Great article Amanda. I think a focus on the long term business horizon is important now more than ever. Even a quick back of the envelop calculation comparing the two factory examples you highlighted – the closure of a $1.6B plant with 700 jobs and the opening of a $1.2B plant with 130 jobs – clearly show the short term costs of these protectionist measures. Ultimately this will serve to undermine the competitiveness of American companies such as Ford, as foreign competitors are able to take advantage of more liberal trade agreements providing them access to affordable capital and labor.
Protectionist measures can be meaningfully productive if they support innovation (e.g. tax breaks for start-ups, research and innovation grants, global patent protections) though this does not appear to be the intent of the recent growth in protectionist policy. Without a focus on new growth opportunities, protectionism is ultimately value destroying for all parties.
In response to your question “LVMH recognizes the need to curb the carbon emissions that could threaten the raw materials its businesses rely on, but is the luxury retail industry inherently incompatible with sustainability?” I would have to answer no. In fact, given the nature of their business – high margin, exclusive, innovative and futuristic – LVMH is one of the few companies capable of leading innovation in this space without disrupting their core business.
As we saw with the Tesla Roadster, people are willing to pay for innovation exclusivity and the type of people willing to pay for these things are LVMH’s target audience. The profit’s from these high margin innovations can then be re-invested in more affordable products, making sustainable fashion simultaneously more luxurious and accessible . LVMH need to go beyond managing their supply chain and review their product innovation process to see if they can make sustainability fashionable and sexy.
1. Urban, Tim (2015). “How Tesla will change the world”, Wait But Why. [Retrieve here: https://waitbutwhy.com/2015/06/how-tesla-will-change-your-life.html%5D
I had never realized that my favorite beverage was also doomed by climate change!
I agree with Drew’s comments that as an industry leader ABI play an important role in setting the industry standard for climate conscious business practice and am glad to learn they are making a conscious effort in this space.
That being said, ABI’s overall carbon footprint is negligible and will not affect the march towards warmer climates and environmental transformation forthcoming. More importantly, ABI should focus on changing their operations for the inevitable pain this will bring. While diversification into alternative revenue streams provides an attractive business opportunity, almost selfishly I’m more concerned with sustaining the beer manufacturing business. ABI can learn for global leaders in water recycling such as Australia. The Western Corridor Recycled Water Scheme in Brisbane, Australia is the country’s largest water project at $2.5B. The project purifies 232 megaliters a day and redirects it for use in industrial and agricultural industries as well as supplementing local drinking water.  Such innovations would allow ABI to continue to support its primary operations while reducing its demand on the water table.
1. Johnstone, Craig (8 May 2009). “Water recycling pipeline in mothballs”. The Courier-Mail. Queensland.
2. Veolia Water (2010). “Western Corridor Recycled Water Project, Queensland”. Key contracts and projects.
Fantastic article, Daniel! While in Australian I had the fortunate enough to hear Associate Professor Robyn Sloggett, Director of the Centre for Cultural Materials Conservation from the University of Melbourne give a talk on modern art fraud. Your article addresses many of the topics she raised.
The biggest challenge in art fraud will always be authentication. Even great institutes such as Sotheby’s have fallen victim to the cunning of the modern art frauds but blockchain innovations will definitely dampen the incentive to commit fraud to begin with. One particular challenge is the disconnect between when a forgery is detected compared to when it was committed. Often a fraudulent work is authenticated by being sold in lesser known market such as country estate auctions. Through this process creates provenance – the person can say “I bought it at this auction and I know the artist previously lived in the area”.
Blockchain creates an incorruptible way to track provenance to its inception which ensures that whenever a fraud is detected it can be immediately be connect back to the original source. This drastically dampens the incentive the incentive for the fraudster as they previously only focused on one end of the supply chain – manufacturing and first sale – now they are connect to every and all future transactions, increasing the risk of exposure.
Great to read about the connection between technology and art!
As an Australian who only discovered Amazon a few months ago I continue to be surprised by their ongoing innovation, challenging the traditional retail experience.
Solving the pain points at check-outs certainly present a huge opportunity but I feel it is just a small step in a large transition towards a fully immersive Omni-channel experience. For the projects I have been involved with trying to establish an Omni-channel experience the biggest challenge has often been stock availability and live inventory tracking. It’s no use having a store front if customer’s cannot rely on their being stock on the shelves. For Amazon in particular I think this is an interesting challenge as their supply chain model has tended to focus on holding large inventory volumes in low cost locations which are not necessarily appealing to a brick and mortar customer. Amazon’s appeal has always been to be the store with everything able to get you whatever you want in a relatively timely manner. Transitioning to a B&M channel may challenge this customer promise as it requires holding more stock in more locations.
Much like Amazon’s previous innovations in warehousing, I suspect that automation of processes such as checkouts will allow them to substitute labor costs for inventory helping them maintain a competitive cost advantage.
Thanks very much for the interesting topic Caue. I found this topic rather thought provoking and was encouraged to hear industry leaders such as GE actively investing in bring their global community closer together in a time of increasing isolationism and protectionism. Naturally so a new and innovative space brought up more questions for me; specifically how can 3D printing further decentralize a company’s supply chain. In shifting towards a digital information economy, AM allows companies to more efficiently move ideas and innovations around the world as changes in the regulatory landscape effect their business. Couple with the idea of renting facilities – as suggested by some of our peers above – I think this has the potential to enable a more interconnect and flexible supply chain which is also more decentralized.