Really interesting article, thanks for posting. I tend to be a pretty harsh critic of CSR activities. I often think they are minimal impact and just a marketing ploy at best, or intentionally misleading at worst. Your reference to the Green Peace investigation is one of the reasons I’m so paranoid! In fact, this reminded me of our IKEA case recently – I suspect they too might be fudging some of the criteria they use to meet FSC standards.
I think you hit the nail on the head with your encouragement of Unilever to increase lobbying efforts. I don’t think we can expect the company to unilaterally implement more sustainable strategies to the detriment of its bottom line and shareholders given that its competitors could take advantage of such a move. Instead, I think Unilever should be lobbying governments to implement across-the-board requirements related to sustainable sourcing and distribution. That would achieve two aims: (1) it would establish Unilever as an eco-friendly brand (which many consumers appreciate); (2) it would allow it to implement ‘green’ supply chain strategies that don’t put it at a competitive disadvantage to its rivals (since under new regulations, rivals would also have to implement these strategies). Since lobbying takes time, it should continue to invest in green pilots that it can then use as evidence to various governments that sustainable supply chains are in fact possible and still profitable for the private sector.
Very interesting piece. Volvo actually just announced it would deliver autonomous SUVs to Uber starting in early 2019 (see article here: https://techcrunch.com/2017/11/20/uber-orders-24000-volvo-xc90s-for-driverless-fleet/). So it seems they are taking heed of your first piece of advice.
I’m intrigued by your second question on whether it made sense for Volvo to race to go electric before its competitors. I don’t think there’s a clear answer to that yet, but I think it depends an incredible amount on one factor alone: government regulation. Many climate-friendly industries like solar, wind, and electric vehicles are only competitive right now due to government subsidies and incentive programs. The big question for Volvo is whether those programs will decline, continue, or increase. Given the current political environments in countries considered eco-friendly (particularly many parts of Europe, and to a less extent, the US) I’m worried about Volvo’s prospects here. With that considered, I think Volvo should be (if it isn’t already) investing a lot of resources into lobbying governments to increase auto regulations to encourage green-friendly technology like Volvo cars. In political environments in which climate change isn’t as high a priority (or is outright scorned like in the US), Volvo should invest in lobbying efforts that change the narrative away from climate change and towards other things that are more politically salient, like energy independence or pollution. But one thing seems clear to me: the success of electric vehicles will, at least in the short term, depend a lot on the extent to which the government regulates them.
I get worried that Walmart is going away from its core business model and customer value proposition by trying to directly compete with Amazon. For example, targeting millennials seems like a fool’s errand for Walmart. Walmart’s investments in things like the Bonobos acquisition, machine learning, and AI – while potentially beneficial – are likely expensive and longer-term in nature, and likely pay off less directly/quickly than Amazon given their different customer bases and corporate competencies (this article helps articulate my viewpoint: https://www.forbes.com/sites/panosmourdoukoutas/2017/05/19/walmart-will-never-beat-amazon/#29654b079ed3) . Rather than trying to compete with Amazon directly on digital tech and distribution, I feel like Walmart would do well to stick to its core by expanding geographically and increasing share of wallet with its targetable market.
Thanks for sharing. This seems like an enormous problem and I’m glad BPS is working to fix it!
The charter vs. public debate is interesting and I don’t know exactly where I come out on it… but this new system seems to give a big benefit to the public system by allowing it to select charter schools’ student populations. I think this is a step in the right direction. With the exception of special needs/special population charters, it seems like this system levels the playing field and prevents charters from ‘skimming’ good students to the detriment of the public system. However, it raises a lot of questions (many of them legal in nature) for me about the extent to which the public system can regulate the charter system.
In response to your questions, I see an opportunity for this system – once implemented – to be used for additional equity-related policy objectives. For example, it could use additional inputs like income level, language ability, even test scores, to balance schools in ways reflective of the public’s priorities (e.g., avoid having schools filled with all low-achieving students, or match schools with specific competencies with student populations that would benefit the most from those competencies). Such a use could be pretty controversial but would provide policymakers a powerful tool to ensure the education system is as equitable as possible.
Finally, a lot of what I’ve read recently about digital tech’s impact on education isn’t related to supply chain at all, it’s related to actual pedagogy and learning. Algorithm-based programs that provide individualized learning (i.e., computer programs that allow slower students to go at a slower pace while faster students can be more frequently challenged) have been piloted in schools though no single program seems to have gained wide appeal. Something to look out for in the future perhaps (http://www.gettingsmart.com/2015/11/8-ways-machine-learning-will-improve-education/).
Really interesting article! I had no idea the UK was such a hub for auto manufacturing and the implications of Brexit on that.
Toyota’s approach to Brexit is interesting and in some ways seems counterproductive to their goals. For example, you reference a Toyota announcement that the UK would remain a priority of theirs and that they’re investing hundreds of millions of pounds in existing operations. If I were Toyota, I’d take the opposite approach: I’d express open concern about the implications of Brexit and the future of Toyota manufacturing in the UK, and get major public concessions from the government to ensure any increase in tariffs or costs would be made up for by Parliament. Toyota’s willingness to so quickly double down on their loyalty to the UK makes me think that they’re very confident that Brexit may in fact not cause the types of problems industry analysts are predicting. Indeed, it would make sense that the government would do everything in its power to have the post-Brexit system reflect as much of the pre-Brexit system as possible (except in name).
This is a broader point but relevant: one of the most interesting components of the isolationist movement both in the US and the UK is that there is some evidence that it is in fact working as intended. For example, in the article above, Jide writes that “Toyota will also look to source more components from the UK, which could offset the impact of currency fluctuations and soften the blow of WTO tariffs.” This is EXACTLY the type of incentives voters wanted when they chose Brexit. In the US we also see slight upticks in some of the industries white color liberals thought were dead, as well as some amount of on-shoring. While many scorn the promises of politicians like Trump or Boris Johnson as infeasible, they might actually be delivering in some ways (even if it is to the detriment of society at large and the future of their countries).
This is a really interesting piece and I think representative of what a lot of companies are dealing with now. It reminds me a bit of the Fuyao case discussion we had.
I worry about making any serious, capital-intensive decisions in response to Trump’s isolationist posture. There are two reasons for this: (1) it’s unclear how ideologically com mitted Trump truly is to isolationism (versus it being a policy he will support insofar as his base feels like he’s ‘protecting’ them) and therefore how persistent and comprehensive his opposition to free trade policies will be, (2) there is a significant chance that he will lose the 2020 election and be replaced by someone more open to free trade. Therefore, investments in upskilling domestic labor or high-tech machinery for domestic automated production may not be the best way to allocate resources, particularly since the payoffs in those things are not immediate. Perhaps an alternative or additional area to focus on is getting Trump to offer massive tax breaks for some symbolic amount of on-shoring… the tax breaks would offset uncompetitive production costs while the company waits for the next political administration. Trump actually did this early on in his tenure with United Technologies, brokering a deal that had Indiana offer ridiculous tax benefits to keep a modest number of jobs from being sent elsewhere (http://fortune.com/2016/12/02/indiana-carrier-jobs-tax-breaks-mexico/).
All of the above said, I think a lot of the decision comes down to whether you think this isolationist position is going to be pretty sticky in American politics for the medium term. There’s a good argument to be said that it will be given that both the far left and far right wings of the country’s two parties actually agree on having isolationist trade policies, and both heavily influence federal policymaking.