Tracking the US supply chain impact of new California Greenhouse Gas Emissions Laws

Posted on October 23, 2011 by aviyer2010

A New York Times article (Oct 21, 2011, A25) describes recent passage of greenhouse gas emissions laws in California that aim to impose stringent caps on emissions with the flexibility to trade with any other firm across the US for pollution credits.   A potential success is claimed by Clean Harbors, a company whose plant in Arizona destroys old refrigerants and thus gains pollution credits it can trade. Can unilateral actions by California generate genuine greenhouse gas reducing actions that would otherwise not occur? Should California restrict the pollution credit trades to companies in California alone ? Will the associated technologies that might be created to reduce emissions provide sufficient green jobs in California to provide a long term global competitive advantage?

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A Parallel between Japanese auto and Chinese solar manufacturers ?

Posted on October 23, 2011 by aviyer2010

An article in the New York Times (Oct 21, 2011, B3) describes a potential reaction to US solar manufacturer unfair trade concerns regarding Chinese competitors , a parallel to Japanese auto manufacturers in the ‘80s.  At that time, Japanese auto manufacturers set up plants in the US and employed US workers to make their cars, and then proceeded to gain significant market share with superior products.  Chinese solar manufacturers, who can set up final panel manufacturing and assembly in under six months,  have already started a similar trend. Given the lower lead time and capital requirements , should the solar industry be expected to follow similar trends  to the auto industry ? Given that manufacturing about 50 % of the content for solar panels commands a “Made in the USA” label and US subsidies, does the associated location based preference make  sense ?  Given the demand for solar panel manufacturing equipment exported to China from the US, should trade frictions for solar panels be expected to cause a shift in demand for equipment to German suppliers, thus hurting jobs upstream in the US ?

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Simple Labels or Comprehensive Nutrient Labels for Food ?

Posted on October 23, 2011 by aviyer2010

An article in the New York Times (Oct 21, 2011, B3) describes a new proposed food labeling system by the Institute of Medicine. The proposal would list calories per serving and up to three stars. Each star would be for “falling below the threshold for sodium, added sugar or saturated and trans fat”. The proposal aims to simplify food evaluation by consumers. But the Grocery Manufacturers Association claims to offer a “Facts Up Front” plan to list all nutrients and the percent of daily recommended dose the food serving would supply.  Should simplicity of labeling, at the cost of lost detail, and its potential use by consumers be the key to choice of an appropriate label? Should consumers expect GMA members to voluntarily choose a label that might harm sales to some of its members? Should overall societal concerns be the key to government regulators choice of food labeling or should it be consumer  marketing considerations  ?

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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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