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?
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.
We all like simple solutions. Tired after work, your teenagers have friends over, and everyone’s getting hungry? Just order pizzas and the problem is solved. But how complicated is it to get pizzas to customers? Is there much room for innovation in this market?
Here’s how it works. A customer places an order on the app. Inside the Zume factory, a team of mostly robots assembles the 14-inch pies, each of which gets loaded par-baked — or partially baked — into its own oven.
Whether the truck has five pies or 56, it needs just one human worker — to drive, slice and deliver to your doorstep.
“She doesn’t have to think about when to turn the ovens on, whether to turn the ovens off,” Collins says. “She doesn’t have to think about what route to take or [whom] to go to first. All of that is driven off of our algorithm.” …
The driver then parks, cuts the pie with a special blade and delivers it piping hot.
The World Series starts tonight. While everyone in Chicago is focused on the prospect of the Cubs winning the Series, that is not a certainty. The one thing that is certain is that someone is going to lose – and that raises the prospect of a Cub or Chief Wahoo on t-shirt proclaiming that a team won something that they didn’t.
So what happens to t-shirts and other tchotchkes celebrating events that never happened? That was the topic of a recent Chicago Tribune story (Where do losing baseball teams’ postseason T-shirts end up?, October 18). The article itself is a little confused (it very much seems that a paragraph was dropped) but it does layout some options:
Last year, VF Licensed Sports Group required customers who wanted early access to merchandise celebrating a baseball team’s postseason run agree to ship any merchandise with a losing team’s 2015 MLB postseason clinch logos, images or graphics to international nonprofit World Vision. Customers had 24 hours following a loss to get in touch with World Vision to start the donation process, according to a 2015 agreement provided by a retailer. …
Another retailer was sent a revised agreement that replaced the donation requirement with a mandate to ship any items for losing teams back for destruction. …
Retailers who violate an agreement not to sell, advertise or promote the losing team’s merchandise agree to pay $100,000 per breach, according to the 2016 World Series preprinted merchandise agreement.
For those who are not baseball fans, let me give you a quick update: The Chicago Cubs are really good this year. They won over 100 games in the regular season and have now jumped out to a 2 – 0 lead in their best-of-five series with the San Francisco Giants. FiveThirtyEight has them as the favorite to win the World Series.
If all of that is news to you, you should also be told that the Cubs have, frankly, sucked for a long, long time. They haven’t won a pennant since 1945 and a World Series since 1908. There is even a short story (The Last Pennant Before Armageddon) tying the Cubs winning a pennant to the end of the world. (To answer the obvious question, the World Series is scheduled to start on October 25th. Barring rain delays, the last possible game would be on November 2nd. The US presidential election is on November 8th.)
So if the Cubs make it to the World Series, there will be a lot of excitement around here. If they actually win the Series, Cook County will likely shut down for a month. And that all raises a question: How many Cubs t-shirts can be sold?
There’s a lot of ways of thinking about that but I think that few would argue that information should be exchanged digitally. In a world in which products are designed and optimized in a computer, it is hard to see why diagrams and blueprints should have to be printed out. Except as Marketplace reports, not everyone is necessarily ready for a digital world (Legacy equipment still hinders digital manufacturing, Jan 28).
The last few years have been rather rough on Takata. Once the firm could accurately have been described as a fairly anonymous auto parts supplier. Your car may have contained some components made by Takata, but you were likely unaware of just what they were. That has changed rather significantly has it has come to light that the firm has produced a large number of defective airbags. Defective in the sense that they explode and send shrapnel into the car as opposed to inflating. To date, numerous automakers have recalled over 24 million vehicles in the US. To put that number in perspective, total car sales in the US set a record at 17.5 million last year.
As you might expect, the firm has been involved in the requisite activities of apologizing and ass-covering. As part of the latter, they commissioned a committee led by a former transportation secretary to review how the firm has managed. The resulting report doesn’t pick a particularly nice picture (Takata Lacks Processes for Tackling Air-Bag Defects, Panel Says, Wall St. Journal, Feb 2).
Takata Corp., the supplier behind defective air bags in millions of recalled vehicles, lacks clear processes for tackling potential safety defects and needs improved manufacturing methods, an outside panel the company commissioned found.
Takata employees tasked with raising safety concerns don’t have well-defined roles and rely on reports from auto makers about quality problems instead of ferreting out problems themselves, according to the report from the panel led by Samuel Skinner, the former transportation secretary under President George H.W. Bush.
The report found Takata lacked its own program for spotting defects in air bags once they’re installed in vehicles that now typically stay on U.S. roads for more than a decade.