Amar Parrin

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Chris, a great question which is becoming ever so relevant as the Boeing – Airbus duopoly becomes more under threat. My opinion is that Boeing should only ring fence very few specific parts of their process that they want to keep in house in order to protect their intellectual property. I think that by not sharing knowledge on these few most complex parts of the process there will be sufficient protection going forward. I have this view because of the rapid rate that innovation and product improvement that has occurred in the industry. By allowing China and Japan relying of reverse-engineering rather than innovating new designs Boeing will be able to stay significantly ahead of the competition.

In addition, I think moving all production to the US is very risky from a political standpoint for sales. For example, Rolls Royce wins 80% of European order and 20% of US orders while GE wins 80% of US orders and 20% of European large engine orders. This shows how political orders can be given that every country wants to attract aerospace jobs to their economy. If Boeing takes a US only strategy I think Airbus will have an opportunity to become more competitive in Asia, which is a key growth market for aeroplane sales. Alternatively, this may have the effect of triggering an even more aggressive competitive response by the governments of China and Japan providing additional support for COMAC or Mitsubishi to develop their own planes more rapidly.

On November 30, 2017, Amar Parrin commented on Can Ocado Weather the Disruption of the Grocery Industry? :

Elan, this is a fascinating article and topic! I do agree that although Ocado has very impressive automation the question does need to be asked whether some of their solutions are beautiful engineered solutions rather than having a compelling business cases. I think they need to be careful of this trap as it can be argued that a their capex investments are yet to be paying off as suggested by their bottom line performance.

For example, I think investing in the robotic hand will not make commercial sense. Robotic picking has proven extremely hard to implement in an environment with a high number of SKU’s and has led to companies like Amazon still doing their final picking manually. Although auto-picking 5 axis robots supplied by companies such as Kuka or Swisslog are widely available especially for items that are rigid, have the same defined shape (such as the Evian cases) it is hard to make a business case when you have too many SKU’s. This is because each SKU will at minimum need a different gripper tool for the robot. As if this is not challenging enough Ocado’s hand is solving for items that are can be categorized as “hard to automate” through auto pickers. This includes delicate items that have slightly different shapes (such as the orange in your article). An orange is harder to pick automatically as it requires adding vision systems which can help detect the item to the robot. Products for this are still widely available in the market but are more of coure more expensive (suppliers include Schubert or ABB). The orange has the additional complexity of being fragile which the Ocado hand is trying to solve for. As suggested this solution in my opinion is very far from being able to commercialize as even the “easy to automate” items aren’t making commercial sense for companies such as Amazon which struggle with a high number of SKUs.

I think helping others digitalize their supply chain could be a good revenue stream for the company. Given the successful implementation in their own warehouse Ocado has a lot of credibility in their knowledge of automation within the grocery market. I think sharing the knowledge is not a major risk as the technologies they are using are widely known but just hard to automate / commercialize successfully. A lot of the complexity is in the successful implementation rather than the R&D which is generally available off the shelf from various vendors.

A well written and interesting article that for me raises the question – how can Patagonia turn the threat of climate change to a competitive advantage? I take an alternative view that their top priority needs to be to create shareholder value by maximising profits. With this in mind, I agree with EN in that the key focus needs to be generating goodwill in the eyes of their customers for any climate change initiative they do. As Patagonia is a for profit business any costs they incur to help the environment should have benefits on their bottom line (either in the short or long term).

I don’t think that it is their role to try change the fashion industry but rather only do this if they think this will help them be viewed more positively by their customers. Finally, I do agree with their strategy of being forward-looking and taking a proactive role on climate change as I think this generates a lot empathy from the environmentally conscious customer. Going green will likely strengthen their brand and make it stand for a company that cares for the long-term sustainability of our environment which will ultimately benefit their bottom line.

On November 27, 2017, Amar Parrin commented on Northern Sea Lanes: Melting Arctic Ice Creates Supply Chain Opportunity :

A very interesting perspective on a truly large opportunity created by the negative effects of climate change. I agree that Atomflot is in a good position to create a strong position in this market and extract value from what is likely to be a product in high demand.

One thing that Atomflot should consider is how to protect themselves from negative public backlash and/or regulation preventing them from using these routes. Given that a large capital investment that is required it is very important to ensure that the company clearly accounts for the potential risks of some countries banning shipments through these routes and/or placing severe restrictions. I think by having an open dialogue with key stakeholders before making a large capital investment the company may be able to get reasonable guarantees that de-risks their investments in the future.

Overall the 15-30% reduction in distance opens up a large opportunity to greatly reduce shipping costs. This will be an exciting space to keep watching.

This article quantifies how severe the threat of Brexit is on JLR’s bottom line. At an expected increase of cost of goods sold of GBP 2,372 per vehicle in a highly price competitive industry I think JLR needs to prioritise minimising the impact of Brexit over any other project. Given that Brexit will begin in Spring 2019, JLR has a very short time to alter its supply chain especially if this means getting its partner suppliers to build new manufacturing facilities in the UK or changing suppliers to be less heavily dependent on the EU.

The article also raises the potential of forming joint ventures with suppliers in China which could be a potential advantage to gain increase market share of sales in Asia. Previously under the EU there was high incentives / political pressure to keep as much manufacturing in the EU in order to create jobs even if this wasn’t necessarily the most cost-efficient mechanism to produce cars. In return, European companies would benefit from not having to pay taxes to move cars across borders. However, for cars sold in Asia JLR can potentially gain a competitive edge on European suppliers by not being bound to manufacture in Europe as they already have to pay taxes anyway after Brexit. The joint venture would allow them to closely control design and quality while gaining a cost advantage of cheaper labour costs and lower logistics costs as the cars are being produced closer to the end user. This can be a very interesting approach to actually turning Brexit to a potential cost advantage in markets outside Europe.

This article essentially questions if additive manufacturing has allowed there to be conditions in which ‘reshoring’ is more optimal than ‘offshoring’ production for the ISS. Reshoring can be traditionally defined as bringing back production to the country where the end user is based while offshoring is known for moving manufacturing to a country with lower labour costs. In this unique case, reshoring would essentially be moving production from the lower labour costs of manufacturing on earth to the higher labour costs of manufacturing on the ISS.

For this case, the question becomes does the higher labour costs of getting personnel on the ISS to manufacture goods through additive manufacturing make sense. For items where the logistics costs can be significantly reduced this will likely make business sense as the cost per pound is currently $10,000. For this to be true the raw material for additive manufacturing would probably need to take up less space than transporting the equivalent volume of pre-manufactured parts. In addition, it needs to be ensured that the raw material that is shipped is actually used as manufacturing on the ISS will require forecasting demand rather than having a confirmed order of a required part. If these conditions hold true 3D printing can likely provide a method to significantly reduce costs.

In addition, the article mentions additional benefits which are harder to quantify that can be gained by adopting additive manufacturing. This includes the benefits of shorter lead time and eliminating rework cause by damage in transit. I agree this may allow opportunities for additional products to be made which may allow personnel to stay on the ISS longer.

A good question raised is the precision differences between tradition CNC machining and additive manufacturing. It is true that CNC machining is more precise and can achieve a accuracy of 1 micron on every axis. This is currently unattainable by additive manufacturing so the question needs to be asked whether this level of precision is required especially as many of the parts used in the ISS are likely to be mission critical.

Overall this is a very exciting article which shows immense potential for additive manufacturing to play a role in changing the operations of the ISS in the near future.