Ma rch 2016 • w w w.busine s sreviewe urope.e u
Integrating TO EXPAND Interview
Smiffys fancy dress
Technology
TOP 10
Roaming free in the EU
Principles for digital success SPECIAL REPORT
Designing a digital transformation
ALWAYS RISING TO MEET NEW CHALLENGES Over the years, Technicolor has proudly supported Forthnet in providing end users with the best in class broadband services. Looking ahead, we are thrilled to continue our successful collaboration as Forthnet ventures into new multimedia horizons.
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EDITOR’S COMMENT
Digital development W E L C O M E T O T H E M A R C H issue
of Business Review Europe. Our cover story this month features Telefónica Deutschland, continuing our series of in-depth interviews with the leading executives driving the technological developments within this communications company around Europe. Digital transformation is also the subject of our interview with SGN’s Andrew Quail, who talks about how his role as Director of IT has changed as technology becomes a driver within the organisation. Other features include a look at how the EU’s changes to roaming charges will affect businesses, an interview with fancy dress business Smiffys, and our top tips for digital success. We do hope you enjoy the issue, please send any feedback to @BizReviewEurope
Lucy Dixon Managing Editor EMEA lucy.dixon@bizclikmedia.com
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CONTENTS
Features
INTERVIEW
Smiffys is the leading fancy dress brand across the UK and Europe
TOP 10
6
TECHNOLOGY
12 Roaming free
18 4
March 2016
Principles for digital success
Company Profiles
30
Telef贸nica Deutschland
TECHNOLOGY 30 Telef贸nica Deutschland 58 Lebara
58
72 Workonline Communications (Pty) Ltd 82 SGN
SUPPLY CHAIN 100 Deutsche Bahn 122 LPP
MANUFACTURING 134 Houghton International
82
SGN
Lebara
72
Workonline Communications
100
Deutsche Bahn
134
Houghton International
122
LPP
INTERVIEW
DRESSING
UP
Smiffys is the leading fancy dress brand across the UK and Europe. Company Director Dominique Peckett explains why the industry just keeps growing W R ITTE N BY N E LL WA LK E R
IF YOU’VE EVER stepped foot in a fancy dress shop, Smiffys is a brand you will be familiar with. Operating under the umbrella of parent company R H Smith, established in 1894, Smiffys supplies costumes, wigs, and accessories across the UK and Europe, and Director 6
March 2016
Dominique Peckett fell into this family business almost by accident. “It was never really planned,” she says. “I finished university and my plan was to go into political research, but my father asked me to join what was then a very small business, and I loved it. It’s
something I have a real passion for.” Peckett works closely alongside her brother and father, which “sometimes makes for interesting board meetings, but we understand each other’s strengths and maintain an understanding that wouldn’t necessarily be
achieved with colleagues who aren’t flesh and blood”. R H Smith is very proud of being a family-orientated company. Peckett’s father had recognised at an early stage that there was previously no brand for fancy dress, and he set about establishing Smiffys to fill that gap. 7
INTERVIEW
The company understands that, while still a niche industry, fancy dress has changed with the times. The concept of costume parties in the Western world began with 18th century masked balls, which maintained their novelty through the years. Now, the industry is more popular than ever: “The fancy dress industry has expanded dramatically. Halloween has become 8
March 2016
a lot more prevalent, and so many more people celebrate it. Virtually every supermarket and pound shop sells Halloween-related products now, and not just costumes, but snacks and decorations too. It has helped the fancy dress industry’s growth and customers’ access to it.” The company has a Leeds-based team of 15 designers who undertake
DRESSING UP
trend research to keep Smiffys products on top. They look at what’s previewing on catwalks and on the high street, what films and franchises are emerging, and brainstorm concepts before selecting 300 or 400 new product designs for release. “We don’t hold licences for big franchises, but we are affected by films. A big trend not long ago was vampires, and
now with big series like The Walking Dead, it’s all about zombies. Day of The Dead has also had a huge spike of interest, thanks to a particular scene in Spectre. We’re very much influenced by popular culture.” Large corporations selling licensed products, such as Disney, are the biggest competitors for Smiffys, and as such become the target 9
INTERVIEW
for imitators. However, the pursuit for cheaper versions of expensive brands leads to counterfeit issues, and Smiffys has its market cornered as a trusted business: “People are now copying products and importing them straight from China. We’ve done some press releases about counterfeiting and were recently on Fake Britain – a consumer rights TV show in the UK – talking about issues of safety around such items.” “Brand is something we’ve spent years building up in terms of 10
March 2016
awareness. Consumers trust brands. We try really hard to impart our values. We’re very ethical in the way that we trade and invest heavily in trying to exceed safety compliance, especially in children’s costumes.” All of Smiffys’ manufacturing is done in China, operating within 15 key factories, some of which it has been trading with for 20 years. The costumes and wigs continue to be made by hand to ensure high standards are adhered to, and third parties are sent in to perform spot
DRESSING UP
checks periodically. Smiffys’ wigs used to be made in the UK, but with other developments in the industry has come issues of cost: “It’s become more about price. Unfortunately – inevitably – it means that consumers are chasing a cheaper price, so the manufacturing has to go to cheaper areas.” In the UK, fancy dress is a yearround business. While it may spike over Halloween, Brits will grasp at any excuse to dress up: pub sports matches, hen and stag weekends, birthday parties, Sports Relief, and
major holidays are all reasons to celebrate. Thanks to the slow but steady popularisation of Halloween in Europe, along with carnival season, Smiffys has since become popular in Germany, France, Spain, Sweden, Denmark, and many other European nations. “Our export sales have really gathered apace over the last few years and that’s something that we’ll continue to focus on – maintaining brand awareness in the UK and in the export market.” Remarkably, Smiffys has managed to maintain its positive brand image without the benefit of an online presence: “Until recently you would have to buy from an intermediary. We’ve launched an online platform, smiffys.com, which will allow us to reach consumers, get feedback, and engage with people to better understand their needs. We still support our intermediaries, but in this day and age it’s very rare for a brand to not have direct access to the consumer. A lot of people still like to research online before going to the physical shop. It allows them to see the full breadth and range of our products, which bodes well for the future of the business.” 11
TECHNOLOGY
ROAMING FREE Written by: DAN I E L KU RGAN , C EO of B I C S
Following the news that Mem the European Parliament have favour of eradicating mobile r charges for subscribers acros the telecoms industry braces new era in international comm
G
mbers of e voted in roaming ss Europe, itself for a munications
13
TECHNOLOGY SINCE THE EU began the introduction of legislation to reduce roaming costs in 2007, the mobile industry landscape has changed completely, from one dominated by voice and messaging to an ecosystem revolving around data usage. This evolution has also had a profound impact on the demand for roaming services, with reliance on data usage leading to demand for constant connectivity. This has been nourished by the ease of accessibility allowed by smartphones, and roaming bundles offered by the bigger operators in most major European markets – many of which offer LTE roaming while abroad. The quality and speed of data connectivity is a vital element in encouraging growth. In some markets such as the UK, where all major service providers offer LTE, operators are now allowing domestic upgrades from 3G at no extra charge. And it’s no surprise that consumers expect the same level of service while outside of their home market. How will the EU roaming regulations impact this? Not that significantly. Many of the operator bundles already in place are priced to 14
March 2016
encourage usage at the same level when business and consumer customers leave the country. Those paying standard roaming tariffs are likely to be encouraged to increase the amount of data used while abroad, carrying a margin for both the visiting and subscriber networks. Although service providers are now relying on a decreased margin per unit, ARPU is actually likely to sustain due to the explosion in traffic volumes. This is in addition to an anticipated decrease in ‘silent roamers’ – subscribers who turn off cellular services when they are outside of their home country. The availability of high-speed roaming services and price reductions seen in recent years have already caused a dramatic increase in data roaming volumes, further lowering the cost will cause an even more drastic rise. LTE roaming to become a worldwide opportunity The European summer holiday season sees an annual rise in roaming traffic from holiday-makers venturing further afield, armed with their mobile devices. Since 2014, double-digit
ROAMING FREE
monthly growth in LTE roaming traffic has been experienced by carriers worldwide, illustrating this increased demand from for high-speed data is prevalent all over the world. Nearly all consumers in developed markets across the globe now have access to domestic LTE, and with this widespread availability comes the expectation and demand for similar data speeds when users travel abroad – just like we have seen in Europe. The depletion of EU roaming
fees will impact roaming prices outside of Europe, as operators see the increased volumes that can be achieved introducing value bundles for subscribers. These are accomplished through competitive commercial agreements with selected partners and can provide an excellent value-add for subscribers. Many forward-thinking operators have already arranged new LTE roaming agreements and the relevant technical interconnections to make this a reality for their subscribers, 15
TECHNOLOGY
and are reaping the rewards through both revenues and loyalty. Opening up the roaming market Outside of traditional operators, the new legislation also provides great potential to usher in a new era of innovation from new parties in the mobile ecosystem. We are likely to witness the launch of new ‘roaming only’ pan-EU MVNOs, largely focused on the machine-to-machine and data-centric market, which are 16
March 2016
predicted to be a huge market driver in the coming years. This dynamic new marketplace will further fuel the profitability of roaming services and stimulate cross-border data usage. Reduced costs also open up the international market to appbased OTT players and small virtual mobile operators (which use a host network to operate in their home country to appeal to niche markets) to begin to provide their subscribers with cross-border services.
As these new players are introduced to the ecosystem, traditional operators will need to collaborate with them to ensure ubiquitous services are offered to all subscribers. The end result is a truly connected continent, where new entrants and competitive incumbents both work to increase mobile usage and ensure complete customer satisfaction. With LTE providing the backbone for the next generation of
communications, this can become a reality and eradicate those who chose to ‘silently roam’ on cost grounds. This boost in roaming traffic will offset the loss operators will initially feel once the ban is set in June 2017 and over the next two years, it is up to operators to capitalise on monetising data roaming where they can. Then, once the new cost structure is in place, it will be the subscribers’ turn to thrive and roam.
17
LIST
10
principles
for digital success
The critic the evolv both onli
Written by Chris O
The road to digital succes strewn with obstacles, cha and pitfalls. In many secto economy, traditional organ can’t hope to compete eff unless they embrace the d economy. At the same tim
cal principles for success in ving business landscape for ne and offline businesses
Outram, Founder and Chairman of OC&C Strategy Consultants
ss is allenges ors of the nisations fectively digital me,
many of today’s pure digital plays have a lot to learn from other superior competitors. There are ten principles which will steer the most digitallyambitious organisations safely along on the road to success. 19
LIST
02
01
Start with vision and purpose
In a business landscape where so much is in flux and new ways of operating are being developed all the time, never before has the need for an inspiring vision and audacious goals been greater. Such visions have a dramatic effect on the ability of companies to attract people and finance in equal order. For example, Moneysupermarket orientated itself around saving the UK £1 billion in 2012, which translates into 500,000 households saving £200 each. This created an organisation motivated by helping people to save money. 20
March 2016
Be obsessed by customers / consumers and their behaviour
John Roberts, CEO of AO in the UK, summed it up well when he said: “The web hasn’t changed what customers want, it has empowered them. We want to consistently be the best in how we treat our customers.” The competitive battleground in digital businesses is, rightly, around capturing the hearts and minds of consumers. Unless you can inspire and retain large numbers of them – and simultaneously very high market shares – you’ll gain only modest recognition in the digital world
1 0 P R I N C I P L E S F O R D I G I TA L S U C C E S S
03
Embed the right planning horizons
On speaking to any pure-play entrepreneur, you will learn that they invariably have a very ambitious vision of what they are trying to achieve, but seldom do they have detailed plans on how they are going to get there. Given that the digital world and its underpinning technologies are developing so quickly, it is entirely defensible to have a business model that is experimental and empirical. In fact, many argue that this greater flexibility is key
to pure-plays’ success. Rapid feedback loops allow you to refine and develop your customer proposition, your understanding of how customers behave, the challenges for the supply chain and how ultimately you might make money. So while you may dispatch detailed plans, it is crucial to build your organisation’s thinking processes robustly. Assessing top-to-bottom objectives and key results every quarter gives you the ability to stay focused and also to pivot when and where you see greatest opportunity.
21
LIST
04
Understand and invest in competitive differentiation and advantage
In the digital world, competitive differentiation and advantage can be a combination of a number of factors such as a low cost business model, the brand itself, unique technology, supply chain, rate of innovation – the list goes on. It is essential that entrepreneurs are honest and self-critical in order to ensure that the advantage is real and applicable to the marketplace
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March 2016
in which they compete. A good test of this is the best-in-breed benchmark as defined by Andy Street, MD of the John Lewis Partnership, when he said: “focus on beating the best, even if they are not your most direct competitors, because it makes you stronger.” This will require experimentation which will inevitably mean a few failures along the way, but tolerance and a learning culture have long proven capable of turning ‘failure’ into sustainable success.
1 0 P R I N C I P L E S F O R D I G I TA L S U C C E S S
05
Harness technology effectively
Don’t make the mistake of believing that ‘IT’ is what we mean by ‘technology’ in the digital age. The sort of technology which makes digital businesses work is not the same as the technology (IT) that is at the core of many traditional businesses.
It is very much more consumer oriented and is as much about consumer interface as it is about transaction, supply chain management or flows of massive amounts of information. The cost of poor or slow consumer facing technology is very high – that’s a lesson hybrids are better off learning early.
23
TLOIP S T1 0
06
Build a robust business model which encompasses an ecosystem of staff, suppliers, and customers
In the early years of the digital era, hybrids often placed their e-commerce or online teams in separate organisational entities in order to avoid polluting the mainstream with radical and often disruptive ideas and/ or to prevent the mainstream smothering new ideas. As a result, at the same time that pure-plays 24
March 2016
were outstanding at front-end consumer interface issues, they were na誰vely incompetent in management of the supply chain. Nowadays, both pure-plays and hybrids understand the need to have a fully integrated business model. By engaging with consumers in co-creation, getting suppliers to provide inventory (and even delivery) systems and ensuring your own organisation is capable across a multichannel model, the added value of integrating digital assets of a business with its physical assets becomes very clear.
1 0 P R I N C I P L E S F O R D I G I TA L S U C C E S S
07
Do not tolerate mediocrity In the digital world, the quality of your people and the culture in which they operate can translate into a massive competitive advantage. Creating a culture of openness so that even the most junior employees can influence the direction of the business
makes all the difference. Insight and creativity are no longer bound up with experience. Pure-plays translate this into true competitive advantage by organising to get the most out of a talented workforce who are used to building apace. Small teams focused on tough problems can make rapid inroads – an all-important characteristic for success in the fast-moving digital world.
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TLOIP S T1 0
08
Reinvent yourself frequently
One of the truisms of the digital world is, of course, that nothing stands still for very long. Knowing this, it is incumbent upon the leadership 26
March 2016
of any business to make sure that management is constantly questioning itself on whether its business continues to be fit for purpose, and is responding to customers and competitive requirements. If not, it needs to reinvent itself rapidly.
09
Design a fit-for-purpose governance model Although organisational shape has been transformed in the digital era, governance remains key and can make or break a business’s success. The push for corporate transparency and integrity is only likely to hasten the need to reflect this in your business model. It is vital, therefore, that both hybrids and pureplays design a corporate governance model which will help unlock value in a competitive environment. This should include: shareholders with longterm conviction, an informed board, and an inspired leadership; a motivated management. 27
TLOIP S T1 0
10
Build a fit-for-purpose organisation It has been found time and again that simply dropping a group of digitally competent individuals into the middle of the traditional organisation will not work. Tissue rejection - which happens quickly and brutally - usually smothers and discourages even the most motivated group of digitally oriented individuals. In order to get the best out of this talent, companies need to build an agile culture of experimentation and learning through failure – they should make decisions at speed and be encouraged to experiment. 28
March 2016
1 0 P R I N C I P L E S F O R D I G I TA L S U C C E S S
These ten principles for success are designed to deliver your company safely along the road to digital success. Yes, the speed of transit has increased exponentially; yes you might get a flat tyre or two along the way; and yes you may change course and end up somewhere entirely different than originally planned. But in no way does this mean you should tear up the guide book completely. Instead of ‘move fast and break things’, the mantra championed by Facebook’s Mark Zuckerberg, organisations should embrace a newer motto: ‘move fast and turn your satnav on’. 29
Integrating TO EXPAND Written by: John O’Hanlon Produced by: Danielle Harris
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TELEFÓNICA DEUTSCHLAND
For Germany’s largest mobile operator, integrating the networks of O2 and E-Plus while instigating an accelerated LTE roll out was a unique technical challenge that fell to the company’s CTO Cayetano Carbajo and his team
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T
he new Telefónica Deutschland is the largest mobile communication provider in Germany, setting the pace for the telecommunication industry and its evolution in a time of digitalisation there. The aim is to become the leading digital telecommunications company in this key European market, the pursuit of this goal started at the beginning of 2016 with the process of integrating Telefónica and Eplus networks. These networks are using the three mobile standards (GSM, UMTS and LTE; this is 2G, 3G and 4G) with nationwide coverage. The integration work started in 2015, while the company continues to build out its
TECHNOLOGY
LTE (4G) network. By around mid 2016, it says, the plan is that customers of both networks will also be able to use a shared LTE. What current E-Plus and BASE mobile customers will see is a gradual conversion to the brand O2 over the course of 2016. This way, Telefónica Deutschland is simplifying its offer in the premium segment and providing its customers with a consistent high-quality product and service range under one brand. The role of the BASE online portal will remain unchanged though special offers for new customers are based on the O2 tariff. A fundamental repositioning as a sole online brand is planned for a later time. “The transfer of the BASE and E-Plus customers to the brand world of O2 will contribute to a significant simplification of structures,
1,300 Employees in the technology team
w w w. t e l e f o n i c a . d e
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Changing the Way We Work, Live, Play, and Learn Cisco designs and sells products, provides services, and delivers integrated solutions to develop and connect networks around the world. We are focused on helping our customers use IT to enable, differentiate, or fundamentally define their business strategy and drive growth, improve productivity, reduce costs, mitigate risk, and gain a competitive advantage in an increasingly digital world.
What is Cisco’s Mission Statement? Shape the future of the Internet by creating unprecedented value and opportunity for our customers, employees, investors, and ecosystem partners.
Kontakt, Cisco Deutschland, Cisco Systems GmbH, Am SĂśldnermoos 17, D-85399, Hallbergmoos Tel: 0800-187-3652 or +49 (0) 811 554 3535 Cisco Systems, Inc., Corporate Headquarters, 170 West Tasman Dr., San Jose, CA 95134, USA 1-800-553-6387
www.cisco.com
TELEFÓNICA DEUTSCHLAND
Cayetano Carbajo, CTO 36
March 2016
TECHNOLOGY
technical platforms and processes at Telefónica Deutschland,” says CTO Cayetano Carbajo. Since it entered the German market in 2005 with the acquisition of O2, Telefónica has made rapid strides in the market and now offers mobile and fixed, voice and data services for private and business customers. With a total of 48.6 million customer accesses, the company is one of the three leading integrated telecommunications providers in Germany. In the mobile segment alone, Telefónica Deutschland is responsible for more than 43.3 million accesses – making it the German market leader. So this has been a busy time for its Chief Technical Officer (CTO) since his appointment in 2014. Cayetano Carbajo moved to Munich from Madrid, where he spent the previous decade as Technical Director at Telefónica’s headquarters: before that he was CTO in Mexico, where he created the company’s GSM network in that country by amalgamating two pre-existing CDMA networks. All in all he has been with the company for 21 years. For Carbajo, Germany is the ideal environment for an engineer. “We engineers tend to be well ordered people, with a clear view of processes, and that definitely fits the German national character.” Nevertheless we shouldn’t make too much of this, he says. Most of the work he has been leading his team (he oversees a 1,300 strong networking ‘family’ spread across Germany) into doing here is unmapped territory. Certainly the w w w. t e l e f o n i c a . d e
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WE turn no into now Marketing wants new digital services. Finance instant monetization, and IT is left balancing these expectations with reality. With Transformative IT from Ericsson, operators become more agile to say yes, now. We Turn Network Evolution into Business Revolution Our telecommunications world is characterized by two mega-trends: a continuously rapid increase of mobile data traffic mainly driven by video and the emerging Internet of Things. Today almost 50 percent of mobile data traffic is video, whether live, on-demand, or usergenerated. In the year 2021 video will already generate 70 percent of the worldwide mobile network traffic. Ericsson is the only industry player that provides service providers and the broadcast industry alike with a complete end-to-end portfolio from content creation and distribution to network transformation to experiencecentric Managed Services. In the emerging networked society a flexible and efficient infrastructure will help operators to build offerings towards new value chains, support millions of different services and devices and work perfectly where ever people want to connect. Achieve Business Agility with Transformative IT Transformative IT can help operators manage the complexity of change, speed the adoption of new technologies and add intelligence to the end result. This IT-intelligence
is a prerequisite for networks and systems to support the real-time transactions, real-time insights and real-time automation necessary to satisfy user requirements. Transformative IT makes operators agile and offers them the Power of Yes, turning No into Now. Ericsson as a Transformation Partner for Telefónica Germany As the world’s leader in mobile infrastructure, telecoms services and OSS/BSS, Ericsson is proud to support Telefonica Germany in their network transformation after the E-Plus acquisition. One example of such BSS transformation is Online Charging. The Online Charging System from Ericsson has already been in use by Telefonica in Germany for their initially 12 million prepaid subscribers. Now Telefónica in Germany expands its online charging system to support all 30 million prepaid subscribers. The expansion results in the largest prepaid online charging implementation in Western Europe. Extending the Ericsson Online Charging System represents an important step towards the crucial OSS/BSS harmonization and network consolidation of these previously separate mobile networks.
Furthermore Ericsson supports Telefónica in Germany as End-to-End Partner in their Network Consolidation in various areas, such as providing turn-key transport solutions for the Optical Backbone and the Microwave Network or creating the VoLTE service for their end users. Ericsson leads the transformation of the world’s most advanced operators to achieve the agility required to thrive as a digital enterprise and extract value from the Networked Society. Ericsson provides the industry’s most comprehensive and integration-ready mobile infrastructure, telecoms- and broadcast-services and OSS/BSS portfolio. 115,000 professionals with global experience and deep ICT knowledge make sure, that our customers always stay ahead.
www.ericsson.com/ spotlight/transformative-it
TELEFÓNICA DEUTSCHLAND
“I and my team are carrying out the integration into a single, seamless network ... the biggest network integration that has ever been undertaken, anywhere” – Cayetano Carbajo, CTO
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March 2016
technology that underpins communications in Europe has evolved a long way from the CDMA networks that he was dealing with in Mexico. It is an environment in which a creative, questing spirit is more important than being versed in the traditional ways of doing things, he says. “As CTO my job is changing all the time. I am leading the integration and evolution of both networks and service platforms, and what we are finding is that our situation here is not really analogous with any other country. Currently we have two networks because Telefónica Deutschland acquired E-Plus in 2014 and we had the network from O2 as well. I and my team are carrying out the integration into a single, seamless network. I do believe that this is the biggest network integration
TECHNOLOGY
that has ever been undertaken, anywhere.� The initial integration work is focused on densely populated urban areas, as Telefónica Deutschland aims in a short time that as many people as possible should profit from the new, integrated network. Total network integration is planned to complete in five years. The networks were both fully audited after an intensive phase of planning and testing in preparation for this challenging large-scale project. Having decided which transmitter sites will create the optimal geographical distribution, the next phase is the integration proper. As a first step in the process, in May
Telefonica Deutschland is headquartered in Munich
w w w. t e l e f o n i c a . d e
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Forming a sustainable and leading digital Telco: Huawei’s support of the consolidation of Telefónica Germany and E-plus Selecting a reliable and strategic partner is one of the keys
and solutions architecture. This was possible by combining
to business success, as the consolidation of the networks of
Huawei’s local knowledge as service provider, deep insights
Telefónica Germany and E-Plus demonstrates.
in the networks coming from multiple joint projects, global best practice with its continuous search for innovative
Huawei had been working with Telefónica Germany for many
solutions and the mutual trust and openness of the partners
years regarding wireless, network, professional services and
based on the strong relationship.
other fields, before being chosen as partner for the M&A process of E-Plus and Telefónica in Germany.
Huawei demonstrated that it was able to support Telefónica’s consolidation and business trans-formation. As a result,
To support the integration of the two networks, Huawei
Huawei was chosen in early 2015 as a major partner for
not only brought its industry-leading technology and global
equipment and services for Telefónica Germany.
consolidation experience to the program, but also a long and well established trusted relationship that would prove
The agreed consolidation services delivery model provides
mission critical in the process.
several important benefits for Telefónica. With Huawei as Single Point of Contact having end to end program
The complexity of this consolidation project required a
management responsibility, complexity is reduced by
strategic decision looking for true partnership. A specifically
minimizing the number of interfaces and dependencies
tailored solution was designed based on Huawei’s extensive
between different parties. The optimized step-by-step
experience from preparing and executing consolidation
implementation methodology secures smooth delivery
projects in leading markets.
on time for both new LTE coverage and GSM/UMTS
The best practice solution developed by Huawei addresses
consolidation with minimum risk for unplanned service
three key business objectives:
degradation for the end user.
a) shorten the time needed to prepare and execute the consolidation,
Huawei
b) secure a better end user experience of the consolidated
mobile operator with the most subscribers in the German
network compared to before and
market and the most optimized spectrum, on its way to
c) maximize the cost synergies without jeopardizing time to
become the leading digital telco and is looking forward to
market and user experience.
future cooperation in new technology domains that enable
accompanies
Telefónica,
Germany’s
Telefónica to realize its leadership targets. Consolidation typically brings huge changes for the companies involved – affecting not only the network and the operational structures, but also the organization of the companies themselves. Therefore the first thing to do is the definition of clear strategic objectives and a joint team which designs the consolidation strategy for forming a sustainable and leading digital telco out of the two companies. Huawei successfully worked with Telefónica on the network development strategy, the operational models and the timeline. Major contributors to these three elements were Huawei’s capability to analyze and compare the benefits of different technical scenarios, implementation methodologies
Huawei thanks Telefónica for its trust and confidence choosing Huawei as a key partner in the German network consolidation.
biggest
a better connected germany.
www.huawei.com/de
T E L E F Ó- NSUPPLIER I C A D E UPROFILE TSCHLAND HUAWEI
Huawei is a leading global information and communications technology (ICT) solutions provider. Our aim is to enrich life and improve efficiency through a better connected world, acting as a responsible corporate citizen, innovative enabler for the information society, and collaborative contributor to the industry. Driven by customercentric innovation and open partnerships, Huawei has established an end-to-end ICT solutions portfolio that gives customers competitive
advantages in telecom and enterprise networks, devices and cloud computing. Huawei’s 170,000 employees worldwide are committed to creating maximum value for telecom operators, enterprises and consumers. Our innovative ICT solutions, products and services are used in more than 170 countries and regions, serving over one-third of the world’s population. Founded in 1987, Huawei is a private company fully owned by its employees. www.huawei.com/de
TECHNOLOGY
2015, Telefónica Deutschland activated national roaming in the UMTS networks for all O2 and E-Plus customers. Since September localised test runs have been conducted, providing enough information on how to convert individual transmitter stations within a few hours and to fully implement the network merger in a given area within a week. This was to ensure minimal network disruption and make sure customer experience wouldn’t be affected. The UMTS network from E-Plus is the best in Germany and extends well beyond urban areas. “With National Roaming the user experience of mobile data services has been improved by UMTS in areas where customers previously had no LTE coverage,” he says. “We are consolidating the sites because many are duplicated, and we are going to end up with 25,000 sites, so we are dismantling 14, 000 sites. This is a key element in our synergy plan. Besides this consolidation we are doing a complete technology renewal to have the most recent network delivered in outstanding quality. For the consolidation we chose what w w w. t e l e f o n i c a . d e
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TELEFĂ“NICA DEUTSCHLAND
The demand for better demands a better network.
www.juniper.net
TECHNOLOGY
is the best site in terms of quality and cost and then the other becomes redundant.” By the end of the network integration process Telefónica Deutschland will have transferred a total of 7,700 mobile telephone sites to Deutsche Telekom. “This will have benefits all round,” Carbajo adds. Telefónica Deutschland can use resources that would have been needed for the elimination of these overlapping locations on the rapid LTE expansion instead. In general, dismantling redundant network sites is not only expensive, but also takes time and ties up personnel. Normally, any existing property leases have to be cancelled and equipment has to be expertly dismantled. By the end of this process Telefónica Deutschland will be able to offer its customers an optimised network with more than 25,000 sites. “We have our criteria for selecting the best sites from the coverage point of view, w w w. t e l e f o n i c a . d e
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TELEFÓNICA DEUTSCHLAND
THE FUTURE IS WIRELESS Wireless transmission holds on to the technology crown for mobile backhauling. In this interview we explored together with SIAE MICROELETTRONICA, what is happening in the mobile backhaul space, and what we should be expecting to come in the near future. Mobile networks and wireless backhauling, are they still moving hand in hand? Capacity has always been a shadow for wireless transmission, today this is no longer a topic for discussion since the introduction of solutions like our RF Multicore ALFOplus2. This field proven technology offers 2Gbps of guaranteed traffic in licensed bands. Furthermore with millimetre-wave radio we are opening the way to multi-gigabit solutions of 10Gbps for urban areas. An order of magnitude lower in total cost of ownership (TCO) compared to fibre and the characteristic deployment flexibility are the two other strong contributors to the renewing success of this technology, which continues to define mobile backhaul. (Read more about RF Multicore ALFOplus2) Why operators talk about services from the network?
decoupling
Today an operator’s service portfolio is defined by the implemented network. This model limits what can and cannot be offered. The new model to aim for is a “service centric” approach, where the network is instrumental to the service delivery, and Software Defined Networks (SDN) is the way to reach it. It represents a great opportunity for operators to free themselves from
the incumbency of a technology or dominant vendor, thanks to the promise of a real multivendor and multi-layer interworking paradigm. SIAE MICROELETTRONICA is embracing SDN. We demonstrated our commitment both working with the ONF in the first SDN wireless transport proof of concept, as well as with the live demo at MWC16 pioneering the “New IP” model. All our SM-OS based microwave products are natively supporting SDN protocols, infomodels and architecture, bringing the future of SDN closer to reality. (Read more about our SDN) Articulated backhaul networks, multiple product types and SDN, how do you keep them all together? With LTE, the mobile backhaul network has become very articulated, and with 5G and SDN at the horizon it will keep on changing. It becomes fundamental that the backhaul network keeps operating seamlessly regardless the changes in the deployed equipment. This concept is now paramount in any portfolio that aims to satisfy the incoming transport challenges of new technologies. To satisfy this need, all our products run a common Operating System named SM-OS that guarantees common operational behaviour irrespective to their deployment arrangements; split-mount, full outdoor or aggregating platforms. (Read more about our SM-OS) For more information please visit our website: www.siaemic.com
TECHNOLOGY
and we’re assessing them one by one. ” This in itself would be a major task for this year but it’s just the customer facing part. In common with what we have seen at Telefónica in other markets, the technology vendor base in Germany is being streamlined. “From our current vendors in the mobile space,” he reveals, “only Huawei and Nokia will remain. A similar process is happening where the EPC (evolved packet core, also known as the SAE core) is concerned, and from two vendors we will go down to a single supplier, in this case Huawei, as the packet core vendor.” Growing Telefónica Deutschland’s LTE coverage is vital to keeping the company ahead in this highly competitive market, thus a key task for the technical teams. “My competition here in Germany has a bigger LTE coverage than
“My competition here in Germany has a bigger LTE coverage than Telefónica Deutschland has at the moment, but we don’t intend to leave matters that way” – Cayetano Carbajo, CTO
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Telefónica Deutschland has at the moment, but we don’t intend to leave matters that way. We plan to implement more than 10,000 LTE base stations this year and that will make a significant difference in this market. As the leading digital telecommunications company, we aim to deliver the best network experience to our customers with our mobile network by 2017, though of course our strategy is to continue to expand our mobile coverage continuously after that date.” To do this, having the best and most dependable network is merely a necessary tool. What really matters is delivering a quality experience to the customers, he emphasises. “This is what we call end-to-end customer experience, and is a combination of the quality of the underlying technology, the device and the application our customer is using. To do that we are investing in optimisation and optimisation tools as well as monitoring customer experience and reacting to problems in the service, whether this is an outage caused by the network or a performance issue caused by the network itself or anything else that impacts upon it.” One key example of an optimisation tool that will really make a difference is the adoption of self organising network (SON) technology. “I truly believe we are one of the most successful operators of SON tools, which automate to a very large extent the tasks that traditional maintenance and troubleshooting methods would really struggle to keep up with today. The way it used
Telefónica Deutschland is responsible for more than 43.3 million accesses – making it the German market leader
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TELEFÓNICA DEUTSCHLAND
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TECHNOLOGY
to be done was already very complex and in the environment of the networks we are building today that approach has become quite unviable.” The solution the company has chosen to deliver the new levels of automation is Cellwize SON. This technology, which places its emphasis on solutions that work seamlessly with all technologies and vendors, plays a central role streamlining the process to ensure that the modernisation project is completed smoothly. “The end result is a superior and personalized service to subscribers, when they need it, wherever they are. Managing and controlling a multi-vendor, cross-technology network can be a real challenge. Networks are sensitive and become unstable very fast and unexpectedly. Still most of the work required for keeping the system stable can be automated, allowing my team to focus on managing the network. We are using this both for our single-network
“I truly believe we are one of the most successful operators making use of SON tools, which automate ... the tasks that traditional maintenance and trouble shooting methods would struggle to keep up with today” – Cayetano Carbajo, CTO
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Open Connectivity Solutions for Cloud and Mobile Services
Mobile Broadband With Double the Power ADVA Optical Networking is a long-established and well-trusted partner of both Telefónica Germany and E-Plus and its mobile backhaul technology has played a vital role in both networks. That’s why the process of consolidating and expanding the newly combined infrastructure will be simple. Telefónica Germany has a mobile backhaul solution with future-proof scalability and extremely low latency. Thanks to ADVA Optical Networking’s innovative products, twice as many customers will now receive the ultimate broadband experience.
“All sections of our newly integrated team are familiar with the high quality and excellent service that ADVA Optical Networking provides. Knowing that we can rely on that same level of technical expertise as we go forward gives us a great deal of confidence. With a single central management system monitoring our entire network we’ll be able to operate at the utmost efficiency and deal with any issues in an instant. We know that ADVA Optical Networking’s equipment can handle the most rigorous networking requirements. It’s also great to work with such an innovative and dependable supplier based here in Germany. With their manufacturing, and research and development locations so close by we can rely on quick and direct support whenever it’s needed.” Cayetano Carbajo Martín Chief Technology Officer, Telefónica Germany
TECHNOLOGY
optimisation and also for our consolidation programme.” Telefónica Deutschland is also implementing tools to measure the end-to-end customer experience. One way to do this is to collect customer feedback but this is unreliable and subjective. A much better way is to use advanced diagnostics to gain insight into the entire ‘experience chain’ as he puts it. “It’s a way of monitoring not just the network behaviour but to see what devices our customers are using and what applications are running on them. After all, customers don’t differentiate between the device, the network and the application – they just want it to work, and that is precisely what we mean by customer experience. But to be clear: always ensuring data protection has the highest priority. In accordance with the statutory regulations, we only use fully anonymised information and conclusions cannot be drawn about individuals.” Yet a further goal for this year and next is to advance in the virtualisation of the network,
€7.79 billion
Telefonica Deutschland’s combined revenue
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TELEFÓNICA DEUTSCHLAND a process whereby, thanks to technological evolution that allows the operator to make use of generic hardware. “It’s a win for us if we can use generic hardware and software optimised for the network and also gain a lot of operational improvement, by operating a service that is cloud based.” That brings the conversation to the key topic of virtualisation, one that we have explored in past articles in connection with Telefónica’s global digital transformation. “Technology is moving fast. Remember when, not so long ago telecommunications operators had no knowledge of IP networks? Now IP is our
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‘We need to evolve and become the best players in the world when it comes to virtualisation and cloud’ core technology! With virtualisation it is the same I think. The knowledge of network engineers about the cloud is limited right now but we need to evolve and become the best players in the world when it comes to virtualisation and cloud. We have a clear plan for training our people to have the best possible skills in these processes.”
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Phone home Written by Nell Walker and Produced by Danielle Harris
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LEBARA
Lebara is bringing migrants’ homes to them with its unique new range of mobile services
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ichard Bastin is the CTO responsible for group technology at Lebara, having joined in 2014 to drive the digital revolution of the business. Lebara began in 2001 as a calling card business; customers would buy the cards from shops, and the company would earn a small commission. That worked well for three years, then Lebara decided to begin operating as a mobile virtual network operator, or MVNO. An MVNO sits between a standard mobile network operator (an MNO) and the customer, allowing cheap international calls – with the aid of the MNO’s technical infrastructure – aimed at the migrant community. “The ability to call home cost-effectively was the inspiration for the company. Lebara’s cofounder would call his mother in India, and would use up his monthly call allowance in the space of three minutes,” Bastin explains. “Making international calls is much cheaper now, and that’s thanks in part to Lebara.” Bastin explains how a Lebara call works: “The UK customer will have a specific Lebara SIM card, and when they make a call, it goes over the MNO’s radio mast network. The MNO will detect that it’s a Lebara customer and direct the request to Lebara to check if the customer has a balance. If the answer is yes, the call continues, and Lebara seamlessly carries the voice traffic
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over its network of 100 carriers across the globe. That means we can offer a low-cost alternative to traditional networks, and it’s a system that has proven successful for us for over 11 years.” Lebara’s features One of Lebara’s most successful new products is Lebara Talk, an app that makes international calls and messaging even simpler. But with free services like Skype and Viber battling for supremacy, what makes
1000
Number of jobs supported by Lebara
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Seeing the Simple
In the Complex Ability to ďŹ nd solutions to complex problems. Distinguish forms in the abstract. This is the true nature of innovation. For the last 26 years, Sasken has enabled world leaders in various industries to deliver tangible solutions that are at the forefront of technology.
Digital
Telecom
Semiconductor
Automation
Automotive
Consumer Electronics
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Sasken – Enabling new value streams through Digital Data is the New Oil powering the Algorithm Economy. While traditional data warehouses and reporting systems have existed for years now, they have not been very effective in driving actionable insights. Sasken is focused on the emerging areas of Data Discovery and Advanced Analytics. Their Big Data Lab enables customers to ingest and process large amounts of data in the cloud, with no impact to existing IT infrastructure. Sasken’s Advanced Analytics offering leverages a variety of advanced predictive analytics techniques to enable businesses derive actionable insights from historical data for revenue growth and profitability.
Physical to Digital Enablement Since 1989, Sasken has been making significant contributions in the communication revolution with partners in Europe, US, Japan and China. Sasken was the first to market 3G wireless systems with simultaneous voice and browsing capabilities. The company demonstrated 2G and 3G protocol stack components in early 2000. In 2010, Sasken became the first and only Indian company to successfully design an end-to-end satellite phone for Inmarsat PLC. They have been delivering R&D services to port various versions of Android on leading chipset platforms with 100 million devices enabled for partners so far. Sasken has been able to catalyze the adoption of these technologies for special purpose terminals (used in civil defense and paramilitary). The advent of newer digital technologies has opened up a plethora of opportunities for businesses to innovate new value streams. For a seamless Digital journey, it is imperative for enterprises to develop the ability to experiment along a distinct Digital Innovation track as opposed to the traditional approach in developing IT systems. Sasken’s suite of Digital IT capabilities complemented by its 25+ years of embedded and devices expertise make it a Digital Innovation partner for world’s leading enterprises. Sasken is focused on physical to digital (p2d) transformation that enriches enterprises’ competitive advantage and helps them achieve business objectives.
Sasken helps Lebara save millions of Euros in carrier costs Harnessing the latent power of data, Sasken’s Predictive and Prescriptive Analytics solution leverages statistical models to predict customer demand and determine appropriate supply-side decisions. Sasken is implementing an Actionable Insights platform leveraging the latest data technologies to enable business users to visualize and uncover insights.
SASKEN - SUPPLIER PROFILE
Sasken is a leader in providing Product Engineering and Digital IT services to global tier-1 customers. Sasken’s deep domain knowledge and comprehensive suite of services have helped global leaders maintain market leadership in Semiconductor, Automotive, Telecom, Consumer Electronics, Retail, and Automation.
We have established ourselves as pioneers in creating IP and solution accelerators that have been a part of over 200+ commercially shipped unique products of globally leading OEMs. With 70+ patents, we enjoy a reputation of being a technology leader.
Sasken’s solutions are backed by CMMI ML3, ISO Established in 1989, Sasken 9001, ISO 27001 and TL 9000 employs 2000+ people, operating certifications. Our proprietary from state-of-the-art centers in quality management systems India, Finland, and China. We also strengthen our business offerings have a presence across Germany, and ensure client satisfaction. Japan, South Korea, UAE, UK, and Sasken’s commitment to USA. Sasken has been listed in environment is highlighted by the National Stock Exchange and its ISO 14001 certification. Bombay Stock Exchange since www.sasken.com its initial public offering in 2005.
TECHNOLOGY
Lebara different? “It comes back to our customer base,” Bastin says. “For Skype and Viber to work you need a smart device at both ends. Many of our customers will be calling someone who may only have a standard landline, and therefore can’t take advantage of smart features. We also have a well known brand and loyal customer base, who use Lebara in preference to other apps because they can still maintain contact in a cost-effective manner.” Talk was the first of Lebara’s new digital product to be released. It was launched in 12 countries in early 2015, and current Talk customers are reaching as far apart as south-east Asia and North America. Digital technology has made the transition from a Europe-based company to a global company far simpler than in previous years, with Lebara in control of the pace of change.
‘The founders have set a vision, funded it, and driven it through. They have a clear strategy powering the team to drive effective delivery for global growth’
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“If we wanted to launch in a new country with an MNO partner, it would typically take many months because of all the new technology and complexity involved. We managed to break into 12 countries in the space of a few weeks, which you can only do on a digital platform by downloading straight from the app store.” Lebara hasn’t stopped at simply enabling better communication. Its next product, Play, is an entertainment platform and is similarly inspired by the ever-growing migrant community. “Our ambition is to launch multiple products to the migrant community, that enrich their lives. We set ourselves some challenging goals, and Play is something completely different to anything Lebara had done before. It connects customers to home, with a rapidly growing fullylicensed catalogue of over 3,000 films and 150 TV channels so that they can view real content legally from home, rather than being limited to only what is available in their new country. We already have many thousands of our customers using the service, and we’re delivering over a petabyte of content a month through the Amazon platform.” Relationship with customers Lebara has another unique way of managing its relationship with customers and ensuring their loyalty – by employing many members of its target market. “A large percentage of our employees are migrants, meaning we have a huge wealth of
Key Personnel
Richard Bastin CTO
Richard has over 25 years IT experience in a variety of industries, including financial services, e-commerce and now telecoms. Richard has led teams to deliver market leading and award winning solutions for blue-chip companies, as well as rapidly growing startups. Richard has used his Digital experience to transform Lebara from the single product European focused business that it was in 2014, to the multiproduct Global business that it became in 2015.
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6m Current number of customers
experience to draw on. We have internal focus groups and an excellent customer service team which talks to customers regularly; that all feeds into our product development cycle, which we run in an agile way. We make it very clear to potential employees that this isn’t a normal telecommunications company. Every employee goes through an induction programme that explains to them the company’s vision, and what we are achieving with this multiproduct future for the migrant community.” Lebara allows staff to test its products inhouse, encouraging honest feedback. The loyalty of Lebara’s customers – and alongside that, employees – is rewarded, as it offers preferential
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treatment to those who remain with them. “Once we have all the feedback we need, we get our products together and make sure they work in harmony so that our customers can benefit from using more services. In the mobile space they’re called ‘bundles’. It might mean that customers gain additional minutes if they’re using one of our other products, and that can work either way. A migrant will go through a journey of their own as they settle in a new country, and we want to be able to keep delivering new products and services to them so that Lebara continues to help them in their everyday lives. It’s important to have a holistic view of the customer, which we’ve done by extending our systems in this way.” The future for Lebara Lebara is aided in its quest to supply its target community by its major partners, including technology and communication giant Sasken. “Sasken has been instrumental working with Lebara, to optimise the way we work with our MNO partners. By leveraging the power of data science and predictive analytics to mine data for actionable insights, Sasken has added tremendous value by helping us to bridge the supply side with customer demand, adding significant savings to the bottom line. Sasken is working with us in bringing out further improvement to our business intelligence systems, and developing enterprise tools that are vital to our business needs, as we prepare
FACTS
Lebara has over 100 global carriers to carry international voice traffic across its network
Lebara Talk is available for smartphones to download on Android and iOS.
Lebara Play offers over 3,000 films and 150 TV channels from customers’ home countries
Lebara is 100 percent privately owned
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LEBARA ourselves to leverage the power of analytics on a broader scale for business success.” This approach makes Lebara a formidable force. Larger companies offering similar services simply do not cater to the niche and complex global market Lebara has cornered: “The larger players are focussed on the national audience. Netflix is the natural parallel to our Play product, but we’re going the other way; selecting highquality content from Bollywood, Nollywood and Eastern Europe to offer to our customers around the world. Catering to migrants is something very few businesses do, but we understand it very well and will continue to deliver on it.”
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The business plans to expand even further by introducing a financial services product. “The first one off the production line will be a remittance product which allows our customers to pay bills and send money home to their loved ones.” With its core customer base hailing from Asia and eastern Europe, this is another feather in Lebara’s cap aimed at making everyday life easier for its migrant customers. Progress has proven swift for this relatively young company, and Bastin attributes that to the vision of the businesses founders. “The founders are still very much part of the business,” says Bastin. “Lebara is 100 percent privately owned. It’s not easy to change a company, but the founders have set a vision, funded it, and driven it through. They have a compelling strategy powering the team to drive effective delivery for global growth.” w w w. l e b a r a . c o m
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Keeping Written by Nell Walker
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W O R K O N L I N E C O M M U N I C AT I O N S ( P T Y ) LT D
Founded in South Africa in 2006, Workonline Communications is a privately owned global Network Service Provider
S
ince 2006, privately-owned Workonline Communications has worked tirelessly to provide Africa with high-quality IP transit and connectivity services, achieving acclaim as the Southern African network with the highest number of directly interconnected global tier 1 transits. Some of the largest international telecommunication companies make use of Workonline’s technologically advanced services, as its network has proven stable, resilient, and reliable. According to Workonline’s Director of Business Development, Edward Lawrence, the company’s structure and products are far simpler than they appear: “We basically provide two services: IP transit and various forms thereof, and connectivity or transport services. Within those two categories we have hundreds of moving parts we use to design each individual service; we don’t have a fixed price list; all the services we provide are tailor-made to the requirements of our clients. We don’t deviate from what we do, meaning we can be very flexible within the bounds of what we do, and deliver the services we focus on at scale.” Group input The direction of the company, and each individual project it undertakes from conception onwards, is group effort: “We have a very flat organisational structure designed to maximize collaboration,” Lawrence says. “Everyone has the chance to contribute towards the
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A large degree of growth still needs to take place in places like Kenya.
direction of the company. We achieve this by increasing interpersonal communication as much as possible between everyone regardless of seniority, and working together to agree on direction to achieve the goals we set for ourselves and the company as a whole.” Workonline’s liberal company structure allows all members of the business to feel a part of its operations; impressively, it has lost only one employee since the company began. “We don’t enforce office hours so everybody can work when they want. We manage productivity through a goal-based system,” Lawrence explains. “We try to bring the passion out of people. If you’re very good at what you do, the chances are that you’re
20 Number of staff working at Workonline Communications
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W O R K O N L I N E C O M M U N I C AT I O N S ( P T Y ) LT D
Workonline is dedicated to developing the network across Africa, in places like Kenya and
passionate about it, so how can we enable and support that passion? By giving our employees the tools to play with to discover themselves and what they can achieve, and by supporting them in any direction they wish to grow in. We actually implement that, rather than just saying it.�
Zambia, for example
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Prestigious partnerships As it has grown, the business has forged bilateral partnerships with the largest global players such as TeliaSonera, NTT, and Level 3 Communications, and according to Lawrence, “forming these relationships has proven to be very fruitful for all parties involved. Essentially the cornerstone of our relationships with our partners is the technical aspect. Their engineers feel comfortable and confident in dealing with
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us because of the level of skill that we have on board and our knowledge of the African market. Vice versa, we look to them for their knowledge depending on the markets in which they are strongest of have the most experience.” Falling in line with its growth and expectations from its prestigious client base, Workonline decided to improve the brand awareness of the company. To this end, Workonline recently decided to refresh its logo to show an identity which reflects its modernity. The basics of the business remain, but its image has developed alongside its blossoming reputation. What sets Workonline apart is the determination to stay ahead of the curve, Lawrence says: “We’re often the first to come up with and implement either technical or commercial models in the subSaharan African market. That’s what attracts the partnerships that we have in place, and ensures that they remain in place over the years to come.”
“The developments we’ve made are about constantly researching and putting in place new and more efficient ways of doing things” – Edward Lawrence, Director of Business Development
Technology Workonline is a tech-heavy company with a very strong engineering team, and it has the accolades to support its notable status. Its transport services are MEF compliant, and one of the company’s directors, Ben Maddison, was the first ever person to achieve 100 percent on the MEF certification w w w. w o r k o n l i n e . c o . z a
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‘We have a very flat organisational structure designed to maximize collaboration. Everyone has the chance to contribute towards the direction of the company’
globally. “Out of thousands of engineers around the world, Ben was the first and the only one thus far to get full marks,” Lawrence comments. “We have a very high level of technical skill on board, which we constantly strive to improve. The developments we’ve made are about constantly researching and putting in place new and more efficient ways of doing things.” Part of staying ahead is rigorously planning the future, Lawrence says. “The year is pretty much mapped out already. We’re looking at where to build in 2017. The focus is on expansion of the network into a few new key markets. We’re investing heavily in the expansion and
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uptake of Internet Protocol version 6 – or IPv6 – and we’re somewhere in the top double digits of IPv6 networks in the world by size. We’ve tried to encourage uptake by offering a free 100 Megabits per second of IPv6 transit to any AfriNIC LIR. We’re very involved in sponsoring training of the use of IPv6 and helping networks to make that transition.”
The new cable system being
Workonline’s future As is common in the technological sector, outside forces have the potential to alter a company’s plans. An example of this is a new cable system which is being
planned between Brazil and Africa will present new opportunities for the company
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We see a huge amount of growth potential in Africa as the world focuses on connecting the next billion people to the Internet
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planned between Brazil and the west coast of Africa could present new opportunities for Workonline. “Typically there’s been no need for us to have infrastructure in North America because all of the paths between Africa and North America either go through Asia-Pac or Europe. The topology of the global cable system network will change if this project progresses, and in doing so it would open up the possibility of us building a PoP in North America. That’s far from being confirmed, but it’s a potential development.” Bandwidth in Africa is commoditising fast, which has been an advantage to Workonline. The business was designed around a foresighted belief that this would occur, and Lawrence says “we have been fortunate in that the current trend has played into our hands. A
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couple of the developing market’s currencies struggling has impacted our clients, but on the whole the recent economic situations in Africa haven’t had much impact on us at all. We have some very good advisers who saw this coming. We still see a huge amount of growth potential in Africa as the world focuses on connecting the next billion people to the internet.” Regardless of how plans may change, Workonline will continue to develop the network across Africa. “While South Africa is a little more developed than many others, there are plenty of countries where there is a lot of work to be done,” Lawrence concludes. “A lot of growth still needs to happen in places like Kenya and Zambia. When I visit them, I can’t help but wonder why people aren’t seeing the opportunities.”
‘We’re often the first to come up with and implement either technical or commercial models in the subSaharan African market. That’s what attracts the partnerships that we have in place’
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Designing a digital transformation Written by Lucy Dixon Produced by Kiron Chavda 83
S G N LT D
SGN has been through some enormous changes with the way it uses technology, managing to improve efficiencies while harnessing the power of innovation
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hen Andrew Quail took over as Director of IT for SGN four years ago his job, he says, was to ‘keep the lights on from an IT point of view’. As a gas distribution network, SGN keeps the gas flowing safely and reliably, making sure there’s availability of systems, availability of the supply of gas and – crucially – availability of engineers to respond to public reports of the smell of gas. Fast-forward to 2016 and it’s impossible to overstate the rise in importance of IT within SGN. Not only is it the backbone of the organisation when it comes to keeping gas customers warm and safe, it’s now driving SGN’s growth and efficiency strategy. Quail explains: “So my role now is to not only perform a supporting role to the business but to help drive excellence around customer service and innovative ways of working across our operational business. My role has changed
ENERGY
massively in those four years to the point that I am required and expected to absolutely improve both the top line and the bottom line of the company. This has been driven by the changing demands and expectations of our customers, our business and the regulator and the wealth of opportunities now available given the disruption brought about by digital technology.” SGN is responsible for ensuring a safe and reliable gas supply to 5.8 million homes, looking after 74,000km of gas pipeline across the south of England and Scotland. Starting this year, SGN Natural Gas will construct new gas pipelines in Northern Ireland. Quail says: “If you smell gas, we have to be at your home within an hour and we achieve that over 97 percent of the time.” SGN is also undertaking an extensive update to its infrastructure, replacing the ageing pipes across the network. At the same time, it’s going through
3,700 Number of jobs supported by SGN
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Key Personnel
Andrew Quail Director of IT Andrew joined SGN in November 2008 as a senior Programme Manager. He had previously worked within a number of organisations including; Centrica, Capgemini Consulting, Tata Consulting, and TUI in a variety of IT roles. He has led multiple large scale business transformation and IT change programmes. He was appointed as SGN’s Director of IT in 2010 and is accountable for all IT services and the definition and delivery of all technology change.
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a huge change in the way it uses technology. Listening to Quail describe SGN’s digital transformation, it’s clear to see it has been through some monumental changes – while keeping costs down. A particularly tough challenge. The starting point, he says, was people. “I’ve had to bring in new people and I’ve also had to change our ways of working. I’ve started with the customer-facing side of our business with business solutions and business relationship management. So, just as SGN is focussing more and more on improving our customers’ experience, I need to do the same internally. The next wave of capability I’m developing is around the focus on architecture and data management which are fundamental given the different type of IT that’s being put in place now and the heavy leaning of our CEO and the company overall, towards technology innovation. Of course, just like SGN, our dayto-day operational performance has to be completely reliable and rock solid. It is vital that we don’t take our eye off the ball. So, bringing in new capabilities and more experience in these areas, while retaining and indeed reducing my overall operating cost base is really the challenge I’m facing but it’s something we’re achieving.” The new people Quail mentions
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The Microsoft Cloud gives Special Olympics instant access to key performance and health data for every athlete, no matter where they are. Microsoft Azure and Office 365 help streamline the management of 94,000 events across 170 countries each year. So the focus can be on changing the lives of athletes, and that’s the true victory.
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have been found in a variety of ways. “It’s not a quick process finding the right people for the long term and reorganising at the same time, so we’ve taken our time. We’ve been working with recruitment firms we know but also using networks and different methods of connection to professionals as well, including social media.” A similar journey has been undertaken when it comes to how SGN manages the relationships it has with suppliers and partners, taking time to expand its circle of knowledge with carefully chosen third parties who can help SGN on its journey of continuous improvement. Within Quail’s team, there has also been a change on how the employees are organised. He says: “I’ve got a group of people who look at future demand and work with our business on prioritising that work. Then there’s a group responsible for design and architecture and also a group responsible for projects, building and testing plus the traditional ‘run’ part of the organisation. We still have those capabilities, but now we are putting in place cross-functional and cross-skilled teams. So those guys getting together in a single team with different parts of the business to deliver the specific solutions that are of real value to our customers, faster and at lower cost, becomes the order of the day rather than just passing work from one team to another as we used to. This may seem obvious to many web-based or smaller organisations but for a more traditional utility organisation, w w w. s g n . c o . u k
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S G N LT D this has meant some real challenges in how and even where people work with each other. A good example is in customer service area where we are now delivering a number of initiatives in a much more agile and lean way. We are all working to a common outcome of improved customer experience through a number of connected initiatives and driven by the end customer. What I’m driving now is much more about collaboration, communication and cross-functional team working and that’s a fundamental part of changing our operating model longer term.” This increased speed of delivering solutions is a significant change for SGN and another of Quail’s projects is a huge migration of the majority of its services to cloud providers. “We’ve had our strategy signed-off by our board and it’s a very large two to three-year programme of IT transformation. Now that programme demands my team to work differently because it’s not just about moving services to another location it’s also about operating differently. Looking at far more automation around the management of IT, being able to start services up literally within minutes rather than months and managing our consumption based on what we use today, not what we bought several years ago.” Not all SGN’s services are moving to cloud providers, though, as Quail explains: “We’ve some parts of our services which are considered critical national infrastructure and so for now, those are services won’t be moving 90
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but I see that changing soon. Particularly when we see the leading IaaS providers such as AWS and Microsoft Azure now building major service centers in the UK for government IT services.” The advantages of the shift to the cloud are numerous, says Quail. “It gives me cost transparency that I don’t have at the moment. I’m predicting significant cost reductions through that efficiency. So there are financial benefits but more importantly, this strategy is driven by the demands of our business.” And SGN in 2016 is most definitely an innovative place to be, with an increasing focus on using technology throughout the business. “The innovative technology we’re now seeing being applied in our business is genuinely transformational. We’ve got an innovation team that has won so many awards, they almost need a bigger trophy cabinet. Our team is now putting robots into our pipelines for video-based inspection as well as repair work and we are also looking at using much more sensor monitoring of our network. So that poses a challenge to us my business as to how do you bring all those services and the detail together in a meaningful way?” The detail Quail is referencing to is the enormous amount of data produced by an increasingly technological company. He adds: “Vast quantities of video and sensor data are great, but how do you access, share and more importantly, use it? What’s very clear to me is my current IT architecture and IT service provision won’t be fit for purpose in a very
“Our team is now putting robots into our pipelines for video-based inspection as well as repair work and we are also looking at using much more sensor monitoring of our network.”
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Working in partnership with SGN to deliver the digital utility. AMT-SYBEX and Sigma Seven, part of Capita plc, have brought together two of the most innovative mobile solutions in the UK market to create a next generation mobile working solution for our clients. We have created a world first, a fully independent mobile worker solution with both highly-accurate GIS mapping & flexible digital processes. This gives our customers, like SGN, a “one-stop shop” solution for automating their business, improving data quality and timeliness, delivering greater efficiencies and improving customer service.
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short space of time unless we radically change what we do and how we do it. The merging of IT and OT is already happening across SGN and we therefore need to develop and provide the services that will grow that phenomenon. This means a fundamental change in how we run our IT services and indeed challenging and changing our thinking on what IT even is.” One of the major ways technology has affected SGN, is the way it works with customers, particularly when it comes to mobile devices. “The expectation from customers is they are updated instantaneously through social media when there’s a service disruption. This requires a digital platform which we just don’t have at the moment. This will be a huge transition for us as our customers now want real-time information. They want to be informed before anything happens and they want it through numerous devices, operating systems and mechanisms; not just a website.” This is something all customerfacing organisations are dealing with, Quail recognises, from retailers to large-scale utilities such as a gas distribution network like SGN. In order to provide this instant information to customers, SGN also has to change how it works in the field. It’s not just about having a sparkly new app or Twitter account, the data must be managed correctly in the first place. “We’re now introducing all sorts of other enablers digitally to our field workforce to help them capture, access and share data which currently, can be quite w w w. s g n . c o . u k
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onerous for them. Simpler tools to do that such as bar code reading and scanning devices through their mobile phones, which is then automatically uploaded to our cloud and when required, integrated to our enterprise systems.” But before this can happen, the workforce needs to find the problem they are dealing with and, once again, technology is playing a bigger part here. “We’re heavily reliant on finding our pipeline, which of course is below the ground in most cases and so having real-time and up-to-date map data of our assets is important. So that’s something again we’re now delivering through a mobile service this year, which historically would have been
collected back at the office, looking at paper maps. This detail will all be delivered real time to our employees’ new tablets and smartphones and they will have the facility to update that realtime, thus making our organisation safer as well as significantly more efficient,” says Quail. A practical example of how digital technology is driving efficiency at SGN. “These solutions will only get deployed to the business if they affect our top line or bottom line. We’re not just rolling technology out for technology’s sake.” It’s an exciting and challenging time to be in charge of technology at a company such as SGN. “I’ve had to completely change how I look at creating and delivering solutions and value into the organisation and I think any CIO w w w. s g n . c o . u k
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who is not approaching the role in a much more open-minded manner is really going to struggle and get left behind. We’re seeing completely different ways of delivering services in completely different cost models. I have to be open to completely new ways of working which I’ve never previously thought about. That’s not just about different demands from the business but a whole different way of leading an IT organisation.” Part of this different way of working is the way
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Quail works with vendors and suppliers. He explains: “We’ve had to segment our vendors between traditional IT vendors, such as IBM, Oracle, SAP and a new set of digital enablers like, Amazon, Deloitte and Microsoft, which has also completely transformed itself recently from behaving like one of the more traditional ‘mega vendors’ to an organisation that is really helping us on our digital agenda to set up services very quickly and at a very low cost. And we’re working with others, for example, we’ve got an app development platform run by a leading enterprise mobility company called Kony. Again, very low cost to deliver solutions; very agile and interactive with the business. It’s the same story with Sigma 7 field-based solutions for our field operatives. There is still a place for the traditional vendors to support our industrial, high availability systems of record but these digital enablers are the type of vendors we’re working with to learn how we do things differently. How we can deliver different type of solutions that perhaps we haven’t thought about before.” So, Quail says, a story was presented to SGN’s board about how the company needed to change to embrace the changing technology landscape, from mobility solutions, big data, cloud computing and social media to all the technology advancements such as robotics, drones, the Internet of things and more. And the board was, well, on-board. As an organisation, SGN is rising to the challenge of a digital transformation.
“I have to be open to completely new ways of working which I’ve never previously thought about. That’s not just about different demands from the business but a whole different way of leading an IT organisation.”
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Image Author: Christian Bedeschinski Image copyright: Deutsche Bahn AG
The drive towards qu
Written by: DB Central Procurement Produced by: Richard
quality
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Procurement at Deutsche Bahn AG is changing together with the whole company
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T
he history of the railway in Germany began in 1835 with the opening of a six-kilometre line between the cities of Nuremberg and Furth, in today’s federal state of Bavaria. Some of the milestones in the now more than 180-yearold German railway history include the end of World War II and the rail reform in 1994, the year Deutsche Bahn AG was founded in a form of joint-stock company. The rail reform heralded a renaissance of the railway in Germany, and the facts are impressive. Today Deutsche Bahn (DB) is active in all segments of the transport market with great success. DB is Europe’s second largest carrier in the passenger transport market, bringing 4.3 billion passengers from A to B each year on buses and trains. We run 25,000 passenger trains each day, providing a wide variety of
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connections between cities and regions. DB is also the second largest freight transport and logistics provider worldwide. We have locations in 130 countries, where we operate 5,000 freight trains a day, transporting nearly a million tonnes through Germany and Europe. DB’s subsidiary company DB Arriva is active throughout Europe with buses and passenger trains. DB operates the largest rail network in the heart of Europe. Nearly 5,700 stations in Germany serve as gateways for our customers to our rail network of over 33,400 kilometres. However the company’s performance suffered considerably in the recent months, and customers’ expectations have not been fulfilled. The company has been put under increasing pressure on the markets, with economic consequences. DB is currently facing
3 million
Number of jobs supported by Deutsche Bahn
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Global and local – supply chains tailored for every customer
Our competence in transport by rail, road and multimodal transport chains make TRANSA DB Schenker’s European full load specialist. TRANSA is a one hundred percent subsidiary of Schenker AG. DB Schenker, as the brand of the Transport and Logistics Department of Deutsche Bahn AG, offers logistical competence, integrated networks and rail know-how from one single source. TRANSA works successfully in this strong operative network as a specialist for European transport logistics in road and rail.
With 1500 locations in 150 countries, DB Schenker is one of the leading transport and logistics providers worldwide. Gateway into the DB Schenker World! TRANSA Spedition GmbH Sprendlinger Landstrasse 175 D-63069 Offenbach Phone +49 69 84007-120 Fax +49 69 84007-232 salessupport@transa.de www.transa.de
DEUTSCHE BAHN AG
Image Author: Claus Weber Image copyright: Deutsche Bahn AG
major challenges due to the increasingly tough competition in passenger transport because of the liberalisation of the long distance coach market and various new sharing models, for example, as well as in freight transport because of the dramatic drop in fuel prices and reduced lorry tolls. Additionally, there is no doubt that digitalisation is fundamentally changing mobility as well as working environments, making it necessary for DB to adapt fast. DB has therefore started the ‘Zukunft Bahn’ programme (Future of the Railway), with the objective of considerably increasing quality, punctuality and operational reliability, to start winning over more customers again and to noticeably improve our economic results. This programme will be a major lever to achieve the economic, environmental and social performance goals of the DB 2020 strategy.
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We are convinced that rail transport has the potential to become the most important mode of transport for the 21st century – it is dependable, comfortable, safe and environmentally friendly. Rail is not only an important part of life for millions of people and a reliable partner of Germany’s economy; it is also plays a key role in reaching climate targets in Europe. The ‘Zukunft Bahn’ programme requires the involvement of all divisions of DB, working together for better quality, more customer focus and greater success. Central Procurement has a direct impact on EBIT and can thus make an important contribution to achieving success, which is why we have decided to realign its business in line with the rest of the group.
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DB Procurement – on track towards ‘World Class Procurement’ Central Procurement has developed a mission statement to guide us in its work: We guarantee that the DB Group’s business units worldwide are supplied with materials, capital goods and services – economically, on time and with the right quality – and, in so doing, ensure DB’s innovative capability and sustainable market success. Central Procurement has developed its own ‘World Class Procurement’ roadmap based on our DB2020 Group strategy and in line with our Procurement 2020 programme. Our roadmap was developed based on the results of a performance assessment and benchmarking 107
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passion ‌ TO BE THE SERVICE PARTNER OF CHOICE. Providing innovative and competitive aftermarket solutions for our rail customers worldwide. | www.knorr-bremse.com |
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On this basis, Central Procurement will move from a classic corporate purchasing department to a ‘World Class Procurement’ unit over the next few years. To do so, Central Procurement has defined four central strategic directions as part of its roadmap. • ‘Increasing Procurement’s value added’: Aimed at achieving a close dovetailing of the targets of various Group subsidiaries and those of Central Procurement. Only through close coordination can all possible commercial and technical means be utilised to generate maximum added value for the Group. • ‘Comprehensive business partner management’: Aimed at establishing Procurement as a part of the customers’
Key Personnel Uwe Günther Chief Procurement Officer
Uwe Günther studied Electrical Engineering and Business Administration. Before joining Deutsche Bahn (DB) in 2007, he was active in various procurement leadership positions in the aviation as well as in other industries. From 2011 to 2014 he led the infrastructure procurement department of DB. Since July 2014 he is Chief Procurement Officer of the Deutsche Bahn AG.
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process carried out by a renowned external consultancy. “The results of the assessment conferred us ‘professional’ status (top 25 percent of all assessed companies), which is a source of pride for us and our employees and motivates us to reach the ‘World Class’ level. We are working with our business partners to develop a roadmap through 2020,” says Jan Grothe, Head of Procurement Principles and IT-Systems.
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management team and initiating and developing product group strategies within competency and cross functional teams in cooperation with stakeholders and technology and quality assurance units. • ‘Effective Supplier Management’: Aimed at actively developing suppliers and the market on an international level and, when necessary, regaining or ensuring stable supplier performance levels with regard to quality, punctuality and cost. • ‘Efficient (digital) processes and organisation’: Aimed at optimising and streamlining processes and regulations as well as IT support.
‘We want to win customers with reliable suppliers and sustainably shape the supply chain’
Image Author: Bildschön, Silvia Bunke Image copyright: Deutsche Bahn AG
Special focus on the supply chain – our Supplier Management approach Our suppliers serve as valuable partners as we strive to achieve greater safety, quality and innovation. “We want to win customers with reliable suppliers and sustainably shape
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the supply chain,” says Uwe Günther, Chief Procurement Officer (CPO) of Deutsche Bahn AG, in describing the goals of his team and suppliers. Effective supplier management has thus been included as one of our four central strategic directions on our path to becoming a World Class Procurement unit. DB’s standardised Supplier Management process includes four phases: Supplier Qualification, Supplier Development, Supplier Appraisal and Supplier Adjustment. The first two phases help us to prepare suppliers to work with DB. Supplier Qualification includes an assessment of the supplier’s technical and commercial suitability. Different supporting documents must be provided in this process depending on the requirement category of the specific range of products and services. In general, we want to complete Supplier Qualification prior to the bidding process and we see this as beneficial to both us and the supplier. In the optional Supplier Development phase, steps are taken to further develop suppliers who do not yet meet our criteria for qualification, independent of any contracts. Our Supplier Development phase is designed to improve our suppliers’ performance through a shared dialogue and to expand their potential, minimise risks and ensure that they can take part in competitive bids going forward. The following two phases ensure the high performance of our core suppliers and serve to 112
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Image Author: Jet-Foto Kranert Image copyright: Deutsche Bahn AG
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MOCG-A10002-00-7600
DEUTSCHE BAHN AG
Intelligent infrastructures don’t just react. They anticipate. Thinking mobility further through advanced software solutions. siemens.com/mobility
New ideas, concepts, and technologies are in great demand with our ever-increasing need for mobility. With over 160 years of experience in passenger and freight transportation and our IT know-how, we are constantly developing new and intelligent mobility solutions to provide greater efficiency and safety. Prescriptive monitoring systems reduce train downtime and increase availability. Dynamic control systems optimize
traffic flow and throughput. And electronic information and payment systems improve passenger experience. It’s in how we electrify, automate and digitalize transport infrastructures that we’re setting the benchmark for tomorrow’s mobility – today.
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‘Effective supplier management has been included as one of our four strategic directions’
Image Author: Claus Weber Image copyright: Deutsche Bahn AG
integrate new suppliers. The Supplier Appraisal phase includes an evaluation of contract fulfilment according to defined criteria. In this phase, we evaluate suppliers along the supply chain in terms of quality, costs and punctuality. We assess suppliers based on their strategic importance to DB. We always evaluate promptly and throughout the entire business relationship. We inform our suppliers at least once a year of their rating as we see this exchange as quite important. In the Supplier Adjustment phase, we monitor the suppliers which whom we have current contracts and projects to be able to respond quickly to changing situations. Our standard process is rounded out by an incentive programme for suppliers with
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DEUTSCHE BAHN AG For people. For markets. For tomorrow.
Supplier Innovation Award 2016
For the first time ever, Deutsche Bahn is honouring its most innovative business partner with the Supplier Innovation Award 2016. Is your company an innovative supplier of Deutsche Bahn? Then it is your chance to show us how your products or services can help us to make our service offers more sustainable. Apply now for the Supplier Innovation Award. The closing date is 10th March 2016. All information about the award, terms and conditions are available at www.deutschebahn.com
especially high performance. We show our appreciation of excellent suppliers with our DB Supplier Award and especially with our Supplier Innovation Award, which will be given for the first time in 2016. Building alliances and strengthening networks – Internationalising DB Procurement The increasing internationalisation of both the Group itself and procurement markets represents both a challenge and an opportunity on our path to achieving better quality in the Group and in Purchasing. Based on our World Class approach, we see the role of our department as follows: International DB Procurement bundling demands globally to achieve the best conditions by
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‘China plays an especially important role here, since over 80 percent of the market growth for high-speed trains over the past few years has been here’
sourcing from the best suppliers world-wide with a significant benefit for all business units. We have developed specific measures to achieve this goal Our concept of a DB-wide Global Procurement Network is intended to enable all internal customers, staff members and managers who are involved with procurement centrally or locally to deal with the challenges and opportunities posed by the global markets. We are developing new formats to this end, from qualifying courses at our DB Institute of Procurement to regular discussion groups. “We can only reach our ambitious goals
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if our colleagues are highly qualified and have the specialist and language skills to analyse markets, innovations and risks within their product group on an international basis,” says Arne Oehlsen, Head of the Procurement Customer Portal and Qualification Unit. He continues: “In our newly integrated qualification programme, we are also bringing together purchasers, managers and internal customers to learn about specific product groups and tendering issues as a team.” The opening of our International Procurement Office in Shanghai in November 2015 is aimed more at the supplier market. “Global Value Sourcing is one of the main procurement levers for a globally active group like DB. Together with experienced staff, we want to develop relationships with existing and new suppliers here locally in the Asian market,” says Michael Boback, Head of DB AG’s International Procurement Office Shanghai with regard to the office’s objectives. “China plays an especially important role here, since over 80 percent of the market growth for high-speed trains over the past few years has been here. The production, development and testing capacities in China are state-of-theart. We are looking to intensify contacts with companies who offer high-quality and innovative products at competitive prices, even though the price is not the sole decisive criterion. As a driver of innovation, DB supports the cross-sector ‘RailSupply’ programme as a pioneering step towards comprehensive 119
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â‚Ź 40 billion
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2014 revenue of Deutsche Bahn
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digitalisation of the supply chain. This solution makes daily collaboration between customers and suppliers more transparent and allows for cooperative processes across all levels of the industry, from rail operators to system providers and suppliers on different levels. Central Procurement can thus maximise supply security, innovative power, process stability and supply chain transparency for DB AG and can recognise bottlenecks at an early stage. We are a founding member of the ‘Railsponsible’ sector initiative. Within this initiative, we are working together with our competitors to improve the sustainability and efficiency of our supply chain. As part of the initiative, suppliers are assessed based on defined standards, for example with regard their compliance with human rights, labour
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standards, environmental protection and activities to combat corruptions. “In this way, we as a group can fulfil our social obligations and create transparency and trust,” says Jan Grothe. “We are also encouraging all of our competitors to actively work to achieve these goals.” The ambitious goals we have set as part of our World Class Procurement vision have put DB’s Central Procurement on the right path for the future. Whether through our standardised process for Supplier Management, our measures to qualify suppliers or tapping new markets in Asia through our International Procurement Office in Shanghai, we are contributing to the Group’s success through innovative approaches and are doing our part to deliver top-notch product and service quality for our customers, as part of the ‘Zukunft Bahn’ programme and the DB2020 strategy.
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In fine style Written by Nye Longman Produced by James Pepper
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Having grown into a major fashion retailer, Poland’s fast fashion network is cresting the wave of its success, expanding its brands into new markets and leveraging its optimised supply chain network
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is perhaps the best example in the European fashion retail market of what can be achieved in 20 years. Following consistently high growth – especially over in the past few years – the Polish fashion retailer has pushed the limits of its global supply chain in order to deliver both quality and value to its customers. In just under a decade, the company has seen its sales swell from €170 million to over €1.13 billion, significantly grown its number of stores and accelerated logistics facilities and solutions. We speak to Sebastian Soltys, LPP’s International Logistics Director, about how he and his teams have ensured that the company’s supply chain has accommodated rapid geographical expansion, as well as evolved to serve the addition of new clothing brands. Operations and expansion LPP is the most popular fashion retailer in Poland – and it is by far the largest. Its size and popularity have enabled the company to look beyond its borders for revenue opportunities. Following the entry into Germany, Croatia and the Middle East, it currently has stores in 18 countries serving three continents. Over the years, LPP has developed six well-known fashion brands which consist of: RESERVED; Tallinder; MOHITO; House; Cropp; and SiNSAY. The RESERVED brand is perhaps the best example of LPP’s diversity and
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Key Personnel
Concept work for the new LPP Headquarters
supply chain capabilities and is little wonder that the company chose to launch this as its premier brand in the German market in 2014 –it is maintained by extra value added services such as garment ironing or hanging garment distribution. Later this year, the retailer is planning to open a high-profile store on London’s prestigious Oxford Str. House and Cropp offer clothing lines for fashion-conscious young people; its SiNSAY brand specifically targets the younger female market. The company attracts customers over 30 through its newly rolled-out premium brand Tallinder - while it focuses specifically on the female market with its MOHITO brand whose autumn/winter collection in 2014/15 was designed in collaboration with Polish supermodel Anja Rubik. Somewhat fondly, Soltys recalls a time when the company was small enough to be managed from a single location he says:
Sebastian Soltys International Logistics Director When Sebastian joined LPP back in 2005 as Project Manager he had a clear goal - to set up LPP’s first automated distribution centre. Having achieved that, he took charge of processes optimisation and throughput development, attaining the role of Logistics Center Director and advanced to Supply Chain Management Director further down the line.
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The flagship store for the Cropp brand
The flagship store for the House brand
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“I remember when I joined the company 10 years ago - we used to have 10,000 square meters of warehousing - our turnover and the store collateral were both small back then.” Back in 2005, LPP had just over 200 retail stores, but by 2015 this number had shot up to over 1,600 supported by a 70,000 square metre logistics centre. He explains how the youthfulness of the organisation had actually facilitated rapid growth and had given LPP the freedom to create modern solutions: “We had the luxury of creating our logistics operations from scratch, which differs from many retailers; when they need to scale their operations for periods of constant growth, they often have to squeeze them into existing facilities. Saying that, we were able to expand production at our site from 250,000 pieces per day in 2008, to 1,200,000 in 2015.” Supply chain strategy Soltys also explains that, in order to accommodate the massive growth of its retail stores network, LPP had to ensure that its entire
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“Alongside the growth of our company, in terms of logistics and supply chain it was enormous, very rapid growth that actually forced us to be very dynamic and flexible to keep up with organisational changes” – Sebastian Soltys, International Logistics Director supply chain was able to adapt and grow, he says; “Alongside the growth of our company, in terms of logistics and supply chain it was enormous, very rapid growth that actually forced us to be very dynamic and flexible to keep up with organisational changes.” “With growth in both the number of our stores and the destinations we serve, the challenge is to orchestrate on a daily basis in terms of time, cost and quality the supply from hundreds of manufacturers which are placed in more than 20 countries, spread across more than 120 different landing points.” “Every single day we have a multitude of goods landing, as well as goods in transit and coming in and out from sea ports, airports, and roads. All in all, it is a constant flow from one supply chain side to the other, represented by 1600 shop floors. Adding additional disruptive layers to that global network means that my team and I have very difficult jigsaw to put together.” And how does LPP ensure that the entirety of its supply chain is up to scratch? Soltys explains: “The key to success is ability to be flexible
The flagship store for the MOHITO brand
The flagship store for the SiNSAY brand
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Reliable partner for value-added warehouse automation
Vanderlande is a major player in the warehouse automation market and specialises in solutions for food retail, fashion, parts and components and e-commerce. It cooperates closely with its customers to optimise their supply chain and enhance the efficiency of the processes in their distribution centres. The company is a one-stop shop for innovative systems, intelligent software and life-cycle services. This integrated approach results in an optimum performance throughout the system‘s lifetime. > vanderlande.com
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with the strong eagerness on driving process improvements. You need to also remember to be reliable when collaborating with your vendors. “The biggest advantage for LPP is that we can react at a fast pace to cope with any environmental changes. When expansion was booming in Russia three years ago, we set up a distribution centre in Moscow and created a separate supply chain model for the reason of strengthening reaction against the market demand and to bring stock closer to the end customer.” “A year and a half ago, when the political and economic situation in Russia deteriorated, we were able to very smoothly balance what we were bringing out in the Russian market directly, and what we bring to the other countries. So we were just very dynamic with goods between the countries where we operate.” Jacek Kujawa, Vice President of the Board at LPP, adds: “More than ever before, excellence in supply chain and logistics is about bringing the real contribution into the revenue growth and enhancing customer
An extra layer of efficiency gained by the Automatic Storage and Retrieval
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© 2015 Accenture. All rights reserved.
THE INSIGHTS TO KNOW HOW TO
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satisfaction. Being innovative in terms of advanced logistics technology and IT systems in reasonable fields really pays off. Although all logistics developments made required much capital investment, they brought us a continuous cost to serve decrease.”
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Ethical expansion In recent years LPP has worked hard to ensure that its supply chain is as transparent and ethical as possible, which culminated with the creation of a dedicated CSR department last year to provide oversight on this initiative. This endeavour may be relatively new to the company, but due to its inherent speed, it has been able to take it on board with gusto. LPP’s spokesperson Marta Chlewicka says: “We are initially concentrating on implementing the right controls and auditing our factories. While we don’t actually own any factories, we are focusing on being precise with the ones we use – we will be conducting more audits and social audits in our supply chain, especially in Bangladesh this year, and in the future we would like to also control our factories in China.” “We are the only Polish fashion retailer who joined the Accord on Fire and Building Safety in Bangladesh initiative whose aim is to improve the safety in the clothing production facilities in Bangladesh.” Soltys adds: “We also take into account the transport we currently use; we ship via
Number of staff employed by group
LPP also has five franchise stores in the Middle East region
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LPP modern ocean ultra-vessels, which are currently the best on the market and have reduced carbon dioxide emissions. We are also starting some trials with rail connections from the Far East to Poland which will make the supply chain smoother and faster, and no doubt much environmentally friendly. “I would say that nowadays supply chain visibility is crucial, but it’s going to be very challenging for the next couple of years, and only those companies that have full supply chain advanced visibility would gain any advantage facing the volatile macroeconomics. We aim to enhance the supply chain supporting systems to clearly see and analyse every single step of chain, because that helps you to mitigate the impact of the global disruptions and keeps you a step ahead.” “We operate in a total of 18 countries, across three continents and supply roughly 120 million pieces of garments and accessories yearly.
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Tallinder – the first premium brand in the portfolio of LPP
Such a distribution scale would definitely not be feasible without a well synchronised supply chain, supported by the advanced intralogistics technology and systems. He concludes: “On top of that, I would emphasise the human element, because you might have an ideal system but there need to be personnel to understand the process and the data and combine it to achieve the best results. In the end, it’s all about synchronising every supply chain link well with the previous and the next one.” Having grown at an unbelievable rate in the past decade, LPP has shown that a newcomer to the market can not only move with unmatched speed, but can do so without compromising on the quality of its products and build a strong yet flexible supporting supply chain. As the fashion retail space continues to evolve, the company can be sure that the systems that it has in place are more than capable of accommodating them.
“More than ever before, excellence in supply chain and logistics is about bringing the real contribution into the revenue growth and enhancing customer satisfaction” – Jacek Kujawa, Vice President of the Board
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Formula for su Written by Nye Longman Produced by Alex Neagu
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Houghton International is the world’s largest metalworking fluids company and is keeping ahead of its competition while fostering innovation and delivering value for a range of customers
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oughton International’s reputation as a problem solver for its customers has been long and hard-earned – it all started in 1867 (two years after its founding) when it introduced a rust prevention product into the American market. Since then the company has grown its products and industry verticals, and has also expanded internationally. After successive years of strategic investment and growth, the company was recognised in a 2010 report by Kline & Company as the world’s largest supplier of metalworking fluids. Following up this achievement, we speak to a number of key management figures within Houghton who outline how this was accomplished and how it will be maintained and expanded in the coming years. This report explores Houghton from multiple angles: we speak to Mervyn Chung-Fat, Director of Marketing and Product Management; Michel Gerard, Global Director for Automotive Components; Neil Winterbottom, Director of Fluidcare Operations; Mirek Kania, European Equipment and Services Manager; and Dr. Dave Slinkman, Senior Vice President of Global Research and Technology. Together they provide a fascinating insight into how the company has every aspect of its business geared to serving the needs of its customers while maintaining operational excellence across the board. Customer-centric operations Houghton International is responsible for
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bringing premium speciality chemicals and lubricants to a variety of industrial segments which include automotive, aerospace, metals, mining, machinery, offshore and beverage can industries. Leveraging its decades of experience working with such a variety of products and sectors, Houghton is now able to provide a range of associated services which help customers to manage their chemicals and provide as much value as possible from them. Headquartered in North America, the company has a truly global presence, whether through directly-owned offices or affiliated suppliers. Alongside the Americas, Houghton has a strong presence across the length and breadth of Europe, South-East Asia and the Far East, as well as manufacturing operations in India and Australia, Russia and
1900 Number of jobs to be supported by Houghton International
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Turkey. Through a combination of partners and appointed representatives, Houghton has a presence in Africa’s two largest economies – Nigeria and South Africa. Neil Winterbottom explains how Houghton has come a very long way from simply selling specialised high-performing chemicals and is now able to also provide a range of after-sales services to customers, which helps them improve productivity, reduce costs and minimise risks. He says: “By recognising our customers’ needs, we can guarantee savings while delivering real benefits and adding value – and even make their operations more competitive. We have a lot of our employees operating and working on customer sites to achieve this - they have even become part of the customer’s team to a certain degree. Having continually delivered in this regard, our customers have come to rely on us as their main source of technical in-house know-how.” Mervyn Chung-Fat explains how Houghton’s customer alignment strategy is carried out globally: “The key element that we’ve learned is that one size doesn’t fit all, as chemical regulations change around the world. To be able to support a customer today you have to realign yourself with how they are organised and what their specific needs are. We try to make sure we support them locally, but with this global perspective, because so many are run at a global level or are looking into it for the future. Wherever our customer’s plants
Kevin Smith President, Europe, Middle East and Africa Kevin Smith has over 30 years of commercial and general management experience in global industrial, speciality chemical and consulting businesses. Prior to joining Houghton, Smith held the position of CEO, EMEA for Arysta Lifescience, a $1.6 billion global specialty crop protection firm, where he led the region to strong growth in revenue and profitability through acquisition, sales execution, commercial discipline, and product development.
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CE RTIFIE D
SUSTAINABILITY EVERYONE CAN UNDERSTAND CREATE PRODUCTS WITH A HIGHER CONSUMER VALUE USING OUR BEST-IN-CLASS GROUP III BASE OIL PROCESS TECHNOLOGY. HyLubeSAT™ - LET INNOVATION DRIVE YOUR BUSINESS.
P U R AG LO B E, the P U R AG LO B E logo and the Earthmark are registered trademarks of Puralube, Inc . and or its affiliates . © 2016. All rights reser ved . Contact: info@puraglobe.com +49(0)344 122 815 923
PURAGLOBE - SUPPLIER PROFILE
“PURAGLOBE’s mission is straight forward to provide the best in class base oils from used oil feedstock and this gives an amazing >80% CO2 reduction for our clients. Puraglobe have consistently achieved these targets by having a clear vision, decent knowledge and a unique application to successfully navigate our milestones,” CEO Mr Andreas Schueppel said. “ PURAGLOBE is one of the world’s largest fully integrated non-virgin oil companies. They own the most advanced and modern global refinery for sustainable base oil specialties & products. The company’s focus is on superior and sustainable base oil solutions using exclusive refining technology in its conversion of used oils into premium products. In 1995 PURAGLOBE became the exclusive licensee of Honeywell UOP HyLube™ Process Technology to produce Group II products with commercial operations commencing in 2004. We will start the commissioning of the PURAGLOBE Group III refining plant based in Germany in the first quarter of 2017. The worldwide exclusive and completely novel Honeywell UOP HyLubeSAT™ technology will allow us to produce the highest possible quality of re-engineered Group III base oils building upon PURAGLOBE’s 12 years of successful operational experience. PURAGLOBE and Honeywell develop their R&D programs as a partnership, ensuring breakthrough advancements and eco-compliance. Today PURAGLOBE offers base oils with a certified carbon footprint. As a CareForClimate® certified business, PURAGLOBE prides itself on a sustainable business approach, and its processes are kinder to the environment compared with virgin or crude base oil refining; Hylube™ technology has already prevented many millions of tons of CO2 from being released into the atmosphere. The company values a cleaner environment, believing it drives business towards excellence, and that ‘greening’ engines from the inside-out with its specialist products contributes to the cleanliness of the atmosphere.
PURAGLOBE has furthered its credentials with its 24h Nuremberg ‘CareForClimate®’ 2015 and 2016 racing car team. The company has successfully produced the one millionth ton of non-virgin feed stock into Group II and III- base oil products, used for industrial, automotive and driveline lubrication applications. This further enhancement towards a Group III base oil enables lubricant manufacturers to formulate low viscosity engine oils, as well as lubricants, together with the advantage of cutting edge fuel economy performance level. PURAGLOBE have major plans for the future, starting with further expansion of production at its German industrial site. This further investment in production will enable PURAGLOBE to be the first worldwide manufacturer using this process to produce API Group III base oils at this high quality. On the technology front, PURAGLOBE have recently signed a Joint Development Agreement with Applied Graphene Materials UK Ltd. The agreement will see the development and characterisation of dispersions of AGM’s graphene nanoplatelets that will be included in PURAGLOBE’s sustainable base oil product and specialty technologies. It is anticipated that as a result of the collaboration, PURAGLOBE’s graphene loaded base oil solutions will find a home across a wide range of industrial and automotive applications, where the unique friction and wear properties of graphene will add significant performance gains in lubricants and machining fluids. PURAGLOBE aims to address climate change as a combined industrial approach, alongside global virgin companies, to extend the lifespan of natural oil resources in the future. Today PURAGLOBE base oil technologies are being used in various industrial, driveline and automotive applications (e.g. ATF, PCMO/HDDO engine oil formulations). If you want to become our customer please call us under +49(0)3441-22815923 or send an email to soenke.moehr@Puralube.com
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are, we strive to provide the same promise of performance and service to that customer.” Michel Gerard adds: “Each industry has a range of specific needs, which at Houghton we strive to address and predict. Let’s use the automotive industry as an example, as it is a very challenging market where competition is very tough: the automotive customer is always looking to increase productivity and efficiency, as well as to improve quality.” “If we are to provide the right solution for this customer, we need to understand its needs all the way down to individual plant level, while also understanding its drivers from a global perspective. We often run audits at customers’ plants - we want to know how their processes work and what kind of process we can help to develop.” “We try to impact the whole manufacturing value chain which means that we know all the plant production processes and we understand where Houghton’s solutions can provide value and savings for the customer.” Talent management Ensuring that the company’s goal to retain its position as a global leader is fully understood, adopted and delivered across the world is no mean feat. Even with the best business model in place, no company can function without the collective efforts of its employees, which is why Houghton’s management teams make sure that
Mervyn Chung-Fat Director of Marketing and Product Management Mervyn Chung-Fat has 17 years of experience in the metalworking industry - in abrasives and metalworking fluids. He has worked in North America, Asia and Europe. He joined Houghton in Europe in 2011 as the Product Management Team Leader for Europe, Middle East and Africa (EMEA). Now, he leads the global product teams for the automotive and aerospace markets in addition to the marketing responsibilities for EMEA. Chung-Fat earned his BS Industrial Engineering from Worcester Polytechnic Institute.
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“Houghton employs chemists, chemical engineers, biologists, and metallurgists in the research and technology group and has over 20 PhD chemists involved in the Research efforts globally” – Dr Dave Slinkman, Senior VP, Global Research and Technology
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the company employs intelligent, dedicated and customer-focused employees at every level. The company has reinforced its talent management operations using a two-fold strategy – firstly by maintaining a constant working partnership with universities across the world and, secondly, by ensuring that the current workforce has the scope and resources to develop. Dr. Slinkman explains how the company is actively engaged in pushing the boundaries of current thinking to new levels: “Houghton is working with a number of Universities throughout the world, spanning a number of the application areas that we serve. In Europe specifically, Houghton is involved with the University of Sheffield Advanced Manufacturing Research Centre, the University of Birmingham, and the Technical University of Dortmund. “Houghton employs chemists, chemical engineers, biologists, and metallurgists in the research and technology group and has over 20 PhD chemists involved in Research efforts globally.”
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Winterbottom adds that the company measures its employees’ performance using a variety of means but primarily does so, in line with many other larger organisations, using a balanced score-card system. Furthermore, he explains that Houghton is not content to simply score the achievements of its staff on a case by case basis: “If we see a production
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Clearly the next generation of oil separation. The C-Thru速 Separator is a unique, patented unit designed to remove solid and liquid contamination from metalworking and cleaning fluids.
C-THRU速 SEPARATOR
US Patent No. 7,416,657
Reduces waste disposal
10x more efficient than belt, disk, and rope skimmers
Eliminates oily floors
Magnetically mounts on machine tool
No consumables
NexJen Technologies Ltd. 7887 Root Road North Ridgeville, OH, 44039, United States. Tel: 1.877.352.4628 Fax: 1.440.372.1027 Email: sales@nexjentech.com
Austria Belarus Belgium Brazil Bulgaria Canada China Croatia Czech Republic Denmark Finland France Germany Greece Holland Hungary India Ireland Israel Italy Japan Luxembourg Mexico Morocco Netherlands Norway Poland Portugal Romania
www.nexjentech.com
Russia Singapore Slovakia South Korea Spain Sweden Switzerland
Taiwan Thailand Turkey Ukraine United Kingdom United States
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improvement we will typically write up a case study. We will then circulate that within the organisation and also during our corporate reviews with our customers. There have been many cases of an improvement being scaled to multiple manufacturing plants; if we know improvements can be made, then there is no reason that these cannot be rolled out globally.” Continuous development is a key element of keeping talent and Houghton invests much in training. In 2013, Houghton won two Training Journal Awards for their HELIX training programme specially developed for their sales organisation. Smart innovation As European Equipment and Services Manager, Mirek Kania is keen to illustrate the pivotal role that research and development plays in directing the company’s approach to providing solutions to its customers, and it is this factor that enables Houghton to retain its leading global position. He says: “We are more distinctive in the marketplace because we provide the customer with the greatest number of tools and because we can offer them the most savings. If a customer uses standard filtration methods, for example, we can provide additional equipment that enables them to make unexpected savings - perhaps a secondary filtration device that helps to keep the fluid cleaner and in better condition.” Chung-Fat adds: “We have research groups
$1bn The amount of revenue generated by Houghton International
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Mirek Kania European Equipment and Services Manager Mirek Kania has a Master of Science from the Academy of Mining and Metallurgy, Krakow, Poland in NonFerrous Metals Material Engineering. He joined Houghton in August 1995 as sales agent and continued his career in various sales and commercial positions including sales Manager, sales Director for Poland, Fluidcare® Operation Director in Poland and Eastern Europe. Since 2012, Kania has led equipment and services business development in Europe.
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in North America, Europe, Asia and in South America. Everywhere we are producing products we have an R&D team there. Innovation is a core part of our corporate strategy. This also extends to managing our supply chain where continuous improvement – particularly Six-Sigma – is part of our DNA.” Dr. Slinkman explains that the Houghton’s extensive experience has endowed the business with both foresight and the will to act on it – particularly in regard to a global regulatory framework that is more environmentally-orientated than ever.
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He says: “Houghton’s Hocut® 4000 series of metal cutting fluids is a great example of how regulatory changes like REACh can lead to innovative solutions as we have removed boron, DCHA, and formaldehyde releasing components while maintaining and improving lubricity.” In an industry where regulations often vary from country to country and where customer requirements are, by nature, in a constant state of flux, keeping to a single operational approach can be extremely challenging. Houghton International has demonstrated across the board that its business model is sustainable, profitable and flexible enough to attain its much deserved position as a global market leader. w w w. h o u g h t o n i n t l . c o m
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