GB's Profile

The idea of piloting “automation innovation” in China before deploying it in markets like the U.S. is interesting but also a bit confusing. Would it not be more efficient and cost effective from a knowledge transfer standpoint to pilot those capabilities in the markets in which they are intended to be used? I think of Toyota’s production system and the difficulty the company had in replicating its process in the U.S. While it’s U.S. and Japan facilities were set up identically, there were significant challenges in implementing that model due to the cultural differences between countries. We have seen in many cases across all of our classes that communication is at the heart of many organizational issues – why would Ford be able to do this better than Toyota, or any other company for that matter? I would argue that the company should avoid this production innovation strategy and focus on building those domestic capabilities upfront.

In making investments towards offsetting its carbon footprint, Alaska Airlines has both symbolically and practically demonstrated its commitment to combatting climate change. I would argue though that greater progress could be made if the company looks to partner with industry leaders in the renewable tech / energy space to drive continued improvement. Naturally, the company’s resources will be primarily focused on its core business, and without any mechanism for direct corporate accountability with respect to climate change, companies (Alaska included) willl only be incentived to do “enough” to be perceived as proponents of the cause without making truly meaningful contributions to reversing climate change. The day of reckoning will come eventually, and when it does, Alaska will want to be adequately prepared for a future where the cost of carbon pollution will far exceed the needed investments in renewable energy sources.

Omnichannel inventory visibility has been all the rage in the retail space over the past decade. Companies such as Nordstrom’s, Dick’s Sporting Goods, Nike, and Adidas have invested millions of dollars in both creating inventory visibility across their marketplaces and leveraging their brick and mortar presence as “mini distribution centers”. The interesting question going forward will be how much further brands and retailers will need to take this capability. Consumers are increasingly brand disloyal and value convenience and cost above all else. With that in mind, does it make sense for brands like Adidas to partner with some their retailers (Foot Locker, Nordstrom, etc) to expand the reach of their inventory visibility. And to an even more extreme degree, is there a world in which they might pool inventory in an effort to reduce aggregate inventory carrying costs across the marketplace? These questions become all the more relevant in the face of Amazon and its push into the apparel / footwear space with its private label and branded product offerings.

This is a FASCINATING topic. As the author mentions (and is little known), beef production is one of the largest contributors to carbon emissions vis-a-vis methane output and land requirements to effectively raise cattle. Further, (livestock) farming is heavily subsidized by the government in the U.S. to keep prices affordable for consumers and profitable for producers. Therefore, the interesting question becomes…how can this new model and product be leveraged in emerging markets where significantly larger populations need access to quality nutrition at low cost? To me, this is a solution for meeting the short term and long term demands of population growth in emerging markets with limited crop and livestock production capabilities

I am a bit skeptical of subscription based retailers. None have demonstrated an ability to scale and compete with incumbent retailers for a variety of reasons. To do so, they would need to differentiate on the basis of assortment, experience, convenience, or branding, but this is near impossible to do because so often their value proposition is “style” at an affordable price. In serving their consumers on a low cost basis, Birch Box and other subscription based retailers hamstring themselves in their ability to generate sufficient awareness and brand loyalty. Birch Box is trying to do this through this loyalty programs, but few retailers have demonstrated an ability to do this effectively. Where Birch Box has an opportunity to differentiate is through the use of its data and analytics capabilities to anticipate trends, but to capitalize on that data it will need to either deliver high quality (perhaps exclusive) assortments, or differentiate itself through collaborations with high profile designers as other retailers such as Nordstrom has done. While they will likely stick around for the foreseeable future, it feels that no amount of supply chain digitalization will be able to drive a sufficient level of differentiation or competitive advantage in relation to traditional retailers such as department stores, or compared to online pureplays like Amazon that deliver extreme convenience and quality at low low prices.

Protectionist policies are an interesting question with respect to Nike. The company has historically conducted manufacturing offshore due to cost advantages / labor arbitrage, but as we’ve seen vis-a-vis the recent iPhone 10 debacle at Foxconn and other suppliers, labor arbitrage is hardly a sustainable strategy going forward. Further, “speed to market” has been a hugely important area of focus for Nike over the past several years, and irrespective of protectionist trade policies, the company has made a very deliberate shift towards near shore manufacturing in response to consumer demands, not due to the political climate. In addition, as the company’s business shifts increasingly towards emerging markets such as China and Southeast Asia (around 40% of Nike’s business is from North America, and this will decline over time), production will naturally shift towards those high growth markets. Nike’s long term decisions will hardly be governed by a tenuous, ephemeral political administration that has demonstrated little capability to execute on its stated agenda.