The impact of HR 2245 “Preserving Access to Life Saving Medications Act 2011”

Posted on December 25, 2011 by aviyer2010

Bill HR 2245 plans to require drug manufacturers to notify the Federal govt, 6 months in advance, of potential shortages. Shortages are defined as situations where the total supply is less than observed demand. The Federal govt is then required to work with manufacturers to identify alternate sources or alternate drugs. Given the significant role of drug distributors, and lack of supply chain visibility regarding stockpiles, how should drug manufacturers comply ? Given the role of retail prices in impacting supply, and pressures from HMOs to decrease drug costs, should the govt be required to mainain price floors to mantain manufacturer incentives for supply ? Should the FDA be required to manage production shutdowns and rampups in a timely manner to ensure drug availability ?

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The global supply chain for Michael Kors and impact

Posted on December 24, 2011 by aviyer2010

An article in the New York Times (Dec 20, 2011) describes Michael Kors Holding, an apparel company that generates 95 % of its revenues in the US and Canada, makes its apparel in Asia, and is incorporated in the British Virgin Islands. The result significant tax savings – estimated across all US multinationals to generate $ 1.375 trillion in cash overseas. Should this global supply chain be celebrated as effective management or a deceptive unfair outcome ? Should companies be mandated to pay a sales tax collected on their revenues (by the Federal government) rather than permit incorporation to decide tax consequences – and what would be the associated impact ? Would you expect changes in the income tax collection regime (through restrictions on global supply chains) to increase prices for US consumers ?

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Planning the impact of fog, snow and rain at UPS to prevent delivery delays

Posted on December 23, 2011 by aviyer2010

A Wall Street Journal article (Dec 23, 2011) describes the 120 million packages delivered by UPS in the week of Dec 25, with late shipments creating costs between $5 and $ 30. UPS claims that its monitoring of the weather and rerouting have saved 1 million packages and $ 20 million in revenues.  One main concern is fog – which usually rolls in about the time that the cargo planes land.  Should delivery guarantees to customers be linked to weather to decrease the costs faced by express delivery companies  ? Given the differential impacts of weather across trucks and airplanes – how should the transport modes be changed to compensate for weather patterns ? Should pricing for delivery across modes be adjusted by time of year and weather pattern to better reflect delivery costs ?

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Business Class seat comfort based airline competition and supply chain impact

Posted on December 23, 2011 by aviyer2010

An article in Bloombergbusinessweek (Dec 19,2011) describes airline competition to attract business class passengers, who pay 3 to 10 times the economy fare, are 15 % of the seats but 50% of the flight revenue.Business class seats, with new features, are at the center of this competition, and, at 300 lbs, are three times the weight of economy class. This customization of seats by airline has three impacts (a) increased weight which decreases fuel efficiency, (b) increased testing to satisfy airworthiness which takes a three year seat design time and (c) delays due to specialized wiring, which creates production delivery delays. Should airplane manufacturers force seat standards to improve operational and cost performance ? Should suppliers offer features as options installed after airplane delivery ? Given the costs to serve business class passengers, do they really contribute to 50% of the profits too?

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Reverse Logistics – managing the US Army withdrawal from Iraq

Posted on December 23, 2011 by aviyer2010

An article in Bloombergbusinessweek (Dec 19, 2011) describes the management of the ramp down in Iraq, with 2 million items to be accounted for removal. The choices (1) donate to Iraq,(2) ship back to the US Army for use, (3) Ship back to the US for sale to state and county governments to save local costs, (4) Dispose as waste.  Given that the original cost was borne by the US taxpayer, what should be the goal in determining the optimal route for items ? Given the high shipping costs, should those cost be recovered during sale of items, or should it be considered as the logistics cost of deployment ? Should some items be dismantled and just useful parts shipped (e.g. Engines and gearboxes) ?

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The “internet of things” and supply chain impact

Posted on December 23, 2011 by aviyer2010

An article in the Wall Street Journal (Dec 18, 2011) describes the role of smart sensors and cameras using real time information to impact health care, energy and water conservation and transportation. A GE project uses cameras in hospital rooms to alert physician or nurses hn steps in routine car are skipped, thus saving costs and improving health care. An IBM project monitors potential mudslides due to heavy rain and proactively evacuates. Another project monitors water use at homes and advises customers how to save 7 % of their water use. What potential role can such sensors play in fragmented supply chains, where decisions by one company impact costs aced by the other? How should OEMs encourage use of such sensors across supply chains to improve sustainability ? How should equipment manufacturer standards be managed to ease integration of smart devices ?

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Reducing design elements to improve supply chain performance at Lego

Posted on December 23, 2011 by aviyer2010

An article in Bloombergbusinessweek (Dec 19,2011) describes Lego’s decision to outsource themeparks, sell the entertainment division and decrease the number of design elements available to designers from 12,900 to 7,000. The company describes each new element as creating both mold costs and global supply chain costs, with designers now required to be more creative using fewer elements. How does product variety add to global supply chain complexity ? Is there a point at which the variety level is too low to be competitive, thus decreasing revenues ? Since Lego is a toy brand, is this risk of decreasing variety higher than in other sectors ?

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Industry Impact of Loss of funds for light bulb efficiency enforcement

Posted on December 23, 2011 by aviyer2010

An article in the New York Times (Dec 16, 2011) describes loss of funds for enforcement of new light bulb standards, requiring a 25%reduction in energy use for 100 watt bulbs. Thus, while the standards kick in as planned in early 2012, the energy department will not have the funds to monitor their implementation by bulb manufacturers. Bulb manufacturers plan to abide by the regulation. But in the absence of enforcement, should production of the old light bulbs be stopped, even if there is demand ? What about lower wattage light bulbs ? Is government volatility of enforcement increasing costs for the industry and consumers ?

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Ebooks more expensive than paper ?

Posted on December 23, 2011 by aviyer2010

An article in the Wall Street Journal ( Dec 15, 2011) describes a decision by book publishers to dictate retail prices for ebooks, with retailers requiring permission before discounting. Given that used paper book prices are set by market trends, ebook prices are now close to new paper copies, and more expensive than used books. In addition, ebooks cannot be resold, thus preventing resale. Given the increased availability of ereaders, will the new supply chain control by publishers drop their overall sales as against a system where retailers set prices ? Will publishers be more focused on preventing ebook piracy than retailers ? What is this control vaies by country, will it cause leakage and thus loss of supply chain control for publishers ?

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Using security cameras to fine tune retail assortment and displays

Posted on December 23, 2011 by aviyer2010

An article in Bloombergbusinessweek (Dec 19, 2011) describes the use of security camera video data to track consumer flows within Montblanc’s retil stores, with software by Retailnet enabling adjustments that increased sales 20 %. Given that individual tracking of customer movement can enable retailers to more carefully tarrget customers,  and retailer costs thus decrease, the remaining issue is whether it respects consumer privacy. Who owns the video data collected by retailer security cameras in the store and can retailers use that data to decrease their costs ? What regulations should be enforced or created to guarantee consumer privacy ? Should camera data be permitted to extract gender, age and nationality data to correlate with sales success ?

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