The impending channel conflict as style magazines link to ecommerce sites

Posted on September 27, 2011 by aviyer2010

A New York Times article (Sept 26, 2011) describes plans by fashion magazines such as GQ, Vogue and Esquire to link styles they present to sites where readers can purchase clothing. At the same time advertisers in these magazines like Barneys, have catalogs that look more like emagazines.  At what point will the channel conflict with advertisers swamp the benefits from connecting to etailers for magazines ? Should magazines be paid a percent of the purchase or a flat fee for directing consumers to sites ? How will independent etailers be impacted by these trends ?

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The New Kindle vs the iPad battle

Posted on September 27, 2011 by aviyer2010

A New York Times article (Sept 26, 2011) describes the impending release of a new tablet by Amazon.com and the ensuing battle with Apple. Amazon provides content – ebooks, music, entertainment – but adding email and games covers the bulk of what consumers want. Apple has a lead in apps, great market share and a series of failed competitors from Samsung to RIM to HP. Some analysts suggest that Amazon could benefit from its customer ecosystem and the lock-in it brings thus generating millions of units of sales. Will content providers benefit from the emergence of two effective devices ? Can a content driven Amazon make content more scarce for the iPad ? Will the low energy focus of past Amazon Kindle ereaders be key to the new device and its success ? Will component manufacturers be in the drivers seat  as they play off technology availability to the two new players in the market ?

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Internet productivity and future employment across supply chains

Posted on September 26, 2011 by aviyer2010

An article in the International Herald Tribune (Sept 24, 2011) describes a presentation by Yuri Milner, a Russian investor in Facebook and Zynga.  He describes internet based companies generating revenues of $ 100 million per employee compared to 10 to 20% of that level for offline businesses. He claims Facebook engineers supporting 1 million users each.  He also quotes statistics suggesting an accelerating move to the internet by users and businesses.  Is the increasing revenues and profits for companies and decreased employment a result of increased internet use across the supply chain ? Will his forecast of a “global brain” where innovation comes from global collaboration portend a diminished role for the firm ? How will it impact global competitiveness across countries if innovation is dispersed ?

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Marvin Windows and the no layoff decision

Posted on September 25, 2011 by aviyer2010

An article in the New York Times (Sept 24, 2011) describes the”no layoff” strategy used by privately held Marvin Windows of Warroad, MN.  To reduce costs, employees saw cuts in perks like tuition reimbursement, overtime, salary cuts of 5 % and hourly worker working hours cut to 32 hours per week. But maintaining the workforce is a strategy the firm claims will allow them to gain market share as the economy recovers. Is Marvin Window’s strategy a competitive alternative to reducing capacity ? How could the slack capacity be deployed to enable innovative window solutions that can improve energy efficiency to comply with impending future regulations ? Given the volatile market for windows, do you expect Marvin to be able to synchronize supply with demand more effectively than the competition and imports ?

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Print to order by HarperCollins and small bookstore competitiveness

Posted on September 25, 2011 by aviyer2010

An article in the Wall Street Journal (Sept 23, 2011) describes the impact of a decision by the publisher HarperCollins to make 5,000 paperbacks available through OnDemand Books LLC Espresso print Machine. The small printer enables a book to be printed in a few minutes.  The goal is to decrease the 25 to 80 % of paperbacks not available in bookstores due to space limits, the revenue will be split 70 % to the publisher and 30 % to the bookstore.  Will such a strategy enable local bookstores to compete with Amazon.com or will it be subsumed by e-books ? Should the publisher own the printer and recover costs based on book sales or should this remain the bookstore owner’s decision ? Will such a decision decrease the incentive for the bookstore to carry books by HarperCollins ? How can the publisher use this strategy to increase competitiveness of his books?

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Panama Canal Expansion and US Trade and Domestic port Impact

Posted on September 24, 2011 by aviyer2010

A New York Times article (August 16, 2011) describes the construction in the Panama Canal, scheduled to be completed by 2014, that will permit ships that are 25 % longer and 50 % wider to pass through while relieving the capacity constrained current delays of a day or more faced by ships.  The impact is estimated to be increased trade in the ports of Savannah and New Orleans that have to deepen their harbors and increase their handling capacity. It is also expected to decrease shipping costs for grain from the US to Asia. But the ultimate impact of this capacity expansion and its links to flows through the Suez Canal are unknown.  Given the expected cheaper shipping routes for US agriculture, do you expect increased production in the US ? How would you expect the costs to use the expanded Panama Canal to be set to capture some of the shipper’s savings ? Given that the  decreased delays will reduce shipper intransit inventory costs, what impact will you anticipate for  the supply chain ? Given the advantage of the new channel is for large ships with greater capacity, what impact will these new routs have on shipment sizes ?

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Using customer financing of prototype designs to cover manufacturing costs

Posted on September 24, 2011 by aviyer2010

A New York Times article (Sept 23, 2011) describes Kickstarter – a crowdsourcing website model to fund designs.  Designs are proposed along with a fundraising goal with an “all or nothing” model – if the minimum is not met, no funding is provided. The article describes furniture, ipad covers, iphone stands etc – all of which started with a design prototype, an appeal for funds with associated products or services based on funding level. Successful projects then had to be produced to satisfy funding sources. Several of the designers claim that fulfillment costs were significant and were underestimated. For which products is such a crowdsourced funding model appropriate ? Should Kickstarter provide additional services such as sourcing or fulfillment or is it better off making the designer absorb these risks ? Given the opportunity for customer feedback to improve designs, should funding customers be given ownership of some of the intellectual property associated with the final design ?

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College apparel and provider sourcing strategies

Posted on September 24, 2011 by aviyer2010

A New York Times article (Sept 23, 2011) describes frustration expressed by student groups at Ohio State and University of Southern California because contracts for manufacturing their school apparel was granted to a unit of the Dallas Cowboys that has used sweatshop labor in the past. The students point to an El Salvador plant that had contaminated water and forced overtime and a plant in Indonesia that was closed with no worker payments. Should students have the right to dictate sourcing decisions at their University ? Should the University be held responsible for monitoring and ensuring supplier conformance to quality or should this process be managed by contract penalties ? If the supplier in turn uses an agent for sourcing does responsibility for compliance transfer to the agent or country of location of manufacturing ?

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Postponing Customization of the Prius to the NJ port

Posted on September 24, 2011 by aviyer2010

An article in the New York Times (Sept 23, 2011) describes customization of the Toyota Prius, manufactured in Japan, at the Newark port. Cars are tailored to customer requirements such bluetooth, accessories, quality touchup, satellite radios, alloy wheels etc.  This assembly postponement enables vehicles to be built standard in Japan yet cater to customer tastes in dealerships. Why is it optimal to customize at the port rather than at the dealer – is the supply chain better off this way or is it an attempt by Toyota to prevent dealers from installing generic options ? How far can this customization go before it impacts quality ? Given the fluctuating demand for hybrid cars – does this postponement enable pooling of demand uncertainty across regions ?

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Financing sustainability driven retrofits and thus manufacturing growth

Posted on September 20, 2011 by aviyer2010

An article in the New York Times (Sept 19, 2011) describes a new consortium, including Lockheed Martin and Barclays bank, that will finance retrofits of buildings to decrease energy costs, cutting energy use and utility bills by 33 %.  Building owners would pay for the upgrades through surcharges on property bills that will be lower than the energy savings.   Coordinated by a nonprofit, the Carbon War Room, these initiatives will require new windows, doors, insulation, lighting and mechanical systems, solar panels etc.  Lockheed martin is expected to do engineering tasks for large projects. Do you expect such financing arrangements to be game changer in the industry’s attempts to decrease energy costs ? Should manufacturers of capital equipment become part of such solutions to drive product demand ? Should utilities be part of the consortium because of the associated reduction in their own (power plant) capacity needs ?

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