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Katie – fascinating topic. I was surprised at the low yield of cold supply chains and the corresponding billions of dollars of waste. I like your hardware improvement points, but my thoughts turned more towards analytics approaches made possible by higher fidelity and real-time hardware inputs. Two thoughts in particular came to mind. The first is the idea of monitoring and optimizing “cold capacity.” In simplest terms, one unit of supply requires less energy to refrigerate than ten units. A real time picture of location, quantity, and temperature threshold across the supply chain would allow DHL to describe a minimum required energy output for discrete blocks of the chain (warehouses, trucks, planes, etc) to keep it at the required temperature. Some of the ~30% spoil rate you describe could be traced to higher volume chunks of the chain where storage simply doesn’t have the ability to maintain the necessary temperature. Identifying these areas would allow the chain to be re-engineered. My second thought was could DHL optimize global movement plans to minimize refrigeration energy expenditure based on real time climate data? How much refrigeration energy could be saved on a ship by taking a slightly more northerly route and staying in colder water? What is (or is there) a breakeven point for additional miles traveled versus energy savings from natural refrigeration? Interesting considerations for the logistics industry to keep an eye on.

First of all, great tagline. Really drew me in.

I agree with the basic construct of GM’s dilemma. Beyond costs, I think key metrics to consider are current domestic supply chain capacity and time horizon for developing additional capacity. The two are closely related. Assuming the market doesn’t currently allow massive excess production capacity to just float around in the US, that capacity would have to be either created from scratch via large capital expenditures or wrenched from current users via higher WTP. If GM has plans to create new capacity, the lead time on that development would have to be weighed against likely time horizons for geopolitical catalysts. If they plan to pull capacity from current domestic players, the higher purchasing costs would have to be considered, as well as the fact that whatever impetus brings GM home will likely do the same to other auto players. The competitive landscape will become more cutthroat on the home front.

As GM figures out their ability to supply, they should also take a critical look at demand. War or economic disruption would also have an effect on markets, specifically what and how much customers want. Failure to consider this could result in wasted capital developing new unnecessary capacity.

On November 30, 2017, dillonkasmer commented on The Vikings Attack Climate Change: Statoil’s Quest to Reduce Emissions. :

It’s ironic to think of a fossil fuel company as carbon emission-conscious, but they clearly are. In addition to tactical efforts to reduce emissions, I’m curious how Statoil grapples with being a leader in reducing dependence on their primary product. Presumably if the entire world took similar steps, demand for oil would decrease and impact their bottom line.

My article dealt with a topic that could be relevant to Statoil as they continue to cut emissions: nuclear powered ships. Russian-owned Rusatom builds and operates nuclear powered ice breakers, which despite a negative connotation from land-based disasters such as Chernobyl are zero carbon emission vessels. Rusatom has never had a significant environmental or safety issue with their nuclear power and serves as an example of what can be responsibly done with that technology. The US Navy, whose submarine and carrier forces are purely nuclear powered, has also never had an incident. Statoil and other companies operating large ships should explore incorporation of nuclear power as an environmental protection measure.

On November 29, 2017, dillonkasmer commented on Is Happy Hour Over? The Impact of Climate Change on E & J Gallo Winery :

I think a key factor in addressing this problem is the consideration of variability. Most climate change predictions are massively complicated models boiled down to a few new “average” temperatures or precipitation levels for public consumption. What this means is that current and future wine growing locations aren’t facing a smooth shift in temperatures but a period of increasing volatility. As such, growers should be favoring a diverse portfolio of land and tools in an attempt to build some degree of resiliency.

Where financially feasible, growers should invest in land in different areas to spread the risk of local climate phenomenon ruining an entire year’s yield. Local measures such as sun screens and north-slope planting should also be aggressively pursued. For culturally constrained wines, altering grape type may be the only option. I think this niche of the industry will handle this well – customers’ experiential expectations of their product is tied as much to customs and history as it is to a specific taste of wine.

I see the pros for keeping production overseas as maintenance of existing relationships, which could lead to a higher number of future purchases from those clients. In addition to the risk of intellectual property loss, it also leaves Boeing exposed to possible future trade restrictions with China, which could increase if American trade policy becomes more isolationist. US production, on the other hand, offers possible cost savings due to increased automation (for now, Asian manufacturers will doubtlessly acquire the same technology soon) and better protection of intellectual property. If I were Boeing, I would favor the US option. It protects against shifting trade policy, protects Boeing’s competitive advantage with intellectual property, and only isolates state owned foreign customers. Lower supply chain tiers could potentially still be sourced from overseas in a relationship preserving move.

On November 29, 2017, dillonkasmer commented on Building a Better Way to Build at Katerra :

In terms of real estate relationships with existing contractors, I think Katerra would be wise to focus on smaller firms. Due to high costs and historic relationships between developers and large contractors, real estate development has a high barrier to entry. Katerra offers an alternative to this for smaller or newer firms without the capital that large developers have.

The relationship with sub-contractors is trickier. I view the role many of them perform as binary – their function will either remain relevant or it won’t, rather than gradually ebbing over time. Katerra could either not utilize their services at all, or potentially build relationships with one or two regional subcontractors to perform all of the minimal work required at multiple Katerra sites.

Your comment about integrated sensors monitoring problems is interesting, but I wonder to what degree that already happens. Some commercial buildings already require monitoring systems by code. The same concept applied to homes would be interesting but would not necessarily be cost effective.