Will the global package business model offered by “manyship.com” be sustainable ?

The website http://www.manyship.com describes a system in which individual travelers post their planned trip, shippers post their requirements and the available capacity is assigned to carry products between destinations. The company charges shippers $20 per pound and pays carriers $10 per pound. Manyship plans is to capitalize on the fact that many air travelers do not use up their baggage capacity, thus enabling them to get paid to carry 50 pounds or more per trip and earn up to $500.  Should manyship be considered the uberX for air travel, enabling better capacity utilization and thus lower costs to move small packages ? Will the liability considerations associated with this model cause carriers to withhold capacity and thus doom this model ? Is this model competitive because it shifts the cost for transport, customs clearance and responsibility for claiming the goods as personal rather than business merchandise shifted to the individual carrying the product ?  

Posted in Air, Capacity, Cost, Ecommerce, Global Contexts, Liability, Service Operations | Leave a comment

Rail delays and crop price impact

An article in the Financial Times (September 1, 2014) titled “Rail Delays Knock north US grain prices” describes speed reductions of 9% for Burlington Northern Railroad (BNSF) and 11% for Canadian Pacific causing shipment delays.  The backlog for BNSF was 16,500 movements in April and the lack of alternative access to barges or other options caused inventories for farmers in North Dakota to rise significantly.  The impending large soyabean harvest (a growth of 33%) this year is expected to add to the congestion.  Will the rising capacity crunch for rail traffic and the projected drop in prices in North Dakota to clear the market cause follow up price pressures for the coming harvest ? Is the drop in speeds the result of risk management practices to transport crude oil from the same region ? Should the rise in the premium for shuttle trains (from 0 to $2000 to $3000 per car) be controlled to assist grain movement or should it be permitted to float to a level that reflects the market capacity conditions ?

Posted in Capacity, Grain, Operations Management, Prices, Railroad, Supply Chain Issues, Train | 2 Comments

Is Amazon vulnerable because it does not control last mile delivery ?

An article in WIRED magazine (May 8, 2014) titled “Amazon Should Make the Postal Service Its Own Personal Courier” describes Amazon’s service vulnerability because it does not control outbound transportation from distribution centers, unlike WalMart. The UPS delivery slippage last Christmas and its impact on Amazon suggests how vulnerable the company is to third party transportation. But should Amazon convert fulfillment centers to sortation centers and team up with the US Postal Service to efficiently use postal carrier delivery routes ? Should Amazon create its own fleet of dedicated delivery trucks and, if so, how will it ensure effective utilization to keep delivery costs low and ensure the close to 150 deliveries per route required to be effective ? How will Amazon’s same day delivery goals match up with these realities ?

Posted in Ecommerce, Operations Management, Supply Chain Issues | Tagged , , , , , | 5 Comments

Will the SupplierPay program boost small business sales ?

An article in the Wall Street Journal (July 11, 2014) titled “Apple, Coca-Cola Among Firms Signed on to White House Plan for Small Suppliers”, describes a voluntary plan announced at the White House under which small suppliers would be paid faster, usually within 15 days of delivery. The goal is to increase access to capital at lower costs and mimics the federal government’s QuickPay program. But will the faster payment terms also mean that prices charged by suppliers will be forced to decrease, given that their costs are now lower ? Will faster payment just shift the cost from the supplier to the buyer, albeit at a lower financing rate, thus lowering supply chain wide costs ? Why are such programs not already in place driven by buyer self-interest ?

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Amazon’s 1 cent shipping in France

An article in Slate (July 11, 2014), titled “France Banned Free Shipping. So Amazon made it cost 1 cent”, describes Amazon.com’s response to a new French law that bans free shipping and permits only bricks and mortar bookstores to offer the up to 5% discount on books. These laws were meant to restore the competitiveness of traditional bookstores. But will Amazon’s counter with a 1 cent shipping charge, far below the actual cost, negate the impact of the law force publishers to lower their costs to Amazon ? Will the real benefits competitive advantage to Amazon be the flexibility for customers to order at any time and access used and out-of-print books which may offer Amazon greater margins ? Will a more coordinated supply chain whereby Amazon works with local bookstores to permit ordering of brick and mortar store books (new and used) be a more appropriate resolution for customers ?

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Should “pay to delay” launch by branded pharma be considered illegal ?

An article in the International Herald Tribune (July 10,2014) titled “EU fines drug makers over generics”, describes the $450 million fine levied in Servier, a branded producer of the blood pressure drug perindopril. The company is accused of buying up rights to an alternate manufacturing process after its patent expired, and paying generic manufacturers to delay production, thus propping up drug prices. Once these tactics stopped, prices for the generic drug dropped 90%. Should such tactics by patent owners be banned to increase price competition? Will prices of drugs during the patent period increase if business tactics to reduce competition after patent expiry are banned ? Should such rules consider alternative treatments as competing options or should they apply to each individual drug ?

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France’s laws to protect bookshops

An article in the International Herald Tribune (July 10,2014) titled “The French do buy books. Real books”, describes two French laws, the “Lang Law” that says that book prices cannot be discounted more than 5%, and a new rule that states that discounted books sold online cannot be shipped free. The two laws aim to eliminate the advantage for online booksellers like Amazon,while preserving choice for consumers. Will such price constraints, which increase costs to consumers on average, create benefits of increased book variety ? Should books be treated differently than other products in preserving their availability?

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