Posts Tagged ‘Operations Strategy’

Apple is apparently getting serious about cars. It came out this week that building an electric car is now a “committed project” at Apple (Apple Targets Electric-Car Shipping Date for 2019, Wall Street Journal, Sep 21). But that raises the question of who would actually build it for them. It’s not that Apple has never made stuff before, but recent years they have generally leaned on the likes of Hon Hai Precision Industry (aka Foxconn) to assemble phones and laptops and such on their behalf.

That got me thinking about a quote from Carlos Ghosn, who runs both Nissan and Renault, that appeared last week in Automotive News (Ghosn sees tough time ahead for industry disruptors, Sep 18).

Renault-Nissan CEO Carlos Ghosn said aggressive hiring of auto industry executives by software companies shows how vital it is for new players to understand manufacturing and vehicle design. …

The complexity of cars means it will be tough for new players to enter the auto industry. ..

“That is one of the reasons you are seeing the outsiders massively hiring engineers from our industry. Why? Because they need to understand the product more in order to make the transformation they think they can make,” Ghosn said at a press conference here Wednesday.

Ghosn is not the only one thinking about what it would take for a tech giant like Apple or Google to get into the auto business (Apple and Google Create a Buzz at Frankfurt Motor Show, New York Times, Sep 17).

“What is important for us is that the brain of the car, the operating system, is not iOS or Android or someone else but it’s our brain,” Dieter Zetsche, the chief executive of Daimler, the maker of Mercedes vehicles, told reporters at the car show. IOS is Apple’s operating system for mobile devices.

“We do not plan to become the Foxconn of Apple,” Mr. Zetsche said, referring to the Taiwanese-owned company that manufactures iPhones in China.


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When you think about United Parcel Service (if you ever do), you like think about the big brown truck that brings boxes to your house. But UPS does much more than deliver e-commerce purchases to residential addresses. They also have a significant business handling supply chain logistics. That business is potentially threatened by the evolving technology of additive manufacturing. Who needs a logistic purveyor when parts and components can be reduced to a file, sent around the world, and then printed at its point of use?

That concern has led UPS to experiment with 3D printing, investing in a start up and setting up a facility at UPS’s hub in Louisville. They currently have 100 printers and are planing to to expand to 900 (UPS Tests a 3-D Printing Service, Wall Street Journal, Sep 18). Just what are they doing with these printers?

UPS expects more companies will migrate some production to 3-D printing from traditional manufacturing on an aggressive growth curve, according to Rimas Kapeskas, head of UPS’s strategic enterprise fund. And UPS is also talking with customers about taking on a bigger role as a light manufacturer using 3-D printers. …

Late last month, the operation received an order for 40 mounting brackets for paper towel dispensers from a division of Georgia-Pacific LLC that makes dispensers, Dixie cups and cutlery. CloudDDM printed the mounts and UPS shipped them to a Georgia-Pacific engineer by the next morning. The brackets were slated for a month-long “stress test,” said Michael Dunn, senior vice president of innovation development for Georgia-Pacific.

Whirlpool turned to the operation recently when its own 3-D printers were all occupied. The maker of Maytag and KitchenAid products uses the printing method for prototypes of items like trays for refrigerators and venting systems for dryers, as a way to test parts on smaller scale.

The article also reports that UPS has used the service itself to produce parts for its fleet of planes. (more…)

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Many, many years ago, I began collecting music. By the time I was in college, I had several crates of records that meant helping me move was a good way to hurt your back. I finally broke down and switched to CDs when the Replacement’s All Shook Down was released only as a CD. Of course, now CDs have given way to files and streaming while my old LPs gather dust in the basement. But vinyl records are making a comeback — they now account for 9% of sales for music sold in a physical form. Last year that amounted to 13 million records — the highest total in 25 years — which has led to some interesting production issues (Vinyl LP Frenzy Brings Record-Pressing Machines Back to Life, New York Times, Sep 14).

Independent Record Pressing is an attempt to solve one of the riddles of today’s music industry: how to capitalize on the popularity of vinyl records when the machines that make them are decades old, and often require delicate and expensive maintenance. The six presses at this new 20,000-square-foot plant, for example, date to the 1970s. …

But the few dozen plants around the world that press the records have strained to keep up with the exploding demand, resulting in long delays and other production problems, executives and industry observers say. It is now common for plants to take up to six months to turn around a vinyl order — an eternity in an age when listeners are used to getting music online instantly.

Here’s a video that goes with the article.


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EM-BE840_BARREL_16U_20150512051208Bourbon, 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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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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About a year ago, we had a post on Zulily and how they managed their order fulfillment. It featured a nifty graphic from the Wall Street Journal showing just how much longer their delivery times were relative to other interet retailers. Now, the Journal has another story — with a spiffy updated graphic — discussing how their delivery times have gotten even worse (Zulily Nips Business Model in the Bud, Mar 23).



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The dollar has been on a tear over the past year. Check out how much it has appreciated against the euro over the past year or so (A Shakeup in Currencies, Wall Street Journal, Mar 19).


There are some obvious implications from this chart. For example, if you spent spring break in Europe, you have an impeccable sense of timing. Also, if you are US-based manufacturer counting on exporting to Europe, you are going to be swimming upstream (see, for example, Strong Dollar Stands in Manufacturing Sector’s Way, WSJ, Mar 15).

But if a strong dollar hurts US firms, it’s gotta be a godsend for European businesses, right? Well,maybe not. How a weak euro impacts European firms is going to depend on the structure of their supply chains. Check out this eye candy from today’s Wall Street Journal (Europe’s Fashion Retailers Under Pressure From Strengthening Dollar, Mar 24).



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