I agree very much that we have been too oblivious about the downsides of adding another whole layer of potential digital disruptions to the supply chain (on top of the physical layer). That danger has been downplayed for too long, and now we – as corporations and as customers – are paying for this mistake via information breaches. It is stunning that Target – even though it had its first major data breach a while ago – is still struggling with measures to protect its information, and it highlights the security struggle that corporations face as they try to reap the benefits of a digital supply chain.
The second point of the set of mesaures you proposed stood out to me: The weakest link in the digital supply chain is – ironically – the human factor. Only with a comprehensive set of awareness trainings, digital “fire drills”, and constant reminders is it possible to minimize the risk of humans falling prey to hacking attempts made possible by phishing, social engineering and other means malicious hackers use.
Interesting read. The one thing that I do not fully grasp is how the Hema supermarket differs from other (non-Chinese) supermarket retailers leveraging scale, such as Wal-Mart in the US. These stores also provide the convenience of experiencing the merchandise in person whilst online orders are possible. Wal-Mart also uses sophisticated digital tracking systems to optimize its inventory planning and is also available in rural neighborhoods through its Express markets.
On another note, since Taobao.com can track all customer ordrs as they are routed through its system, it should be able to aggregate this data and optimize demand/inventory on a grand scale already, without the use of the Hema supermarket system. For example, it could simply optimize demand by showing vendors first whose projected inventories have not been exhausted yet, based on Taobao.com’s forecast/planning. This way, vendors are incentivized to follow Taobao.com’s forecasts, resulting in minimal inventory and an even, fair distribution of orders.
Thanks for the interesting read. One thing that Hemak should be considering as a measure is lobbying against NAFTA changes together with other automotive and manufacturing companies. An increase in tariffs resulting from a cancellation of the NAFTA agreement would inevitably lead to: 1. A rise in consumer prices as manufacturers pass on increased logistics costs to costumers; or 2. a cut in labor costs or quality of products as the increased tariffs eat into margins. Both scenarios would work directly against the plan of the current US administration to provide a better life for US citizens.
While it is concerning to all manufacturing companies that the NAFTA agreement might be abolished completely, I believe that a simple increase in the percentage of components to be produced in NAFTA should not influence GM’s supply chain that significantly, mostly due to the not so stringent definition of what components are NAFTA-sourced, as you mentioned in the case. The usual practice in the automotive industry is to create knock-down kits (KDs) specifically to circumvent these kinds of regulations. The components/cars are actually assembled in another plant (e.g., in China), then “knocked down” (to a certain degree) into their spare components again and shipped to another facility to be reassembled. This practice should make it feasible to increase the amount of “NAFTA-produced” components to 80% easily.
In addition, independent of the tariff issues, many companies commonly ask their suppliers to locate their component production literally right next to the OEM’s final assembly plants due to the logistics risks (breakage, long lead times, slow reaction times, inventory buildup), especially for high-value components that are oftentimes delivered just-in-time or even just-in-sequence (as we have seen in the Fuyao Glass case). Therefore, having 80% of components sourced from NAFTA should not be a huge issue for GM.
Great thoughts, Aaron.
I very much agree that GMO are one of the most feasible and best ways to keep our world fed in face of increasing climate change, despite the (as of now) not completely researched potential dangers to human consumption. Another factor, however, one should consider is the fair/equal distribution of food across the globe, especially to areas that are strickened by poverty and drought. Much of the food in the US is wasted and crops are burned/dumped, while in other parts of the world, people are still starving.
On a sidenote, as a German, profit-oriented and emotionless machine, I very much welcome the acquisition of Monsanto by German pharmaceutical giant Bayer.
An interesting read that highlights the growing conflict between long-term regulatory targets (related to sustainability) and optimizing for short-term profits that automotive manufacturers currently face.
While I do agree that GM should align its long-term perspectives to reach emission targets, I do not think the short-term answer is as clear-cut. From an economic perspective, deliberately not reaching the EPA targets by 2025 could make sense depending on a couple factors:
– The actual amount of penalties faced by GM if it does not reach the targets: Staying with a non-sustainable target in the short-term is feasible if penalties are low compared to the incremental profits made from staying with the sales of conventional combustion engine vehicles. This will also depend on how much efforts other automotive OEMs make to reach the EPA targets – as the government will have incentives to not overly punish an entire industry (for both political and economic reaosns).
– The incremental amount of profits made that go into development of new energy vehicles: If GM’s incremental profits made from not switching to new energy vehicles immediately is actually diverted into development resources, it might actually benefit the company further in the long-term (esp. if there is a cash constraint).
– The actual market demand for electric vehicles: Even offering a wide range of electric vehicles might not result in the right vehicle mix to reach the proposed emissions targets as customers might still choose to buy conventional combustion engine (especially due to low petrol prices)