Digitization, as RRE points out, will make a huge impact on the Brazilian energy sector. Although the Brazil energy sector is unique in having 61% of its energy coming from hydropower, which also makes it easier to match power generation to consumption, other utilities across the globe, will have an even harder time adapting to renewable but non-continuous sources of energy like wind and solar.
In addition to the use of smart meters and digital automated systems, energy system operators would be wise to consider advances in battery technology to store energy when there is excess generating capacity. Tesla recently delivered the world’s largest battery to South Australia, to store power from a wind farm, releasing energy in times of increased demand.
It is also very interesting to note the impact of the Brazil-Germany game on power consumption during the 2014 World cup! It goes to show that system operators have to react not just to weather events like a heat wave that drives up energy consumption, but to other events of intense interest to consumers – football in Brazil and perhaps a cricket match in India.
I had no idea LEGO was facing bankruptcy in the early 2000s! LEGO faces some unique challenges in terms of Chinese duties on imported toys and they have reacted well to this change by initiating manufacturing in China. They have also focused on lower manufacturing costs in supporting their large markets in Europe through manufacturing plants in Hungary and the Czech Republic and in Mexico for the US market. Whereas isolationism is rearing its ugly head in the US and parts of Europe, it is certainly not a worldwide phenomenon. President Xi of China continues to push for more international trade and other Asian and African countries recognize that free trade is essential to raising the living standards of their citizens.
LEGO will need to carefully weigh the political situation in each major geography and adjust its supply chain to the local reality. The factory in China may support the Chinese market and other nearby Asian countries like Japan and Korea but other markets may require local manufacturing as well. Although Brexit is a concern, the rest of the European Union still seems to be amenable to open borders and cross-EU trade. Depending on the direction the NAFTA negotiations take, LEGO may have to react differently in North America. A one-size-fits-all solution will not be the answer, and LEGO (and other companies with similar global supply chains) will need to react appropriately to changing geo-political conditions.
Gildan certainly faces very interesting challenges as isolationism drives barriers to international trade. This is a problem common to the apparel industry as a whole, but particularly for low value products like “free swag”. The apparel industry supply chain is heavily dependent on unimpeded cross-border flows, with cotton produced in countries like the US and India, spinning and weaving mills in advanced economies, and as the Li and Fung case showed us, accessories like zippers and buttons coming from places like Japan and Korea, and manufacturing done in low cost countries like Vietnam and Bangladesh.
If isolationism is a trend that is here to stay, there is no doubt that apparel costs will increase. Many of the skills required for apparel manufacturing are no longer available in advanced economies and companies that have tried to re-initiate apparel production in the US are having a difficult time finding trained pattern makers and sewing machine operators. Adjusting to this change will be a long term process, with extensive training of the labor force, and perhaps investing in higher levels of automation like laser pattern making and cutting, and companies like Gildan will need to bear the brunt of this investment.
Who hasn’t experienced long delays and multi-hour waits at an airport when an aircraft experiences a “mechanical”, and the part has to be flown to the airport from a hub city far away? This is all too common an experience, adding to the travel challenges of both business and leisure travelers, and the whole aviation repair and maintenance process seems ripe for disruption in the digital age.
As Ryu points out, additive manufacturing may not be the short-term solution. Many parts that fail are highly complex electronic assemblies that are not amenable to 3D printing. The “pooling” of parts across multiple airlines, assisted by sophisticated digital inventory management and “first rights” ownership under the auspices of aircraft manufacturers in partnership with MROs may be the better solution. Multiple airlines operate similar aircraft from a small number of major aircraft manufacturers like Boeing, Airbus, and Embraer, and it should be possible to hold pooled inventory of parts at major airport sites that make these parts available to all airlines operating at those airports. A leading MRO like AAR can play the “trusted intermediary” by taking responsibility for managing this inventory and performing the repair for multiple airlines.
Autonomous trucks, in general, through better control over acceleration, deceleration and idling, will significantly improve fuel efficiency. Platooning is a very interesting operational benefit that can only be achieved by autonomous trucks that can drive in close proximity to each other by having close communications and reaction times faster than human drivers. Transportation companies like FedEx, UPS and DHL will benefit from both autonomous driving and in particular platooning, as they have multiple trucks driving between major sortation hubs that could use this technique.
Open communications standards, though, will be the key to success. Without these, platooning may only be possible between Daimler trucks, and not competitor autonomous vehicles, which ideally should also be able to take advantage of this concept.
While platooning is an interesting concept, it seems to me that environmental benefit can be readily derived from the use of alternative fuel technologies like LNG, CNG, hybrid, and all-electric vehicles. These applications are available now, and not dependent on future autonomous technology and regulation for fuel savings. It will be interesting to see what efforts Daimler has been making in this area as well.
Wal-Mart has tremendous clout on its suppliers, given its size, and any effort that Wal-Mart leads will impact not only its own supply chain but that of its suppliers. It will also, in my opinion, have a competitive impact, as shareholders, NGOs and the general public are likely to demand similar behavior and goals from Wal-Mart’s major competitors like Target and Kroger.
It will be very interesting to know what Wal-Mart’s current carbon footprint is at the time of the start of project Gigaton. While the Gigaton in savings is certainly an impressive number, we should compare it to the total footprint that Wal-Mart currently has to better understand the size and scope of the project impact.
It is also interesting to note that Wal-Mart started this effort in 2016, which is somewhat late, compared to the magnitude and prior visibility to this problem. For example, UPS initiated its sustainability efforts and voluntarily started reporting according to the Global Reporting Initiative (GRI) standards since 2003.