Category Archives: Sustainability

Reducing the Footprint of Your Supply Chain EcoSystem

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A recent article in Industry Week contained an interview with Christian Verstraete, the CTO of Worldwide Manufacturing & Distribution Industries of Hewlett Packard Co. who is pushing the lean frontier to see “how it can be incorporated into the wider view of the complete ecosystem”. This is because companies must have a handle on risk management and mitigation across the supply chain while simultaneously reducing the variants. Rather than do Six Sigma within the company, do Six Sigma across the supply chain“.

HP, which actively models proposed changes to its supply chain in modern simulation software before making any significant changes that could have (significant) repercussions, won Wal-Mart’s 2008 Home Entertainment Design Challenge which revolved around reducing the amount of packaging material in an effort to be environmentally responsible. HP was able to design one package to meet shipping needs for PCs and laptops from China or Thailand that reduced shipping material by 97%.

While the article was short, Christian did make one very good point … a company is a community of human beings and everyone is responsible for doing their part. And today, that means being socially responsible. So before you make a new (global) sourcing decision that’s going to require significant changes to your supply chain, when you’re running that Total Value Model, be sure to take into account the carbon footprint as well. It might not be a very valuable decision after all, especially once carbon credits become mandatory.

Another DUH! Report … but I Like It!

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A recent article in Industry Week pointed out that a recent “report blames petroleum industry for 25% of toxic pollutants”. More specifically, the Commission for Environmental Cooperation (CEC) reported that 90% of toxic pollutants in North America came from fifteen industries, with over 25% coming from the U.S. Petroleum Industry. We need to extract cleaner, refine cleaner, and burn cleaner.

Because, when you combine this with the fact that global shipping is responsible for almost 4% of all climate change emissions worldwide, things get scary. So next time you get to choose a power source, choose a clean one. Once carbon credits take effect, it will be cheaper in the long run.

Energy Efficiency Tips from Rockwell Automation

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A recent article in Information Week on “getting started” with your energy efficiency program had a few good tips that are worth sharing.

  • Identify current power usage
    Use real data which measures power utilization on an hourly basis. Contact your utility provider if you have to.
  • Understand how the bulk of your energy is consumed.
    Once you’ve identified the peak load times, identify the major culprits. Is it a production line or particular piece of production equipment? Air conditioning for your data center? Consider getting an independent energy audit.
  • Look for ways to minimize energy use at peak times.
    Set your charging units to kick in after midnight … not when the batteries are plugged in when people leave at 5:00 pm. Adopt a casual work environment and turn the thermostat up (to 25C) in the summer, down (to 17C) in the winter, and consider instituting a siesta. And if you run a data center, fight to bring back liquid cooling. Why try to cool an entire room when the only part of the machine in danger of overheating in a standard operating environment is the CPU?
  • Sniff the Air
    Compressed air, like electricity, is often a necessary evil in many industries, but it is not monitored closely and systems are typically laden with leaks. Every leak (exponentially) increases the energy required to maintain the pressure.
  • Mechanical Drive Trains Use Energy Too
    And just like variable rate motors can save energy, so can different types of gear reducers.

Is it Time to Get Hip with Hiperos?

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Hiperos is a relatively new entrant in the space focussed on what they call “Extended Enterprise Management”, which is their term for what you get when you amalgamate (what I call) Enterprise Contract Management, Compliance, Performance, and Sustainability into a single 360° solution platform.

The goals of the platform are to provide you with:

  • Supplier Information Central
    • collect all supplier information in one application
    • allow it to be entered and reviewed by suppliers, third parties, and internal staff, according to roles and permissions
    • allow for the creation of quick and easy monitoring reports that can be displayed in a dashboard
  • Cross-Enterprise Supply Chain Risk Assessment
    • allow risk to be evaluated against any supplier or service provider
    • allow risk to be evaluated by category / product line
    • allow risk management programs to be created based on whatever supplier / risk segmentation criteria you select
  • Supplier Performance Management
    • allow for the easy definition of surveys and scorecards
    • allow suppliers to be evaluated based on the type of product being delivered or service being performed
    • allow for internal and external feedback, subject to approvals
  • Regulatory Compliance Management
    • support any and all compliance regulations your organization is subject to (RoHS, HIPAA, ITAR, etc.)
    • allow requirements to be easily communicated to suppliers
    • monitor responses and flag non-compliance for exception based monitoring and resolution
  • Sustainability Initiative Support
    • allow sustainability guidelines to be captured
    • allow them to be communicated across the supply chain
    • monitor adherence to implemented programs

For those of you in a rush, I’ll tell you right now that the application (which is now on R3) does precisely what Hiperos says it can do, that it’s relatively easy to configure and use (and a couple of clients have self configured it without any help at all), and that it can be configured to report on precisely what you want it to report on, and display this information in real time on every login. Furthermore, if you use it’s capabilities to augment data collected internally with data in your other entprise systems and external data sources and integrate 3rd party risk and financial data, such as what you would get from Equifax, Lexis Nexis, or D&B (using their new “D&B Inside” offering), you can truly get a 360° view. Furthermore, if you define your risk assessment and monitoring metrics accordingly (and / or select the right templates for your vertical and organizational risk management needs), my assessment is that you can be just as confident in the risk assessments as you would be if you outsourced it to a specialist consulting firm (especially if you bring one of them in to help you define your risk assessment program and insure you set up the feeds, applications, and reports appropriately).

The application allows you to define what fields you want to track, what metrics you want to use, the calculations that define those metrics, and the reports the metrics appear in. It also allows you to define as many roles as you need (buyer, manager, approver, CPO, third party auditor, supplier, etc.) and define access permissions and capabilities based on those roles. In addition to the standard supplier, contact, contract, and (enterprise) program entities, it also allows you to define “relationships” and define the data you want to capture, track, and measure against those relationships. For example, a relationship will be with a supplier, managed by a local account manager and supplier account manager, against a program type and have it’s own status and risk measurements. Collectively, these measurements and statii can be rolled up to give an overall status and risk picture, which, of course, can be drilled into at any time. You can also define as many levels of details as you need in your surveys and scorecards, which, of course, frees you from the limited capabilities of a 3-dimensional spreadsheet workbook. And it comes with template libraries for standard compliance (HIPAA, RoHS, REACH), risk management, and sustainability (carbon tracking) initiatives that can be used to jumpstart configuration for your enterprise.

The one weakness is that while the application has been configured to be extensible and accept an unlimited number of external data sources, at this point in time, only RSS Feeds and a couple of 3rd party financial feeds are configured out-of-the-box. This means that you will have to do some integration with appropriate 3rd party data sources to get a 360° view, which is vital because, if you don’t have someone on the ground, or a good relationship with a 3rd party auditor you can trust, you can’t trust self-submitted supplier surveys alone. (And, these days, some of the best leading indicators are those you get from financial risk data consolidators like D&B — who acquired Open Ratings — and Equifax — who acquired Austin Tetra — and from import/export visibility companies like Zepol, Import Genius, and Panjiva.)

The application is one that is definitely worth looking at, because the only other providers offering integrated solutions of the same breadth are Aravo, CVM Solutions, and, if you’re in the health-care industry, Vendormate.

Retailers Have a Thing or Two to Teach Wall Street

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A recent articles in Stores on “six lessons Wall Street could learn from retailers” caught my eye because I just couldn’t fathom how, out of all the lessons Wall Street needs to learn (again and again) you could limit the number of lessons to just six, but since I’m a big believer in lean, and fundamentals, I decided I’d give the article a shot. After all, a blogger can never have too much material to write about. It was, at least, an interesting article and I would recommend you read it all the way through if you have the time.

So what were the lessons?

  • Times have changed since 1984.
    If bankers and financiers had been applying some of the basic business practices used by the retail industry, they might be doing the hula today instead of trying to undo countless missteps. After all, companies like Best Buy and Wal-mart are doing fine. (Most likely because good retailers don’t sell items [like complex derivatives] they don’t understand or don’t believe consumers will see a need for.)
  • If somebody calls himself a liar, maybe you should believe him.
    The principle of trust, but verify is etched into the way a good retailer does business. Trust without verification is a recipe for disaster. (Just like handing out loans to borrowers without credit checks.)
  • Hold the spaghetti sauce.
    Retailers know that focusing on what you do best yields the greatest returns. (Financial leverage spawns financial ruin.)
  • Don’t take the t-shirt.
    Retailers, like Wal-mart, have gifts and entertainment policies to prevent conflicts of interest. (Wall Street, in comparison, threw lavish multi-million dollar extravaganzas for its clients while Rome was burning. )
  • Give the lady what she wants.
    In retail, serving the customer is a long term strategy. The best retailers refuse to compromise customer service by adopting short term measures. (In comparison, the Wall Street crisis is intrinsically linked to a financial system obsessed with short-term gains.)
  • Keeping a dog around doesn’t change it into a cat.
    Retailers know that if a product isn’t selling after a short period of time, it’s not going to get better with age. (And throwing more money at it isn’t going to help.)