US Solar panel producer closes MA plant

Posted on January 17, 2011 by aviyer2010

An article in the International Herald Tribune (January 15,2011) describes closure of the MA plant of Evergreen Solar – that shifted production to a plant in China.   The article reports that company had plans to decrease its costs from $ 3.39 per watt in 2008 to $ 2 by 2010, but Chinese manufacturers were selling the same panels for $ 1.60 per watt.  In the article, the company’s managers cite the ability of Chinese plants to form partnerships with local government entities and thus avail of low cost financing with no interest payments due until 2015.    Thus, even with labor costs being a small part of the overall costs, capital financing costs caused the closure of the plant.  How much of the lack of competitiveness of US manufacturing can be tracked to higher financing costs ? Is there a strategic reason to provide low cost financing for alternate energy industries or should global comparative advantage determine sourcing locations ?

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Plug-In Hybrids – how clean are they ?

Posted on January 17, 2011 by aviyer2010

An article in Fast Company (Ariel Schwartz, January 13,2011) summarizes a  MIT study (http://web.mit.edu/mitei/research/reports/transport-electrification.html) that tracks the sources of electricity that will power electric plug-in cars.  Plug-ins using alternate energy sources such as nuclear, biomass etc are estimated in the study to decrease emissions by 66 % compared to gas powered engines.  But, given coal as the source of energy for many states, what can be done to convert the apparent “clean” energy benefits to be realized ? The study suggests a pricing scheme that encourages “green power” derived from alternate energy sources that enable such emission savings to be realized.  Should such supply chain wide impact be “required” to be calculated and displayed by automakers – who can use GPS and other information sources to calculate emissions ?

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Energy Efficiency for troop tents to save fuel convoys

Posted on January 14, 2011 by aviyer2010

An Op-Ed piece in the New York Times (January 13,2011) describes the over 1,000 US troops who have been killed on fuel related missions. The author, Steven Anderson, proposes a solution – using foam insulation on the exteriors of bases to improve fuel efficiency by 80 % and thus decrease the fuel convoys required.  The benefit – save a significant amount of the $ 24 billion in fuel cost and save troop lives due to fewer convoys.  A study reported in the piece claims a $ 1 billion saving from a $ 95 million investment in Iraq.  The links between sustainable structures in war zones and the impact on fuel costs and troop lives is an innovative supply chain connection.  Should such calculations – the link between efficiency and costs as well as risk be required computations in the future ? What are other cases where the cost reduction, efficiency and risk reduction go in the same direction ?

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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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