“Good African Coffee” – its supply chain and sustainability

Posted on April 8, 2012 by aviyer2010

An article in the New York Times (April 8,2012) describes the efforts by Good African Coffee – a company that roasts coffee grown in Uganda, and brands the coffee rather than sell commodity coffee beans. Going up the value chain of coffee requires higher yields, better growing techniques, roasting equipment, cupping to separate tastes etc. But it also improves the food eaten, houses lived in, opportunities for education etc for farmers, and replaces aid with trade as the driver for change. Should Good African Coffee’s supply chain be described as being sustainable ? Should efforts such as this be included in a definition of sustainability – beyond purely environmental metrics ? Given that trade can leverage the impact of aid, should aid be used to subsidize the capital equipment required to move up the value chain ?

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Pepsico’s “water positive” schemes and Jugaad Innovation

Posted on April 8, 2012 by aviyer2010

In a book titled “Jugaad Innovation”, Radjou, Prabhu and Ahuja write about Pepsico’s water positive supply chain in India i.e., the company saves more water than it uses. The secret – enabling “direct seeding” rice planting, thus saving 70% of the water use, and using local village innovators and low capital intensity solutions, called Jugaad innovation. Given that this water saved exceeds water use in the rest of the company’s operations in India, they are termed water positive. Should efforts by a company to create savings that net out its use be a permissible definition of water positive supply chains ? Is the logic the same if a firm were to purchase “water credits ” or “carbon credits” to net out its carbon or water usage ? How important is the need for these innovative approaches to reduce environmental impact to be low capital intensity projects ?

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China’s export mix and target region shifts and global impact

Posted on April 8, 2012 by aviyer2010

An article in Bloombergbusinessweek (April 9,2012) describes a shift in China’s exports towards heavy machinery, cars and ships from shoes, consumer electronics and clothing. Inland locations with abundant labor, targeted government loans and a focus on emerging markets like Brazil and India have resulted in a decrease in exports to Japan, US and Europe from 56% down to 48%. Chinese companies have a 41% share in ships, and the composition of heavy equipment in exports has increased from 29% to 39 %. How will US companies like Caterpillar and GE be impacted by these changes ? How will the lower priced Chinese capital goods increase the competitiveness of emerging economies ? Will Chinese financing of these purchases increase overall manufacturing global competitiveness ?

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The supply chain for songs

Posted on April 8, 2012 by aviyer2010

An article in the New Yorker (March 26, 2012) describes the role of producers (who generate chord progressions, beats and computerized synths), “top-line” writers (who generate melodies, lyrics and hooks to attract listeners) – who then market to performers to add their voice and market. The market for producers and top-line writers is concentrated, thus impacting the similarity of music across performers. The producers and top-lie writer teams market their song structure to performers and pick the ones most likely to generate hits. The performer may record their voice anywhere, and the voice would be combined with the chords and edited to generate the song. In other words, the song is an assembly of disparate performers working at spatially distributed locations and time points. Given such a supply chain for song creation, should one expect similarity in the output across performers or would the need to be successful generate a portfolio of song types ? Should one expect “trends”, as in fashion, that would rely on specific tune types generated by producers ? Will such platform based music result in a few performers generating the bulk of the hits and crowding out new performers ?

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Pepsico’s “water positive” schemes and Jugaad Innovation

Posted on April 7, 2012 by aviyer2010

In a book titled “Jugaad Innovation” Radjou, Prabhu and Ahuja write about Pepsico’s water positive supply chain in India i.e., the company saves more water than it uses. The secret – enabling a “direct seeding” rice planting process, thus saving 30% of the water use, and using local village innovators and low capital intensity solutions, called Jugaad innovation. Given that this water saved exceeds water use in the rest of the company’s operations in India, they are termed water positive. Should efforts by a company to create savings that net out its use be a permissible definition of water positive supply chains ? Is the logic the same if a firm were to purchase “water credits ” or “carbon credits” to net out its carbon or water usage ? How important is the need for these innovative approaches to reduce environmental impact to be low capital intensity projects ?

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Renewable energy server farms in Iceland

Posted on April 7, 2012 by aviyer2010

An article in Bloombergbusinessweek (April 2,2012) describes a server farm on solid bedrock, close to the airport, in the midpoint of the Atlantic, fueled by renewable geothermal energy and cooled by fans that blow in cool air from the outside. The green serve farm that provides IT firms with the panacea of renewable energy, linked to a new fiber optic undersea cable to provide bandwidth. Can remote Iceland become an effective player in the announced strategies by firms to decrease their carbon footprint ? Will geography trump sustainability in permitting this server farm to offer a contingent service – a backup to failures at other points in the network ? Will the competitiveness of such farms suffer as software and hardware tools increase data capacity f existing servers, thus naturally lowering per unit carbon impact ?

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Improving the competitiveness of Portugal’s ports

Posted on April 7, 2012 by aviyer2010

An article in the Economist (March 24,2012) describes the drop in prices per container from $1000 to $300 from Asia to Europe as ship capacities increased to 14,000 containers. Portugal’s deep ports can accommodate these ships but are uncompetitive for port services. Entrenched unloading companies with long leases and strong unions with high wages means that ships bypass this port. If leases are awarded competitively, there were more unloading companies, and port operators were privatized even more, could prices drop and productivity increase to make the ports more competitive and attract more ships, thus increasing much needed jobs ? Can port changes be viewed as an externality – meant to assist the Portuguese economy with opportunities for value added work ? Could the resulting transport and rail flows to Southern Spain boost opportunities for towns enroute ? Is port competitiveness a land based concept more than sea related ?

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US Manufacturing rebound and prospects

Posted on April 7, 2012 by aviyer2010

An article in the New York Times (April 4,2012) describes job growth at Master Lock, a manufacturer, and the 20% of the manufacturing jobs, lost during the recent recession, that have been added back to the economy. However, some of the manufacturing jobs have been lost due to automation, others due to global competition. At Master Lock, 33% of the employees now produce the same output as in the past. How should the focus on manufacturing be tuned to enable innovation in product design and delivery ? Should investments in capital equipment and automation that decrease manufacturing jobs, be discouraged to preserve jobs ? Is there the risk that a focus on manufacturing job creation may make industries less competitive globally ? Finally, it appears that companies shielded from global competition, such as local services, seem to add jobs. Would constraints on global competition, generate jobs but hurt competitiveness ?

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What are GM’s choices for the Opel plant in Bochum, Germany ?

Posted on April 4, 2012 by aviyer2010

An article in the New York Times (April 2,2012) describes worker frustration at GM’s Opel plant in Bochum, Germany, with worries that it will be shut down in 2014. Wages at the plant are six times the wage rate in GM’s plant in nearby Poland. Shutting down the plant will cause GM to incur cleanup costs for the former coal mine site, and high severance payments. The plant produces a popular minivan, the Zafira, but the company has made no investments in the past few years, and the two story plant layout is not as efficient as a single floor. Should GM keep the plant open to save shutdown costs ?Should new investments be subsidized by the local or central government to preserve jobs ? Should employees offer productivity improvements to keep the plant alive ? How should this plant justify itself in GM’s global supply chain ?

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Is fiber optic cable capacity too much ?

Posted on April 4, 2012 by aviyer2010

An article in the Wall Street Journal (April 3, 2012) suggests that fiber optic capacity expansion is too optimistic, pointing to 3% utilization of cable in big cities and new laser technology that expanded capacity in the past. But capacity is being added to accomodate video traffic and high speed trading demands. Will curbs on trading dampen demand and create a capacity glut ? Will new technogies expand capacity from existing cable and decrease demand for new capacity ? Will railroads with buried pipe reap benefits now ? Or is this a repeat of past fiber optic bubbles, leaving the system with excess capacity and economic turmoil?

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