A shortage of jute bags hurts storage of a bumper wheat crop in India

Posted on September 2, 2012 by aviyer2010

An article in the Wall Street Journal (June 23, 2012) describes the large wheat harvest in India, but a shortage of jute bags. Indian law specifies that 100% of the wheat should use jute bags, to protect the industry and its employment. But while wheat production has grown 82% since 1990, jut production has grown only 33%. Options to import from Bangladesh are blocked by a desire to apply the rule only to Indian jute. But the jute industry claims orders were placed late, not that there was a shortage of capacity. Given the desire to protect jute bag production, while preventing the 13% of possible output wasted, what should the government do? Should plastic bags replace jute to protect the harvest? Who should be held responsible for the wasted output, when malnutritution remains rampant ?

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Google’s “Made in the USA” media player

Posted on September 2, 2012 by aviyer2010

An article in the New York Times (June 27, 2012) describes Google’s new media player assembled by a contract manufacturer in California, about a 15 minute drive from Google’s office. Rising wages in China, worries about intellectual property and an increased focus on time to market are described as drivers for this decision – which may portend a new direction for electronics manufacturers. But will consumers pay the higher price for the product to justify the manufacturing location related costs ? Will faster learning curves to accommodate consumer feedback grow sales faster or drop costs rapidly to make the product price competitive? Will the reported supplier locations in the Midwest and the rest of the country grow to enable supply chain efficiencies for the product – described to consist of high % of US made components?

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Using UPS to outsource drug delivery

Posted on September 2, 2012 by aviyer2010

An article in the Wall Street Journal (June 28,2012) describes pharmacists at UPS’s hub in Louisville filling prescriptions for insulin or other drugs for quick delivery to customers. The same supply chain allowed Walgreen to ship vaccines to Laos, with associated custom clearance and temperature tracking. Is the pressure to cut logistics costs and increase service the result of low prices for generic drugs ? Will UPS’s growing drug delivery service make owning warehouses an obsolete division for drug companies ? If competing logistics companies drive prices down, will the market fragment to create a prisoner’s dilemma outcome that hurts all supply chains ?

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Should broadband providers be permitted to charge by usage?

Posted on September 2, 2012 by aviyer2010

An article in the New York Times (June 26, 2012) describes plans by some internet providers to use usage based pricing. Under this model usage for regular subscriptions will be capped or discounts provided for lighter usage. But content providers claim that this will hurt their business and should not be permitted. Should pricing based methods to ration content remain the prerogative of the internet provider ? Should a desire to enable job creation by content providers suggest blocking such pricing as uncompetitive ? Or is the problem a lack of sufficient competition in the internet provision market ?

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WalMart’s supplier workplace allegations by third party activists and impact

Posted on September 2, 2012 by aviyer2010

An article in the New York Times (June 29, 2012) describes allegations by the National Guestworker Alliance against WalMart’s seafood and vegetable suppliers regarding worker wages and working hours. But WalMart and the suppliers allege that the data was aggregated from 1980 to 2012, with different incidents grouped together. WalMart also claims that the activists are against nonunion suppliers. Given WalMart’s low price focus, how much impact will allegations by activists have over the supply chain ? Should supplier qualifications be restricted to current practices or go back in history ? If US law punishes violations with fines, is it appropriate for WalMart to further punish the supplier with order cancellations ?

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Topshops within Nordstrom stores – a beneficial alliance for both ?

Posted on September 2, 2012 by aviyer2010

An article in the New York Times (July 12, 2012) describes a decision to open Topshop stores within Nordstrom’s stores. The limited line of Topshop fashion apparel, with new items delivered weekly, will enable Nordstrom to increase the speed of its fashion changes and reflect new trends. Topshop, new to the US, will learn about US consumer preferences, and use that data as it expands its own stores across the US. Will the learning about preferences from Nordstrom’s consumers enable Topshop to tune its offerings to the US consumer ? Will a 2500 sq ft Topshop store within a large Nordstrom retail store have a sufficient fashion speed up benefit for Nordstrom? Do you see such alliances as win-win partnerships ?

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Private Equity ownership and bulk purchasing savings

Posted on September 2, 2012 by aviyer2010

An article in the New York Times(July 12,2012) describes the private equity firm, the Blackstone Group, which owns 74 companies with a combined 700,000 employees. Across its companies, the firm buys 15 million reams of paper, 35 million FedEx shipments and 900,000 car rentals. Centralized buying through a group purchasing program called Coretrust has enabled savings of 10 to 50%, but requires companies to switch to a common supplier and specifications. Is this switch to more detailed operations a new capability of private equity firms ? Could the focus on savings through common specifications destroy revenues at the individual companies ? How should such programs be managed so that they do not hurt individual firm preferences – should participation be made voluntary ?

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Fracking in the US and guar seed farmer impact in India

Posted on September 2, 2012 by aviyer2010

An article in the New York Times (July 16,2012) describes how growth in fracking for oil has resulted in increased demand for guar, a water absorbing seed grown primarily in India. With prices rising dramatically amidst growing oil company demand, sales of tractors, house building etc have all increased as Indian farmers spend their new wealth. But the high prices caused seeds to be sold, thus creating stress on future yields. Will the higher prices cause guar to be grown in other countries, thus depressing prices ? Will substitute seeds replace guar demand ? Can guaranteed price commitments to farmers enable risk to be transferred from the farmer and ensure supply ?

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Impact of faulty US government data on pecan prices

Posted on September 2, 2012 by aviyer2010

An article in the Wall Street Journal (April 5,2012) describes an overstatement of US pecan exports to Hong Kong and China in 2010 and 2011, which was corrected recently. The impact of higher exports was perceived impending shortages and thus higher prices. But as the data got corrected, prices dropped, but some buyers had already left the market. The impact – growers in the eastern US got higher prices, while those in the west saw lower prices. Buyers who built up inventory were left facing lower market prices than their costs. Should the US government be held responsible for the market risk impact of the data error ? How should the “cost” of the data quality be shared with the market ? Should the risk by buyers part of the “caveat emptor” view of data ?

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Programmable NFC Tags and supply chain impact

Posted on September 2, 2012 by aviyer2010

An article in Bloombergbusinessweek (July 16,2012) describes programmable tags using NFC (Near Field Communications) technology on physical objects. These tags can be read by NFC readers or smartphones with the read capability. Uses include tags on spice jars that can be read by smartphones to provide recipes, and bracelets with email addresses that can be read by NFC readers to send recipes as emails. Can use of such tags enable supply chains to extend to customer’s consumption points ? Will tags enable customers to interact with physical objects and the internet at stores and thus stimulate store level choice decisions and hence demand ? Will the ability of cell phones to substitute for expensive RFID (radio frequency identification) readers from the past hasten use of tag technology ?

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