for smugglers ? Should customers pay these penalties or distributors or manufacturers ? If manufacturers design products with the flexibility to fill refrigerant later, will such designs increase the opportunity to cheat and should they too be banned ?

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