A tale of two companies


When people think about the biggest discount retail stores, they think about Wal-Mart or Target. For a while now those two stores have dominated the discount retail market. Yet, that was not always the case. From the 1960s to the 1990s the two stores that had the majority of the market share were Wal-Mart and Kmart. Both Wal-Mart and Kmart were founded in 1962 and focused on minimizing cost as their business strategy. From the 1960s to the early 1990s they both experienced a lot of growth and Wal-Mart and Kmart generated revenues of 15.96 billion and 25.63 billion respectively. As the 1990s continued the two companies headed into different directions. Wal-Mart became the behemoth that it is today while Kmart began to dwindle. One of the reasons that happened was because of how they developed or in Kmart’s case ignored supply chain management.

Kmart        walmart    Supply chain management is the integration ofactivities that procure materials and services, transform them into intermediate goods and the final product, and deliver them to customers. Competition is no longer between companies; It is between supply chains.

Wal-Mart was a leading pioneer in supply chain management in the discount retail store industry. Most of the concepts they introduced in the 1990s are still in use today by many discount retail stores. Some of the concepts that Wal-Mart introduced were bypassing the whole-sellers to replenish their stores, developing a network of regional and local distribution centers, cross-docking at the warehouses, owning a captive fleet for store delivery, investing in the data-link connecting stores to the headquarters so that demand can be communicated effectively and without delay, and actively collaboration with suppliers like P&G to share demand data. Wal-Mart saw their revenues soar because of the implementation of these concepts and broke away from the rest of the pack.

Instead of trying to develop their supply chain management and focusing on minimizing cost Kmart bought high end items to stock their shelves, going away from the strategy that made them successful in the first place. In the early 2000s they tried to revert back to their previous strategies but were too late and were heading towards bankruptcy. They merged with Sears and even with the help of Sears, Kmart stores have not been ale to regain their market share. Today very few Kmart’s exist and every week more and more Kmart’s close. The future of Kmart is cloudy. Supply chain management is an integral part of how businesses are ran and has the capability to determine whether businesses are successful.


Do you think Kmart can make a comeback and regain their market share? Or are they too far behind too catch up?

Do you know of any other instances where supply chain management had such a large impact in two or more competing companies? What were the results?


Hashtag #shareacoke


Coca cola



We all loved when we found our names printed on a Coca-Cola can or bottle on the shelves at the grocery store.  According to some customer reviews  seeing your name on a big brand such as Coca Cola, makes it more personal. “Share a coke” campaign  first started in Australia in 2011.  After the great success in the Australian market, the campaign expanded on another 80 countries around the world.  In 2014 the “Share a Coke” campaign was introduced in the US market. This campaign boosted the sales in U.S. by 2%. This raise on sales hadn’t happened in a decade for Coca-Cola.  The Coke bottles had common names such as Jessica, Matt, Alisha and more, some buzz words such as friends, BFF and more.  For those who had a name that was not really common like mine, Coca-Cola would let people print their personalized “Share a Coke” bottles in some designated kiosks.  Also you could go online on the Coca-Cola website and create your own virtual bottle and share it on social networks. A lot of pictures with the personalized Coke bottles were shared on the social networks using the hashtag #shareacoke.




In the US, the company printed bottles with the 250 most common names. In UK  the company printed bottles with 1000 most common names.  I was kind of surprised by this fact. Since US is a bigger country than UK one would think the number of names chosen to be printed would be higher. The personalized bottles were introduced in the US market in June 2014.  They were sold on the grocery stores and vending machines.  Lately, you barely see those personalized Coke bottles or cans on the shelves anymore.  Coke is switching back to its standard labels in US.  This campaign was only  a temporary campaign.

What played a major role in this global success?

Coca-Cola made a temporary change in their production line globally, by customizing its product.  I think what played a major role in this campaign was the supply chain management. Making a change like this on the bottles and cans, especially when this change is applied to the global markets, supply chain is definitely a major part of this success.  According to a representative of Coca Cola, the “Share a Coke” campaign was a great success thanks to the supply chain flexibility.  The suppliers had to change their processes to meet the companies demand and the whole innovation demands that expanded globally.  Through this example the supply chain management can be seen as a profit driver instead of just thinking about it as a cost center.


This campaign was only temporary.  Do you think next year Coca Cola is coming up with the same campaign or something else “more attractive” to increase the sales?

What do you think are some other factors that played a major role in the switch of the product line?






Horse Meat and See-through Yoga Pants: Supply-Chain Failures

Education Opportunities

Most students after graduating college will go to work full-time. For those students who want to continue their education either through an M.B.A or specialized Master’s Degree the options are countless. Many students may turn to an M.B.A or another common Master’s degree. However, one of the fastest growing fields in business is for individuals with degrees or experience in supply-chain management.

Supply-chain management is a broad term that incorporates numerous elements of business including leverage, communication, efficiency, innovation, risk management, and continuous improvement. These elements are used by supply-chain managers in procurement, transportation, inventory, and forecasting to name a few. Also, supply-chain hires will find themselves conducting supply-chain analysis, which can incorporate fields such as engineering, analytics, and operations.

Why Supply-chain Management?

As our economy and the economies of the world have become globally focused, supply-chain management has become a necessity. Multinational corporations and global partnerships have opened the possibilities of receiving goods from around the world at the blink of an eye. These new possibilities give businesses and consumers greater opportunities, and access to products at prices never before seen in a free-market.

However, as stories of horse meat in European stores and see-through yoga pants have become more common, managers are turning to supply-chain personnel to prevent these embarrassments from happening again. These negative story lines hurt a companies bottom line and reputation, which can have long-term consequences. By leveraging supply-chain experts a company can help their bottom line and customer service.

If interested, below is a brief overview of supply-chain management through the operations of a lemonade stand.

Supply-Chain Management Failure

One example of a supply-chain management failure, as we talked about in class, is the example of Boeing and the 787 Dreamliner. Boeing increased its outsourcing from about 35-50% on the 737 and 747 to close to 70% on the 787. The supply chain that Boeing had in mind was one that would keep cost’s low and spread the risk proportionately between themselves and their suppliers. Unfortunately for Boeing, this strategy backfired due to poor supply-chain management. Ultimately, this led Boeing to run billions of dollars over budget and caused years of delays.

If a company as large as Boeing can have supply-chain management failures, any company, large or small, can experience similar failures. By hiring individuals with a background in supply-chain management companies are hoping to counteract the potential issues related to supply-chain management.

Increasing Supply

Below are some new programs offered in supply-chain management to meet increased demand.

School Location Program Year Started
University of Houston, C.T. Bauer College of Business Houston M.B.A. certificate in supply chain management 2011
Rutgers Business School Newark and New Brunswick, N.J. Undergraduate major 2011
Bryant University, College of Business Smithfield, R.I. Undergraduate major and M.B.A. specialization in global supply chain management 2012
Governors State University, College of Business and Public Administration University Park, Ill. Online M.B.A. in supply chain management 2013
Portland State University, School of Business Administration Portland, Ore. M.S. in global supply chain management 2013
Texas Christian University, Neeley School of Business Fort Worth, Texas M.S. in supply chain management 2013
University of North Carolina, Kenan-Flagler Business School, and Tsinghua University Chapel Hill, N.C. and Beijing Global Supply Chain Leaders Program—M.B.A. from Kenan-Flagler, Master of Engineering Management from Tsinghua 2013
University of Southern California, Marshall School of Business Los Angeles Online M.S. in global supply chain management 2013
Arizona State University, W.P. Carey School of Business Tempe, Ariz. M.S. in supply chain management or M.S. in supply chain management and engineering 2014


Would an advanced degree in supply-chain management be of interest to you? Do you think supply-chain management can help companies overcome global issues?




Budweiser Tackles Supply-Chain Management

budweiser_4312                                                                                               three-tiered-system

One important thing to take away from Operations Management (OM) is how relevant it is in all branches of business. Developing an understanding for operations management can be the key to solving many problems in a business regardless of your field. This lesson became apparent to me when considering lectures from both my management and marketing course. Marketing concerns itself with the 4 P’s or price, product, promotion, and place. What I want to focus on in this blog is place, which coincidently supply-chain management is one of the OM strategic decisions and a major way companies can reduce cost. Anheuser-Busch’s Budweiser has implemented a supply chain that is worth taking a closer look at.

First, it is important to note that all alcohol producers must adhere to the Three-Tier System, which simply states the distribution of alcohol must include an independent intermediary between producers and retailers to eliminate unfair practices by producers. In other words, “the distributor is not allowed to purchase shelf space or exclusivity, furnish equipment like draft coolers, offer loans or create a feeling of obligation, or offer discriminatory promotional pricing” (Spiess).  What this means for alcohol producers that their supply-chain channel is already determined for them; they do not have the option of choosing between a direct or indirect channel structure. Budweiser must go through a wholesaler/distributor to reach the retailer.

Since Budweiser must have an indirect channel structure paying for distributors will impact their costs. Thus, finding ways to lower the cost becomes the next step. When dealing with the three-tier system, Budweiser must make strategic supply-chain management decisions that will benefit their business. Looking to OM becomes a crucial step. Thus, some brewers such as Anheuser-Busch and Miller have found ways to go around the requirement of an independent distributor without actually breaking the rule. Due to their wealth and success, Anheuser-Busch essentially has ownership of their distributors without actually owning the distribution channel. For example, “In 1977, Anheuser-Busch had their distributors sign an “exclusivity incentive program” which didn’t require the distributor carry only A-B products, but gave huge benefits if they did drop all competitors” (Spiess). Through incentive programs such as these, Budweiser is able to implement a vertical forward integration channel, in which they essentially control their wholesalers.

Of course problems struck when independent distributors found out that “Anheuser-Busch has more than 500 distributors across the country…nearly all of which are independent companies with an exclusive contract to sell A-B beer in a certain geographical area” (Logan) and started to push a bill through the state legislature to stop these practices. They are arguing that Anheuser-Busch is gaining profits by saving on what they normally would have had to pay the distributor (Logan).  Wholesalers believe these producers are exploiting the system meant to protect distributor rights. On the other hand, Anheuser-Busch argues as a smart supply-chain management decision, it makes good business sense to hire wholesalers who are loyal to the Budweiser brand rather than those who also carry their competition. Thus, Anheuser-Busch minimizes costs while distributors are guaranteed its business.

While this is a great way for Anheuser-Busch to minimize cost, is it fair to the wholesaler who will not sign the incentive agreement and is then losing this revenue?

Should alcohol manufacturers such as Budweiser be able to own their own distributors as part of their supply chain management?





Apple’s Ruthless Supply Chain Management

For the loyal Apple customer, Apple can do no wrong. Apple reported Four million iPhone 6 and iPhone 6 plus’ pre ordered in the first 24 hours. Last year Apple sold over 150 million phones.(Satariano and Burrows) The company’s success is attributed to their innovative products which have superior functionality and exceptional user experience. Second to the product is the supply chain management that allows Apple to deliver the high demand products on time to the users.

The iPhone is the most popular phone in the world, in order for Apple to produce and deliver the sheer volume of phones to meet the demand they must create exclusivity agreements with suppliers in exchange for volume guarantees. Working with its supply chain partners, Apple helped develop new manufacturing processes, some of which have been the subject of patents filed by the company.(Apple’s process,pars 5)

Apple is always innovating their products and they do it at no cost and without any consideration of the suppliers. Suppliers of Apple sometimes come out winners and sometimes losers. The iPhone alone has components that come from dozens of different companies. Apple has a reputation as a brutally tough negotiator with companies in its supply chain, demanding advanced technology at razor-thin margins, and it doesn’t hesitate to drop longtime suppliers with little notice, says Francis Sideco, a senior manager at market researcher IHS (IHS). At least nine publicly traded companies get more than 40 percent of their revenue from Apple, data compiled by Bloomberg shows.

blog pic

Audience, a mobile audio processor maker saw their stock plummet from a high of $22 a share to about $8.50 a share when their parts were left out of the iPhone 5 in 2012.(Satariano and Burrows) Peter Santos, chief executive officer of Audience says they struggled to replace lost orders with business from other phone makers because he had no notice. Apple didn’t tell him his company was cut out, and he only knew for sure when his engineers bought an iPhone 5 and took it apart.

What makes Apple great is also what gives them the reputation of being ruthless. Apple is very involved in all aspects of the supply chain management and it’s been that way since late Steve Jobs return in 1997. Apple has a lot of power and leverage when they negotiate the terms on parts, manufacturing and transportation, this in large is what allows Apple to make a superior product to its competitors at a price that is hard to rival and still make a 25 percent profit margin. The bottom line is the company is highly regarded by the end user. Apple’s ruthlessness is what gives them the advantage and keeps them in the green year after year. Some suppliers have begun to reduce their dependence on Apple.

Is the old idiom, business is business, always true? Is it okay for a company to have a ruthless mentality? When the end-users are happy and the company sees huge profits, is it all that matters?




The Fast and the Furious


Recently, I spoke with a former retail executive and got into the topic of fast fashion. I learned some interesting facts about the industry and think it’s a great topic to discuss. I bet that many of us have been to or purchased from fast fashion retailers such as Zara, H&M, or Forever 21. Do you ever wonder how they are able to mass produce some of the trendiest pieces and sell them at such low costs? Well, you will now get an idea of how they do it and how these retailers have become so successful.

Two words that come to mind when talking about fast fashion’s success: Speed and Volume. Zara, fashion retailer based out of Spain, can design, manufacture and get new product into their stores in less than a month’s time. How do fast fashion retailers do this? According to the former retail executive, they have workers go to Italy, France, or wherever they are taking fashion trends, purchase designer garments, and take them to a mass producer in countries such as China or Korea. The manufacturers copy, but alter the piece in 9 different ways, to avoid legal troubles, and then mass produce the new items. Companies might have different strategies, but that is a prime example of fast fashion.

Many of the retailers mentioned do not only provide speed, but they also provide volume. In 2013, Zara produced around 450 million garments for its 1,770+ stores. I can only imagine how much H&M produces with its 2,629+ stores! As these retailers are able to mass produce with low wage manufacturers, they are able to offer their clothing at dirt-cheap prices. Many retailers, such as Forever 21, are then able to charge less for their clothing as they have their manufacturers produce with cheaper, synthetic materials. With prices so low, consumers like you and I find ourselves leaving these stores with at least one item and usually fall into the dilemma of not bothering to make our way back to the stores to make a return.

It is evident that fast fashion’s quick and efficient supply chain management is crucial to their success, but there has to be some downside to the system, right? Since most of the products coming out of these retailers are cheaply made, it is without a doubt that these garments are not going to last forever. As some of you know, some of these garments won’t even last 2 or 3 wears. It is a pain, but at such low prices, what can you expect?

Food for thought:

Can you think of any possible flaws in the fast fashion system?

From a consumer’s standpoint, are you willing to give up quality for quantity?

From an ethical standpoint, what do you think about retailers exploiting low wage workers overseas?






Hog-wild for Factory Farming: Hot Dogs Made in China

As the Chinese population and economy continue to grow, safer and more efficient industrialization practices are necessary to keep up with the demands of a hot dog hungry China. This is not an exaggeration as China is “the world’s largest consumer of pork.” A recent takeover of Smithfield Foods by Shuanghui Holdings Ltd., “China’s biggest meat processor,” will provide valuable insight into industry practices that are commonplace in the U.S. Current processing methods in China lack quality control as the majority of meat is produced by small farms that process less than 500 hogs per year.

From Hog to HotdogThese “conditions on smaller farms can be squalid, with a lot of physical contact between farmers and animals, which can transmit disease.” This type of environment can become a breeding ground for contamination leading to outbreaks of diseases like swine flu and foot-and-mouth disease, having major health implications on Chinese consumers. Authorities blame irresponsible farming practices and the disjointed meat processing system that is not easy to “regulate and makes it more difficult to avoid bad practices.”

In contrast, the highly sophisticated and streamlined systems of pork production in the U.S. is often viewed negatively by Americans and referred to as “factory farming.” Smithfield’s facilities have the “capacity to slaughter as many as 110,000 hogs a day,” and most U.S. farms are much larger than their Chinese counterparts, raising over 2,000 hogs annually. Ironically, these modern processing techniques are the envy of Chinese authorities who are looking to utilize the “expertise of Smithfield’s management team to enhance its pork-processing facilities.” Skeptics claim that the Shuanghi-Smithfield partnership “will exacerbate such problems as complex supply chains and food-contamination risks.”

Although the trend in U.S. agriculture is to go “back to the start” as expressed in marketing campaigns by environmentally conscious companies like Chipotle Mexican Grill, this is not the reality in China. As health out-breaks are more widespread in this Asian country and regulation lacking, efforts to “control food safety” and create more modernized processing methods are a welcomed site.

In such an industry, operational expertise will prove essential in restructuring the pork processing system in China. They will likely face challenges like determining adequate process and capacity design for farming facilities and distribution channels; forecasting to meet the demands of a growing population; Slaughter Pigs in Chinaand improving inefficient and broken supply chains. Improved product quality will likely be most prominent and follow a manufacturing-based definition as increased standards will ensure a safer finished product.

On a personal note, I am an advocate for more naturally produced food in smaller farming environments, yet I understand that the demands and current conditions in China are quite different from the U.S. All criticism aside, the majority of the U.S. population relies on the safe meat supply provided by corporations like Smithfield to ensure peace-of-mind at the dinner table. How do you think that the new deal between Shuanghi and Smithfield will impact Chinese and U.S. consumers, respectively. Will the Chinese citizens have a similar sentiment toward industrialized farming practices in future decades?

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Chocolate: The Road to Luxury


For all of you chocolate lovers out there beware: there may be a flaw in Western chocolate manufacturers’ supply chain management of cocoa. Productivity is not at the levels it needs to be to satisfy manufacturers and consumers. To better put this into perspective, Mars has found that if the levels of productivity remain the same as today, by the year 2020 there would be a shortage of 1.1 million tons of cocoa. If this occurs and current productivity levels of cocoa trended into the future, the cocoa farming business will not be headed in a promising direction.

The disconnect lies within cocoa faming itself. There is little incentive for cocoa farmers to continue in their line of work because of the competitive rubber industry. It is considered a less uncertain industry with a longer crop season by about four months. On top of this, the wage for both types of farming is roughly the same.

The other constraint of the industry is the high risk for disease outbursts. This is partly due to the inadequate access of much needed fertilizers for the cocoa crop.

Cocoa-farmers do not come anywhere near the crop’s capacity since their utilization is only around 60%. Cocoa manufactures have recognized the scarcity as a sincere problem since in many growing areas more than 40% of the cocoa crop is destroyed due to vermin and disease.  One would hope that this type of scarcity could be due to assignable variation that can be improved by subtracting bad causes.

How would you react if chocolate turned into a luxury good instead of an affordable snack due to flaws in the supply chain management?

Chocolate manufacturers are looking to provide solutions for productivity in the cocoa-farming realm. Many companies like Mondelez and Mars have invested millions in education programs in hopes to increase productivity and decrease disease-ridden crop. Mondelez has gone as far as hiring students from universities for these cocoa programs to target efforts toward younger generations. This seems to be an efficient approach, given the fact that peer motivation is a convincing form of motivation.

Another potential solution was Ivory Coast’s decision to set a price minimum for cocoa. This was an astonishing action that stresses how essential cocoa farmers are in the industry.

It is hard to believe that the issue has gone this far. In my opinion, action should have been taken much sooner. The uphill battle is much worse now that efficiency levels have sunk so far below maximum capacity.

Do you think that these efforts put forth by chocolate manufacturers will be enough to save the chocolate industry?

What else can be done to improve the supply chain management and productivity in the industry?

Have you noticed any other flaws in the cocoa/chocolate industry besides the supply chain management?

Which action will have a greater affect on the industry: a price minimum or cocoa farming education programs?



Sustaining The Nike Swoosh

The sports apparel powerhouse Nike, Inc. has recently released big changes in the news by announcing a partnership with Swiss company Bluesign Technologies.  The partnership will accelerate the supply of sustainable materials and chemistries for use in all Nike products.  What does that mean exactly?  Well, it means Nike is going green – they are taking steps to make the production of their textiles more sustainable for their workers, customers, and environment.

Though I bet not many of you have heard of Bluesign Technologies, their company is quite interesting.  They have also partnered with The North Face on a journey to sustainability.  The link provided here (http://www.youtube.com/watch?v=wkOQVQdJ_Lo) is a short video which details great information regarding Bluesign; how they work, the benefit of using their technologies, and how it can better the environment.  Basically, Bluesign is an input management system.  They know everything that thNikeey put into their production and calculate the effect of a chemical used in a textile regarding their air emissions, water emissions, and how it affects the workplace so that they know the outcome a chemical has before even starting production.

Nike is utilizing two of Bluesign Technologies that will provide Nike’s supply chain with access to roll out the tools across Nike’s global supply chain.  With one of the technologies, Bluefinder, a supplier can access pre-screened sustainable textile preparations including dye systems, detergents, and other chemicals used in the manufacturing process.  The benefit of this tool is that it helps suppliers manage restricted substances and increase water/energy efficiency.  The second tool Nike will utilize is Blueguide which gives Nike access to 30,000+ materials produced using chemicals from the Bluefinder at facilities that have undergone rigorous assessment.

Nike is pursuing to enhance their sustainable material strategy.  They are looking to put a set of positive chemistries in the hands of material suppliers by preventing the use of hazardous chemicals.  With Nike using these technologies, they can change production with many manufacturers by having them use technologies in order to produce more sustainable products and increase efficiencies.

I think this is a great partnership for many reasons.  First, as we discussed in class, sustainability is win-win and has a multifold positive impact.  Furthermore, without these technologies Nike’s supply chain had to go through individual factory assessments.  Now, their supply chain will run more efficiently with more innovative products.  With the integration of Bluesign Technologies, materials will be made in a manner which is sustainable between products, the environment, and the manufacturing factory.  The sustainability advantage is not only effective in Nike’s products, but in improving their supply chain by making production more innovative, stable, and of higher quality.  This aspect of their operations management is greatly going to improve Nike to being not only a sports powerhouse, but a sustainable one as well.

 How beneficial do you think the use of Bluesign Technologies will be to Nike?

Do you look more favorably on a company that takes efforts to reduce their carbon footprint and provide more sustainable products- why/not?





Supply Chain Management The Competitive Advantage

In a recent survey  business leaders around the globe stated they are putting a strong focus on their supply chain management. These leaders are trying to come up with a solution to the constant changing technology up-and -down markets to the constraints of natural disasters.  Having a strong supply chain management has become very important with in the business world. Having stronge SCM (supply chain management) helps business stand out from the rest. Not only do business have to deal with big orders they now more then ever have to also work with small customers orders. This survey by PWC stated five key findings to a “more efficient transparent, dexterous and customized supply chain” to what the company needs.

1. “You Can Have It All”  Having a stronge supply chain results other areas of the business benefiting as well. Orders that are on time and correct lead to companies having on average 15 inventory turns a year. Were as companies who lag behind on their have a average of 4 turns a year.

2.”Leaders Focus on Best-in-Class Delivery” Leaders are spending a lot of time focusing on maximizing profit and lower cost while providing superoir delivery. Being able to comunicate and responde to customers requirements while keeping pressure on competitors.

3. “One Size Doesn’t Fit All”  Meeting the needs for specific customer groups has become a significant part of the SPM.  Configuring differences between high end and low end products to different parts of markets. Scheduling different delivery times based on desired time of shipment.

4.”Global Control Of Core Strategic Functions” Even thought some parts of the order might be outsourced the customer interaction is still done with in the company. Keeping a strong connection with company and customer lead to returning customers .

5. “Supply Chain Capabilities Are a Differentiator”  Collaborating with key partneres to maximize delivery performance and creating less supply chain redundancies are important in establishing a best in class delivery. This gives both companies a leading competitive edge.

Companies are changing very quickly just as technology advances at a fast rate. It is hard to keep up at times with new advancements and available new technology.  The article states that 2/3rds the supply chain management will go to automation with in the next two years. This raising standards higher then every before for supply chain management.

What do you think is the most important strategy  for a company to make to stay ahead  with supply chain management standards as they advance?  What do you see in the future with supply chain management?