stl_mba19's Profile

Over the past few decades as the world has become more globalized, supply chains optimized for lowest costs. A garment, for example, might source cotton from one country, textile manufacturing from another, and tailoring from a third, each step located where the cost is lowest. We consumers have become addicted to fast fashion and other similarly low-priced, mass produced products. Brexit and similar nationalist movements in the US have been cast as ways to regain jobs from overseas and to boost economic growth for the home country. It’s interesting to see that British cars are sourcing an increasing percentage of their parts from England. Will prices be forced up as global supply chains become riskier, and as some companies re-nationalize their supply chains in response? How will consumers react?

I also found it interesting that MINI is pursuing an electric car with fewer and simpler components overall. While this certainly provides other advantages – cost savings, ease and efficiency of assembly, and possibly less maintenance required – it might also present a solution for companies trying to simplify their supply chains and minimize their exposure to tariffs.

This article points out the key conflict at the center of the current debate over isolationism: it is becoming more and more complex to take an isolationist stand as the world in general, and supply chains in particular, become more globalized. The options proposed in the article and comments can be summarized as 1) go completely domestic; 2) go completely international and cut out the US altogether; or 3) hedge and make sure your supply chain is diversified to eliminate single points of failure. Option 2 is interesting and something that US companies should be more concerned about in the current political climate. While option 3 seems the most practical, it reminds me of our volatility discussion around United Airlines: the more countries in your supply chain, the more exposure you have to isolationist taxes, tariffs, or outright bans. I strongly agree with John’s point that this is a board-level issue that requires constant attention and a nimble approach to risk mitigation.

I agree with Fede that the water shortage is one of the most frightening consequences of climate change. I am reminded of the epilogue of The Big Short, the movie about the economic crisis of 2008, in which we learn that the investor who first predicted the global crash is now focusing all his trades on water!

I am curious about why smaller brewers use water so much less efficiently than the larger brewers. Do they have more inefficient supply chains? Are they less sophisticated in their production processes? As Fede points out, this seems like a huge opportunity for the BA to provide education and support. I would also suggest that small brewers look into joint ventures for water sourcing in preparation for rising water costs. They will need much larger scale to compete with the large brewers, and banding together could be one way to ensure survival.

It’s very interesting to me that the McIlhennys are effectively canaries in the climate change coal mine. They are already feeling the impacts of climate change in their supply chain through crop quality, volatile weather, and “global weirding,” and have taken steps to mitigate the issue by growing plants outside of Louisiana and planting new seagrass. Yet one of the key reasons the U.S. hasn’t taken stronger action against climate change is a lack of public urgency around the topic, including a large contingent that denies climate change altogether. It seems to me that consumer products, and food in particular, might be where the rubber hits the road in spurring consumers to care about climate change. Rising sea levels may feel abstract and long-term, but having to pay substantially more for Tabasco – or being unable to buy it, or having the flavor change substantially – feels very immediate. I wonder whether the McIlhennys have done any lobbying, advocacy work, or publicity around the issues they are facing. If they and other food companies behind popular and recognizable products speak out, it may help shift perception of climate change away from a long-term problem towards the present-day crisis that it is.

I agree with all the comments above suggesting that CVS’ best bet is to differentiate based on value-added services related to their core expertise. I hadn’t heard that Amazon was looking into pharmacy services, and now I am very interested to learn more. Amazon is the prime (hah) example of a supply-chain company – while they started as a bookseller, now they are seeking to become a one-stop shop for anything and everything that consumers might need, and their scale and ability to deliver products extremely fast is their key advantage. I worry about one company becoming a monolithic supply chain for many types of products, and adding healthcare data to the mix makes me even more concerned. How might Amazon use my prescription data (including whether or not I am compliant with my medicines) to cross-sell me other services? How will this fit in with other services they are developing? CVS could think about using this uncertainty to emphasize their longstanding experience in the pharmacy field as a way to differentiate based on quality and trust.

I agree with Boaty that this is an effective mechanism to lower fixed costs across a system and to allocate specialists’ time most effectively, but there are risks to consider. In addition to the overcrowding concern, one additional concern is that the reallocation of provider time from in-person to telemedicine may have an adverse effect on patient perception of quality. While they may have a quieter night’s rest with telemedicine, many patients expect to see a doctor in person when they are in the hospital. Even getting patients to accept well-trained midlevel providers such as nurse practitioners or physician’s assistants can be difficult, so telling a patient or family member that they will be monitored remotely may decrease patient satisfaction – especially at a place like the Cleveland Clinic where patients travel from around the world for the best possible care.