Hi Dave – interesting application of supply chain and good suggestions – I like the open market platform idea. My question when reading this – and perhaps I am betraying my inexperience – is how does the university share the IP rights with the innovators? By having the university as a distributor, I would want to make sure the university and the inventors’ incentives are completely aligned. I can imagine that universities care more about prestige and big success stories to bolster their name; this may overtly seem to be exactly what the inventors are looking for, but I think some nuances are lost – such as certain elements of control. This concern further supports your open market system which can match connect companies to inventors – but the questions of what the university will take from this transaction remains an important question.
My biggest question after reading this interesting article is: does Zara really stand to benefit from being environmentally conscious? Although the stats you present do seem egregious, the consumers do not really think about it, and I do not see a clear argument that the costs to Zara currently from this supply chain model are greater than the costs it would take to implement sustainability initiatives. As Alona mentioned, Zara is not likely to re-brand and market their sustainability efforts to pass on these costs to their customers. Although Zara should operate ethically as a company, the financial benefits, either long or short term, are less obvious to me. My feeling is that this is a fast fashion industry problem, not a unique Zara problem – and Zara would not stand to benefit by attempting to tackle this issue alone.
I love this topic and think that small insurers are definitely at risk in the digitization age. Just as millennials are moving toward online shopping and online banking, millennial business owners will come to expect easy, almost-instant online procurement of their business insurance plans. The fact that Hastings has moved toward an online portal is promising, as it indicates that they can begin to collect data on their customers. Even without historical data, starting off with increased risks and decreasing those risks over time as more data is gathered would be wise on their part to keep up with the modern age. Although they will likely incur more costs due to risky businesses, some of these can be offset buy the decrease (and even eventual complete phase-out) of agents. As they train their data, business defaults will also decrease. I see their switch to digitization and AI as an investment into their future and definitely a necessity.
After reading this article, I come away with the sentiment that Hyundai’s problems and the effect of its business due to political sentiment and policies are difficult for the company to grapple with. While the solutions you suggested about limiting manufacturing supply to match demand and moving manufacturing to more politically advantageous countries make sense in concept, they seem more reactive rather than proactive may not be feasible due to 1) the differences in labor costs in different countries and 2) fixed cost of having already built plants and long lead time to build new plants. I do like the idea of sourcing more materials from local suppliers, as this is a more preventative measure. Hyundai has no idea what the next big political disruption will be, so focusing on more preventative measures is key. I think a way to do this is to focus on what are traditionally the more stable markets: the US, for example.
I think there are two separate issues at play in this article that may be not be as related as you have stated. 1) is how to efficiently produce custom shoes and 2) is how to better predict demand in this fast fashion age. I think 1) is more of a manufacturing problem whereas 2) is makes for a better digitization case. If Nike is indeed able to achieve complete production flexibility by investing heavily in new manufacturing technologies, the need to forecast is less important (and also less effective for the case of custom shoes). If you are able to achieve JIT delivery due to your manufacturing technologies, at least the manufacturing schedule would not require accurate forecasting (although yes, this would still benefit you in terms of inventory planning). If Nike instead values 2) more, than I would argue that they should stray away from customizable shoes. The increased variations make accurate demand predicting difficult even with 100% transparency and digitization of the supply chain. So I’m with Michael – digitization is a must because fast fashion is the future. But perhaps less customization is a tradeoff that Nike needs to make to fully capitalize on the benefits of a fully digitalized supply chain.
Thanks for the great article, DR! Blockchain is an interesting and bold approach – but I wonder if it is necessary? I agree with Patrick’s point above about these anti-counterfeit measures benefitting the end consumer more than the manufacturer, and I think this point is further illustrated by the fact that pharma companies are just now scrambling to achieve serialization due to DQSA mandates. Pharma would have taken the initiative to serialize before now if the value proposition for them really is strong; instead, the government has to interject to enforce these changes on the patients’ behalf. In addition, achieving full serialization of the supply chain as mandated will already be significantly beneficial in deterring counterfeits. I am not yet convinced that the additional security blockchain will provide will outweigh the large costs of implementation, including the buy-in costs across all players in the supply chain as Kyle mentioned above. If Pfizer wants to act for the greater good of the patient, this cost may be justifiable. But even so, passing on savings in terms of decreased cost of drugs to patients might be a better use of this money. And from a pure profit standpoint, perhaps it is wise to implement the bare minimum in regulatory requirements – the government needs to mandate serialization for the very reason that it is not in pharma’s best interests to overly invest in this area.