Toygaroo – the “Netflix of Toys” ?

Posted on December 6, 2011 by aviyer2010

Toygaroo (http://www.toygaroo.com) is a Netflix like service for children’s toys. parents sign up for three different levels of service (4, 6 or 8 toys outstanding) and pay a monthly fee. All shipping is through federal Express and is free to the customer. As toys are returned, new toys are shipped.  The shipping flexibility permits parents to get toys sent directly to hotels during vacations, so that they can be sent back to Toygaroo without the need to lug along toys along with baggage.  The company claims a Sanitization process that steam cleans toys and uses approved bleaches to assure parents about hygienic toys.  Will the flexibility to have different toys at a steady rate, thus keeping children engaged, be key to the success of this service ? How important is the sanitization guarantee in ensuring that parents subscribe – are the worries any different from those when children share toys during playtime ? The company permits sending back toys with missing parts with associated fees, and has a charge for missing toys – how important is the fairness of this charging in ensuring the expectd level of service ? What other industries could such services extend to ?

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Europe’s Horizon 2020 reserach program funding and implications

Posted on December 6, 2011 by aviyer2010

A New York Times article (Dec 2, 2011) describes the European research fund, Horizon 2020, set to provide $108 billion in funding from 2014 to 2020. But this funding, aimd at innovations in food, health, transport, clean energy etc, requires initial deployment of the technology in Europe, potentially creating manufacturing there.  What are the implications for US manufacturers wanting to avail of this funding – is the constraint worth the funding? How will it impact initial vs steady state supply chain structure for new products that have to conform to the constraint ? Will a market first in Europe constraint be sufficient to cause companies to manufacture in Europe, if that would not be their unconstrained choice ?

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Higher taxes for ebooks than books in Europe

Posted on December 6, 2011 by aviyer2010

An article in the New York Times (Dec 2, 2011) describes the classification of ebooks as a service in Europe, thus facing sales taxes close to 20% vs a tax close to 5% for paper books.  In addition, books a charged taxes based on the location of the seller, not the buyer.  In contrast, ebooks are exempt from taxes in New York, and are charged the same as books everywhere else.  Given an interest in sustainable products, is Europe’s treatment of ebooks rational ? Given that the taxes based on supplier location has caused companies like Amazon to locate in Luxemborg, how will supply chains change if taxes shift to be based on buyer locations? Given France’s unilateral move to match ebook and book tacxes to be closer to 5 %, how will hat impact European book supply chains ?

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Orphan drug laws and attractiveness for pharmaceutical companies

Posted on December 6, 2011 by aviyer2010

An article in Bloombergbusinessweek (Nov 5, 2011) describes the Orphan Drug Act, a competition free seven year period for manufacturers of drugs to treat diseases affecting less than 200,000 patients.  This exclusive period enables drug prices for dosages to reach up to $300,000 and provides the requisite market size to refover costs.  The article describes the attraction of such low volume high price drugs for large pharma companies whose drugs are going off patent. Should patients rare diseases, who would be exposed to high prices, be offered relief through government interventions through subsidies ? Rather than protection against competition, would cost subsidy for manufacturers, in return for margin constraints,  provide the incentive to reign in prices ? Are the ther contexts where such monopoly protection will provide the incentive for innovation, as has been seen in this context ?

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Outsourcing labor to comply with India’s labor laws

Posted on December 6, 2011 by aviyer2010

An article in the New York Times (Nov 29, 2011) describes the outsourcing of the salespeople by Whirlpool’s India division. The varying labor regulations and enforcement, rules regarding layoffs for companies with mo than 100 employees etc, all combine to make compliance cumbersome.  Hence outsourced companies like Teamlease, described in the article, provide the labor required, as temporary employees, to work in companies.  Will the Indian government have to increase contract flexibility to grow jobs ? Will the potential lack of commitment by the temporary employee hurt productivity to the point of being uncompetitive in global markets ? How can the differential rule enforcement across Indian states, and associated competition for industries, change the labor environment to deliver growth ?

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The Impact of a Euro collapse on global supply chains

Posted on December 5, 2011 by aviyer2010

A Wall Street Journal article (Dec 3, 2011) ponders the currency impact of different Euro collapse scenarios.  It suggests that Greece dropping out will cause the euro to go from its current $ 1.34 to the dollar to parity with the dollar.  But if all countries left the euro, it would drop to 85 cents to the dollar.  Given such drastic possible outcomes, how should firms adjust their production and distribution across their global supply chain ? Given the possible demand impact in Europe, should production be moved back to Europe take advantage of the lower priced euro equivalent ? How should companies hedge their capacity across the world to prepare for these possible outcomes ?

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Slow down Postal delivery to save USPS ?

Posted on December 5, 2011 by aviyer2010

An article in CNNMoney (http://money.cnn.com/2011/12/05/news/economy/postal_service/index.htm?iid=HP_LN&hpt=hp_t2) describes a proposal by the US Postal service to change the delivery guarantee for first class mail from the current one to three days to a slower two to five days.  The slower delivery will allow reduced mail processing capacity (from eliminating 250 facilities) and thus lower labor costs.  Given the existence of competitive alternatives for time sensitive mail, do you think the drop in first class demand will further worsen the plight of the US Postal Service ?  Should schemes that decrease front office costs by switching to private shared postal facilities be considered instead ? Should differential pricing (based on distance) for first class mail be considered as an alternative ?

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Justifying the LED light bulb

Posted on December 1, 2011 by aviyer2010

An article in the Wall Street Journal (Nov 30, 2011) describes the calculation being done by companies like WalMart as they switch to light bulbs made from light emitting diodes (LEDs), which last potentially 10 times longer than regular light bulbs but cost up to 20 times more.  One important component, the reduced maintenance costs associated with changing bulbs, estimated as $ 50 per bulb replacement at the Intercontinental Hotel in San Francisco.  While the prices of LED bulbs are expected to drop, the article suggests that inclusion of the savings in maintenance can justify installing LEDs bulbs immediately.  Should similar savings in operating costs be an essential part of justifying sustainable technologies ? Will the benefit from proactive companies that use such a “supply chain view” justify the cost reductions necessary for widespread adoption ? How should firms be incented to broaden their perspective to justify adoption ?

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Evolving landfills into alternate energy sources

Posted on November 30, 2011 by aviyer2010

A CNN video (http://www.cnn.com/video/#/video/us/2011/11/30/javaheri-landfill-solar-methane.cnn) describes a landfill in Atlanta that uses a polyester based fabric with solar panels to cover up a landfill. the solar panels generate electricity that is fed to the grid. But the organic waster generates methane, which is trapped inside the fabric, collected and used as natural gas source of energy.  The report claims that there are thousands of such landfills, which have to be maintained by law for 30 years.  Will landfills now become energy sources, attracting industries to locate close to them for cheap energy ?  Given the energy generated from landfills, will waste now become a revenue opportunity for municipalities ? Do these new revenue sources increase or decrease the incentives for recycling products (because more recycling means less in the landfill)?

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Turkey tails, Samoan obesity concerns and WTO entry

Posted on November 30, 2011 by aviyer2010

An article in Bloombergbusinessweek (Nov 28, 2011) describes the quandry faced by Samoa, which was forced to drop its ban on turkey Tails, the 78% fat content part of the turkey.  Obesity is rampant in Samoa, with the fatty imports being cheaper food sources than the traditional diets.  But World Trade Organization entry for Samoa requires lifting the ban on fatty food imports, permitting import taxes instead.  How should individual countries assess the health impact of consumer choice of fatty foods vs he trade benefit of open borders ? Should subsidies of local foods be the approach to manage this tradeoff ? Should developed country exporters voluntarily restrict exports of unhealthy foods not consumed by their own population?

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