Great reading. It is very interesting to see how interruption in NAFTA would have tremendous consequences on KCS. I do agree with the fact that the company would be forced to focus on developing its operations in the US and in Mexico as two separate businesses for each local market, which would make few sense from a strategic and organizational standpoint and would incur significant restructuring cost. I would also expect a downturn in some sectors of the Mexican economy should trade with the US be drastically reduced, which would in the end make the railroad industry in Mexico not a place to be. I am thus very skeptical as for the future outlook for KCS, in a scenario of interruption of NAFTA.
Great technology and definitely a potential source of strong debates around evolution of human jobs vs. evolution of technologies, should it be widely adopted.
Let’s image a world in which this technology is developed and spread globally. Labor cost is not relevant anymore as criteria for global companies to choose where to locate their facilities. Productivity is much more uniform worldwide since human factor in operations is now very low. Then, are models of global supply chains that we used to observe getting irrelevant ? I do not think so, and I would argue that should “cobots” be adopted widely, logistics and transportation cost will still require industrial companies to find balance between (i) producing close to raw materials sources (which are not distributed evenly on the planet) and (ii) producing close to end market served (which are not the same depending on the products). As a consequence, I would expect large industrial players to keep on managing a global footprint, thus promoting further globalization.
I agree with LP on her point about external influence being crucial to push companies to invest in sustainability and waste reduction. Still, I think that more and more companies realize that investing in waste reduction and focusing on reducing raw materials consumption for their operations can lead to significant cost savings on the long term.
In the case of water consumption, Coca Cola is not the only one big corporation to have taken actions to reduce their negative impact on the environment. For instance, P&G has set up the objective of reducing water used in its manufacturing facilities by 20% per unit of production by 2020, with a specific focus on facilities located in water-stressed regions (1).
Interestingly, P&G not only focuses on reducing its own water consumption but also focuses on providing customers with products that encourage reduction in water consumption. This is for instance the case of shampoo that also features conditioner benefits, allowing people to use less water to clean their hair. These products are sold at a premium compared to classic shampoos. Thus, another way for businesses to have a positive impact on the environment is by shaping consumers behaviors. I am not sure how this would look like in the case of Coca Cola, but my point is that there is no need to sacrifice profits for a company to help reducing water consumption worldwide.
(1) P&G company, “Conserving our most precious resource”, https://us.pg.com/sustainability/environmental-sustainability/focused-on/water, accessed in November 2017
The Speedfactory vs. conventional Asian plants question you raise reminds me of one of the case we saw in class, in which a Chinese glass manufacturer had to decide where to locate its production to serve the US market.
I do not believe that from a cost standpoint the SpeedFactory is able to compete with operations in Asia today, as my guess is that this high end facility (i) probably requires highly skilled workforce to be run for now (including engineers) and (ii) may deal with significant amount of re-work and idle time due to necessary adjustments in processes implemented. Nevertheless, and while Adidas will move along its learning curve with automated operations, we can expect Speedfactory to be able to run at lower cost in the near future thanks to productivity gains and increase in autonomy, even more so as wages are rising in Asian countries.
I do believe that investing in sustainable practices is a must do for CasaLuker. Rationale is extensive but includes that, on the long term, climate change would negatively impact CasaLuker business.
However, and as you mentioned in your article, the company will need to find additional capital to fund its growth and may turn to financial investors to do so. These investors will probably not stand in this case for investments in sustainable practices, mostly because gains from these investments cannot be expected before a long period of time while investors are generally looking for short or mid-term ROI.
This is one of the reason why I do believe that international institutions and governments have a huge role to play in fostering positive agricultural practices. Increase in regulation could force every economical actor (both agricultural companies and investors) to comply with necessary investments in sustainability, especially when their time horizon is not aligned.
To answer to your question, I do not believe that promoting jobs creations and investing in digitalization are mutually exclusive.
I do believe that weaknesses in Sephora inventory management in stores leads to substantial cost, either in the form of missed sales or in the form of shelf space cost incurred by holding unsold inventory for long period of times. Investing in digital solutions to be able to get a more accurate view on demand per SKUs and per location would enable stores to achieve higher turnover of their inventory while the same amount of labor content would be required to handle these inventories.
I would even argue that digital solutions create new job opportunities. A virtuous circle may enable companies which invest in digital solutions to create new jobs, to manage data generated for instance, as the result of operational cost savings achieved.