Will Sweden’s proposed tax breaks for repair and reuse of products improve outcomes ?

An article in the Guardian (September 19, 2016) titled “Waste not, want not: Sweden to give tax breaks for repairs” describes a plan to cut value added tax for repairs of bicycles, clothes and shoes from 25% to 12 % and offer the opportunity to deduct 50% of repair bills from taxes for appliances.  The government hopes to both stimulate use of local labor for repairs and incent repairs over replacement to reduce environmental impact. Given that new products are often more efficient than old ones, will such incentives reduce the environmental impact associated with use of equipment ?  Should consumers who end up replacing their equipment with more efficient alternatives,  for use, but ensure that it is refurbished and sold to others also be rewarded ?   Could one imagine alternate schemes that might perform better than those planned in Sweden ?

Posted in consumer, Global Contexts, Operations Management, ordering, Service Operations, Sustainability, Uncategorized | Tagged , | Leave a comment

Will distributed satellite facilities and automation maintain holiday hiring as volumes grow at FedEx and UPS ?

An article in the Wall Street Journal (Sept 30, 2016) titled “FedEx, UPS Gear Up for Holiday Season With More Sorting Hubs, Technology” describes moves by FedEx and UPS to create satellite facilities and mobile delivery centers respectively, and increase sort automation to handle the holiday surge in packages. In addition, the increased purchase of bulky products has caused an increase in prices for shipping those items and dedicated space by FedEx to handle them at its facilities. Will these distributed sort centers and automation provide the flexibility required to handle the holiday package mix and short delivery lead times expected by consumers ? Can ecommerce companies get consumers to plan ahead by offering better deals or will competition result in a descent to the shortest lead time and free delivery ? How could brick and mortar stores compete on lead times, given that they already hold inventory close to consumer locations ?

Posted in consumer, Cost, delivery, Ecommerce, logistics, Operations Management, ordering, Prices, Service Operations, Supply Chain Issues, technology, Uncategorized | Leave a comment

Understanding the reasons for GM’s shift of work from Mexico to Canada

An article in the New York Times (September 20, 2016)  titled “G.M. Job Shift From Mexico Tests a Trump Premise”, describes a decision by General Motors to shift work from an automobile engine plant in Mexico to Canada and shutting down the Mexican plant. But the decision to move work to Canada was accompanied by an acceptance of a flexible benefits agreement by their unions, thus making it a profitable decision for GM. The article also claims that demands for US manufacturing of automobiles that are not profit maximizing for GM risk decreasing demand for US component suppliers to GM and thus making the US economy worse off overall.  Should US manufacturers who sell to US consumers be mandated to have a certain fraction of US manufacturing or is it better to let the market dictate their optimal supply chain configurations ? In the GM example, are there lessons learned for auto unions that might permit them to trade off benefit flexibility for domestic job size growth ?

Posted in Capacity, competitiveness, consumer, Global Contexts, Made in USA, manufacturer, Operations Management | Tagged , , , | Leave a comment

Will water to boost engine performance be adopted by consumers ?

An article in the New York Times (September 29, 2016) titled “How do you make turbo engines more efficient, Just Add Water”, describes a technology by Bosch that sprays water on cylinders to cool combustion temperatures and increase engine efficiency by reducing engine size or increasing the compression ratio.  The projected reduction in fuel consumption is 4 to 13%. But the new technology will require customers to add distilled water and manufacturers to redesign intake ports. Will the additional demands on consumers to get this efficiency result in reduced adoption ? Should the size of this water container be adjusted to synchronize with oil changes so the consumer impact is limited ? Or should this water change be linked to windshield wiper fluid changes to make it easy for the consumer ?

Posted in Capacity, consumer, Cost, logistics, manufacturer, Service Operations, Uncategorized | Tagged , | Leave a comment

Construction site drones and 15% material savings

An article in Fortune magazine (September 15, 2016) titled “A Drone for every Job Site”, claims that 15% of materials delivered to construction sires end up in landfills because schedules are not synchronized or purchasing issues. Thus, with  $1.13 trillion in US construction spend, the waste is estimated to be $160 billion. The article claims that drone data from job sites, integrated with structural models, will enable better synchronization of purchases with needs. What coordination models can be expected to emerge to realize these savings?  Will builders cut their cost estimates to expect these savings and thus force their adoption?  Will the added information regarding worker productivity, from camera data, impact cost estimates or will it change worker behavior?

Posted in Cost, delivery, logistics, Operations Management, technology | Tagged , | Leave a comment

How treating colds in China impacted the donkey supply chain in Africa

An article in CNN.com (September 29, 2016) available at http://www.cnn.com/2016/09/29/africa/china-african-donkeys/index.html describes a Chinese remedy, ejiao, used to treat colds and insomnia, that uses donkey gelatin. With a fall in the donkey population in China from 11 million to 6 million over the past 20 years as China shifts away from agriculture, there has been a surge in demand for donkeys imported from African countries like Niger and Burkina Faso. The surge in exports from these countries generated an inflow of foreign currency, but reduced the locally available animals, raised prices for other animals and caused a rush to slaughter that polluted water supplies. The result is now a ban on exports by Burkina Faso and Niger. Given the continued demand for donkey gelatin in China, how should African economies engage in a manner that minimizes disruption?  Given that Kenya and South Africa are scaling up their exports to meet Chinese demand, will Niger and Burkina Faso have to adapt quickly or lose access to this market? Given the projected continued demand increase in China, should global rules require the buyer to ensure environmental impact in the source country is minimized ?

Posted in Capacity, competitiveness, consumer, Cost, delivery, disruption, Global Contexts, ordering, Prices | Leave a comment

VW variety and associated costs

An article in the Financial Times (November 20, 2015) titled “Volkswagen (VW) choked by cost and complexity”, claims the company has 117 different steering wheels for the Volkswagen Golf. Plans are afoot to decrease that to 43, with efficiency programs expected to decrease costs by 5 billion euros a year by 2017.  Similarly the company offers 541 versions of front seats -a number to be reduced to 259. Will reducing design flexibility for its engineers maintain sales for VW while decreasing costs? Will such efficiencies and consequent price reductions help restore faith in the brand? Will VW be able to compete with Toyota if it reduces product variations?

Posted in manufacturer, Supply Chain Issues, Uncategorized, Variety, vehicles | Tagged , , , , | Leave a comment