I found this article very interesting – thank you, Alex Robinson! To address your question of the conditions necessary to transition to local production, my inkling is to focus in on Ballast Point and Funky Buddha’s domestic production. Having just recently acquired them, Constellation Brands should perform a deep dive into each of their operations to understand what processes can be streamlined. This way, Corona, Modelo, and Pacifico can immediately become beneficiaries. The company will be able to leverage certain efficiencies across all product offerings, which could arguably lead to greater economies of scale and lower costs. Over time, they may be able to consolidate all production domestically…which brings up the issue of how significant the country of origin is or isn’t to Constellation Brands.
On this issue, I agree with FD in that the brand strength tied to the country of origin doesn’t necessarily correspond to actual production location. However, because Mexico as the country of origin is a key aspect of Corona, Modelo, and Pacifico’s value proposition, I would be careful to keep at least some aspect of the product closely tied to Mexico. Perhaps there’s a key ingredient that they can source from Mexico so as to maintain a strong brand image?
This was a great read, and I found it particularly interesting to learn that such a significant portion of the greenhouse gas emissions are outside of the company’s operation. To answer your question, I think it is necessary to balance short-term performance with long-term investments via a phased approach. General Mills should start by explaining to each part of their supply chain – both within and outside of their operation – how they intend to make their strategy a reality so that all parties are on the same page at a high level. From there, I agree with you, StarP, that they should create a Governance Committee to oversee this transition. I think what is key here is that members of this committee are in the “relevant business functions,” understanding what is working and what needs to be adjusted as they move towards their goal. This constant feedback process will make the journey towards their goal run that much more efficiently.
I also think there are interesting opportunities that lie within their packaging design and material selection. While there are innovative ways to package cereal, for instance, I wonder how this will be perceived by consumers. Will they still purchase the cereal that they may no longer immediately recognize? What can be done to maintain a certain level of recognition but also comply with better design and material selection? Can some of the different packaging sizes be eliminated?
Amazing opener – I laughed out loud. And a very interesting read, John Pettifred! I definitely think Ben & Jerry’s need to significantly invest in an adaptation strategy. I think there are two key ways in which they can look to adapt. First, I agree that they should look to further diversify their product portfolio. While Ben & Jerry’s has several classic flavors, others are more seasonal and are rotated in and out. If the company is thoughtful and strategic, they can work towards new flavors with ingredients less prone to similar risk, as the article mentions. Over time, the company can increase marketing efforts towards these flavors, making them staples and at the same time, rotate out some of the chocolate-heavy flavors. Which brings me to my second idea for adaptation. While I am an avid Ben & Jerry’s consumer, I sometimes find that there are too many chocolate chunks in a serving, overpowering the actual ice cream in the pint. As a result, although this is a stretch, perhaps Ben & Jerry’s can re-evaluate the amount of cocoa used in the cocoa-required flavors and consider revising these recipes. While this would initially lead to inefficiencies in the supply chain – having to revise recipes and production schedules, it allows the company to eliminate the amount of cocoa needed per pint. At the same time, the company could market these revised flavors as “healthier” options, potentially tapping into more of the health-conscious ice cream consumer market.
I agree with OpXYL that Walmart should not publicly embrace “Made in USA” and the related controversy. If the company wants to pursue domestic sourcing, they should thoughtfully do so without relating the initiative back to politics. However, if domestic manufacturing is an avenue they decide to explore more significantly, I have two overarching concerns:
First, what happens to prices? While I agree that costs are climbing in emerging markets, on a relative scale, manufacturing prices will be higher domestically. Does Walmart plan to eat this cost and take a margin hit or will this cost, as OpXYL mentions, be passed to the consumer? With retail price being a key component of Walmart’s value proposition, altering it would put the company in very risky territory.
Second, I wonder if domestic manufacturers can handle the production requirements? Will they be able to handle the volume of production that Walmart requires at the speed at which they require it? The learning curve and defect rate will inevitably be steep, at least at first. What does Walmart plan to do to account for this? One possible solution is to manufacture certain product categories domestically and keep the vast majority abroad, at least until the domestic suppliers are higher up the learning curve and operating at a relatively efficient level.
As FD and Imran mentioned, not only is it great that Ferrero is investing in digital technology to improve its supply chain – it’s necessary. Most, if not all, companies are having to invest in innovations to maintain – or attempt to exceed – the same level of efficiencies as new entrants to their industry. Thus, to your question about investing in new technology versus having tight operating budgets, I think companies like Ferrero are having to take a significant investment hit in the short-term to generate, what they hope will be, long-term benefits that will more than repay the cost of the investment.
This technology also makes me question how the company’s buying process will change. With greater visibility to the entire process, will there be fewer or more buying cycles throughout the year? Similarly, what will the lead-time be now that the supply chain is more efficient? I’d assume that it would improve dramatically, which would, in turn, make me believe that buying cycles could be completed on more of an as-need basis. One could argue that this could lead to greater inventory management – particularly for a product that is ultimately perishable – and inevitably greater cost savings. It will be interesting to see how the SAP Ariba software performs for Ferrero!
I really enjoyed reading this, TOMsupplychain! I too have questions about the scalability of 3D printing for Adidas. In particular, if Adidas were to move towards 3D printing at the point of sale, as the article mentions, what are the training implications? Assuming that there would be a designated individual or team at each store who would learn how to operate this machine, I’d imagine the learning curve to be incredibly complex for a store employee. Second, with the amount of turnover that occurs in this environment, I’d question whether or not the on-site training is even worth it. Third, the investment cost (and accompanying security costs) to hold one of these machines in a store would be significant.
On a separate note, I’m curious how Adidas plans to adjust their inventory levels. The article notes that 3D printing allows for more flexibility and a longer selling period, which are two great benefits of this innovation. However, how will Adidas go about reimagining its inventory investment? How long should products stay on the selling floor for? Will there be too much inventory variety and customization?
Finally, I’m concerned about the quality of the footwear being created from this 3D printer. I’d like to learn more about the pilot and what testing the company did to ensure that the same level of quality and functionality found in other Adidas products is met or exceeded.