A report in Sustainable Brands (http://tinyurl.com/qg5gtn7) titled “H&M Unveils Conscious Denim, Signs Agreement for More Conscious Supply Chain Management” describes initiatives with the International Labor Organization (ILO), Solidaridad and Jeanologia to audit its water use, energy consumption, working conditions, fair wages, “capacity development for social organizations and skill development across the supply chain”. Garments produced will also have a Clevercare label to urge consumers to save water and energy during use. Is H&M’s focus on the entire supply chain, from production to use, a harbinger of the future for apparel supply chains ? Will the company be able to get its customers to pay a premium to cover the costs for these initiatives ? How might H&M be able to maintain a competitive advantage for its garments developed with a conscious supply chain given that the capability is obtained by working with known nonprofit entities whose services are available to all ?
Posted in Collaboration, competitiveness, consumer, Cost, Supply Chain Issues, Sustainability
Tagged audit, conscious supply chain, H&M, jeans, nonprofits, sustainability
An article in CSCMP’s Supply Chain Quarterly (Quarter 2, 2014) titled “A Supply Chain Redesign for Omnichannel success” describes changes to the distribution center at the retailer John Lewis to ensure omnichannel success – a 7.2% sales increase in the 2013 season over the 2012 season with a 22.6% increase in online sales. The changes include reducing the number of distribution centers, coordinating the click and collect (at the store) with store shipments to ensure a smooth flow, and merging all items in an order to ensure the customer gets to pick up the entire order in the 41 retail locations. Given that the flows to the store are batched boxes or pallet loads while customer orders are for eaches, will the merging of these flows generate efficiency ? Should customers be encouraged get deliveries directly in their homes instead of store pickup to increase system efficiency ? Or will store sales increase as customers stop by to shop in the store when they come to pick up online orders ?
An article in the Wall Street Journal (September 19, 2014) titled “Cocoa Prices Surge on Ebola Fears” describes concerns about the cocoa growing regions in West Africa, including Ghana and the Ivory Coast who grow 60% of the world’s supply, as the Ebola virus rages in Liberia, Sierra Leone and Guinea. Cocoa is grown in small farms and picked up by distributors in motorcycles for exports. As transport links decrease due to Ebola fears and the region get isolated, cocoa prices are expected to surge beyond the current 20% price increases. Will increasing cocoa prices cause a shift in product composition of chocolate to alternate formulations that decrease market demand for the long run ? Should local governments, who have most to lose from exports of this crop, figure out a mechanism to ensure stability of the supply chain ? Should the US air bridge that is current set up to provide assistance with treatment of the Ebola virus also be used to ensure stability of the supply chain that provides revenue for local governments or should this be the responsibility of chocolate manufacturers ?
An article in Bloombergbusinessweek (September 15,2014) describers the surging demand for high sulphur Illinois coal coinciding with Clean Air rules that demanded scrubbers in power plants that even the emissions across all coal deposits. With lower costs and located closer to coal fired plants, Illinois coal demand has surged as the quality of scrubbers installed as increased. Is the use of poorer quality coal whose gases can be purged good for the environment ? Should inputs to power plants also be regulated or should emissions be checked while providing flexibility to power plants?
An article in Bloombusinessweek (September 11,2014) describes Partners Healthcare in Boston that is responsible for 28% of physician and hospital visit dollars in Massachusetts and that has seen a 60% increase in prices charged compared to competitors. The company now owns several hospitals and coordinates across them to enable efficiency. But this efficiency has increased market power and prices rather than decrease costs. How should the market be structured so that efficiency is passed on as lower costs? Should hospitals be required to use third party information providers to standardize data so that it is easy for patients to switch providers ? Should prices for procedures be made public to enable comparison ?
An article in Bloombergbusinessweek (september 15,2014) describes a pln to increase the zones over which livers would be allocated to assign livers to sicker patients needing liver transplants. The estimate is that it will save 554 lives over five years but increase the livers transported from 50% currently to 75%, given the need to transplant within 18 hours. But costs are expected to decrease by $246 million given that it will save sicker patients. Will liver donation rate decrease if donated livers are assigned to patients that are not local? Is it fair to permit the factor of 10 difference in liver availability based on region to protect the volume of donated livers? How should the optimal tradeoff be determined, and should it be the decision of the donor to assign the region over which recipients will be chosen?
An article in the New York Times (September 1, 2014) titled “If 2 New Yorkers Shared a Cab…” suggests that 40% of the current 13,5o0 cabs in New York City could be eliminated, along with the associated road congestion is riders in close proximity shared cabs to destinations. The analysis was done by a team at MIT that analyzed data regarding 172 million rides collected by New York’s Taxi and Limousine Commission. Will such efficiency generated by sharing, the associated cost benefit and sustainability impact be sufficient to get customers to share cabs ? How much additional ride time would passengers be ready to tolerate per dollar saved and energy saved ? Will riders need to be certified (rated) as acceptable or connected through social networks to increase adoption ?
Posted in Capacity