Rare Earths Elimination in Electric Motors by Toyota

Posted on January 14, 2011 by aviyer2010

A Wall Street Journal article (January 14,2011) describes imminent breakthroughs announced by Toyota in eliminating use of rare earth metals in electric motors for hybrids.  This is a response to earlier reports claiming decreased exports of rare earths by China in the future – to reserve the material for domestic manfacturers. The materials listed include neodymium and lithium – China is a world source for both metals.  This impact on demand may well solve the supply demand problem – while decreasing costs at the same time.  Should we expect innovation to resolve the current 400 % increase in prices ?  Will such potential adjustments deter unilateral attempts to starve supplies ?

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“Back to Basics” at Uniqlo Japan

Posted on January 13, 2011 by aviyer2010

Businessweek (Jan 10, 2011, page 16) describes the travails at Uniqlo, a division of Fast Retailing in Japan. The firm is repoted to be Asia’s largest retailer and is known for its low-priced casual “basic” apparel.  But competition from Zara and H&M caused the firm to look for more fashion clothing – at the expense of basic items. The result – a 25 % revenue slide at stores with a mismatched assortment that did not meet demand.  The company describes a plan to “strengthen basic lines”(see BW reference) but also expand abroad.  Will Uniqlo manage to export its low priced basic apparel worldwide ?  will Zara and H&M, with their fast response fashion apparel, dominate the Uniqlo low priced basic line ?

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Rare Earths Sourcing in Japan

Posted on January 13, 2011 by aviyer2010

Businessweek (Jan 10, 2011, page 9) has an article discussing the supply of rare earth metals (neodymium, dysprosium etc).  China supplies 97 % of the world’s demand for rare earth metals – but cut exports by 72 % in 2010 and expected to restrict exports in 2011. In response, Japanese manufacturers expect to increase recycled material to account for 10 % of their requirements by 2013. In addition, new mines opening up in Australia are being signed uo for 10 year contracts by Japanese manufacturers.  Will the rare earth supply disruption increase recycling rates ? Will the higher prices slow down alternate energy sources and use of batteries in cars ? Or will the new mines coming online mediate the demand supply mismatch ?

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Probing Insider Trading based on Supply Data

Posted on January 12, 2011 by aviyer2010

A Wall Street Journal article (November 24, 2010) describes the SEC probe of “channel check” as potential criminal activity. The article describes such data for Apple – forecasts of the “build plans” are used to project upcoming production volumes iPads and iPods.  The question is how this information is obtained and if such data is legal.  Other examples in the press have described supplier data used to project OEM volumes.  How much of this “supply chain” information is reasonable to expect to be leaked and what data should be considered “insider information” ?

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Can “Buy American” Hurt US firms ?

Posted on January 12, 2011 by aviyer2010

An article in the Wall Street Journal (September 16,2009) desribes the “Buy American” laws that are part of the US government’s stimulus package.  But companies whose supply chains include Canadian suppliers, like Aquarius, a manufacturer of sewage treatment equipment, are left out.   The same issue applies to GE’s wastewater treatment system assembly. The “Buy American” rules require assembly in the US – and that is a constraint when the supply chain is already optimized across locations.  Are such “Buy American” rules difficult to impose and unreasonable in today’s complex global supply chains ? Will the unintended consequences be higher prices and fewer jobs created domestically ?

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Temporary Stores by Toys R Us for the Holiday Season

Posted on January 12, 2011 by aviyer2010

A Wall Street Journal article (September 15,2009) describes a plan by Toys R Us to open 350 temporary stores that will stay open during the holiday season and then shut down.  The stores will be smaller and will carry the hot selling toys.  A surge in temporary staff during the period will man these stores.  Will such temporary stores that match demand surges become the norm in the retail industry ? Will the convenience but narrow SKU range be an acceptable tradeoff ?

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Speed vs Screening for Air Cargo

Posted on January 12, 2011 by aviyer2010

A New York Times article (Page 1, Nov 2,2010) describes plans by the US administration to demand potentially 100 % screening of air cargo.  But the question is whether such screening should apply to the 80 % of air cargo that are exchanged between customers with long term business relationships.  But this air cargo moves on airplanes that sometimes also carry passengers.  Would segmented screening standards make the most sense ? Or will the delays associated with the 100 % screening be worth the reduced risk ?

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Recycled Paper Availability and Supplier Partnerships

Posted on January 12, 2011 by aviyer2010

A Wall Street Journal article (Page B5, January 10, 2011) focuses on the collaboration with suppliers of recycled paper that paper company SCA – which uses the fiber to make recycled paper for napkins, toilet paper etc.  By investing in recycling centers, providing capital equipment funding, committing to volumes etc, SCA hopes to maintain its flow of recycled material from suppliers.  SCA claims that ties with suppliers are key to its sourcing success.  Will rising commodity prices and potential shortages demand more intense supplier collaboration to succeed ? Or will market relationships solve the supply-demand problem ?

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Russian Control of 50 % of US uranium in nuclear supply chain

Posted on January 12, 2011 by aviyer2010

A finanical Times article (Page 15, Dec 6, 2010) describes the takeover of Uranium One of Canada by ARMZ – a Russian state owned company and now owns two mines in Wyoming.  The impact is loss of control by the US of key parts of the nuclear supply chain, according to the article.  The deal was approved by the US Nuclear Regulatory Commission as well as the Committee on Foreign Investment in the US. Is it relevant to consider foreign ownership of portions of the US nuclear supply chain ? Or would market forces and self interest keep prices and availability competitive ?

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Nuclear propulsion for Civilian Ships – the impact of fuel regulation

Posted on January 10, 2011 by aviyer2010

An article in the Financial Times (Dec 5, 2010) describes how planned regulation of the fuel emissions by commercial ships – is expected to increase fuel costs by 50 % in 2012 due to the level of sulphur content in their fuel.  The result – an increased interest in nuclear propulsion for commercial ships.  Will the shift to nuclear propulsion to contend with fuel costs increase the risks associated with commercial cargo ? Or is this an expected trend – environmental emissions reduction may well increase the reliance on nuclear solutions ?

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