aapl's Profile

“Could more offshoring mean more protectionism to preserve new national manufacturers? Could it create even more competitors? Is the most relevant risk of tariffs not in emerging economies but in the US and EU?”

After reading this thoughtful piece, I was struck by two additional questions regarding the airline manufacturing sector amidst protectionist threats. How are firms considering the increased risks associated with decentralized operations; as we saw in one TOM case, overseas manufacturing increases exposure to diverse, unique economic climates. How do Boeing and Airbus consider fluctuations in currency value, labor and transportation costs, and governmental regulation, and mitigate these risks? In addition, heavy investment in local manufacturing is capital-intensive, making sales forecasting all the more important. How do the likes of Boeing and Airbus account for changes to their global supply chain when forecasting and preparing for future demand? What makes the protectionist threat even more interesting is that market leaders are not the only firms looking to decentralize their operations. For instance, Russian “military-industrial giant” Rostec is considering a cross-border partnership with the UAE to produce a commercial airplane (http://money.cnn.com/2017/11/13/news/companies/russia-rostec-uae-mc21-production/index.html). While I agree that market leaders must be cognizant of protectionist threats and take appropriate preventive measures, I also believe the risks inherent in having global operations are multifold. The airline manufacturing industry has relatively high barriers to entry, given the capital needed to undertake R&D and complete just one production run for example. As such, Airbus and Boeing may not need to act as swiftly as firms in other industries such as consumer technology, where being late to market perhaps poses greater risk of losing market share to established competitors or new entrants.

“As The Body Shop continues to develop its green supply chain one open question I have is: how can The Body Shop work with other companies in the cosmetics industry, including upstream and downstream supply chain partners, to continue to promote sustainability?”

I agree with the assertion that The Body Shop, while cognizant of and responsive to the risks associated with climate change, should endeavor do more to ensure the beauty products industry as a whole adopts sustainable practices. The question of how to make upstream and downstream supply chain partners promote sustainability ultimately comes back to financial incentives. This shift towards sustainability will of course come with added cost, at least in the near-term, and hence the Body Shop will need to consider whether to increase retail prices or restructure margin distribution across the value chain, and if so, how. In addition, the Body Shop should consider lobbying industry associations as well as governmental agencies/regulatory bodies to push for more stringent sustainability standards, with penalties and/or credits given to companies that comply. Furthermore, consumers are increasingly interested in company’s supply chain practices when determining which products to purchase; as such, The Body Shop should set the standard for complete transparency in sourcing, leading the way for other companies to do the same (and perhaps reconfigure supply chain practices that could damage their brand if made public).

“The “Make in India” initiative is forcing smart phone manufacturers such as Apple to consider disrupting their supply chain in order to better access the second largest smart phone market in the world. But is producing an iPhone with Indian component manufacturers who may lack technological expertise worth the inherent risks to product quality?”

The “Make in India” initiative and its implications for smart phone manufacturers such as Apple is quite an interesting case study in barriers to entry, competition, bargaining power, and negotiation. I agree with the author’s belief that in the short-term, Apple must prioritize product quality even at the expense of delaying entry into the Indian market, but in the long-term must reconfigure its supply chain to abide by the “Make in India” initiative. While these appear to be sound strategies in today’s competitive environment, Apple will have to remain wary of its competitors, particularly given that some may be further along in investing in local manufacturing (https://www.wsj.com/articles/apple-scraps-like-an-underdog-in-second-biggest-mobile-market-1498123803?mod=rss_Technology). Although Apple’s brand strength may enable it to succeed despite lacking first-mover advantage in the Indian market, there is too much world smart phone market share at stake for Apple not to continuously revisit its entry strategy and supply chain decisions.

“Reflecting on Starbucks’s plan regarding climate change, I wonder about the transportation aspects of Starbucks’s supply chain: should Starbucks look closer at its logistics departments? Exhibit B gives us an idea of how carbon intensive this part of the process can be for the industry in general, but I wonder if Starbucks has opportunity to improve in this aspect of its supply chain through closer examination.”

It is not surprising that Starbucks, as a massive global brand, is attempting to be proactive in response to climate change. The steps you mentioned, including increasing energy efficiency and adopting better farming practices, are reasonable for bringing about incremental improvement. Perhaps these high-level concepts can be adopted to improve logistics and transportation as well. In addition to decreasing energy use in the “consumption” phase, Starbucks could consider the same improvements in the “cultivation/processing” and “roasting/packaging” phases as well. Drawing from the IKEA case on sustainability, I wonder also whether Starbucks has considered vertical integration to various extents, and whether having more direct control over elements of the supply chain would enable more standardized practices in sustainability. Ultimately, I do believe an industry-wide shift towards sustainability practices is needed; while Starbucks does represent a large share of the market, it cannot alone move the needle without support of competitors, industry associations, and regulators.

“Will 3D printing eventually be the death of brands as we know them today, or can this manufacturing system serve as a sales catalyst, as Adidas is wagering?”

I certainly agree that the Adidas SpeedFactory is a great example of how traditional apparel and accessories retailers are looking to technological innovation, in this instance–digitalized manufacturing–to build their capabilities in true mass customization. You raise an interesting question/concern as to whether 3D printing technology could become so ubiquitous as to spur disintermediation in the apparel industry all together.

As I consider the role of the 3-D printer of the future, I am inclined to call it the “new sewing machine,” the instrument through which designers execute their visions. In the future, even if end consumers are able to 3-D print clothing, there will likely still be demand for clothing ‘designed’ by a brand’s creative director. I believe the greater threat to Adidas and its competitors could come in the form of lower barriers to entry as 3-D printing machine capacity increases and cost associated with purchasing and maintaining machines decreases. Even so, where incumbents will likely have an continued advantage is in other elements of the supply chain, including raw materials sourcing for instance (e.g. bulk ordering or manufacturing of raw material inputs will enable companies like Adidas to maintain lower per unit costs). Thus, the competitive landscape may be significantly impacted. Perhaps one thing that Adidas must do is determine the specific products and customer segments that are most economically attractive to aggressively introduce digitalized manufacturing into the supply chain. Developing expertise in these segments may help protect its brand as well as its top line.

Consider these two articles for more detailed analysis of cost and market implications:

http://www.sciencedirect.com/science/article/pii/S0925527315000547

http://www.sciencedirect.com/science/article/pii/S0040162515000530

“Looking forward, J&J will need to ask themselves: How do we capture this incredible potential to deliver customized medical implants, at a lower cost and faster speed, to patients all around the world?”

I wholeheartedly agree that digital manufacturing, including “3-D printing” technology, will be a great asset in medicine as technological innovation continues. There are undoubtedly many stakeholders and challenges to consider, including research, manufacturing, testing, and of course, the economic rationale. As we consider how medical device manufacturers, or perhaps their customers–hospitals and even physicians themselves–can utilize a truly digitalized supply chain to offer true medical device customization at low cost, I believe there is a silver lining. In contrast to other industries, such as consumer packaged goods, healthcare is unique in the relative price inelasticity of customers when firms can demonstrate increased efficacy and safety of a new product. As such, it may be important for device manufacturers to identify the disease states and use cases for which hospitals, patients, and even payers have a high willingness to pay (e.g. chronic disease that causes significant lifetime healthcare spend and mortality). Through better understanding the value proposition for varied stakeholders and scenarios in healthcare, the question of how, and to what degree, cost efficiencies in 3-D printing must be achieved to accelerate adoption in medicine may be further elucidated.

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