How will blockchains impact supply chains ?

An article in the Wall Street Journal titled “Toyota Unit Joins R3 Blockchain group” (June 23, 2016) describes Toyota’s plan for use of blockchain, an online distributed ledger technology, for non-monetary transactions. The article claims that blockchains can track auto parts across the supply chain, and, potentially, connect with customer smart phones or vehicle sensors.  The potential to react to disruptions either on the supply side or demand side through automatic signal updates suggests potential value across the supply chain. How should supply chain entities, from Tier 4 suppliers up to the OEM, plan their adoption of this technology ? Will independent platforms, such as R3, set the ledger standards, or will the final solution be a multitude of possible formats for distributed data tracking ? How will the benefits from such solutions be distributed across the supply chain so that participating entities realize a portion of the savings across the system ?

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Alternate Future Scenarios for US trucking

An article in by Sean Kilcarr titled “Logistics outlook:last mile a major Choke Point” on June 22, 2016 describes four technology adoption scenarios outlined in the State of the Logistics report for 2016.  The technologies listed include the internet of things, self-driving trucks and 3D printing. The scenarios include 1) Cruisin’ Down the Highway: In this scenario, regulators work to ease constraints technology adoption that improves efficiency for all, 2) Stop Signs and Red Lights: In this scenario, only the easily adoptable technologies are used and that too only by the strongest companies, 3) Middle of the Road: In this scenario, there is limited automation and incremental change and 4) Dead End Street: In this scenario, costs increase due to regulatory inflexibility and thus limited technology adoption.  Which of these scenarios is likely to emerge as the outcome and how will will impact supply chains ?  How should regulators balance the risk associated with approvals with the entrepreneurial benefit to learning by doing ? What is the opportunity cost of not being proactive with technology adoption in terms of loss of competitiveness for US supply chains ?

Posted in Capacity, competitiveness, Cost, delivery, logistics, Prices, productivity, technology, truck, Uncategorized | Tagged , , | Leave a comment

The rising role of Supply Chain Finance

An article in the Harvard Business Review by Rogers et al (“The Rise of FinTech in Supply Chains, June 22, 2016) describes the increased role of payments processing across a supply chain. They describe the flexibility for suppliers to access a payment network, run by new companies such as Orbian and Prime Revenue or traditional banks such as Citigroup or Deutsche bank, that connect partners in a supply chain.  Suppliers can choose to tradeoff timing of access to cash against financing of that early payment at the buyer’s cost of borrowing, thus improving efficiency across the supply chain. Will buyers demand even lower supplier prices given the access to lower buyer borrowing costs ? Would you also expect where supplier borrowing costs are lower and that buyers access the system to stretch out payments using supplier terms ?  How would quality issues, and the threat of payment withholding, be operationalized in such systems ?

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The productivity benefits from Amazon ‘s Kiva robots

An article in Quartz ( claims that the “click to ship” time at Amazon has decreased from 60-75 minutes with human operators to 15 minutes using Kiva robots. In addition, with robots, warehouse inventory can increase by 50%, thus decreasing operating costs by 20%. Will all of this efficiency translate into lower prices for consumers or higher profits for Amazon or both? Do you expect similar benefits for other warehousing operations? Is there a benefit to creating focused warehousing robots rather than using general purpose solutions?

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Shopping cart robots at Walmart ?

An article in the website ( describes a partnership between Walmart and Five element Robotics to assist Walmart shoppers using a personal robot. The goal is to have the robot gather things in the shopper’s shopping list and freeing the shopper’s hands. Will such a focus on the shopping list decrease impulse buys by shoppers ? How can the robots be integrated with retailer promotions to get shoppers interested ? Will shoppers even be interested in going to the store if they just need to follow the robot ? Can Walmart use this approach to compete against Amazon ?

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Are droids better than drones for last mile delivery ?

An article in the Chicago Tribune (April 19, 2016) titled “Droids, not drones, are the future of e-commerce deliveries”, describes plans by Starship Technologies to develp mobile delivery robots to do home deliveries. The company claims that its robots weigh 35 pounds, can be tracked by video, hold 3 bags of groceries, travel 4 miles per hour on sidewalks and do not require any new approvals. The company claims that local retailers can break even with about 15 deliveries per day, a target delivery cost between $1.40 and $4.20 per delivery and a 3 mile radius for delivery.  But drone efforts at Amazon target delivery costs of $1 per package, a speed of 60 miles per hour and a weight of 5 pounds.  Will droids or drones end up solving the last mile delivery problem ? Will the FAA approval delays make delivery to homes less likely for drones int he near future ? Will the proposed “robot delivery as a service” enable shared use of these droids and thus make them affordable to small local businesses ?

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$3 billion worth cancer drugs wasted due to package size ?

An article in titled “Why is $3 billion worth of cancer drugs being thrown away?” describes the 100 mg doses of the drug Keytruda, sold by Merck, and the 140 mg treatment requirement for a single patient, that leaves wasted leftover in the second vial used. If the patient volume is not high, the leftover medicine is wasted.The article describes lower wastage when drugs are available in multiple dosage sizes, thus enabling a better match with demand. What incentives should be provided to drug manufacturers to work to decrease drug wastage ? Should drugs be produced in much smaller vial sizes so that multiple vials may be required for a single dose across patient sizes? Should patients be charged only for the drugs used or also for the drugs wasted ?
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