Category Archives: Production Operations

Walmart tightens on-time, in-full requirements

Posted on September 14, 2020 by just2bruce | 1 comment

A large shipping firm has grabbed a problem by the throat.

Wal-Mart has raised its on-time in-full (OTIF) shipment requirements for all suppliers to 98%. It’s in response to a significant drop-off of on-time deliveries and short shipments, possibly due to COVID-19, but also connected with general carrier and business distress. By punishing suppliers, Wal-Mart sets a standard that others will want to match.

Failure of on-time and in-full deliveries poses a severe problem for managing inventory and matching supply to demand. Carriers won’t be able to get away with it now, and suppliers won’t do as much short-shipping. The standard will ripple over first to other consumer-oriented firms, then to all sorts of firms.

Standards for delivery are a good thing if they become industry-wide. They change the stakes, and give the consumer a clear idea of what to expect for a shipment. They set a basis for deciding what a reasonable charge is. If you can cheat on the delivery date or amount and get away with it, you are likely to when you think it’s to your advantage. And that violates customer trust.

A good example is Amazon’s pioneering of two-day shipping via Amazon Prime. It created a standard for the e-Commerce practice that firms in that market have to be clear about when they set the price for their full offer (including shipment terms)– are they following it or not?

Improving customer trust is a good thing, and sets up sound guidelines for customers to evaluate the value of an offering.

Mark Solomon Friday, September 11, 2020

Link: https://freightwaves.com/news/walmart-tightens-on-time-in-full-requirements

1 Comment

Posted in Logistics, Production Operations, Strategy, Supply Chains

Tagged Logistics, Shipping, standards, transportation

Commentary: What makes Alaska’s oil industry unique?

Posted on September 1, 2020 by just2bruce | 1 comment

This article showcases the difficulties of arctic oil production andlogistics. It is a very nice summary of the most important long term issues.

Of course there are many others, on the sustainability side, like devastation of the tundra habitat, and melting of the permafrost, which might have an effect on global climate. But the more direct impacts noted here show that it’s a tenuous business that only persists because people still need so much oil.

Article Link: https://www.freightwaves.com/news/commentary-what-makes-alaskas-oil-industry-unique

Darren Prokop Monday, August 31, 2020

1 Comment

Posted in Logistics, Managerial Econ, Production Operations, Supply Chains, Sustainability

Tagged arctic, environment, Logistics, Oil, sustainability

Brazil’s May soybean exports jump 33% in month

Posted on May 26, 2020 by just2bruce | 1 comment

Ever since we wrote a paper about exporting soybeans, I’ve been following the contretemps between Brazil and the US regarding soybean exports. China is the largest importer of soybeans from these two countries. Since one is Northern and one is Southern Hemisphere, their harvest seasons differ. So in the past the prices switched back and forth as the harvest supplies soared in one country or another, and China bought around the same from each source. The US has areas where yields are large, is a bit closer, and the inland transport for the soybeans is good. Brazil has lots of land planted, overland transport to ports is challenged a bit, and the distance to China is greater.

But now we have ‘exogenous factors’ as the economists like to say. China is in a trade war with the US. So as the second article indicates, China’s government-owned processors are buying some American beans, whereas the private Chinese enterprises are buying more Brazilian beans. The result is that more beans are going to China from Brazil right now. The trade war’s uncertain vicissitudes may mean that Brazil’s sales will become significantly bigger, and China will only buy what it thinks it has to from the US. Geopolitically, it makes sense for China to support Brazil, a developing country with lots of financing needs and less influence in the world. Support might mean good opportunities for Chinese investment and influence on Brazil’s policies internationally.

The outlook is really unclear. We need to keep watching developments in soybean trade.