The Jones Act and Puerto Rico relief delivery costs

An article in the Wall Street Journal (September 26,2017) titled “Second-Class Puerto Rico” claims that given the Jones Act (which requires “use of vessels built, majority owned and operated by Americans” to transport between US ports i.e., US to Puerto Rico) the cost to ship from the US East Coast to Puerto Rico is twice that to ship to nearby  Dominican Republic.  The US administration has refused to waive the Jones Act for hurricane relief, thus adding to the cost of providing aid to assist the island.  Should waiving the Jones Act be a priority to offer cost effective relief from the US, or should one expect relief goods to be routed through another non-US location to be cost effective albeit taking longer ? Will the existence of the Jones Act hurt US manufacturers wanting to supply to Puerto Rico and instead provide incentives for manufacturers in other countries ?

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Posted in Capacity, Cost, logistics, Made in USA, manufacturer, Operations Management, ship, Supply Chain Issues, transport | Tagged , , | 2 Comments

Not enough new iPhones, strategy or supply chain challenge?

An article in the Wall Street Journal titled “Why There Are Never Enough New iPhones” (September 18, 2017) describes the new iPhones launched in September 2017 as being available only in November, with possible delivery delays. The introduction if many models, with significantly different price points, complicates forecasting demand. The tweaking of design details by Apple, Just-in-Time manufacturing, a complex parts supply chain, just one supplier of the new OLED screens, competitor Samsung’s independent division, add to challenges. Is the delay period, when customers preorder, a strategic choice to improve demand forecasts? Will Apple’s financial forecasts, that are in advance of sales, a reason to be conservative in providing suppliers with orders? Should Apple release its products in versions rather than tweaking designs until the last minute?

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Logistics for Houston residents – should evacuate, or stay, have been the strategy ?

An article in CNN.com (http://www.cnn.com/2017/08/27/us/houston-evacuation-hurricane-harvey/index.html) describes the decision made by the Mayor of Houston to request that the 6.5 million residents stay in their houses during Hurricane Harvey’s touchdown, rather than evacuate, and be potentially stuck on roads due to congestion. After touchdown, displaced residents are being directed to “lilypads” – centralized locations they can get help. But several are stuck in their homes due to the massive flooding of the city.  Is staying put during a hurricane the best strategy, or should people have been asked to come to distributed locations for help, or evacuate early ? Should coordination of the evacuation have been planned to reduce congestion, with approved destinations outside the city ?  Was the decision the result of inconsistent planning or calculated risk ?

Posted in Capacity, congestion, Liability, logistics, Supply Chain Issues, transport | Tagged , , , , | 2 Comments

Amazon’s physical store and its link to web data

A news report on NPR (http://www.npr.org/2017/08/15/540076527/be-more-than-a-bookstore-a-brick-and-mortar-shop-s-key-to-success)describes an Amazon store in New York City that sells books but uses data captured on the webstore to suggest related books, offer Amazon prime discounts etc. The physical store thus serves as an extension to the web store and uses web data to enhance the in store experience, while offering immediate delivery. Should brick and mortar stores leverage the data collected on their web sites to enhance the competitiveness of their stores ? How should other independent bookstores who do not have a large web presence compete – should it by hosting events, such as book readings etc, like the Greenlight Bookstore described in the report ? What information can Amazon collect from the physical store that might help the webstore ?

Posted in Capacity, competitiveness, consumer, Cost, delivery, disruption, Ecommerce, logistics, retailers | Tagged , , , | 21 Comments

“Drone hives” plan by Amazon for local deliveries ?

An article in USA Today (June 23, 2017) describes a patent awarded to Amazon that describes multi-story warehouses described as drone towers located close to cities. The patent describes these warehouses as locations where packages might be stored prior to customer delivery. Will such drone driven deliveries enable Amazon to reduce their reliance on package carriers and increase delivery flexibility ?  Can one imagine drones doing both deliveries and pick up of returns ? Would you expect drone to be more cost competitive in rural or urban areas ?

Posted in Capacity, consumer, Cost, delivery, logistics, Supply Chain Issues | Tagged , , | 2 Comments

Mass faintings at Cambodia factories producing shoes for Asics, Nike and Puma

An article in The Guardian (June 24, 2017) titled ‘Cambodian female workers in Nike, Puma and Asics factories suffer mass faintings” lists the 10 hours per day, 6 days per week schedule faced by workers with short term contracts that do not permit overtime refusal. The excessive heat (over 37 degrees centigrade), small fans just to remove dust etc, were all considered causes. But a medical sociologist, Robert Bartholomew, considers these faintings as partly psychological and a form of  ‘subconscious political resistance”.   Such disruptions cause lost productivity and plant closure, thus disrupting supply. Should the branded shoe manufacturers ensure adequate nutrition, ventilation, appropriate contracts etc for their subcontract workers, or is that the supplier’s responsibility ? Should the Cambodian government create local laws to ensure the welfare of its citizens while remaining competitive ? Should such incidents be publicized to ensure that factory owners suffer a cost from poor labor practices, and, if so, who should store and provide this information to potential buyers /

Posted in Capacity, consumer, Cost, Global Contexts, Liability, Operations Management, productivity | Tagged , , , | Leave a comment

Nintendo and Apple battle for components provided by supplier

An article in the Wall Street Journal (May 30, 2017) titled “Nintendo battles Apple for parts as Switch demand rises”, describes supplier parts NAND flash memory chips, liquid crystal displays and tiny motors used by both companies in their products.  Flash memory demand increase have been caused by growth in web services, demand for the iPhone 7, projected demand for the new iPhone and thus put pressure on availability of components to serve Nintendo’s products.  Will component price increased force rationing of parts and thus resolve the problem ? Will design changes by OEMs provide relief ? Or this is the result of competitive behavior by the OEMs to edge out the competition for downstream products ? Do you expect upstream manufacturers to add capacity to resolve this issue or stay content with higher prices for the limited capacity ?

Posted in Capacity, competitiveness, Cost, flash memory, manufacturer, Supply Chain Issues, technology | Tagged , , , | 1 Comment