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Back to Newsletter Vol 2, Issue 02, May 2020
IT & Operations
This case discusses how Chinese tech startup ByteDance grew into one of the fastest growing internet startups in the world powered by Artificial Intelligence (AI). Valued at US$75 billion, ByteDance offered a global portfolio of content discovery platforms that entertained and informed users in over 150 markets and 75 languages. It developed a suite of apps built around AI. While the company’s flagship product, Toutiao, was the largest AI-powered content discovery platform in China that delivered personalized news to users based on their interests, its popular short form video app TikTok was one of the most downloaded apps. ByteDance was one of the first companies to apply AI technology and machine learning to content discovery and distribution apps. The case elucidates the benefits that the company derived from leveraging AI, including the roll-out of innovative apps, and gaining a foothold in China’s ultra-competitive app ecosystem. In just six years of its launch, ByteDance emerged as a leading global tech player rivaling tech giants such as Facebook, Google, Baidu, Alibaba, and Tencent in influence. TikTok surged ahead to become one of the fastest-growing social media apps in the world with about 500 million active users globally as of August 2019. The case discusses the challenges faced by ByteDance in the global internet market and how sustaining its growth was of utmost importance to the company amid tough competition, slowing economic growth in China, and regulatory pressure in China as well as global markets such as the US and India as authorities clamped down on its popular TikTok apps over inappropriate content. The case also explores the potential downside to extreme focus on AI, including availability of data, privacy concerns, cost and maintenance, and skills shortage.

ByteDance: Harnessing Artificial Intelligence for Breakthrough Innovation
The case “Netflix Migrates to the Public Cloud for Seamless Streaming” talks about the migration of US-based Internet streaming company Netflix Inc. (Netflix)’s streaming services to the public cloud system through Amazon Web Services (AWS) owned by Amazon.com, Inc. (Amazon). The case starts out by mentioning the problems Netflix faced with regard to data storage and data scalability, given its growing business needs. The case then documents how Netflix migrated to AWS by undertaking business process re-engineering, bringing about a sea change in its IT infrastructure and database systems, and designing some proprietary cloud-based systems. It then goes on to provide information about the benefits gained by Netflix after migrating to AWS. Though some analysts wondered whether Netflix would be ready for any failure of AWS in future, Netflix’s Vice President, Cloud and Platform Engineering, Yury Izrailevsky (Izrailevsky), was confident about the Netflix’s data security future on the public cloud.

Netflix Migrates to the Public Cloud for Seamless Streaming
The case discusses the automation strategy of Tesla, Inc (Tesla), the world’s largest Electric Vehicle (EV) maker. Tesla vigorously pursued automation solutions to develop high-performance environment-friendly cars that were not only sustainable, but also superior to fossil-fuel alternatives, delivering massive savings in energy costs, performance, efficiency, and reliability. In 2017, Elon Musk (Musk), CEO of Tesla, focused on hyper-automation, including a robotic assembly line, to increase manufacturing speed and drive down costs. Tesla’s Fremont manufacturing facility in California was heavily automated with hundreds of industrial robots being used for manufacturing, replacing many of the human workers employed there. However, the production ramp-up came with huge setbacks including massive cash burn, missed production targets, financial losses, and high employee turnover. Automation processes actually slowed down production as Tesla. Eventually, Musk admitted that his company had gone way overboard with automation and, ultimately, had to turn back to human assembly line workers to achieve the production targets of Model 3. Despite the setbacks, Musk stated in 2019 that automation would be key to the company’s future. Going forward, the biggest challenge for Musk would be how to reach an optimal level of automation in order to achieve efficiency in production processes and drive down costs.

Automation at Tesla
The case “Paytm Employing Technologies and Tools to Fight Cyber Fraud” discusses the technologies and tools employed by Paytm, one of India’s leading e-commerce and digital wallet companies. The case starts out by going into the reasons for the vulnerability of a digital payments company like Paytm to fraud. Though there are cyber laws in India to check fraud in digital payment systems, companies such as Paytm, continued to be easy targets of fraudsters. The case then provides an overview of the kind of frauds encountered by the customers of Paytm, the loss borne by them, and the various measures taken by Paytm to counter the frauds. Later, the case describes in detail the different tools and technologies like Data Encryption, Data Intrusion Detection Systems, and Artificial Intelligence that were adopted by Paytm to combat fraud. Vijay Shekhar Sharma (Sharma), Founder and CEO of Paytm, was confident that the security measures deployed by Paytm would be effective in combating cyber fraud. The question is, can Paytm maintain the same level of security in future considering the ever-shifting fraud landscape?

Paytm Employing Technologies and Tools to Fight Cyber Fraud
The case discusses the challenges faced by Luca Fichera, Executive Vice-President (Supply Chain) of Nestlé India Limited (Nestlé), in dealing with the mandatory recall of Maggi noodles imposed on the company by the Food Safety and Standards Authority of India (FSSAI). Luca and his team faced a daunting task in completing the reverse distribution exercise of 400 million Maggi noodles packets in a country the size of India with all the complexities involved and that too within a very short planning horizon. The case helps students understand the structure of reverse and closed-loop supply chain and the challenges relating to the collection, transportation, warehousing, and disposal of the products.

Nestlé’s Maggi Recall in India: A Reverse Supply Chain Ordeal
The US-based Popeyes Louisiana Kitchen, Inc. (Popeyes), a chain of fast food restaurants, offered items like chicken, seafood, sandwiches, wraps, kids’ meals, sauces, desserts, and beverages. Headquartered in Miami, Florida, Popeyes was founded in 1972 by entrepreneur and culinary innovator Al Copeland. On August 12, 2019, Popeyes added a temporary item to its menu – Fried Chicken Sandwich. Initially, the product received lukewarm response – until Chik-Fil-A, Popeyes’ competitor, tweeted claiming its own chicken sandwich was the most authentic. Popeyes replied with a tweet which started a tweet war between the two. Soon some other quick service restaurants in the US joined the fray. The Twitter war made the Popeyes Chicken Sandwich famous and pushed up their sales so much that Popeyes’ stock of two months finished by August 27 and it had to declare the sandwiches “Sold Out”. It took the chain another two months to relaunch the chicken sandwich.

Popeyes Chicken Sandwich – A Marketing Triumph or a Supply Chain Disaster?
The case discusses global supply chain giant Li & Fung Limited’s (Li & Fung) evolution from a regional sourcing agent to a global supply chain manager supplying apparel, accessories, and other products to global retailers. The company became a ‘one-stop shop’ for Western retailers by delivering a ‘global value-added package’, including product design and development, raw material and factory sourcing, production planning and management, quality assurance, and shipping consolidation. While the company tasted success as a supply chain manager, its inability to grasp e-commerce and several digital trends proved to be catastrophic for the company and led to a decline in its revenues. The rapid expansion of fast-fashion brands such as Spanish apparel retailer Zara SA (Zara) and Swedish multinational clothing retail company Hennes & Mauritz AB (H&M), also shook up Li & Fung’s traditional sourcing business as retailers began directly communicating with factories to reduce their costs. To add to its troubles, the US announced trade restrictions on Chinese imports in mid-2018. Though the trade war had a huge impact on Li & Fung, it maintained that it was prepared to weather the storm. The company said that its global network of production in 50 countries, decades-long relationships with factories outside China, and its ability to quickly move to production countries would enable a smooth transition out of China. Despite Li & Fung’s optimism, analysts wondered how the company would tackle the challenge of the US-China trade war and continue with its supply chain management dominance in global markets.

Li & Fung: Battling the Global Supply Chain Challenge
This case is about HIsarna, a new steel production technology developed as an alternative to the existing steel production technologies which were not only energy intensive but also high on CO2 emissions. The new process was developed in the wake of the Paris Agreement, which aimed at reducing CO2 emissions globally. The European Union targeted cutting down the emissions to 80-90% of 1990 levels by 2050. The European Union was also looking at adopting a circular economy, which would not only reduce pressure on the environment but also enhance the security of the supply of raw materials and lead to economic growth. As far as the steel industry was concerned it was looking at increasing the efficiency of production and to redesigning production processes to reduce CO2 emissions. Toward this end, the steel industry in Europe formed a consortium called Ultra-Low Carbon Dioxide Steelmaking (ULCOS) in 2004 to identify technologies that would help reduce carbon emissions, ensure energy efficiency, and allow flexibility in the selection of raw materials in the steel industry. The consortium was of the view that a completely new process needed to be developed as the limits of the existing production systems had already been achieved. This resulted in the development of a breakthrough technology, HIsarna, which removed a number of energy-intensive pre-processes and provided flexibility in terms of the quality of raw materials and use of fuels. In the process, the CO2 emissions fell by 20%, and by capturing the high quality CO2, the emissions could be reduced by 80%. The emissions of other fine particles could also be reduced. The technology was tested in a pilot plant of Tata Steel Europe in the Netherlands and the € 75 million project was funded by ULCOS, the European Union, and the Dutch government. HIsarna was a combination of two different technologies, one from metal and mining company Rio Tinto and the other from Tata Steel. After years of trial runs and experiments, Tata Steel was all set to take the new sustainable production process to industrial scale. This called for more investments and it remained to be seen whether steel majors from across the world would show an interest in adopting the new technology in a bid to reduce emissions, or whether they would continue with the traditional steel making processes.

HIsarna – Developing a Sustainable Steel Production Process

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