Apple iPhone model changes and planning by case makers

Posted on October 19, 2011 by aviyer2010

An article in bloombergbusinessweek (Oct 17,2011) describes pressures faced by iPhone case manufacturers, a $ 450 million market, when new iPhones models are announced by Apple.  Rely on leaks and rumors regarding the new phone and invest in tools in advance, to be first on the market ? Or wait for the announcement ready with designs, but execute as quickly as possible but with compelling colors and features, risking launch delays ? Given this supply chain conundrum,  how should risk be shared across the case supply chain? Are the 65% margins that case makers receive the reward for assuming supply risk and the cost to be ready when the new iPhone model arrives ? Should Apple share design outlines with case manufacturers or is its current no sharing approach optimal  ?

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Liking Cotton Price Increases to Consumer Goods Sales Growth in Pakistan

Posted on October 19, 2011 by aviyer2010

An article in bloombergbusinessweek (Oct 17,2011) describes a global cotton driven supply chain. The rising cotton prices worldwide, doubling the past year, has increased spending capacity among  Pakistan’s farmers. But the biggest beneficiaries are global consumer goods manufacturers Unilever and Colgate, who report growths in Pakistan of 15% and 29 % respectively. Such growth has spurred increased salespeople in rural communities  to sell shampoo, soap and toothpaste, albeit in small packs.  Given the tight link between cotton prices and rural demand, how should consumer goods companies plan to adjust if cotton prices drop ? Will introduction of stripped down brands now enable competitive offerings during downturns while preserving brand equity? Will effective rural supply chains developed by Unilever and Colgate in Pakistan be a barrier to entry for other consumer goods multinationals ?

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Contradictory trends – Retail Sales forecasts at odds with imports trends

Posted on October 19, 2011 by aviyer2010

An article in the New York Times (Oct 11, 2011) describes the contradiction faced by shipping companies. Growth in retail sales have inspired strong retail growth forecasts into the future. But dropping manufacturer shipments at ports suggest demand downturns at retail.  Should the container shipments be used as a better guide than sales projections to forecast trends this holiday season? Does this inconsistency suggest a significant supply chain breakdown in the apparel industry or a transfer of risk because domestic manufacturers can respond faster though at higher past price points?

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Llama and guano dung fertilizer in Peru

Posted on October 19, 2011 by aviyer2010

In a talk at the Northeast Conference on Andean Archeology (Andover, Oct 15, 2011), Professor Paul Szpak described the dung of guano birds and llamas and their role as fertilizers.  The guano dung has 11% nitrogen, while the llama dung has 2% nitrogen content. Guanos and  their frequent dung creation creates distributed mountains of dung.  But llamas are social animals that create communal dung piles that can be collected efficiently.  These animals and birds are living factories producing fertilizers for the Andean people.  How should these natural manufacturers be developed into modern supply chains? As the clamor for organic products increases, should industrial manufacturers explore such alternatives? Will conservation efforts in this case mesh well with agricultural imperatives and enable a higher product value for the end consumer?

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Food waste and food shortages across the global supply chain

Posted on October 19, 2011 by aviyer2010

An article in the International Herald Tribune (Oct 15, 2011) describes waste as a key contributor to food shortages. 33 % of food purchased in the UK is wasted. 40 % of the fruits and vegetables grown in India is wasted. But while waste in the UK is by consumers, waste in India is up in the supply chain due to poor supply chain practices – from transport to cold chains. In addition, diversion of crops to fuel will only heighten the supply demand mismatch. How should choices regarding fuel sources be coordinated with efforts to decrease waste in developed and developing countries? Why do food prices not automatically solve the supply chain problem in india? Will third party logistics providers solve the waste problem in this industry and, if so, how will they be compensated for their efficiency efforts?

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Near Net Zero at Frito-Lay’s Casa Grande, Arizona plant

Posted on October 19, 2011 by aviyer2010

An article in Sustainable Life Media (Oct 8, 2011) describes efforts at Frito Lay’s plant to reduce its energy and water impact. 67 % of the energy used comes from renewable sources – solar power. 75 % of the water used is recycled, Greenhouse gas emissions decreased 50 % and 80 % of natural gas usage is expected to be decreased through use of wood and agricultural waste as a source. Finally less than 1 % of the waste is expected to go to the landfill.  Should efforts to move to zero impact facilities be justified based on costs or based on regulatory compliance or PR benefit ? Do you expect proactive companies to benefit more than companies that wait until regulations demand such efforts ? WOuld you expect product designs to change to enable zero emission manufacturing ?

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Amazon.com – the WalMart of the web ?

Posted on October 11, 2011 by aviyer2010

An article in the Economist (Oct 1, 2011) reports that Amazon.com’s are 11 % lower than other retailers with physical stores for 100 products selected randomly.  The prices at Amazon were even lower compared to store websites. Amazon.com’s low profit margin, scale, the Kindle as a storefront, Amazon prime shipping for $ 79 a year – all make its web strategy akin to the Walmart in the physical world.  But, unlike Walmart, Amazon competes with Apple for the tablet, Barnes and Noble for the ereader, IBM and Apple for Cloud services, WalMart for physical goods and Best Buy for electronics.  Do you think that Amazon.com’s supply chain execution capability sufficient to enable it to compete on all fronts ?  Given the razor thin margins and increased warehousing costs as delivery lead times are kept low and inventory is distributed, how do you expect Amazon to compete locally if sales tax requirements are imposed on the company ? Is Amazon’s key to competitiveness its customer service and ability to absorb competitors (like Diapers.com) ? How should the company leverage its capability globally ?

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Airline sustainability goals and biofuel role

Posted on October 9, 2011 by aviyer2010

A New York Times article (Green Column, Oct 9, 2011) describes the airline industry goal to become “carbon neutral” by 2020 and cut emissions by 50 % by 2050, given that they account for 2 % of all human generated carbon emissions. Some of the efficiency come from new designs and materials for aircraft and engines have made engines 70 % more efficient than 40 years ago. Other gains are expected to come from use of biofuels, from palm oil, jatropha weed and algae. But a great source is municipal waste generated by the very cities that these airplanes fly to.  Will these different sources of efficieny enable the industry to reach its goals ? Will fuel sources have to be subsidized to enable the industry to reach its goal while retaining competitiveness ? Will the industry have to slow down its growth and role to attain its goal ?

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The Impact of concentration in the Global Electronics Supply Chain

Posted on October 8, 2011 by aviyer2010

An article in the Economist (Oct 8, 2011) describes how concentration of manufacturing by Taiwanese firms has enabled price decreases and feature increases faster than chip prices. At HTC, new product development time has dropped by six months compared to two years ago. NVIDIA has seen potential demand for its $ 20 chips go from $ 4 billion in PCs to $ 40 billion in smartphones.  Multicore chips have enabled energy savings by swiching ff, while flas memory technology has enabled increased storage.  As the increased incorporation of the cloud becomes widespread, what is the future mix of  software and hardware that we should expect ? Will the separation of design and software development in Silicon valley and production in Taiwan remain the dominant supply chain configuration in this industry ? At what point will manufacturers, like HTC, become proficient enough to develop their own closed configurations (like Apple) ?

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Toyota retools in Japan, plans for a weaker yen

Posted on October 8, 2011 by aviyer2010

A Wall Street Journal article (Oct 7, 2011) describes efforts by Toyota to retool, reduce production batch size and plan to be competitive when the yen gets weaker. This strategy is counter to efforts by other automakers to move production out of Japan. The investments will enable flexible manufacturing and multiple tasks on short assembly lines. The aproach trades off setups for flexibility but can be managed because engine capacity is for six million while only 4.5 million are produced. Is the smaller batch, higher flexibility Toyota gamble a competitive gamble ? Will Toyota’s moves to invest on flexibility provide the required capability adapt to global conditions ? Is the increased automation a response to the graying Japanese workforce ?

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