Erica Santoni's Profile

NAK, thank you for sharing! As a European, I fully share your concerns regarding the British economy after Brexit – as a chocolate lover, I am even more concerned now that I have learned about the challenges Cadbury is facing.

What should Cadbury do? For the moment, nothing. The investment and the time needed to completely switch production from the UK to other countries is too high: it is better to wait few months and see where the negotiations will lead us before committing to a radical strategy change.
I believe that in the case of a “hard Brexit,” the incentives for Cadbury to move production abroad will be consistent, unless the UK government will implement countermeasures targeting directly local companies.

Nevertheless, the shift to production abroad might be easier than expected: some of Cadbury’s chocolate is already produced outside the UK, as the company own facilities in more than 15 countries.[1] This also mean that UK customers might have already been buying products produced abroad, or more in general did not abandon Cadbury because of its foreign plants. Therefore, also going forward UK customers will likely keep on buying Cadbury products even if production is abroad, as they have already been doing.

As far as management concern for existing employees, in case of a “hard Brexit” many new jobs will be available in the UK as a substantial number of non-British workers might have to leave the country: should Cadbury’s employees lose their job, there will be high demand in other companies staying in the UK.

[1] http://www.mondelezinternational.com/~/media/MondelezCorporate/Uploads/downloads/cadbury_Fact_Sheet.pdf

PolkaDots, you are raising a very interesting point: what’s the impact on the customer? My first reaction is that Walmart may incur in a misalignment between its customer promise and its operations. On the one side, customers shopping at Walmart are looking for affordable prices, while on the other side, “Made in the USA” products need costly operations to be manufactured. I can hardly see how these two can be reconciled, at least in the short term, with manufacturing and labor costs still being considerably higher in the States compared to developing countries. One way, given also the size of Walmart and its economic relevance at a national level, may be to lobby to introduce programs that subsidize local production, and therefore decrease Walmart’s costs – and ultimately consumers’ prices.

Speaking of Walmart’s effort to promote local products so far, the company is also facing a new challenge: better control its supply chain. Many of its products labeled “Made in the USA” did not in fact adhere to the requirements (i.e. not all components were manufactured and assembled in the United States), attracting not only bad publicity but also an investigation of the Federal Trade Commission.[1]
If Walmart wants to be 100% American, it needs to do a better job at enforcing rigorous standards, not only with its direct vendors, but also with its suppliers’ suppliers.

[1] Forbes, “Walmart’s Made In The USA Claim: Fact Or Fiction?,” June 2016. https://www.forbes.com/sites/lauraheller/2016/06/28/walmart-made-in-the-usa-products-fact-or-fiction/#4291788d3a2b

Choc Talk, I really enjoyed reading your article! I was positively impressed to learn Mars is focusing much of its effort at the beginning of the value chain, investing in cocoa farmers and implementing mitigating strategies from the start.

An additional step Mars could take is investing in an even prior step of the supply chain: forests. At the moment, cocoa is causing great damage worldwide. As demand for the product increases and supply struggles to keep up due to climate change, we are witnessing a natural disaster in West Africa due to deforestation caused by greedy cocoa growers.[1] These beans, grown illegally inside protected areas, get sold to Mars and other major producers and are part of the products we eat every day, as they get mixed with “legal” cocoa beans. I think there is a lot of margin of improvement on this side for Mars: (1) Mars should have a better control over its supply chain, making sure its suppliers are sourcing cocoa from reliable sources, and (2) it should contribute to the reforestation of the areas hit the most.
Good news is that Mars can focus its effort on one country only: Ivory Coast, the country that supplies 40% of the world’s cocoa and that is experiencing the greatest harm from a deforestation standpoint.

[1] The Guardian, “Chocolate industry drives rainforest disaster in Ivory Coast,” September 2017. https://www.theguardian.com/environment/2017/sep/13/chocolate-industry-drives-rainforest-disaster-in-ivory-coast

CR, such an interesting topic! I think you hit the nail on the head identifying the two key issues here: privacy and human touch.

As far as privacy is concerned, I think Ron Harrison, Global Design Officer for Marriott’s Global Design, gave the easiest and at the same time most correct solution when he came to class this week: “we will get as much information as you will decide to share with us.” In other words, it will be key to let the client decide what to share and not to share with the hotel. Today, Marriott through its loyalty program (Marriott/SPG) asks customers many information that already uses to improve their stay. Many questions concern their preferences (e.g. proximity of the room to the elevators, top floor option, check-in/check-out time preference). Moreover, if you are a usual customer (e.g. business traveler) Marriott will try to accommodate you in the same room every week to give you a sense of continuity, and if it’s your birthday you may even find a surprise on your pillow! My belief is that if the customer has agreed to share certain data with the hotel, then the hotel can and should use that information to make the experience more enjoyable, and I can totally see a future not so far away in which many more habits and preferences are captures, stored, and used.

Speaking of “human touch”, I do believe personal interactions are necessary, especially in the hospitality business and even more in the high-end market. At the same time, I can see a great upside in digitization that simplifies life for both customers and hotel staff. There are many low value added activities that can be eliminated, many others that can be made more “fun” through futuristic innovations. This will enable staff to add value where it is needed, and ultimately to never lose personal connection with clients.

M, very interesting article! Climate change is definitely affecting many agricultural products, from coffee to oil, but I think it will pose the biggest challenge for wine producers. I believe so because while for coffee or oil the country/region is the one that matters, for wine the specific area of origin is much more important to consumers. Think about Bordeaux or Champagne: their production is strictly limited to a well-defined area, outside of which they lose the right to their own name. In this sense, I would challenge your proposed solution of diversifying geography. It may be an option for certain wines, but not for all – and for sure not for the most famous wines.

In the short-term, I agree with you that focusing on water and energy management is crucial, in order to minimize waste and increase efficiency.
For the long term, I would suggest to focus on the development of more resistant grapes. For example, in the world of coffee Illy has financed a research to sequence for first time the genome of Arabica, the key coffee variety, hence providing a basis to develop a more resistant variety, without compromising quality.[1]
A second approach I would suggest is collaborating with suppliers and peers to develop industry-wide solutions. After all, climate change is a collective issue and as such must be treated.

[1] Illy. “Illy Value Report.” 2016. http://valuereport.illy.com/pdf/BILANCIO_illy_ECONOMICO.pdf

Amy, great article! I think the introduction of continuous flow manufacturing, together with other digital innovation to ensure consistent quality along the production line, has the potential to change pharmaceutical companies for the better. This is a much-needed improvement in the pharmaceutical sector, given the many scandals that saw major companies recalling drugs or even closing production plants due to quality concerns. Johnson & Johnson (J&J) itself recalled a high number of drugs over the course of time, with damaging consequences from a reputational and monetary perspective.[1],[2]
On top of that, continuous production will also enable a better use of resources, with reduced material waste and machine downtime, that will result in higher production and lower costs. This increased efficiency will also benefit final consumers, as they will have access to greater volumes – possibly at a lower price.

At the same, I believe there are many obstacles to the scalability of this solution. First of all, regulatory challenges persist. The FDA approval is on a drug by drug basis and it seems to be quite a long and stringent process, as even the industry leader J&J received the greenlight for only one product – its HIV drug Prezista.[3]
A second challenge entails the high coordination needed within the entire supply chain – from equipment suppliers to API and excipient manufacturers. A third one is about the high capital investment needed to convert the production and to set up the required mechanism of quality control.[4]

Given such challenges I imagine the introduction of continuous production will require some time. Nevertheless, it will definitely be a game changer with time, enabling consistent upsides for both producers and consumers.

[1] Reuters, “Timeline: Johnson & Johnson’s product recalls”, February 2012.
https://www.reuters.com/article/us-johnsonandjohnson-timeline/timeline-johnson-johnsons-product-recalls-idUSTRE81L01K20120222
[2] Reuters, “Tylenol maker to pay $25 million for selling metal-contaminated drugs”, March 2015.
https://www.reuters.com/article/us-johnson-johnson-tylenol/tylenol-maker-to-pay-25-million-for-selling-metal-contaminated-drugs-idUSKBN0M629S20150310
[3] Pharmatech.com, “FDA Approves Tablet Production on Janssen Continuous Manufacturing Line”, April 2016.
http://www.pharmtech.com/fda-approves-tablet-production-janssen-continuous-manufacturing-line
[4] Pharmatech.com, “Continuous Manufacturing: A Generic Industry Perspective”, May 2017.
http://www.pharmtech.com/continuous-manufacturing-generic-industry-perspective