Respond to at least three of your peers. In your response, address any thoughts you have on supply chain drivers and evaluating the success of SCM in an organization.Students need to contribute three

Chapter Ten Case: ETSY

What does orthopedic surgery and governing a country have in common with knitting socks, scarves, and headbands? Nothing except the salary. Hobbyist Alicia Shaffer is earning $80,000 a month selling her handmade goods on Etsy, which adds up to an annual revenue of $960,000. That is the same amount as an orthopedic surgeon makes, and more than twice as much as the United States president makes.

Etsy is an online craft makerspace for handmade goods. ETSY is building a human, authentic, and community-centric makerspace that uses the power of business to create a better world. In an Etsy page 190Economy, creative entrepreneurs can find meaningful work selling their goods in both global and local markets, where thoughtful consumers can discover those goods and build relationships with the people who make and sell them. It’s an ecosystem that connects buyers around the world to the communities where Etsy shop owners live, work, and create. As Etsy grows it is committed to its mission ensuring its core values are woven into all decisions it makes for the long-term health of its business, from the sourcing of office supplies to employee benefits to the items sold in its marketspace.

Shaffer’s company ThreeBirdNest is named after her bird tattoo that honors her three children. Shaffer attributes her success to deep-seated motivation and access to a global supply chain through Etsy. ThreeBirdNest launched in 2011, when she made a few headbands for the small women’s clothing boutique she ran in Livermore, California. Her headbands were so popular she decided to start selling them online. “I opened an Etsy shop, figuring I‘d help pay for my kids’ soccer and dance lessons to supplement the boutique’s sales,” states Shaffer. “I was recovering from the failure of a business I’d run selling baby products—handmade slings, carriers, and blankets. After that business tanked in the recession, I’d lost a little bit of confidence in my ability to be an entrepreneur.”

In the first few weeks after its launch, ThreeBirdNest made 90 sales. Shaffer credits much of the traffic to Pinterest—she pinned her items. Still, “It was absolutely mindboggling. I thought it was a complete fluke.” But a few months later Shaffer found herself hiring a friend to help with shipping as orders began flowing like water. Through its independent website and Etsy shop, ThreeBirdNest receives an average of 150 orders per day, with most orders consisting of three items. Around the holidays, that number goes up to 700 to 1,200 orders per day. Last January, the business raked in a total of $128,000 in sales. Since its launch, it has made 100,000 sales on Etsy alone. ThreeBirdNest is unusually successful on Etsy, as most Etsy shop owners feel lucky to sell 10 pieces a month, and 65% of Etsy sellers make less than $100 from their shops in a year. Etsy makerspace crafters usually need day jobs to support their hobbies. 1

Questions

1. Without makerspace’s like Etsy how would crafters market and sell their products?

2. Explain how the bullwhip effect could impact a crafter on Etsy.

3. Explain procurement, logistics, and materials management for ThreeBirdNest.

4. What are some advantages and disadvantages of using Etsy to sell good and access its global supply chain?

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* LEARNING OUTCOME REVIEW

10.1. Describe supply chain management along with its impact on business.

A supply chain consists of all parties involved, directly or indirectly, in obtaining raw materials or a product. To automate and enable sophisticated decision making in these critical areas, companies are turning to systems that provide demand forecasting, inventory control, and information flows between suppliers and customers. Supply chain management (SCM) is the management of information flows between and among activities in a supply chain to maximize total supply chain effectiveness and corporate profitability. In the past, manufacturing efforts focused primarily on quality improvement efforts within the company; today these efforts reach across the entire supply chain, including customers, customers’ customers, suppliers, and suppliers’ suppliers. Today’s supply chain is an intricate network of business partners linked through communication channels and relationships.

Improved visibility across the supply chain and increased profitability for the firm are the primary business benefits received when implementing supply chain management systems. Supply chain visibility is the ability to view all areas up and down the supply chain in real time. The primary challenges associated with supply chain management include costs and complexity. The next wave in supply chain management will be home-based supply chain fulfillment. No more running to the store to replace your products because your store will come to you as soon as you need a new product.

10.2. Identify the three components of supply chain management along with the technologies reinventing the supply chain.

The three components of supply chain management on which companies focus to find efficiencies include procurement, logistics, and materials management. Procurement is the purchasing of goods and services to meet the needs of the supply chain. Materials management includes activities that govern the flow of tangible, physical materials through the supply chain such as shipping, transport, distribution, and warehousing. The technologies reinventing the supply chain include 3D printing, RFID, drones, and robotics.

* REVIEW QUESTIONS

1. What are the five primary activities in a supply chain?

2. What is the bullwhip effect and how can it affect a supply chain and a firm’s profitability?

3. Where are the customer’s customers in a typical supply chain?

4. Where are the supplier’s suppliers in a typical supply chain?

5. What is procurement and how does it impact the supply chain?

6. What is logistics and how does it impact the supply chain?

7. What is materials management and how does it impact the supply chain?

8. What is RFID’s primary purpose in the supply chain?

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* MAKING BUSINESS DECISIONS

1. 3D Printing for Poverty

Thirty-three-year-old Kodjo Afate Grikou wanted to help his community in West Africa to print necessities that they can’t source locally, such as kitchen utensils for cooking. The structure of the 3D printer he had in mind uses very little in terms of new parts because it is mostly made up of ewaste and scrap metal. Before building this printer, he set up his project on the European social funding website, ulule. The project received more than $10,000, despite the printer costing only $1,000, mostly through purchasing new parts that he couldn’t find locally. Grikou hopes that his innovation will inspire teenagers and young people in his community to attend school and gain an education so they can make further life-changing developments that will benefit not only their lives but also others around them. In a group, brainstorm ways 3D printing can help rural communities fight poverty.

• What is the quickest way to deliver products to our customers?

• What is the optimal way to place items in the warehouse for picking and packing?

• What is the optimal path to an item in the warehouse?

• What path should the vehicles follow when delivering the goods?

• What areas or regions are the trucks covering?

2. 3D Printing Weapons

In 1976, the big movie studios sued Sony for releasing the first VCR because it advertised it as “a way of recording feature-length movies from TV to VHS tape for watching and taking over to friends’ houses.” Over the next eight years Universal Studios, along with other powerful media groups, fought Sony over creating the device because it could allow users to violate copyright laws. The courts went back and forth for years attempting to determine whether Sony would be held liable for creating a device that enabled users to break copyright laws. In 1984, the U.S. Supreme Court ruled in favor of Sony: “If a device is capable of sustaining a substantial noninfringing use, then it is lawful to make and sell that device. That is, if the device is merely capable of doing something legit, it is legal to make no matter how it is used in practice.”

Just think of cars, knives, guns, and computers as they are all used to break the law, and nobody would be allowed to produce them if they were held responsible for how people used them. Do you agree that if you make a tool and sell it to someone who goes on to break the law, you should be held responsible? Do you agree that 3D printers will be used to infringe copyright, trademark, and patent protections? If so, should 3D printers be illegal?

3. Analyzing Dell’s Supply Chain Management System

Dell’s supply chain strategy is legendary. Essentially, if you want to build a successful SCM system your best bet is to model your SCM system after Dell’s. In a team, research Dell’s supply chain management strategy on the web and create a report discussing any new SCM updates and strategies the company is using that were not discussed in this text. Be sure to include a graphical presentation of Dell’s current supply chain model.

4. Robots Took My Job

Kiva’s little orange robots are becoming the latest craze and a truly fascinating innovation in warehouse management. Kiva’s robots are replacing conveyor belts and carousels at the order fulfillment warehouses of retailers such as Zappos, Staples, and Amazon. Kiva Mobile Fulfillment System uses a page 193breakthrough parallel processing approach to order fulfillment with a unique material handling system that simultaneously improves productivity, speed, accuracy, and flexibility.

• How can Kiva robots help distribution centers attain flexible, efficient order fulfillment?

• What other types of businesses could use Kiva robots to improve distribution productivity?

• How would warehouse employees react if they were told the company was implementing Kiva robots?

5. Fixing the Post Office

Is there anything more frustrating than waiting in line at the Post Office? Well, not only are those lines frustrating, they are also becoming unprofitable. The United States Postal Service is looking at a $13 billion loss in 2011, one of the greatest catastrophes in its history. What is killing the Post Office? Perhaps it is Stamps.com, a website that allows you to customize and print your own stamps 24 hours a day. Getting married? You can place a photo of the happy couple right on the stamp for the invitations. Starting a business? You can place your business logo on your stamps. Stamps.com even keeps track of all of a customer’s postal spending using client codes, and it can recommend optimal delivery methods. Plus, Stamps.com gives you postage discounts you can’t even get at the Post Office or with a postage meter.

• What new products are stealing business from the Post Office?

• How could the Post Office create new products and services to help grow its business?

• How could the Post Office use cost, quality, delivery, flexibility, and service to revamp its operations management processes?