This was a great read! In going through this, I couldn’t help but think that no matter what Starbucks itself does to curb climate change, the effects will not be felt on the ground unless there is a global, multi-industry shift towards sustainable production practices. To this effect, what if big hitting companies with a strong sustainability agenda (for example, Nike, IKEA and Starbucks) formed some type of corporate-led sustainability “league” in which they used their combined size and reputation to affect more widespread change by putting pressure on governments, creating more consumer awareness, sharing best practices, pooling R&D resources etc. Given the lethargy of most governments on these issues, I think “enlightened capitalism” may be the answer. Just a thought…
Super interesting, thanks Jeff! I agree with the above comments that autonomous vehicles themselves won’t necessarily cause a relocation of production facilities to the US. However, perhaps the increasing pervasiveness of Industry 4.0 – also known as smart manufacturing or the Industrial Internet of Things (IIoT) – may be a stronger driver. The biggest challenge associated with Industry 4.0 is data security and this “could become particularly tricky for OEMs looking to move data across borders” given the threat of intellectual property theft, especially in the Far East . Furthermore, the data risk increases as OEMs share information with suppliers, which will cause them to be more selective of their business partners to ensure trust and appropriate control systems, potentially favoring domestic players.
Great read! While rising unit costs are going to indeed be a challenge, I think the falling pound does not spell all doom and gloom for Cadbury in the long run. If we consider the situation in terms of supply and demand, we see that there are a couple effects at play when the pound falls:
1) UK products become cheaper internationally and export demand increases
2) Imports become more expensive, and so UK citizens spend more on domestically produced products
Both of the above effects suggest that in the long run, the depreciation of the pound will in fact increase the demand for UK manufacturing output. However, this positive impact will be delayed due to international order lead times and a rule of thumb is that it will take 18-24 months for the new prices to work through and trade to fully reflect changes in exchange rates. This effect is known as the “J-curve” .
Thanks Adi, really interesting read!
I agree with your view that the move to e-commerce should be leveraged to improve demand forecasting and inventory management. However, I believe there are two further areas of the supply chain that require immediate focus:
(1) Distribution centers designed for e-commerce – typically traditional distribution centers are designed for bulk shipping whereas e-commerce calls for warehouses where orders composed of individual SKUs can be packaged and shipped directly to a customer’s home. Is this a current management consideration?
(2) Last mile customer delivery – how is Canada Goose planning on ensuring timely, inexpensive delivery of online orders and managing customer returns given they have not historically needed to do so?
Great read, thanks Niko!
I fully agree with the comments above that Walmart’s brick & mortar network is a strategic advantage and should be incorporated within, rather than replaced by, their digitization strategy. Given the high cost of last mile delivery (up to ~30% of a product’s total transportation cost ) I think their key play should be to incentivize the in-store pick up of online orders by passing on a portion of the transportation cost saving to customers in the form of discounts or loyalty points.
Getting customers to order online should, however, be an integral part of their digitization strategy as it allows Walmart to learn about customer purchasing behavior at an individual level and enables them to provide customized services to build loyalty. For example, once Walmart learns about a customer’s typical purchase routine they could send a reminder email just before the customer’s next forecasted purchase with relevant promotional offers and quick re-order links.
Lastly, this customized service should be replicated in stores using beacon technology, which triangulates a customer’s location within the store and shares it with the Walmart app on the customer’s smartphone, enabling Walmart to push customized promotional coupons to the customer based on their location in a timely manner, with no effort on the part of the customer.