Good job taking a topic which has a lot of lingo and breaking it down in an easy way to understand, Kyle! In terms of the long-term implications of blockchain in energy trading: As you’ve mentioned, it sounds to me like it will bring about a lot efficiencies in the way energy is traded today and also potentially cut out the “middlemen.” I wonder if this means that many companies which exist today and have business models built on energy trading, like ones we learnt about in our other classes, will no longer exist or have to radically change their business models in order to survive. Apart from much of their functional role being replaced, their core business models are also threatened by the price transparency which would ensue from having publicly available pricing.
However, given that blockchain is only a digital ledger, I think that there will still be a number of “middlemen” functions which will need to be performed (e.g. logistics, storage), but as mentioned, business models will have to evolve since their margins will be pressured by the price transparency.
Insofar as whether having smart contracts across the industry is feasible – I am curious as to whether having such platforms requires that all transactions in the industry move towards this platform (or at least all transactions of a certain kind), or whether it’s possible for the current systems to exist with these new mechanisms. My initial instinct is that it will be difficult for these things to coexist, since it will be unclear as to what business volume should remain where, which players are using which platform, and also those who use the platform may be disadvantaged due to the transparency v.s. those not. Also, who will pay to build, maintain, and enhance this platform? How will it develop if there is pressure from “middlemen” to stick with status quo? This is perhaps where regulation could play an interesting role. I wonder if it can, and needs to push the industry towards adopting uniform standards, and whether there need to be new entity licenses for the bodies which maintain these platforms.
Lastly, I wonder if there are any geopolitical implication of this coming about, given that energy is very sensitive for countries. Does it “democratize” the industry too much to the extent that there is room for malicious actors to say buy out supply and starve those who need it? Or create concentrated vulnerability which is subject to digital attacks?
Bill Nye, I was curious to read this since I looked into the healthcare supply chain too! Thanks for a clear, focused piece. You bring up an interesting question around privacy and data security. I believe that the existing regulatory frameworks around healthcare data will still apply and can easily cover the use cases you’ve mentioned around telemedicine. The only difference will be that more data will be captured digitally than is being captured today. I think the privacy and data security issues become more tricky when we start to combine the patient outcomes data with other sources of data, such as supply costs data to help providers make better purchasing decisions (check out “Mercy” healthcare systems, providing a few reading links below). On one hand, it is always possible to anonymize and aggregate data, but given low sample sizes and unique features of particular cases, there is a risk to being able to identify patients.
On your question of how traditional healthcare organizations make investment decisions: As mentioned above, I think by combining different sources of data like Mercy is doing, it is possible to measure the effectiveness of these technologies. With two nuances: 1) Healthcare providers should think of ways to “prototype” technologies, or do smaller-scale pilots, so that the costs of learning are reduced, and 2) They have to think about what are the right metrics of “success” carefully, and for whom.
A few other interesting things for us to think about on this topic:
Insurance – As virtual/telemedicine expands, an important party in this equation is those with the purse strings. How will insurers be impacted by this evolution, and how do we engage them to adapt?
The digital supply chain – I’ve read a couple of interesting articles about how this can impact telemedicine; so beyond just providing this virtual medicine, really using a digitized supply chain to measure what’s going on while the patient is home (e.g. for chronic patients) and understanding how their environment affects their condition, or having a supply chain efficient enough to deliver medical goods to the end-patient remotely can be game-changers in this space.
“Healthcare Supply Chainnovators 2016: Global Patient Care and Supply Chain Analytics Win the Day,” Gartner, Inc., accessed November 2017.
World Wide Technology. “Mercy Virtual Creates Anytime Healthcare.” Case study, World Wide Technology website, https://www2.wwt.com/case-study/mercy-virtual-creates-anytime-healthcare/, accessed November 2017.
Damir, wow this is a difficult topic to address! Good job picking something which requires deeper thinking and is still an outstanding issue. While reading your essay, I also started thinking about the first question you ask on whether FLIR can establish enough transparency. Getting reports from its suppliers on “self-certification” or writing a code of standards, but seem like “check-the-box” items rather than substantive. Such reports can easily be fraudulent. After trying to think hard on this, I resorted to Googling to see if anyone else has solved the problem, and found the Engadget article below – which basically suggests: Technology has not been able to solve this problem, but there are interesting ideas people are trying out!
A few interesting solutions proposed are: Use RFID tags, collect information from suppliers, use blockchain. But it seems that the effectiveness of these solutions is still to be proven. Other solutions which are recently getting attention are: Using satellite imaging, or even better – a less “techy” solution which is to enable workers to anonymously provide information about their factories, or engaging NGOs/journalists and giving them access to data.
I could see how some of these solutions could be interesting for FLIR, particularly the low-tech ones; but quite frankly, I don’t have a good answer (and I don’t think the world does either) on how to solve this issue. Technology is only a tool/enabler; it will require deep thinking, experimentation, engaging people, and a lot of humanity to address this.
Darius, you’ve clearly explained this problem and the current solution Smurfit Kappa Group has implemented on pricing. It sounds to me like a very tough position for Smurfit Kappa Group to be in, and the solution requires a lot of effort.
A few thoughts, however: Firstly, since Brexit was not isolated to the Smurfit Kappa Group, is there a reason they would be more heavily affected than their competitors? I’m running under the assumption that they’re competitors have a similarly geographically distributed supply chain structure. But basically, I wonder if the playing field is levelled across the industry, or if there are several players who are say more UK-based, and hence will make it difficult for Smurfit Kappa Group financially.
Second, you mention that you’re concerned about their competitiveness in a commoditized and price-sensitive industry. I agree this is a concern if there is competition which can undercut their prices, but if not, the consumers will have to accept the higher prices. However, now that Smurfit Kappa has been put in this position, it might make sense for them to think through how they could (1) differentiate themselves from competition to the end-consumer, and (2) really improve upon their cost structures in order to outcompete others. To this end, a couple of ideas are broadening their portfolio to include other value-added paper/packaging products, and to go through a full re-thinking of their supply chain (there may be opportunities for them to improve, just as we saw a gap between United and Asahi today).
Wow this is very informative, clear, and concise! Thanks for a good read Leo, I was curious to read something by a published author 🙂
It sounds to me like Huawei is doing a lot to build a greener supply chain, and I think your suggestions are the next logical steps for the company to take. As you said, I too am concerned about whether Huawei can and will sustain this level of engagement with green issues, or not, given competition. Arguably, a greener supply chain can result in changes which are beneficial to their cost structure overall (e.g. energy or raw material inputs costs savings), but this will not always be the case.
I’m wondering, rather, as to whether there is a stronger role for regulators to play here. The release of GHGs as a byproduct of production, results in a strong negative externality, which will be hard for the producer to correct on their own since they capture value from the externality. If the regulators limit emissions, then it creates more of a level playing field across industry players, and helps reduce the externality. However, one risk is if this is implemented in a limited set of countries, companies in those countries may be disadvantaged relative to others in the global markets. In any case, what is the state of regulation in China? I was trying to figure out what’s going on and it looks like something is under way but not implemented?  Would this affect Huawei?