Social Networking at P&G to drive sales growth

Posted on April 3, 2012 by aviyer2010

An article in Bloombergbusinessweek (April 3, 2012) describes Proctor & Gamble’s foray into social networking and its demand impact. A Facebook campiagn for Pepto-Bismol focused on “Celebrate Life” – targeting users of the product on Saturday and Sunday mornings – and driving a 11 % market share growth in 2011. Similarly, a Facebook campaign “Mean Stinks”, sponsored by Sercret deodorant, is a campaign against bullying, that increased page visits by a factor of 25 and sales by 16 %. Will consumer products manufacturer sponsorship of such social media sites enable specific marketing campaigns to drive growth among 25 to 54 year old customers that are synchronized with its supply chain ? At what point will customers tire of the sponsorship messages and merely reward the compay for doing good deeds, thus eliminating the benefit of targeted campaigns ? Will such efforts enable global leveraging of marketing spends or will they remain inherently local, thus requiring a separate campaign in each location aroud the globe ?

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Unilever’s Sustainability Measures for its Supply Chain

Posted on April 3, 2012 by aviyer2010

A white paper by Verdantix Ltd (http://www.verdantix.com/uploadedfiles/products/Verdantix%20Unilever%27s%20Strategy%20Leverages%20Value%20Chain%20Influence.pdf) describes specific measures at Unilver e.g., measurement of its environmental impact per unit of consumer usage i.e., per tea bag or per dose of detergent, with a goal to decrease that impact by 50 % between 2008 and 2020. The company also aims to move to 100% of its agricultural raw material sourced from sustainable or recycled sources by 2020. Finally total emissions across its global plants are expected to show a 5 % decrease per year – requiring significant improvements in its European plants to compensate for energy sources in developing economies. Are such supply chain wide sustainability efforts easier for global corporations like Unilever with its global footprint and thus access to a portfolio of choices ? Should one expect these changes to be driven by philathropic concerns or profit motives ? Do you expect such initiatives be be required to retain Unilever’s customer base or are they driven by anticipated compliance requirements ?

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Wal-Mart’s ecommerce approach to combat Amazon.com

Posted on April 3, 2012 by aviyer2010

An article in Bloombergbusinessweek (April 2, 2012) cites WalMart’s 8 % growth in 2011 vs Amazon.com’s 41 % growth as reason for WalMart to innovate in the ecommerce space. The result (a) Endless Aisle – which permits customers to order online any items not in the store, (b) Pay With Cash – for customers without credit cards to order online and pick up at the store with cash, (c) Shopycat – which scans a customer’s Facebook friends preferences and suggests gifts. Will these festures be sufficient to combat “scan and scram” – whereby customers scan items in the store and purchase from cheaper e-tailers ? Given Amazon.com’s lead, will WalMart be able to use its $ 264 billion US sales heft and physical store presence to compensate ? Will upcoming ecommerce transaction sales tax collection requirement level the playing field between WalMart and Amazon ?

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

Posted on April 3, 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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The reuse vs recycling decision at Starbucks

Posted on April 2, 2012 by aviyer2010

An article in Sustainable Brands (http://www.sustainablebrands.com/news_and_views/articles/starbucks-increases-recycling-backs-away-reusable-mugs?utm_source=newsletter&utm_medium=businessweekly&utm_campaign=april2) describes a decision by Starbucks to shift from reuseable to recylclable cups. Reuseable mugs were related to a 5 % increase in water usage in 2011, after and 17 % drop from 2008 to 2010, so the company decided to lower its target use of reuseable mugs from 25 % to 5 % by 2015 (the current level is 1.9%). Should the reuse vs recycling debate include the impact of water usage in addition to greenhouse gas impact etc ? Should Starbucks planned use of 100% renewable enrgy by 2015 be considered in conjunction with its container choice and design to assess progress towards sustainable service provision ? To get to the target of 100 % recycling, how should the responsibility for provision of recycling bins be shared between Starbucks and municipalities ?

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The risk in Apple’s IP protection and litigation strategy

Posted on April 1, 2012 by aviyer2010

An article in Bloombergbusinessweek (April 2, 2012) describes Apple’s jihad against Google, Samsung, Motorola and their Andrioid powered hardware devices. But each specific IP case dredges up prior art – work by other several years ahead of Apple, thus casuing the firm to loose its claim of superior design and software. But it also damages the software and design driven firm’s relations with Samsung – producer of $ 7 billion worth of parts, chips, screens etc. Does Apple’s IP focused jihad present a supply chain risk for the firm ? Will successive rulings that go against Apple make the company more like every other, thus damaging the brand premium that customers are willing to pay ? Will faster innovation, rather than slowing down competitors be the only defendable competitive strategy for Apple ?

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How many hours should Chinese workers work at Foxconn’s plant ?

Posted on April 1, 2012 by aviyer2010

An article in the New York Times (March 31, 2012) suggests that only 18% of the Chinese employees at Foxconn’s plant have complaints about working longer than the Chinese government mandated maximum of 49 hours each week, with overtime for any hours worked over 40. About 48% of employees claimed the current hours were reasonable, 34% preferred to work longer hours, with many claiming that their single status and lack of alternatives meant that they preferred to made it easier for them to 60 hours to earn more money. Do you accept the logic from the Chinese government that workers will not be able to refuse management’s request to work longer hours, thus requiring a cap ? Should workers who want to work longer hours be permitted to do so, if the laws adjust and it is legal ? Given that the overtime hours were used only because of labor shortage, how should Foxconn manage compliance – will higher wages resolve this issue ?

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The collapse of Sony’s interest in Sharp’s Sakai plant

Posted on March 29, 2012 by aviyer2010

An article in the Wall Street Journal (March 29, 2012) describes a collapse in Sony’s interest in Sharp’s Sakai plant, whose production of high end LCD displays was expected to decrease costs for Sony, and garnered a 7 % investment from Sony. But when demands for TV sets increased due to a Japanese government incentive to switch to digital broadcsts, Sharp’s low yields prevented a reliable supply. But by the time yields increased, prices of LCD panels from other suppliers crashed, thus diminishing Sony’s interest in the plant. The result – Sony now feels it should get out of any further investments and sell its stake. Is this a case of a supply option that got undone by low yields at the plant ? Will the resulting observed risk and thus need by Sharp to to sell a stake to a Chinese manufacturer, Hon Hai, increase retail pressure on Sony ? How should capacity investments be structured to anticipate possible yield risk ?

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Ban “pink slime” or let the market decide ?

Posted on March 29, 2012 by aviyer2010

An article in the Wall Street Journal (March 29, 2012) describes a move by supermarket chains to ban ground beef containing “pink slime”, an additive made from leftover beef trimmings, that is used as a filler in beef. Iowa’s governer is reported to say that banning pink slime will mean the killing of 1.5 million head of cattle to maintain current production. Should retailers offer beef with and without the filler and let the market decide ? If the increased use of pink slime is a way to keep prices low and food affordable, but it is deemed unhealthy, should regulations be passed to prevent its use ? How should the supply chain impact of this filler be anticipated and managed ?

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The ripple effect of Foxconn’s changes

Posted on March 29, 2012 by aviyer2010

An article in the New York Times (March 29, 2012) describes widspread violations discoverd by the Fair Labor Association, hired by Apple to audit its suppliers, at Foxconn. The supplier, Foxconn, has committed to adhere to Chinese law, which restricts factory employees to work less than 49 hours each week (compared to 60 hours a week), while maintaining their wage levels. The impact is expected to increase labor costs, require more employees, and impact all consumer electronics manufacturing. Will these changes by Foxconn increase prices of electronic products or will it cause OEMs to cut their margins to maintain prices ? Will the improved compliance in China increase the magnitude of the manufacturing in China ? How will these increased wage rates ripple across all manufacturing in China ?

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