Thank you for a very well-written and interesting article.
The question of “What is better for Americans, more manufacturing jobs in the U.S. or lower cost vehicles” is exactly the right one to ask in my view, as it is one manifestation of the broader philosophical question that this country has been grappling with for several years now. Basic economic theory would suggest that free trade increases aggregate economic welfare. Positive economic effects of free trade include cheaper consumer goods such as cars and electronics. However, the spoils of liberalized trade policy are not spread evenly – and some geographies and industries experience a collective loss of utility as a result of increased foreign competition. We saw this vividly during the 2016 US election, where Donald Trump’s anti-trade rhetoric led to an unexpected swell of support across the “rust belt” states in the upper Midwest where free trade has led to the shuttering of many factories and economic devastation of entire communities.
The government may well decide that a strong domestic manufacturing industry is a national imperative – either for national security or for social welfare reasons. However, in my view such government intervention should have to meet a high standard of evidence and proof of a compelling national interest, as protectionist movements will often reverse aggregate economic gains that have been captured by broad swaths of society.
Thank you for an interesting read. I think Starbucks’ current actions are very interesting and represent a rational corporate response from a profit-maximizing point of view. Securing the company’s global supply chain is an existential challenge and one that the company should devote considerable time and attention to.
Your recommendations for further actions by Starbucks raise, in my mind, a broader philosophical point about corporate responsibility and accountability vis-a-vis climate change. Many of the additional actions Starbucks could take to combat climate change (e.g., sourcing more expensive palm oil) would unambiguously raise costs for Starbucks as a company vs. the status quo. The question of whether they should take these actions anyways – which would result in lower margins, higher prices for consumers, or both – reminds me of some recent conversations our class has had around corporate sustainability efforts (e.g., IKEA) and the social responsibility of companies (e.d., Kerr-McGee).
I don’t think there is an objectively correct answer here – some may argue that our model of capitalism ought to evolve and encourage corporations to assist in solving broader societal problems, while others may maintain that this is the proper role of government and corporations should remain tools designed solely to maximize total return to shareholders. I am sure this debate will continue for some years to come.
TJ – fascinating article. I read it with great interest. I think these types of sustainability programs will become more commonplace as effects of climate change become more widespread. Corporations have a vested interest in protecting their supply chains, even if they wouldn’t otherwise be concerned with the environment. A few reactions to some of the questions you’ve posed:
– I think the environmental aspects of disposable “pods” of all types will continue to be problematic. One potential course of action is to offer a redemption deposit or reward for recycling the pods (similar to how bottle deposits work in most US states). In theory, a reward of 5-10 cents per pod may be enough incentive to remove most of the pods from the garbage. Of course, this would add a significant expense to the unit economics of these pods so the financial math may not work out… but it could be investigated further.
– Unfortunately I consider it to be close to inevitable that certain commodities (coffee among them) will decrease in supply and increase in price as climate change lowers crop yield and quantity of suitable land. Nespresso can (and probably should) attempt to mitigate these effects by investing in new generations of agricultural technology and seed strains that seek to maximize yield for remaining farm resources.
Very interesting article – thanks for the read. I certainly agree that technology should enable dramatic improvements in supply chain performance – particularly, as you point out, in demand forecasting (e.g., predictive analytics) and asset utilization (e.g., IoT telematics that predict maintenance needs in advance).
In my view, the biggest untapped opportunity in trucking logistics is in autonomous driving. You allude to this in your article, but I would emphasize its transformative potential even more. Many industry analysts agree that the “short term” impact of autonomous driving will not be to eliminate drivers altogether, but rather allow them to operate cars remotely. This innovation would (a) provide drivers a better quality of life, (b) improve roadway safety, and (c) allow for redesign of trucks to eliminate the drivers’ seat cabin and create greater fuel efficiency.
Further reading on this topic below:
Thank you for this very interesting article. I do think that distributed ledger technology holds enormous promise for food distribution, and your essay clearly illustrates some of the compelling reasons why early experiments with this technology have excited many people.
You’ve also touched on some of the key concerns with widespread implementation; chief among them in my mind is the concern over expanding to universal adoption among all partners in the supply chain, especially in emerging markets. The blockchain derives its power from network effects – because of this, early efforts at adoption may prove challenging due to the relatively small benefit derived during early stages of the adoption curve.
Another concern that Walmart and other players will have to confront is the “garbage in, garbage out” problem. The information on a blockchain is only accurate if a physical transaction is recorded accurately in the first place. Walmart will need to establish clear standards and operating procedures for all of its supply chain partners in order for the blockchain to deliver its full promise as a system of record for the entire ecosystem.