This is such a fascinating issue. Your last few questions brought to mind the phrase “garbage in, garbage out” and unfortunately I think that is true in this case if, like you say, the onus is on the supply chain to input data correctly. I wonder if there is a way to automate even this aspect of it, similar to RFID technology we’re seeing in retail, where each piece of clothing is tagged with RFID technology and you’re able to track inventory down to the individual SKU. The issue with that too, though, is this idea of cost that you’ve rightly brought up, and more broadly, building out the infrastructure to accommodate something of this scale.
To Joe’s points above, I would push back and say that it is in Walmart’s, or any large CPG company’s, best interest to make their suppliers care about this issue. I see blockchain as being most useful not to the customer, but for the retailer themselves to identify inefficiencies in their supply chain or potential red flags early on before it reaches the consumer. I can only imagine the scale of cost savings if Walmart is able to measure the exact time it takes for this particular banana to travel from farm to shelf, and (perhaps more sinisterly), their ability to leverage this data against their vendors to compete for faster delivery times or better pricing.
As a frequent consumer of Nutella, I am fully in favor of Ferrero taking leadership on ensuring that hazelnut supply remains abundant for the forseeable future.
The two questions you pose are particularly interesting given the scale involved. If Ferrero only consumes 0.3% of global palm oil production, why is it that they have been so criticized by the media? Is there a worse offender who is currently being overlooked by the public at large? For me, I’m not sure if Ferrero being at the forefront of the sustainability debate is necessarily a competitive advantage. I buy chocolate based on taste, not because of the company’s sustainability practices. I think in any sustainability discussion there is a question of where value lies — either in the tangible impact to the business, or the visibility to the customer and if that visibility will allow the organization to price higher or sell more units. In this case I feel like the majority of the value comes from the former.
I really enjoyed reading about this issue! To respond to your two questions, I believe that reshoring jobs to the U.S. should ultimately be incorporated into the company’s long term strategy given the scale of costs involved, but the broader question is, what kind of jobs? I agree with Brooke’s point that certain aspects of manufacturing might be lost to the U.S. given the gains overseas, but if we were to disaggregate the manufacturing process, there might be areas where American expertise or even where more sophisticated machines and the operators required to use said machines might play a larger role (for example, producing more intricate parts or combining all the parts of an Apple product). This could not only benefit Apple politically, but also drive efficiency in their supply chain.
With regards to your second question, I think oftentimes companies are most innovative in the midst of inefficiency, and so an argument could be made that this increased inefficiency would drive further innovation. Beyond that, my view is that Apple’s critical task as an organization is rooted in innovation and R&D, so they would be more likely to pass the increased costs from inefficiency on to the customer (given their dominant position in the market) or would eat the costs as they know improving their products is the only way they maintain their status in the market. I also believe that given Apple’s importance and their symbolic significance, the cost to reshore would not be as high as anticipated, as they would probably be able to negotiate significant tax benefits.
As an international student, I am overly invested in this very topic. I agree that HBS should look towards globalizing their classes and curriculum more, but question the impact of satellite campuses abroad. For example, Yale-NUS in Singapore was Yale’s first international campus and also serves as Singapore’s first liberal arts college. However, many Yale faculty members have refused to teach in Singapore due to the perceived lack of human rights/ freedom of speech in Singapore. Yale-NUS students mostly come from Asia, and on some level it seems to be more of a money maker for Yale rather than a way to break free of the recent American isolationism sentiment. In that context – a second question I ask is, what is the role of a satellite campus to educate others in other parts of the world? How much of satellite campuses are for commercial, rather than educational, gain?
I wonder also about the role that HBS has in educating leaders about how to handle critics of globalism and, especially for those going into COO-type positions, how to handle and motivate employees who might retreat to isolationism due to labor-intensive jobs leaving the US. Our jobs will probably be safe from globalism or digitization, but what responsibility do we have as future leaders to think about the pressures of the people we will manage in the future?
Swan, this is so interesting and especially so for the sheer volume that Inditex manufactures out of Europe. I think the questions you pose are spot-on — I don’t think it is at all climate change friendly (or cost efficient) to ship goods back and forth from Asia to Europe and then back to Asia again, especially if their shipments are not at full capacity. However I wonder if there is a political cost to off-shoring warehouses to Asia (for example, government push back or tax implications).
I am also intrigued by their move towards eco-stores — I wonder if they are making similar strides in their warehouses and factories, where it seems like they could cut down on waste the most. For example, making denim requires a lot of water, and with the recent drought in places like South Africa and California, climate change has the potential to impact even the production of their items, not just the transportation of them.
This is such an interesting topic. Walmart has been on a acquisition spree lately (Bonobos, Modcloth, Moosejaw, etc in addition to Whole Foods and Jet.com) — I think through these acquisitions they have both been able to 1) acqui-hire some of the best talent in the consumer-facing retail space, and 2) through Whole Foods, expand their brick-and-mortar square footage for a new customer — all of which builds their internal innovation arm and reduces their need to rely on external innovation.
I agree with Danni that Walmart still has the opportunity to make a huge impact for millions of customers. I don’t think it is at all too late for Walmart to win against Amazon. I also don’t think they are necessarily competing in the same space. Walmart’s grocery business far outstrips Amazon’s, especially because only 2% of consumers shop for groceries online. I see their huge brick and mortar presence to be a big plus as they are able to leverage their large stores as warehouses — this cuts down dramatically on last mile shipping costs. They don’t even need to use their associates if that gets too expensive, but the fact that they have a strong footprint of stores that can act as local warehouses already gives them an edge over Amazon.