Malthus

Malthus

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Malthus
On November 30, 2017, Malthus commented on Walmart in the Face of Isolationism :

One quick heads up – you noted “While Walmart appears committed to these new business practices, recapturing $250M of products annually is still insignificant compared to its annual U.S. sales of ~$480B.”, which as several other commentators pointed out, is a very powerful statement. However, per this source [1], Walmart is making a $250 BILLION commitment to US manufacturing, not $250 million. This is more than half of their revenue – a big commitment indeed! I think this really strengthens your overall argument about Walmart’s commitment to US manufacturing!

I also wonder, from a corporate social responsibility perspective, what are Walmart’s obligations to create domestic manufacturing jobs. For instance, Walmart is already the largest employer in the US, with more than 22 million US employees, and indeed is the largest employer in 23 states [2]. Why is 22 million retail jobs not enough – why are the also obliged to create a further million manufacturing and related jobs as well?

[1] https://corporate.walmart.com/americaatwork?gclid=EAIaIQobChMIh-2s2Pm-1wIVGoGzCh2qCAraEAAYASAAEgKAvPD_BwE
[2] https://finance.yahoo.com/news/largest-employer-every-state-100039131.html

Malthus
On November 30, 2017, Malthus commented on God Save the Bean! :

Great post Erica!

I wonder how we reconcile Illy’s response to climate change with the facts on the ground, as presented in your well-researched article. For instance, these two statements make me concerned for Illy:
-Climate change is projected to halve the land suitable for coffee production by 2050, and to cause the extinction of wild coffee by 2080.
-“We predict that we will need twice as much as coffee at least – more probably three times as much – by the end of the century, with less than 50 percent of the land available”, said Andrea Illy, the company CEO, at the 2016 World Economic Forum

As I interpret it, we need coffee yields to go up 4x to 6x, but in fact coffee yields are likely to go down to zero. I’m not sure how Illy plans to reconcile this.

Also – I wonder, again regarding the article warning of the extinction of the coffee plant, why can’t coffee production be moved to latitudes further from the equator as the world warms? E.g. coffee is currently grown between the latitudes of 25N and 30S (the “bean belt”) [1]. As the world warms, shouldn’t less equatorial latitudes that were formerly too cold for coffee production come into the sweet spot? E.g. shouldn’t we expect the bean belt to bifurcate, rather than disappear? Not sure there’s a good answer, but I’d love to hear your perspective.

[1] http://www.ncausa.org/About-Coffee/Coffee-Around-the-World

Malthus
On November 30, 2017, Adam Aisen commented on United Launch Alliance: Rocket Without an Engine :

Super interesting!

A few questions. First – why were Russian scientists more advanced than US scientists after the Cold War? I always thought the narrative was that the biggest challenge in space engineering was to put a man on the moon, and since the US accomplished that and the USSR did not, I took that as presumptive proof that the US had better rocket science. Is this untrue, or had the US advantage eroded in the intervening 20 years? If so, why/how did it erode? It feels like a real shame.

I also wonder about Boeing’s recent announcement [1] that they are working with the Air Force on the development of a new ICBM. Given the similarities between ICBM engines and space-launch engines, I wonder, is this a potential third competitor as a US-made low-earth orbit engine?

Finally, given the technology overlap between ICBM capabilities and space capabilities (both are launching payloads into space?), I would love to hear your opinion as to the impact of the US’s lagging in space technology on the nation’s defensive readiness? Is the US’s nuclear deterrent diminished due to a reliance on Russian space technology?

[1] http://boeing.mediaroom.com/2017-08-21-Boeing-Awarded-Design-Work-for-New-Intercontinental-Ballistic-Missile

Malthus

I’m a fan of your post, CPG Manufacturing Fan. Really great analysis. I especially appreciate the characterization of what a digital supply chain means at the beginning of your post.

A few questions. To the point you raised of CSR, what sort of a social responsibility does a company like Colgate Palmolive have to its employees, who may lose their jobs due to automation? What role do you think such considerations should play in a company’s decision to automate work that formerly provided meaningful employment?

I also wonder how innovative Colgate truly is when it comes to supply chain digitization. For instance, the Gartner report [1] which rated Colgate #9 considered the following factors in its ratings: (Peer Opinion*25%) + (Gartner Research Opinion*25%) + (ROA*20%) + (Inventory Turns*10%) + (Revenue Growth*10%) + (CSR Component Score*10%)

The variables are defined as:
1. Gartner Opinion and Peer Opinion: Based on each panel’s forced-rank ordering against the definition of “DDVN orchestrator.” Demand-driven value network (DDVN) is a business environment holistically designed to maximize value of and optimize risk across the set of extended supply chain processes and technologies that senses and orchestrates demand based on a near-zero-latency demand signal across multiple networks of corporate stakeholders and trading partners. [2]
2. ROA: (2016 net income/2016 total assets)*50% + (2015 net income/2015 total assets)*30% + (2014 net income/2014 total assets)*20%.
3. Inventory Turns: 2016 cost of goods sold/2016 quarterly average inventory.
4. Revenue Growth: (Change in revenue 2016-2015)*50% + (change in revenue 2015-2014)*30% + (change in revenue 2014-2013)*20%.
5. CSR Component Score: Index of third-party corporate social responsibility measures of commitment, transparency and performance.

My question for you – do you think that this is a fair rating system? My sense is that it may not be. E.g. strong ROA and inventory turns could certainly be a result of effective digitization of the supply chain, but I can think of a number of other factors as well. Revenue growth and CSR efforts seem to be very strange measures of digitization of the supply chain.

[1] https://www.gartner.com/newsroom/id/3728919
[2] https://www.gartner.com/it-glossary/demand-driven-value-network-ddvn

Malthus
On November 30, 2017, Adam Aisen commented on Shell’s Evolution from Oil and Gas to Energy :

Super interesting post, Danny! I have no doubt that as population and GDP per capita continues to grow, the world will use more energy and not less, and thus regardless of society’s efforts to conserve energy, ultimately alternative energy sources are absolutely necessary to remediate climate change. Thus, I strongly agree with many of your conclusions.

At first I was surprised as to why shifting from oil to natural gas was a good thing, as it feels like both are hydrocarbons and burning either should should result in CO2 emissions. I dug up this link [1] from the EIA which I thought was interesting, as it shows that burning natural gas actually produces 26% less CO2 than burning gasoline per BTU.

My question for you – do you think that shifting from one fossil fuel to another, albeit one with a better CO2 profile, is enough to solve climate change, or do you think this is only a half step? Also, I’m curious as to why you don’t recommend that Shell explore nuclear as an energy source, as it is CO2-free?

[1] https://www.eia.gov/tools/faqs/faq.php?id=73&t=11

Malthus
On November 30, 2017, Adam Aisen commented on Blockchain for Shipping -Is it Really Revolutionary?- :

Great post, Toshi!

It’s interesting to think about both the technical implications the question as well as the business/social implications of your post. As to the technical, I wonder how this will actually be implemented? E.g. if the blockchain is essentially a decentralized, secure ledger [1], how will it be used in this case? What sort of transactions will be written to this ledger, and when? What sort of ledger is currently used, and why is the blockchain better?

As you observe, Maersk is using the blockchain to pursue transparency, but why is it even necessary. If the blockchain is only a decentralized secure ledger, why is it necessary to use blockchain to impose transparency? Can a centrally-stored, non blockchain based ledger also be used for this purpose?

In short, I wonder if there is a genuine technical justification for the use of blockchain, or if it is merely for show. I suppose my technical background simply isn’t deep enough to really understand the technical implications of this technology and why/when it is necessary!

[1] https://blockgeeks.com/guides/what-is-blockchain-technology/