An article in the Wall Street Journal (April 3, 2015) titled “Hunger for Organic Foods Stretches the Supply Chain” describes both the rising demand for organically grown products and the cost of transitioning to organics. The interim period has rising production costs,due to constraints on fertilizer use without the organic label on products. Should retailers share this cost to increase supply rather than leave it to producers? Given the long term environmental benefits,should costs also be borne by all rather than just organic product consumers?
In an article in the “Sourcing Journal” (April 24 2015) John Thorbeck describes research with Warren Hausman on the persistent gap in the performance between Zara and other apparel retailers. Their results suggest a profit increase of 28% through adoption of fast fashion practices. They claim that close coordination of production and retailing, quick response to trends and ownership of retailing are key differentiators. Can other retailers and manufacturers similarly gain customer trend information and adapt production if they outsource production or is ownership of production a necessity ? Can technology i.e. smartphones and cameras and big data enable such insights?
A recent program aired by John Oliver in “Last Week Tonight” (first aired Sunday, April 26 2015) on HBO focused on the link between the demand for inexpensive trendy clothes and associated supply chains. He focused on examples where products for the Gap, WalMart, Children’s Place etc were produced by unauthorized subcontractors who violated safety standards and even used child labor. The retailers claimed that their contractors had in turn created these subcontracted tasks without authorization. John Oliver compared this lack of knowledge regarding the entire supply chain to the equivalent of mystery ingredients and processes in preparing food – sending such packages of mystery food – large quantities procured at cheap prices – to CEOs of apparel retailers to make the point. How much should we hold retailers responsible for knowing their entire supply chain and ensuring that all suppliers involved in the production adhere to the code of conduct specified by the retailer ? Is the consumer demand for low prices the cause of this proclaimed ignorance i.e., will rules have to be broken to deliver such low prices and fast turnaround ? Should the apparel industry turn to a third party to certify their supply chains or should only those who can certify their supply chains be permitted to sell product to the US consumer ?
An article in The Verge (March 31, 2015) titled “Amazon Has invented tiny plastic buttons that simplify ordering” describes Amazon’s partnership with 18 manufacturers to supply wifi enabled buttons that, when pressed, generate an order through Amazon Prime. These buttons can be placed close to the location of products or on appliances and thus simplify ordering when required. Will such devices enable manufacturers to build in brand loyalty and avoid the lure of private labels ? Will manufacturers be better off providing supplier agnostic devices that can be set to order from the customer’s preferred retailer ? Should one expect that the required battery replacement will be done by the consumer promptly or will this require repeated mailings of such devices ? Finally, is this the decoupling of ecommerce from the laptop or smartphone to stand alone customized ordering devices ?
Posted in consumer, Cost, delivery, Ecommerce, loyalty, manufacturer, ordering, Supply Chain Issues
Tagged Amazon, Dash, Ecommerce, manufacturers, ordering, wifi
An article in the Wall Street Journal (February 26, 2015) titled “When Drones Aren’t Enough, Amazon Envisions Trucks with 3D Printers” describes a recent patent awarded to Amazon that describes printing the required product for the customer rather than carrying it in inventory and transporting it to the customer. The possible use is to print spare parts required by customers and offer quick delivery without carrying inventory in anticipation of customer demand. But success in this front will require manufacturers to share design details and print files, in return for the benefits from customer delivery. Will OEMs find it in their interest to share design files with Amazon to enable customer satisfaction ? Will such printers be used to customize products already available and offer convenient 3D printing capability for customers ? Will there be enough volume to generate the truck utilization required for these services to be profitable ?
An article in EcommerceBytes (March 2, 2015 http://www.ecommercebytes.com/cab/abn/y15/m03/i02/s04 ) titled “Online Selling and the future of package delivery”, describes the possible role for the US Postal Service that already serves every postbox every day. It describes use of the US Postal Service by UPS’s SurePost and FedEx’s SmartPost. These new opportunities and Sunday delivery for Amazon suggest that USPS will benefit from ecommerce delivery opportunities. But a recent move by USPS t move to “cluster boxes” that require customers to come pick up their merchandise suggests moving away from their core capability. Will USPS emerge the winner as ecommerce delivery expectations grow ? Will ecommerce companies like Amazon feel the need to offer home delivery themselves to build brand loyalty ? Or will customers prefer to pick up packages from retail locations or package boxes enroute to work or shopping ?
An article in the Wall Street Journal titled “Technology Bubble? Ask Waffle House” (February 24, 2015, http://www.wsj.com/articles/technology-bubble-ask-waffle-house-1424754062?cb=logged0.0031108735129237175) describes an alliance between Roadie (a technology startup) and Waffle House (a 24 hour restaurant). Under the agreement, Waffle House’s 1750 stores will serve as pickup and drop off points for college students who will use the Roadie app to accept and complete deliveries along routes they are already driving. The delivery person gets 80% of the fee, with insurance and photographic evidence of delivery included. Will such use of third party spare delivery capacity provide a cost effective delivery alternative to UPS, FedEx and USPS ? How will dealing with security concerns, timeliness of delivery, tracing impact the costs for Roadie ? Will drivers be able to earn a sustainable income stream to incent them to be available when required ?
Posted in Capacity, Collaboration, Cost, delivery, Ecommerce, Operations Management, retailers
Tagged Capacity, Collaboration, Coordination, Cost, Design, Margins, Risk, Service