Simon Pellas's Profile
I agree with Mohammed in that I was stunned to learn how much landfill is contributed by personal care and beauty products. As such, I agree that a market leading firm such as Sephora has a duty to invest in order to minimise the environmental footprint of its operations and products. Learning that 95% of emissions stem from the supply chain, this is obviously a critical area for Sephora to focus on. However I do see a tension between having rigorous standards for its suppliers and the ability to monitor/enforce these standards. In selling third-party products through their retail channels, it can be argued they have limited scope to enforce these stricter standards in supply chains they do not own. It is easy to argue that they have bargaining power through their sheer size, but simultaneously I believe the financial aspect speaks loudly if they were ever to consider dropping a best-selling product due to supply chain standards. Paying a sustainability premium in the wholesale channel is a good solution which aligns incentives; the only thing to bear in mind is that the end consumer will ultimately bear the cost of this through increased prices. A coordinated consumer education process would help in making customers accept this price increase.
An essay fit for HBS; well written and presents a compelling logical argument and a clear problem position.
I would like to focus on your observation that passing on the cost to the consumer would render Target uncompetitive and put it out of business. In the broader context, Target’s main competitors all face the same problem in the current political climate and all struggle to find a solution. I absolutely agree that political lobbying is one of the necessary actions to be undertaken, but given the irrationality of the current administration I fear this route will have limited tangible effects. As such, if this proposal persists I believe the ultimate outcome would have to be rising prices across the board given this is one of the only options left to prevent bankruptcies of this kind of business. Target would not necessarily be put in an disadvantageous situation given prices would rise across the board to its consumers, and the ultimate loser would be the American public. Perhaps this third-order negative effect on the average citizen might be necessary to raise awareness that the public policies voted into the White House were sold on false premises, and as such ensure that this protectionist agenda will be rather short-lived in power.
Very relevant article which focuses on one of the many unfortunate outcomes of the shifting political climate over the past few years. Whereas I fully agree that counter-proposals should be presented in a logical manner backed with deep and accurate data analysis, I am at the same time skeptical as to whether or not this will have the desired tangible result. We have witnessed several times how the Trump administration emphasises “alternative facts” and appeals to a sense of patriotism, which I believe cannot easily be overcome by logical reasoning. Additionally, this US president has been elected on a certain mandate to enact protectionist policies in favour of American companies and as such it will be politically hard for the US to digest a solution which falls short of this promise. In addition to your suggestions, I would emphasise the role of Canada and the bargaining power this duo could develop vis-a-vis the US. I am not suggesting Mexico and Canada always have converging interests, but in the current political climate I believe a rational compromise can be achieved more easily through aligning Mexico’s position with that of Canada.
It is very interesting to see how you can reap such large efficiency gains from a seemingly simple improvement to the coordination process and work flow structure. It is contradictory that a larger factory with a bigger number of SKUs, where the potential for efficiency gains is presumably much larger, has been deemed unsuccessful due to the system causing a bottleneck. I fully agree that the company needs to dedicate more resources towards this initiative and implement it across its whole manufacturing network, as the learning economies of scale from repetitive trial-and-error can be huge. I would also take this reasoning one step further and investigate whether the human component could be further reduced or removed altogether, along the lines of Amazon’s driverless robots shifting merchandise in its warehouses. This would reduce the risk of human errors such as loading the wrong Budweiser pack onto a truck and would allow for automation, better quality control and ultimately lower costs.
Insightful article on an industry traditionally obscured behind a veil of complex regulation and poor emotional connection with its customers. I fully agree that Helvetia, along with other insurers, needs to foster a a culture of digital innovation and win the “battle for technology talent”. However, this is easier said than done. The top-tier talent required to develop innovation in a heavily regulated and error-sensitive industry such as insurance will come at a very high price, which will put further pressure on the bottom line in an already constrained profit environment within the insurance industry. Furthermore, even if Helvetia is willing to pay a fair market price for this expertise, I see a big challenge in attracting this talent to put their knowledge to use within the insurance industry. Traditionally not seen as a “cool” industry to work in, but rather an “old boys’ club”, it will take considerable marketing effort on Helvetia’s part to attract and retain the talent they need.