Business Chief - USA, February 2018 by Business Chief USA

February 2018 • USA EDITION

WHISKY BUSINESS

CITY FOCUS PORTLAND

Bogart Spirits

TOP 10

United States

IPOs

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FOREWORD HELLO, AND WELCOME to

a customer-led approach is now the

the February 2018 edition of

number one asset for any business.

Business Chief. This month, we feature an exclusive

“In the past (at Mercedes-Benz), often we built things because we

interview with Robbert de Klerk,

can. Technical things, more driven

CEO of the Humphrey Bogart Estate,

by innovation, more driven by what

who discusses how the legend of

us as engineers can build. Now we’re

Humphrey Bogart’s love for Scotch

trying to find out what our customers

is kept alive through Bogart Spirits.

want today and tomorrow,” he says.

Entering the UK and US markets,

Building on this subject is our look at

the company has seen consumer

the main challenges companies face with

demand increase exponentially,

retaining talented staff, with commentary

leading the business to acquire its own

from a number of industry experts.

distillery and also move premises.

Following on from this, Business Chief

Innovation has been essential for

looks at how operational risk management

any business to remain competitive,

has developed in recent years and

but the emergence of digitisation

what we can expect in years to come.

has seen the need for companies

On top of all this, we look at what

to completely overhaul traditional

Oregon’s largest city, Portland, has to

ways of working. Conrad Fritzsch,

offer local businesses. Additionally, we

Mercedes-Benz’s Director of

look at a recent New York Stock Exchange

Digitalisation, Marketing & Sales has

list, highlighting the top 10 largest initial

supported this view, and explains

public offerings of recent times.

why people as much as technologies

Enjoy the read!

are the true drivers of change, where

www.businesschief.com

www.bizclikmedia.com

F E AT U R E S

L E A D E R S H I P & S T R AT E G Y

Bogart Spirits TECHNOLOGY

DIGITAL TRANSFORMATION: CHANGE FOR THE PEOPLE, BY THE PEOPLE

24 PEOPLE

Whatâ&#x20AC;&#x2122;s the key to keeping your best talent?

S U S TA I N A B I L I T Y

Why operational risk management is vital – and where it’s headed TOP 10

UNITES STATES IPOS

CITY FOCUS

PORTLAND

C O M PA N Y PROFILES

82 ZTE

Technology

Avaya

Technology

108 AkzoNobel

Supply Chain

Pella Corporation

Flowserve Manufacturing

Construction

132 Rubies Costume Company

Manufacturing

120 NAES Energy

142

L E A D E R S H I P & S T R AT E G Y

WHISKY BUSINESS:

BOGART

SPIRITS

“The problem with the world,” Humphrey Bogart once said, “is that everybody is a few drinks behind.” More than 60 years on from the noir icon’s death, Robbert de Klerk, CEO of the Humphrey Bogart Estate, explains his quest to catch us all up

Writ ten by SAMUEL MUSGUIN -ROWE

L E A D E R S H I P & S T R AT E G Y

FROM L TO R: STEPHEN BOGART, LESLIE BOGART, ROBBERT DE KLERK

THE CELEBRITY ALCOHOL market is as beguiling as it is baffling. What at first appears to be an ill-fitting endorsement gone too far can sometimes, upon closer inspection, make sense. On the face of it, an elite athlete lending their name to a bottle of whiskey seems somewhat outlandish. But when the distiller in question is Conor McGregor – who, having been stopped in the 10th round versus Floyd Mayweather last August, arrived at the post-fight press conference sipping ‘Notorious’ Irish whiskey – it fits. 10

February 2018

It’s not a perfect science (for every Cîroc, there’s a Trump Vodka), but every once in a while, there emerges an indisputable no-brainer. Take Humphrey Bogart. A committed drinker, legend has it the actor would finish his days on set by calling out “scotch!” – and a glass would be placed in his hand soon after. Forget the many immortal lines from his films (including Casablanca’s iconic misquote, “play it again, Sam”), Bogart was at his most poetic when pondering alcohol off-camera. “I don’t trust a man who doesn’t drink,”

“Bogart was closely associated with loving a good drink ... it’s why seeing Bogart’s iconic image on a bottle of liquor still resonates with people in 2018” – Robbert de Klerk, CEO, Humphrey Bogart Estate

he claimed. When asked whether he had ever quit booze, Bogart, the original leader of the legendary Rat Pack (Frank Sinatra took over after Bogart’s death), quipped: “Just once, and it was the most miserable afternoon of my life.” He passed away in 1957, but ‘Bogie’ never died. Not really. He lives on in his peerless performances on-screen, through his seemingly eternal influence on popular style and culture, and, more recently, he’s with us in spirit – specifically, Bogart Spirits. “Our main goal is to keep his legacy

alive,” says Robbert de Klerk, CEO of the Humphrey Bogart Estate. “We do it through a variety of initiatives, such as our annual film festival in Key Largo, our re-boot of his Santana Films production company, and our social media presence. We also do it through licensing and partnerships for products that have an authentic connection to his legacy. Bogart was closely associated with loving a good drink, so a partnership in the alcohol business is a natural fit for us. It’s why seeing Bogart’s iconic image on a bottle of liquor still 11

L E A D E R S H I P & S T R AT E G Y resonates with people in 2018.” And resonate it does. Producing a gin, vodka, rum and a limited-edition whiskey, Bogart Spirits is selling in increasing volumes, with each bottle featuring Bogie’s image, signature and a famous quote. Having first launched in the United Kingdom, then arriving in the US late last year, demand has seen the brand acquire its own dedicated distillery in California. At the time of writing, it has already been upsized three times. Big business Born and raised in the Netherlands, de Klerk came to the States for love (his wife is American), and practiced law until a friendship with Audrey Hepburn’s oldest son saw him introduced to the late Bogart’s son Stephen. Taking the CEO role in 2009, de Klerk initially used his legal know-how to “clean up the landscape” for the Bogart Estate, taking action against companies looking to make a fast buck off Bogie’s image without permission. Then he set about building the business. While in some states it remains a free for all, California protects a celebrity’s right to publicity after 12

February 2018

death, passing this on to their estate. It’s big business – in 2017 alone Michael Jackson made $75mn, topping Forbes’ list of topearning dead celebrities for the fifth consecutive year. Elvis, who left the building in 1977, made $35mn. For Bogart’s children, Stephen and Leslie, the business of Bogart will always come secondary, according to de Klerk, “to protecting and promoting their father’s legacy.” “This type of business will open you up to the criticism of fans who’ll say, you know, ‘Bogart wouldn’t do this or like that’,” he admits. “But what I say to that is when Bogart was alive he was associated with plenty of advertising campaigns. He certainly wasn’t averse to associating his name with commercial undertakings. And, perhaps more importantly, it’s the Bogart family that benefits from this, and the proceeds fund our efforts to make sure each new generation of film fans learns of his legacy. Stephen and Leslie, having discussed this often with their mother, Lauren Bacall, are convinced Bogie would get a big kick out of our efforts.” “The key, always, is to be authentic, to be fair to his legacy, and to be fair

“Humphrey Bogart was someone who looked like, sounded like and came across like an average guy made good… he would not have been the guy to put his name on a $100 bottle of liquor, so that’s not what we want to do either” – Robbert de Klerk, CEO, Humphrey Bogart Estate

to his fans. We do this by associating Bogart’s image with products that he used, that he loved, and that he would’ve promoted.” It’s why Bogie fans can purchase an official Bogart Trench Coat from Aquascutum (which is where Bogie bought his famous trench coats), play a Casablanca slot machine developed with Everi and Warner Bros, and join Stephen Bogart each October in Key Largo – named for one of Bogie’s best loved films and home to the real African Queen boat – to celebrate all things Bogart at the annual Humphrey Bogart Film Festival.

Partnership Unlike most of the estate’s other commercial deals, however – which often license the Bogart name for a set amount of time – its recent foray into the liquor business is a partnership. Why? “[Alcohol] is so strongly associated with Humphrey Bogart and such a core part of his identity that we did not want to enter into a short-term licensing agreement,” explains de Klerk. “If we had said to a big alcohol company, ‘sure, put out a limitededition Humphrey Bogart scotch’, 13

“The majority of Americans will be able to get their hands on a bottle of Bogart’s in 2018” – Robbert de Klerk, CEO, Humphrey Bogart Estate

L E A R N M O R E AT: H U M P H R E Y B O G A R T. C O M

for example, that would exist for a year or two, and we would be out of the market in that category. Any other brand would say, ‘we’re not interested’. We wanted to build our own brand. And when you ask a partner to build a brand with you, and to invest in doing it the right way, they need to know that you’re committed for the long term.”

February 2018

So, having spent a prolonged period scouring the industry for a collaborator who shared their vision, the Bogart Estate went top-shelf. A partnership was inked with billionaire Patrón Tequila co-founder John Paul DeJoria and his company ROK Drinks, which is led by UK entrepreneur Jonathan Kendrick. The ROK website bears

L E A D E R S H I P & S T R AT E G Y a mandate to: “Build the Mega Brands of Tomorrow, Today.” The Bogart Spirits partnership is the perfect marriage, de Klerk says, as ROK’s liquor market know-how and clout is matched by the worldwide recognition of Bogart’s image. And yet he is aware that “quality is paramount,” as sell-through is key to the effort to build a successful liquor brand. “Many people will pick up a Bogart bottle, but they’ll only pick up their second bottle if they loved drinking the first one,” de Klerk says, “and that is why we have invested in our own craft distillery helmed by a master distiller.” A three-tier distribution system, paired with state-by-state registration, means that launching a nationwide liquor brand in the US can take some time. However, Bogart Spirits is off to a very fast start. Bogart’s is already available in big box retailers in its home state of California, has just partnered with one of the nation’s largest distributors in Humphrey Bogart’s birthplace of New York, and has signed distribution agreements in states ranging from Colorado to Louisiana just in the first month of 2018. It seems de Klerk is well on

his way to delivering on his promise that “the majority of Americans will be able to get their hands on a bottle of Bogart’s in 2018.” The rest of the world may also not be three drinks behind for much longer, because de Klerk explained that Bogart Spirits fields regular distribution inquiries “ranging from Brazil to Australia to Japan to Italy”. As for price, the Bogart Estate was resolute from the outset that their product would sit in what de Klerk characterizes as “affordable luxury.” Bogart’s Gin, Rum, Vodka, and Whiskey are retailing at prices that are neither cheap nor extortionate, and this perfectly captures the man whose image is on the bottles. “Humphrey Bogart was someone who looked like, sounded like and came across like an average guy made good,” beams de Klerk. “Despite his upper-class New York roots, he was never snobbish, he was never elitist and it was important to him that everything he did was accessible to everyone. He would not have been the guy to put his name on a $100 bottle of liquor, so that’s not what we want to do either.” 15

TECHNOLOGY

CHANGE FOR THE PEOPLE, BY THE PEOPLE Writ ten by BEN MOUNCER

Digital transformations are now seen as mission critical to businesses large and small, yet Conrad Fritzsch, Mercedes-Benzâ&#x20AC;&#x2122;s Director of Digitalisation, Marketing & Sales, explains why people as much as technologies are the true drivers of change

TECHNOLOGY

SPEAK TO THE leader of any ambitious business in any region of the world, and it won’t be long before you arrive at one particular topic in the conversation. ‘Digital transformation’ may well rank as the buzziest of buzz phrases from 2017, a year that also made convincing commentators ‘influencers’, heralded any progress points as ‘nextgen’ and redefined an employee’s (human, not robot) working capacity as ‘bandwidth’. While quirks in language come and 18

February 2018

go, however, the plans and processes that define a ‘digital transformation’ are here to stay. This is no fad. Like the office chairs you sit in and the screens you’re reading on, technology as the vertebrae of a business – and installing it quickly - is becoming less desirable and more just plainly essential. Yet a recent study, conducted by Vanson Bourne, reported that nine out of every 10 digital transformation projects fail. The research called on input from 450 CIOs, CTOs and

The parent company, Daimler, knows the pairing of its mobility platforms with the trends and futuristic technologies of tomorrow is the answer to the individual needs of its customers

Chief Digital Officers at sizeable companies in the United States, the United Kingdom, Germany and France. This startling rate of derailed disruption is consensus, not just a manufactured statistic. Why does the embedding of digital in businesses prove so problematic, when the very people charged with managing that business have, more often than not, made it their priority? Are they trying too hard, losing sight of its true purpose?

“When you have true customerobsession, then this is what will drive your transformation because you see what’s important and what’s not so important” CONRAD FRITZSCH Director of Digitalisation Marketing & Sales at Mercedes-Benz 19

Video: An insight into the experience and shape of digital transformation at Daimler with the Digital Life Day 2017

CONRAD FRITZSCH Director of Digitalisation Marketing & Sales at Mercedes-Benz

Conrad Fritzsch, born in Berlin in 1969 joined Daimler AG in August 2017. He is the Director of Digitalization Marketing & Sales Mercedes-Benz. He is the driver of the digital transformation. In order to promote entrepreneurial creativity and cooperation, Fritzsch brought digital marketing and IT together within a swarm organization. In his function, he leads the digital transformation and Mercedes me, which offers a digital, personalized ecosystem and is all about to satisfy customer demands. Besides, he promotes a seamless customer journey, which is ensured through the new website in frontend and backend â&#x20AC;&#x153;OneWebâ&#x20AC;?. Further he is responsible for eCommerce. With the creation of new international delivery hubs, Fritzsch is also very active in worldwide recruitment of digital high potential employees.

February 2018

TECHNOLOGY Conrad Fritzsch is Director of Digitalisation, Marketing & Sales, at Mercedes-Benz. As the overseer of a digital transformation in a worldfamous company steeped in tradition, he is keenly aware of the challenges. For him, the focus shouldn’t be on technology itself, but on people. “Customer-obsession is the starting point for any transformation,” he tells Business Chief from the automaker’s headquarters in Stuttgart, Germany. “In the past (at Mercedes-Benz), often we built things because we can. Technical things, more driven by innovation, more driven by what us as engineers can build. Now we’re trying to find out what our customers want today and tomorrow. “What is important for our customers? When you have true customer-obsession, then this is what will drive your transformation because you see what’s important and what’s not so important.” Fritzsch joined Mercedes-Benz’s parent group, Daimler AG, in August 2016. In the short period since he has started the long journey to change, trying to impart his expertise on a company boasting 280,000 employees; a weight of work he

admits being surprised by initially. “Coming from start-ups, I really underestimated how huge and complex the company is,” he remarks. The 48-year-old’s primary role is to weave innovative digital products into modern working models, all with the customer’s requirements as the motivation. For example, Fritzsch lead on ‘Mercedes me’, the manufacturer’s range of mobile services and apps that come together to deliver a best-inclass digital service to its customers. His most notable change so far, though, has been to merge MercedesBenz’s marketing and IT provisions, creating a swarm mentality that has hastened the pace of change from both a technical and personnel perspective. He claims its most crucial aspect has been the buy-in of the employees. “The first point that you have to really solve is, does the company want to change or not? Not only the Board, not only the top management, everyone. We have to create a working and culture model that works for all of us.” explains Fritzsch. “Digital transformation in big companies is more a transformation of the people, from A to B. It’s not too much about digital only; you have to 21

TECHNOLOGY understand that the people are the core in this changing process. Daimler is a fantastic company and it knows that we have to change because the world is changing, the customer is changing. “In our department, there were around 250 people from IT and the business unit together. We said, ‘Okay, these are our problems we have to solve and these are the people we have’. Then you see white spots because there are new roles we didn’t make! When you build digital products like apps, you need all kinds of experts – so we built a team from both outside experts and inside experts.” A vital part of the process was establishing the new working models, with the scale of change broken down into step-by-step parts – an approach

“Digital transformation in big companies is more a transformation of the people, from A to B” CONRAD FRITZSCH Director of Digitalisation Marketing & Sales at Mercedes-Benz 22

February 2018

to transformation that Fritzsch likens to developing a key piece of software. “When you build software, you go out with beta, the version one, version two etc. This is the same method. With the people, we said ‘let’s change in this direction’. We built a Daimler blueprint which combines the strengths of start-ups and global company,” he adds. “Everybody was on the boat, they had the right mindset. They didn’t say ‘so we made something wrong and now some guy’s come here and has some big answer?’. We built a solution together and everyone could see that solution. That is super important when you want to change.” Fritzsch’s energy for his mission is career, and it’s a passion that powered a unique career ahead of him taking up the role at MercedesBenz one and a half years ago. Back in 1993, he co-founded the advertising agency Fritzsch & Mackat, where he served as Creative Director, leading on all creation and consulting. His innovative spark saw him launch tape.tv in 2008, an online music video streaming service that, at its peak, serves 3.9mn unique users, hosting videos from high-profile

DigitalLife Days is a method for the Group to keep staff informed of technological developments and show digital transformation in action artists from around the world. Fritzsch left the company in 2016, with Daimler picking up the phone. “I have never worked on this scale. And I thought, ‘okay, the transformation of the car industry is a fantastic challenge’,” he reveals. “In my life, I had built my own companies but I had never had one of these corporate challenges, as they described; when a corporate company really wants to change. I thought, with all the skills and experiences I gathered in the past, that I can do it.” Is he content with how it has gone since he picked up the baton in August?

“Am I happy how it goes? 100% yes. Are we done? 100% no. It’s a really tough journey for us,” he summarises. “In my world, when I made it my plan in August, September 2016, I thought it will be much quicker. We’ve decided that we need more people, to move forward and to change more dramatically. “With digital transformations, don’t make a plan and think it will just work. There is always a change, there is always a new idea from outside, there is always a distraction. But you have to take everyone on this journey with you.” 23

PEOPLE

Whatâ&#x20AC;&#x2122;s the key to keeping your best talent? Stuart Hodge looks at the main challenges companies face in terms of staff retention and some of the novel approaches big companies are taking to create a positive culture Writ ten by STUART HODGE

PEOPLE FOR ANY BUSINESS, ensuring that you keep hold of your most talented members of staff in an often increasingly competitive job market can be the difference between sustained success and the possibility of stagnating or going backwards. Indeed, a recent Willis Towers Watson study showed that more than half of all organizations globally have difficulty retaining some of their most valued employee groups and that more than a quarter of employees are considered ‘high-risk’ for turnover. Most scholars would agree that motivation is at the heart of keeping a workforce happy and, according to a recent report by Forbes, establishing an emotional connection with staff is the key to ensuring a cohesive and inclusive culture around the company. The Forbes study asked HR professionals what their biggest challenges are related to corporate culture and they said overwhelmingly that creating a cohesive culture (55%) and retaining talent (41%) gave them the most concern. Lola Gershfeld, Psy.D, Board Dynamics Specialist and CEO at Level Five Executive, says creating 26

February 2018

52% of executives feel culture is primarily set by the current CEO that emotional connection can be done using a three-stage plan called Board/Team Dynamics Process. “When everyone is familiar with and understands one streamlined process the culture becomes much more cohesive,” she says. “Team members start speaking the same language and using

W H AT ’ S T H E K E Y T O K E E P I N G Y O U R B E S T TA L E N T ?

the same tools to work through conflict. This is where you start to see some really positive changes. “In our work, we’ve found that culture has to start from the top. Everyone tends to look up to learn behavior. This is backed up by a recent study from Duke University that says 52% of executives feel

culture is primarily set by the current CEO. And, while boards of directors do not directly choose the firm’s culture, they influence the choice of culture by picking the CEO. “Boards also modify the eventual success of the culture by reinforcing or undermining it through their approach in addressing challenges 27

PEOPLE

“Addressing emotional connection is the way to arrive at a cohesive culture that retains and attracts talent” - Lola Gershfeld, CEO, Level Five Executive together and making that emotional connection with the executive team. “So, to have a long-term effect on culture, you have to start with the board and the executive team. This might seem overwhelming, but in that same study, 91% of executives said culture is important at their firm and 78% view culture as one of the top three or top five factors that affect their firm’s value. 28

February 2018

Executives and boards understand the value of culture and they are looking for long-term solutions. “Improving culture is within arm’s reach. We know how to fix culture for the long haul; it’s just a matter of committing to it. Addressing emotional connection is the way to arrive at a cohesive culture that retains and attracts talent.” But this is just one approach to

creating a positive culture within a company. For some companies, such as the Star Entertainment Group in Australia, it’s more about creating an operational identity and sense of belonging for employees. “With over 4,500 staff, the real trick is to ensure that everyone is willing to act autonomously,” says Dino Mezzatesta, COO. “It’s important to have confidence and faith in your

employees and support them to give their best. There are four things we ask our employees to do: live it, bring it, own it and deliver it. “By ‘live it’ we mean that people need to understand guests and their expectations to ensure that what they provide is in keeping with what a customer wants. When we talk about ‘bringing it’, we want our people to always give of their best and to bring everything that they can to offer to our customers. ‘Own it’ means step up, don’t be afraid to take ownership of situations, to be brave and not to be scared to do things differently. And ‘deliver it’ is basically the final step, because if you do the top three then you should be able to be the perfect host.” Given the Star Entertainment Group’s award-winning hospitality offering, there can be no doubt that this approach is working, but another important factor for businesses is ensuring that they are helping to develop the leaders of tomorrow as well. Figures in the TalentKeepers Workplace America report show that a disappointing 36% of organizations are taking steps to 29

PEOPLE

A US study shows 36% of organisations are taking steps to develop leaders to drive engagement

develop leaders to drive engagement. “Leaders need to be trained in employee engagement skills and must understand their role in retaining and motivating people,” says Christopher Mulligan, TalentKeepers CEO and author of the report. “The first step in leveraging leaders is determining how well they are currently doing and understanding specifically what training they need to become successful. Every leader should have engagement and retention goals, 30

February 2018

incentives to meet those goals, and consequences for failing to do so.” Clearly the pressure to keep your best staff has never been greater and the lengths companies will go to in creating a positive working culture and environment are more creative than ever. For Paul Alexander, Head of Indirect Procurement for EMEA with BP, the best way to ensure staff loyalty and to keep them happy in their work is by engaging employees on an intellectual level

W H AT ’ S T H E K E Y T O K E E P I N G Y O U R B E S T TA L E N T ?

to stimulate and challenge them. “My view is that inspiration and learning is really what people are turned on by these days and that’s what creates a successful team,” says Alexander, who is a bonafide leadership expert and speaker with a passion for the subject. “Something that compounded my thinking was research by Zenger and Folkman. They’ve written a couple of books, the first of which is called ‘The Extraordinary Leader’ and their research is absolutely fascinating. “They’ve found many things in their studies and they’ve used

“Inspiration and learning is really what people are turned on by these days and that’s what creates a successful team” - Paul Alexander, Head of Indirect Procurement for EMEA, BP

very, very large sample groups to test their assumptions. They have found very clearly that the ability for leaders to inspire interest and the resource and sincerity you put into development and learning are the things that will drive success. “I do believe in a knowledgebased economy and a productive economy: you need to have people who want to work for you and are motivated and want to succeed. “The research on the millennial generation really underlines all of this, I think what they’re asking for which is to be treated with respect, not to be hugely well rewarded but to be sensibly and adequately rewarded but to be treated well and given the opportunity to learn and fulfill themselves. “I think that’s what we all want; the difference now is that a lot of work has gone into listening to millennials who have a loud voice and I think and hope our workplace is evolving the way it needs to do for the benefit of us all. “Another thing I would point to is the work of Dan Pink. What he says is three things really turn people on: autonomy, the freedom to do the job 31

PEOPLE Employees who are â&#x20AC;&#x153;engaged and thrivingâ&#x20AC;? are 59% less likely to look for a job elsewhere

February 2018

W H AT ’ S T H E K E Y T O K E E P I N G Y O U R B E S T TA L E N T ?

the way they want to do it; mastery, giving them the support to excel at what they do; and purpose, helping them find a reason to do what they do. “If I could crystallize everything that I’m saying about leadership into one word it would be: inspiration. Within procurement, they can be the kind of people who turn up, place orders and do a commodity task, or they can be the people who save the company. “My very strong belief is that when people come to work they should be able to have a good time and I don’t know why so many organizations struggle with that.” Indeed, when Alexander breaks it down like that it is hard to fathom why so many companies find it difficult to create such a positive environment for staff to work in, and no doubt this issue is becoming increasingly important. Research from Gallup shows that employees who are “engaged and thriving” are 59% less likely to look for a job with a different organization in the next 12 months. Companies like German online clothing retailer Spreadshirt have an even more novel approach to creating that positive culture and

ensuring that work is a fun place for employees to come into, as Philip Rooke, CEO, explains. “We have a Feel Good Manager whose job it is to make Spreadshirt a great environment to work in and a big part of this job is organizing the company events. We always have a big summer party where family and friends, but also former Spreadsters, come together. Now we also have a “Spreadster exclusive” event, called Wandertag, like a summer outing. “Talent retention isn’t a big problem for us. We have a great product and a great company, but we do not take that for granted. Like any company we have our bad days. Our culture and talent retention is led by our Head of Recruiting and Feel Good Manager. “She’s responsible for the onboarding process for each new Spreadster, and improving workplace culture. In particular she has brought in programs on management communication to improve the way we work with talent. If you respect and empower talent, it wants to stay.” Words which should perhaps be borne in mind by companies who are worried about competitors poaching their most talented employees. 33

S U S TA I N A B I L I T Y

Why operational risk management is vital – and where it’s headed

Writ ten by STUART HODGE

Business Chief looks at how operational risk management has developed in recent years and what we can expect in years to come...

S U S TA I N A B I L I T Y MITIGATING RISK. IT’S a challenge that every company faces but it’s sometimes a difficult thing to confront or to feel that you’re maximizing the potential from. It can mean anything from having more money set aside for workers’ compensation to an awareness of transaction risk in crossborder deals – that’s why there can often be a reticence in certain sectors to properly address it. Michael Rosenberg is from WPV Corp, a company which claims to have developed technology that almost completely mitigates the risk of harassment/sexual harassment and workplace violence, using a validated risk assessment and an incident reporting system that is held outside the organization. “Managing risk can literally mean the difference between a company being profitable and being bankrupt,” he says assertively. “Reactive cultures that ignore risk waste millions of dollars literally having to deal with emergencies. It’s like a car: if you don’t do the maintenance and ignore the risk, it will break down at the worst possible time and cost you a lot of money to fix and replace. 36

Feburary 2018

Many organisations still use spreads

“Ignoring operational risk leads to significantly higher insurance rates, turnover, lost time and most importantly brand degradation. “Identifying and preventing operational risk before it becomes a crisis literally is the single largest factor in ensuring a company’s survival.” But what exactly is operational risk and how do you manage it? “Typically, operational risk is a highly-siloed discipline in

sheets to manage risk

organizations,” explains Val Jonas, CEO of British consultancy company Risk Decisions. “Good risk management may be carried out locally, but this doesn’t necessarily meet the organization’s need to achieve a connected view of risk. It also doesn’t encourage creativity in thinking about both up-side and down-side scenarios. This is exacerbated by the fact that most organizations still use spreadsheets

to manage risk in each silo. “Those organizations most effective at risk management embed a culture of risk awareness and management as a top-down imperative. This encourages more informed risk taking, drives creativity and increases business performance. “Key strategies include establishing a consistent approach to give panorganization visibility of risk, while allowing different operational areas to 37

We asked

Tim Ng…

Operations is an oft used word in the business world, but what does it really mean? “As a Chief Operating Officer, my challenge is multifaceted. It is not a role that is well defined. It is a role that is integral to the company but is also unique to the sector I am in. The role of a Chief Operating Officer for a financial services firm is very different from one in manufacturing, technology or health. “The maturity of the business impacts greatly on the skills necessary to ensure that the company operates in a manner that allows it to react to internal and external pressures. “With market uncertainty and volatility caused by Brexit and the pressure on the currency markets, companies have required a sustained pursuit of greater efficiencies and major business transformations. “The nature of the position is diverse with a wide variation in operational roles from one sector to another, but the core lies in supporting the CEO and determining the optimal strategy for the future and then help implement it. “As a CTO, it made sense to move into a broader role within the company which is primarily a technologyenabled business. The ability to marry technology and development skillsets to operations gives us the capability to take our operational agility to another level. We are not wedded and reliant on third parties, we can develop and create our own solutions to operational challenges. “The challenges facing operations are varied and can be likened to guerilla warfare – you just don’t know where you will have to be next.”

Feburary 2018

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manage risk as appropriate. This will increase and improve collaboration which can lead to valuable insights e.g. supply risks impacting multiple areas of the business. Another strategy is to implement regular audits of key suppliers’ risk policies and processes to ensure they deliver. For example, pharmaceutical companies ensuring that the third-party companies running their clinical trials will do so ethically and in the required time-frames. “Finally, all business cases should include an assessment of risks, with clear explanations of how they will be managed.”

One of the key facets of operational risk management companies have to address in this day and age is the prospect of cybercrime. Figures in last year’s Accenture Cost of Cyber Crime study showed that the average annual cost of cybercrime is $11.7mn, increasing annually by 22.7%, with the number of breaches increasing by 27.4% to an average of 130 each year. “Operational risk management is getting more important in recent years due to the new and more stringent regulatory requirement while organizations are keen to embrace the digital transformation which essentially increases the risk exposure as a result,” says William Tam, Director of Sales Engineering, APAC, for global cybersecurity expert Forcepoint. “The continuously shifting ‘threat landscape’ requires an equally transformative view on behaviorcentric security. To manage cybersecurity risk, companies need to include measures that understand the nature of human intent and the ability to dynamically adapt security response. That’s the path forward to stop cyberattacks dead in their tracks. “Cloud computing has been 39

S U S TA I N A B I L I T Y a key disruptor to operational risk management. As business critical data continues to move to the cloud, and be made available to anyone anywhere, traditional perimeter-based security and riskmodelling are becoming obsolete. “Organizations need to concentrate on when and why people interact with critical data. Additionally, as malware continues to evolve, the risks will multiply, leaving traditional security controls ineffective.” It’s an ever-evolving space, and requires companies to be clear in their thought process and implementation. Jeff Skipper, an expert in organizational psychology who runs his own consulting firm, Jeff Skipper Consulting, believes it is an area which companies often fail to address. When asked how important operational risk management is in the business world, he responded assertively. “Very,” says Skipper. “And it’s too often overlooked because risk management doesn’t seem like ‘productive’ work. You only feel the gap when something goes off the rails. However, the impact of that can be measured in revenue hits, reputational 40

Feburary 2018

damage, and employee exits. “In my work with leading organizations in both the public and non-profit sectors, risk management is most commonly only given lip service. The leaders whom I advise are the ones who continually surface risk as a lever to remove obstacles and act. “Combining high risk awareness with the strategic use of what I call ‘leadership capital’ is a critical combination for successful initiatives. It has made the difference between 10% and 100% cost overruns.” Skipper believes that poorlymanaged strategic projects are often at the root of organizational failings with regards to risk management. “It’s very common for the best people to try and avoid key projects because they are very demanding,” he says. “But having the best people with strong skills and leadership is key in these situations. “Secondarily, there are major gaps in future anticipation. We don’t give people time to think about the ‘what ifs’, which can be the greatest source of risk avoidance as well as innovation.” One of the key areas where innovation is expected in the ORM

“Managing risk can literally mean the difference between a company being profitable and being bankrupt” - Michael Rosenberg, WPV Corp space, as it is in so many others, is by embracing cognitive technology. David Cahn is the Director of Product Marketing for Elemica, a leading business network for supply chains of process businesses, discussed how that might, and might not, change things. “Cognitive risk management involves the decision by a human to follow the risk mitigation procedures, but knowing the risk of something doesn’t prevent us from taking a chance anyway,” says Cahn.

“However, cognitive science is being incorporated into technology to create powerful tools that tackle complete problems. Advanced analytics and automation will increasingly play bigger roles as tactical solutions to drive efficiency or to help executives solve complex problems. “The real opportunities lie in re-imaging the enterprise as an intelligent organization – one designed to create situational awareness with tools capable of analyzing disparate data in real or near-real time. 41

“Organisations need to concentrate on when and why people interact with critical data” - William Tam, Director of Sales Engineering, APAC, Forcepoint “The goal of cognitive governance, as the name implies, is to facilitate the design of intelligent automation to create actionable business intelligence, improve decision-making, and reduce manual processes that lead to poor or uncertain outcomes. In other words, cognitive governance systematically identifies ‘blind spots’ across the firm then directs intelligent automation to reduce or eliminate the blind spots.” 42

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Tim Ng, COO of Europe’s leading digital health business Now Healthcare, casts an eye even further forward. “A key challenge in the future will be the necessary integration of new and future technologies into core processes, world-changing technologies like artificial intelligence and machine learning,” says Ng. “Data is at the heart of operations, and those who can harness it will be more

S U S TA I N A B I L I T Y successful than those who can’t. “The greatest impact and trend will be the use of artificial intelligence. This is a logical next step from business intelligence – systems that can consume data from multiple data streams and provide actionable intel in a format that is easily digestible to the management. Say goodbye to huge teams of analysts: AI will be the new norm. “Technology in general will drive greater change, so operations people will need to thrive on the adrenaline of complexity and change. The operational canvas will be changed forever and this needs to be embraced. “The world economy has faced and is still facing large structural changes on the way to bringing business to the international stage. Technology has impacted hugely with the world becoming a much smaller place – globalization of businesses has significantly accelerated with small companies able to enter the global markets through the use of technology. It is no longer an honor reserved for large companies and SMEs. “Because of this, agility is required. Agile operations allow the companies

to react to market conditions and plot routes through the minefield of consumer demand. I expect operational processes to be more agile with changes made almost instantaneously, as technology allows access to real time KPI (key performance indicator) management to an unprecedented level. “Deeper integration of systems and data will be necessary with mobilization and real time access a key enabler. With executives able to access data anytime and anywhere, leading to strategic and tactical decision making many factors quicker than previously possible. Micro services will be the new fabric for operations with the reliance on the large monolithic enterprise systems no longer necessary. Imagine if you could piece together the services you needed like a jigsaw. Able to add, update and discard as necessary when new technologies or better AI became available. “These are just the beginnings – it is no longer enough to be a safe pair of hands. It is now necessary to have the mindset of an innovator and creator to ensure that operations are able to support the needs of the business.” 43

CITY FOCUS

PORTL Headline Seque rest volorum aute velestio intem illibus es qui ut alit et, sita iuntur?

WE TAKE A LOOK AT THE INNOVATIVE CITY OF PORTLAND, OREGON, AND SEE WHAT IT HAS TO OFFER Writ ten by AUTHOR

Writ ten by OLIVIA MINNOCK

TLAND

CITY FOCUS LOCATED IN OREGON at the confluence of the Columbia River and Willamette River, Portland is the state’s largest city. Portland is also the second most populous city in the Pacific Northwest. The approximately 640,000 people that make Portland their home are a portion of the more than 2.4mn individuals residing in the city’s metropolitan area. This makes it the 25th largest such area in the entire country. Due to its favorable location, Portland easily lends itself to

numerous industries. Energy costs are fairly low, the city boasts large and modern marine terminals and it is also a hub for international air carriers. Portland also has the reputation of being a “weird” city. While pundits like to point out the absurdities that sometimes come from the city – the chummy local government and its fixation on artisanal coffee, for example – these same kinds of attributes can also lend themselves to unique businesses that might flounder in other environments. Here, they are

THE AVERAGE RENT IN PORTLAND IS $969, ABOUT HALF THAT OF SAN FRANCISCO 46

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often embraced by the niche markets they serve and are able to expand to meet the increased demand for their distinctive products and services. The Port of Portland The Port of Portland is the country’s third-largest export tonnage port as well as the largest situated in fresh water. The marine terminals of Portland handle more than 13mn tons of cargo every year and is also the location of one of the United States’ largest ports based on export

tonnage. While the steel industry became Portland’s top producer in the 1950s – and still accounts for multi-billion ton shipments of metal to destinations overseas – it is currently better known as the country’s largest shipper of wheat. Big business in Portland As the above statistics demonstrate, Portland is a study in contrasts. According to a recent Biz2Credit study, the Portland metropolitan area was noted as having the

CITY FOCUS nation’s second-highest revenue on average in terms of businesses with average revenue below $10mn or with fewer than 250 employees. Portland has also been recognized as one of the last cities that hasn’t devolved into skyrocketing rents and other rising costs. For example, the median rent in the city sits at around $969 per month. This figure is about half of what a renter can expect to pay in San Francisco. Diversity in Portland’s educational offerings adds to the development of innovative start-ups and the growth of others. In addition to Portland State University – the university with the state’s second-highest enrolment – other notable institutions of higher learning include the Oregon Health & Science University, Pacific Northwest College of Art, Lewis & Clark Law School and the National University of Natural Medicine. Portland businesses find themselves sprinkled throughout any list that highlights fast-growing, emerging or innovative companies. Technology is an important component of Portland’s economy, so much so that the city has earned the nickname of “Silicon Forest.” This 48

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moniker is a nod to the rich number of trees that dot Portland as well as its similarity to the Silicon Valley area of Northern California. In addition to the more than 1,200 companies devoted solely to technology, the city is home to numerous resources and support networks. These include business incubators, as well as facilities for online startup companies and software businesses.

INTEL Perhaps not surprisingly, Intel is the largest employer in the Portland metropolitan area. Famous for its computer chips and other components that meet the growing demand for speedy technological functions, Intel boasts more than 15,000 area residents on its payroll. The company maintains several campuses in Hillsboro, a city located just west of the central area of Portland.

www.intel.com/content/www/ us/en/homepage.html

CITY FOCUS ACTIVEWEAR INDUSTRY

PORTLAND IS ALSO HOME TO NUMEROUS MAJOR, ACTIVE-ORIENTED BRANDS INCLUDING THE FOLLOWING:

NIKE Nike is the iconic maker of athletic shoes worn by celebrities, sports stars and ordinary citizens around the world. With products to meet the needs of every type of athlete – even those who are couch potatoes – Nike fosters a culture that rewards innovation, creativity and invention. of the central area of Portland.

www.nike.com/us/en_us

February 2018

ADIDAS Adidas manufactures sports clothing and shoes for the general athlete as well as for ordinary people who like to be comfortable and stylish. The sports brand also develops products that meet the specific needs of players of tennis, football, basketball and more. of the central area of Portland.

www.baltics.adidas.com

COLUMBIA Columbia Sportswear is the undisputed leader in outdoor apparel and related products. Combining their passion for the outdoors with an understanding of the people who enjoy it means that Columbia Sportwearâ&#x20AC;&#x2122;s boots, pants, jackets, fleece and shoes boast the latest in innovative technology.

www.columbia.com

TOP 10

TOP 10 UNITED STATES IPOS

A recent New York Stock Exchange list revealed the largest Initial Public Offerings in the last 180 days â&#x20AC;&#x201C; here are the top 10 (accurate at time of writing) Writ ten by SHANNON LEWIS

TOP 10

www.pqcorp.com

www.venatorcorp.com

PQ GROUP HOLDINGS INC. PQ Group Holdings Inc. is a provider of inorganic chemicals in two primary areas: performance materials and chemicals, and environmental catalysts and services. According to NYSE, its proceeds are that of $507.5mn. It has 72 factories worldwide, providing goods to over 4,000 customers, according to The Motley Fool. Although this segment of the company is new, its roots in PQ Corporation date back 100 years. According to its company website, the applications of the products it provides fall under the following categories: Fuel & Emissions Controls, Consumer Goods, Packaging & Engineered Plastics, Highway Safety & Construction, Industrial & Process Chemicals, and Natural Resources.

February 2018

VENATOR MATERIALS PLC

Venator Materials PLC is a specialty chemicals manufacturing company. NYSE places its proceeds at $522.1mn. Its area of focus is pigments, specifically titanium dioxide, and additives, reaching a customer base in over 110 countries, according to its company website. The company website states it employs 4,500 people across 27 facilities. Its chemicals are used in a wide range of products from paint, plastics, and inks, to clothes, cars, mobile devices, and cosmetics.

NEXA RESOURCES S.A.

EVOQUA WATER TECHNOLOGIES CORP.

Nexa Resources S.A. focuses around the extraction, production, and trade of zinc, copper, and lead. It primarily refines and sells zinc, specifically in Peru, and in Brazil. According to NASDAQ, it has 5,387 employees, and NYSE places its proceeds at $570.4mn. As a global mining company, with mines in the Pasco, Ica, and Moquegua regions of Peru, it forms part of Votorantim. According to its company website, its legacy began in 1956 as a non-ferrous metal market called Companhia Mineira de Metais, ultimately becoming Nexa in 2016.

Evoqua Water Technologies Corp. brings in proceeds of $575mn, according to NYSE. With a 100year legacy, this water company is, according to its company website, â&#x20AC;&#x153;the global leaderâ&#x20AC;? in protecting and improving water for industrial customers, and municipalities. It has over 200,000 sites across the world, with water specialists and offices in Australia, Canada, China, Italy, Germany, Singapore, the United Kingdom, and the United States, according to its company website, with 4,000 employees, according to NASDAQ.

www.nexaresources.com

www.evoqua.com/en

TOP 10

www.switch.com

www.sogou.com

Switch designs, builds, and operates data centres, a technology infrastructure ecosystem company. According to NYSE, its proceeds are of $611mn. With headquarters in Las Vegas, it oversees 689 employees, according to NASDAQ. An ecologically sensitive company, its Switch Green sustainability initiatives are dedicated to ultimately running all its data centers in North America completely on renewable energy, according to its company website, an initiative complemented by Switchâ&#x20AC;&#x2122;s innovations in density, cooling, power, and design.

Founded in 2005, Sogou search and search-related services to a Chinese market. According to Bloomberg, it currently oversees 2,315 employees. NYSE places its proceeds at $658.4mn. It has 45,000,000 outstanding shares, each at a price of $13, according to NASDAQ. It provides both a search-engine, Sogou Search, and a Chinese-language input software for Multi-station Access Units, both mobile and desktop called Sogou Input Method. It is a subsidiary of Sogou.com Inc, and offers searchrelated advertisement services.

SWITCH

February 2018

SOGOU INC.

BP MIDSTREAM PARTNERS LP www.bp.com/en_us/ midstream/bp-midstreampartners.html

BP Midstream Partners LP is a partnership formed by BP pipelines with the purpose of operating, owning, acquiring, and developing pipelines as other related mid-stream goods, initially crude oil, natural gas, and refined products. It was founded in 2017, and bases itself out of Houston, Texas. According to NYSE, its proceeds are of $860.3mn. NASDAQ states it has 52,375,535 outstanding shares, each priced $18. It owns existing infrastructure; onshore it owns crude oil, refined products, and diluent pipeline systems, while offshore it has natural gas pipeline systems and interests in four crude oil systems in the United States.

SEA LIMITED

www.seagroup.com/home Sea Limited was originally conceptualized in the 1970s, and ultimately founded in 2009 as an internet platform corporation, engaging with e-commerce, digital entertainment, and online financial services across Southeast Asia. NYSE places its proceeds at $884.4mn. It is a games company that was formerly called Garema. According to Bloomberg, it employs 6,000 people, and has strong ties to both e-sports, and finance apps designed to connect producers with consumers. NASDAQ places its share price at $15, with outstanding shares standing at 58,960,000.

TOP 10

02 QUDIAN INC. www.qudian.com

Qudian Inc. is an online credit corporation, with proceeds of $900mn according to NYSEâ&#x20AC;&#x2122;s listings. It provides cash credit products for China. Headed by Min Luo, it currently employs 1,014 people according to

February 2018

NASDAQ. Its share prices initially went $24, with 37,500,000 shares outstanding, as reported by NASDAQ. It went public on October 18th of this year, but found its share prices plummeting to $12.9 as of the 19th of December of the same year, according to Seeking Alpha.

LOMA NEGRA COMPAÑIA INDUSTRIAL ARGENTINA www.lomanegra.com.ar

Loma Negra Compañía Industrial Argentina is a leader in the cement industry of Argentina, with ties as well to Paraguay. Its origins date back

to 1926, when Argentinian Alfredo Fortabat discovered limestone, a key ingredient in the production of cement, in Loma Negra, Argentina. According to NYSE, it made $1.097bn in proceeds. Under CEO Sergio Faifman, it currently employs 3,258 people, according to NASDAQ, and had a share price of $19, with 119,205,298 shares outstanding.

TRUST IN TRANSFORMATION ELEVATING AVAYAâ&#x20AC;&#x2122;S SUPPLY CHAIN TO BEST-IN-CLASS

Written by Fran Roberts Produced by Denitra Price

S U P P LY C H A I N

Benji Green (Left) and Fred Hayes (Right)

AVAYA IS A RECOGNIZED INNOVATOR IN BUSINESS COMMUNICATIONS. THE COMPANY ALSO APPLIES INNOVATION TO ITS OWN PROCESSES, INCLUDING AN IMPRESSIVE TRANSFORMATION OF ITS SUPPLY CHAIN OPERATIONS IN RECENT YEARS “Over the time I’ve been here, there’s been a radical transformation in our supply chain across many areas. Today, we are a best in class supply chain on all 11 metrics that we benchmark against externally.” These are the words of Benji Green, Avaya’s Senior Director, Integrated Supply Chain Planning & Operations. “It’s been an amazing transformation,” he continues. “I feel very lucky to have been part of it, but also proud to have had a hand in driving it.” 64

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As a global leader in delivering superior communications experiences, Avaya provides the most complete portfolio of software and services for multi-touch contact centre and unified communications offered on premise, in the cloud, or as a hybrid. Today’s digital world centres on communications enablement, and no other company is better positioned to do this than Avaya. As such, the company needs to constantly transform and improve to maintain its leading position. Avaya’s supply chain transformation to best-in-class has been a global, multi-year strategic initiative based on targeted investments in people, processes and partnerships directed towards a clear vision to be the very best. Fred Hayes, Senior Vice President of Supply Chain, clearly defines its vision to “Exceed employee and customer expectations while fuelling profitable growth.” This vision drives every decision the team makes. IN THE BEGINNING Avaya’s supply chain has not always been industry-leading, far from it. “In the beginning, it was tough,” says Green. “12-hour days, hair

on fire supply constraints, excess inventory, completely manual processes, imbalanced supplier terms and conditions, poor cash to cash. You name it, it was bad. It was hard to imagine becoming best-in-class at the time.” Nine years ago, Avaya’s supply chain was considered one of the biggest obstacles to companywide performance. Hayes recalls: “Just to give you an example, at one point before I had started, the Chief Executive Officer at that time in an all hands meeting apparently made some reference to Avaya having the worst in class supply chain on the planet.” There was a long way to go to reach the best-in-class vision and Fred knew it began with the team. Avaya needed world class talent, with the right attitude, immersed in the right culture to deliver world class results, and this became Fred’s first priority. TALENT AND CULTURE Avaya began by making substantial investments to attract, train, and retain the best and brightest candidates. The talented team at Avaya was built and developed over several years and it w w w. b u s i n e s s c h i e f . c o m

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S U P P LY C H A I N

started when Avaya hired Jim Chirico as COO. “He began the process, first hiring Fred Hayes as Head of Supply Chain. We targeted proven talent outside of the telecommunications industry that had the functional expertise and leadership to transform the culture and organization. I was part of that initial team that was recruited to help lead the transformation,” reflects Green. Over the first year, Fred built an entirely new supply chain leadership team, each hired for specific expertise. “We completely overhauled the team, from logistics and warehousing to order management, to planning, to procurement. Each leadership hire was a critical part of the transformation strategy,” describes Hayes. The new leadership team embraced the vision and the mandate to become best-in-class. In turn, each leader made a commitment to drive cultural transformation for their team across all levels. This has been fundamental to driving the business forward. “It is about having the right attitude, the attitude of empowerment for the employee, the expectation of delivering continuous transformation, delivering on commitments, delivering 68

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results,” notes Green. “That includes leadership that is willing to take risks, that supports and promotes taking risks, is not afraid of making a change to improve the business.” To make sure the right attitude and culture permeates the organization, Avaya leverages a robust HR talent management program, top to bottom, as well as an employee engagement process. For Avaya, the performance management system is a critical way to create a culture that engages employees and attracts people who will contribute to the team’s success. Avaya sets clear expectations and rewards the high performers. Employee compensation, bonuses and opportunities for promotion are all tied to robust and clearly defined performance metrics. Green summarizes: “What that does, by definition, is retain high performers and drives everybody to better and better results. “The flipside of this type of culture is that we also consistently let go of our lowest performers. We give significantly larger bonuses to the highest performing employees, we give no bonuses to low performing employees,

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Avaya Oceana intelligent software tracks and analyses behavior, enhancing the customer experience and the lowest performers typically will be worked out within a year. What that does, by definition, it retains high performers and drives everybody to better and better performance.” Employee engagement is another key to culture development as it’s one of the single best predictors of employee retention and productivity. “We actually use an employee engagement survey, which is a crossindustry survey that measures the employee engagement across four key variables. Our employee engagement has gone up 60% over the last six

years. They are happier because the culture is very clear, the expectations are very well defined,” observes Green. A final piece of the talent puzzle has been Avaya’s university engagement program, created to attract and quickly develop young talent. “We have a strong new graduate program. We bring in fresh talent out of a top university system and put them through a multi-year, multi-position, multi-organizational rotation program,” states Green. “We’re bringing in new talent with academic pedigree. Most of them w w w. b u s i n e s s c h i e f . c o m

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have come in already Lean Six Sigma trained and certified through a green belt program. We’re immediately throwing them into the rotation program, immediately requiring them to do projects. You start with every new employee driving that culture.” With the right team and culture, Avaya began to transform. “What will happen, in my experience, in that type of culture and that type of environment, is you will naturally build very systemic processes that constantly improve and reinforces the behavior.” MANAGEMENT SYSTEMS Hayes and the new leadership team began to create a robust management system obsessed with achieving best-in-class standards. At the management systems’ core are continuous improvement, metric management, and globalization. Stemming directly from and reinforcing the supply chain culture, the leadership team developed multiple continuous improvement programs. As an example, Avaya’s supply chain has a formal project management office with Lean Six Sigma black belt certified project managers, prioritizing and 72

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driving the biggest and most important opportunities. Frank Carbone, Director of Supply Chain Strategy and business lead for the Project Management Office, says: “This dedicated team of supply chain architects, senior program managers and data management experts have helped deliver the ‘key game changers’ for our supply chain. The team’s focus is to drive positive change every day. Their leadership, expertise, collaboration, passion and drive champion a continuous improvement culture at Avaya.” “Additionally, we have an ongoing Lean Six Sigma training program that is available to any employee who wants to submit their name to it and has a project they can prove has a clear return on investment and is warranted for the company. That’s good for the employee and good for the company,” Green observes. “Continuous improvement is a culture and a process.” Metric management leverages the HR performance management process to ensure every employee’s individual objectives are successfully tied to the organizational, and that company objectives and are clearly

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defined and measurable. It answers two fundamental questions: Are the employees’ objectives meaningful to the organizations’ objective? And, can the company measure the organizational objectives to ensure it delivers best-in-class? “We very clearly define our objectives at the start of every year and we very consistently measure each of those objectives,” Green explains. “I have a customer satisfaction metric for on-time ship. I don’t look at it once a quarter or

once a month – I look at it every single week. Not only what it was last week, but what I think it’s going to be for the next three weeks. It’s a very micro and robust focus on the objective that’s disseminated to all the employees, from the part-time employees all the way up to the CEO. They’re all linked to company objectives,” Green details. The Avaya supply chain measures and reports over 100 metrics, each discretely aligned with four pillars: customer satisfaction, employee

“IT’S BEEN AN AMAZING TRANSFORMATION. I’VE FELT VERY LUCKY TO BE PART OF IT, BUT ALSO PROUD TO HAVE HAD A HAND IN DRIVING IT” – Benji Green, Senior Director, Integrated Supply Chain Planning, Avaya

Avaya Call Center technology maximizes efficiencies

S U P P LY C H A I N

Avaya Unified Communications seamlessly integrates across multiple devices, on the go or in the office satisfaction, cash to cash and supply chain expense. By rigorously tracking these metrics, Avaya is confident it is on track to realize its vision. Globalization is a simple idea organize and streamline distributed organizations and processes into easier, centralized, more automated workflows managed by the best talent globally. “The benefits are huge. It reduces headcount. It reduces redundancy. It recognizes talent. It drives process efficiency. It takes the best of each sub-process to create 76

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the ‘best’ process applied globally,” states Green. Avaya’s supply chain reorganized into global teams focused on core processes: a global demand and supply planning team, a global logistics team and a global strategic procurement team. “We streamlined and flattened the organization, reduced headcount, improved accountability, and expanded responsibility for our top talent. Simultaneously we collapsed disparate processes into one best-in-class process.” One notable example is Avaya’s

S U P P LY C H A I N

implementation and expansion of RapidResponse (RR), a Gartnerrecognized magic quadrant tool from Kinaxis for supply chain planning and collaboration. Over a five-year period, Avaya migrated its business processes onto the single platform. It was initially used only for supplier communication, before being expanded to include supply planning, demand planning, inventory planning, inbound and outbound logistics planning, procurement spend analysis, POS analytics and much more. “We do everything from daily supply assurance and revenue risk to strategic product transitions on rapid response,” explains Green. Central to globalization, RR allowed for extensive automation of non-value added work, standardization of processes across multiple MRP instances, products portfolios, and regional variations. The tool, properly managed, has globalized Avaya’s planning and operations processes and organization and helped deliver dramatic improvements and sustainable performance. STRATEGIC PARTNERSHIPS “I think the third piece of the puzzle

has been our consistent and persistent systemic strategy to really align our strategic supply base,” Green notes. In every area, from procurement to manufacturing, to software and service providers, Avaya has reduced the supply base, leveraging global providers and invested in longer term relationships with industry expertise. Green explains: “We consolidated the manufacturing environment across a couple of really key suppliers – Wistron and Flextronics – for large volume contract manufacturing. We’ve leveraged Avnet’s in-region capabilities with their global reach for our more complicated, higher costs, build-toorder portfolio. We’ve also centralized around some key component suppliers like DSPG for chips and Tianma for LCDs, as examples.” These close relationships allow Avaya to have much better working relationships, including dedicated teams to work with each supplier for day to day operations, accelerating decisions and tighter operational controls. Both improve manufacturing readiness, quality control, allocation and freight decisions, build prioritization and more. In logistics and warehousing, Avaya w w w. b u s i n e s s c h i e f . c o m

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has partnered with a few key providers as well, investing IT and resources to enhance and automate processes while reducing costs and consolidating spend. CEVA Logistics and Crane World Wide are contracted global logistics providers with close working relationships. Avaya gets controlled rates and predictable availability while suppliers get consistent, predictable volume and revenue. Choice Logistics has managed the majority of Avayaâ&#x20AC;&#x2122;s 180 maintenance locations for over 10 years, providing small stocking locations, warehousing, and final

mile delivery. Similarly, Geis has provided provisioning and maintenance warehousing and fulfilment. Avaya has leveraged Geisâ&#x20AC;&#x2122; WMS expertise to automate replenishment, order fulfilment, export documentation, and more for all of Avayaâ&#x20AC;&#x2122;s Europe, Middle East, and Africa operations. Similarly, Avaya has partnered with the best-in-class software and services providers including Salesforce.com for CRM, Baxter for maintenance planning, Coupa for spend management, Luxoft and Mera for outsourced engineering and research

Avaya Scopia business conferencing optimizes collaboration and is always on demand

February 2018

and development, and Sutherland for low cost, outsourced, but high skilled managed labor. Sutherland has also been a critical software provider, integrating solutions with Avaya’s ERP for the very complicated reverse logistics tracking space. Such relationships are invaluable to Avaya. “We outsource more and more to functional expertise and we’ve consolidated and built strategic relationships with those supply partners. You develop relationships built on trust that maximize results for both parties,”

observes Green. “Suppliers have been happier with us because they also see the value created through strategic long-term partnerships.” DELIVERING SUCCESS “There is an absolute focus on delivering success,” Green continues. “For us, success is best-in-class and we knew that from day one. There is very intense focus on the metrics, understanding what we had to do to our expense structure, to our people structure, to our customer satisfaction metric to make sure we were delivering

“WE’RE ACTUALLY SPENDING A LOT OF OUR TIME DRIVING THE CULTURAL AND OPERATIONAL SUCCESS WE’VE HAD IN SUPPLY CHAIN TO OTHER ORGANIZATIONS” – Benji Green, Senior Director, Integrated Supply Chain Planning, Avaya w w w. b u s i n e s s c h i e f . c o m

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“IT IS HAVING THE RIGHT ATTITUDE, THE ATTITUDE OF EMPOWERMENT FOR THE EMPLOYEE, THE EXPECTATION OF DELIVERING CONTINUOUS TRANSFORMATION” – Benji Green, Senior Director, Integrated Supply Chain Planning, Avaya

This is Avaya

February 2018

best-in-class to both our customers and our employees and fuelling profitable growth.” Avaya’s supply chain has delivered undeniable results. Recently recognized by Aberdeen, Avaya exceeded industry benchmark best-in-class performance on all 11 metrics it tracks externally. The company has reduced supply chain expense by $125mn per year, equivalent to a 50% reduction, and driving down expense to only 3.8% of revenue versus 4.4%. Similarly, Avaya has reduced its cash tied up in net inventory by 94% to $181mn. That’s resulted in a 224% improvement in inventory turns from 5.8 up to 13.0 turns. Simultaneously, customer satisfaction and on-time shipments are at a record best, with 97% on-time in 2017 compared to 78% in 2010. This has driven optimal revenue recognition, cash to cash cycle, and reduced quarter end and weekly average unshipped hardware revenue by 95% to less than 0.5% of revenue. Avaya’s supply chain transformation is well documented with tremendous results to move from ‘worst-in-class’

to best-in-class. It’s been achieved by a great team immersed in the right culture, delivering continuous process improvements, and leveraging strategic partnerships. Not surprisingly, the Avaya leadership team has more transformation planned for the future. “With a very large data company like ours, global standardization continues to be an absolute mandate,” Green acknowledges. “We have opportunities to push this efficiency model and partnership model across the rest of the company. We’re actually spending a lot of our time driving the cultural and operational success we’ve had in supply chain to other organizations. That’s a pretty unusual story if you’ve got a supply chain team that’s helping shape the rest of your company in very cool, strategic ways.”

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A GLOBAL

FOOTPRINT,

A STREAMLINED SUPPLY CHAIN With its streamlined, innovative supply chain, ZTE USA is forging a new path in the telecommunications market. By transforming its customer experience, the US subsidiary is turning the mobile industry on its head and ushering in a new decade of innovation Written by Laura Mullan Produced by Denitra Price

ZTE USA

nce unknown outside of China, ZTE turned its attention to the USA in 1998, carving out a market share on the continent. Fast-forward two decades, and the mobile behemoth is now a household name, growing to become the fourth-largest smartphone supplier in the US. The success of ZTE USA has been legendary in the telecommunications industry and, thanks to its resourceful supply chain, it seems that the company is set to continue on this upward trajectory. Kevin Finerty, SVP of Supply Chain and Quality at ZTE USA, says that the company’s ethos has been integral to its success. “ZTE positions itself as a telecommunications company that offers premium quality at an affordable price,” notes Finerty. “That’s where we want to make our mark in the US market and that’s where, quite frankly, we have already been making a mark. “We’re one of the top patent holders year-on-year, especially when it comes to Long-Term Evolution (LTE) and 5G technology, and we have

February 2018

a very clear vision of how we fit in the industry ecosystem,” he adds. “But we have bigger aspirations than just succeeding in our niche – we’d like to expand further. We are currently the fourth largest original equipment manufacturer (OEM) in the market and we’re aiming to become the third largest.”

KEVIN FINERTY

SVP of Supply Chain and Quality at ZTE USA

As the Senior Vice President of Supply Chain and Quality for ZTE USA, Mr. Finerty is responsible for ensuring the supply of quality products to US and Canadian wireless carriers. He and his team manage the dayto-day supply operations as well as coordinate directly with both ZTE and customer teams in China.

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IT & MOBILE ASSET MANAGEMENT

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S U P P LY C H A I N

Driving efficiency in its supply chain Renowned for its technological ingenuity, ZTE USA’s strategy of offering innovative, quality products at mid-tier prices has helped the company gain a foothold in the US market. Finerty says that this pioneering mindset has also applied to the subsidiary’s supply chain function where digitization strategies are helping to streamline operations. By implementing a collaborative, planning, forecasting, and replenishment (CPFR) method and using the Oracle-based product

Demantra, the US subsidiary is using data analytics to promote greater integration, visibility, and cooperation between its partner’s supply chains. In doing so, ZTE USA hopes to transform its intricate supply network. “Ultimately, it comes down to communication with the customer and having a weekly discussion about the company’s forecast, replenishment plans, demands, and supply chain system,” notes Finerty. “Getting data about our supply function isn’t as hard as it may seem. Our customers are typically willing to share their data because they

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ZTE USA

LIXIN CHENG, CEO ZTE MOBILE DEVICES SHARES HOW FOCUSING ON YOUR ROOTS CAN HELP DRIVE BREAKTHROUGH INNOVATION

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“Data visualization is really helping us to drive efficiencies in our

supply chain” – Kevin Finerty, SVP of Supply Chain and Quality at ZTE USA

want to know what our supply chain looks like,” he adds. “By using our new systems, such as Demantra, we communicate this data back to China which allows ZTE to have clearer communication around what the customers’ demands are now and what they are going to be in the future.” Data and analytics Like many technologically advanced companies, big data is playing a significant role in the way ZTE USA does business. Having this data is

one thing, says Finerty, but taking it to a new level where you can digitize it and visualize it is another crucial part of the company’s transformation. “Data visualization is really helping us to drive efficiencies in our supply chain and we are working closely with companies such as Tableau to achieve that,” says Finerty. “It helps our sales team look at the region, product, market or carrier, and see what’s doing well and where we need to focus our marketing, promotion and supply chain operations. “Our leaders in China are continually spearheading new innovations for the corporation, but if I take a step back from that and see what we can really achieve right now from a supply chain perspective, it’s about having the most

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ZTE USA

February 2018

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ZTE IS CURRENTLY THE FOURTH LARGEST SMARTPHONE SUPPLIER IN NORTH AMERICA BEHIND APPLE, SAMSUNG, AND LG.

up-to-date information to help us meet our customer’s needs,” he says. “We can see what’s happening in real-time and prepare for changes in the supply chain and that’s very advantageous.” Dual distribution center strategy This strategy is helping to accelerate the company’s growth however, ZTE USA is not only interested in digital transformations, it is also transforming its operations by implementing a dual distribution center strategy in the US. This tactic is helping ZTE USA

quicken its distribution times, reduce costs and deliver more directly to its customers through the ZTE USA’s website or through retailers like Amazon and Newegg. “It’s great for us to be able to ship directly to the consumer,” notes Finerty. “Yet, in other instances, it might make more sense to work with one of our partners to get the best value for the dollar. In this way, the dual distribution center is really helping us to make our operations more cost-effective, depending on the business type.”

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We design and manufacture custom packaging then process and fulfill under one umbrella. A single point of contact allows our clients the benefit of complete project management and a commitment to quality and on-time delivery. Our clients have come to depend on us to make it right, pack it right and deliver when needed. The high pressure demands of the telecom industry created our concept and our performance has proven it. MobilTechâ&#x20AC;&#x2122;s ability to provide all the support service including repair, postponement, ecommerce and custom solutions have fueled our rapid growth. Our unique one-stop-shop is making the rest of the industry take note. MobilTechâ&#x20AC;&#x2122;s ability to provide all the support service including repair, postponement, ecommerce and custom solutions have fueled our ou rapid growth. With over 100 years of combined knowledge, serving the telecom industry, our innovation is making a difference in the way cell phones are delivered to the marketplace. Together, we make the process easier for our customers.

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S U P P LY C H A I N

Undoubtedly, ZTE USA has experienced exponential growth. However, despite the pressing challenges of a growing supply chain and brand name, ZTE USA has remarkably achieved this success without extra manpower. “ZTE volumes in the US have grown over 70% in terms of units delivered from 2016 to 2017, but we’ve done it with the same amount of people,” notes Finerty. “If you’re managing your business in the right away and you have the systems in place to do that, you don’t necessarily need more people to ship more pallets. You just need better preparation, better communication and better planning.” Global Footprint The company’s burgeoning size has not only been advantageous for its bottom line, it has also helped ZTE USA develop strategic partnerships thanks to its growing brand. “I think we have great opportunities to leverage just the sheer size of ZTE,” reflects Finerty. “We have a lot of established supply relationships so when we go to the table to meet

with companies - whether it’s somebody stateside or a global brand - that relationship is already established and I’d say that’s really one of the big positives.” Whilst the company’s immense size can be valuable, it also poses its challenges. “We can have some communication challenges, in terms of finding out if there are supply issues,” says Finerty. “For instance, the overall cultural differences between China and the US can also present some complications. It’s really incumbent upon the US team to learn how the Chinese teams operate and how it’s best to communicate with our counterparts in Asia. I think for those of us, like myself, who have been here several years, we’re still learning, but we are progressing well. I think that’s valuable from a talent perspective for ZTE USA.” By utilizing its digital tools and data, ZTE USA has taken an intuitive approach to its supply chain, delivering purchase orders early if possible and supplying surplus stock during promotion periods. “If you’re always presenting how you

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ZTE USA

can help, eventually suppliers will figure out that you’re the company that they can rely on when they need help,” Finerty notes.

“We are currently the fourth largest original equipment manufacturer (OEM) in the market and we’re aiming to become the third largest” – Kevin Finerty, SVP of Supply Chain and Quality at ZTE USA 94

February 2018

Upcoming challenges ZTE USA has seen record successes, but Finerty doesn’t underestimate the challenges that lie ahead. His team is exploring how the company can retain consumers and get them to stick with the ZTE brand, and how they can harness the potential of the Internet of Things (IoT). From a supply chain perspective however, perhaps one of the company’s biggest hurdles is keeping up with material supply. When there’s a shortage of a particular chip or LCD component, it can disrupt the supply chain. As a result, Finerty and his team work closely with procurement to keep ahead of any issues and prepare for them. The other biggest challenge facing ZTE USA? Finerty believes it is SKU proliferation. Catering to both major and small mobile carriers in the US, ZTE’s customers often request a unique product. This may seem like an innocuous challenge but it has

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a profound effect on under its belt, what Employees at the product line. “Even does the future ZTE USA though the internals might hold for ZTE USA? be 90% identical, everyone “A major part of our threewants a unique SKU,” comments year planning has been focusing Finerty. “Because of SKU proliferation, on that the end-user experience,” we have to prepare and manufacture reflects Finerty. “How can we touch products on different lines and them a little bit more directly? How that’s one of the main challenges can we understand what they’re we are facing at the moment. I feeling about the overall product think perhaps as ZTE grows and experience? It’s going to be a switch shows its value there may be some of our mindset from a carrier-focused opportunity for some standardized company to a more customer-focused products across carriers.” one. It doesn’t mean that we’re going Armed with an efficient supply chain to walk away from being the best and rigorous expansion plan, ZTE provider and supplier we can be for USA has become a well-recognized the carriers - it means we’re going name in the US in the short space of to take it up another level to really 10 years. But with such successes understand that customer mindset.”

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FLOWSERVE 2.0 AND THE JOURNEY TO SUPPLY CHAIN TRANSFORMATION Flowserve provides products and solutions that solve global problems. Now it’s transforming its supply chain capabilities as it sets out the route for Flowserve 2.0 Written by John O’Hanlon Produced by Denitra Price

FLOWSERVE

pace is a premium commodity on a floating production, storage and offloading unit (FPSO). Offshore oil and gas is a key market for Flowserve, which leads the world when it comes to flow control, but outside that industry it’s not always understood what a critical role pumps, valves and actuators play on a production platform, nor the amount of room these take up on an oil rig. “The most expensive real estate in the world is the back of an offshore platform,” says Ronaldo Marques, Vice President – Supply Chain, and he should know, having over a 25-year career led strategic procurement and supply chain for some of the most recognized O&G companies. These include Texaco, Chevron, and most recently Shell, where he was responsible for an annual spend of $9bn. He joined Flowserve in April 2017, attracted by the opportunity to make a real difference in a company that recognized the need to integrate its supply chain operations and bring this vital aspect of the business into the heart of its strategic decision making.

February 2018

Let’s look again at the FPSO example. Pumps and valves are the core of the equipment, but the smart part of the installation is the actuator which controls the flow. More than a million of Flowserve’s Limitorque division actuators have been installed around the world, and some have been in operation for more than 50 years. Their ruggedness and reliability are legendary. Recently a client constructing a new FPSO found there was not enough space on the platform to accommodate the large conventional actuator selected to operate it. The Flowserve design allowed construction of the FPSO to proceed according to the originally planned layouts, with no need for costly and invasive redesign. It also ended up saving around 2,000 kg (4,400 lb) in weight. Usually, production modules on FPSOs are installed in close proximity, explains Marques. “Because FPSOs carry refinery-grade heavy equipment on a marine vessel, managing weight translates directly into savings in capital expenditure. Lowering weight by just one ton (2,200 lb) can result in construction

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Ronaldo Marques

Vice President - Supply Chain at Flowserve

“THE MOST EXPENSIVE REAL ESTATE IN THE WORLD IS THE BACK OF AN OFFSHORE PLATFORM” w w w. b u s i n e s s c h i e f . c o m

FLOWSERVE

WORKING IN TIGHT SPACES The effort to custom design an actuator to work within tight space and weight restrictions demonstrates the capability of Limitorque to respond to critical customer needs, with unique and efficient solutions that combine technical excellence with economic practicality. The customengineered â&#x20AC;&#x2DC;Margheritaâ&#x20AC;&#x2122; solution revealed itself to be sufficiently innovative for immediate patenting, providing a new turnkey actuator solution where size and weight are critical considerations

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savings of $30,000 to $50,000.” This result had everything to do with supply chain management, he points out. Not supply chain alone, but in alignment with engineering and suppliers. It’s quoted because it represents clearly the value proposition offered by Flowserve. “Because we work with engineering we save a whole lot on materials,” says Marques. When he joined Flowserve, at the same time as its new CEO and President R Scott Rowe to whom he reports direct, the global organization was very fragmented. With 17,000 employees at 254 locations in 55 countries, and four major business platforms each under its own President , procurement was being carried out on a local, or at best national basis. There were some very good pockets of excellence but there was clearly a huge opportunity to be seized. He and Rowe were of one mind, that integration across the business could yield huge benefits, and noticeably better outcomes for its customers. Their plan has been to deliver strategic change through

supply chain transformation. Marques’ enthusiasm for this task is boundless. “The important thing is that we are aligning ourselves with the business. As we transform our supply chain and integrate across all platforms and business segments globally, we will simplify processes and save a lot of money. We will eliminate waste from double handling, simplify processes and procedures, standardize, then automate big time. We need to refocus the local and global organization, work with robust leadership teams, and our human capabilities worldwide.” The job of rationalizing the supplier base has already been started over the last 10 months, reducing their number but working with these in a more collaborative way. “Until now we’ve approached our suppliers from the inside-out, so to speak – we tell them what to do, sometimes not in a very collaborative way. We are going to change that to an outside-in, aligning people, processes and technology with our key suppliers to create value in a flexible strategic supply chain. We are going to deploy

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tools and systems to enable the supply chain data and then drive the accuracy and analytics, with a mindset of continuous improvement and the ruthless elimination of manual process.” This is not reinventing the wheel, and he admits that eliminating duplicate activities, identifying and sharing best practices and encouraging the local teams to own these continuous improvements may look simple. But in a complex global organization it takes time to roll out these ideas. This plan was endorsed by the top leadership team from the get-go, and the roadmap to global supply chain alignment by 2020, the road to Flowserve 2.0, was an early outcome. “The most exciting thing is that nine months down the line we have full endorsement from every leader from corporate HR, IT, finance and so on, and also from the platform presidents of every division. It is no longer a supply chain plan: it is their plan – a Flowserve corporation plan. That is critical.” The value proposition is so powerful, he adds, that it has been bought into by the entire business. “Flowserve 2.0 is the turnaround of Flowserve and my job as part of the leadership is to transform Flowserve’s supply chain so it’s the most admired and competitive in the entire industrial manufacturing industry.” The company already has a powerful suite of tools. The basic supply management system comes from a trusted partner, Zycus, with whom Flowserve has been collaboratively rolling out modules to the

FLOWSERVE

global sites. â&#x20AC;&#x153;We are leveraging that technology, which will give us valuable visibility, data storage, data analytics and the like. We have plenty of data within the company but what is it telling us? We partner with Zycus to drive improvements on top of the data whether elimination, simplification, standardization, supplier rationalization or renegotiation.â&#x20AC;? Flowserve also uses Zycus for contract management. There is

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nothing simple about writing and executing strong, favorable and risk-minimizing legal contracts with suppliers. Many parties need to be involved, and the complexities multiply rapidly when contracting at enterprise levels â&#x20AC;&#x201C; across locations, strategic business units (which are often distinct legal entities) and across global regions and sovereign borders. The iContract system smooths out these complexities. Over the last six

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“WE ARE NOT DRIVING AN INITIATIVE, WE ARE DRIVING A FULL SERVICE STRATEGY” – Ronaldo Marques, Vice President – Supply Chain, Flowserve

FLOWSERVE

months Marques has visited every one of the company’s manufacturing sites in China, India, Europe and Australia to explain and facilitate the learning needed to get these systems working in an integrated way. Another good example of a vendor that assists integration and the taming of raw data to assist decision making is Mihlfeld & Associates (M&A), which makes sense of the huge bulk of logistics data that’s available. “We have more than a million logistics invoices a year so we work with M&A on technology to audit, analyze and pay these invoices – and we continuously improve on that,” Marques adds. The plan is delivering. Flowserve

“I DON’T NEED TO TALK ABOUT SUPPLY CHAIN BECAUSE THE BUSINESS IS TALKING ABOUT SUPPLY CHAIN. THIS IS NIRVANA” – Ronaldo Marques, Vice President – Supply Chain, Flowserve

2.0 is on its way. 2017 targets were reached with two months to spare. “We are not driving an initiative, we are driving a full service strategy. We are driving cross-platform change in areas like indirect spend and logistics. We listened to the business leaders and the VPs, sales and operations people and the plant managers, and we adapted our plans to drive their plants. What’s not to like? On top of that we layered in the corporate initiatives, the cross platform initiatives and then the roadmap that I presented, together with the whole strategy, to the board. They gave us full and unanimous support.” A major win for strategic sourcing was a drive to rationalize the global payroll. 46 countries were served by 38 different suppliers and internal HR resources, so consolidation was a must. The plan had been to make phased changes, with Europe, the Middle East and Africa sorted out over two years and Latin America following in 2019. “I got the guys together, and said why don’t we do this all at once?” Marques adds. The result was unbelievable, enabling not

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Hydraulic Power Recovery Turbines — Calculating Unit Efficiency and Power Recovery

only all the business requirements but also introducing automation, AI and other available technologies using a very disciplined process. Impacting 15,000 employees, HR is now consolidated in one supplier, one system. The implementation is going to be 80% complete in 2018, saving 30% on the projected cost.” He is already working on how to reduce the cost to serve for the other corporate functions by similar margins, with direct impact on the bottom line.

So, Flowserve is well on its way to becoming a data-driven business, a business with growth on its agenda. The supply chain plan will not be different from the corporate plan. At a recent Flowserve ‘summit’ of 100 leaders, the supply chain alignment story was delivered by the President. “We drew up the presentation together,” says Marques. “I don’t need to talk about supply chain because the business is talking about supply chain. This is Nirvana.”

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STANDARDIZED AND

RE-ENERGIZED

Inside AkzoNobelâ&#x20AC;&#x2122;s operational transformation Written by Nell Walker Produced by Denitra Price

AKZONOBEL

Millissa Hernandez Flanagan, SVP Integrated Supply Chain at AkzoNobel, describes the ways in which she has reorganized the business to improve safety, drive productivity, enhance growth and deploy a heartbeat of the business with and operational excellence

hile you may not be aware of the ways in which AkzoNobel has impacted the products you use every day, it is a business that has remained almost omnipresent since its inception in 1994. As a global leader in paints, coatings, and specialty chemicals, AkzoNobel serves businesses and consumers via 46,000 staff across 80 working locations with its industry expertise and skill. When a company of this size and reputation requires a change, the task of finding a true expert can be daunting, if necessary. In the case of AkzoNobel, the right expert was found in the form of Millissa Hernandez Flanagan, SVP Integrated Supply Chain. Hernandez Flanagan holds

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degrees in chemistry and chemical engineering, and has been honing her knowledge and experience for 33 years across the realms of metals, refining, chemicals, and plastics. Having been a major team player for big names like ConocoPhillips, GE, Novelis, and SABIC, she joined the AkzoNobel family just over two years ago. The common thread for her career has been operational excellence, supply chain leadership,and change management, and as such, these are areas in which she truly thrives. So, how has Hernandez Flanagan’s extensive skillset contributed to AkzoNobel’s success thus far? “My approach to transformation is always very similar,” she explains. “I use an approach of

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“THE REASON THIS MODEL WORKS SO WELL IS BECAUSE WE KEPT IT SIMPLE” – Millissa Hernandez Flanagan, SVP Integrated Supply Chain

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When Outcomes Matter, manufacturing companies like AkzoNobel call upon Venetia Partners to help fix, build and transform the business performance of their integrated business operations and supply chain. Venetia Partners supported AkzoNobel’s Pulp & Paper Chemicals business in the design and deployment of their supply chain organization and strategy. Venetia’s deep operational and deployment experience in asset-intensive industries translates into extremely high-value consultants that leverage your team to create and leave behind lasting improvements deep inside your operation. Having also been the in the driving seat of major supply chain transformations like Novelis, we know the organizational and managerial shifts required from in and outside a supply chain to produce real outcomes.

In supporting AkzoNobel’s transformation, Venetia drove bottom line results by: • Providing interim plant management to turn around a struggling operation • Mobilizing, training and deploying “Accelerated Outcomes” teams to embed the new operating practices deep into the business, where the transactions happen — ensuring adherence and sustenance in the new way of operating the business • Deploying industry leading business practices and processes (“Playbooks”), developing internal personnel and driving the necessary behaviors across the globe. • Launching a roadmap for the deployment of industry-leading operating practices, tools and governance for an improved end-to-end supply chain planning/execution capability • Establishing KPI-driven process improvement plans and dashboards for underperforming business areas/ departments and processes

Effective, collaborative and result-producing advisory partnerships like Venetia and AkzoNobel are rare. Find out how Venetia Partners’ knowledge and passion can work with your team to achieve new performance levels. Learn more: www.VenetiaPartners.com.

AKZONOBEL

“WE NOW HAVE AN END-TOEND TEAM FOCUSED ON SAFETY, PRODUCTIVITY, AND GROWTH, SO WE CAN CONCENTRATE ON MAKING MONEY” – Millissa Hernandez Flanagan, SVP Integrated Supply Chain

looking at strategies and building an organizational model around that strategy as a team, before deploying it. What has made that work, and what I’ve learnt over the years, is that the team owns the strategy from the beginning.” On first stepping into her current position, Hernandez Flanagan realized it was a business which was growing wildly. Chemicals – her specialty – in particular have been consistently profitable, showing incredible growth worldwide. However, the

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business needed to grow even further and wider, but lacked the infrastructure to support that growth. “The teams knew where the gaps were,” Hernandez Flanagan says. “They identified the gaps, and so when we built an organizational model, we used continuous improvement methodology to drive and lead key projects to build it out. This meant using standard operational excellence models to think about what a supply chain team should look like.” Having established a fully-formed

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and efficient team, Hernandez Flanagan then applied that structure to her specific division – Pulp and Performance Chemicals – and allowed the group to take ownership of it, building layers and growing into their roles. Implementing excellence Hernandez Flanagan helped to build an End to End Integrated Supply Chain organizational model removing siloed processes and helping the business to deal with mergers and acquisitions more effectively. Her team, which boasts a broad range of skills, now

exceeds 2100 people globally – and that requires standardized tools. “When you put in a model where you need to standardize and leverage acquisitions, standardized processes, roles, tools, data and governance are needed,” she explains. “To support infrastructure needed, we added a process excellence group that knows how to optimize global operational processes and tools. They know ERP and middle-layer software, and how to make it work at site level. We have 28 sites across 19 countries, and we’ve effectively deployed standardization at every one of those sites.”

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AKZONOBEL

AKZONOBEL EMPLOYS

46,000 STAFF

ACROSS 80 WORKING LOCATIONS

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One might assume such a change required a drastic overhaul of staff too, but this has not been the case for AkzoNobel. Many of its teams have worked together their entire career but while they are all very experienced, they lacked knowledge of operational excellence. For Hernandez Flanagan, the key was not hiring new people, but training the talent the business already had. “I didn’t make many changes. I brought in a few new leaders – one for capex, one for global supply chain, and so on – but aside from that, I kept the Akzo team and trained them. We had to make some adjustments along the way, but thanks to getting existing staff on board with change management, we’ve really knocked it out of the park. “They know this business, and they now have gained new knowledge on operational excellence and are really driving it. They’re now wildly set for success.” Hernandez Flanagan had also deployed similar systems at GE, SABIC, and Novelis. “The reason this model works so

well is because we kept it simple,” she says. “We had the right blend of existing talent who took the training very well, and now we’re looking at growing talent.” Hernandez Flanagan considers it a responsibility of hers and AkzoNobel’s to invest in the industry and emerging talent, and so the team is working on creating and training fresh talent with education programs that will fast-forward them into the market. This education also extends to systems which are increasingly becoming industry standard, such as Kaizen and Six Sigma, and how AkzoNobel can apply them to itself. Hernandez Flanagan is now working on value stream mapping to solidify the company’s continuous improvement strategy yet further, increasing site capacity and employee education side-by-side. The teams are constantly growing and training, and safety and productivity continues to increase as a result. “Whether you’re looking at productivity through optimization, maintenance, procurement, or opening up capacity doing value

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AKZONOBEL

stream mapping, it’s a heavy focus and starts with a mindset of Excellence,” she says. First, we drive Safety Excellence, keeping our team safe. This fosters an atmosphere of excellence required to then drive productivity and enhance growth.” Leading the industry This attitude goes a long way to explain AkzoNobel’s worldclass position. In safety, working

AkzoNobel – creating life’s essentials

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environment, and sustainability, as well as operational efficiency and change leadership, the Pulp and Performance Chemicals business continues to lead the way. Hernandez Flanagan is of the opinion that transformation of a businesses should always be focused on the right degree of change required for the challenge striving to maintain safety excellence, maximizing productivity and enhancing growth with optimized capital. Deployment of an end to end Operational Excellence strategy should be conducted in multiple waves that complement key business opportunities. “Having standardized basic HSE, Six Sigma, operations, maintenance, quality, supply chain, procurement, and capital projects, we’re now striving for excellence at the right level within each function,” says Hernandez Flanagan. “Enhancing our Digitization strategy is on our radar, to take us to the next level of excellence within our business.” Sustainability is also a passion for Hernandez Flanagan and her team. Green initiatives can often by overlooked in the supply chain

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industry, but AkzoNobel values its eco efficiency targets, concentrating on lessening its use of electricity and optimizing water across all of its sites. “We’re looking improve our carbon footprint around the globe,” she says. “We also focus heavily on zero hazardous waste to landfill initiatives, and all components that drive the eco-efficiency portion of sustainability for the company.” With each element of the transformation’s infrastructure firmly in place and underway, AkzoNobel’s task is to continue its positive development into the future. “We now have an end-to-end team focused on safety, productivity, and growth, so we can concentrate on making money – and how do you make money? Through Safety, Productivity and Growth.” Making money for AkzoNobel means remaining excellent with regard to safety, sustainability, and productivity. The business has received substantial productivity feedback since making its recent changes, and these changes allow it to grow faster and deeper than the

competition through unconstrained continuous improvement and the optimization of both capex and opex. “Our differentiator now is that we already have our end to end Integrated Supply Chain team in place, and we’ve deployed an Operational Excellence strategy over the last 18 months,” says Hernandez Flanagan. “We’ve got the right people, the right processes, the right data, and the right tools. The infrastructure is in and that’s how you manage and grow a business in a smart way.” She concludes: “Historically we have seen businesses making revenue and hit targets, but it’s short-term. An Operational Excellence model with an end to end Integrated Supply Chain structure provides a heartbeat that has poised our business for growth, and that is very exciting.”

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MANAGING ENERGY THE SMART WAY The CIO of NAES has spent a hectic couple of years getting the company ready for a future defined by growth and efficiency Written by John Oâ&#x20AC;&#x2122;Hanlon Produced by Andy Turner

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n 2001, NAES was acquired by industrial giant Itochu, a Global 250 trading company – second in size among Japanese companies only to Mitsubishi. Energy is one of its key sectors, which made NAES the leading independent operator of powergenerating facilities, a strategic target for the company. Today, NAES is recognized as the go-to partner across the industry, providing clients with operations, maintenance, fabrication, construction, engineering, asset management, technical/financial advisory, energy management and technical services. With the financial backing of its parent company, NAES has pursued an aggressive program of acquisition during the last five years. Recent additions include Gridforce Energy Management (July 2017), which ensures that clients’ power flows reliably while enhancing their profitability and reducing their risk exposure; and PurEnergy (June 2016), an asset management firm that frees power plant owners and lenders from day-to-day operational

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duties while optimizing the economic performance of their assets. These and three other acquisitions have helped to expand the Issaquah, Washington-based company into a $750mn enterprise. As CIO Jim Dionisio sees it, NAES cannot merely keep pace with the digital world; it needs to be led and enabled by IT at every stage, from its office infrastructure right though to customer relations. “If you don’t have a strong relationship with technology in your business, you are probably going out of business,” he says. In his 30-year career, Dionisio has created IT solutions for Fortune 500 companies and many state and local government agencies. When he joined NAES in July 2015, he found that the infrastructure was not entirely ‘enterprise standard.’ The relatively new leadership team presented him with the challenge of transforming NAES into a leaner, more agile organization while retaining the core values that had made it the industry leader – and not forgetting today’s top businesscritical concern, cybersecurity.

ENERGY

James ‘Jim’ Dionisio CIO

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This was no small ask. “It required serious agility from an IT perspective to reform the business in short order and bring people up to speed,” Dionisio says, “so I’ve been very busy.” He started by replacing an aging infrastructure, working with key business partners to standardize things corporate-wide. For basic

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but essential document copying and control, he called in Pacific Automation as part of a complete top-to-bottom update. For the infrastructure rebuild, he partnered with Cisco to support the growth that was taking place. Considering how small and lean a team he was working with, Dionisio knew that routine business processes

ENERGY

Typical of the 150+ powergenerating facilities NAES operates across the U.S., Canada and Mexico, the natural gas-fired Harquahala plant near Phoenix, Arizona, produces 1,090 megawatts of electricity

should not be managed in-house. The people he hired needed to focus on strategic management of data – not back office maintenance. “Key to my success here is having great people managing the data,” he says. “That’s been critical.” Since he can’t afford dedicated people for functional roles such as web development or IT procurement, he now turns much of this work over to third parties like CDW. He hired

a few essential people: a project manager, a database administrator and someone to manage the critical SharePoint platform that supports all of NAES’s power plants. A business intelligence analyst will complete the team for the time being. “I brought in people who understood what building an enterprise business is all about,” Dionisio recalls. “I now run the smallest IT shop I have ever had, but we do more with less. I’m a big

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NAES has launched a Leadership Development Initiative to nurture promising young employees, such as Brandon Barrow (shown here), an operations technician at Elwood Power Station near Chicago, Illinois

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“Key to my success here is having great people managing the data” – Jim Dionisio, CIO, NAES

believer in surrounding yourself with the brightest people you can find.” With his team in place, he set about shifting platforms such as MS Office, Email, SharePoint and Storage onto the cloud. His vision was to add hyper-convergence across NAES’s subsidiary firms to ensure that all the back-end systems would be easy to manage as resources expanded. To help achieve better tracking of incidents, tasks and changes, he brought in cloud computing specialist ServiceNow. Dionisio took a moment to enthuse about the current cloud-based Office suite. “Microsoft has done an

excellent job on the cloud services side, and we consider them a strong partner,” he says. “We love tools like Skype for Business, which is great for videoconferencing and IM’ing. I can be on a call at my desk, transfer to mobile and continue it on a train if I have to.” The bread-and-butter business for NAES is still its work in the energy sector, in which it operates and maintains some 160 power plants. Because these facilities are spread across the United States, Mexico and Canada, robust communications is a key enabler for the enterprise and its 4,200 employees. Acquiring a new company and its

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NAES operates a broad range of technologies, including this biomass plant in Florida, which burns waste from forest products manufacturing

Explore Real Stories of Digital Transformation In a cloud-first world, do you know how to succeed in: Empowering employees?

Engaging customers?

Optimizing operations?

Transforming products?

Adopting new technologies can be a daunting task. Hear from others who are leading their industries in digital transformation.

ENERGY

staff, in Dionisio’s view, should never be just a matter of absorbing it. “We give them time to settle in,” he adds. “My job is to manage migrating them into our systems, moving them into our domain, getting them onto our e-mail system, and so on.” While every acquisition is unique, the process has gotten smoother, he believes, because he’s had his team write and discuss lessons learned after each one. They then do a gap analysis to improve their next migration. “The excitement of IT,” Dionisio adds, “is that there’s always something new and positive from which you can learn.” Analytics and business information will be his team’s main concerns going forward. It is currently working with company leaders to select a single ERP platform to replace the assorted systems used by various units across the enterprise. “We need to be on a unified system rather than continue to manage the legacy systems our acquisitions bring with them,” Dionisio says. “For example, we’re currently managing six different accounting systems that we want to consolidate into one centralized ERP.” A vendor

will be chosen shortly, with the implementation slated for Q1 of 2018. Dionisio is also moving NAES from the Salesforce CRM platform to Microsoft Dynamics. He has no basic criticism of the existing system except that it takes too big a bite out of his budget. “Since we’re doing so much of our work on the Microsoft cloud already,” he explains, “I was able to bundle MS Dynamics and get my costs down to almost a quarter of what a Salesforce renewal would have cost me.” Migrating to the cloud in itself has yielded a direct saving of more than $2mn. “I like saving money – that’s the other half of the CIO hat,” he quips. “To keep doing that, we not only have to continue to innovate, we must consolidate. Every part of the business depends on technology to make it as effective and as affordable as it can be.” A case in point: NAES recently changed over to Gensuite as its dedicated program for managing safety, training and compliance across its extensive fleet of plants. This replaced a motley assortment

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“I need the wherewithal to know the business and identify the problems. If I kept my head in the sand, I’d miss the next new thing that’s just around the bend” – Jim Dionisio, CIO, NAES

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NAES manages annual ‘outages’ (power plant shutdowns) that require large-scale overhaul activities (shown here) as well as IT upgrades to ensure peak performance throughout the year

of products, each of which needed to be supported separately. “I was faced with having to hire another person,” says Dionisio, “but by consolidating everything into Gensuite, I avoided increasing my headcount.” While the new program has brought immediate benefits by standardizing training, he points out that change has to be managed sensitively. “Nobody likes being asked to abandon the thing they’re used to, even for a better system!”

Jim Dionisio loves his work, regularly arriving at the office at 5:30am and often extending his workday even beyond his 7:00pm arrival home. He’s a great believer in reading the latest literature and attending as many conferences as he can. “As CIO, my job is to understand how IT tools can solve problems,” he says. “So, I need the wherewithal to know the business and identify the problems. If I kept my head in the sand, I’d miss the next new thing that’s just around the bend.”

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INNOVATION THROUGH DIGITIZATION Rick Hassman, Pella Corporation’s Chief Information Officer, discusses the company’s adoption of integrated technologies to drive further growth Written by Catherine Sturman Produced by Andy Turner

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“I

nnovation is a key component for us. As we look at what products we have, the quality and the breadth of products and services we offer, being a national brand, is a distinguisher for us,” remarks Pella Corporation Chief Information Offer Rick Hassman. Passionate about the company’s leading ambitions to remain ahead of the curve and cater to an ever-changing customer demand, Hassman has been behind Pella Corporation’s internal digital transformation, which has seen it drive positive customer experience and business growth at every step. With a growing number of Pella window stores across the United States, Hassman explains the importance of housing a customer-direct business model, which has seen it gain an edge over competitors. “We’re one of the very few companies that has a direct sales network,” he says. “Between our vast network of direct sales showrooms, the Pella Certified Contractor Program to help consumers with installation to our own customer service teams within the corporate office and within our sales location, we can support the customer, every step of the way. That’s a key differentiator, for Pella.” Evaluating the distinct stages of customer interaction throughout the industry, the subject of reliability continued to be a theme. Thus, Pella has transformed its processes to continuously develop trust with its customers, which is now supported through the implementation of enhanced data

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CONSTRUCTION

“We can support the customer, every step of the way. That’s a key differentiator, for Pella” – Rick Hassman, Chief Information Officer

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#processmining

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analytics. This has further allowed the business to better understand customer needs and requirements. “Throughout the building industry, when you start thinking about the experiences that a lot of people have with contractors, with delivery, with building materials, reliability plays in all of those touchpoints,” comments Hassman. “Thus, through our data analytics, we adjusted our own customer processes for more communication on when we’re going to arrive, when the product’s going to be there and to step up and troubleshoot any issues. That is really what customer experience has become for us.” Gaining deep insights Adopting a new ERP system, Pella has been able to centralize its core

systems and integrate its data technologies, enabling it to remain competitive, create a seamless service and retain its position within the window and door market. By working at Pella for nearly 20 years, Hassman has witnessed how the industry has deepened its focus from building relationships, to investing in digital technologies to drive long term savings and allow for increased efficiencies. “There is a dependency on data, on ease of ordering, information being fed,” observes Hassman. “The whole service experience from a digital perspective is where the construction industry lags.” Pella has developed a ‘built-toorder’ environment, overhauling its traditional systems which became unable to support the changes within

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Architect Series Reserve Historical Windows & Doors from Pella

its service delivery. Pella’s longstanding partnership with Oracle has seen the company counteract such complexities and transform its IT infrastructure to guarantee increased flexibility and scalability for future growth. This has also filtered into a complete transformation of several of Pella’s departments; from manufacturing, order processing and finance to its CRM and customer service systems. Disruptive technologies The implementation of a continuous improvement culture (CI) at Pella in the early 90’s, mixed with the data analytics and customer feedback provides a multitude of strategic advantages and feeds into Pella’s overall brand strength. “It allows us to be more agile and react to the industry needs, and provide a deeper and more service focused experience,” reflects Hassman. Pella’s partnership with Munich-based B2B SaaS startup Celonis

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will also help enhance its CI capabilities. The use of process mining within the project will enable Pella to get even more out of its data and provide key insights as to how the business can be improved long-term. “Celonis extracts our data, which includes time stamps, system flows, work flows and all the data that comes within the applications and creates an accurate view of how processes occur within our systems,” explains Hassman. “For example, it maps out

“The whole service experience from a digital perspective is where the industry lags” – Rick Hassman, Chief Information Officer

exactly how a purchase order is created, how requisitions created it, and how a purchase order is then evolved from the requisition. It also details how it’s released, how it’s received and how it’s paid. “It creates an encompassing view of our efficiencies. When we deviate from a process, it shows what’s causing that. It’s a ‘lean systems’ view of where we have inefficiencies

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in our process and it allows us to quickly get to those points. “It’s very exciting because it’s a complete circle. We started with CI, which mapped out our process and we then moved to this integrated system. Now, this integrated system is feeding the data back as part of the CI, allowing us to develop even more efficiencies.” Setting a precedent Pella adheres to the highest possible standards across its manufacturing operations, even testing many products beyond their required

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industry caliber. Nonetheless, this has presented a number of challenges for the business. From a windows perspective, the minimal standards within the building industry vary from region to region across the US, creating a number of complexities for manufacturers. “Window and door styles are different across the US,” notes Hassman. “We have to balance between business priorities and building codes and industry trends, almost daily.” “It is something we’re always trying to determine, from a sustainability and

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compliance standpoint, where can we expand and grow and what steps do we need to implement to do it,” he continues. Additionally, desired styles and materials used in the manufacturing of Pella’s products tend to differ depending on region, especially within new homes and buildings. “Historical designs are coming back,” observes Hassman. “While there is also a contemporary style trend where customers want a minimal frame and large expanses of glass.” Despite such challenges and slow growth within the window and

door industry, Hassman expresses confidence in increased innovation and energy initiatives within the sector. “Aluminum will be a preferred material in some parts of the country, and in other regions, vinyl will be preferred, as well as a love for the versatility and timelessness of wood,” he concludes. “The sizes of windows continue to grow. People are really looking at the window as a wall in many areas, highlighting where the industry is headed.”

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A STORY OF

TECHNOLOGY TRANSFORMATION

AT RUBIE'S COSTUME COMPANY

Rubieâ&#x20AC;&#x2122;s Costume Company is the largest designer, manufacturer and distributor of Halloween costumes and accessories in the world. Chief Information Officer Greg Tsirulnik explains how the familyowned company is using new software systems to stay ahead of the competition Written by Fran Roberts Produced by Andy Turner

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“R

ubie’s has been, and still is a family owned company,” reveals Greg Tsirulnik, Chief Information Officer. The three principles of the Beige family continue to be intimately involved in the day to day operations and the growth of the company. “They’ve created an environment that allows the employees to be creative and come up with a variety of interesting and out of the box ideas, designs for the products, as well as ways to improve already an excellent customer service. It’s clear that they put their heart and soul into everything that they do. They don’t just create a product for the sake of creating a product,” Tsirulnik states. “They take pride in what they do. It’s not just about the bottom line but also about the customer.” This sense of pride and family involvement is seen throughout Rubie’s, which today employs over 2,000 people worldwide. “What I find remarkable is that there are several generations working in the company. It is not uncommon to see an individual with the company for 25, 30 years,

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“We’ve been here for 66 years, and I don’t really see us slowing down” – Greg Tsirulnik, Chief Information Officer and their offspring continue the tradition working for the company in various areas of business. It’s kind of cool and refreshing to see that type of love for the brand. Today there are several next-generation Beige family members that work in various departments: production, sourcing, sales, marketing and ecommerce. The company is still young and growing and it’s evident of the younger generation impact on its growth.”

M A N U FA C T U R I N G

“RUBIE’S HAS BEEN, AND STILL IS A FAMILY OWNED COMPANY” – Greg Tsirulnik, Chief Information Officer

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R U B I E ’ S C O S T U M E C O M PA N Y

‘Rubie’s Costume Company is the largest designer, manufacturer and distributor of Halloween costumes and accessories in the world’

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Embracing ecommerce Despite being nearly 70 years old, Rubie’s has moved with the times and embraced modern technology and industry trends to stay ahead of the competition. “I believe that the online industry is going to continue its growth. We’ll have to adapt to that to stay competitive. The industry is taking its direction from the online consumer. We are seeing more and more sales by marketplaces such as Amazon and eBay which we are actively working with,” explains Tsirulnik. “Ecommerce shopping is becoming more of a standard.” The popularity of online shopping has also changed the way that consumers purchase products from Rubie’s. “People usually try to order as far ahead as possible using the online sites,” Tsirulnik reveals. “The trend has been that in the retail stores – whether it’s the several of our flagship stores located in New York or the customer stores throughout the world – it seems that customers order online and go to the store when it’s much closer to Halloween time so they can see the product, touch the product and buy

costumes when online stores can’t offer the shipping methods to get it in time.” Enhancing its hardware is also key to keeping Rubie’s ahead of the competition. “We are working on advancing our business continuity planning as well as disaster recovery. A lot of solutions have already been implemented, but as you know technology’s always evolving,” acknowledges Tsirulnik. “We’re now looking to the cloud and outsourcing to partners like Microsoft to better enhance the solutions that are already in place.” Partnering prowess Rubie’s has already collaborated with some key software partners to more effectively manage the company’s operations. “One of the partners that we work with is NCG. We utilize their web PLM [Product Lifecycle Management] system. Through the partnership that we have developed, we use the system to create designs. It’s an entire lifecycle, so from the concept to the actual design, to style adaptation, through different technical specifications, license approvals,

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timelines and more,” details Tsirulnik. All that information is entered into the collaborative PLM system that is being utilized across all the Rubie’s products – costumes, accessories, wigs, masks, hats – and across multiple brands as well. “The PLM system allows us to control the production approval process, designs, and standardize, as well as centralize, all that in one particular

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system,” comments Tsirulnik. “The second partner that we utilize is Simparel. Simparel provides us with an enterprise resource planning system, an ERP.” Through that system, Rubie’s is able to control and track the entire sales, production, purchasing, and financial aspects of the business. Sales orders go into that system and production orders are placed against the

M A N U FA C T U R I N G

demand or as part of replenishment, allowing orders to be tracked. “We’re able to see what state the sales orders are in, what the demand is, what the top sellers are, and then respond to those demands accordingly,” Tsirulnik remarks. “We’re able to forecast and plan certain lines ahead of time and create the production orders against those and in a specific manner. It’s an

intelligent tool that allows us to run our business much more effectively.” Exploring new territories While much of the company’s business occurs in the run-up to 31 October, Rubie’s offers a vast selection of products that extends well beyond Halloween, helping people around the world celebrate holidays and special occasions from

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“We’re able to see where sales orders are, what the demand is, what the top sellers are, and then respond to those demands accordingly” – Greg Tsirulnik, Chief Information Officer

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RUBIE’S WORLDWIDE

Rubie’s is the world’s leading costume designer and manufacturer with offices around the globe.

Easter to Mardi Gras, St. Patrick’s Day to Christmas, New Year’s Eve to bachelorette parties and everything in between. As an exclusive license holder in the US, Rubie’s has many of the most popular collections within its portfolio, including Star Wars and Harry Potter. But what does the future hold? “We will continue exploring new territories, partnering with different

businesses and seeing which markets we can penetrate, creating different partnerships with a variety of different companies, and just accumulating in the industry. We’re not going anywhere,” advises Tsirulnik. “We’ve been here for 66 years, and I don’t really see us slowing down. Rubie’s is Halloween, we are the trend and the pace setters.”

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The source of value

Procurement executives across the globe continue to see the potential they can unlock throughout the supply chain. They understand that business today is about engaging, collaborating, adapting instantly to evolving needs, and finding new sources of value. Getting that value, however, can prove a challenge.