Category Archives: Domestic Business

Wal-Mart vs. Amazon Logistics

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JUNE 25, 2013

This Wal-Mart hub sends supplies out to physical stores

This Wal-Mart hub sends supplies out to physical stores

Few have done better than Wal-Mart when it comes to retail logistics—the art of ordering, transporting, stocking and tracking merchandise, writes The Wall Street Journal (June 19, 2013).Wal-Mart pioneered a sophisticated hub-and-spoke distribution network which uses warehouses to service stores less than a day’s truck drive away so it could remove middlemen, quickly replenish shelves and reduce costs. At its distribution centers, scanning technology tracks merchandise as it flows at 6 miles per hour on 12 miles of conveyor belts onto trucks. Some items spend less than 45 minutes in warehouses.

Supply trucks crisscross the country and arrive daily at Wal-Mart’s more than 4,000 U.S. stores. Shipments are based on real-time data of shopper purchases, transmitted by the second as employees scan items at store checkouts. But with its e-commerce operations, which began in the late 1990s, Wal-Mart has been less exacting, instead relying on makeshift spaces carved out of store-serving warehouses and third-party operators to handle the load. Electronics ordered from Walmart.com are often delivered by companies like Ingram Micro which transport Apple tablets or Samsung phones to shoppers without ever going through Wal-Mart’s warehouses.

By contrast, Amazon has spent 15 years building its e-commerce network, with more than 40 U.S. warehouses within 35 miles of major cities. “As Amazon’s bets on infrastructure pay off, it can sell products at lower costs and puts even more pressure on other retailers,” says one industry expert. Wal-Mart now plans to spend roughly $430 million this year on e-commerce investments, including a logistics system tailored for Web orders. It is building distribution centers, but also will use stores as mini distribution centers. While logistics costs account for 3% of the price of an average “shopping basket” in stores, they make up 15% of the price of online orders.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Jumping the Queue at Universal Studios

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JUNE 13, 2013

Universal StudiosSince I live in Orlando, the theme park capital of the world, the recent New York Timesarticle (June 10, 2013) “At Theme Parks, A VIP Ticket to Ride”, caught my eye. Theme parks have traditionally been the ultimate melting pots. Tourists, retirees, rowdy teenagers, families and fathers who would rather be golfing are all thrown together in an egalitarian experience in which the queue for one is the queue for all, and cotton candy is the food of the masses. Not anymore.

As stratification becomes more pronounced in all corners of America, from air travel to Broadway shows to health care, theme parks in recent years have been adopting a similarly tiered model, with special access and perks for those willing to pay. Now Universal Studios has pushed the practice to a new level. It has introduced a $299 V.I.P. ticket (the regular admission is about $85), just in time for the summer high season, that comes with valet parking, breakfast in a luxury lounge, special access to Universal’s back lot, unlimited line-skipping and a fancy lunch.

Fearful of puncturing its utopian image, Disney has stuck to a single class of ticket. V.I.P. tour guides are available, but Disney charges an exorbitant price — $380 an hour, with a minimum of six hours — to limit demand. Business is good at both companies. Universal’s 3 theme parks in the U.S. attracted 20 million people last year, a 19% increase from 2010. The Magic Kingdom at Walt Disney World recently recorded the busiest day in its 41-year history.

The amusement park industry urgently wants to expand profits without introducing costly new rides every summer. Universal, which recorded $953 million in profit from its parks in 2012, has no major new attractions planned until next year; the V.I.P. Experience, in the meantime, is a relatively low-cost way to generate revenue and send a message of bigger and better into the marketplace.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.

Barbies, Auto Parts Hot Off the 3-D Press

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June 11,2013

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Ford forges ahead with 3-D printing of this engine cover

Ford forges ahead with 3-D printing of this engine cover

Companies such as GE, Ford and Mattel are pushing 3-D printing further into the mainstream than most people realize, writes The Wall Street Journal (June 6, 2013). Unlike traditional techniques, where objects are cut or drilled from molds, resulting in some wasted materials, 3-D printing lets workers model an object on a computer and print it out with plastic, metal or composite materials.

Ford Motor The auto maker sees a future where customers will be able to print their own replacement parts. A customer could log onto the Web, scan a bar code or print up an order, take it to a local 3-D printer, and have the part in hours or minutes. Ford is currently using 3-D printing to prototype automobile parts for test vehicles. Ford engineers use industrial-grade machines that cost as much as $1 million to produce prototypes of cylinder heads, brake rotors, and rear axles in less time than traditional manufacturing methods. Using 3-D printing, Ford saves an average of one month of production time to create a casting for a prototype cylinder head for its EcoBoost engines. The traditional casting method, which requires designing both a sand mold as well as the tool to cut the mold, can take 5 months.

General Electric GE’s Aviation unit prints fuel injectors and other components within the combustion system of jet engines. Building engine airflow castings by melting metal powders layer by layer is more precise than making and cutting the parts from a ceramic mold.

Mattel The toy maker used to sculpt prototypes of toys from wax and clay before building the production models out of plastic. Today, Mattel engineers use any of 30 3-D printers to create parts of virtually every type of toy that it manufactures, including popular brands such as Barbie, Max Steel, Hot Wheels cars and Monster High dolls.

This post provided courtesy of Jay and Barry’s OM Blog at www.heizerrenderom.wordpress.com. Professors Jay Heizer and Barry Render are authors of Operations Management , the world’s top selling textbook in its field, published by Pearson.