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Thanks for sharing your insights on Starbucks and the implications that climate change will have on its business! Regarding your suggestion for product innovation and creating new varietals of coffee in the future, I do think that this is a valid strategy that Starbucks should pursue, but I do worry about the implications it will have on the company’s brand (given that many consumers are still in the process of becoming comfortable with genetically modified foods). It does look like Starbucks has started to innovate in this area, though, and I am curious to see how they will go to market with successful variant strains of coffee beans in the future [1]. Another key issue I find with Starbuck’s strategy relates to its own carbon footprint (exhibit B). As Starbucks aims to reduce its energy consumption at its stores to lower greenhouse emissions, it has simultaneously increased its number of menu items that require more electricity for refrigeration and heating. Although coffee still makes up the bulk of the electricity use, I think it’s still a classic example of how business goals/objectives can clash somewhat with sustainability efforts. Given Starbuck’s early initiative in climate, however, I do have faith that they will be able to reconcile their strategies differences and meet their aggressive energy and climate change goals.

[1] https://www.technologyreview.com/s/601404/starbucks-responds-to-climate-change-with-mixed-results/

Thanks for sharing this insightful piece on digitalization in the retail industry. I agree with Lululemon’s move toward RFID technology to increase inventory visibility throughout the supply chain. Not only will this allow the company to better track its inventory, it should hopefully lower out of stock incidents and may even improve sales in the process as item availability improves. To answer your question whether or not Just-In-Time manufacturing is a viable option for retailers, I do believe that it is a great option only if the company is vertically integrated to some extent. Fast fashion retailers like Zara do operate under the JIT principle, but I believe they are able to do this in part because they are vertically integrated (Zara manufacturers about 50% of its SKUs at company-owned factories), and can leverage information transfer more easily throughout the supply chain. Thus, Zara and other fast fashion rivals have achieved a truly pull model of supply chain management that Lululemon has yet to fully incorporate at this stage [1]. Now, whether or not Lululemon wants to take on the costly burden of integration is a question for management given that there current outsourcing model does hold some advantages as cases like Li & Feng have shown us in class.

[1] https://www.supplychaindive.com/news/retail-supply-chain-shift-turn-times-holidays/510607/

On December 1, 2017, BC commented on Globalization with Apple :

Thanks for sharing your insights on Apple and the implications protectionists policies will have on the company moving forward. To answer your first question regarding Apple’s response to rising labor costs in China, I do think that in the short term Apple should consider diversifying its geographic footprint to expand into neighboring countries with lower labor costs. That being said, I believe increasing dependence on automation will have a tremendous impact on Apple’s strategy moving forward as it considers labor costs management. As more and more workers are replaced with machines, Apple prospects of moving manufacturing back to the US in line with Trump’s protectionists agenda may increase. I think the central question to answer here is what type of labor Apple will need from a manufacturing prospective in the automated landscape of the future.

Lastly, I think one other element that will figure into Apple’s decision to invest more in US manufacturing is where its key partners and suppliers are going. Foxxconn, one of Apple’s largest manufacturing partners, already has plans to build new factories in the US [1], and if this trend continues I believe that Apple may consider increasing their US investment as well.

[1] https://www.cnbc.com/2017/05/09/foxconn-us-factory-likely-may-be-used-for-iphone-and-ipad-displays.html

Thanks for sharing your insights on this important topic. To answer your question regarding geographic diversity and whether or not pharmaceutical companies should be rewarded for spreading out their production over multiple locations in order to mitigate environmental risks to the supply chain, I definitely agree that pharmaceutical companies should be incentivized to reduce natural disaster risks by diversifying their global footprint. The fact that 8% of all drugs in the US come from Puerto Rico, an area likely to be battered by intensifying storms over the next century, poses huge health risks. One way to incentivize pharmaceutical companies to diversify in the US may have to come in the form of state tax incentives in regions of the country less likely to be impacted by natural disasters. Regarding the question of FDA-enforced inventory demands, I do not think this will be feasible given that climate change is also expected to increase the number of vector-borne diseases and other health issues that will probably strain capacity in the medium and long-term anyway [1]. Again, I think monetary incentives like tax-breaks can also be implemented to help Big Pharma companies better manage their inventory levels moving forward in this high risk environment.

[1] http://www.pharmaceutical-journal.com/opinion/time-to-act-pharmacists-must-be-prepared-for-environmental-changes/11138390.article

Another key element in this discussion is what key customers are doing and where they are making investments. In 2012, South Carolina became the nations’s leading tire manufacturer [1] in part because BMW and other automakers were making huge investments in the state. As one spokesperson from Continental Tire, which recently built a $500 million dollar plant in Sumter, SC stated, “we do a ton of business in the east coast and want to be close to our customers” [2]. I do think the case for U.S expansion has merit given rising nationalists sentiments abroad (China being a key example), and roughly half the states in the U.S now have “right-to-work” laws, which gives tire manufacturers much more flexibility with their work forces. That being said, the true question is how long Trump-fueled protectionists sentiments/policies will carry on.

[2] http://www.autonews.com/article/20140719/OEM10/307219991/tire-makers-roll-into-south-carolina

On November 29, 2017, BC commented on UPS: Innovating or not? :

Thanks for sharing your insights on UPS’s freight and small parcel shipping businesses! Regarding the freight business, I agree with your suggestions to enhance their information technology capabilities and incorporate RFID tracking into their supply chain. RFID will not only automate the tracking of inventory throughout the supply chain, it will also increase transparency for the customer and hopefully improve customer satisfaction metrics for the business.

With respect to disruptive technologies like Amazon’s drone delivery and autonomous vehicles, I do believe that UPS should invest in these technologies moving forward to position itself for the future of delivery services. But I do not think that Amazon poses as large of a problem for UPS as many may think. For one, UPS has been in the delivery business for over 100 years and knows an incredible amount in terms of predicting and solving for delivery problems, something that Amazon may not be able to replicate over night. In addition, UPS makes most its revenues from its B2B freight business and not its personal parcel business, the arena that Amazon would likely dominate if it enters this market. So although I do believe that UPS must invest in technology to stay abreast of the latest trends from a competitive standpoint, I think they will fair better than most predict if Amazon or other technology firms enter the delivery business.