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SCM.271

Posted: 13 September 2021

A post on all my notes taken in class.

Lesson 1

Texas Freeze impacted the Bullfrog Hot Tubs. There was a chain effect.

Cold weather froze the gas wells. Power companies went offline as they did not have gas. Without power, chemical plants had to shut down and many of these plants take months to re-open! The petrochemicals products produced include PVC, resins, etc (Slides from Caplice, 2021).

Why did lumber price skyrocket? Demand was up - people wanted to move out. Supply is down - many people are doing carbon offsets on their land.

Freestyle Soda Machines

  1. A student mentioned Anheuser-Busch had trouble getting aluminium and they couldn’t make cans fast enough.
  2. Coke has a dedicated fleet and also hires other trucks.
  3. Shifting demand patterns due to COVID - from commercial to retail. The shops just didn’t want those refill packs for the soda machines - no restaurants were open! For commercial, you’re just shipping syrup. However, you ship cans of coke for retail. To ship the same amount of coke, it requires 6X more space! The production methods could still produce, but we just couldn’t deliver.

  4. A student worked at Walmart. She has been to the banana rooms. It’s a massive room (nitrogen?), where they start the ripening process. Different colors of bananas can be three different SKUs (lol). That’s super interesting.
  5. A student worked at Boeing they talked about how many vaccines they can ship because it requires dry ice - and a plane can only take X amount of dry ice.

What’s the similarity between bananas and cement?

  1. They are both tied to the sourcing. Bananas can only be sourced from warmer climates (unless it’s some new urban farming startup) and cement is locally sourced as it’s probably too heavy to ship.

Most sales come from new products. This is interesting. Original Ruffles has predictable demand - it’s just a favorite among people and they buy it for parties, stuff like that. However, if Ruffles introduces a new product that’s novel and interesting, people might just grab it to try it! So if they keep making new products, they can capture some sales. It’s just like McDonald’s in Singapore with new products every month (it gets me to go try it sometimes - it works).

  1. Power law happens a lot in the real world - important few versus the trivial many.
  2. ABC analaysis - A items, B items, C items. Where should you spend most of your time? The A items. They are the important few - the 10 products that generate 50% of your sales.
  3. A student mentioned that in Anheuser-Busch do more than ABC, they have DD and EE. Cummins goes all the way to FFF.
  4. Classic product segmentation: innovative vs functional.
  5. The same product, delivered to different customers, can have a different SKU because of the way it’s managed!

Lesson 2