Tag Archives: technology

Drug Testing and Statistics

Doping

I feel very surprised that people like Lance Amstrong or any other atheletes could by pass the drug test so easily for many years until they got caught. Until recently, I read a blog post about the statistics that reveal the truth about this:

Anti-doping tests have a huge false-negative problem. I have been talking about this for years

As it is a huge false-negative problem, most of the time, the dopers will escape it. But if a player tested positive, it is very high likely that they use doping. It is only somebody suspects and request an official legal and expensive process.

And even if you pass 500 doping test is not an impressive as you thought, more here

The anti-doping agencies are so concerned about not falsely accusing anyone that they leave a gigantic hole for dopers to walk through. . . . While we think about Armstrong’s plight, let’s not forget about this fact: every one of those who now confessed passed hundreds of tests in their careers, just like Armstrong did. In fact, fallen stars like Tyler Hamilton and Floyd Landis also passed lots of tests before they got caught. In effect, dopers face a lottery with high odds of winning and low odds of losing. .

Domain + Tech + Design

 

 

 

 

 

 

 

 

We can see the new hype about education, health care or photography. I believe that in this new era of technology startup, it is time that we are innovating in each industry, to transform the industry into a better format. We have technology there, we have social network there, we have better design there, in iOS or Android platform. The technology industry have gone quite far comparing to other industries like education, healthcare, design, news, food, lifestyle.

We have seen innovations in Education with Coursera, Ucademy, Khan Academy… We have seen more innovations is coming in Healthcare with Misfit Wearable…News is already transformed with iPad, iPhone, social network and how we share news together….

I agree with the article:

The only way out of this innovation gridlock is an expansion in founding team diversity. I believe the missing piece from the DNA in the founding teams of transformational companies is now the domain expert, who has deep insight into the industry they are trying to disrupt.

I think we will see more innovations in each industry, rather than just technology improvement like the last few decades with Microsoft, Google, Facebook, Apple and Amazon.

In the meantime, our project team in CMU has spent a significant amount of time to produce a quite good report on the Education Innovation.

http://blogs.hbr.org/cs/assets_c/2012/07/map-of-value-creation-thumb-580×482-1971.jpg

Rethink about Transportation Cost

The oil price is increasing everyday, the politics corruption in China gets worse, the labor cost of Chinese increases quickly and the natural disaster happened in Japan and Thailand. Suffering all above problems, now is the good time for company to think about one question: Will Outsourcing still save cost?
Will Outsourcing still save cost?
There are some significant changes to the structure of the world in the last 20 years. Firstly, we look at the new cost of global supply chain management with the changes of oil price, Chinese labor cost and natural disaster cost. The next section will discuss about the cost of losing sales, market share and brand name by delay transportation.
Oil Price

Oil Price

Oil Price

Figure 1: The oil price in the last 25 years

http://en.wikipedia.org/wiki/File:Brent_Spot_monthly.svg

Figure 1 shows us how the oil price has behaved in the last 25 years. The best time for outsourcing was 1993-2003, where the oil price is stable and only around 40-50$. However, in the last few years, we have seen a new average oil price which is around 80$ and at sometime, the highest price is 140$, when the war in Iraq and then Libya happened.
Chinese and General Asian Labor Cost

China Labour Cost

China Labour Cost

Figure 2: The GDP per capita for China in the last 7 years

The labor cost in China has increased 3 times since the last 7 years, going from 1500$ to 4500$. This cost has been marked into the cost of good sales for all companies.
Total Landed Cost-Saving
According to McKinsey (2008), the total landed cost for outsourcing to China has changed significantly since 2003 to 2008

2003

2008

Labor savings

100

45

Freight

-7

-28

Shipping Related

-6

-6

Inventory Carrying

-12

-12

Product Returns

-6

-10

Hidden Cost

-5

-5

Total Landing savings (losses)

64

-16

Table 1: The Total Landed savings for midrange server has changed, from a positive to a negative number.

 

These total landed cost has been affected by the increase in annual wage in China, the cost of shipping and energy. Now, company has suffered 16$ lost when outsourcing the midrange server manufacture to China.
The Effects on Sales, Customer Service and Brand
Outsourcing has a problem, you have to ship the components to the assembly line and then ship the completed products back to US to sell it. There is a cost in this delay. Transportation is usually varied and currently, the transportation has become congested that delay is come more usual. This delay leads to various problems:

  • Over stock or out of stock: this could cost the retailers money when they are over stock and have to pay more for inventories. If they are out of stock, the problem can become worse, they can lose the customer and hurt the brand name.
  • The problem of delay manufacturing. If there is a big delay happens to the factory, the workers will have nothing to do for some days and then have to work overtime in other days.
  • The probability of accident and natural disaster: when the disaster happened in Japan and Thailand, the supply chain management is broken and people need to wait for the products to come out.
  • The global gridlock: there is a traffic congestion by train, truck, ship and air recently. This leads to a delay time in transporting the products to the right place. Actually, the company also needs to rethink between cost of air and ship shipping as shown in Table 2.
By Sea By Air
Unit Price

10

10

Asian Manufacturing Cost

-3

-3

Ocean/air shipping cost

-0.2

-0.8

Landside shipping and storage cost

-1.8

-1.6

Accounting Profit

5

4.6

Average reduction in profit due to out of stock or over stock

-3.8

-2.5

Total

1.2

2.1

Table 2: Comparison between Shipping By Sea and Shipping By Air, which leads to a winning for Shipping By Air

  • There are some critical products that could not be delayed, especially health care system of the government. If they could not deliver the vaccine or the drug in the appropriate time, people could die. For example, in case of the heath care vaccine distribution program, the manager said:”It was clear that if a nationwide emergency, such as a bird flu epidemic, put pressure on the vaccine supply, the CDC couldn’t respond the way the public would demand”.

Recommendation
With these problems and effects on the business in the long term, this is the time we may need to rethink about the transportation and outsourcing. The real cost is increasing while the hidden cost of brand name and customer experience becomes more important in this competitive world. We need to start thinking about moving the factories out of China and move it back to near the main sales and distribution place. Mexico could be a good place for U.S. market and European Center would be a nice choice for the whole Europe market…

 References

- Barboza, D.2010, Supply Chain for iPhone Highlights Costs in China, The New York Times.

- Winter, 2008, Time to Rethink Offshoring, McKinsey on Business Technology.

- Stalk, G.2009, The Thread of Global GridLock, Harvard Business Review.

- Copeland, M.2008, How the U.S. Centers for Disease Control and Prevention revolutionized the way vaccines are delivered, Smarter Medicine.

- Zappos.Com: Developing a supply chain to deliver WOW!, Stanford, Graduate School of Business.

- Schreibfeder, J.2011, Why Is Inventory Turnover important?, Effective Inventory, viewed on 18/02/2012,

<http://www.effectiveinventory.com/article2.html>

- World Bank Data, viewed on 19/02/2012,

<http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?page=1&display=default>