Posts Tagged ‘Supply Chain’

Last week, we had a post on how the rise of e-commerce was messing with college dorms. Now the Wall Street Journal is reporting that the influx of package deliveries is also causing headaches at apartment complexes across the country (Web-Shopping Deluge Boxes In Landlords, Oct 20).

The onslaught has turned management offices of apartment buildings into de facto receiving centers as landlords grapple with recording packages, tracking tenants down to pick them up and finding places to store the parcels.

Camden Property Trust, the 14th-largest U.S. apartment operator by number of units, stopped accepting parcels at all of its 169 properties nationwide this year. Executives said the Houston-based landlord, which has roughly 59,000 units in 10 states and the District of Columbia, had received almost a million packages in 2014, and the rate was increasing by 50% a year. …

Each package results in about 10 minutes of lost productivity, Camden executives estimated. At a rate of $20 an hour for employee wages, that amounts to about $3.3 million a year, they said.

Beyond the staff costs, there are a number of other complications. For example, having the office at a complex open normal business hours may suffice for most things, but if residents leave for work before 8:00AM and don’t get home before 6:00PM, coordinating pick up can be a hassle for both the landlord and the resident. There is also a question of liability. If the office signs for a package as a courtesy for a resident, who is on the hook when it somehow goes missing? Given that these problem scale with more delivery, I can understand the desire to refuse to accept packages. Of course, that decision is not terribly popular with many renters. The article has multiple quotes from people who now have packages delivered to a relative’s house or who are just itching for their lease to be done so they can move to a more accommodating complex. (more…)

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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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How is this for a bold assertion: All your clothes are made with exploited labor.

That is the title of a recent Atlantic article which discusses what Patagonia learned when it audited the practices of its second-tier suppliers. These are not the firms sewing sweaters or assembling backpacks. Rather these are the mills producing fabric and factories producing components that go into those sweaters and backpacks. It turns out that a lot of those mills were engaged in some dubious practices.

About one-quarter of those mills are based in Taiwan, and the majority were found to have instances of trafficking and exploitation.

The problems stemmed from how those mills found the people to work their factory lines. They didn’t hire workers themselves and instead turned to so-called labor brokers. These labor brokers charged migrants exorbitant, often illegally high fees in exchange for jobs. There were other red flags, too. Suppliers would open bank accounts into which the workers deposited their paychecks, so that fees for labor brokers could be automatically deducted. Workers’ movements were also restricted through the confiscation of passports. The recruitment and hiring process used by many labor brokers can create a cycle of fear and debt that leaves workers neither able to leave their jobs nor to make a decent living.

The article goes on to explain that sourcing labor through brokers is both legal and common in Taiwan. It is arguably necessary for the mills to be cost-competitive. Still it is an embarrassment for a brand such as Patagonia which has staked quite a bit on being a better global citizen than the typical clothing brand. (Check out the social responsibility page on their website.)  (more…)

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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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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? (more…)

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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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Here’s an interesting supply chain problem for you: What do you do when Mother Nature jeopardizes your usual production process?

That may sound a little melodramatic, but it is a relevant question for makers of high-end fashion jeans (Why the California Drought Matters to the Fashion Industry, Wall Street Journal, Apr 10).

The four-year drought in California is hurting more than just farmers. It is also having a significant impact on the fashion industry and spurring changes in how jeans are made and how they should be laundered.

Southern California is estimated to be the world’s largest supplier of so-called premium denim, the $100 to $200-plus-a-pair jeans such as VF Corp.’s 7 for All Mankind, Fast Retailing’s J. Brand and private-equity owned True Religion. Water is a key component in the various steps of the processing and repeated washing with stones, or bleaching and dyeing that create that “distressed” vintage look.

“(The) water issue in fashion in Los Angeles is a big deal,” said John Blank, economic adviser to the California Fashion Association, a trade group. Premium denim “requires water. It is all about that processing. It is the repeated washing to get the premium look. This is what people pay for.”

Southern California produces 75% of the high-end denim in the U.S. that is sold world-wide, Mr. Blank said.

This data from Levi’s highlights the water usage in question.


Unsurprisingly, actually growing cotton and consumers washing their clothes accounts for most of the water usage but steps the jeans maker control (e.g., cut, sew and finish) still uses a large amount of water.

So what can a fashion label do?


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