Tag Archives: Digital

Updates from McKinsey

Digital disruption at the grocery store
Five trends are shaping the transformation of the US grocery industry. Understanding them is key for grocers to achieve profitable growth in this new competitive environment.
By Steven Begley, Eric Marohn, Sabah Mikha, and Aaron Rettaliata – In the past two decades, e-commerce has altered customer shopping behaviors and transformed the US retail landscape from brick and mortar to omnichannel. Grocers have remained largely immune to digital disruption—until recently.

Powerful trends, including new competitive pressures, technological advances, and evolving consumer attitudes and behaviors, will disrupt the grocery business from coast to coast in the next few years. Some grocers are learning from other retail sectors and countries, recognizing threats early, seizing opportunities, and catching a wave of profitable growth. Others are struggling, and some may disappear.

Until relatively recently, the US grocery sector has remained sheltered from the forces of e-commerce for a couple of reasons: Most American shoppers still prefer to choose their own food (especially meat, produce, and other perishable goods), and few grocers have had the financial capacity to invest in the highly efficient, large-scale cold chains required to make home deliveries at a profit. That is changing.

While online sales accounted for anywhere from 3 to 4 percent of the US grocery market in 2019, the share could be greater than 10 percent by 2025 as major retailers—including well-funded entrants from outside the sector—invest in automation and innovative operating models to solve challenges in fulfillment and last-mile delivery. As quality rises and online grocers make more compelling offers, millions of shoppers will get comfortable offloading a task that only about 15 percent say they enjoy. We have seen that online grocery is supply driven, and as online grocers provide more supply, customers will adopt the new method of grocery shopping. more>

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Cybersecurity and digital trade: What role for international trade rules?

By Joshua P. Meltzer – Trade and cybersecurity are increasingly intertwined. The global expansion of the internet and increased use of data flows by businesses and consumers—for communication, e-commerce, and as a source of information and innovation—are transforming international trade. The spread of artificial intelligence, the “internet of things,” (IoT) and cloud computing will accelerate the global connectivity of businesses, governments, and supply chains.

As this connectivity grows, however, so does our exposure to the risks and costs of cyberattacks. As the President’s National Security Telecommunications Advisory Council observed, the U.S. is “faced with a progressively worsening cybersecurity threat environment and an ever-increasing dependence on internet technologies fundamental to public safety, economic prosperity, and overall way of life. Our national security is now inexorably linked to cybersecurity.

Not only are traditional defense and other national security targets at risk of cyberattack, so too is the broader economy. This includes critical infrastructure—such as telecommunications, transport, and health care—which relies on software to network services. There is also cybertheft of intellectual property (IP) and manipulation of online information. More broadly, these risks undermine business and consumer trust in the internet as a basis for commerce and trade.

Many countries are adopting policy measures to respond to the threat. According to one estimate, at least 50 percent of countries have adopted cybersecurity policies and regulations. more>

Why economics must go digital

By Diane Coyle – One of the biggest concerns about today’s tech giants is their market power. At least outside China, Google, Facebook, and Amazon dominate online search, social media, and online retail, respectively. And yet economists have largely failed to address these concerns in a coherent way. To help governments and regulators as they struggle to address this market concentration, we must make economics itself more relevant to the digital age.

Digital markets often become highly concentrated, with one dominant firm, because larger players enjoy significant returns to scale. For example, digital platforms incur large upfront development costs but benefit from low marginal costs once the software is written. They gain from network effects, whereby the more users a platform has, the more all users benefit. And data generation plays a self-reinforcing role: more data improves the service, which brings in more users, which generates more data.

To put it bluntly, a digital platform is either large or dead.

As several recent reports (including one to which I contributed) have pointed out, the digital economy poses a problem for competition policy.

Competition is vital for boosting productivity and long-term growth because it drives out inefficient producers and stimulates innovation. Yet how can this happen when there are such dominant players?

Today’s digital behemoths provide services that people want: one recent study estimated that consumers value online search alone at a level equivalent to about half of US median income.

Economists, therefore, need to update their toolkit. Rather than assessing likely short-term trends in specific digital markets, they need to be able to estimate the potential long-term costs implied by the inability of a new rival with better technology or service to unseat the incumbent platform.

This is no easy task because there is no standard methodology for estimating uncertain, non-linear futures. Economists even disagree on how to measure static consumer valuations of free digital goods such as online search and social media.

And although the idea that competition operates dynamically through firms entering and exiting the market dates back at least to Joseph Schumpeter, the standard approach is still to look at competition among similar companies producing similar goods at a point in time. more>

How digital technology is destroying our freedom

“We’re being steamrolled by our devices” —Douglas Rushkoff
By Sean Illing – There’s a whole genre of literature called “technological utopianism.” It’s an old idea, but it reemerged in the early days of the internet. The core belief is that the world will become happier and freer as science and technology develops.

The role of the internet and social media in everything from the spread of terrorist propaganda to the rise of authoritarianism has dampened much of the enthusiasm about technology, but the spirit of techno-utopianism lives on, especially in places like Silicon Valley.

Douglas Rushkoff, a media theorist at Queens College in New York, is the latest to push back against the notion that technology is driving social progress. His new book, Team Human, argues that digital technology in particular is eroding human freedom and destroying communities.

We’re social creatures, Rushkoff writes in his book, yet we live in a consumer democracy that restricts human connection and stokes “whatever appetites guarantee the greatest profit.” If we want to reestablish a sense of community in this digital world, he argues, we’ll have to become conscious users of our technology — not “passive objects” as we are now.

But what does that mean in practical terms? Technology is everywhere, and we’re all more or less dependent upon it — so how do we escape the pitfalls? more>

Updates from GE

Japan;s First Digital Power Plant Goes Live
By Kristin Kloberdanz – The massive gas-fired Futtsu Power Station, which forms a small peninsula in Tokyo Bay, is capable of generating 5,040 megawatts of electricity for millions of Japanese homes and businesses.

Made up of four combined cycle blocks, the plant is already the most efficient of the 15 power stations operated by TEPCO Fuel & Power, the utility servicing the area around Japanese capital. But in the interest of “kaizen”—the Japanese philosophy of continuous improvement—TEPCO believes it can perform even better.

As a result, Futtsu is about to become the first power plant in Japan to go digital, specifically in its No. 4 block. TEPCO will soon start using Predix, GE’s cloud-based platform for the Industrial Internet, to see if it can squeeze even more efficiency out of the plant.

GE’s Asset Performance Management (APM) software analyzes real-time data—such as temperature, pressure and changes in the levels of liquids and gasses—coming from sensors embedded in machines around the plant to make it run more efficiently and predict when things need to be fixed.

Normally, maintenance happens on a specific schedule whether or not the parts actually need to be repaired or replaced, a practice called time-based maintenance. With APM, TEPCO is aiming to better understand when parts really do need to be changed. This condition-and-analytics-based maintenance limits costly downtime and minimizes upkeep during periods of high electricity demand. more> https://goo.gl/WsG2gX