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On December 2, 2017, BuildProcess commented on Ford’s Global Supply Chain Hits a Bumpy Road :

A great article on a conundrum facing many CEOs today! Isolationist policies are particularly difficult to react to when they happen so suddenly. I agree with Ford’s strategy of maintaining production plants in countries throughout the world. Disparate supply chains can be more complex to manage efficiently. Yet they also offer the benefit of diversification – Ford won’t be crippled if the Trump administration does set off a trade war. A rule of thumb I would use in gauging how much to react is to make sure you’re no worse than your competitors. If every other major car company is in as poor of a position to respond to the potential tariff, then it may not be worth making additional adjustments to your company strategy. If, however, Ford’s supply chain (e.g. reliance on Mexican factories) leaves it particularly exposed compared to competitors, then Ford should protect itself against the regulatory change.

Such a great article looking at the tradeoffs of sustainability in the supply chain! As you note, Chipotle does seem quite far ahead of any of its competitors in the fast-casual lineup. This case reminded me of Starbucks and Ikea, which also have had to rigorously manage disparate supply chains to their sustainability standards. One idea for Chipotle is to start taking ownership stakes in its supply chain. It seems shocking that Chipotle’s key pork supplier could be so non-compliant as to cause downstream impact for a year. Overall, Chipotle should move slower in its sustainability efforts – food safety should be its top priority. Indeed, much of the goodwill that Chipotle had generated over the years was wiped out by its food safety scandal. Having grown so big so fast, Chipotle now has to embrace the cultural shift of managing downside risk, not just upside opportunity.

This is a fascinating look at changes in regulatory policy can “reveal” hidden elements of a supply chain. In light of this new regulatory policy, I think the firm has to take on the e-verify problem, given how critical it is to their supply chain. The existing policy of ignoring the documentation issue allows the firm to essentially defer the true costs of operating their business. The high degree of skill involved suggests that the LFP faces particularly high costs losing its laborers and tenured mangers. This decision point reminds me of corruption cases in the United States: a US firm can use bribery to achieve short-term goals in a foreign country, but in the long-run, compliance is lower-cost.

On December 2, 2017, BuildProcess commented on Nuclear Digitalization: Westinghouse’s Critical Challenge :

This is highly relevant article with all the pressure that the nuclear industry has been under. I agree that digitalization is important, and that Westinghouse should invest in upgrading its facilities. Less clear is how security concerns impact the need to be a digital first-mover in the nuclear power space. Exelon has clearly outpaced Westinghouse via its partnership with GE Hitachi. Bringing data analytics to the heart of nuclear operations is laudable, but wonder about the security tradeoffs: how does Exelon / GE Hitachi prevent hacking and other cyber threats? A less ambiguous digitalization need involves Westinghouse’s management of suppliers. Becoming more nimble in its supply chain of nuclear components will reduce construction costs and carries far less of the serious risks associated with its core nuclear business.

On December 2, 2017, BuildProcess commented on Monsanto Predicting Weather: Crazy or Crazily Smart? :

The shift into big data seems like the perfect fit for Monsanto. These ethical questions are quite interesting given the context of Monsanto’s GMO products. Here, however, there seems to be less opportunity for the monopoly power and price-gouging that accompanied Monsanto’s seed products. With those products, a farmer has to buy Monsanto’s seeds and accompanying pesticide, and must do so every year. Weather information seems much less sticky: any farmer can take weather measurements and share the results of their crops. The shareability of this data means that Monsanto’s weather data advantage is less defensible. This makes big data more ethical, because it reduces the pressure on any individual farmer to share data with any individual company: farmers have the choice about which data provider they want to work with.

On December 1, 2017, BuildProcess commented on Will Artificial Intelligence push CN off the rails? :

Great idea looking at AI on a lower-profile transport method! Government shouldn’t step in to protect this strategic asset, because I don’t believe autonomous trucks can replace trains. I agree that AI will potentially eliminate labor costs for the trucking industry, making it more competitive. But I see the crucial issue not around labor, but rather fuel. Trains are perfect for low-value, high-weight, and less-time-sensitive items (often raw materials). Shipping sand or iron ore, for example, is too costly using vehicles. Government should allow the space for the rail industry to respond to autonomous trucks. They may in fact be highly complementary: autonomous vehicles are perfect for “last mile” delivery that trains can’t handle. Governments can justify the need to protect strategic systems, but I don’t think they should protect the rail industry just yet.