Supply Chain Management

Is cost still king? Maybe it’s ruler in a constitutional monarchy with reps from environment, quality, security, and other factors, but how much power will it keep? Last year I sat inside our professor’s office rambling excitedly in regards to a potential local food value-chain project in Western Pennsylvania. He cautioned me to think critically about which individuals were willing to cover local and organic food, and exactly how much. I held returning to this discussion as I read this week’s articles on Manhattan micro-factories, customer led and crowd-sourced design.

And next I thought, all this must be expensive awfully. The articles are known by me praised these tiny industrialists to be profitable, and supposedly producing reasonably priced products utilizing new prototyping technologies but I am skeptical about the scalability of scale-less manufacturing across most industries. 72 on a child’s shirt.

That may be worth it for “originality” for some people, but not most. Shouldn’t economic crisis mean that individuals are less willing to pay higher margins for custom work? Show me these people that are creating their own clothing and vehicles right now. I will suggest to them a Target and my Toyota Corolla.

So, exactly what does this have to do with local food? Week we read foundational articles about source string management Our first, that suggested that more than cost matters. Consumers value quality, environmental impact, and a number of issues. But apart from extremely niche high-end industries like high fashion, most consumers caution a great deal about cost. My purchasing patterns are exemplary of several others probably, where, of other factors and concerns regardless, cost is king.

I caution a lot about food and I spend most of my time cooking, eating, and learning. But as a specialist pupil I’m in and out of unusual careers. When I’m earning money, I buy organic and local. When I’m not, it’s conventional produce. And my conventional veggies are extremely (artificially) cheap because agribusiness has not only adulterated our food supply but because it has taken advantage of economies of size.

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Certain parts of america have a competitive benefit for production. All year round Those buying local in California can get their hands on good food. Those of us in New England are considering a different story. Furthermore, going local in food and disrupting these economies of level might cause exactly the kind of problems locavorism is meant to address. “A local food system would raise the price of food by constraining the efficient allocation of resources. The financial costs of increased insight needs from forsaken gains from trade and scale economies will straight bear on consumer welfare by increasing the costs of food.

And, once we try to deal with obesity, locavorism is likely to raise the price of precisely the wrong foods. Grains can be grown cheaply across much of the country, however the costs of growing produce outside specific, limited regions increase quickly. Sloan Management Review, Winter 2010, pgs. In my micro-factory we’d semi-mass produce kinetic sculptures that are turned on whenever your doorbell rings. The ball runs along the wall length sculpture and through different chains, loops, hoops, and bells, eventually a pulley system pours a glass of wine for an arriving visitor, making delightful noises all along. I’m going to make millions.

Not because it is of interest as a repository for collateral capital, but exactly since it is so unattractive, the low-return business must follow a high retention plan. If it desires to continue operating in the future as they have in the past – and most entities, including businesses, do – it has no choice simply.

For inflation functions as a gigantic corporate and business tapeworm. That tapeworm preemptively consumes its requisite daily diet of investment dollars regardless of the ongoing health of the web host organism. Whatever the amount of reported profits (even if nil), more dollars for receivables, inventory and fixed assets are continuously required by the business in order to merely match the machine volume of the previous year.

The less successful the enterprise, the greater the proportion of available sustenance claimed by the tapeworm. Under present conditions, a business getting 8% or 10% on collateral often does not have any leftovers for growth, debt decrease or “real” dividends. The tapeworm of inflation cleans the dish. The low-return company’s inability to pay dividends, understandably, is often disguised. Corporate America is embracing dividend reinvestment plans increasingly, sometimes even embodying a discount arrangement that but forces shareholders to reinvest.