Monthly Archives: July 2009

Low Cost Energy Efficiency Measures Courtesy of Industry Week

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Since every business uses energy, every business stands to save if they can reduce their energy usage … and this savings will be considerably more in the long run than what you can get through energy sourcing alone if you can noticeably reduce your energy footprint. And while some measures, such as installing massive solar arrays and building your own wind farm, might require a lot of up-front capital, other measures won’t. In this post, I’ll review some of the low-cost tips for manufacturers put forward by a recent Industry Week article on “energy management” that deserves to be reiterated.

  • Turn off circulation pumps during down time
    Just like you should turn off air in the office at night and on weekends, turning off water circulation pumps on the weekends can be a big cost saver for manufacturing plants as keeping them running during downtime can require over 100 MWh a year for many plants
  • Reduce pump speeds to coincide with the actual process demands
    Overcooling can be costly.
  • Eliminate heat loss by closing unneeded bypasses
    Heat requires energy.
  • Improve process controls.
    This will prevent waste, and, thus, wasted energy.
  • Move to high-efficiency motors.
    As motors break or get replaced on an upgrade schedule, move to more energy efficient models.

Checklists for Identifying, and Helping, Distressed Suppliers

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A recent CPO Agenda article, on why you should put “suppliers and vendors first”, in addition to making a few very good points, had some good checklists that you can use for identifying distressed suppliers and, if they are key suppliers, helping them.

Distressed suppliers often do one or more of the following:

  • ask for pre-payment, price increases, and contractual relationships (to show to their bank)
  • change factory habits upward and/or delay tax payments and VAT returns
  • substantially increase their CCC over a short time period
  • announce “temporary redundancies”, travel freezes, or both
  • suspend capital expenditure programs
  • stop paying dividends or buying back shares
  • cut bonus payments on a large scale

If a supplier is distressed, the following might help the supplier out:

  • pay your invoices on time
  • pay your invoices on delivery of goods
  • make advance payments
  • buy raw materials directly from a tier two supplier and pay only a conversion fee to the tier one supplier
  • provide or support financing
  • take an equity stake
  • merge or acquire

While the current economic and cash crisis will claim many more victims and will not be a “quick win” for anyone , there are things you can do to make sure your key supplier is not one of the victims. If you’re on the ball, you can foresee the disaster before it happens and take steps to prevent it. It’s up to you.

The Supply Chain Opportunity in a Challenging Economy

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Spending less money seems to be a logical step when times are tough, but it can be a short-sighted approach. Companies must not just make fewer, smaller investments, but make smarter investments. Just because the economy has slowed down, it doesn’t mean you have to.

I couldn’t have said it better myself. This quote, from a recent article in i2’s Supply Chain Leader about “The Supply Chain Opportunity in a Challenging Economy”, gets to the heart of the matter … if you’re not investing smartly, you’re slowing down with the economy. And if you slow down, you risk becoming the next bankruptcy.

But getting back to the article, the next point it makes is that in this tough economy, a sharp focus on supply chain management is critical to your company’s success. Definitely. Remember Business 101: Profit = Revenue – Cost. Smart supply chain management lowers cost WHILE increasing value, which can increase revenue, which maximizes profit. It’s really that simple.

Now is the ideal time … for technology that provides a quick return on investment and long-term savings. Technology implementations that streamline manufacturing operations, optimize inventory, and focus on increasing cash through improved asset utilization and enhanced transportation management can enable your business to maneuver through volatile times, setting you up for success once the economy recovers. That’s why this blog has a large technology focus. Technology will help you optimize your supply chain, which saves you money and, done right, optimizes your cash flow.

And don’t forget to maximize the investments you’ve already made in your supply chain. This will help ensure that you are in a position to not only weather the storm, but to move past the competition once the storm clears. If you have systems that have been working well for you, even though it might seem a bit costly (at first), maintain the maintenance, acquire supplementary modules or systems that maximize your return, and hire consultants to help you figure out how to get more out of what you have. Remember, it’s all about ROI.

Then stay the course. A focus on innovation will lead to success … especially when so many companies have essentially curled up in the fetal position to wait out the storm. Recessions aren’t just when the losers are culled … they’re when the winners are made. And if you’re reading this blog, I am assuming you’re a winner … so go get ’em tiger!

That’s Not Trash … That’s Profit!

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A recent article in Industry Week explained how TerraCycle can turn your “garbage into gold” by taking non-recyclable pre- and post- consumer materials and up-cycling these traditional waste streams into reusable products which includes eco-binders, trash & recycling containers, pencil cases, backpacks, lunch boxes, and other consumer materials. They’ve even come up with a way to create fertilizer from, and package it in, bio-degradeable waste.

So where’s the profit? If you are a school, church, or a non-profit organization, TerraCycle will provide you with packaging materials and cover postage to ship it non-recylcable food packaging that it uses in the creation of its products — and pay you for each item you provide. For example, you can get $0.02 for each drink pouch, candy wrapper, or cooky wrapper your members collect and send it.

Is Your Supply Chain Ready For The Millennials?

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The Millennials — better known as Generation Y, the children of the Baby Boomers born between 1980-1999, are beginning to flood the global job markets … at least to the extent that they can find work in this recession. And like each generation before, they’ll need to be integrated and trained because, if you don’t, the resultant turn over (which will cost you between 50% and 150% of their salary) will be huge … and the cost on global supply chains will run into the Billions.

The Millennials bring with them a unique perspective and work ethic that stymies older works and frequently leads to intergenerational conflict. They need to be challenged, given regular feedback, cross-trained, and shown a career path. They have high expectations for success, and they are looking for an organization that can help them achieve it. They are the most technologically savvy multi-tasking generation to-date, and they work best when collaborating. They’re a work-hard and play-hard generation looking for “cool” employers and organizations that provide them with:

  • career laddering,
  • socialization,
  • mentoring, and
  • positive reinforcement.