Examining the effects of globalization and isolationism on LEGO's global supply chain
Ab's Profile
Ab
Submitted
Activity Feed
Great article Maggie. It was interesting to read about the steps that PepsiCo is taking in their agricultural supply chain and that they are trying to replenish 100% of the water used in high water risk areas. I agree with you that an audit across their entire supply chain is an important and potentially high impact next step. By looking at efficiency in non-high risk areas, they would be
1. Contributing to global water conservation efforts
2. Setting new standards and practices for themselves that would then be applied across all geographies
They also have the opportunity to lead change not just within their organization, but across many industries. With a giant like PepsiCo making a huge public commitment to water efficiency and showing improvement and action, hopefully they could set the standards for other companies as well.Would it be thinking too big to say PepsiCo should shoot for water replenishment or be “water neutral” across all of their supply chain? They could challenge themselves with the impossible and then tackle it step by step, with the triage across supply chain units that you suggested.
Thought provoking article, AMM. Your concern over the effect to the community of Juarez if Delphi closes down operations would have a serious and devastating effect on the local community. [1]
In fact, in 2008, when Delphi closed their plant in Dayton, Ohio because GM plants had closed down, the disastrous effect on the community was compounded. [2] On the one hand, I would say that Delphi would be sensitive to the huge negative impact they could have on Juarez if they were to close down their plants there. They have seen firsthand not just the devastating effects they left behind. On the other hand, Delphi would also be aware of the magnitude of financial benefits of moving. They have experience weighing the costs and benefits of shutting down operations and setting up in other locations. Unfortunately, I suspect it will all come down to maximizing profit, with less thought to human issues.
This article makes me draw parallels to the rising costs of labor in China. I have heard first hand from multiple manufacturers there that they are investigating options for cheaper labor – with Vietnam first on their list. As countries move to cheaper and cheaper options, eventually they will run out of places to go with cheaper conditions.
http://www.cnn.com/2008/US/11/19/ohio.plant.closing/index.html
Interesting article, this is an exciting opportunity for 7-Eleven. I agree with you and Nirav that 7-Eleven should develop their app in house. They can tailor their app completely to the desired customer experience. If they were not such an international powerhouse, I would recommend they outsource, but given the scale of the 7-Eleven brand, building the app themselves makes sense. I don’t think the process necessarily needs to be that slow. They can get an early version out quickly to test in limited markets which features will have the desired effects on customer behavior. They can experiment with coupons, gamification, etc. The sooner they have access to the data set of purchases by customers, the better they can plan inventory, promotions, and more! Because the learnings will be core to 7-Eleven’s business
On the other hand, outsourcing delivery seems like a wise move. Setting up the logistics and infrastructure to do that well would be a huge headache and best left to an external group.
Interesting take, Elle!
I think it may have been too late for supplier financing to save Toys R Us from bankruptcy. While it’s true that Toys R Us was historically running late on payments to suppliers, the fact that they were one of the largest distribution channels for toys kept major brands with them. By the time the death spiral started, their problems were already deeper reaching than that – they have faced declining in store traffic, losing customers to online alternatives and overall suffering from a lack of imagination. (1) They were missing the bigger picture of needing to reinvent their entire business and stave off competition.
With the Toys R Us example in mind, I wonder which types of businesses would benefit most from Citi turning their data into actionable strategic advice. They may be able to help smaller independent retailers – ones who have flexibility to swap out products quickly as you suggested in the article. In the case of a smaller retailer, automating the invoicing and payment process would eliminate costly labor and help them improve their margins to better compete with larger retailers.(1)
Great article and interesting arguments. I am highly skeptical that Walmart will feasibly be able to switch broadly to US manufacturing for the majority of their products for a couple of reasons:
1. Price. Unless Walmart changes strategy away from EDLP, consumers will continue to expect the lowest prices. That is currently the core of their value proposition.
2. Well established supply chain infrastructure in China for their wide array of products (switching costs would be huge and have to be done very gradually to move to more US manufacturing).
As a promotional tool however, featuring certain “Made in America” products could be a PR win if executed well. Walmart has a “Made in America” program, but faced backlash in 2015 when certain products in the program were actually found to be made overseas.I do agree that Walmart could better serve the American consumer by paying their workers higher wages. As Walmart loses market share to Amazon, they need to double down on the key differentiators. One major differentiator and potential advantage is the opportunity to provide quality face to face customer service. Currently, Walmart is lagging behind some other brick and mortar retailers with in store customer experience, but with a well executed overhaul, they could drive real change.