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2012

I interviewed Mark Trowbridge, one of the principals of Strategic Procurement Solutions, who discussed how procurement can better align and adapt to a culture. He has been in the field of procurement ever since getting out of college. Mark has progressed through a number of different industries; transportation, manufacturing and financial services. At his last job before going into the consulting arena about 12 years ago he was in charge of ¾  of Bank of America operations and strategic sourcing activities and all of the company's contract management responsibilities.

 

This provided a good basis for him to go into the consulting arena. He worked with a couple of major consulting firms as a director level person on a number of their initiatives. In the year 1999 Mark and some of his colleagues with similar backgrounds formed Strategic Procurement Solutions. They have been blessed to work with some leading clients with companies as large as Apple, BP, Intel, large financial services and manufacturing companies, Johnson & Johnson, Bristol Meyers, Squibbs etc. With each of those engagements they have learned more about how best practices are done in procurement. They bring value and also learn from each of their clients.

 

 

Something which Mark and his team have been working with a number a clients on recently has been aligning with the culture of the company that is represented in the supply chain. There is an expression that Mark and his colleagues use a lot with different clients when looking at their organizational alignment and the alignment of their procurement processes with the company operations and their key customer groups and also as they look at the alignment of the organization with the supplier community. There is no one cookie cutter approach that is going to work for all different types of companies.

 

They use the following expression within their company walls:

“Culture will eat strategy for lunch every day of the week”.

 

If we look at companies trying to be effective at strategic sourcing, with an emphasis on the word “strategic”, they can come up with the best text book definition of strategic that they want for the supply chain. However, unless they do a good job of aligning the company operations and the way they do business and procurement with those company operations they are not going to be successful.

 

There is a lot of importance in taking the time to understand the company culture, building key relationships with important business executives within the company, to make sure there is full cooperation and alignment of the company's supply chain needs with procurement teams that are supporting those acquisitions, and making sure everyone is working together as a team rather than there being silos of push back within the company on key expenditure areas. It is where procurement is not becoming involved at the start of the processes and where they are the last link in the chain and doing what Mark and his team call “PTD” which is Papering The Deal which someone else has put together.

 

A theme with a number of different companies has been they have been working with is how pertinent it is to properly position procurement to impact the company culture and build the processes and relationships in a way that fit that particular company's way of doing things.

 

Culture as it relates to procurement

 

A mistake that Mark sees many companies doing, especially when they have read theoretical books on supply chain and how procurement should function is that they try to impose a cookie cutter approach on how the procurement and supply chain organization should be organized in structure and function. Sometimes they fail to take into account the unique culture of the company they are working with.

 

In fact, Mark has seen on a number of occasions where a procurement leader who has been successful in one company culture has moved to another job with another company and not been successful because they tried to impose the same way of doing procurement on the new company and that just didn't fit the particular company culture.

 

Each company has a unique corporate culture and that corporate culture sometimes come from the history of the company (whether through mergers and acquisitions, led by leaders who believe in standardization and process efficiency, or an entrepreneurial company where the unique business owners within the organizational footprint are encouraged to be fast, nimble, agile and to take risks.

 

Depending on the company culture procurement needs to adapt its way of doing business with those lines of excellence. Procurement often fails to do that and imposes a round peg in a square hole (many times procurement is straight armed and pushed out of the involvement in important acquisitions). With the right alignment the procurement professionals can be involved at the start of the acquisition process which can make a big difference through strategic sourcing and supplier relationship management.

 

It really is a matter of adapting a unique approach to the company culture. As mentioned earlier, Mark has an expression within his company that “culture will eat strategy for lunch every day of the week”.

 

If we take the topic of strategic sourcing, that word 'strategy' is what begins that. The culture can eat the strategy for lunch if we don't approach it in the best possible way and build the relationships with the executives and the management of the different lines of business within our organizations to facilitate our proper involvement in acquisitions.

 

How procurement can better align and adapt to a culture

 

Mark believes that any culture at any organization, no matter the type, is made up of important business relationships. For example, Mark was on a conference call recently with the director of a large supply chain group with about 120 employees who has been transforming her organization both from a process and a culture alignment perspective to impact her energy company's expenditures in a more proactive way.

 

She has taken the time and energy outside of what we would normally think of as her normal job responsibilities and pave the way for important decisions to be made by the different vertical business owners across the company.

 

Regarding some of the important strategic changes she is trying to impact, she has met privately on numerous occasions with many of the key decision makers within the company's management so that when she goes to get approval for changes to policy or changes to procedure there are no surprises. She already has the votes lined up. Similar to how an attorney is trained to do in law school, you never ask a question that you don't know the answer to. You better make sure that you know that everyone will be aligned with you before you take to a very senior level to get buy in. Make sure you have had those pre-meetings and get things laid out for you.

 

This is an example of building the relationships and taking time to mentor those and to realize that change comes slowly to everyone. People tend to resist change. Taking the time to “grease the skids” can make the decisions go much better. Building those relationships can make a big difference for how supply management is.

 

Conclusion

 

Companies that are interested in the services Mark's company offers or many of the informational pieces they put together for their audience of participants can be accessed at www.StrategicProcurementSolutions.com

 

Mark Trowbridge

 

marktrowbridge.jpg

 

Principal

Strategic Procurement Solutions, LLC

LinkedIn Profile

I interviewed Tom Tysl who was in the distribution business for 30 years, primarily in construction equipment. He had the advantage of growing with a company from small to very large through multiple acquisitions. He saw the advantages that a bigger company has because of resources and the facilities which were able to do deliver and secure those advantages. The company has developed some ways for smaller companies to do the same thing.

 

 

Current forces affecting parcel shipping

 

Everyone has to focus on their core these days. When the downturn hit successful companies that are surviving have paired down every expense they can and focused on their core, what provides them with their income streams. Because of that, there are certain things (especially on fringe expense line items) that don't get audited, checked or verified. They just get paid because there are no resources or body to do the work anymore.

 

One of those things is the auditing of parcel manifests every week. When times were good and people were in all of the cubicles there was someone who could go over that manifest closely. We see more and more companies not auditing very much at all.

 

Who is affected?

 

It is the people that use UPS and FedEx to ship their products, whether parts, e-commerce or anyone who uses those services. I see that as more of an opportunity. There are a lot of people offering services for LTL and truckload services. But for parcel delivery it is not so widespread. The truth is that last year UPS and FedEx had over $3 billion in uncollected warranty. It is on time or it is free. However, they make it time sensitive and time consuming to file and collect for warranties.

 

What are some of the signs that there is a problem?

 

The other part of the problem is the added surcharges and fees they are assessing. They are trying to make money as well. They know people are not looking too hard. We see clients that have packages mysteriously grow in size and weight as they cross state lines with additional fees like address change fees or a lot of different ways they are adding fees and surcharges to their invoices. You don't even know it is happening unless you are going over your manifests line by line.

 

Unfortunately, most people or many companies today are not doing a very good job. They will do it spotily or occasionally or just do random samplings.

 

How can companies get started on the path of parcel auditing?

 

It amounts to having the staff dedicated to doing it, or outsourcing it through a service. That is probably the easiest way.

 

How would they get started with evaluating whether or not to outsource?

 

If you just took one manifest in a week (you have 14 days to question a bill) for people shipping hundreds of packages and go through every line item I guarantee you will find things you didn't know were on there. When you look at that you could see the value of an audit service that really goes through and performs a 50 point audit on every package, from manifest to delivery confirmation. A lot of people don't realize this but UPS bills your account when your label is printed. When your printer spits out that label and bar code your account is charged for that delivery, whether that label makes it to a package or not.

 

Conclusion

 

Another issue they are having is address changes. We are seeing more and more fees ($5 address change fees) put onto your bill. For example, if your database in your company has a client that is “E Mainstreet, Anytown USA. You print that label and your account is charged. When the guy is delivering it in Anytown USA he scratches the 'E' out and puts 'East'. Your account is charged a $5 address change fee because he changed the address.

 

If that client, your customer, ships again and the address label comes out of your printer again you will be charged. If you are not going over your manifest this can go on and on every time that client places an order.

 

One of our services is what we call “soft saving”. We notify you when this is happening so that you can modify or correct your database and stop those fees from happening.

 

The other thing that has happened a lot is that you pay for services that are unnecessary. You pay for over night and because of where the client is and where the routes are you could get standard delivery and the package would arrive on the same day. No one is going to tell you about that, but we will.

 

You can correct your parameters for that client and know that if you ship it standard they will receive it the same time as a 2 day shipment or a next day shipment will arrive. It just depends on where the client is. There are a lot of things they are adding like fuel surcharges, dimension changes, proof of deliveries. There are all kinds of ways they are adding to their income stream on the backs of their users. If you are not going through that manifest closely you are over paying.

 

In addition, anyone can use your account if they have your account number. How many former employees are out there with your account number and go up to a brown box on the side of the road, pull up a shipping document, pull out their company's old account number and ship? Unless you are going over your manifest you don't know when things are moving under your account number that you didn't bill for or have no knowledge of. We are finding a bit of fraud that way as well.

 

Tom Tysl

 

tomtysl.jpg

 

Regional Vice President

Advocates For Savings

President at Tactical Leverage LLC

LinkedIn Profile

 

 

1701 W. Northwest Hwy

Grapevine, Texas 76051

Direct - 817-404-9011

Fax - 817-224-2924

ttysl@advocatesforsavings.com

I interviewed Randall Gibson who discussed simulation for warehousing and distribution. Randall's background is in computer science. He has graduate degrees from the University of California Berkeley in Electrical Engineer Computer Science. This led him to get into real-time process control, being one of the early integrated systems folks. They ended up founding a company in San Diego which was part of White Machines, an early carosel manufacturer. They were later acquired and had been through several acquisitions. It was FKI and now part of Intelligrated.

 

 

Randall's early background was in the software and integrated systems side of the small parts automation systems. This led him to get interested in how to plan these systems because there is a lot of confusion over statements of work, how the automation software would fit into the operations etc. At the time, simulation was very early in its history in manufacturing which was primarily only available on mainframe computers. At the time the IBM PC first came out is when we first saw this type of application get ported and suddenly it was available for a modest cost to be able to use.

 

He got interested in this and started up a company called Automation Associates. Their goals was to apply simulation to help plan and understand how automation systems and in particular distribution and manufacturers would work prior to building, installing or making changes.

 

They ran the company for about 18 years and were pretty successful doing that. They sold the company in 2005 to one of their larger transportation, engineering and architecture planning firms (a client). Randall was a senior vice president principle there for 3 years until he retired in 2009. Then a colleague of his who teaches this discipline at Oklahoma State University decided to start Diamond Head Associates with Randall in order to get back into applying the technology.

 

They do the analytics component of the supply chain. It is the strictly planning, all the way from global network constructs and structural design optimization down to understanding and optimizing the operation inside the four wall type of systems like distribution systems.

 

Trends in simulation for warehousing and distribution

 

Simulation has been a slow adoption in the industry. In same very large industries in particular, it has been part of the natural planning cycle for many years. For example, petroleum cracking plants or electrical generation plants use some specialized simulation planning software to help design and develop those.

 

When it comes down to applying it towards distribution it has been a slower adoption than in the manufacturing area. In fact, simulation used to be referred to as manufacturing simulation because that is where it was first planned and adopted into very large manufacturing facilities like steel, automobiles etc. In the distribution area a lot of people misunderstood what it could be used for. They used over simplified thinking in that it was only really useful to simulate the conveyers and automated storage retrieval devices, thinking that is was just to validate the rates of electromechanical equipment automation.

 

Whereas, in fact the key to those types of  facilities is to understand the control software and the operational procedures they planned, in particular the order formats and profiles that are going to be fed into the system for picking. Simulation can accurately represent all of that. In fact, you need to do that in order to really understand how the system is going to operate.

 

It has been a little bit more of a slow adoption because a lot of people don't understand that. We are starting to see this now more readily accepted and even dictated in part of the planning process these days. It still has a ways to go before its fully integrated into the planning cycle. It is not as inexpensive as people would like to think. It is not something that can be done in days. It usually takes weeks to do a proper simulation process. That expense and time lag has contributed to slower adoption than in some of the other applications. A lot of people view it as an elective and not absolutely necessary to do. It is starting to become more widely understood now as the automation and order fulfillment systems become more and more complex, larger and more dependent on sensitivities to the mix of order profiles.

 

Distribution Roundtable Event

 

The Distribution Roundtable is a group of professionals in the distribution industry. It is an educational format. W&H Systems have been involved with helping put this together and promoting it. They have featured speakers on topics. Generally, it is an online event. Sometimes they will do a live event. They approached Randall to see if he would be interested in speaking on this topic for the group because they haven't had anyone involved with this yet.

 

The event happens June 21st at 2pm Eastern Time. It is open to anyone in the industry who is interested. They can look at the website and get an invite.

 

The event will discuss designing and fixing an automated distribution facility and how to get it right using dynamic simulation. They will talk about the role of simulation and make sure everyone understands the way in which it can be applied not just to equipment but the entire operations – order processing etc. They will go through examples from real world situations where it is applied. One example is for a new system to help validate the design and get the investors to understand. The second example is from an existing system that was under performing. This is a typical story that you see a lot. There were a lot of ideas on how to fix it but they didn't want to disrupt it any further. They used the simulation project as a way to help find a way to do that. At the event they will walk through some of the highlights of those two example projects to try to nail some of the concepts down.

 

Who should attend?

 

The people that would get the most out of the event are operations and operational managers, all the way from industrial engineers who are tasked with helping to design processes in a distribution facility up to the facility manager who is going to be responsible for operations and throughput. It would be good for them to become aware of the technology and understand how and where it can be applied so they can decide when it might be useful for them to look at it as a technology to help approach, analyze and fix either potential problems they might be experiencing or help smooth the way for growth from an acquisition or adding a significant new component to a DC such as new SKUs etc.

 

People from the financial planning side can also benefit from understanding what investment levels will be useful. Models can help keep people from over investing in automation equipment.

 

Conclusion

 

Randall has done this type of event in the past. It is usually an eye opener. People tend to underestimate what these models can do and how useful they can be when they are properly done. There is specialized software programs involved, although that is not the critical component. There are a number of software programs that can be used. The critical component in making a successful project, like in many other disciplines is having an experienced analyst involved in doing the modeling and analysis.

 

Are you interested in simulation of warehouse & distribution  operations to ensure the correct design of operations for optimal  efficiency? If so, please sign up for this LinkedIn Group's webinar on  June 21, 2012 at http://www.distributionroundtable.org/component/eventbooking/?task=view_event&event_id=3&Itemid=142. The webinar starts at 2:00 PM ET.

 

 

About Randall Gibson

randygibson.jpg

 

Managing Principal

Diamond Head Associates

I interviewed Mike Star back in 2009 where he discussed his views the recession as a real world learning experience for everyone in supply chain. Are his views still valid today? Mike said the recession has given us real, firsthand knowledge of what can happen when the concepts and capabilities that were all just theories prior to the recession aren't inherent to our supply chains.

 

Down the road, we're going to see companies focusing on their core business, and on what differentiates them for the competition. Companies will also turn to partners that specialize in providing innovation, best practices, technology to meet the supply chain challenges of the future.

 

 

Backing Away from Technology and Innovation Investments

 

Mike Star says he's seen a number of consequences tied the economic downturn. For starters, companies have come to the stark realization that they are incredibly inefficient at responding to significant changes in the supply chain, and many companies have stepped completely away from technology and innovation investments. Even projects that were planned and funded for 2009 were put on hold. "Companies have been forced to cut assets, particularly in supply chain," Star said, "and I don't think those assets will be very easily replaced."

 


A Crash Course in Lean Supply Chain Management

 

In Mike Star's words, "The recession has been a crash course in lean just-in-time supply chain management." All the principles have been tested by analysts, and all theories have been discussed in classrooms, but the recession gave us real, firsthand knowledge of what can happen when the concepts and capabilities aren't inherent to your supply chain.

 

Putting a Positive Spin on Recession

 

If you're looking to put a positive spin on the recession, Mike Star says he thinks companies have a much better idea of where their vulnerabilities lie, where their inefficiencies are, and that has forced companies to improve collaboration between actors in the supply chain. Suppliers are communicating with manufacturers, and knowledge is being passed up through distribution channels all the way to retailers. "We're finally getting to the point where collaboration and communication is being forced, and we're all going to have to respond to that," Star concluded.

 

Four Things Companies are Learning to Live Without

 

First, Mike Stars says we're quickly learning to live without fixed assets that go along with managing the supply chain. He believes companies will be looking to shift those costs from fixed assets to variable costs to better deal with fluctuations in the supply chain.

 

Secondly, companies will also have to learn to live without buffer stock. Star has watched companies drive inventory levels down, and, in certain industries, he's seeing already short lead times cut down even further.

 

Third, product manufacturers are beginning to rationalize their SKUs, which means consumers will have to live without as many choices moving forward. In the future, Star said, companies will have their standard product offerings, and will be able to make supply chain decisions based on more standardized products versus variables that might be more difficult to supply on an as-needed basis.

 

And finally, in terms of what we'll be missing, Mike Star says the big capital outlays and expenditures for supply chain innovation will continue to be scrutinized, and companies will need to turn rely on supply chain partners to provide those types of advances in the future.

 

What Companies Need to Change to Avoid Future Troubles

 

Companies have shown they can bring projects to a screeching halt, even projects they had planned to make investments in. What will need to change, Star said, is that companies will need to find a way to escalate those decisions that can put that innovation back into the supply chain -- to get those necessary projects back on track, so they’re not caught in the same situation down the road. It will be interesting to see what happens, because companies can very easily kill a project budget, but they have yet to show that same expediency in putting those decisions back on course.

 

Down the road, we're going to see companies focusing on their core business, and on what differentiates them for the competition. Companies will also turn to partners that specialize in providing innovation, best practices, technology to meet the supply chain challenges of the future.

 

The Future of Supply Chain Technology

 

From the software technology perspective, Mike Stars has witnessed firsthand a tremendous amount of planned technology investments and innovations being put into a holding pattern, and as he said, it’ll be interesting to see if those companies can actually bring those projects back online and expedite them quickly. Star suspect that’s going to be a challenge for them. "In the supply chain software space, we’ve seen a tremendous amount of companies defer those decisions, and decide not to make those expenditures at this point in time, Star added.

 

Best Buy is a company that has been very aggressive with trying to remove nodes from their parts distribution operations, and their technician process, to improve efficiency. Those kinds of innovations are what companies will likely continue to pursue as they try to drive costs out, to simplify, and to streamline their supply chains.

 

What's on the Other Side of the Recession?

 

Mike Star thinks there will be increased interest in third-party logistics providers, and see them becoming more prominent in the market as companies look for alternative to managing their supply chains.

 

"A third-party logistics company that specializes in innovation, technology, best practices can help companies move their supply chain forward much more quickly than they could on their own,"

 

Mike Star

mikestar.jpg

 

Supply Chain Technology Professional

LinkedIn Profile

I interviewed Pedro Rodriguez, an educator, specializing in supply  chain, at the University of Wisconsin. He has also held executive level  positions in procurement, materials management, production and  logistics. Rodriguez holds two degrees, one in industrial engineering  and one in business. He also spent six years in the merchant marines.

 

He discussed the bad and good consequences of the recession on that supply chain talent is your most important asset.

 

On the down side, the recession has brought lost jobs, bankruptcies, consolidations, excess inventory and obsolete inventory. On the upside, the recession has brought an increased focus on supply chain as a key strategic value for companies.What doesn't kill us makes us stronger.

 


The Bad Consequences of Recession

 

Pedro Rodríguez said he's seen both bad and good consequences of the recession. In the "bad" column, Rodríguez lists the loss of direct and indirect positions across the supply chain.

 

Also on the "bad" side of the list is the number of bankruptcies and consolidations in the supply chain, especially among smaller companies that were more than 40 or 50% reliant on a handful of customers. "Those businesses," said Rodríguez, "were really hurting and a lot of them went belly-up or were acquired by other companies."

 

And finally, Rodríguez points to something he says the media missed, or is choosing to ignore, and that is the amount of excess and obsolete inventory, and free manufacturing capacity, which causes additional problems. First, companies have a lot money tied up in unusable inventory at a time when they could really use cash; and secondly, manufacturers, distributors, and even transportation firms are doing things with their unused capacity that they wouldn't normally do. "So you just kill margins to get utilization, and that's bringing profits down for a lot of companies," added Rodríguez.

 

The Good Consequences of Recession

 

One of the positive things he's seen, both in working with companies, and teaching executives in the business school, is the increased focus on supply chain as a key strategic value for companies. In the past, Rodríguez said, supply chain was viewed as nothing more than the cost of doing business - never as part of product development, marketing, finance, or other functions in the company. "Today," he says, "companies are realizing that by not having good supply chain prophecies, strategies, network designs, and also operations, they have not been able to follow the recession from a demand versus supply standpoint."

 

In the future, Rodriguez believes increased visibility of supply chain management will be a key strategic component of business models. “We know of two people that have been promoted to senior vice presidents from vice presidents where there was a job that didn’t exist prior to the recession because the CEO wanted to have a senior vice president of supply chain in their teams, at the highest level. So, I guess that’s the good news,” added Rodriguez.

 


Life Without Cheap Capital and Finding the Spend

 

"We’re gonna have to learn how to live without cheap capital." Right now, he says, a lot of companies lack the financial power to provide the same level of service to their customers, and they're trying to provide service with a lot less inventory. What will be required in the future, he says, is more tactical planning.

 

In terms of investing, Rodriguez says he's seeing more companies focus on supply chain network design, which goes beyond deciding where to place a warehouse or manufacturing plant, but also involves deciding where to source raw materials, components and even finished goods. "That's something that is done on a five-year horizon, as opposed to a short-term tactical move," Rodriguez said.

 

According to Rodriguez, companies are also investing in things like ERP and warehouse management systems for the sole purpose of improving performance. "We’ve implemented many of these processes across many industries, and the key there is that the CEO, the president, or whoever has P&L responsibilities - somebody that can break the ties between supply and demand - needs to lead the process on an ongoing basis," said Rodriguez. “What you try to do there is put one single plan for demand, production, and inventory for the entire company across all functions. So, purchasing, logistics, sales and marketing, manufacturing, distribution, all the different functions in the greater operations umbrella of the company, they are well-aligned with the right metrics, with the right incentives, with the right processes, with the right tools to match supply and demand at minimum cost," he added.

 

Learning to Act or React

 

Pedro Rodriguez offered two examples of how different companies react to different circumstances.

 

The first company, a manufacturer of end units and spare parts for heavy off-highway equipment, failed to react to a forecasts showing a marked decrease in demand. The reason, Rodgriguez said, was a poor SMLP processes, sales and marketing units that were completely disjointed from operations, and a reluctance to pass the bad news along to the company's corporate headquarters in Europe. Failing to take appropriate steps all along the supply chain, coupled with a fear of sharing forecasts with superiors, left the company with a lot of excess inventory.

 

"The lesson learned from that company's experience," said Rodriguez, "is that you have to have all your company looking at the right signals on an ongoing basis, and make sure that the financial reporting does not stop you to do the right thing."

 

The second example offered by Rodriguez is a company that had processes in place to catch structural demand shifts and then to react appropriately. Instead of shutting off the spigot, and killing their business from a service perspective as some companies might have done, they stuck with their business model, which was based on providing fast, reliable service. By making a few adjustments in inventory levels according to target service level, time and location, they survived. And despite the lingering recession, this company actually gained market share by meeting and exceeding the demand of their customers, and the demand of their competitor's customers. Today, they're positioned to capture even more business because they kept a solid strategic and tactical planning  process in place.

 

Every Company's Most Important Asset

 

"I think if anything has been learned from this period," said Rodriguez, "is that companies need to invest more in talent in the supply chain. And as an educator myself, I cannot tell you how good it is to have good, educated people in supply chains. so my parting comment is, invest in people, in supply chain, of course, and then processes and tools, but first, people. Educated people are the key to success.”

 

About Pedro Rodríguez

 

Pedro has led teams in procurement, strategic sourcing, operations, materials planning, logistics, and supply chain lean six sigma in the automotive, aerospace, industrial equipment and automation industries. Pedro has worked as consultant or held executive and managerial roles at Rockwell Automation, Eaton Aerospace and Automotive, W.W. Grainger, Schreiber Foods, Tornier, Libman, PJPS, UPS, Ryerson Tull and others. He also served as an engineering officer for the Spanish Merchant Marine.

 

Pedro holds a BS in Marine Engineering from the Polytechnic University of Catalonia in Barcelona, Spain, and MS in Industrial Engineering and MS in Business from the University of Wisconsin at Madison.

I interviewed Pierre McDonagh who discussed an upcoming sustainability conference in Dublin, Ireland for executives interested in being at the leading edge of sustainability. If you are starting out as a new entrepreneur or small business and you want to see how the supply chain is altering towards sustainability, you can see how larger organizations have taken the leap of faith.

 

 

Why is the Sustainext EU conference at the DCU Helix Center in Dublin, Ireland this October 11 & 12 of 2012?

 

In terms of how I see the conference coming into being and why there is a need for it, there are two things:

 

  1. Since 1989 to the present day organizations have made a fundamental leap of faith towards sustainability which we could never had envisaged back in 1989. In 1989 business and marketing were particularly being seen as the bad guys of society where the free market was working very   efficiently. There were negative consequences and clearly all of the negative consequences for a lot of people in society were the result of big business wanting to sell products to markets which were not necessarily ecologically grounded.

  2. The situation has changed phenomenally since then. What is great about this conference at Dublin City University is that we have a number of thought leaders coming together to help showcase how business, smaller organizations and NGOs are actually making sustainability happen on a much more regular patterned basis.

There is also interesting scholarship coming out of industry from various stakeholders which are leading the way forward. I would be particularly thinking of Bob Lattimer's provocative work from the point of view of some academics who are wedded to their own perspectives on sustainability. Lattimer is coming in with a fresh eye and also a call to action, which is much needed. Sustainability tends to be understood from different disciplines.

 

What Lattimer is offering is quite a fresh perspective. This needs to be heard more fully than it has been. It has been talked about at a previous summit at Drexel where it was very well received. In terms of academia within Europe it really needs to be engaged with the thought leaders who have been researching sustainability, whether funded by research grants, institutions or just from their own individual perspectives.

 

Lattimer is asking delegates at the conference to consider and react to they way forward for the new generation. He is calling this term Universal Sustainability. You can imagine a group of people who have been working for a number of years and are still laboring under an older concept such as sustainable development,or the swing to newer terms like sustainable consumption or production hearing this call.

 

Being confronted with this force of energy, it is time to take it to the next generation and recognize business is the driving force for sustainability. Business all of a sudden is at the center stage of the solution instead of at the center stage of the problem.

 

What are the pillars across the conference?

Essentially we have grouped together an eclectic range of experts across agriculture and food, healthcare, transformative education, global society, mobility & transportation and carbon footprinting. We brought them together to showcase how our green economy is operating; what the challenges are, what the sustainability issues can be in the present and future. This is a great opportunity for people across societies to come together and share their experiences, as well as help each other and network.

It is also great from a student's point of view as our graduates need to be able to hit the ground running. Our aspirations are to give our graduates the skills to be competent and understand sustainabilty as soon as they go out into the workplace. Our graduates are looking for employment opportunities. To get them there we need to offer live experiences. I created the concept of global externships in sustainability with the Sustainability Collaborative and colleagues at Rutgers University. Students will benefit from jobs and organizations might be able to find the students with the sustainability insights and skills they are looking for.  There is the possibility to put student's skills to good use across the globe.

What we are working towards is having graduates understand and see how the organizations at this summit are thinking globally, but acting locally. It is also great for exhibitors and sponsors to showcase the great jobs they are doing.

 

Who should attend?

 

  1. Healthcare professionals and those researching healthcare.

  2. Investors - and those offering solutions.

  3. A number of organizations who have a reputation in sustainability marketing.

  4. Policy experts who have been working with their governments and have knowledge to share.

  5. Educators – key academics in Ireland who have been leading the changing sustainability curriculum.

 

Why attend?

 

The answer is simple. If you are skeptical, come along and we’ll prove your skepticism is wrong. In a best case scenario if you are starting out as a new entrepreneur or small business and you want to see how the supply chain is altering towards sustainability, you can see how larger organizations have taken the leap of faith. In the future, sustainability will not be the exception, but the way things are done.

If you are interested in being at the leading edge you need to come to this conference and network and learn from experts. If you have questions for the delegates which is local to you the panelists can provide feedback.

 

The innovativeness of business and education working together

The answer is the elephant in the room for a lot of researchers who study sustainability. If the problem is the system and the institutions within the system then we need more than one party to come up with a solution. Many like governments and universities tend to move more slowly than businesses. Businesses have a 'can do' mentality. They can react quickly to problems. This is what has happened in the past 20 years . Now what we are seeing is that businesses are turning back to universities and saying they need them to give them the graduates who can help them do sustainability. It is now a natural relationship which previously may have had a lot of tension.

Business and education coming together is horrific for some people who fear commercialisation of an educational space. In terms of sustainability for business and education coming together there are research projects which can be developed in terms of how we green our society. The businesses are also employers for a lot of our graduates. If you are talking about efficiency, benefits for society, and value for money in terms of education, everyone is focused on an end product which is ultimately sustainability.

What is debatable from an academic sense is that climate change is happening. There are issues regarding the survival of the species. Ultimately, if we are to move forward as a human race we need better ways of understanding organizations and community and it comes down to sustainability. Some people might see it as a challenge. However, you have to be engaged and say why you agree with it or why don't agree.

Education and business will be seeing an increasing number of alliances in the future regarding sustainability. It is very much in tandem with NGOs and other professional organizations that can come together and work as part of the community. What we are seeing in business and universities is that we are almost re-defining what an organization is considered to be, away from hierarchical confined within limitations and hidden from society, to more to be part of society. Business as the community is not just a concept but an organization.

The financial crisis has challenged personal as well as governmental budgets. We have to not only think smart and act smart, but also work together. One example, classically, is the Chinese economy. Their next five year plan has sustainability at the heart of it. Eco-cities are springing up. These things are happening at a speed which scientists and social scientists couldn't have imagined in the past. These are tremendously exciting times to be writing about or living through as a business person or young graduate.

 

Link to the SustaiNext Website

 

About Pierre McDonagh

Pierre has been a business faculty  academic at a number of institutions. He beagan life as an academic at the Queen’s University of Belfast before he developed the theory of sustainable communication while he was working at Cardiff University in Wales between the years of 1989 and 1995 while also lecturing at Sheffield University in England. Subsequently, he worked at  University of Stirling in Scotland, and then spent some time at Dublin Insitite of Techology before moving to Dublin City University Business School within Ireland’s University of Enterprise DCU in 2005. Pierre  spent a sabbatical at Arizona State's Morrison School Management & Agribusiness in 2002 and is Associate Editor of the Journal of Macromarketing and serves on the review boards for Consumption Markets & Culture, Journal of Strategic Marketing and Journal of Marketing Management. He was appointed to the Advisory Committee for Transformative Consumer Research within the American Association for Consumer Research in 2009.

Having edited one of the first books on Green management with Andrea Prothero and a winner of the Charles C Slater Memorial Prize he has a lot of experience where he has been able to see from an academic perspective how important it is for an organization to be understood not just for what it does in terms of servicing markets, but also how it has an impact ecologically speaking. This is essentially where his body of work from 1989 to the present day has focused. He has very much tried to assess and analyze the process at play, which can be quite complex and help advise and consult stakeholders trying to bring sustainability centre stage to the decision making process.

 

His DCU page is here

http://www4.dcu.ie/dcubs/biographies/pierre_mcdonagh.shtml

 

and he is contactable on pierre.mcdonagh@dcu.ie

I interviewed Dean Dorcas. Dean co-founded his company about 16 years ago. They are based out of Seattle. The company started out as an outsourcing firm. They would go into distribution centers and give them a fixed cost bid to take over either special projects that they had or ongoing processes. In order to do that they had to come up with ways to increase productivity significantly without making a large investment in fixed IT resources.

 

 

That model worked well up until 6 or 7 years ago. At that time we started working with the Walmart and Target supply chains. What we found is that the systems we had developed were not robust enough in order to meet the expectations of the customers both because of the size of operations and complexity of the work, as well as the expectations for productivity increases.

 

We ended up developing an internal labor management system to manage our work force to give us visibility on every employee and how they did on a daily basis compared to fair labor standards. We also tied them in with rewards for achieving goals set for them. When we rolled that out to the first facility where they had been using temporary employees, we came in to more than double their productivity within the first year. This saved more than $1.5 million/year in labor costs.

 

Meanwhile, our employees ended up making about 30-35% more from a compensation standpoint than they did before because of the pay for performance we set up. At that point we realized we had come up with something pretty powerful and unique and we made the decision to commercialize the product as a cloud-based system. That is where Easy Metrics came from.

 

If you look at our company today we still do the outsourcing. We still manage the operations for companies. We also offer companies help in using our software to manage their own facilities.

 

If you look at the software itself it comes down to 3 areas which it focuses on:

 

  1. Visibility –      helping a customer really understand where all of their labor dollars are being spent by process and category within a process and seeing how that compares to budget or labor standards.

  2. Accountability –  holding employees accountable on a daily basis for performance based on fair labor standards.

  3. Alignment –      setting stretch goals for employees and then rewarding then with a portion of savings for achieving those stretch goals.

 

Trends and challenges in labor management

 

In general, labor management is very complex and expensive to implement. Therefore, most companies don't go that route. The reason we developed our system Easy Metrics is that we take a different approach which makes it easier to implement. Labor management companies realize they need to get a handle over labor productivity and costs. In general, labor management is a complex and expensive approach to implement.

 

The other issues is that there is a lot of work in a facility which is not necessarily tracked on scan guns. It is not tracked electronically. It is important to capture all of that work as well so that you know where those costs are being applied and levels of productivity in those different areas. This is something we have incorporated into our model; a way to make sure all labor dollars are being captured and tracked.

 

In terms of trends I would say the whole shift to cloud-based computing is obviously a big trend in labor management, especially when you start talking about smaller facilities of 30 people. A cloud based system is going to be a much more attractive approach than a stand alone system.

 

We had one customer, a document storage company. They have some facilities back East which may have 80 people. They also have some smaller satellite operations that only have 2 or 3 people. Because of the cloud based nature we were able to set up those smaller facilities and give them the same visibility over that facility with 2 or 3 people as they get for their facility with 80 people. A traditional labor management system wouldn't even look at those smaller facilities. As a manager I want to know

how my facilities in various cities compare.

 

Recommendations

 

The first questions I tend to ask are: Can the employees impact the level of productivity? If it is machine driven or line driven a labor management system is not going to be as impactful if the employees are more autonomous in the work they perform.

 

How much variation is there between a top performer and a bottom performer? If that variation is large then there is a lot more gain that can be achieved by implementing a traditional labor management system.

 

I would look at the level of electronic tracking within the operation. If there is a fair amount of manual type processes, then a traditional labor management system is not going to be as good of a solution.

 

We have partnered with Raymond which is owned by Toyota. It is a forklift company. They have a sensor called iWarehouse on the forklifts that captures all of the travel distance which employees do. We are able to pull that data into our system and get travel time, speed etc. for the different work without having to map out XYZ coordinates within a facility. This drastically decreases the level of complexity in rolling out a labor management system. Normally they have to map out every location and calculate distances between locations. We don't have to do that because we just get the travel distance from the iWarehouse system. It really is a revolutionary approach to labor management.

 

Conclusion

 

If you think big picture labor management tends to focus on accountability. We have actually seen the real value coming from understanding where all of my labor costs are being applied by process, category, how that is comparing to budget and how that is comparing to labor standards. From there we drill down and eventually get to the point where you have to hold employees accountable. However, it is important to first identify the problems before you start trying to address it. The cost and visibility of the labor costs is a critical component that our system is able to give our customers.

 

This is something that, from what I have been told, traditional labor management doesn't focus on very much.

 

Dean Dorcas, Co-Founder and CEO of Easy Metrics: Dean graduated #1 in Economics and in the top 1% of his class from the U.S. Naval Academy. After spending five years as a commissioned officer in the Navy, Dean founded IMS with a former classmate, Dan Keto. Under their leadership IMS was awarded as one of Washington State’s fastest growing companies in 2007. Dean is recognized as a leading expert in designing effective Pay for Performance incentive systems for labor intensive operations. In 2002 he graduated from the three-year Owner/President Management Program (OPM) at the Harvard Business School. In addition to his professional and academic successes, Dean was also a National Motorcycle Champion and a national caliber rower. Contact - dean@easymetrics.com

I interviewed David Raney who is a private consultant providing services in the realm of environmental & energy policy and dialogue facilitation. He spent the prior 30 years of his life working in the automotive industry. For the previous 17 years he was the senior manager of environmental and energy affairs for Honda in North America.

 

 

What are the challenges involved in the process of the use of post consumer materials in production?

 

The subject has been an evolving process for many years. The automotive industry has worked diligently in the developed world to reduce the amount of material at the end of the vehicle's life which enters the waste stream. Today, in North America upwards of 90% of any vehicle at the end of its life (particularly the new cars less than 7 or 8 years old) has 95% of its material such as steel, aluminum, ferrous and even non-ferrous materials are reprocessed in one way or the other. Only about 5% of the material is actually going into the waste stream, commonly known as 'shredder residue', stuff you can't find a use for such as carpet and some of the materials in seats, and even some of the plastics.

 

The goal is to continue to try to reduce this, but also to find materials that are processed at the end of a vehicle's life and to bring them back into production facilities of the automobile manufacturer. There are obviously uses for other materials such as tires which can be ground and re-used to make park benches or in aggregate to pave roads.

 

The other challenge is to take materials that are post consumer such as plastic water bottles and find a method to grind those up and actually include them into the production of the vehicle itself.

 

We are starting to see a lot of this actually happen. Ford, Honda and Toyota are large manufacturers that are finding ways to bring this material back into the production environment and utilize it in making brand new cars.

 

The challenges are really to preserve the cost features of producing a certain component that goes into a vehicle or truck, but also the quality. Sometimes it is difficult to match the quality image and production capabilities of used material that would match up with 'virgin material', material that is created specifically for the design and development of a new product.

 

Using post consumer material has to perform in the same way that virgin or raw material performs in terms of its quality, image, durability and the ability to hold color and not fade. These are all very important processes in the design of a car.

 

What activities are going on in the industry in terms of the post consumer material production?

 

Industry has learned so much after the last 10-20 years in terms of how to respond to this and the need of reducing the input to waste streams. Not only are all manufacturers looking for ways to take components out of an end of life vehicle, but also looking at other materials going into the waste stream to see if there are other applications in the production environment.

 

I personally believe we are just at the forefront of seeing some other major breakthroughs of not only be able to bring post consumer materials back to the production realm while keeping the quality, but also the primary thing is to manage the cost. In the past, it has been a challenge to go after the post consumer material because it may cost more money than virgin material. The transportation cost in handling and collection can really overwhelm the ability to keep cost down in the manufacture of a component. This is really a challenge in any new product development and design & production environment – to match up the cost you would have in any new product development. It is difficult to convince someone, even if you have a company that is committed more than others in the sustainability world. Trying to manage your supply chain to push something through that costs more which would be the environmentally right thing to do would still be difficult to push through in a production environment.

 

I believe there are changes happening. Some of the changes are regulatory driven. The European directive is forcing manufacturers to increase the recyclability and recycled content in their cars. You are not seeing that happening in North America. It is primarily an issue of being able to match costs or sometimes reduce the costs of using some materials.

 

It is a growth area and certainly on the forefront of vehicle designers. You might even call it design for the environment or designing for recyclability. I think one thing that is really the next realm for pioneering is in the developing world where you are seeing growth in vehicle population occur on an exponential basis, such as in China and India.

 

How will these processes involved in the recovery of post consumer materials for production be transitioned to the developing world?

 

Just as I mentioned what has happened here in North America and the other parts of the developed world such as Europe, you are going to see an evolution happen in those countries, not too unlike what happened here. While the technology of the cars is there and the content and capabilities of having these post consumer and recycled materials actually included in production, what is not in place in those countries are the systems for treating end of life vehicles. There still is an enormous amount of waste and input into waste streams in both of those countries that still has yet to be managed.

 

Therefore, the recovery and the ability to capture not only end of life vehicle materials and also post consumer material in a consistent way for bringing back into the production environment is still in its infancy. The vehicle dismantling industry is very immature in both of those countries. The management of fluid recoveries and materials from the automobile and also the consumer environment in a way that could actually be a robust and adequate and consistent enough supply for the production environment has yet to evolve.

 

Everyone is watching it that is in the industry. I would predict that probably within the next 5 to 10 years you will start to see something occur. It may have to be driven by regulation. Some of it may match what is going on in the developed world.

 

About David Raney


David Raney Photo 11-2011.jpgCo-founder & CEO, Raney & Associates

LinkedIn Profile

 

David Raney has built a career centered around innovation, cutting-edge R & D, and dynamic, strategic development in the motor vehicle industry and beyond. He has more than thirty years of experience in strategic product planning and corporate protocol development for compliance with motor vehicle safety, environmental, and fuel economy regulations.  He has guided firms in corporate public policy development, facilitation of consensus positions in trade associations and industry consortia, and establishment of credible, sustainable, and integrity-based relationships with U.S. government regulatory bodies.  Mr. Raney’s efforts have facilitated establishment of better and more effective public policy, the development of enhanced product life cycle management programs, implementation and management of corporate waste minimization and corporate environmental management and public reporting processes.

 

 

Mr. Raney served as the Senior Manager, NA Environmental and Energy Affairs for the American Honda Motor Company from 1993 until 2010.  From 1983 to 1993, Mr. Raney was the Director of Safety and Emissions Regulatory Affairs for Saab – Scania of America/General Motors Corporation. From 1983 through 1983, he worked in engine engineering for Deere & Company.

 

 

Mr. Raney holds a BS in Mechanical Engineering from the University of Oklahoma and an Executive MBA from the University of California, Los Angeles. He was a Federal Appointee for the US Clean Air Act Advisory Committee from 2005 to 2008. He was a Federal Appointee for the EPA Mobile Source Tech. Review Subcommittee from 2005 to 2010. He serves on the Board of Advisors for the University of Oklahoma College of Engineering, the Board of Directors for the Santa Barbara Community Environmental Council, is a member of the Society of Automotive Engineers, and many others. He is also a frequently sought after speaker at universities such as Johns Hopkins, University of Arizona, UCLA Anderson School of Management, UCSB, Duke University, and others.