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2012

I interviewed John Wilkerson who shared his views and experiences with Green Purchasing. John Wilkerson is a 25 year supply chain, global sourcing and sustainability executive with a broad background spanning procurement, global supply chain management, and sustainability. His functional expertise ranges from sales and operations planning to retail manufacturing, global logistics, and lean/six sigma. He has a very broad geographic background which ranges from Asia, Europe, Latin America and North America.

 

John is glad to be fortunate enough to have an opportunity to be able to present some thought leadership work with Fox Business, MSNBC, APICS, ISM, Kyoto Publishing, Environmental Leader and a few other publications.

 

 

Definition of Green Purchasing

 

Simply stated, green purchasing is the buying or purchasing of goods or the acquisition of goods and services for the enterprise. It is not a lot different than traditional purchasing. However, John and his team applies 7 principles to help shape the thought process for green purchasing strategy.

 

  1. The most important principle is looking at the total cost of ownership throughout the acquisition. The things we pay attention to from a principle perspective are price, geographic source, service level and also the specific solution.

  2. Supply Partners – John looks for his partners to participate in some type of carbon footprint reduction strategy, or water optimization strategy. He and his team look for those folks to be part of that thought process.

  3. Supply chain partners should develop a strategy for renewable energy long term. In the short term it is not realistic in most cases. They look for the supply base to participate long term in the renewable energy market.

  4. The basic principle that suppliers or supply chain partners need to comply with the appropriate rules and laws, whether local, national or international standards.

  5. Look for supply chain partners that are socially responsible throughout the supply chain network.

  6. Suppliers evaluate risk throughout the supply chain.

  7. Suppliers clearly have strategies to prevent risk.

 

These 7 principles, combined with the acquisition of goods would be the John's definition of Green Purchasing.

 

Who Should Be Involved With Green Purchasing?

 

The traditional concept was for procurement/strategic sourcing programs to have the Chief Purchasing Officer be exclusively involved in purchases.

 

In Green Purchasing the environmental health safety team is the most critical group John and his team needs to bring in to collaborate to make a big difference in the future. When you think about different organizations, the most progressive out there have key initiatives that they pursue in the Green Purchasing space. There are two things they look for:

 

  1. Reducing Environmental Risks

  2. Being More Socially Responsible

 

The traditional CPL team can't do that without the environmental health and safety team. This is the time to be able to work together.

 

How Should Companies Get Started?

 

John uses the Institute of Supply Management (ISM) as part of his direction on this topic. Companies such as AT&T, Herman Miller, General Mills, ADM and Rockwell are sustainability leaders which are the strongest in the retail manufacturing space. From a public sector side Alcoa, SCIC, and IBM are the leaders who have actually set the path.

 

John sees a 3 step methodology for most organizations to participate in this space. The 3 step methodology for transforming or transitioning to a green purchasing transformation project would be to:

 

  1. Establish a business case

  2. Develop a trial program

  3. Expanding the trial program and going to a more broader based perspective in green purchasing deployment.

 

Looking at the Business Case

 

John sees 4 points which are very important:

 

  1. The voice of the end retail customer: This involves understanding the influence of millennials, the Generation Y, the people on the West and East coasts, etc. Organizations and enterprises do pay attention and this is one reason Green Purchasing is important. This group of people      are being monitored by experts, demand planners and marketing planners. It is very important for for organizations to pay attention. As marketing drives organizations it trickles down to purchasing.

  2. The voice of the shareholders and investors: WallStreet, NASDAQ, Hong Kong and all the indexes are looking at the environmental sustainability programs. Green Purchasing is another one of those items that is out there. You have to listen to it and it is another reason why you generate the potential business case.

  3. The voice of the business: Organizations do not like to have negative press and boycotts of their brand. Green Purchasing is another extension of the marketing in this space.

  4. The voice of the workforce: It is very important to recognize that those same Generation Y millennials are in some cases driving things and making things happen.

 

Developing and Trial Program and Looking at the Total Cost of Ownership

 

You want to make sure that Total Cost of Ownership is the first case. From there you want to be able to clearly understand the voice of shareholders and most importantly the voice of the customer. After you complete your trial program you will take the program to full blown deployment. If this makes sense the CPO organization will get involved. It is just a matter of taking the lessons learned from a trial program and extending it further.

 

About John Wilkerson

john_wilkerson copy.jpg

John Wilkerson, CPSM, SSMBB

Supply Chain, Procurement, Sustainability Executive

LinkedIn Profile

I interviewed David Schneider who discussed the difference between information and knowledge, along with some practical applications of it. He has been writing and studying this topic for the past decade, both for the benefit of his own managerial practice and to teach others when he was a corporate manager and now as he serves both individuals and companies as a consultant and coach.

 

 

David says you can think about it as a cycle. Everything in human life or nature follows a cycle. Some examples. One of the things which differentiates life from things that don't live is that plants, animals, humans have the ability to recognize patterns. You look at the life cycle of hibernating animals. As it gets cold they put on more fat and sleep through the winter. Frogs living in frozen temperatures change their diets and their bodies adjust.

 

We live through these patterns. We them in the changing seasons and not just living cycles but in our economy and history.

 

Knowledge and the development of knowledge and learning follows a pattern. It is a loop. To illustrate this is something very practical starting with an event which happened to him recently. He went ice skating and fell, breaking his ankle. In the past he had no knowledge of the bones which were broken prior to the accident. He had tacit knowledge of the bones, but he didn't know what they did. After breaking them he learned he had a spiral fracture and simple fracture and it messed up his ankle joint. This required surgery and no weight bearing on the joint.

 

This opened up a whole new world and problems he had to solve. Mobility was an issue he had to deal with. He couldn't drive. He had to figure out ways to live his life inside his home and outside his home/business with a cast and crutches. He had to find ways to solve them so he searched for information using the Internet.

 

The information wasn't necessarily validated. He could go through the reasoning to see what fits. He went through a process of tacit knowledge creation. He was left with information but it wasn't knowledge. He validated from various sources what works and what doesn't. He would look at reviews from others. You can only get so far in developing knowledge with these until you externalize and talk to other people who have experience with it. You find there is no one with universal practical experience. You end up creating multiple one on one connections.

 

There are also other forums to make connections with other people who had similar experiences. You actually enter what is referred to as the Japanese term called “ba”,a place where you come together and exchange ideas. You are exploring ideas and questioning. This can happen face to face or in an email, phone call etc. It is a very much individual experience.

 

This is the first step to moving from tacit to explicit knowledge. Then you narrow down what other people have said and try to get a specific crutch. There are several options, such as rental versus buying. The explicit knowledge has been gathered from groups of people and then applied. You take it from being explicit to tacit. You apply it.

 

David bought the forearm crutches, which were much better for his body. He become much more mobile. Other explicit sources supported him and said they were good crutches. He gathered a tacit piece called experience.

 

However, as David was walking out of an elevator someone kicked his crutch from underneath. The lesson he learned is that people don't pay attention. He also learned that in public places the forearm crutches are a liability. The big traditional crutch would have been more stable. In that tacit learning experience he learned that in public he doesn't want to use the forearm crutches.

 

The following week David brought the big traditional crutches. People made room for hi on the elevator. None of the research he did ever spoke to this issue. However, he learned through the practical/tacit application. More knowledge was created and it was tacit to him. To continue the loop of the knowledge he would have to go through and explain it. Through this interview he is taking the tacit knowledge and entering “ba” with the readers. This will help the readers take the tacit knowledge and make it explicit again. This is a never ending spiraling loop.

 

This loop is what Drucker talked about in his writing in the 80's and 90s. Knowledge creation is a cycle. The act of knowledge is taking knowledge and moving it from a tacit individual knowledge, bringing it to a one-on-one experience where you externalize it and it becomes explicit. As you explain this knowledge or information, this thinking with other individuals. Groups then take it and broaden it out through group activities such as publishing and writing.

 

Then someone takes that knowledge and internalizes it once again. It becomes tacit once again as they apply it in the practical application to solve their own problem. This is the path to knowledge creation.

 

This is part of the healing loop which businesses and individuals need to apply.

 

How Organizations Learn

 

 

When thinking through how organizations apply information, technology and  in the creation of knowledge it is important to realize that knowledge isn't created through the application of information technology. All information technology does is allows you to increase the capacity for information.

 

 

Your data capturing ability, capabilities to capture, categorize and distribute data increases.  Data can be grouped and categorized into information. However, information in itself cannot become knowledge. It only becomes knowledge when you take that information, apply critical thinking to it and then decide to use that information to apply.

 

Companies and organizations that truly develop ways to create knowledge change the structure of their organization. It becomes not a tactical approach, but a core of their strategy. It becomes part of the purpose of their business and their mission. The organization accepts that it has to become a source of creation of knowledge. In doing this they change the structure of their organization. They change the way the people inside the organization interact with each other. They change the way the organization interacts with external entities such as suppliers, customers, clients and the community at large.

 

Knowledge creation is not a tactical application. It is a strategic goal. It becomes a core leg of a company's strategy. It is the founder's or leader's role to decide how the company is going to create knowledge.

 

It is the 'how' not the 'what'. It is how we are going to facilitate this and why we are going to facilitate this. This is how organizations are successful in creating the structure and environment necessary for this knowledge loop or this creation of knowledge cycle to live. The creation of knowledge is a living activity. It is not a straight line manufacturing process. It is a living organic activity which involves organic human beings. It includes their dreams, thoughts, opinions, feelings, and reasoning ability.

 

The failure to understand that all of those components are needed for the creation of knowledge leads to the failure of the creation of knowledge and the failure to learn.

 

About David Schneider

 

david_schneider.jpg

 

Visionary Logistics & Supply Chain Consultant/Coach

- Industrial Engineer

- Material Handling Professional

LinkedIn Profile

I interviewed Sean Penrith who is originally from South Africa. He is an electrical engineer but hasn't spent time as an engineer, but rather a serial entrepreneur, for better or worse. He created a number of businesses. A recent business he started before his current one was a sustainable glassware company where they supplied product to 27 countries. Sean sold this company and moved to Portland to take up the position with Earth Advantage Institute, which is a non-profit formed in 2005. It was spun off from Portland General Electric, the utility company.

 

 

Sean's view on energy efficiency, climate change and green supply chains

 

There is very little attention applied to the issue of the supply chain as it related to energy efficiency, specifically in the built environment which is the world they focus on at Earth Advantage Institute.

 

Their whole outlook on this centers around the need to set things on a life cycle basis. Life cycle includes all of the embedded materials leading to and from a building site. As an industry we fail to consider to true life cycle cost of ownership, whether a commercial or residential building because we focus on the first costs, as opposed to the supply impact costs and the long term maintenance and longevity of that particular asset which is being built.

 

Unfortunately the industry measures the value of property on a square foot basis, as opposed to number of dollars per ton of Co2 emitted during the life cycle of the entire building, which would include the supply of materials.

 

For Sean, when he looks at how to approach this he believes that when the world finally moves to a carbon constrained world and the reality sets in, every single aspect of the different cycles in the built environment will need to be assessed. This includes off-site and on-site emissions, obviously including the supply chain. This will be only time we are actually going to come to grips with the impact of efficiencies in the supply chain and the low Co2 emissions levels of the materials which supply the built environment.

 

Sean has some misgivings about US leadership in this realm and it is of great concern to him that we are not propelling this forward in the United States.

 

Background on the built environment

 

In terms of Co2, the reason Earth Advantage Institute is focused on anything that is commercial, industrial or residential is because this sector contributes over 40% of the Co2 emissions. When Sean talks about the built environment he means buildings, whether commercial or residential.

 

How to go about assessing your emissions

 

Earth Advantage Institute does this for companies, essentially by creating a carbon foot printing methodology which looks at all of your Scope 1, Scope 2 and Scope 3 emissions which are your direct and indirect and supply chain emissions. They create a foot print map of the industrial facility including everything related to it such as commuting to and from work by the staff, the carbon impact on the materials that supply the utilities etc. Earth Advantage Institute then works with that entity to project a goal to move towards and a plan on how to reduce those emissions.

 

Ultimately they help companies learn how to deal with the risk mitigation of a carbon constrained world. Some of the entities they deal with require not just understanding their foot print and reducing, but also how to position the company against things such as corporate social responsibility issues, liability issues, etc.

 

Potential money savings and money making opportunities

 

In any building there are basically 4 areas of significant opportunity to reduce energy consumption; namely space heating, space cooling, lighting and the thermal envelop. When you address any aspect of the building in those areas you will reduce energy and correspondingly reduce Co2 emissions. Any technology or material needed in addressing those 4 main areas are part of the supply chain because those are technologies which need to come into the building environment and through vendors to reduce the energy.

 

For someone looking to get in it is easy to look at the contribution areas in terms of Co2 or the potential to reduce energy and to provide a product that addresses it. This is what the insulation firms are doing. It is what the HVAC and furnace industry with the heat pumps etc. are all doing. They are providing a technology which creates a massive reduction in energy consumption and thereby reducing the Co2 costs.

 

What is amazing to Sean is that a company that is not interested in creating a carbon footprint is the same company which is not interested in saving operational money.

 

Whenever you reduce the Co2 foot print you save a ton of money. It should be a no-brainer.

 

How to address your senior management

 

The wrong approach is to say “here are areas where we can reduce carbon emissions, and by doing it we help green the planet.” This doesn't help because if senior management doesn't have the inclination to care about climate change the initiative will fly right out the window.

 

The only prudent way of selling this is simply to say “we can improve efficiencies in these areas by investing this amount of money, which has a payback of this much over 5 to 7 years and saves us on energy.”

 

A footnote can be added which says: A reduction in energy also mitigates 6 million tons of Co2 per year.

 

Conclusion

 

As an energy efficiency industry or even a carbon emission control sector, we have really failed to send the real value which really values today to either a consumer or a manager. It is not that carbon emissions are not important, they are vitally important. This is what Earth Advantage Institute's mission is all about, they want to stabilize emissions at the 450 ppm. However, they fail to package the value proposition succinctly to make it make sense today. It is simply dollars and cents. The industry has been remiss at marketing themselves as a solution and instead are seen as a problem.

 

About Sean Penrith

 

Sean_Penrith.jpg

 

Executive Director

Earth Advantage Institute

LinkedIn Profile

Ann-Lee Jeffs is the founder and CEO of the Sustainability Collaborative. The Sustainability Collaborative aims to integrate universal sustainability, which is a second generation sustainability framework. It focuses on the social pillar of sustainability, which consists of 3 pillars: 1. Economy, 2. Environment and 3. Social. It is a think tank consisting of representatives of all sectors of our global society, including education, community, business and non-government organization representatives.

 

 

They have made tremendous progress including summits. SustainNext is named for their summits and conferences. The planning is underway for an EU summit to take place in the EU in June of 2012. The summit will converge the healthcare, agriculture and food sectors under the framework of global society (universal sustainability) to look at the challenges and opportunities to re-shape the dialogue regarding sustainability to truly focus on the social piece.

 

In addition, they have done a successful pilot of internships to bring professionals in the workforce to the classroom. They had a successful demonstration at Dublin City University where they are launching a pilot in March of 2012. With the successful pilot they plan to introduce it as a global program.

 

They are also doing content development on Universal Sustainability with Drexel University, Dublin City University, and Rutgers University, with the support from business leaders to develop the content on Universal Sustainability. Mary Ann Liebert Publishing Company is publishing articles on Universal Sustainability in the context of the economy, education, science and technology and other aspects of universal sustainability.

 

Getting the basics right

 

Getting the basics right has changed quite a bit with global society which we live in. As it becomes more complex supply chain is truly an example of a place where you can clearly see the complexity. In order to get things right focusing on one area such as the cost or environment are not going to address the challenges and opportunities. The challenges could be compliance, if you don't have that balanced approach and look at all things in totality and in a comprehensive approach. You also need to look at social aspects. If you source from a culturally sensitive area, when you commercialize the product it will become transparent and you may need to recall the product.

 

Whether supply chain, research or commercial it was at one time acceptable for each to work in their own areas. Today, with our global society you need to approach the issues, challenges, projects and initiatives with a different mindset aiming to understand the influences with negative and positive impacts. You may pay that extra cost for a renewable resource to make your product, or support small businesses in a developing market such a s coop. Supporting that effort may give you competitive advantage in the marketplace. Getting outside your comfort zone and talking to people to understand their challenges and opportunities and tying it back to your research to work with your suppliers for opportunities.

 

Mastering sustainability – driving collaborative actions in innovation

 

Mastering sustainability in the context of supply chain, operations or research is a continuous journey. Having the curiosity to find out things that are not in your comfort zone and truly finding out what are the things of concern to the consumers. What are the challenges for global society? What are the things as a society we need to work together to address? It is putting these pieces together and developing a strategy, in supply chain it is developing basic guiding principles for working with suppliers and having them incorporate those guiding principles. Your suppliers also have their suppliers. It can be a ripple effect across the supply chain. It is developing a firmer process in addition to strategy and guiding principles which is a framework to check in with your suppliers. It is recognizing the successes and sitting together with your suppliers and operations colleagues to think of innovative approaches for addressing the issues in your supply chain.

 

For example, if there is a substance in your product which is perceived as less desirable because it is not 'natural'. You may look to your suppliers to find opportunities for alternatives and ways to make it cost effective at the end of the day. It is truly getting the basics right and having the curiosity to develop the framework, strategy and guiding principles and having the program to check in. It is taking the program and engaging with the suppliers and external manufacturers to find creative ways to address these challenges.

 

About Ann Lee-Jeffs

 

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Founder, Sustainability Collaborative;

Founder,GreenPharma GPh;

J&J Product Stewardship Manager

LinkedIn Profile

I recently interviewed Bill Petersen who is VP of Business Development at LCI Supply Chain Collaboration Network, Inc. Bill shared with me their plans to launch a new social network for supply chains product which will roll-out on Jan 1, 2012.


LCI has a rich history in supply chain management and dealing with companies that have large international complex supply chains. Over a period of the last 15 years they have developed solutions that automate a lot of the process. They automate things such as inventory management, creating documents for import/export, auditing those documents, doing rudimentary transportation and warehouse management and other similar types of activities.

 


The founder of the company had a vision where all this information would be put in a shared environment (This was the second-generation of the product. Linking the individual programs so they could talk to one-another and all of the supply chain partners had access.)  so that for example, when a carrier makes a change to their invoice on a shipment, that change is automatically picked up by the customs broker that is preparing the documents which are declaring the value of the goods.


This update to that document can avoid a lot of problems downstream when someone goes to look and asks how you valued those goods. By doing this collaboratively instead of in a serial process, LCI’s customers are able to save a lot of time and money. They discovered what they call the 95/5 rule where before they installed the system people were spending 95% of their time putting out fires and chasing information. Only 5% of their time was spent doing what they were really hired to do, namely managing the process.


LCI is able to reverse this into a 5/95 ratio. They have had some absolutely startling results in some organizations (which are listed on their website) where they are saving the company millions of dollars per year in operating costs. For example, one of their customers which they are currently implementing has 8 people that do nothing full time but call vendors and confirm that a shipment is on its way. All these people do is confirm that an order is going out and that it is underway and will arrive on time. This is in the automotive industry where the cost per minute of shutting the line down runs into the thousands of dollars. The system LCI provides automates this process and eliminates the overhead. It also eliminates the issue of human frailty and failing to follow up on something.

 

Barriers to collaboration besides the technology

 

The barriers are chiefly things like time, distance, language, access to data etc. The problem is the business process itself ideally should be done face to face in real time. When you separate suppliers and users by time, distance and language that process just explodes. For example, if you have a release schedule on orders where manufacturing companies using a material requirements program to generate the forecast and they run it every day, the supplier will be getting a new instruction to ship on a daily basis. How does the customer know whether that supplier will be able and willing to comply?

 

That requires follow-up to close that loop. In the LCI system both the supplier and the customer are on the same network. When the release is made to send the order out to the supplier they have the opportunity to confirm or deny the order right there on the screen. If they confirm it there is no action taken. If they say no or change it in any way in terms of quantity, price, delivery time or any other parameter then the customer is notified automatically where it says “they want to do this, do you approve it?” It automates the back and forth process.

 

There are multiple examples of problems that can come up such as a carrier changing their invoice price, a customs broker changing their fee, or a supplier that does not produce required documentation such as a certificate of origin. These problems can be resolved sooner and much faster with the network type organization.

 

The future of collaboration

 

LCI will launch on Jan 1, 2012 with a $14 billion manufacturer. It will be a social network that uses these tools. You have Facebook where you have a bunch of profiles online that can be connected to do scheduling of soccer games, revolutions etc. What LCI is doing is taking the supply chain tools/apps and making them available in the social network environment.

 

What this means can be better understood with the following example: let’s say you have a shipment that is leaving China for the US. You have a vendor in China, a customs broker in China, a trans- ocean carrier, another customs broker in the US and  rail and truckload transport. All of these people are involved in the shipment. By being in a social network together, if any of them have a problem they can send out an alert to the other people in that specific supply chain to notify them of a change made.

 

This type of networking capability is something that is not there today. There are companies such as Yammer which offers a Facebook type environment designed for business. However, there is no core application behind it. It doesn’t really do anything but link people together. LinkedIn is another example. It does a good job of providing information about people and allow you to find people in the network, but it doesn’t really provide any functionality on its own. This is how LCI differs.

 

Within the LCI system they can help their customers that are facing a problem such as hurricane Katrina on the Gulf coast, which created a lot of issues for the petroleum industry.  Under the LCI system someone such as an engineer under the transportation network can send out an alert across the company to anyone that had transportation or material movement in their profile within the company to join a discussion group. They could create a blog on solving that problem and send it out to everyone in that company that had anything in their profile which indicated it would be of interest to them.

 

It is the information sharing you would have in something like Facebook, but focused on the business environment, and backed up by functional apps with proven track records. This is where LCI sees things going in the future. LCI is pleased that they are actually there.

 

Suggestions for those interested


LCI’s current attention is focused on getting the beta sites up and running on Jan 1, 2012. They made a decision in April of 2011 that they were going to suspend all sales and marketing activities in order to make this happen. They had been in business for 16 years and are doing very well with their existing product line. The company is currently not doing any demos or websites which reflect MACROLYNK, their social networking product, but will have one up early next year.


This will change after Jan 1, 2012 because they will then have a real live customer and will be able to cite exactly what they are doing. Bill suggests anyone who is interested contact him now and he will be able to get back with more specifics in January.


About Bill Petersen


Bill_Petersen.jpg

 

VP, Business Development
LCI Supply Chain Collaboration Network, Inc.
LCI Website
LinkedIn Profile

I interviewed Larry Dull from Packaging Knowledge Group, a full service packaging consultancy specializing in sustainable packaging. Both of the general founding partners of Packaging Knowledge Group, otherwise known as PKG are packaging engineers with BS and MS degrees from Michigan State. Larry and his other partner have both been in the industry for a number of years and have experience in a wide variety of industries and products.

 

 

They come at packaging, and more specifically sustainable packaging, from the viewpoint of the practicing packaging engineer. They do projects to help companies develop sustainable packaging and provide design, development and testing services around packaging. They also provide training to companies and were the first official provider of training for the Walmart Sustainable Packaging Scorecard. As a result they have a lot of experience training companies to comply with the various scorecards that are out there right now.

 

Larry and his partner also provide help to a lot of Walmart suppliers to actually be able to fill out their scorecards and to make what is probably even more key is to make improvements in your score after you fill out your scorecard.

 

Larry and his team does just about anything concerning packaging.

 

Latest trends in Green Packaging

 

 

A lot of people have heard the term green and it is thrown around quite loosely these days. Larry assumes that when we say green we are talking about sustainable. If you are trying to make your supply chain more sustainable, packaging is a key component of the supply chain and packaging is one of the thrusts you might endeavor to improve your whole sustainability in your company.

 

As a key component of supply chain thinking, packaging fits right in with trying to make your supply chain greener or more sustainable. A lot of people don't realize that one of the biggest negative impacts on sustainability is damaged product. One of the major functions of packaging  is product protection. Packaging is required to move product from point of manufacture to end use. The protection and delivery is the major function, through there are other functions such as communication, sales and regulatory compliance etc.

 

Product damage has a major impact on supply chain sustainability. A lot of money, time and resources are spent in dealing with damaged products. If you enhance your packaging in terms of product protection and delivery function you may indeed end up spending more money on packaging and packaging materials. However, the net overall impact on the total supply chain picture would be  positive because you are eliminated some of these negative impacts which may be pretty big on sustainability in terms of resources, time and money having to be spent dealing with damaged product.

 

The key to this whole thing in terms of packaging's major impact on supply chain sustainability is firstly product protection and reducing product damage. This is not to say that packaging doesn't have other impacts in the supply chain, because it does. For example, if your secondary and tertiary packaging are sized inappropriately (ie. bigger than they need to be) you lose cubic efficiency throughout the supply chain, starting with your pallet load, going into the warehouse, trucks, ocean containers etc. The impacts of non-sustainably designed packaging in terms of cubic efficiency just flow all the way through the supply chain. When you get to the end of that supply chain and add up all of those negative impacts from improperly designed packaging, it can have a big impact on total supply chain sustainability.

 

There are a number of different areas in which packaging, either poorly or properly designed, can have either a negative or positive impact on total supply chain sustainability.

 

How can supply chain professionals start taking action to make their supply chains green?

 

In terms of packaging, you need to hire packaging engineers! Packaging has historically been a function in a lot of companies which gets done by whoever is available to do that job. Companies that spend millions of dollars in product design and have got the product designed and ready to go into production then realize they need something to put the product in to get it through the supply chain. They then run around and get some purchasing or manufacturing people to design the packaging. This generally turns out to be packaging that is not designed very efficiently, resulting in a  negative impact on total supply chain sustainability.

 

The number thing companies can do to improve supply chain sustainability is to make sure you have a packaging professional to design your packaging, because then it will be done right the first time and you will reap the benefits of not only efficiently designed packaging, meaning cubic efficiency throughout the supply chain, but also have packaging that is going to deliver to product to the end user in a damage free high quality condition. This would eliminate all the resources dedicated to dealing with product damage.

 

Low hanging fruits and challenges

 

Cubic efficiency is one of the big low hanging fruits. All it takes is someone who has the time and expertise to look at the relationship between the size of the product, the fragility (what sort of shock vibration or temperature and humidity inputs will damage your product), and current packaging. More often than not you will find that there are some improvements to be made in terms of cubic efficiency. Secondary and tertiary packaging is usually too big. People usually ere on the side of being too conservative than they need to be in terms of product protection and will throw more packaging materials, meaning a bigger size of secondary and tertiary packaging. This leads to less efficient packaging throughout the supply chain, starting right from the pallet pattern and going to warehouse cubic efficiency, truck loading etc.

 

Package volume, as it compares to product volume is usually something that is easy to look at and you will usually find some big sustainability gains in that area.

 

 

About Larry Dull

 

LarryDull.jpgSustainable Packaging Expert Specializing in Supply Chain Practices

Packaging Knowledge Group

LinkedIn Profile

I interviewed Tiffany Potter who discussed how to reduce your greenhouse gas emissions in the supply chain. Learn how Tiffany realized there were billions of dollars sitting in the wings waiting to be invested in this market.

 

The reason why it is important to have a focus on greenhouse gas  emissions, even though there was no federal policy passed is because  across Europe the Kyoto Protocol and those countries that did ratify the  Kyoto Protocol, as well as different states in the US with partnerships  – there is still pressure to put a price on carbon.

 

 

 

Tiffany got into this industry in a non-linear way. She was a wildlife biologist at Yellowstone and was tracking Lynx in  the Yellowstone National Park during the Bush Administration. She was  frustrated with the Endangered Species Act and how administrations were  so overburdened with the laws and not keeping up with their  requirements.

 

Tiffany started to think that we may be looking at conservation the wrong way in the sense that we were penalizing people rather than incentivizing them to do conservation. This is when she decided to go to the Yale School of Forestry and Environmental Studies to study Environmental Finance. This was about the time that the Kyoto Protocol was taking off. The Kyoto Protocol is an international policy which creates flexible mechanisms for countries to invest in reducing pollution and incentivizing the right investments in clean technology such as solar, wind, power, etc.

 

It was during this time that Tiffany was working on an internship at the United Nations where she noticed large banks and private equity firms were raising quite a bit of capital. She got a job as a consultant working for one that raised $400 million dollars in a matter of weeks. They were high net worth individuals who were literally throwing capital at these funds which were investing in this industry. This is when Tiffany realized there were billions of dollars sitting in the wings waiting to be invested in this market.

 

The idea that you could incentivize people to make the right decision was bringing players to the table and making strange bedfellows and very unique public and private partnerships, as well as bringing energy to the table which she did not see when she was working for the government and around people who felt burdened by government policies like this.

 

To summarize, Tiffany was working with many different banks and private equity firms when she realized her passion was not so much just about making money but about making sure that this market is robust and healthy and does have environmental performance.

 

Tiffany believes we need to have legally binding policies and strict oversight and regulation to make sure that whatever investments are made into this are made to have fruitful results in terms of energy production that is sustainable for renewables and emission reductions that are legitimate.

 

This is when Tiffany started her own consulting firm called Streamline LLC and ended up launching Ecoanalytics which is a company that provides market intelligence to investors who are investing in emissions trading, renewable energy trading, water trading, nutrient trading and endangered species banking. Her company has had quite a bit of luck raising money from public and private partners to track the data around these markets and to help project developers find capital and help financiers place capital.


Why is greening the supply chain with a focus on greenhouse gas emissions relevant, especially now after the failed attempt to create a federal climate change policy?

 

The reason why it is important to have a focus on greenhouse gas emissions, even though there was no federal policy passed is because across Europe the Kyoto Protocol and those countries that did ratify the Kyoto Protocol, as well as different states in the US with partnerships – there is still pressure to put a price on carbon. There are very diverse stakeholders including policy makers, industry emitters, environmentalists, etc want to internalize the full abatement costs of CO2 emissions and have true costs accounting for and regulated by legally binding policies.

 

Even though there isn't a nationalized standard policy to do this, there has been a hotchpotch of different programs popping up across many different states. If you are a company that has representation across multiple state lines it is very confusing the track all of the different traffic that has gone on due to a lack of standardization.

 

Examples of what is happening include:

 

  1. California which has a historic climate change law went into effect at the turn of the year. This requires reduction in carbon pollution to 1990     levels by 2020. The state also has rules for transportation where California put into action a directive for reduction of at least 10%  in the carbon intensity of California's transportation fuels by 2020. There is also a state requirement to procure 33% of the energy produced and generated by 2020 to be solar. 20% of the energy procured must be procured by renewable energy sources by the end of next year!

  2. There are renewable energy standards which have been put into place to require that procurement of renewable energy by 30 of 50 different US     states, including the District of Columbia. These regulations require the increased production of energy from renewable sources such as wind, solar,  biomass and geothermal. For example, in DC the renewable portfolio standard is to procure 20% of renewable energy by 2020. 2.5% of this must be solar by 2023.

  3. At the federal level the EPA is passing new rules. They passed the tailoring rule which requires facilities to obtain government permits to pollute,    if they increase their emissions of greenhouse gases by about 75,000 tonnes of CO2 per year. There is also a new emissions rule giving   provisions for how fugitive emissions – those emissions coming from industrial activities and those emissions that don't pass through a stack chimney vent or other opening must also be treated for permitting.

 

As you can see there is a host of state and federal laws alone that require companies to run the gauntlet of environmental policy, which is actually much harder to do than if you just had one stand alone federal policy that was comprehensive for both renewable energy and carbon policy.

 

Who benefits from addressing environmental responsibility in core business practices?

 

It is everyone personally and anyone at a business. Delta Airlines just put in a $3 surcharge for flights to Europe because the emissions trading scheme which has been put into place there. Companies can basically benefit in 3 ways:

 

  1. Improve their image through corporate social responsibility campaigns

  2. Tax write offs

  3. Reduce emissions liability

  4. By making money

 

One of Tiffany's favorite examples is a company like Entergy which is trying to address greenhouse gas policies within their core business practices on many levels. They have something called their environmental initiatives fund, which is essentially a tax write off for this southern utility. Basically what they do is co-invest in technologies and social programs at very early stages which benefit their own bottom line in many respects.

 

For example, Tiffany's company Ecoanalytics won money from them to write a methodology with a group called Terra Resources PLC for quantifying emissions from wetland loss, which is a big problem in one of Entergy's lake areas.

 

This program is to create wetland carbon offsets. Where you have many lands that are dying in the south because they are not being recharged by natural water since it has been channeled off into the Mississippi – Ecoanalytics has created a way to recharge wetlands down in the south and sequester more carbon in the process. This can be monitized in emission trading schemes.

 

Ecoanalytics won money from their fund to create this methodology which was just announced yesterday in the Wall Street Journal. Now this company is seen as a leader in the field because they are pioneering new programs that go into a type of public library that many different users can use. They are seen as a leader and are reinvesting their profits into hometown areas of concern. The company is essentially investing in their own ability to reduce their emissions and liability in the future.

 

If they continue to participate in these programs to reduce emissions this way they can essentially get credit on their own properties to reduce their own emissions on a state or federal level, if this were to happen in Louisiana. They are reducing their emissions liability, improving their corporate social responsibility image, saving money through tax write-offs, and they are potentially making money.

 

How does someone go about changing their core business practices to better govern their own environmental performance and efficiency.

 

Regarding the whole concept of changing your core business practice to better govern your own performance, Tiffany believes what many companies need to do is really have a 'Come to *****' moment about this. There are a lot of simple things companies can do to really improve their performance. Obviously, a lot of companies don't want to do this.

 

The simple things they can do right away is to have an independent expert objectively assess their liabilities and their assets. A lot of companies don't realize you can actually make money from some of the things which are a pollutant such as garbage that is going to a land fill where you are paying a tipping fee to dispose of it. You could re-route that waste.

 

Consultants like Tiffany can actually show companies how they can make money in this business, or reduce their own costs. Some of the things companies can do is so simple. For example, making the conversion to telecommuting to reduce the amount of travel. Tiffany was preaching this herself but wasn't practicing at her own company at Ecoanalytics. Last she flew over 150,000 miles. In 2012 she has made a proactive commitment to telecommute with her clients. While nothing can beat being a front of a client, once she explains to a client why she wants to make this move they really understand what she is talking about and it reduces quite a bit of cost from the overall project.

 

Other things companies can do include without making a drastic change is to invest in renewables from simple programs. For example, in Maryland, Washington DC, Pennsylvania and Delaware businesses and organizations can actually choose their electric supplier. There is a group that provides electricity which is generated from wind power at rates that are sometimes lower than other utilities. You can sign up for the service and if you are a small business owner it is one small contribution you can start making on a monthly basis.

 

Ecoanalytics uses a group called sustainable hosting which provides their web-based and Internet services. They co-invest in wind energy to run their control panels and servers.

 

There are much larger ways you can do this as well such as how Entergy has created the environmental initiative fund. However, on the personal and small business level you can make these 3 small commitments which actually send very strong signals to your electricity provider or to your client about how you are practicing what you are preaching.


About Tiffany Potter

 

TiffanyPotter.jpg

 

Managing Director

EcoAnalytics

LinkedIn Profile

I recently interviewed Jeff Karrenbaurer who discussed supply chain risk management and how companies are not prepared. Even after repeated natural disasters and threats in the Gulf, people are still not taking the necessary steps to be prepared. You see a lot of articles about people doing supplier certification or that they are financially sound, running them through security clearance and CTPAT certification through customs. All of this is important. Cisco for example has a very elaborate risk management process.

 

 

However, surveys such as the one from Aberdeen a few years ago said that 13% of their respondents didn't have any kind of formal supply chain vulnerability planning in place. Jeff estimates it is actually 87% of companies do not have formal supply chain vulnerability planning in place.

 

These are appallingly low numbers. As far as Jeff is concerned it is part of responsible management. You can be placing the enterprise at risk. Many companies strategic plan for IT is to hand you a nice thick binder with detailed plans to bring up business systems of data centers go down.

 

If you ask the supply chain VP where his risk management binder is they will look at you with a blank stare.

 

They don't have vulnerability, supply chain interruption analysis, back up plans or contingency plans. The contingency plan Jeff has seen more often than not is a phone tree and if something happens they get together around a conference table and discuss what to do. That is not very sophisticated planning. You don't see very much disciplined planning.

 

It is like the military where you ask what if the enemy does this or that. The military carries it one step further and asks what they think the enemy will do, how to counter that and assuming the enemy knows my countermeasures, how to disguise or counter the counter measures.

 

Why do they go through all of this elaborate planning? Because it keeps them alive.

 

 

Whether natural disasters or pre-meditated attacks by an intelligent adversary threatening to close the Straight of Hormuz. The Long Beach dock strike of 2003, Katrina, repeated Japanese earthquakes, the Tsunami, Iceland volcano, hurricanes in the Gulf etc. These things recur and we will lose things short term or long term.

 

What are our contingency plans? How should I build redundancy into my system?

 

  • Qualifying secondary suppliers

  • Qualifying secondary sources of      manufacture

  • Building additional buffer      inventory

 

You don't get rewarded for this. Wall Street certainly doesn't reward you for it. They hammer you for it. It is ironic that the people who should be demanding prudent investment will hammer you for doing prudent management of the investment? The ratios don't look as good and this is all the 24 year olds understand, they don't understand operations. They didn't take it in school, they studied cool things like finance and marketing. They never made a business plan in their life and they will not reward you.

 

Management very often does not reward you. This requires very disciplined planning, but there is an old adage which says 'Structured Activity Drives Out Unstructured Activity'. You can make contingency planning highly structured. We know how to do that. It is a network tool where you keep asking what if , what if...how do you deal with it?

 

Structured activity for most most companies is phone calls, emergencies, and meetings. Jeff has a professional colleague at a big pharmaceutical manufacturer who's standard voice mail message replies that he is in various meetings today. This is his standard every day greeting. He is in 5 to 8 hours of meeting almost every day. He gets work done after hours. When this is the case you take contingency planning and put it off for later.

 

Jeff  has posed the following question to the largest companies in the world and still can't get an answer:

 

Column 1: Imagine a spreadsheet where column 1 is a list of all my raw materials (assume you are a manufacturer).

 

Column 2: The volume used of each raw material.

 

Column 3: The total sales volume of all the products this particular raw material is a part of. There will be double counting because some raw materials will be part of a number of different products.

 

Column 4: The profitability of all of the products which this raw material is a part of. Jeff believes profitability is more important than sales.

 

Column 5: How many suppliers do you have for this raw material?

 

 

The largest companies in the world cannot provide Jeff with this database as part of a risk audit. Jeff is looking for a raw material that is in 40%  of the finished products by sales volume or profitability and it comes from a single supplier in a Third World country with an unstable government. These would put the enterprise at risk.

 

Over 90% of a particular resin which appears in every circuit board out there comes from Japan. Japan sits on a fault! The electronics and automobile industry is still reeling from that and the flooding in Thailand. Yet, we see precious little evidence of people doing formal supply chain interruption, risk and vulnerability planning to deal with these things we know will recur. How much more evidence do we need?

 

If you qualify secondary suppliers your raw material costs will go up and Wall Street will hammer you and so will management. This is same with manufacturing. If you increase inventory to establish a buffer in case the JIT system goes south. The ratios won't look as good. Capital turns won't look as good. It will hammer your stock price. This is absolute insanity.

 

Jeff's frustration is that companies won't take action to mitigate these risks. They are just sitting and hoping nothing happens. Yet, we know this isn't true, we know things happen. As a citizen this bothers Jeff. As a supply chain professional it drives him up the wall.

 

There are ways to approach supply chain vulnerability analysis in a very disciplined way. It is the same network design tool. You don't need anything but the will to sit down and take the time and spend the resources to do it.

 

About Jeff Karrenbauer

 

President at Insight, Inc

+1.703.366.3061

LinkedIn Profile

I interviewed Daniel Feiman who discussed his book THE Book on . . . Business from A to Z: The 260 Most Important Answers You Need to Know. Several of the chapters: Operations, Process, Yield, and Quality were actually written with the supply chain in mind and were co-authored. In fact, the book was put together with 20 co-authors. Part of the focus was on the supply chain, and two of the co-authors are supply chain experts.

 

 

Daniel has a marketing background from his college days and afterwards. He moved to the banking field because he was recruited by the president of a bank who felt it was easier to take someone with a strong marketing background and teach him banking, rather than try take and banker and teach him how to sell. Daniel realized he needed a more sophisticated degree on the financial side. He got an MBA in Finance from Pepperdine University. This helped Daniel learn to speak the language of his clients and the marketplace.

 

After roughly 12-15 years in banking, he started to look for other challenges and began teaching corporate finance at UCLA. A few years later, Daniel discovered that the banking industry wasn't moving in the direction consistent with his needs. He left commercial banking in 1996 and started his consulting firm, which focuses strategy, finance and process. Daniel believes he and his team can teach companies ordinary companies how to create and sustain extraordinary results by turning the roadblocks into road maps. Daniel and his company have done this in the marketplace for the last 17 years.

 

Why another business book?

 

Daniel and his team actually asked this questions amongst themselves before they started and kept it going during the entire development process. The reason for another book, and in this case 'The Book on Business,' is because too many books in the marketplace are very narrowly focused, like most of our careers. They may not serve the vast majority of leaders, managers and supervisors who know they need to get their job done and accomplish goals.

Today they need access to information, not that they need to have expertise in every area from accounting to the z-score, but they do need to understand these areas and use them when appropriate.

 

This is what led to the crafting of this book to fill that very large void in the marketplace.

 

What is the reasoning for organizing the book by 26 chapters with 10 questions each?

 

Daniel was riding his bicycle with a few friends and talking about some business ideas and it came to him that what they are trying to do in the book is cover from A to Z. Daniel asked how he could do this effectively given that there are dozens or hundreds of subjects in business that one could write almost endlessly. There are also many books which cover certain subjects.

 

However, Daniel and his team of advisors thought that if they could cover the entire spectrum it would have to be from A to Z. They decided that first area of business starting with “A” was accounting. “B” would be branding. When they got to “S” it was strategy, etc. The entire 26 chapters representing the alphabet unfolded from there. Once they decided on this, they realized they could write a book on each of these but a 10,000 page book would not do well in the marketplace.

 

Therefore, Daniel decided that for most people if they could narrow a subject down to the 10 most important questions, along with their answers, it would allow anyone to use it as a quick reference on a specific topic and also a backstop for what they do on a day to day basis. It would always have value.

 

How did he choose the chapter titles?

 

Daniel and his team actually went through a process similar to how they work with clients on process improvement. They started with some brainstorming. After they laid out the alphabet they sat down and tried to think of every business subject which started with that letter. Then they sat down with different clients over a several week period of time to lay out the alternatives and input, narrowing it down until they finalized number 26.

 

No matter what 26 they chose, many people were happy but there were others who asked “Did you consider?” In the next book, which will be 'The Book on Business 3.0' they will actually come up with some of the alternative subjects which are equally important.

 

Why do the book and the chapters have so much value for supply chain managers?

 

Part of the reason is that when Daniel works with clients, talks to groups and works with members of the Institute for Supply Management they are always focused on how to optimize what they do. Part of every organization's vulnerability or weak link is the supply chain externally. No matter how much we improve our organization and how much we plan, implement and measure; unless our entire supply chain is on the same page, we are really subject to the challenges of our external supply chain directly but also our supplier's suppliers. Daniel wanted to keep this in mind in everything they did in the book.

 

Two of the co-authors Lee Schwartz and Andy Pantaneous are really focused on the supply chain in their entire practice. There are 4 chapters: 1. Operations, 2. Process, 3. Quality and 4. Yield which specifically address both the internal and external supply chain.

 

Effectively, if you add Strategy and a few of the other chapters it is a perfect model for beginning an optimization of the supply chain. Daniel thinks this is sorely missing in a lot of organizations today.

 

Where to get the book?

 

  1. Amazon.com

  2. Builditbackwards.com

  3. Smashwords

  4. B&N.com

  5. itunes

 

About Daniel Feiman

 

DanielFeiman.jpg

Daniel Feiman, MBA, CMC® and Visiting Professor, is the Founder and Managing Director of Build It Backwards, a consulting and training firm based in Redondo Beach, CA. He teaches “ordinary companies how to create extraordinary results” by leveraging his expertise in Strategy, Finance and Process. Mr. Feiman has provided expertise as a management consultant for more than 16 years, after a long and very successful career in commercial banking. He works internationally with cutting edge start-up companies, as well as industry leading multi-national firms; where he facilitates strategy, finance and process improvement projects, improving business effectiveness in a wide range of industries.

 

Daniel is an internationally recognized seminar leader who has worked with firms such as Apple, Credit Suisse, Hilton Hotels, Institute for Supply Management (ISM), Mattel, PEMEX (México), Promigas (Colombia), Reliance (India), the Small Business Development Center (SBDC), TRW and the University of Manchester (UK), among many others. Daniel is the Publisher of the Build It Backwards series, and author of numerous published articles, white papers (available at www.BuildItBackwards.com) and business books. Daniel is also a reviewer for the New York Journal of Books. He is adjunct faculty at the University of California, Los Angeles (UCLA) Extension Department (since 1990) and the Visiting Professor in the University of Huddersfield’s (UK) Business School. He has also been interviewed on various television and radio shows. dsfeiman@BuildItBackwards.com

I interviewed Vishnu Rayapeddi who discussed why staying competitive requires value chain visibility from concept to customer. Vishnu calls silo-based organizational structures and architecture "an old style of thinking." Today, Vishnu says, people need a complete view of the value chain, from concept to development to manufacturing to launch and post-launch, which includes "looking after the customer." Vishnu believes it is all about resilience, cost-effectiveness, maintaining close relationships with all stakeholders, responding to the customer's ever-changing needs, and providing value at every step along the supply chain.

 


Vishnu Rayapeddi shared his opinion of silo-based organizational architectures, specifically whether they encourage or suppress innovation. Vishnu is the founder of Productivity Solutions Limited, a Lean and Supply Chain Management consulting firm, so he brings a unique lean perspective to the table.

 

Vishnu Rayapeddi calls silo-based organizational structures and architecture "an old style of thinking." Today, he says, people need a complete view of the value chain, from concept to development to manufacturing to launch and post-launch, which includes "looking after the customer." By taking a broad view of the entire supply chain, stakeholders really begin to collaborate with one another -- each focused on maximizing value-adding activities, while trying to minimize non-value-adding activities.

 

The customer, Vishnu says, plays a vital role in the value chain, because in today's world, the market is totally demand-driven. Customer's wants and needs change dramatically day-by-day, and unless organizations, including supply chain organizations, innovate with an eye toward meeting customer demands it will be very difficult for them to stay competitive.

 

In terms of innovation, Vishnu Rayapeddi believes there are a number of solutions that can add value. First, of course, is having a complete view of the value chain, but also implementing integrated supply chain systems, Kanban systems or web-based Kanban systems, which allows everyone, including suppliers and customers, to be linked through web-based technology. Vishnu says it is all about resilience, cost-effectiveness, maintaining close relationships with all stakeholders, responding to the customer's ever-changing needs, and providing value at every step along the supply chain.

 

In closing, Vishnu Rayapeddi advises companies to have a strategy in place that not only encourages innovation, but also makes it possible to execute, or they will surely fall behind their competitors.

 

About Vishnu Rayapeddi

 

vishnu.jpgVishnu Rayapeddi has over 22 years of  operational experience in a  number of industry sectors including  Pharmaceuticals, Nutraceuticals,  Poultry, Meats, FMCG, Food, and  Electronics. He is the Founder and  Managing Director of New  Zealand-based Productivity Solutions Limited, a  Lean and Supply Chain  Management consulting and training organization.

 

Founder and Managing Director
Productivity Solutions Limited

LinkedIn Profile

Jeff Karrenbauer discussed Green Supply Chains and how their flagship product can be used to facilitate the process of understanding the carbon values associated with the supply chain. The product does strategic supply chain design, it is a network model. It incorporates procurement, manufacturing (at any number of stages or complications), arbitrary Bills of Material, cascaded processes, by-products and then on to distribution centers, ports, pools or cross-docks to be shipped to customers. Included in this scope would be procurement, manufacturing, warehousing, transportation, customer service, inventory, duty, taxes etc.

 

 

This allows people to look at various strategic supply chain design questions: Where should I manufacture? Where should I have distribution centers and how many? How many plants should I have? Should I own them or should I outsource? Which suppliers should I use?

 

All of this is done either under a system-wide cost minimization or profit maximization objective. It is a very comprehensive look at a supply chain.

 

However, layered on top of that are green design issues. In many cases people are just starting to incorporate this into their strategy. Many will simply ask for an audit at the same time. They want a cost minimized supply chain, but they will also want to know the corresponding energy and carbon values associated with that supply chain.

 

The complication is that there is significant data gathering required to estimate energy usage and carbon emissions at each stage of the supply chain.

 

Some people just want audit numbers of the cost min or profit max of the supply chain, along with the corresponding energy and carbon.

 

However, with these numbers we are also able to do a carbon minimization or an energy minimization supply chain. You are simply substituting one measure for another. Instead of doing dollars or cost, you are doing energy or carbon minimization. It is the same mathematics, despite claims by some in the industry. There is nothing breakthrough about it at all.

 

The most likely use will be to address constraint issues. The easiest to understand would be Cap & Trade. This is a politically charged word in the United States right now. But it is an every day occurrence requirement in the European community. They are saying that for all of your facilities regardless of where they are and what they do, there is a certain carbon cap. If you exceed that cap you pay a penalty or buy credits from someone else. This is Cap & Trade.

 

Jeffery believes when looking at processes you should also be able to look at byproducts. Some byproducts can be sold and others need to be disposed of. There is a cost associated with this which may vary by location.

 

You can't just dump the stuff in the nearby river anymore.

 

This should be incorporated in the design as well, it is a cost of doing business.

 

What should supply chain managers do next?

 

You first have to convince management that it is important. This will go nowhere for a supply chain manager if the CEO thinks this is all for a bunch of tree huggers. They will not get any support at all with this type of CEO mentality.

 

If management does think these things are worthy of pursuit for whatever reason (whether economic or good citizen etc), the next thing they need to do is start auditing their supply chains to get an energy consumption/carbon emission audit. At the same time while you are doing this you are gathering data. It is analogous to gathering cost data.

 

You are asking what is the cost of this manufacturing process. In addition to that you are asking what is the energy consumption of this manufacturing process and how much carbon are you emitting. These things follow in tandem.

 

After doing a really comprehensive audit and if I care about energy consumption or carbon emission you will ask where it is happening in your organization and how much. With this data in hand you can then start asking strategic questions.

 

If you look at this as just another management constraint, what will it do to you? Does this mean you need to re-design your supply chain or not?

 

About Jeff Karrenbauer

 

President at Insight, Inc

+1.703.366.3061

LinkedIn Profile

I interviewed Carl Shreyes who is a PMI Certified Energy Professional who says supply chain is probably one of the biggest risk factors he has to consider since he is in the engineering and construction management industry. He has dealt with a lot of raw material requirements, procurement of items and equipment. This automatically leads to the supply chain; at least in the transportation, and the total supply chain from the upstream and downstream until it gets installed on to the site in the oil and gas industry.

 

From this perspective, the risk for the last year and a half has reduced considering there is a lot more available in the market and less in demand.

 

However, in the overall market for petroleum items, the risk by itself is a major challenge. Carl can't really tell you if it’s increasing or decreasing, but he definitely sees an upward trend.

 

 

Actions taken

 

He had actually started the process of setting up long-term firm-order level vendor and supplier contracts with his suppliers for specific equipment. Most of the bulk equipment that his company needed, like piping or pipeline related or steel are tied to long-term, firm-order based deals with their vendors and uppliers. This part of the risk was reduced because it covers about 25% to 30% of their total procurement.

 

Another action he has taken to deal with risk relates to client-based requirements. Requirements change on a custom day or two basis. Carl and his team usually choose a vendor among three or four qualified vendors. They narrow it down to a standardized list of vendors and suppliers who can provide a variety of equipment for us over the years.

 

Conclusion

 

The major risk factor is availability of material. Carl currently works in the Middle East. They don’t have a lot of vendors who provide the kind of equipment needed. Of course, for bulk items they do but not specific equipment.Although there are no duties, the time and the effort needed to import something from a different location to a location of work is one of the risks, but that’s on the lower side.

 

A lot risks can be mitigated. Carl thinks risk that should be mitigated include duties and getting the item to site. What he has done is expediting. He had a specific expediting team, a logistics team that’s focuses solely on keeping track of this on a regular basis. He let them travel if they had to, but they also had a system where their vendors use the same ERP. Tracking the equipment becomes easier, and they get the information immediately, as soon as they release it.

 

Thought Leadership

 

As an individual, what Carl brings to the table is a combination of both the technical knowledge and the business experience in the industry. He has been educated technically with a master’s, and he has an MBA. Carl has experience with new technology, poly-silicon. He works in the high-tech industry, although his recent work was basically a process plant.

 

Carl has the ability to think outside the box. He likes tokeep an eye out for new project opportunities. He manage projects, so the ability to think big is what he brings to the table.

Carl believes in continuously building of his knowledge. He has always been leading teams since high school. In addition, Carl has been the student representative during college and the president of the MBA association during his MBA. They revived the association and started having keynote speeches almost every other week. Carl had people in the industry who directly interacted with them before they started taking courses. If a person in the industry was interested, he could host one or two classes per semester for a particular course of his interest.

About Carl Shreyes Chakravarthy (CAPM)

CarlShreyes.jpgPMI Certified Energy Professional

Actively seeking opportunities for growth in energy sector                
United Arab Emirates
Oil & Energy

LinkedIn Profile

Dan Hearsch is a manager at Ricardo Strategic Consulting, a  management consulting group part of a larger organization, Ricardo  Incorporated. Ricardo PLC is part of the parent company which is a 100  year old English engineering consultancy. The main things Dan has been  involved in since being with Ricardo are cost reduction and supplier  risk management projects with some of the OEMs, mainly the American  OEMs.

 

Dan  has been leading work streams that have to do with cost reduction on a  number of different commodities, some supplier diversification, which  has to do with the risk management, given the recent downturn and the  ongoing issues within the automotive supply chain world.

 

 

Supply Chain Risk

 

Obviously, it doesn’t take a lot of reading of the news to see that supply chain risk is increasing. Right now I think you are coming to a head in a lot of ways. The things that caused the current downturn, ie tightening credit markets, the contraction of automobile production, are all factors that are creating problems for the OEMs themselves and their suppliers. There is an interrelatedness and interconnectedness of the supply chain. For example, a company like Leer who supplies GM, Chrysler, Ford, and probably all of the OEMs as well. When they have a problem because GM can’t pay their bills it creates a problem for Ford because it may be that the same plant is producing parts for multiple OEMs, they are producing for GM and Ford.

 

Even if what they produce is a common part it creates an issue where Ford isn’t able to get their parts even though they pay their bills. Put this issue with the fact that the OEMs are no longer able to sell as many cars, so they are not producing as many cars which means they are not buying as many parts.

 

The automotive industry is a fixed capital industry, like almost any manufacturing industry. There are many fixed costs that suppliers are forced to re-coup their variable cost. When volumes go down that is another weight on the scale, going the wrong way.

 

All of these issues together are creating the current environment where suppliers are failing. You have got companies that are not able to cover their costs, they are not able to get credit to get them past this difficult time. All of these things build onto one another.

 

What we advocate is being more attuned to your supplier’s financial health. We do a lot more analysis for our clients, looking at suppliers not just from a pure balance sheet standpoint, but also who else are they doing business with. Let’s say I am representing Chrysler, I don’t just say how much of your business is with Chrysler, I look also at how much is with GM, how much is non automotive, and work to actively manage those relationships, or those ratios if you will.

 

We are doing a better job of working with an eye toward where commodity markets are going. We are also trying to do a better job at forecasting actual demand. Some of the forecasting tools have been based on historical volumes, historical purchase behaviors. Right now you can almost throw them out the window

 

All of the OEMs have stopped selling quite so many vehicles to fleet organizations. A company like Ford doesn’t just dump its excess capacity by selling to Hertz. All of those relationships are gone. Well, it has significantly changed the models. Where it used to be a spike in demand could actually cause the model to completely mis-forecast, we are taking a little bit more of a deep dive, a more holistic approach to working on forecasting. The forecasting is a big one.

 

Making sure that the data makes sense.

 

If you have a particular part that you are trying to determine how many you are going to buy over a certain period, this can be an important cost reduction exercise when you are watching a part for the first time. As a part goes from a current model application where it is on a car that is in active production into a past model application where you only need it for service and anticipating how many parts you are going to need over a certain period, what you are willing to pay for it, and also what you should be selling it for. All of these things become very important

 

 

From an IT standpoint, making sure that the data you are getting is the data that you expected and the system isn’t mis-reporting. What we have been doing for our clients is bringing a fresh set of eyes and a fresh perspective to they way they have been doing business for so long because it is what is necessary today. Things really have changed.

 

It is a little bit of the frog in the pot of water. If you put a frog in cold pot of water and heat it up, the frog is not going to jump out and will eventually be boiled. If you take a frog and put it in the hot pot of water he will jump out. Right now the automotive industry is..the water has gotten very hot and now we are trying to help companies jump out, or at least not repeat the same mistakes.

 

 

3 Recommendations for Keeping Pace with These Risks

 

1. I would say the biggest one is re-think the way think customers are going to buy your products. With regard to volume and with regard to their behaviors.

 

Companies have gotten used to replacing batteries at a certain rate. The technology has improved and the cars are better and people are not replacing them quite as often because the credit is not there. Really think about your forecast. My experience, not just as a consultant but my history as a buyer has been that the OEMs have predicted we are going to make 100,000 of this vehicle. In my time in the automotive industry those volumes almost never happen. Being more intelligent about the way you do those.

2. Being smart about who you are partnering with. Doing those types of financial analysis, really understanding the risks you are exposing yourself to when you do business with a company.

 

More beyond just “hey this is a great company, can they make what I need them to make?”, but also are they going to be around for a few years?

 

 

3. I would say challenge the paradigms about localization, or the benefits of being a low cost country. The rules have really changed there as well. It used to be a few years ago you could get almost anything cheaper in China and it would cover the trade-off of transportation. Nowadays the opportunity costs are different. But it doesn’t mean just come back to the US. Really analyze and study what the right place to buy this thing for your business from a total landed cost and then also take into account the risk.

 

I think as a firm what we bring as a management consulting firm. We focus not just on the automotive industry but also the transportation industry, anything that moves. Airplanes, trains, it is a core in automotive and truck manufacturing, power trains, and engines. But what we bring that I don’t think any other management consulting firm can bring is the technical expertise.

 

Most of our consultants have been engineers in the past. I am almost the lone exception at the firm. All of my experience is in supply chain. We have a strong engineering group that is actively involved with pretty much every company making an engine, a transmission, or anything like that. We can leverage that experience and expertise when we come to a company.

 

The benefit is, for example on a cost reduction project, or a warranty improvement, we are not just running your typical set of metrics or trying to bring in smart people and have them learn how to do what we need to do. We are bringing in very experienced people in the automotive industry who have a very strong backup of technical expertise and experts back at the shop, if you will. We are able to bring both of those sets of expertise. We are able to bring the best of both worlds from an engineering and a management consulting standpoint.

 

Thought Leadership

 

We have a pretty good background in improving process. That is the core competence of most management consulting firms, change management and process management. However, we have expertise that is focused on product development requirements and also it is diversified across a lot of industries that are core manufacturing industries. I think that one of the key things that we bring that makes us very innovative is that we have expertise in helping aerospace manufacturers. We help these huge international companies improve their processes and we learn things from them that we are able to bring back to automotive where they are applicable and can help improve the processes of a 100 year old company like Ford or GM that have great processes but the businesses are almost starting to converge. GM is getting smaller because it is a lower volume type of world. For GM to re-learn how to be a lower volume type of company. I think we are able to do that better than almost anyone because of our experience working with aerospace companies or alternative energy generation companies, power manufacturers, etc.

 

The supply chains share a lot of similarities but they also have some big differences. We are bringing these lessons as we go to new markets like Russia and China. Not just brining our core lessons learned over the years but also our expertise working in the Automotive industry in the Western world of established markets as well as the things we learned working on a white board, a big white space like Russia where we figure out how to set up a supply chain in Russia. I think we bring a lot of lessons back and then re-apply them to the established markets. This is something that has really helped to add value to our clients.

 

About Dan Hearsch

 

Dan_Hearsch.jpg

 

Associate at Ricardo Strategic Consulting

Greater Detroit Area

Automotive

LinkedIn Profile

Per Olof Arnäs has a PhD in logistics from Gothenburg Sweden. He has been working in transportation and logistics for the last 20 years. For a period of 8 years, up until 1 year ago, he had been working in the transportation industry dealing with strategic issues ranging from supply chain management, sustainability, traffic safety, IT, energy issues etc. For the past year he has been back in academia as a senior lecturer and researcher at Chalmers University of Technology in Gothenburg where he does research in ICT based transportation systems.

 

Per calls himself a ‘serial blogger’. His main professional hub is a Swedish blog called logistikfokus.se , translated as Logistics In Focus which is a crowd-sourced logistics blog. He has translated some of the postings from that blog and placed them on his English blog Dr. Logistics.se.

 

 

Dustin: I read your blog post titled ‘Social Shipments – What if a pallet had a Twitter Account’ as well as ‘Time to Retire the Homing Pigeon’ My question is whether it is possible to build an information sharing network for transport based on what is already online?

 

Per: What I wanted to show with that posting was the principle behind social media such as Twitter. It is far different from the principles we have today which we use to build our information infrastructure. For example, the information exchanged today for B2B communication is paper based. This means that it is built on a paper metaphor with a sender, message and receiver(s) of that message.

 

That metaphor can be traced back to the homing pigeon where you actually had to have an agreement between the sender and receiver on the formats and channel of distribution of the information.  If you look at Twitter, it is almost the opposite where you don’t have senders or receivers of information, you have broadcasters and subscribers. Of course you can direct messages to certain accounts, however the basic principle is that everyone broadcasts information and everyone can subscribe to information.

 

The thought experiment in this blog post was that what if we actually used Twitter as an infrastructure? You are not allowed to do that on Twitter by the way because you have to have to be a human being to open an account. However, you could use an open source such as Status.net to build an actual platform where owners of data publish their information. If you are interested in data from one or more data suppliers you are free to access that data and mash something up that you want to have in your business.

 

The basic idea is to remove the hierarchies and constraints performed by having senders and receivers of information with a pre-agreed format and method of communication ad instead focus on broadcasting. Of course if you are a broadcaster you are also required to document your broadcasting format, or API. This is done today with public transportation. You can look at the APIs online and see that you have a number of ways of obtaining the information. For example, with the public transit system in New York you can build apps and functionalities from that data without actually needing to ask the public authorities who own the data. You don’t have to ask them to use the data, you just use it and build functionality from it.

 

Dustin: What are the expected outcomes?

 

Per: In Europe at the moment they are working on actually harmonizing the transportation infrastructure across borders to get Green Corridors where you have the large arteries of the transportation infrastructure in Europe because Europe consists of a lot of different countries with different technical standards. For example, you cannot drive a single train from one city in Europe to another without running into problems. What they are doing in Europe on a massive scale is trying to harmonize the transportation infrastructure.

 

One of the large hurdles to navigate through is the disparate information between countries and actors. Europe has done hundreds of projects where they tried to standardize. They tried to come up with a common message format which everyone should use. If everyone used the message format the world would be a better place. However, in reality it always comes down to who should pay, who should own the message format and who should be able to make changes to it? All of the actors (companies and governments) are looking at the cost side. They want to know how much does it cost them to adapt to this messaging system, when they already have an in-house system that already works for their needs.

 

All of these projects have a built in bomb when it comes to who should pay for them. The only way to turn this around is to look at the information infrastructure on a system level and see that everyone should be able to broadcast their information in a way which suits them best. Of course you will have standards which you can use to transmit digital information.

 

Kevin Kelly’s “Web 3.0” actually talks about creating an infrastructure where everything just pours data into the one machine. Everyone is able to extract from one machine.

 

In a practical sense what weI want to achieve is a plug and play where a shipper or logistics service provider could at one time change traffic loads and the planned links (for example in response to free capacity such as with a train delay which gives the opportunity to load goods onto the train). If you look in hindsight at logistics operations when you have all the data you can always say that you could have done things differently.

 

The more real time information you can get  you can’t get more real time than Twitter right now ) the better decisions you can make.

 

 

Dustin: How close are you to achieving your goals?

 

Per: I am actually waiting for a company like Twitter to actually acknowledge there is a B2B opportunity here, which they haven’t yet. They focus on consumer brands and consumer utilities. I think we are on the brink of a market disruption where one or two large actors will try to seize this opportunity because there are loads of information traveling in the business-to-business (B2B) segment. This information is high value, time critical and worth a lot of money, a lot more than my Tweets are worth.

 

An actor like Twitter or Google could actually make a difference and disrupt the old way of doing things, which is in essence sending papers even though the papers are in digital form.

 

It is not easy to make a prediction on when this change will come, but I think it will come. It is not a linear development. At some point you will reach critical mass.

 

I am not really sure but perhaps in 10 years we will see a lot more of this broadcast/subscriber infrastructure in place. Government agencies across Sweden at least and I think across Europe have started to actually see that they own a lot of data and they can broadcast the data. They don’t have to construct the Apps and they don’t need to know how people will use the data. They just publish the data and let others do the value adding to the data.

I think that the public sector is ahead of the business sector now. However, the business sector has to pick this up eventually. Within 5-10 years we will see it across the board.

 

About Per Olof Arnäs

 

PerOlof.jpgSenior Lecturer at Chalmers University of Technology

Vice Director at Northern LEAD Logistics Centre

Co-founder at Wesserbisser.se (Sole Proprietorship)

Co-founder at Quintab

Dr. Logistics.se

Twitter@DrLogistics

LinkedIn Profile

I interviewed Daniel Feiman who wrote the book with Dr. Tony Miller on getting more productivity out of people by any means possible. As the title implies, The Book on Improving Productivity by Fair Means or Foul, is about using any method you can to achieve productivity, even if it isn't fair.Most books on the topic of productivity cover traditional efficiency tools from an operational view, while Daniel Feiman and Dr. Miller examine the issue from the human perspective. Inside the pages of their book, you'll meet the "problem children," the "time-bandits," the "steamrollers," the "sticklers" and many other people you will recognize.

 

 

 

Daniel says the book was written for one reason -- to put a tool in the hands of managers that would help them better deal with their employees, because "when the organization does better, the individual operating unit does better, and everyone does better."

 

 

 

 

 

About Daniel Feiman

 

Mr. Feiman brings three decades of experience in consulting and training to his clients. He has spent more than 18 years in the areas of traditional and nontraditional banking, where he developed his skills at commercial lending, marketing, leasing, asset-based lending, management, and loan work-outs. As an internationally recognized speaker and trainer, Mr. Feiman also has developed and presented hundreds of successful seminars, training programs, and educational courses to thousands of attendees around the world for topics covering the gamut of strategy, finance, and process improvement.

 

 

Mr. Feiman has worked with firms such as Hilton Hotels, Mattel, Institute for Supply Management (ISM), Credit Suisse, TRW, Reliance (India), PEMEX (México), Saudi Aramco (Saudi Arabia), University of Manchester (UK), Promigas (Colombia), and the California Institute of International Business & Economics.

 

 

In addition to authoring numerous articles that have appeared in publications such as The Los Angeles Times, American Banker’s Association Journal, and Beverly Hills Business, Mr. Feiman has contributed to several books on strategic planning and career outplacement.

 

 

The Book on Improving Productivity by Fair Means or Foul

 

Daniel Feiman worked in the field of commercial banking for 18 years, and in his words, "when banking stopped being fun," he began looking for more opportunities to help companies, so he left the banking industry and started a consultancy. Today, Build It Backwards is 14 years old and provides services that address strategic planning, financial modeling and process improvement.

 

 

Daniel's work as a consultant was also the inspiration for a book he recently co-authored with Dr. Tony Miller, a world-renowned expert in productivity and human resources. Titled The Book on Improving Productivity by Fair Means or Foul, the majority of the book deals with positive methods for improving productivity within an organization, and with employee and peers. Inside, Daniel says, readers will also find a number of templates, models and case studies. But, what makes this book a standout, is that it also offers help for those situations where managers and supervisors have exhausted all positive avenues, yet still have a few "problem children."

 

 

Fair Means and Foul -- Breaking it Down

 

 

Fair Means

 

As the title implies, The Book on Improving Productivity by Fair Means or Foul, is about using any method you can to achieve productivity, even if it isn't fair. That may sound a little harsh, but it should be noted that the majority of the book focuses on "fair means," including positive reinforcement, motivation, process improvement and the like.

 

 

Detailing just a few of the "fair" examples, Daniel said, the book offers insight into the difference between competence and performance, and how to use the performance appraisal as a tool for improvement. The chapter dealing with process improvement provides readers with two different techniques, including very specific steps, that can deliver permanent benefits to any company, because, as Daniel said, " If we can improve our process for every supply chain and every organization, it will eliminate waste and eliminate the unnecessary." Also on the "fair" side is a chapter about organizing companies in such a way that their reward systems truly benefit their most productive employees.

 

 

Foul

 

On the "foul" side, we have the "problem children," or those who haven't responded well to any of the fair techniques.

 

 

Daniel Feiman says there are groups of people who share common characteristics. They are not necessarily organized groups, but individuals whose habits are such that they aren't as productive as they should be. Smokers, for example, should be allowed to smoke, Daniel says, but time away from the job to indulge their habit should not be compensated.

 

 

Next, we have the "poor performers," those who work within our organizations who simply are not pulling their weight. Instead of pushing the problem off on human resources, who in many cases, aren't able to help because they don't have firsthand knowledge of people's performance issues, or understand the people's jobs, Daniel suggests getting to the root cause of the problem, "‘What is keeping them from performing? Is it a lack of motivation? Is it a lack of training? Is it a lack of understanding their job? What is keeping them from performing?’ And if it is just the fact that they simply don’t want to perform, then we suggest a variety of ways to help them find another source of employment," Daniel said.

 

 

The last chapter of the book deals with very specific "problem children" and very specific situations, including "time bandits," who will do almost anything other than their job, "steamrollers," whose personalities are so strong that they basically overwhelm everyone else, but still don't get the job done, and "sticklers," who are so focused on details that they keep asking for more information, but never get to the job. In each case, the book provides both foul and fair ways to approach the problem.

 

 

Daniel Feiman recalled someone once telling an employee, "The bus leaves in 5-minutes -- be on it or under it." Some people might find that a little strong, he continued, but the point was, "We want you to be part of the team, but if you’re not going to be part of the team, get out of the way." On the flip side, the fair way of dealing with that same employee would be to determine what the issue is, and then help them work it out as a means of turning them into a productive individual.

 

 

Why HR Fears Daniel Feiman's Book

 

The Book on Improving Productivity by Fair Means or Foul has received positive comments and endorsements from managers, leaders, attorneys and lecturers, but one group in particular has been conspicuously absent.

 

 

"One of the endorsements we’ve gotten on our book," Daniel Feiman said, "is from an attorney who works on employee issues; another one is from a Ph.D. lecturer over at UCLA, in the Anderson graduate school. We have found that this book is extremely valuable for almost anyone except HR people, and that was not our intention, but it seems that HR people are a little afraid of taking this to heart because it means that a lot of the power that people have given to HR is taken away and given to the managers."

 

 

Daniel says the book was written for one reason -- to put a tool in the hands of managers that would help them better deal with their employees, because "when the organization does better, the individual operating unit does better, and everyone does better."

 

 

Most books on the topic of productivity cover traditional efficiency tools from an operational view, while Daniel Feiman and Dr. Miller examine the issue from the human perspective. "If we can give managers a tool that has specific examples, techniques, and case studies to help them get more productivity from their people —and we’re not talking about intimidating them or browbeating them, we’re talking about real positive improvement -- that is the real intention of our book," said Daniel Feiman.

 

 

Buy the Book

 

DanielFeiman.jpg

 

The Book on Improving Productivity by Fair Means or Foul, by Dr, Tony Miller, MBA, FCIPD, MBPS, MAPS and Daniel Feiman, MBA, CMC, can be purchased directly from www.builditbackwards.com, and from Amazon.com, in traditional or "Kindlized" formats.

 

LinkedIN Profile

I interviewed Fortunato Cartolano, President and CEO of FCO Global. He discussed a new research project aimed at connecting non-hierarchical manufacturing networks.

 

 

 

In order to compete with the far east and United States, it is essential for the European electronics industry to capitalize on opportunities for streamlining the supply chain through shared knowledge, collaborative decision making and cultural understanding.To address the issue, the industry has already formed a number of non-hierarchical networks that inherently require greater collaboration at the tactical and strategic management level, which in turn requires a new level of data and information sharing between network partners. ERP systems provide and adequate view of operations and can be used to build links to other companies -- where they fall short is in providing transparency at the strategic and tactical planning levels -- and that is exactly what Fortunato Cartolano and other electronics industry experts are addressing with a research and development project dubbed "CONVERGE."

 

 

The CONVERGE project brings a consortium of experts, representing the European electronics industry, academia and technology providers, together as part of a research effort aimed at closing the gap by providing a framework and tools for exchanging tactical and strategic information necessary to make informed decisions.

 

 

 

The Challenge of Connecting Non-hierarchical Manufacturing Networks

 

The European electronics industry faces stiff competition from manufacturers in the far east and United States. In order to compete, European companies are beginning to recognize the need for improved flexibility and collaboration across the supply chain.

 

 

According to Fortunato Cartolano, who is tasked with managing research and development for a project dubbed "CONVERGE," it is essential for the European electronics industry to capitalize on opportunities for streamlining the supply chain through shared knowledge, collaborative decision making and cultural understanding.

 

 

To address the issue, the industry has already formed a number of non-hierarchical networks that inherently require greater collaboration at the tactical and strategic management level, which in turn requires a new level of data and information sharing between network partners. For managers who must distinguish between sharable and non-shareable information, non-hierarchical networks present a real challenge.

 

 

At present, collaboration within non-hierarchial networks is primarily focused on the operational level and is accomplished through Enterprise Resource Planning (ERP) systems. At the operational management and shop floor level, ERP systems can provide an integrated view of operations information across all functions within a company and can be used to build links to other companies. Where they fall short is in providing transparency at the strategic and tactical planning levels -- and that is exactly what Fortunato Cartolano and other electronics industry experts are addressing with the CONVERGE project.

 

 

The CONVERGE Solution

 

The CONVERGE project brings a consortium of experts, representing the European electronics industry, academia and technology providers, together as part of a research effort aimed at closing the gap by providing a framework and tools for exchanging tactical and strategic information necessary to make informed decisions. The overarching goal of the CONVERGE research project is to facilitate the free sharing of data and the "interconnectedness" of different supply chains while providing assurances that confidential information is secure.

 

 

The speed of development in the electronics industry demands supply chain transparency. Companies need visibility into future orders and risks across the supply chain, as well as visibility into tactical and strategic decisions made by their suppliers and customers, in order to plan their own activities accordingly. CONVERGE endeavors to create a network of partners who share information on previously agreed terms. Because each partner in the network needs the ability to make its own tactical and strategic decisions based on the multiple supply chains, the information cannot be centralized. To that end, CONVERGE delivers a de-centralized decision support system for production planning and resource optimization built on an Open Decision Framework (ODM) that consists of a: Reference model for collaboration in non-hierarchical networks, on the management level.

 

Deployment process to apply the reference model at different usage levels (generic processes for all industry sectors, processes for the electronic industry, for particular networks and for particular companies).

 

 

Prototype based on existing CRM/SRM-Tools extended and adapted to the new reference model enabling the new collaboration concept inside and between companies, and connecting heterogeneous software systems.

 

 

In approximately five years, the expected cost savings is anticipated to be in the neighborhood of 180 Mio. € -- assuming a diffusion rate of 10% of the 600 European Electronic Manufacturing Service companies.

 

 

 

About Fortunato Cartolano

 

Fortunato.jpgPresident and CEO

FCO Global

LinkedIN Profile

 

Fortunato Cartolano brings more than 20 years of business development and key program management experience to the table, having worked for SIEMENS Automotive and Magneti Marelli. Today, Fortunato is President and CEO of FCO Global, a management consulting firm that caters to the transportation industry. He is also actively involved in a 30-month research and development project called "CONVERGE," which aims to improve supply chain integration and real-time decision making by connecting non-hierarchical manufacturing networks within the European Electronics industry.

 


 

 

I interviewed an independent consultant and business technology leader Alok Ahuja. Alok believes there is a strong connection between business process and competitive advantage. Streamlined business processes that are supported by agile and scalable technologies, he says, can help companies assess the market, drive solutions and bring products to the market in a shorter time span. The right kind of business processes have turned some companies around and literally transformed them.Dell, Walmart and Costco have strong competitive advantages over their closest competitors gained primarily by shifting to agile business processes.When selecting a technology that enables a business process, Alok advises companies to be certain that it has flexibility, scalability, and is nimble enough to adapt changing dynamics in the market space.

 

 

 

 

Alok has spent his career leading technology-driven business transformations.Alok is delivering long term program management services to large and mid-sized companies in the Seattle Area. Alok also worked as a Director, Product Management at SAP Labs in Palo Alto, California where he launched a new supply chain management software solution. Prior to that, Alok incubated an RFID based software solution at Microsoft. In prior years, Alok launched the acclaimed ‘Web Sphere Product Center’ product at IBM USA.  While at IBM, Alok also provided principal level leadership on highly successful consulting engagements delivering ERP, E-Business, SCM, and CRM solutions to Fortune 500 clients such as Solectron, Invensys, Nortel, Bio-Rad, and IAMS.

 

 

Alok is passionate about streamlining processes and attributes his 15 year consistent track record with success in process rationalization to critical thinking and practical use of technology. Alok has an Engineering degree from Punjab Engineering College, Chandigarh, India, and an MBA from the University of Toronto. Alok is also a certified Project Management Professional (PMP) and a Certified Information Systems Auditor (CISA).

 

 

 

Listening to Alok Ahuja talk about business process as a source of innovation and competitive advantage, it becomes quite clear that he is very passionate about the connection. The right kind of business processes have turned some companies around and literally transformed them. Dell, he said, is a perfect example -- they shifted the paradigm with nimble supply chain management processes. Walmart and Costco, Alok said, also have strong competitive advantages over their closest competitors gained primarily by shifting to very nimble, very agile business processes.

 

 

If you have a nimble, effective business process, Alok advises, you will see improvement in assessing the market, sensing the market, driving solutions and bringing innovations to the market in a shorter span of time, while taking some of your competitors advantages away. With the right business process you not only gain the advantage of shortening time to market, he continued, your innovations will be more market- and customer-centric.

 

 

When asked for his advice on building flexibility into business processes to reflect evolving business models, Alok replied, "We know that technologies and business environments are changing, and as Thomas Freidman said, the world has become flat, so anytime you develop a business process, you should anticipate that there’s going to be change and bake in the flexibility up front."

 

 

When selecting a technology that enables a business process, Alok advises companies to be certain that it has flexibility, scalability, and is nimble enough to adapt changing dynamics in the market space. A great example of agnostic technology that can adapt to changes in business processes, he says, is Cloud computer

 

 

 

Alok Ahuja

LinkedIn Profile