It’s Valentine’s Day and that means roses and big business for flower shops. But how do flower shops get their roses? NPR’s All Things Considered answers that question if, say, you are a shop in the market for 25,000 roses (For Florists, Roses A Nerve-Racking Business Around Valentines Day, Feb 13). Enjoy!
Archive for the ‘Supply Chain’ Category
Over time, this blog has had a lot of posts about shipping containers. Here is another one.
More specifically , we have from Vox and short video on the history and economic impact of shipping containers and why container ships keep getting bigger and bigger (How cargo ships got so huge — and transformed the world economy, Jan 22).
You may not be familiar with Xiaomi, but you likely will be soon enough. Xiaomi is a Chinese smartphone maker. It sold its first smartphone in 2011 and is already the third biggest player in the market. It also holds the distinction of being the most valuable tech start up going — yes, even more valuable than Uber. (See here and here for more.)
How did they get so big so fast? Mostly by being cheap. Their phones offer a level of value that, say, Apple cannot touch. A new iPhone without a contract with a carrier (i.e., without a subsidy) will set you back at least $600. If you want more storage and a bigger screen, that creeps up to near a thousand dollars. Xiaomi’s phones top out around $500 and they have offerings under $150.
So how does Xiaomi manage to offer so much for so little? That is the topic of a TechCrunch article (This Is How Xiaomi Keeps The Cost Of Its Smartphones So Low, Jan 19). Now part of their success is due to their distribution strategy. In China it sells only on-line. Hence, it can cut retailers or carriers out of the equation. But that is not the only factor. How they mange their product line and purchasing (and consequently their supply chain) also makes a difference.
[Hugo] Barra [the company’s VP of International] explained that Xiaomi is able to make price concessions thanks to the combination of a small portfolio and longer average selling time per device.
Importantly, Xiaomi continues to sell older devices (and tweaked versions of them) at reduced prices even after it releases newer models.
“A product that stays on the shelf for 18-24 months — which is most of our products — goes through three or four price cuts. The Mi2 and Mi2s are essentially the same device, for example,” Barra explained. “The Mi2/Mi2s were on sale for 26 months. The Redmi 1 was first launched in September 2013, and we just announced the Redmi 2 this month, that’s 16 months later.”
Today is a big day for companies in the shipping business. Coming off of the last weekend before Christmas, it is not too surprising that the likes of UPS and FedEx are expecting a massive rush of packages ordered by everyone who gave up on the mall and just ordered it online. In case you couldn’t have guess that for yourself, both the New York Times (Crunch Time for FedEx and UPS as Last-Minute Holiday Shipping Ramps Up, Dec 21) and the Wall Street Journal (A Test for UPS: One Day, 34 Million Packages, Dec 21)have articles today about how shippers have planned to deal with the deluge.
For my money, the Journal article is more interesting if only because it contains nuggets like that e-commerce will soon account for half of all U.S. packages. This video summarizes some of the main points of the article.
I cut my academic teeth doing work on supply chain contracting. I consequently found a BBC report on pay-to-stay payments interesting (Premier Foods accused over ‘pay and stay’ practice, Dec 5). The subject of the report is Premier Foods, a large UK manufacturer with several food brands. Premier had the chutzpah to effectively ask its suppliers for bags of cash. Here is what the firm’s CEO wrote.
[Chief Executive Gavin Darby] wrote: “We are aiming to work with a smaller number of strategic suppliers in the future that can better support and invest in our growth ideas.”
He added: “We will now require you to make an investment payment to support our growth.
“I understand that this approach may lead to some questions.
“However, it is important that we take the right steps now to support our future growth.”
But when a supplier raised questions in an email about the annual payments, another member of Premier’s staff replied.
“We are looking to obtain an investment payment from our entire supply base and unfortunately those who do not participate will be nominated for de-list.”
You can contemplate the lovely Britishness of “nominated for de-list” while watching this video on the subject.
I should note that Premier Foods has since backed off its demand after the negative press following this report (see here).
So what should be more profitable for a retailer, selling from physical stores or selling over the web? That’s the question that a recent Wall Street Journal article considers (How the Web Drags on Some Retailers, Dec 1). At first glance, the answer seems straightforward. Web sellers don’t need to rent stores or have staff cooling their heels waiting for customers. However, the reality isn’t necessarily so clear,
While conventional wisdom holds that online sales should be more profitable, because websites don’t need the pricey real estate and labor necessary to maintain a store network, many retailers actually earn less or even lose money online after factoring in the cost of shipping, handling and higher rates of returns.
For retailers that outsource their Web and fulfillment operations, costs can run as high as 25% of sales, industry analysts said.
Kohl’s Corp. says its profitability online is less than half what it reaps in its store. Wal-Mart Stores Inc. says it expects to lose money online at least through early 2016 as it invests to build its technology, infrastructure and fulfillment networks. Target Corp. says its margins will shrink as its online sales grow. Best Buy Co. said faster growth on its website will weigh on its profitability at the end of the year.
Click here for a video of the reporter discussing her findings.
We have posted a few times about how miserable it can be to work in an Amazon fulfillment center. (See for example here.) We have also had a few posts on Kiva robots — both before and after Amazon bought the company in 2012. Kiva produces automation systems for fulfillment centers. These are essentially robots that bring shelves to pickers who select what is needed to complete customer orders. At the time Amazon bought them, Kiva’s clients were firms like Crate & Barrel that while significant catalog/web retailers had far less variety than Amazon. Indeed, one of our posts on Kiva was basically asking when the robot hordes were coming to a fulfillment center near you.
According to the Wall Street Journal, those hordes have now arrived (Amazon Robots Get Ready for Christmas, Nov 19). Back in May, CEO Jeff Bezos claimed that they would increase their number of robots from 1,400 to 10,000 over the year. What difference does this change make?
At a 1.2-million-square-foot warehouse in Tracy, Calif., about 60 miles east of San Francisco, Amazon this summer replaced four floors of fixed shelving with the robots, the people said.
Now, “pickers” at the facility stand in one place and wait for robots to bring four-foot-by-six-foot shelving units to them, sparing them what amounted to as much as 20 miles a day of walking through the warehouse. Employees at some robot-equipped warehouses are expected to pick and scan at least 300 items an hour, compared with 100 under the old system, current and former workers said.