Nokia volume drops and supplier impact

Posted on September 27, 2011 by aviyer2010

A Wall Street Journal article (Sept 27, 2011) describes the declining fortunes of Nokia and its impact in suppliers. These suppliers are described as finding that Apple and Android based smartphones are using custom built components that are closed to these suppliers. What is a possible alternate approaches that suppliers could consider to survive ? Will suppliers have to morph to become OEMs of phones to permit the supply chain to persist ? Will there be a collateral impact of failure of these suppliers on prices charged by component manufacturers to current smartphone OEMs ?

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FDA responsible for generic drug shortages ?

Posted on September 27, 2011 by aviyer2010

An article in Forbes (http://www.forbes.com/sites/aroy/2011/06/24/drug-shortages-the-new-death-panel/) describes strong FDA enforcement of Good Manufacturing practices with zero tolerances for generic manufacturers. Any violation causes shut down of a production line, with alternate suppliers requiring lengthy permissions to ramp up to compensate. In other words, an attempt to overregulate by the FDA and prevent adaptation by competitors may the cause of a shortage, which the FDA now has to solve.  Should the FDA be required to balance its regulation with consequences for availability of drugs ? Should the approvals required by audited competitors to ramp up production be eased ? Should distributors be given advance notice to build up inventory ahead of inspections to reduce potential shortages ?

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Europe rules regarding airline emissions

Posted on September 27, 2011 by aviyer2010

A New York Times article (Sept 26, 2011) describes new European rules that restrict airline emissions to 97 % of their emissions from 2004-2006 with a free emissions 85 % of this limit. This number will drop to 95 % by 2013-20 with the free limit dropping to 82 %. The emissions not free will be generated by trading with other industries.  Should the European Union have the right to restrict emissions for all nonEuropean carriers who fly to Europe ? Is the claim that an increase in free emissions frees up cash to invest in new airplanes reasonable in the associated time frame ? Can the estimated ticket cost impact of $ 2 to $ 12 euros per ticket be expected to hurt airline demand ?

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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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