Managing retail customer queues to decrease dissatisfaction

Posted on December 8, 2011 by aviyer2010

An article in the Wall Street Journal (Dec 8, 2011) describes retail queues and consumer perceptions of waiting time.  While a single queue is mathematically ideal as an approach to decrease average wait times, consumers perceive any waiting time greater than 3 minutes as higher than the real time.  Efforts to alleviate waiting times include handheld scanners for checkout (at Apple), queue busters who prescan items while the customer waits in line (Home Depot)  etc. But should single queues be dropped in favor of separate queues with consumers choosing their line ? Should entertainment (using TV screens), or impulse buy opportunities (Gap, Old Navy) be the way to decrease waiting time perceptions ? Or should more cashiers be added if the line grows beyond a fixed number ?

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US Battery companies “shocked” by low demands and high costs ?

Posted on December 8, 2011 by aviyer2010

An article in the Wall Street Journal (Dec 5, 2011) describes the plight of US battery companies, funded by over $ 2.4 billion in Federal grants, but struggling to win contracts from automakers. In the case of Ener1, low sales of the automaker Think Global generated low demand. For A 123 systems, losing a contract from GM, which went to LG Chem of South Korea, created low demand. The article claims that the close to 20 year lead for foreign battery manufacturers puts their costs at $ 400 per kwh vs the current US manufacturer cost of $ 1000 per kwh.  The key – the learning curve associated with the higher production volumes. Should the US govt strategically source batteries for all of its needs to increase production volumes for US battery companies ? Is the battery industry worth developing domestically to increase the odds of more green supply chains in the US ? Should the battery companies be allowed to fail to permit creative destruction in the industry or sheltered to enable their survival ?

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Eliminating USDA oversight of “fresh” meat labels – a good idea ?

Posted on December 8, 2011 by aviyer2010

An article  in the Wall Street Journal (Dec 7, 2011) describes a proposal by the USDA to eliminate their oversight of claims like “fresh”, “low-fat” or “Italian style” for meats.  The claims will thus rest on the credibility of the producers, thus eliminating 580,000 approvals from the USDA and $ 8.7 million in costs over 10 years.  Is this the kind of regulation that is best suited for elimination, with “caveat emptor” being the operative approach  Since the costs saved from a regulatory perspective per approval are small ($ 15 per approval), is the expectation that the approval time savings would permit a more efficient supply chain, thus making products more affordable ? Can the industry be expected to self regulate “food claims”, thus generating efficiencies by leaving government regulators out ?

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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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