Advantages and challenges of contract manufacturing

The Inditex (Zara) case that we discussed today, gave us an opportunity to expand on the role of contract manufacturing to modern supply chains. Even though your notes mainly mention cost savings as a major driving force behind contract manufacturing, It has been convincingly argued that Asian economies offer other advantages as well.

For example Apple has noted that if it were to manufacture its iPhones in the USA, it would need 9 months just to find the thousands of engineers that would be needed to oversee operations.

In addition, the amount of flexibility that Chinese and other Asian factories can display in production scheduling is beyond anything that can be matched by western firms. (read: How the U.S. Lost Out on iPhone Work including the memorable story about waking up 8,000 workers in the middle of the night to start the 12 hour shift for the first production run of the iPhone).

Unfortunately, such flexibility often comes by engaging in serious violations of ethical norms that most western firms adhere to and also serious violations of labor and safety laws. An article published 2 days ago in the New York Times does a superb job in describing these problems: In China, Human Costs Are Built Into an iPad

Pic by R. Donovan, Flickr (cc license)

Fake reviews, image manipulation and the efforts to stop it

In our discussion on the increasing importance of consumer reviews we talked about businesses’ efforts to enhance and even manipulate their image online.  A collection of carefully staged hotel pictures can be found at Note that most these pictures are not digitally manipulated (photoshopped) and it is unlikely that we will soon be able to develop automated tools to detect this type of manipulation.

It is easier to detect photoshopped images, which are usually employed to sell beauty and lifestyle products. A recent scientific article on the topic can be found here and a relevant funny video (that also features a well known Greek pop-star @ 1:45) is available from you tube.

Researchers also try to develop tools that will analyze the language of text reviews and spot fakes. A nice article on this was posted in the New York Times.


Are managers getting better with time?

How many Henry Fords are there today?

I have always wondered how great business managers of the past, like Jack Welch, Michael Eisner, or even further back all the way to Henry Ford, would compare to today’s top business talent. But how can we make such a comparison? A recent paper on top chess players has given me a couple of ideas on how to approach this question.

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