Great topic! I agree with many of the previous comments around the necessity of Whirlpool to innovate better and make their production more efficient to compete.
I would be very interested to see how the costs of the Samsung washers produced in the US will compare to the costs of those produced in Asia. A price differential of $50-$100 does not seem too significant for a high-priced item such as a washer. I wonder if Samsung’s move to US manufacturing will lead to a much higher price driven by more expensive labor, raw materials, etc. If they are able to maintain costs with the move to the US, Whirlpool will be forced to compete more viciously. Does this lead to the outcome WS mentioned in their comment – paying more for lesser products – or the opposite – increased competition leading to better products and a price war? The other outcome is Samsung’s superior innovation leads to market segmentation that keeps them focused on high-tech, high-price washers (and higher margins, I would guess) and Whirlpool focuses solely on lower priced, lower tech washers.
Ultimately I think the outcome will not benefit the consumer, and as other commenters have stated, competition should enable better manufacturing strategy (such as choosing to produce in Asia) to win in the market.
Really interesting topic, Anusha! I think Eric and Faraz bring up great points. This article cultivated related thoughts for me. I see autonomous trucks as an exciting prospect for UPS, but primarily in hub to hub, long distance transport. In these situations, transportation and travel time is limited by regulations around how long truck drivers can be on the road. Driverless trucks would enable faster transport, as the truck could drive long distances without stopping (it would be even more exciting if trucks did not need to stop for gas!).
For delivery from hubs to end-recipients, I think it will be much more challenging for UPS to move to driverless vehicles. While the trucks are used at this point to transport from hub to recipient address, they are even more important in the delivery from truck to door. If UPS removes drivers from trucks at this point in the delivery process, who takes the packages from the trucks and delivers to the door? I can’t imagine a recipient going to the driverless truck to retrieve their package (and staying home all day to wait for the truck to arrive). However, I do think autonomous vehicles will so significantly change the way we operate that there might be a behavior change that will naturally occur. I also think the work UPS is doing with drone delivery is just as intriguing as driverless trucks, and could be the exact innovation to bridge the truck/hub to end recipient gap.
This is an interesting subject. I think Nike’s move to bring manufacturing closer to market as part of its “manufacturing revolution” initiative is an interesting response. I wonder how this move will play out in the long term. The shortening of lead times and potential for better inventory management are additional incentives for them to make this change. Can they use these other metrics to somewhat offset the increased manufacturing costs?
As they look into the future, the advantages of bringing manufacturing closer to market may go beyond hedging against isolationist movements. This change may also allow Nike to make a strategic change enabling them to be more agile and quick-to-market in their supply chain. They can put innovations on shelf more quickly, adapt to demand more easily, and ultimately save on expenses incurred while expediting products around the world. Perhaps, these other aspects of moving manufacturing will give them savings in the long term that will help offset the additional costs these trade agreements will lead to in the short term.
Great article. You mention two key digitization efforts that Shake Shack is implementing – and both are equally important.
I think the front-end digitization is inevitable. This is something Panera has been doing for years, and personally, I love being able to go in during the lunch rush and essentially skip the line. As you mention, this simply moves the bottleneck of the operation from ordering to preparing. As much as I see automation reducing labor needed at the register, I can’t imagine the economics of further automation in prep would make sense any time soon. In a time where customers want everything made exactly to their preference, I don’t see the prep staff shrinking. The labor issue is one that Shake Shack will have to reconcile as they continue to automate their front-of-house. However, increased throughput from faster ordering could necessitate a larger prep/support staff needed. Assuming this leads to higher revenue, it might make sense for them to maintain their current staffing model, with a focus on roles other than checkout (I’m imaging a metric such as # burgers/staff member – if this can be improved by higher volume, staffing may no longer be an issue).
The other digitization factor you mentioned is their partnership with ArrowStream. This is very exciting for a business that uses shelf-life sensitive inputs. For something like vegetables that may only have a shelf life of one week, the ability to closely monitor inventory, forecasting, and supplier scheduling could unlock significant savings, efficiency, and decrease waste. This could even give Shake Shack the ability to reduce the space needed for inventory storage (and transition to more JIT delivery), reconfigure kitchens, and use the additional space to create a more delivery-friendly work space, as you discussed.
Great overview of Pepsi’s challenges and efforts in combating climate change. You mention that Pepsi is looking at reducing emissions throughout its entire supply chain. I wonder how this effects suppliers, immediate, secondary, tertiary, etc. A quick read of their Supplier Guidelines for Sustainable Agriculture  lays out many qualitative guidelines but no specific or quantitative mandates for their suppliers to meet certain thresholds. All of the goals you have laid out for them to hit their emissions targets are great, but how do they actually go about doing that? How do they ensure that their suppliers are doing enough to have a true impact?
I think companies as global and large as Pepsi have a responsibility to not only set goals, but to change the ambiguity that often comes with climate change and sustainability efforts (particularly true in Food & Beverage). They should be working with suppliers globally to ensure there are numeric KPI’s set and enforced.
The challenge for such a global company is complying with local regulatory environments (and potentially local competitive environments where competitors may not be as focused on sustainability). Not only should Pepsi be setting a precedent with their own operations, they should be doing everything they can to enable their suppliers to do the same. They must set and enforce metrics and use their size and influence to create localities where suppliers can be reasonably held to extremely high standards. Only doing this for their internal operations is not enough.
Slightly unrelated, but as Pepsi is extremely focused on agriculture sustainability, I wonder how they think about their influence and responsibility in GMO research and efforts to feed a growing population? It would be interesting to see how they are contributing to global sustainability outside of climate change.
1. “PepsiCo Global Sustainable Agriculture Policy.” PepsiCo, Oct. 2016, http://www.pepsico.com/docs/album/
policies-doc/pepsico-sustainable-agriculture-policy.pdf. Accessed 29 Nov. 2017.
Great essay! What I found most interesting about many of the measures you mentioned that LATAM has taken or should consider taking is that they not only decrease CO2 emissions, but also reduce costs. Finding ways to be more fuel efficient, take more direct routes, use more fuel efficient fleets and take in-flight measures to reduce weight would all lead to lower operating costs for flights and ground operations.
While climate change is issue enough to drive these changes, the cost-savings that come along with them are attractive as well. LATAM could be tempted to take advantage of these cost savings to increase net profit. I am skeptical when businesses potentially mask what is actually an exercise in cost-saving as a climate change initiative. For this reason, LATAM should be transparent about their realized savings from efficiency initiatives and use those to combat climate change in other ways, such as funding alternative fuel development.