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Jared White
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Mr. Bourne, interesting and informative article. I agree that the political environment can lead to decisions that are sub-optimal for business and workers in both the near and long term. This appears to be one such situation. I would be curious how significant the cost differences are for SunPower and how many vendors the company has sourced. I also would focus on solutions elsewhere in the operating model. Given the declining cost of solar energy and subsequent increase in adoption, I am surprised to see such declining gross margins for a firm that has a technological advantage. Are they “getting paid” for having a stronger offering or is the value being captured by another party?
Lots of great points. I agree that e-commerce creates complex issues for retailers in the building products industry, with so many large, high-ticket items for sale. I would argue that consumer engagement for significant purchases is incredibly important, and Home Depot must allow its customers to engage with them in store. With that in mind, I think enabling each of its stores to have e-commerce pickup capabilities is a necessity. Given the footprint of a typical Home Depot store, they do not have the luxury of multiple stores in relatively concentrated geographies – they must serve a large number of customers efficiently from a centralized location. By removing full-suite e-commerce capabilities from a selection of stores they run the risk of a breakdown in the relationship with the customer. I agree that they will incur additional costs, but I view them as necessary costs in light of technological advancement.
Nicely written piece. I agree that the issue of motivating employees and subsequently determining the appropriate organizational structure are critical. I also would have questions regarding the impact on suppliers’ businesses. Traditionally, the hospital supply model has focused on bulk purchasing and scale. As suppliers must adjust to smaller orders with less lead time, will there be disruptions in quality or delivery? A hospital faces a significant cost of failure, and must overcome the urge to err on the side of security over efficiency. Boston Children’s appears to be on the leading edge of the learning curve, but the path to adoption at scale is murky. Clear and compelling communication of the ROI to stakeholders is essential, as well as demonstrating how the use of data has demonstrable long-term benefit.
Great article, Ashley. To your question regarding allowing manufacturers to operate in the Caribbean, I believe that they should. Penalizing an economy for potential natural disasters is a more extreme measure than I would support, and begs the question of where the line will be drawn for what determines “too risky”. Emily makes a great point that the focus can be on mitigating or accommodating climate change as it relates to the drug industry. I think the FDA is better positioned to focus on accommodating, and should do so in the form of tighter requirements for disaster planning. One measure would be to require manufacturers of critical, single source drugs to house a network of emergency supply, geographically distributed to minimize risk of disruption from a single event. The government could support this through either (i) providing tax credits for emergency production or (ii) “buying” the excess supply until it is used. I agree that the FDA has a social responsibility, and needs to consider both the manufacturers and the patient population when considering solutions.
Interesting read on an important topic. You raised a few questions regarding who will bear the cost and how much customers will take the time to do research prior to purchasing, the answers to which I find concerning for the firm(s) investing in this type of system. It appears that Walmart is essentially supporting a mechanism for transparency that one would expect to lead to tighter controls, the cost of which will reverberate through the entire supply chain. I would characterize Walmart consumers as extremely price-sensitive, and an improvement in sourcing transparency is not something I expect the average customer to be willing to pay for. I suspect the incremental cost would ultimately be borne by the government in the form of subsidies, or by Walmart’s suppliers (given the operating leverage that Walmart has). I am optimistic that consumer health and safety are powerful enough forces for this to succeed, but I am also skeptical. To Joe’s point, this solution may be overshooting what consumers truly care about, and be a bit too complex to resonate with someone making a quick buying decision.