Is the inability to source custom screws a reason why it is difficult to build iPhones in the USA ?

Posted on January 31, 2019 by aviyer2010

An article in the New York Times (January 28, 2019) titled “A Tiny Screw shows why iPhones won’t be “Assembled in the USA”” describes the difficulties that Flextronics, Apple’s assembler of the high end Macbook Pro in Austin, Texas, faced in sourcing custom screws. The article describes their search for a supplier who could deliver 28,000 screws, and their option being a single supplier who could make at most 1,000 screws a week and took 22 trips to deliver the required volume. The claim is that such supply chain gaps make assembly of electronic products, which often requires design changes and quick delivery given the lean nature of the supply chains, difficult in the USA. But it also claims that availability of tooling engineers in China, and labor costs in China of $2.10 per hour, as additional reasons. Does the story of the difficulty in sourcing screws reflect poor inventory planning for components i.e., why wouldn’t Apple buy a large quantity of the required low cost components and decouple procurement from usage or is the sourcing difficulty valid given design changes ? Would assembly be easier if designers were constrained to use standard parts for low end items, such as screws, so as to alleviate the assembly bottlenecks ? Does Apple find assembling in the USA difficult because the supply chain is managed by Flextronics, Apple’s supplier, rather than Apple itself ?

Posted in Capacity, competitiveness, Cost, delivery, emb2021, Global Contexts, logistics, Operations Management, ordering | Tagged , , , , | 20 Comments

Growing retail logistics options for customers causing confusion ?

Posted on November 18, 2018 by aviyer2010

An article in the Wall Street Journal (November 18,2018) titled “Black Friday Shoppers Beware:Online Shopping Gets More Complicated” describes the many options for shopping and pickup at retail stores. At Target there are 6 options from store purchase, to curbside pickup or DriveUp, to free in-store pickup or Order Pickup, to Delivery From Store to the customer’s home for a $7 fee, to delivery same-day all year around for a $99 annual fee. These same features have different names at WalMart and Macy’s. Within the store, customers can use regular checkout or checkout using their phones. Customers are expected to use different modes depending on the task, perhaps using OrderUp around Thanksgiving and Driveup around Christmas. Will these varying options create customer confusion and decrease sales ? Should customers be provided a guarantee that the net prices will not change substantially across these different modes or should they be asked to value their time appropriately when choosing across these options ? Should stores create a choice survey to enable customers to pick the best option that suits their goals ?

Posted in consumer, Cost, delivery, Ecommerce, logistics, retailers, Service Operations | Tagged , , | Leave a comment

TSA’s plans to reduce queues at US airports

Posted on November 17, 2018 by aviyer2010

An article in the Wall Street Journal (November 14, 2018) titled “”The Struggle to Make Airport Lines a Little Less Awful” Reports that in 2018 only 2.4% of passengers in the top 40 airports waited more than 20 minutes, compared to 4.24% in 2016. However, average wait times in regular lines increased from 5.87 minutes in 2016 to 6.48 minutes in 2018, wait times during peak summer increased 10 to 12 minutes. Travelers using TSA PreCheck waited less than 5 minutes 92.6% of the time. Should the focus be on average time, or on ensuring that PreCheck, which involves paying a fee, has fast service most of the time ? Should investments in technology, such as CT scanners or facial recognition for international arrivals, be justified based on average wait time reduction, or be provided as a service for paying customers who are ready to pay for faster processing ? Should security queue time guaranteed be linked to airline premium customers, with airlines charged for such access ?

Posted in airport, Capacity, queue, Service Operations, technology | Tagged , , , , | Leave a comment

IoT success requires an ecosystem

Posted on November 15, 2018 by aviyer2010

An article in the Harvard Business Review (August 7, 2017) titled “Success with the Internet of Things (Iot) Requires chasing more than the cool factor”, claims that inter-connectivity and a partner ecosystem is a precursor to leveraging the benefit of IoT. Harley Davidson is reported to have connected their information technology (IT) systems with their operations to generate an “IoT enabled plant”. The reported savings include “reducing the production schedule from 21 days to 6 hours, operating cost savings of $200 million, improved production efficiency and reduced downtime”. What are the challenges to integration of the IT system and operations to generate savings ? What are the challenges associated with the creation of a successful ecosystem across companies ? How should incentives be adjusted to enable real-time collaboration ?

Posted in Capacity, Collaboration, Cost, IoT, Supply Chain Issues, technology | Tagged , , , , | 38 Comments

Tesla acquiring trucking capacity to complete deliveries by December 31

Posted on November 15, 2018 by aviyer2010

An article in the TechCrunch site titled “Tesla acquires trucking companies to squeeze in more deliveries before Dec. 31” describes the federal electric vehicle tax credit of $7,500 that winds down by Dec 31st, and is available only to customers who take delivery of their vehicle by year end. With production expected to rampup to 7,000 vehicles per week, delivery has been a bottleneck. The article claims that Tesla has purchased some smaller trucking companies and reserved capacity to complete deliveries. How should the company ensure that delivery capacity is synchronized with production rate and customer delivery schedules ? Since production volumes of 7,000 each week will require production of 50 cars per hour across all shifts and days, how should the supply chain be managed to eliminate surprises in delivery or manufacturing ? Given earlier reports of supplier payment delays by Tesla, can suppliers be expected to cooperate to deliver the desired volumes by year end while enabling Tesla to maintain profitability ?

Posted in Capacity, car, consumer, Cost, delivery, emb2020, logistics, manufacturer, Tesla | Tagged , , , , , | 31 Comments

Should the lower shipping prices from China to the US end ?

Posted on October 21, 2018 by aviyer2010

An article in the Wall Street Journal (October 17, 2018) titled “No More Mail Privilege for China as U.S. to end deep discounts in packages” describes the classification of China as a “tier 3” country while the U.S. is a “tier 1” country, thus permitting subsidized postal rates, from 40% to 70% reduced rates, from China to the U.S. These shipments are small packages, weighing 4.4 lbs or less,from auto parts to jewelry to housewares. Does this one way subsidy provide an unfair advantage to Chinese companies over the US or a reduction in supply costs for users of these products ? Will making the transport costs symmetric in both directions result in fairer supply chain flows ? Should similar actions be taken with Singapore and other countries too ?

Posted in consumer, Cost, delivery, Global Contexts, logistics, manufacturer, Prices | Tagged , , , | 1 Comment

Walmart’s new technology intensive warehouse that is 40% more efficient

Posted on October 21, 2018 by aviyer2010

An article in finance.yahoo.com titled “Walmart’s grocery warehouse worker of the future will have a STEM background” discussed the new warehouse in Shafter, California that will use automation to get eggs, diary and frozen goods to warehouse employees pick rather than having workers lift over 2,000 cases per shift. The result is an estimated 40% increase in product movement, and lower costs. Will Walmart use these cost savings to decrease consumer prices or increase it thin margins for grocery ? Will the additional skill levels required to operate these warehouses result in current workers getting upskilled or a newer type of warehouse employee ?

Posted in consumer, Cost, disruption, logistics, Operations Management, retailers, technology | Tagged , , , , , , , | 55 Comments

Preventing child labor use for cobalt mining

Posted on October 21, 2018 by aviyer2010

An article in Fortune (September 1, 2018) titled “Blood, Sweat and Batteries” describes artisanal mining by over 10,000 children using hand tools in the Democratic Republic of Congo (DRC), the source of 67% of the world supply of cobalt. With prices of cobalt rising 400% between 2016 and 2018 due to electric vehicle battery needs of 18 lbs of cobalt per battery, and demand expected to triple by 2025, the demand in the DRC is soaring. Given it’s poverty level, cobalt mining attracts children who can make $9 a day, far better than alternatives to help their families. Should end product OEMs, the makers of smartphones and electric vehicles, be held responsible for solving this problem? Or is the solution to build batteries that use much less to no cobalt? Should OEMs be responsible to train children for alternate occupations and thus prevent them from mining?

Posted in Africa, Capacity, cobalt, consumer, Cost, Global Contexts, mining, Prices | Tagged , , , , | Leave a comment

Is V-commerce by Fanatics the future of retail?

Posted on October 21, 2018 by aviyer2010

An article in Fortune (September 1, 2018) titled “Licensed to Thrill”, describes the company Fanatics that has exclusive rights to sell professional basketball and football clothing. The company describes V-commerce as a combination of manufacturing, logistics and technology capacity. Fanatics orchestrates delivery product for sale online within hours of an athletes choice of team, manages retail stores and the unique intellectual property of player content. Will the future of retail require such execution to remain relevant? Will Amazon and Walmart be expected to compete for such content? How can manufacturing speed be used by retailers to compete?

Posted in consumer, Cost, delivery, Ecommerce, retailers, technology | Tagged , , , , | 1 Comment

Going Digital in the construction industry to reap $1.6 trillion in potential savings

Posted on October 11, 2018 by aviyer2010

An article in Fortune (October 2018) titled “Building with Bits and Bytes” reports that the construction industry is replacing paper with digital drawings, enabling collaboration with architects and reducing the 33 percent reported waste, totaling $1.6 trillion. The construction industry’s productivity improvement is estimated as 1 percent, vs 2.8 percent for the overall economy. Will competition across builders mean lower construction costs as a result of digitization? Will maintenance costs decrease as a result of better designs? Will construction firms devise their own proprietary software to optimize designs and construction costs?

Posted in Capacity, competitiveness, Cost, delivery, logistics, Operations Management, technology, waste | Tagged , , , , | 17 Comments