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Posts Tagged ‘global operations’

Check out this spiffy graphic from Automotive News on the evolution of auto assembly in Mexico (Japanese automakers march into Mexico, set up export base, Mar 10).

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That expansion has to a large extent come at the expense of the rest of the North American industry as this graph from the Chicago Federal Reserve demonstrates.

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Note that overall assembly capacity has declined. That’s not too surprising. The industry was generally seen as being overcapacitated, and the Big Three took the never-let-a-crisis-go-to-waste route to reduce the number of factories and resize their business. But Mexico clearly gained and it is forecasted to gain even more. Here’s another graph from the Chicago Fed.

AOS-Chart-2

It should be noted that this growth is driven by Japanese brands. GM is the only US or European firm to open a new plant following NAFTA. All the action lately has been due to the likes of Honda, Mazda and Nissan. Given this growth in capacity, it is not too surprising that Mexico is expected to pass Japan this year and Canada next year to become the top source of imported cars in the US. But why has there been such a rush invest there? (more…)

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Have you finished your Christmas shopping yet? You apparently are not alone in procrastinating.  Shoppers are buying later and that is causing problems for firms trying to make sure they can get the right items to the right markets. Take, for example, toy maker Lego (Predicting Holiday Sales Poses Issues for Lego, Dec 13, Wall Street Journal).

The Christmas shopping season is getting trickier to navigate as buyers are waiting longer to purchase holiday gifts, Lego’s chief financial officer said Friday, and the trend is creating a need to get more immediate buying data from retailers, particularly in the U.S. …

In a telephone interview, John Goodwin said “this year is going to be the greatest stress test we have ever had.” While a late Thanksgiving contributes to the stress, “people are pushing off their gift buying later and later into their calendars.” …

[A]ccurately tracking buying patterns during the December shopping rush is of critical importance to a company such as Lego, which holds out as long as possible to package its bricks for shipping to individual markets. Many of Lego’s basic bricks are the same, but buyer tastes rapidly change, Mr. Goodwin said. So the company waits to decide what volumes of specific play sets to assemble.

“It increases the importance of getting very good data, so we can supply the retailers with the right products at the right time. We have to be as close to the ultimate purchase as possible in order to respond…nobody wants a disappointed child on Christmas.”

(more…)

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So how much does it cost to make a hamburger — in Nigeria? Turns out, it costs more than you might realize (Burgers Face a Tough Slog in Africa, Dec 10, Wall Street Journal).

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This is the breakdown for a Johnny Rockets burger and some of the numbers might seem out of whack — Why should iceberg (!) lettuce costly nearly five times as much in Africa as New Jersey? The answer is simple: It’s imported. Why import lettuce? Because the local supply chains are simply not sophisticated enough to support the quick service business.

But that quest is straining a supply chain that is short on the refrigerated trucks and warehouses needed to keep patties and vegetable toppings fresh. And in many places, Africans are consuming beef at a faster clip than cattle ranchers can deliver new cows, meaning beef prices keep climbing. That is testing the limits of what the continent’s young urbanites can afford.

And this is not just about Africa. (more…)

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“Where does that come from?” sounds like an easy question to answer and at a high level it is. Which car models are produced at which plants is public knowledge so whether your Toyota was built in Kentucky or Alabama is easiest enough to figure out. But if you want to take it to another level — to know where different components came from and where the stuff that goes into the components comes from — is a lot harder. That is the conclusion reached in a blog post on Nautilus (The Secret Life of Everything: Where Your Stuff Comes From, Oct 29). Modern, global supply chains are so far reaching and support so much complexity that transparency (at least to the outside world) is lost.

I’d thought of [supply chains] mostly in terms of delivering Amazon orders and keeping Staples stocked. Those are just endpoints, the final few steps of a waiter carrying a meal on a tray. And what I really didn’t get was that supply chains don’t just carry components and ingredients, but synchronize their movements. Shipping a box of pens to Staples is the obvious part. Coordinating the arrival of barrels, caps, boxes, ink cartridges, and nibs (through which ink flows) at the pen factory—and also metal to the nib factory, oil to the plastics-maker, and so on—is the bulk of what supply chains do, and in the most efficient manner possible, with algorithms optimizing everything from shipping networks to the path of pallets through warehouses, with an eye to what happens when one of these many moving parts goes invariably astray.

The problem then is that unless you pick a real simple product — like a T-shirt — it is pretty much impossible to know where all the components come from and where all the various production steps are executed. NPR’s Planet Money took on this challenge of tracking a T-shirt from cotton field through production and shipping to the disposition of used American clothes in Africa. It’s an eye-opening  picture of global supply chains.

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Today, a bit of eye candy from International Business Times (China Manufacturing: 10 Things The Chinese Make More Of Than Anyone Else In The World , Aug 2).

things-china-makes (more…)

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It is hard to think of a more challenging problem: How do you distribute necessary medicines in a developing country lacking infrastructure? That is question tackled by Simon and Jane Berry, two Brits trying to reduce childhood deaths from diarrhea in Africa. Diarrhea is the leading cause of death for children under five — which is tragic since it is not some mysterious disease. It is completely treatable by standard and (in the grand scheme of things) cheap medicines. But you need to get the medicines out to rural areas. The Berry’s solution was a packaging innovation that lets them piggyback on existing, super efficient supply chain. Whose supply chain? Here’s a hint, their not-for-profit is called ColaLife (ColaLife: Turning profits into healthy babies, BBC, Jul 22).

Simon Berry and his wife Jane had come up with a strikingly-simple idea – a package for medicine that slotted into the empty space at the top of a crate of soft drink bottles, fitting neatly in between the bottlenecks.

A dazzling idea, to piggyback the delivery of the diarrhoea medicine for babies onto one of the most efficient distribution systems in the world. Go anywhere and you will find a shop selling Coca-Cola. And the plastic packaging is ingenious – once opened it becomes a measuring device.

Here is what ColaLife’s anti-diarrheal kits look like sitting in the crates.

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Here is how the crates get out to villages.

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3012591-slide-slide-2-177-feature-the-wireAt first glance, simple products like metal baskets or paint brushes should not be made in America. These should be simple to make, the product should be standard, so production should go to a low-cost location. But that ain’t necessarily so. A pair of recent articles discusses how some small US manufacturers are managing to compete in seemingly staid, boring industries.

The first story is from Fast Company and focuses on Marlin Steel, a firm that once focused on wire baskets for bagel shops (The Road To Resilience: How Unscientific Innovation Saved Marlin Steel, Jul/Aug). That’s a business that eventually went to hell as cheap imports came into the market. The fortunes of the company changed with an order from Boeing.

The job that rescued Marlin Steel was small–20 baskets, a $500 order. Greenblatt was handling sales in 2003, so he took the call himself. “It was an engineer from Boeing,” he says. “He didn’t think I was in the bagel-basket business. He just needed custom wire baskets.” The Boeing engineer, who had seen a Marlin ad in the Thomas Register, a pre-Internet manufacturing directory, wanted baskets to hold airplane parts and move them around the factory. He wanted them fast. And he wanted them made in a way Marlin wasn’t used to–with astonishing precision. For bagel stores, says Greenblatt, “if the bagel didn’t fall out between the wires, the quality was perfect.” The Boeing engineer needed the basket’s size to be within a sixty-fourth of an inch of his specifications. “I told him, ‘I’ll have to charge you $24 a basket,’” says Greenblatt. “He said, ‘Yeah, yeah, whatever. No problem. When are you going to ship them?’”

It turns out that the guy from Boeing was not alone in wanting custom baskets for use in a factory. Further, lots of other buyers were much more concerned with getting just the right basket really soon than with whether the price was as cheap has possible. The image above is something used in a GM factory to hold pump housings when they are being cleaned. (more…)

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So how much innovation can there be in supply chain design for cut flowers? Once the industry globalizes (as it has), it would seem that airfreight is the only option. Customers value freshness and cut flowers are the essence of a perishable flower. However, there may be more room for process changes than you would think as there is a trend of shipping flowers by sea (Fresh-Cut Flowers, Shipped by Sea?, Wall Street Journal, May 11).

The delicate business of transporting fresh-cut flowers from field to vase is being quietly rearranged, with more and more blooms taking a slow steam by sea from South America and Africa instead of being whisked by air.

Global cut-flower sales approached $14 billion last year and most move by cargo plane, but high jet-fuel costs and improvements in chilling technology are prompting a shift to more ocean shipping, particularly for imports to Europe.

Ocean transport costs can be half those of airfreight, an important consideration for price-conscious supermarkets and florists. Mom is unlikely to notice the difference in her Mother’s Day bouquet. Proponents say certain roses, carnations and other hearty varieties show no ill effects from the sea voyages spent in refrigerated containers a degree or two above freezing.

According to the article, some industry participants say that ocean shipping could account for a significant chunk of the market in coming years. Currently, airfreight accounts for 99% of shipments.

(more…)

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Last Monday I posted about Rethink Robotics’ Baxter robot which can be easily programmed to perform a variety of manufacturing tasks. And that very day, the Wall Street Journal had a story about a firm that uses Baxter robot (A Toy Maker Comes Home to the U.S.A., Mar 11)! K’Nex Brands makes a variety of plastic building sets that snap together to make any number of things. Over the last several years, they have moved much of their production from China back to Pennsylvania. There are a number of strategic reasons for the move.

By moving production closer to U.S. retailers, K’Nex said it can react faster to the fickle shifts in toy demand and deliver hot-selling items to stores faster. It also has greater control over quality and materials, often a crucial safety issue for toys. And as wages and transport costs rise in China, the advantages of producing there for the U.S. market are waning.

Robotics play a roll in this. They use the Baxter for “simple packaging tasks,” which sounds like the kind of thing that it would be impossible to have a human do more cost effectively in the US than in Asia.

But to my mind, the most interesting part of the article discusses the design trade offs that K’Nex has made to facilitate the move. (more…)

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An interesting story from today’s Wall Street Journal (Companies Seek to Avoid China New Year Hangover, Feb 21). Basically, the Chinese New Year is complicating supply chain management.

For toymaker The Bridge Direct, Easter now begins in August.

That is when the Boca Raton, Fla., producer of Inkoos stuffed monsters and Justin Bieber dolls has to file orders with its Chinese suppliers to ensure delivery by the spring holiday. It used to place orders closer to the key selling period, which allowed it to get a sharper sense of demand and better manage its cash. But now the greater concern is making sure it doesn’t get left shorthanded because of China’s New Year holiday.

The company is one of many from the U.S. and other countries that are closely watching China as factory workers slowly return this week from the country’s long Lunar New Year holiday. Every year, millions of China’s 250 million migrant workers leave their factories and travel across the country to visit their families at home. The problem for toy and apparel makers in particular is that fewer and fewer workers are returning to the factories when the break is over.

(more…)

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