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 /

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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

Shoe Manufacturing moving from China to Ethiopia as costs increase

An article in the New York Times (June 1, 2017) titled “Chinese maker of Ivanka’s Shoes Looks for Cheaper labor”, describes the Chinese shoe manufacturer, Huajian International, moving some of their production from China to Ethiopia in response to decreased labor availability for factory work and increased wages in China. The 5,000 workers in Ethiopia are described as a trend that will expand as China sheds repetitive manufacturing jobs to other low wage countries. But will the high logistics costs to ship from Africa result in higher overall manufacturing costs ? Will increased automation and associated customization of shoes move their manufacturing back to the USA ? Or will ecommerce companies like Amazon enable direct shipping against customer orders from Africa to the USA?

Posted in Africa, Capacity, China, consumer, Cost, delivery, Global Contexts, logistics, Made in USA, shoes, supplier, Supply Chain Issues, technology, Uncategorized | Tagged , , , , , | Leave a comment

Are “slow growth chickens” the future ?

An article in the New York Times (May 1, 2017) titled “A Chicken that Grows Slower and tastes better” describes a plan by Perdue Farms to develop chickens that take 25% more time to mature, get more time to run around, have a potentially healthier life and thus taste better and cost 30% more to feed.  But these birds also have less wing muscles, with meat distributed over the rest of their body. With many chains such as Bon Appetit, Chipotle, Subway, Starbucks announcing plans for slow growth chicken purchases, a questions is how the supply will adjust.  Will the shift to slow growth chicken require “more land, water and feed” as claimed by a recent Eli Lilly report ? Will the reduced weight of chickens mean that the world’s food supply of chicken will be short of impending demand ? Will the Global Animal Partnership’s plan to only award its animal welfare certification to slow growth chicken provide the demand side requirement to impact supply ?

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Reducing Emergency Room queue time using telemedicine

An article in the Wall Street Journal (March 27, 2017) titled “Can Tech Speed up Emergency Room Care?” describes the increased use of remote care by emergency room doctors at New-York Presbyterian/Weill Cornell Medicine.  The Express care program offers emergency room patients the option to be connected to a doctor via teleconference, overseen on site by a nurse or physician’s assistant. The impact is to decreased wait time from 2 to 2.5 hours down to 35 to 40 minutes.  The article claims that around 30% of the emergency room visits involve suture removals, wound checks, rashes, eye pain etc, which are good candidates for telemedicine. In addition, doctors can remotely provide services to many hospitals, thus improving efficiency. If telemedicine can provide efficient, high quality service, should it be made a choice for the customer or chosen for the customer by the hospital ? Since telemedicine decreases costs, should patients be charged lower fees for such service or will the reduced queue time compensate ?

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Bird flu and global poultry supply chain impact

An article in the Wall Street Journal (March 22, 2017) titled “Bird-Flu Outbreak Brings Pain for Poultry Producers in Asia”, describes the emerging cases of H7N9 bird flu in China, with over 140 human deaths in China this year alone, and its impact. Poultry farmers in China are dumping product so that prices have dropped 13% and imports 24%.  But markets in South Korea have seem price increases due to low supplies. With China banning US imports over avian flu concerns, Thailand is expected to benefit from China market growth, with Chinese imports expected to grow by 10%, making it the second largest importer of poultry (Mexico is the largest).  How should US poultry producers manage the volatility caused avian flu ? With large stocks culled across the world (30 million in South Korea alone), how should producers plan their chicken inventory to optimize performance ?

Posted in Capacity, chicken, competitiveness, consumer, Cost, disruption, Global Contexts, Supply Chain Issues, Uncategorized | Tagged , , , , | Leave a comment

Agristats and possible chicken supply coordination

An article in Bloombergbusinessweek (February 15,2017) titled “Is the Chicken Industry Rigged” describes the increasing profits for chicken manufacturers and a lawsuit about possible coordination. The industry participants subscribe to an information sharing service, Agristats, owned by Eli Lilly, that provides data across the industry regarding individual plant details. The claim in the lawsuit is that such knowledge enables competitors to understand production rampup plans of each other, and thus coordinate actions without meeting. The class action lawsuit claims a resulting increase in prices from what they may have been. How much detail should the trade be permitted to share with each other to improve efficiency while not enabling collusion ? Should rational decisions from such shared data that improve profits be considered unacceptable or are they a portion of the efficiency benefits shared by the industry ? if, as the industry claims, prices went down during this period, is that evidence that such collusion did not take place ? Could prices have not gone down as much as feasible because of implicit coordination ?

Posted in Capacity, Collaboration, competitiveness, consumer, Cost, Liability, Operations Management, ordering, productivity | Tagged , , , , | Leave a comment