IKEA has big growth plans. According to the Wall Street Journal, it aims to increase its revenue by €50 billion by 2020 — 74% higher than its 2014 revenue (IKEA Can’t Stop Obsessing About Its Packaging, Jun 17). Part of that growth is going to come from expanding into new markets, some may come from new formats, but a lot of it has to come from selling more stuff through existing stores. And that is going to require finding ways to cut prices to move more volume.
That’s where design comes in. IKEA is reviewing products in order to find ways to reduce their production and — importantly — their distribution costs. As this graphic demonstrates, this is pretty much a war on air.
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Posted in design, Logistics, Retail | Tagged design, Ikea, Manufacturing, Retailing | Leave a Comment »
How to get people on to planes is something we have covered many times on this blog. However, it is always interesting when some airline tries something new. That gets us to Delta’s Early Valet (Airlines try to save time with speedier boarding process, Associated Press, Jun 1).
Delta’s Early Valet service will offer to have airline employees take carry-on bags at the gate and put them in the bins above assigned seats. The airline wants to see if its own workers can load the bins faster than passengers.
The service began Monday on about two dozen flights, and that number is expected to rise steadily during June, Delta spokeswoman Morgan Durrant said.
Early Valet will be offered through August on some departures from Delta’s busiest airports — Atlanta, New York, Los Angeles, Detroit, Minneapolis, Salt Lake City and Seattle.
It will be available only on flights that typically have a high number of vacationers. Presumably, business travelers know how to board a plane efficiently. Specially tagged bags will be stowed on the plane before boarding begins, Durrant said.
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Posted in Airlines, Services | Tagged Airlines, Services | 5 Comments »
Bourbon, as you may know, is having a moment. As the graphic above shows, production and sales have soared in recent years. But the Wall Street Journal reports that supply chain problems may keep the industry from growing further (Bourbon Feels the Burn of a Barrel Shortage, May 11). The specific issue relates to barrels. Federal law requires that bourbon be aged for two years in new oak barrels (Why is there a federal law about bourbon? See here.) and it is getting hard to get enough bourbon barrels.
The shortage reflects a supply-chain conundrum. Upstream, barrel makers face a wave of demand because a half dozen established bourbon distilleries and 300 new, craft distilleries are increasing production amid a bourbon boom. Downstream, they face a shortage of white oak wood used in barrels because the lumber industry hasn’t rebounded from the housing market’s collapse. …
All the growth might have been intoxicating except for a sobering fact: The demand for more barrels coincided with a massive contraction in the lumber industry. As the housing market crashed in 2007, sawmills shut down and loggers abandoned the market. Lumber production shriveled to about 5.9 billion board feet in 2009 from 11.7 billion board feet in 2005, according to the Hardwood Market Report, which tracks the forestry industry.
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Posted in Operations Strategy, Supply Chain, Supply Chain Risk | Tagged Operations Strategy, Supply Chain, Supply Chain Risk | Leave a Comment »
What’s your address? For most readers of this blog, that is a pretty easy question to answer. You have a street name and a unique number. Throw in a postal code and maybe an apartment number, and you are good to go. For much of the world’s population, however, things aren’t so easy. Whether because they live in rural villages or poorly planned, rapidly growing cities, many people in developing nations don’t have a standard address. This creates a variety of problems. In particular, it cuts them off from many parts of modern commerce. How do you deliver a package to someone who can’t easily write down where they live? Note that this matters for a developing nation. If a country has an under-developed retail market, fostering an e-commerce industry is likely a better solution for many products than building out physical locations — but that cannot happen without some way of locating customers.
Solving this addressing problem is the goal of what3words, a start-up firm profiled in a recent BBC article (Giving everyone in the world an address, Apr 30). Their plan is to match every three-meter-by-three-meter square on the globe with a three-word triplet. Under this scheme, the house I grew up in becomes collapsed.networking.farm — which would only be better if it were collapsed.networking.firm.
The argument is that it is easier to remember three words than, say, a set of random numbers. The goal then is to come up with words that are simple and unambiguous to use. Here is how their website explains the process.
Each what3words language is powered by a wordlist of 25,000 dictionary words. The wordlists go through multiple automated and human processes before being sorted by an algorithm that takes into account word length, distinctiveness, frequency, and ease of spelling and pronunciation.
Offensive words and homophones (sale & sail) have been removed. Simpler, more common words are allocated to more populated areas and the longest words are used in 3 word addresses in unpopulated areas.
How does this play out in practice? Continue Reading »
Posted in eCommerce, global operations, Supply Chain | Tagged eCommerce, global operations, Supply Chain | Leave a Comment »
When a firm makes something, should it also take responsibility for delivering the product? For many firms, the answer is a firm”no”. They happily hand over the logistic of schlepping products to some third party. Most firms are happy to let someone else own trucks and recruit drivers. That’s what make the story of Ashley Furniture so interesting (A Radical Supply Chain Idea: Own Your Trucking Operation, Apr 29, Wall Street Journal).
Ashley Furniture Industries Inc., the largest U.S. maker and retailer of furniture, has resisted that trend. It owns and operates about 800 trucks and delivers the vast bulk of its own products from factories to stores. “We think it is a core competency,” says Todd Wanek, chief executive of the family-owned company.
Ashley employs about 3,000 people in transport and warehouse functions in the U.S., nearly a quarter of its U.S. head count. Its distribution centers feature racks specially designed to speed loading, and its managers arrange for trucks returning after they deliver their furniture to carry loads for other companies for a fee. Its drivers, dubbed Ashley Ambassadors, are also charged with building customer relations.
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Posted in Logistics, Operations Strategy, Outsourcing, Supply Chain | Tagged Logistics, Operations Strategy, Supply Chain | 1 Comment »
The Supreme Court hears a major civil rights case today on same-sex marriage. As you might surmise, there are a lot of folks with a very personal stake in its outcome. Many of those people might want to actually witness history and be present when the case is argued before the court. As Slate tells it, that isn’t so easy (Not All Must Rise, Apr 27).
For many Americans, the arguments in the marriage equality cases will be the most important inflection of the court into the very core of their homes, their lives, and the status of their families. Many of those Americans started lining up Friday, four days before arguments that will take place on Tuesday morning, for a chance to witness one of the most important moments in Supreme Court history.
Many other Americans simply paid a line-standing service $50 an hour to secure a place for them.
Starting Friday, if you or your law firm had $6,000 to shell out, a paid proxy—a company such as LineStanding.com or Washington Express—would arrange to have someone hold your place in line. The fact that some of these line-standers appear to be either very poor or homeless and may have to stand in rain, snow, sleet, or hail so that you don’t have to irks at least some people who feel that thousands of dollars shouldn’t be the fee to bear witness to “Equal Justice Under the Law”—the words etched over the door to the Supreme Court building—in action.
The article goes on to note that because the court hearing room is small and various seats are reserved for guests of the justices, media types and so on only 70 or seats are available for the general public. Yesterday morning, Slate reports that 67 people were already in line and that many weren’t overly forthcoming when asked for whom they were waiting.
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Posted in Pricing, Queue management, Waiting | Tagged Queues, Services, Waiting Time | Leave a Comment »