Feeds:
Posts
Comments

This is, of course, the weekend of the Super Bowl. While other business sections might focus on advertisements, the Chicago Tribune takes a hometown angle and talks pigskin — or more accurately cowhides since that’s what footballs are, in fact, made of (Chicago’s in the Super Bowl: Local firms team up to make big game’s football, Feb 2). The footballs are made by Wilson, which is based in Chicago, but the balls are made at a factory in Ohio. The leather, however, all comes from Horween Leather which has processed hides in Chicago for over 100 years.

Here’s a description of just what they do for the leather:

For 24 hours, hides are treated with an acid solution that removes the hair. To make leather used in sporting goods, hides get a first round of tanning in large drums where fats and oils are stripped away and chrome is added to strengthen the material.

Employees then take the “wet blue” hides — named for their pre-dyed tint — and assess quality. Every hide will get another round of tanning, but the process depends on the final product. Football leather emerges with a grippable tackiness — part of the reason Nick Horween is irked when announcers blame flubbed passes on slippery balls.

Bone-colored football leather is dried in an oven on the tannery’s top floor, glued to glass plates to keep it from shrinking. A pebblelike texture — Wilson’s pattern includes tiny W’s — is stamped on with heated steel plates. The leather then is sprayed with dye until it’s that recognizable reddish-brown hue.

The whole article is worth checking out and features a video of the Horween plant.

This should not surprise you at all: Christmas is a big deal for Lego. According to the Financial Times, half of the company’s sales come in the month or so before the holiday (Lego makes push to avoid disappointments of Christmas past, Dec 22). But how do they gear up for that big peak in sales? Check out the video below:

Continue Reading »

As we have posted about before, retailers using store inventory to fulfill on-line orders is a thing. It is also a thing that raises an interesting question: At what level of store inventory should a retailer stop using store inventory to fulfill on-line orders? That is, should everything be available first-come, first served or should some store inventory be held back only for those customer that wander into the store? According to the Chicago Tribune, different chains are following different strategies on this (With Hatchimals scarce, who gets dibs — online shoppers, or those in the store?, Dec 13).

Target ships online orders from 1,000 of its stores, up from 460 last year. To avoid empty shelves, Target will turn off the order pickup or ship-from-store option on some items when a store’s stockpile falls below a certain threshold, said Target spokesman Eddie Baeb. Stores that ship also get extra inventory.

An online customer likely doesn’t care which store or warehouse handles their purchase. The shopper already walking the aisles does. Exactly how many items Target holds back depends on the product and how quickly it typically sells. …

Other retailers, like Toys R Us, don’t try to guess how many items to hold back for in-store customers.

Even on Christmas Eve, the retailer doesn’t bump back online orders to help procrastinating brick-and-mortar holiday shoppers. Purchases, whatever the format, are first-come, first-served, said Toys R Us spokeswoman Jessica Offerjost.

Continue Reading »

How does lean operations interact with how workers are treated? That is the question behind an article in Stanford Business (Lean manufacturing benefits workers and the bottom line, Autumn 2016). Here’s the story in a nutshell. Nike began working with its apparel suppliers to implement lean operations at the suppliers’ factories. This entailed bringing in managers to train them and then supporting them as they began implementing lean assembly lines.

While one side of Nike is doing that, another is going out and auditing suppliers for how well they maintain labor standards. This team is monitoring compliance with local labor laws as well as Nike’s own standards. They are passing out letter grades. Suppliers that are doing well get As and Bs. Those with major violations are getting Cs and Ds.

And, of course, both Nike teams are collecting data: Who has implemented a lean line? Who has cleared up their problems with overtime pay and so on? Some academics get a hold of that data and start to look at whether lean moves the needle on labor standards. (You can find a link to the academic paper here.)

Here is what they found. Continue Reading »

It’s the end of the year so it is clearly time to see what is up with how retailers are handling holiday logistics. A useful starting point is this graphic from the Wall Street Journal (As Web Sales Spike, Retailers Scramble to Ship From Stores, Dec 1).

bf-am288_toysru_16u_20161130143006

 

This shows how Toys R Us fulfills its web orders. And, yes, that says that over 40% of the web sales were fulfilled from stores. (To put that total in perspective, the company’s revenue last year was $11.8 billion.) Continue Reading »

It’s not every day that you see a video about supply chain contracting, so I cannot resist posting about it:

The video comes from Vox and they have an article that goes with it (The hidden war over grocery shelf space, Nov 22). That article, in turn, was at least partially inspired by a report written for the Center for Science in the Public Interest (Rigged: Supermarket Shelves for Sale, Sep 28, 2016).

The contract in question is a slotting allowance. Slotting allowances are paid by food manufacturers to retailers in order to get items onto shelves. The money is paid upfront and often varies with the number of stock keeping units (SKUs) introduced and the number of stores in which the products will be stocked. The term comes from the act of creating a space — i.e., a slot — for an item in a warehouse or on a store shelf. The origin story is that retailers at some point started demanding that vendors compensate them for the costs they incur in helping launch new products (which often fail). The reality is that the money involved is now significantly higher than the cost of rearranging products. In effect, retailers are selling off their real estate.

So are slotting allowances good or bad for markets and customers?

Continue Reading »

There is a good chance that the last time you bought something on Amazon’s website, it wasn’t actually sold by Amazon. It instead came from an independent merchant, and Amazon just handled the logistics of getting the item to you. That arrangement has an implication that I never considered until a recent Wall Street Journal article (Amazon Prods Its Sellers to Free Up Warehouse Space, Nov 4): By inviting in the additional sellers, Amazon is giving up control of just what is in its fulfillment centers. If a merchant wants to sell miscellaneous crap, that is their business. At the same time, however, that miscellanea potentially ties up space that Amazon needs — or at least could use more profitably on other items. This is particularly true as we head into the holiday season when Amazon should reasonably expect business to be booming.

What is a poor e-commerce giant to do?

How about a little surge pricing? Continue Reading »

%d bloggers like this: