I guess manufacturing in the US gives an auto brand a premium image. They customers might respond to the practice in a positive way, given that auto is a relatively luxury product. When the government put high import/export tariff on the business, the companies don’t have a lot options. However, an argument to such regulation could be the government can encourage the companies to put a more value-add work in the US and outsource the low value-added work. Faced with high tariff or governor’s regulation, the company can choose to produce the WIP outside the US but assemble the WIP into Finished Goods in the US. However, I don’t think the change on the manufacturing locations is adding value to the overall supply chain, but it is purely a political fight.
Great post! You brought up an interesting point: since Apply heavily rely on the co-manufacturers in foreign counties with different regulations, how can they manage their suppliers’ practice on CO2 footprint and other environmental issues. I think it will be challenges to engage suppliers to share the same level of responsibility, given that the majority of the suppliers are located in emerging countries where the regulation is less strict. Also, who will pay the practice is questionable.
I guess anther thing to do for Apply is to spend more efforts to recycle the unused phone. Now Apple launches new products twice a year. Consumers upgrade the phones more frequently than before. To recycle the used phone can reduce the waste.
Regulation and policy play a critical role in constraining the global trade. It helps the government protect the local business but hurt the customer’s business. When Walmart ends the business with international suppliers, the consumers no longer get access to cheap products of reasonable quality. End consumers are paying the cost of isolationism!
The benefits of global supply chain is to manufacture and source the product from a place where the cost is lowest. Creating such isolationism, in short term, will help increase the domestic business. However, in the long run, it cannot optimize the value chain.
Walmart, as a global retailer, attracts customers for the diverse products at a lowest price. I think the isolation will make Walmart lose the advantage of lower prices. At some point in the future, the trend of isolation is likely to break.
Great post and very interesting topics! Shake Shack is definitely a pioneer of digitalizing restaurant services. I think there are a few opportunities in the restaurant business. First, there lacks of a standard digital solution across all restaurants, which means every restaurant chain has to develop its own ordering app. This situation challenges independent small restaurant business because it requires a relatively significant one-time cost. Also customers need to download different apps or go to different platforms in different restaurant chains. Second, the challenge is that the digital system is not integrated. The ordering process and supply management are conducted on two different platforms so that the information flow is not integrated. So I believe there is an opportunity to create a “ERP/SAP” system in the restaurant business.
Sustainability of supply chain is a very heated topic at the Hershey Companies. It has launched tons of initiatives to ensure the supply of cocoa from farmers in Africa. For example, it launched a text-based learning system to educate the farmers how to improve the output of cocoa trees; and it conducted an initiative to empower women to join the farm work given the shortage of labor. These efforts do not only impact the supply of cocoa, but have a great social impact.
Meanwhile, although there is a 2% increase in the chocolate demand globally, it is obvious that the consumers’ snacking behavior has been changed: they become more cautious of healthy eating habits. So the Hershey Company also acquired a beef jerky company a few years ago to diversify the portfolio.
I like the thought that CPG companies like P&G can potentially become retailers. In the traditional CPG business models, there are multiple layers between the CPG companies and customers, and each layer will take out a certain portion out of the business. However, these middlemen conduct value-added service to the business, such as distribution, inventory management, and sales. I can imagine that if CPG takes out these middlemen, the business might become more profitable, or the price will be lower in favor of customers. On the other hand, I would argue if the CPG companies have the capabilities to handle the logistics part by themselves. If P&G establish a direct-sale team, how much will it cost? How much capital investment does it require? Does P&G have the capability to manage that in terms of talent and infrastructure?