Author: Kurt Greenbaum


About Kurt Greenbaum

As communications director for the Olin Business School, my job is to find and share great stories about our students, faculty, staff, and alumni. I'm also on the U College faculty in the journalism sequence. My background includes a stint at the Consortium for Graduate Study in Management and as a journalist for the St. Louis Post-Dispatch, Sun-Sentinel in South Florida and the Chicago Tribune.

Paulino do Rego Barros Jr.

The 2018 Olin Business magazine shared a series of vignettes featuring alumni faced with a business decision requiring them to weigh data with their values. We featured these stories to support Olin’s strategic pillar focused on equipping leaders to confront challenge and create change, for good. This is one of those vignettes.

When Retail Credit Corporation was founded in Atlanta nearly 120 years ago, the company kept paper files on consumers to gauge their creditworthiness. “This industry has grown from looking at a file and just saying, ‘Does he pay his bills? Yes or no?’” said Paulino do Rego Barros Jr., MBA ’91.

Indeed, as a veteran executive at the company now known as Equifax, he’s on the vanguard of the power and pitfalls the massive data revolution has wrought on the industry and its customers. Equifax and its competitors wield data that tracks purchases, evaluates how reliably customers pay bills, and measures customer assets.

In spite of the power, Barros said, “there is a strong sense of stewardship and ethics.” That sense of stewardship came through a little more than a year ago when hackers breached Equifax.

Two days after he was named interim CEO, Barros apologized to consumers and customers in The Wall Street Journal. Barros is now US Information Solutions, president and former interim CEO, Equifax.

“We didn’t live up to expectations,” he wrote. Under his leadership, the company gave consumers free credit monitoring services, upgraded its website, boosted access to call-center support, and instituted other measures to regain the faith of consumers and customers.

“The regulatory framework establishes very clearly what we can or cannot do with consumer data,” he said. “But the decisions I made—and our ethical and moral values—are very important to us.”

Munir Mashooqullah

The 2018 Olin Business magazine shared a series of vignettes featuring alumni faced with a business decision requiring them to weigh data with their values. We featured these stories to support Olin’s strategic pillar focused on equipping leaders to confront challenge and create change, for good. This is one of those vignettes.

In 2012, Munir Mashooqullah’s company was an acquisition target. For shareholders, the deal might have made sense: Mashooqullah, EMBA ’98, and an Olin Distinguished Alumnus, said the acquiring company had higher profit margins and better systems and IT infrastructure.

Even some of his employees thought the deal would be good for Synergies Worldwide, which manages apparel sourcing and supply chain management for the “fast fashion” industry. “Everyone was saying, ‘Why can’t you be more like them?’” said Mashooqullah, founder and custodian, Synergies Worldwide. “I lost people. I lost tactile monetary opportunities.”

Clients, however, didn’t like the deal. They liked their current service. They appreciated the value they received.

“There are stories in leadership where you do not go with what is told to you just because the numbers look right,” he said.

Today, the company Mashooqullah founded 31 years ago is thriving. In fact, a senior executive for the competitor jumped ship to become the CEO when Mashooqullah retired in 2016.

“If there is something you believe in— and you’re not just driven by the dollar sign—in retrospect, many times people win,” Mashooqullah said. “But at the time, it may not look right.”

A global trade war initially launched with Trump Administration tariffs on Chinese steel in 2018 indeed boosted domestic steel production. But as analysts learned how higher costs would affect downstream manufacturers—and later affect demand for domestic steel—stock prices for US steelmakers tumbled by almost 50 percent year-over-year.

Panos Kouvelis

Olin researchers cited that anecdote—among many others—in new research exploring the complexity of tariffs as a trade tool in a global economy. The new paper also established a supply chain model to explain those effects and proposing that in some cases, the effects were foreseeable when accounting for strategic, multi-party interactions and competition.

“The logic that levying tariffs will help protect and strengthen the corresponding domestic industries is not that straightforward in today’s global economy,” wrote Lingxiu Dong and Panos Kouvelis in their paper, “The Impact of Tariffs on Global Supply Chain Configuration: Models, Predictions and Future Research,” accepted for publication in the journal Manufacturing & Service Operations Management.

Lingxiu Dong

When policy makers employ a tariff—a tax on imported or exported goods—as a tool to protect a domestic industry from foreign manufacturing, they may assume the industry operates in a vacuum. But as Kouvelis explained, the effect of imposing a tariff on, say, soybean exports, has ripple effects throughout the supply chain for both soybean farmers and their suppliers as well as for the downstream consumers of soybeans.

Risk of changing suppliers

In retaliation for earlier US tariffs, the Chinese government imposed a 25% tariff on 106 US goods—including soybeans—in April 2018. Chinese buyers of US soybeans—often used as feed by pork producers—have started finding suppliers in Brazil and Argentina, avoiding higher prices. Thus, the Chinese market begins to dry up for US soybean farmers, possibly forever. Agribusiness firms in South-America are expanding aggressively in the region to capture the Chinese market opportunity.

“Suddenly, they realize there’s another sourcing opportunity and they seize the opportunity,” said Kouvelis, Emerson Distinguished Professor of Operations and Manufacturing Management at Olin. “Tariffs have short-term benefits and long-term implications that are frequently quite unpleasant. In the long term, firms adjust to the new realities.”

Kouvelis and Dong began working on their paper about 10 months after the Trump Administration levied the first tariffs on steel and aluminum imports from all nations, including China, in March 2018.

“It’s a very timely topic. What we thought as we started reading the stories was that the impact is not that obvious,” Kouvelis said. Under the theory, tariffs would protect US manufacturers from cut-rate imports of foreign-made steel and aluminum. US firms could expand, hire and supply more US consumers of steel and aluminum. But that’s not how it works.

“Trade policies such as tariffs have significant implications not only for the industries the policies were intended to protect, but also for the complex supply chain that they are a part of,” said Dong, professor of operations and manufacturing management. “The net effect of those reactions on the industry and the supply chain is hard to predict.”

The researchers did not conclude that tariffs were a poor instrument for executing trade policy. Rather, policy makers must be aware of the likely effects if they’re used. For example, tariffs may indeed restrict trade within a region of the globe—but that doesn’t mean all the companies within that region will be US firms.

“Companies go where they see the opportunities and the growth,” Kouvelis said. “We are moving towards regional supply chains, and in many cases that might be a desirable supply chain outcome. Shorter and market-focused chains are often argued as agile and lean. But tariffs might not have been the best way to end up there, and they may have caused competitive headaches for some of the US companies.”

Building a forecasting model for supply chain restructuring

In their research, the pair developed a number of mathematical models accounting for different variables in the supply chain. They examined where the supplier of raw materials is located relative to the manufacturers of finished goods, for example. Or whether the suppliers or manufacturers have multiple production plants in international locations or localized facilities.

Other variables include the costs of shipping goods or finished products and the ability (or inability) of a company to pivot to new suppliers or production facilities as costs rise.

Woven throughout, the two researchers sprinkled anecdotes about how the tariffs have affected companies and industries. Motorcycle maker Harley-Davidson, for example, experienced higher production costs in the United States, thanks to steel and aluminum tariffs, and an increase of $2,200 per bike from shipment costs resulting from European retaliatory tariffs. The company ended up shifting some of its production to Europe to better deal with such cost increases.

Meanwhile, the researchers captured the complexity of the auto industry, where US-made cars may be using Chinese components that are potentially exposed to US tariffs, while the final products exported to China are also exposed to Chinese tariffs.

The model Kouvelis and Dong created would predict what is actually happening: US carmakers are shifting production to China, especially for the lower end car models—employing more Chinese workers and fewer US workers. US production facilities will experience further labor declines through flexible automation.

“We can tell you in stories after the fact some of the impact, but we need a model that predicts the direction of change and explains the stories,” Kouvelis said. “What are the factors you have to think about so you can predict the move before it happens—rather than being a Monday-morning quarterback?”

During last month’s spring break global immersion trips piloting the new, revamped MBA program, students on the Shanghai branch of the program spent an afternoon touring a garment factory northwest of the city.

The factory, founded by Olin alumna Judy Yu, a 2016 graduate of the EMBA program with Fudan University, opened its doors to 70 students on the trip, walking them through the finer points of the company’s process and supply chain. Mudoo Fashion Co., a sportswear manufacturer founded in 2004, supplies fan-wear and active wear for a variety of sports around the globe.

But one focus is on rugby uniforms for teams in New Zealand—the home country for Hyrum Palmer, MBA ’19, who was enamored about the factory visit and the connections Yu’s team had made with these professional sports organizations. He was rewarded for his queries with a jersey manufactured for one of his favorite teams, New Zealand national rugby union team the All Blacks.

In gratitude, Palmer closed out the visit to MuDoo by performing a ceremonial “haka,” a ritual “war dance” used by New Zealand rugby teams to fire up the team and the audience. Check it out in the video above.

Angela Lu, MBA

Angela Lu, MBA ’19, is president of Olin’s Graduate Business Student Association. She wrote this post for the Olin Blog.

What I remember most about Barcelona is the crush of bodies, pressed against me from all sides, holding me up, rendering me immobile and rigid—stable enough to sustain the five or six additional levels of the “human castle” above me.

Castellers demonstrate an unsurpassed level of teamwork when constructing and assembling towering castell structures—literally, a castle constructed with people. This is the very definition of “tight-knit.”

I lived in Barcelona for a year before joining Olin for my MBA. It was actually in Barcelona that I took my GRE and wrote my application essays (and participated in castell-building). It seemed particularly fitting that, six weeks before graduation, I found myself once again in Barcelona as part of Olin’s pilot for the new global curriculum.

How would the city testify to my growth over the last two years?

Student pile into a jeep during a tour and discussion of marketing needs at Barcelona's Gramona Winery.
Students pile into a jeep during a tour and discussion of marketing needs at Barcelona’s Gramona Winery.

Ask any local what makes Barcelona a special city, and you’ll likely hear something about the thriving and integrated diversity of the city. We experienced this warm, inclusive welcome during our week, both at ESADE Business School and at the family wineries that opened their doors to allow us to learn about their craft and business operations.

While we turned our classroom knowledge into actionable insights for our hosts, I realized something else was knitting itself into existence: deeper bonds between two-year colleagues.

Here we were, thinking we knew each other well enough, yet discovering commonalities never uncovered before and having philosophical discussions and intimate reflections previously unimagined. The coursework was intense: We had long days with much work to accomplish, and just as much desire to explore the city and take advantage of being in this Spanish metropolis.

At the Gramona Winery, where second-year MBA students gathered data for a project to help the winery enter the US market.

Every one of us had different goals and expectations of this trip. Instead of pulling in different directions, however, we came together to support each other—in a way that fully resembled forming a base of a castell.

The demanding pace of our week-long course forged stronger friendships and created bonds between previously congenial but distant classmates. Once again, Barcelona revealed to me how precious it is to be part of a tight-knit group.

We call ourselves a family at Olin. Like all families, we have our squabbles and disagreements. Like all families, we come together despite our differences because we fundamentally respect and care for each other.

Looking forward to this coming academic year, I am hopeful that the newest recruits to our Olin family will—over the course of their multi-week trip to Washington, DC, Barcelona and Shanghai—build genuine, lasting and enviable relationships with each other and commence their core curriculum in St Louis with an unmatched commitment to each other’s success.

Tom Tian, BSBA; Lilu Li, MSF-WAM; Robert Huang, MSFC; Tim Solberg; Alvin Nguyen, MSFC; Carl Compton, BSBA; James Pai Hao-Lun, MSF; winners of the 2019 Quinnipiac portfolio competition.

For the second time in as many years, a WashU Olin team grabbed the first-place trophy at the prestigious Quinnipiac Global Asset Management Education Competition in New York City March 28-30, 2019.

A six-member team of master’s of finance students and BSBAs competed against 75 teams for the trophy in a competition culminating months of work managing a portion of the Washington University endowment fund, analyzing stock choices and presenting about the team’s investment strategy.

Olin Professor Tim Solberg coached the winning team, which included Tom Tian, BSBA ’20; Lilu Li, MSF-WAM ’19; Robert Huang, MSFC ’19; Alvin Nguyen, MSFC ’19; Carl Compton, BSBA ’19; and James Pai Hao-Lun, MSF ’19.

“Professor Solberg successfully put together a very diversified team,” said Nguyen, the team leader. “James has advanced technical skills, therefore he increased our team productivity by gathering necessary data from different sources, then cleaning them up, and uploading them to Bloomberg for analysis. Liyu’s quantitative background, Robert’s in-depth fundamental knowledge, and Tom’s quick thinking enabled us to combine all the resources needed to conduct our comprehensive analysis report quickly and efficiently.

“Carl transformed our analysis into an excellent PowerPoint presentation and collaborated with other team members to polish their presentation skills,” he added. “I leveraged the strengths of my teammates so we can work in complementary partnership to maximize each other’s strengths and compensate for individual weaknesses.”

An Olin team also won the same competition last year. In both cases, the students had participated in WashU’s “investment praxis” course, taught by senior lecturer Charles Cuny and Solberg. In the course, students manage a $1 million segment of Washington University’s endowment.

This year’s team didn’t have to fight through a wicked nor’easter to make it to the competition, but they shared the same appreciation for the discipline, teamwork and rigor required to compete.

“The competition gave me a much more holistic, hands on experience to the world of finance than is readily available at most schools,” Compton said. “The ability to run $1 million of real money puts much more emphasis on the psychological side of finance that escapes the normal classroom setting. It is very easy for students to nod their head in agreement when a company is worth buying or selling, but when the money is tangible, you begin to question your assumptions and selling policy.”

Using the new finance lab in the Kopolow Library, Solberg taught the team how to use Bloomberg terminals to determine portfolio attributions by industry sector and stock selection. It was while coaching the team last year he realized a financial lab would be much better for tutoring than having terminals spread throughout the campus.

Compton said the competition forced the team to do performance attribution and analyze a portfolio from multiple different angles, pushing them to better understand where their portfolio was underperforming or outperforming—and why.

“It’s easy to give a presentation on a portfolio that does better than the market, because no one questions you,” he said. “It is much more difficult to be convincing when your portfolio underperforms the market, and you have to argue that the portfolio performed exactly as it was expected to, even with huge drawdowns from unforeseeable losses from two holdings.”

He said the team felt confident standing in front of a panel of judges, delivering a robust answer to every question “and walking out of the room knowing you killed it.”

Pictured above: Tom Tian, BSBA ’20; Lilu Li, MSF-WAM ’19; Robert Huang, MSFC ’19; Tim Solberg; Alvin Nguyen, MSFC ’19; Carl Compton, BSBA ’19; James Pai Hao-Lun, MSF ’19.