USA EDITION
January 2018
HOW AVERY DENNISON STAYS AHEAD THROUGH PROCUREMENT INNOVATION Exclusive interview with Roland Simon, VP Global Procurement Materials Group & Corporate Sustainability at Avery Dennison
BOSTON CITY FOCUS
AGCO’S
PATH TO SUPPLY CHAIN EXCELLENCE
PLUS
FOREWORD HELLO, AND WELCOME to January’s USA edition of Business Chief. The new year has brought with it a new look and even more original content for the magazine. This month, we feature an exclusive chat with the American CEO of BrewDog, Tanisha Robinson, about how Scotland has spread its legacy of craft beer to the United States, and what makes it so popular there. We also look at the future of the Internet of Things and how it is set to impact 2018, as well as speaking to Indeed’s Senior Vice President and Global Head of HR, Paul Wolfe, about the company’s unique treatment of staff.
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On top of all this, January contains a look at how the UN and World Bank’s ‘Roadmap For a Sustainable Financial System’ is likely to affect the future, and additionally, we discuss the venture capital resurgence occurring in Boston. Plus, our first list of the year is the top 10 fastest-growing companies in the US. Also featured this month are unique interview-based articles on Avery Dennison, AGCO Corporation, AkzoNobel, NAES Corporation, Rubie’s Costume Company Inc, and Pella Corporation. Enjoy the magazine, and feel free to join in the conversation on Twitter: @BizReviewUSA
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BrewDog joins the US craft beer revolution PEOPLE
THE BREAKTHROUGH YEAR FOR IOT? TECHNOLOGY
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Indeed shows how to make an ‘unlimited leave’ policy work
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Can the UN and World Bank’s ‘Roadmap for a Sustainable Financial System’ lead to a brighter tomorrow?
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CITY FOCUS
BOSTON
A VENTURE CAPITAL COMEBACK IN TECH TOP 10
TOP 10 FASTEST GROWING COMPANIES IN THE US
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64 AGCO
SUPPLY CHAIN
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Avery Dennison SUPPLY CHAIN
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Naes
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AkzoNobel SUPPLY CHAIN
Rubies Costume Company
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Pella Corporation CONSTRUCTION
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BrewDog joins the US craft beer revolution Scottish brewer BrewDog is spreading the cult of craft ale with expansion into the USA. American CEO Tanisha Robinson explains how her background in startups has equipped her to deliver an aggressive program of growth with plans for new tap rooms, hotels and breweries across the country Writ ten by DAN BRIGHTMORE
SINCE 2007, BREWDOG’S founders James Watt and Martin Dickie have been on a mission to make the world as passionate about great craft beer as they are. BrewDog disrupted the business world in 2010 with the launch of a pioneering crowdfunding initiative. Equity for Punks (taking its name from the brewer’s flagship ale Punk IPA) has seen the company raise £40m since 2009, taking more money through crowdfunding than any other on record. Watt and Dickie believe the funds, and the army of 56,000 punk shareholders, have enabled their Scottish craft brewery to scale up without selling out. With almost 50 global bar launches, export into 60 countries, and a new brewery recently opened in Ohio, BrewDog is determined to take the craft beer revolution stratospheric, with Watt and Dickie keen to push the boundaries, put the beer first, champion other small breweries in its venues and invest in people. And getting the right people to serve up American expansion was key. “We were searching for someone to head up our USA operations, and as soon as we met Tanisha Robinson we knew we’d found our top dog,” 10
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says Watt. “The killer combination of her astute business instinct, huge passion for craft beer, and her love of our new hometown Columbus, made her the perfect fit. Our USA launch and expansion is one of the most exciting and ambitious ventures we’ve dreamt up yet, and with Tanisha at the helm, the sky is the limit.” “It’s been a busy few months in my role as CEO of BrewDog USA, and my goal is to have it not slow down!” jokes Robinson. “We’ve officially opened our first US brewery in Canal Winchester along with the company’s largest taproom to date (and first in the US), DogTap in Columbus.” Ohio is the launchpad
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for BrewDog’s Amercian expansion plans. “Our beers are available at retail and on tap throughout the state of Ohio,” confirms Robinson, who reveals further expansion in the Columbus area to cement the brewer’s US base camp. “We’ve just opened the Short North Bar and Franklinton will open in spring 2018.” The state of the art 100,000 sq ft eco brewery occupies a 42-acre site at Canal Winchester in Columbus and is running on all cylinders confirms Robinson. “Right now, we’re capable of producing 110,000 barrels, or more than 1.5mn cases, annually. Once we expand production to full capacity, the output will reach 550,000 barrels
“BrewDog US is very much like an earlystage startup. It’s absolute mayhem, and I’m completely in my comfort zone” – Tanisha Robinson, CEO, BrewDog USA 11
DOGHOUSE COLUMBUS IS COMING!
annually - more than 7.5mn cases. Our US brewery is also one of the most technologically-advanced and environmentally-friendly breweries in the world.” “Additionally, we’ve already broken ground on the world’s first crowdfunded craft beer hotel the only way we know how - by blowing sh*t up!” laughs Robinson. “The DogHouse will be located on our Canal Winchester property adjacent to the brewery. In true BrewDog fashion, we broke the ground with 12
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an explosion. We’ll be hosting grand openings for our new taprooms, and we have a few other tricks up our sleeves, so stay tuned.” “‘We blow sh*t up’ is my favorite part of BrewDog’s charter,” enthuses Robinson mischievously. “It’s a directive for us to constantly challenge ourselves in how we think about our business. But in this case, it only made sense to take it literally. The DogHouse is already a hotel and sour beer facility like no-other thanks to our Indiegogo backers and Equity Punks,
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so it deserved an explosive start to construction. We’re super excited for it to launch in summer 2018.” The hotel will feature a craft beer spa, a Punk IPA tap in every room and an in-shower beer fridge. Guests who stay in the luxury suites will even have their own hot tub full of Punk IPA. “We’ve also pledged to build a bar across the US-Mexico border,” reveals Robinson. The remote location of the new venture, dubbed ‘The Bar on the Edge’, reflects the Scottish brewery’s intention to expand to the
farthest reaches of the United States, while its controversial positioning makes a physical statement about collaboration and inclusivity, which have always been a cornerstone of the craft brewer’s identity. “’The Bar on the Edge’ will be set up in the furthest outskirts of the United States, highlighting our ambition to reach every corner of the country as we begin to brew our beers on US soil. Beer has always been a unifying factor between so we thought it would be fun to place the bar a few 13
L E A D E R S H I P & S T R AT E G Y feet further to actually cross the US-Mexico border too,” says Watt To further meet the challenge that American expansion brings, Robinson is honing in on recruitment. “We’re currently looking for great people that bleed craft beer and love to blow sh*t up - two main points of the BrewDog Charter! We’ll be hiring across every aspect of the business, and more than doubling the size of our US team,”
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she pledges. “And we’re always on the hunt for talented brewers as we expand capacity.” Robinson is aware BrewDog faces stiff competition from the legion of craft breweries across the States. “It’s really forcing everyone in the industry to fixate on creativity and quality,” she notes. “This means there’s a lot of really amazing, interesting beers coming out, and this expanded range means
a lot of people that aren’t into craft beer, yet, will definitely find something they love. The Columbus, and wider Ohio, beer scene is particularly vibrant because of the constant expansion, knowledgeable patrons, talented brewers, and incredible diversity.” How has her career prepared her for the challenge of establishing the BrewDog brand in America? “I’d say 85% percent of my role at
“Our USA launch and expansion is one of the most exciting and ambitious ventures we’ve dreamt up yet, and with Tanisha at the helm, the sky is the limit” – James Watt, Co-founder, BrewDog
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BrewDog is basically the same as what I was doing previously leading my startups,” Robinson confides. “BrewDog US is very much like an early-stage startup. It’s absolute mayhem, and I’m completely in my comfort zone.” Robinson, a long-time Columbus resident, has a wealth of entrepreneurial experience having founded several successful companies priming her to deliver sales strategy, operational growth, and developing Brewdog’s American bar division while creating a cohesive business consistent with the brewer’s Aberdeenshire roots. Her most recent startups include Print Syndicate, a design, technology and marketing company known for lookHUMAN.com, ActivateApparel. com, and MericaMade.com, which sold in excess of $40m worth of products in its first four years. She also co-founded TicketFire, the mobile app that allows users to use, transfer and sell paper tickets, and currently serves on the board of The Columbus College of Art and Design, Mount Carmel Health System, and The Greater Columbus Arts Council. Brewdog launched its Equity for Punks program to American 16
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“We’re focused on making great beers, telling our story to the US in a very BrewDog way” – Tanisha Robinson, CEO, BrewDog USA
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audiences in 2016. After closing in summer 2017, it had garnered a community of thousands of investors raising more than $6m. With the Brewer’s Association anticipating the craft beer market to account for 20% of the total beer market in America by 2020, BrewDog is poised to take all it has created in Europe and establish itself through its base in Ohio with Robinson installed to drive integration into the US market. Fuelling that integration is BrewDog’s unique approach to CSR. “We’ve announced we’ll be giving
away 20% of our profits every year - 10% will be shared equally among our staff and 10% will be donated to charities chosen by our people and our Equity Punks,” explains Robinson. If the brewer achieves its projected targets, BrewDog will donate in excess of $58mn via this Unicorn Fund in the next five years alone. Giving away 20% of our profits, forever, is not about altruism,” maintains Watt. “It is about impact. It’s not about profits. It is about purpose. This is the biggest community-fuelled, crowdfunded charity contribution 17
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in history. Outdated CSR policies have zero consideration for their real-world impact, existing merely for the purpose of an oversized check and an awkward photo shoot,” he adds. “This is a call to arms for businesses to democratize the impact their charitable contributions can have on their community, 18
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their people, and the world.” Of the total, 10% of profits donated to worthy causes, 5% will go to charities chosen by BrewDog’s Equity Punk investors, and 5% will be issued to charities chosen by its global team of employees. BrewDog has also committed to reinvesting the balance of its profits back into the
business for at least the next seven years. Valued at more than £1bn in 2017, sales at the craft brewer rose 61% in 2016 to £71.8m, leading to an 8% rise in pre-tax profits to £3.76m. “We’re hugely excited to launch the Unicorn Fund in the USA,” says Watt. “As we grow here in the States, each of our bars will have their own Unicorn Fund to give back to their local communities as well as worthy global causes. Right now, we’re 110-strong and growing our US workforce daily, along with 9,000 newly recruited American Equity
Punks, all of whom will be responsible for the positive impact of the Unicorn Fund in the years to come.” To achieve a positive impact beyond the bottom line, the real work starts now. “Our biggest priority right now is getting our beer into people’s hands,” affirms Robinson. “We’re focused on making great beers, telling our story to the US in a very BrewDog way, being the greatest place to work in the world, and creating awesome experiences for our customers and the Equity Punk community.”
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THE BREAKTHROUGH YEAR FOR IOT? STUART HODGE LOOKS AT WHAT 2018 HOLDS FOR THE INTERNET OF THINGS, HOW IT’S SET TO GROW AND WHAT THE REMAINING CHALLENGES ARE Writ ten by STUART HODGE
T E C H N O L O G Y T R A N S F O R M AT I O N THE INTERNET OF Things is ready to take its rightful place at the forefront of business in 2018. Or so it would seem: a recent report from Navigant Research claims that combined cumulative global revenue for Industrial IoT (IIoT) devices, software, and services is expected to total more than $1trn between 2017 and 2027. IoT is essentially the glue which binds people, machines and data - so it’s no surprise to see it becoming a major point of focus for businesses around the globe. The Navigant report also states that revenue from annual global shipments of IIoT devices is expected to grow from $47.9bn in 2017 to $129.3bn in 2027. Ralf Gladis, CEO at global payment solutions provider Computop, can see the change happening. “The Internet of Things is fast becoming a reality around the world,” he says. “Both small and large devices will process payments for us. Our cars will automatically pay for fuel and parking fees, our smartwatches will pay for taxis and our smartphones will prove to be a universal tool to buy and pay everywhere. 22
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“With that scenario in mind, payment will become a silent, smooth and automatic process. Only payment methods that support this will have a future.” But for the technology to become a truly global phenomenon, Gladis believes ensuring consumer trust is key. “How do you want your car to pay for fuel? Credit card, PayPal or your company’s fleet card? Handing that process over to our devices will be a big change in consumer behavior. “New payment brands with no history or trust would keep consumers from embracing new technology and would slow the process down. Established brands will probably make the decision easier.” Gladis is speaking in terms of the end user, and IoT disrupting numerous industries: especially manufacturing, energy, agriculture, healthcare, and automobiles. As a result, more and more organizations who are embracing IIoT are beginning to recognize the potential of leveraging the technology. “We are starting to see more and more companies across the spectrum adopt IIoT strategies,” says Neil
How the Internet of Things Will Change the World
“How do you want your car to pay for fuel? Credit card, PayPal or your company’s fleet card? Handing that process over to our devices will be a big change in consumer behaviour” RALF GLADIS CEO of Computop
Strother, principal research analyst with Navigant Research. “They are deploying hardware and software platforms to help lower operational spend and to serve as a competitive differentiator that can help them sell products and services at lower costs. “IIoT technologies also support a broad digital transformation initiative within a business, enabling it to offer customers enhanced services and improved experiences.” 23
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At this moment, there is an argument that IIoT solutions appear somewhat overwhelming to deploy for managers unsure how to harness the array of technology choices. Industrial managers face additional costs, complex technologies, big data, and uncertain outcomes with the result being a confused potential customer base and a market which has both the desire and potential to grow more quickly. Further research, from $7.4bn turnover IT services company HCL Technologies, drilled a little more deeply into these struggles. Their work, based on a Vanson Bourne survey of 263 organizations across Europe and the United States, found that as many as 49% of organizations surveyed are struggling to get off the ground with IoT, due to an uncoordinated and siloed approach, with 43% saying their customers will suffer as a result. The findings of this report indicate that despite widespread acknowledgement of the potential benefits of IoT, many organizations are limiting its use to just one process or function, as opposed to a businesswide approach. According to HCL, 25
T E C H N O L O G Y T R A N S F O R M AT I O N this represents a major threat which could derail IoT projects by postponing the time-to-value, and thereby reducing the competitive advantage that businesses stand to gain. Matthew Dunkley, a Director for IoT at Flexera who works with businesses to monetize their IoT investments, recently penned some notes around best practice for intelligent device manufacturers. “The Internet of Things is transforming today’s landscape – promising higher margins, new revenue streams and steep profits. Manufacturers used to be able to deliver updates yearly, which seems almost inconceivable today,” he says. “Constant updates are now the
“The Internet of Things is transforming today’s landscape – promising higher margins, new revenue streams and steep profits” MATTHEW DUNKLEY Director for IoT, Flex
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norm – be it weekly, daily or even hourly. Producers must absolutely do that to keep their software safe and secure and mitigate vulnerability risk. “Companies making this transition are already reaping the rewards and commanding premiums. Why? Because they understand the power of their device is in the software, which includes all of the features buyers desire. And managing the software in devices requires a different way of looking at their entire business model.” He expands: “Take software upgrade management, for example – the process of making sure customers have the latest and greatest technology powering their devices. IoT companies that think like software companies know they must manage the core processes (renewals, delivery of software and updates, maintenance and services). If they do not do this right, they will suffer from low renewal rates. “For instance, IoT companies often do not have processes in place to manage the software lifecycle over time and drive renewals – meaning that end users are often unaware of available upgrades, or have trouble finding them. When
Lenovo Tech World - Internet Of Things
that occurs, satisfaction falls.� Customer satisfaction will be the key to making the technology more widely popular, particularly with end users. The HCL report also pinpointed security concerns as being the principal reason as to why the technology has not been taken up more widely to this point. Indeed, 38% of respondents cited this as the primary barrier. Global security company Forcepoint has just released its 2018 predictions, and the report asserts that because
of the wide-scale adoption of IoT devices in consumer and business environments combined with the fact devices are often both easy-to-access and unmonitored, these devices are now a highly attractive target for cybercriminals wishing to hold them to ransom or obtain a long-term, persistent presence on the network. Whilst ransomware of these connected things is possible, it remains unlikely in 2018. The main new threat that will emerge this year is what the report is calling ‘the disruption of 27
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things’. The belief is that, because the IoT offers access to both disruptive possibilities and massive amounts of critical data, we will see attacks in this area, and may also see the integration of a ‘man in the middle’ (MITM) attack. In short, IoT will not be held to ransom but instead become a target for mass disruption. “At the heart of our predictions is a requirement to understand the 28
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intersection of people with critical data and intellectual property,” said Dr. Richard Ford, Chief Scientist at Forcepoint. “By placing cyber-behavior and intent at the center of security, the industry has a fighting chance of keeping up with the massive rate of change in the threat environment. “We know that data leakage and ransomware will continue to be the focus for remediation and prevention,
“By placing cyberbehaviour and intent at the centre of security, the industry has a fighting chance of keeping up with the massive rate of change in the threat environment” DR. RICHARD FORD, Chief Scientist, Forcepoint IIOT revenue is expected to surpass $1trn in the years up to 2027
but behavior-centric risks are now behind a multitude of security incidents. People’s behavior should not be set in opposition to security: the two are not mutually exclusive. “Users have the potential to unintentionally compromise their own systems in one minute and be the source of innovation in the next, but we can only empower users if we truly understand the ways they
interact with critical business data.” Caution must therefore be exercised by anyone in business who is choosing to embrace IoT. Without doubt, the future of IoT is a positive, if uncertain, one. No doubt there are multiple barriers which will need overcoming if the technology is to reach its full, disruptive potential. Could 2018 be that year? Let’s wait and see. 29
Indeed shows how to make an ‘unlimited leave’ policy work Indeed’s Senior Vice President and Global Head of HR, Paul Wolfe, explains how and why the company implemented a policy of unlimited leave for staff Writ ten by STUART HODGE
PEOPLE
PEOPLE AS A COMPANY specialising in recruitment, it should come as no surprise that Indeed, the world’s number one job website, knows what it takes to be a good employer. Indeed, which now has over 200mn monthly visitors to its global website, offers all manner of benefits to its 5,000 or so global employees including parental leave for both primary and secondary caregivers, adoption assistance, back-up child care, student loan repayment management, a wellness program and even pet insurance.
The company also ensures that all offices are stocked with healthy snacks and beverages, with remote workers receiving a monthly box of snacks, similar those available onsite. Indeed implements a casual dress code in open offices with convertible desks that offer a sitting or standing option for employees, and there is plenty of comfy seating and spots where employees can go for some quiet time or one-on-one meetings. Communication access is also a premium consideration, with Indeed ensuring that video conferencing
Indeed believes it helps to have spaces for staff to break out, work and collaborate. Opposite: Indeed’s ninth floor terrace at its New York office 32
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“Compensation consistently ranks as the least significant factor when it comes to considering what makes people happy at work” – Paul Wolfe, Senior Vice President and Global Head of HR.
is available for all employees to connect with the rest of the company’s global workforce. But despite that myriad of resources and benefits available to help keep employees comfortable and happy, there is still one policy we are yet to mention which seems the most innovative and potentially groundbreaking of them all: Indeed allows all of its employees unlimited leave. Under what the company calls its ‘Unlimited PTO’ policy, employees can take as much time as they wish
– for sickness, personal days or vacation days. There are no limits. A company statement says: “Open PTO empowers current employees, makes for happier workers in the long-term, and also demonstrates to potential talent that the company cares about the health and wellbeing of its employees. “Beyond salary and benefits, most workers will gravitate towards opportunities that are employeecentric. Compensation consistently ranks as the least significant factor when it comes to considering what 33
PEOPLE makes people happy at work.” This last statement is backed up by findings in the company’s own Workplace Happiness Index, 2016. Indeed considers the unlimited PTO policy to be an unmitigated success, so we caught up with the company’s Senior Vice President and Global Head of HR Paul Wolfe to find out more. “An engaged workforce is critical - if you don’t have an engaged workforce, you are going to be facing constant turnover, low productivity and a lacklustre employer brand,” he says. An engaged workforce is really
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the foundation for a successful company and a company’s greatest asset - a happy employee is your best brand ambassador. “These days it’s rare that you would interact with a candidate who hasn’t researched your company either formally using tools like Indeed Company Pages, or informally by asking their family, friends and extended network what they think about your company brand. Happy employees will have strong messages to share about why your company is a great place to work.
Chill out areas help to keep staff happy and motivated
“We believe that trusted, empowered and rested employees have a better chance of being happier and also performing better” – Paul Wolfe, Senior Vice President and Global Head of HR “Companies who are actively engaged in offering a rewards culture need to make sure they are promoting it in their job descriptions to help bring candidates in, and companies who are struggling with retention should think about ways they can make their environment more attractive to effectively compete for talent.
“Ultimately, the investment it takes to create a supportive work environment is rewarded with happy, highperforming and retained employees.” And unsurprisingly, the policy proved mightily popular with staff. “It was extremely well received and is very popular with our employees,” Wolfe says. “Part of the reason this
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PEOPLE is successful is that we are showing we trust our employees to take the amount of time off that makes sense for them and their roles. “We also encourage people to take time off: managers have conversations with employees who aren’t taking time away, and also take time away themselves to set a good example that rest and recuperation is important. We consider our paid PTO program a success because employees have taken a healthy amount of time off and simultaneously been very productive.
“ These days it’s rare that you would interact with a candidate who hasn’t researched your company” – Paul Wolfe, Senior Vice President and Global Head of HR
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In fact, we saw a 28% increase in the number of days taken off by employees after the first full year.” The unlimited leave policy is not a global first. It remains pretty rare but there are other companies within the technology sector who have done the same or similar – however, the size of Indeed as a company makes its rollout of this kind of policy particularly noteworthy. Where did the idea come from for Indeed to do this and how does it make sure that employees
Open-plan eating and meeting spaces (above) along with chill out areas (below) help staff unwind yet remain productive
don’t abuse the privilege? “We believe that trusted, empowered and rested employees have a better chance of being happier and also performing better,” says Wolfe. “Our leadership team thought through the pros and cons of implementing an Open PTO program and the benefits were overwhelmingly outweighing any cons. Ultimately, we want to create a great work environment for our employees so they can, in turn, help others find great jobs as well. “The open paid time off policy was rolled out on a global scale at Indeed, and managers were provided with FAQs and support on monitoring their team’s time off. The unlimited vacation policy also reflects Indeed’s core mission of helping employers attract the talent they need, and job seekers find work that they enjoy. “Our managers are responsible for approving time off - so we don’t really have any issues of abusing the policy. Managers and employees work together on discussing PTO and covering off on responsibilities during time away.” It seems then like a good idea,
well-executed, by a successful company. As well as the higher performance of a highly-motivated and cared-for for workforce, what other positive benefits has Wolfe seen as a byproduct of the policy? “Indeed is a rapidly growing global company,” he explains, “so like any growing company, we have to make sure we are keeping engagement high as we grow and that we don’t lose our culture and the things that make Indeed a great place to work. “Numerous factors go into this: the office environment, the kind of work staff are doing, their manager and team, to name just a few. You have to work on all of these aspects which in concert contribute to an engaged workforce. “And tenure is certainly a byproduct of motivated employees. We want to keep people that we hire with Indeed as long as we can, and motivation is critical to that. “We realize it is unlikely we will keep all of our employees for the length of their careers, but while they are at Indeed, we want them to be happy, and if they decide to leave, we want them to look back at their experience with us positively.” 37
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Can the UN and World Bank’s ‘Roadmap for a sustainable financial system’ lead to a brighter tomorrow? A range of commentators have mixed reviews on the potential impact of research from the UN’s top environmental body and the World Bank Group Writ ten by STUART HODGE
S U S TA I N A B I L I T Y
AXA and the United Nations Environment Program Inquiry held a conference to discuss ‘New Rules for New Horizons: Reshaping Finance for Sustainability’
SWEDISH FINANCE AND sustainability expert Sasja Beslik knows that things need to change: the status quo with the current construction of the global economy and the rate and means by which we are using the planet’s resources is not sustainable. Beslik, one of his country’s foremost experts on finance and sustainability, feels an awakening and a global 40
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recognition of the need to reshape how financial challenges are looked at is necessary to effect meaningful change and bring long-term solutions. At the end of last year, the UN’s top environmental body and the World Bank Group released a roadmap “to help governments and the private sector design a global financial system that is fit-for-purpose”. The research found that climate
“ The challenge is not about what to do any more, the challenge is how to do it and how quickly you do it� SASJA BESLIK, Head of Group Sustainable Finance at Nordea Bank
action has opened up an initial investment opportunity of $22.6trn from 2016 to 2030 and stressed how the next two years will be crucial to build on existing initiatives and finance sustainable development globally. Beslik is pleased to see a progressive move towards recognizing the issues we are facing, but is adamant that this can only afford to be the mere 41
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The roadmap is built on traditional logics that are linked to alternative and innovative finance
S U S TA I N A B I L I T Y beginnings of any real progress. “The roadmap is a very good first step, but the devil is in the implementation side,” he says. “The challenge is not about what to do any more, the challenge is how to do it and how quickly. “When I started working 10 or 15 years ago, sustainability was not on the agenda in the financial sector, but now it is. We all agree that we have responsibility but now we need to figure out how to meet it.” The UN and World Bank research backs Beslik’s assertion, showing
“The UN and World Bank roadmap for a sustainable financial system includes three major insights: a definition of sustainable finance, clear mapping and certain actions” ARINE GIRARD, Finance Professor C at Audencia Business School
that policy and regulatory measures targeting sustainability have grown 20% year on year since 2010. “I think it’s a very ambitious road map,” Beslik continues, “but a good first step. The magnitude of this transition that we need to happen in the financial sector is huge, but it’s so needed. And it needs to happen much more quickly, because while you and I can do things on a personal level to, say, reduce our private impact, we are digging a hole beneath ourselves if we don’t get financial systems to act much more swiftly on this.” But is Beslik, who works as Head of Group Sustainable Finance at Nordea Bank, surprised at how often these challenges are ignored by vast swathes of the market? “Saying we a long way to go is an understatement, but all of us have seen more focus on sustainability within the financial sector over the last three years, purely because more players are understanding the market opportunity in this from the product side. Also I think some are feeling more pressure, both from regulators and from customers, and they think they need to take a stance on this.” Carine Girard, Finance Professor 43
S U S TA I N A B I L I T Y at Audencia Business School in Nantes, France, believes the report has provided clarity. “The UN and World Bank roadmap for a sustainable financial system includes three major insights: a definition of sustainable finance, clear mapping and certain actions,” she says. “These proposals were developed from a multi-level analysis that was international, national and marketbased. This analysis integrates not only the stakes in terms of governance, but also environmental, social and governance risks as well as We have seen more focus on sustainability within the financial sector over the last three years
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impact investing. Such an approach is designed to ensure effectiveness, efficiency and resilience. “This type of financial system makes sense because it is built on traditional and local logics using high-impact drivers that are linked to alternative and innovative finance.” Technology investor Jeff Stollman has an MA in economics and many years spent as an environmental economist, and he takes a different stance. “The concept addresses currently popular trends, but is, itself, unsustainable for a number
Proposals were developed from international, multi-level analysis
of reasons,” claims Stollman, who currently manages Rocky Mountain Technical Marketing, Inc. “A key element of the program is redirecting negative externalities, especially environmental externalities, so that they are accounted for in the cost of production. “Problems with that could include businesses resisting adding cost to their products because it will make them less marketable, or because the redirection of externalities will be uneven across industry sectors and across pollutants and other deleterious impacts, there will be
‘The entire financial sector since 2008 has been facing a cultural revolution needed within the industry’ ongoing crises moving from industry to industry as products that have grown costly are displaced with alternatives. “This will upset the employment market and create a significant downward shift in the value of capital assets used to produce goods 45
S U S TA I N A B I L I T Y and services that are impacted. In turn, this will cause bankruptcies of industries which are no longer sustainable. And while this will be beneficial to the environment, it will have an uneven impact on those displaced by the shrinking or closing of their employers’ businesses.” It is perhaps a change in consumer attitudes that will be necessary to effect real change, but even then Stollman points out this could be problematic. “Another issue is that one of the biggest impacts on the global environment arises from wanton consumerism: people buying “stuff” because advertising makes them want things that they don’t need. Environmentally, much could
‘Beslik is adamant that the release of the report was a ‘crucial’ step in the hope of any meaningful move towards a sustainable global financial model’ 46
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be gained by merely reducing this surplus consumption, but doing so would cause a massive contraction of global markets. How will we keep people employed if we stop producing this surplus?” he asks. “I could go on endlessly about the deficiencies of the program, but I don’t mean to suggest that it is not worth pursuing. I just expect that the results will be mixed and the benefits will remain hard to justify.” Beslik understands Stollman’s concerns but is adamant that the release of the report was a ‘crucial’ step in the hope of any meaningful move towards a sustainable global financial model. He wants to see more guidance given to politicians to help lobby for legislative change and feels there is certainly an appetite for this. “The entire financial sector since 2008 has been facing a cultural revolution needed within the industry,” he says. “I think it now demands awareness from the top. The leaders of the big financial institutions really need to step up and show what to go for with regards to sustainability within the role of the financial sector. “Still, the majority of the financial institutions in the world do not educate
A change in attitudes will be necessary to effect real change
financial analysts and professionals with a full understanding of sustainability aspects related to their future jobs, and how the investment or lending of banking decisions will impact the societies they live in. “We need to reform the educational system, because then you get people that are educated about this in the financial system. They will embrace the change and make that change happen. “I think we are at the beginning of a very big shift, with big players getting engaged, and we see a lot of interest from customers and clients.” For Beslik, it comes down to a triumvirate of issues. “I call it a
triangle,” he explains. “You have an income inequality or income distribution on one hand. Then you have climate change as one of the sort of risks that are not related to any particular society, it’s more of a global issue. I think income inequality is also. “The third one I think is related to transparency and participation – how transparent are you about your business and the way you run it, and also how do you participate in solutions that we need as a society going forward? “I think these three things interact with each other in a very interesting way going forward, and they all demand a quite big mental shift.” 47
CITY FOCUS
BOST
Headline
Seque rest volorum aute velestio intem illibus es qui ut alit et, sita iuntur? Writ ten by AUTHOR
STON A VENTURE CAPITAL COMEBACK IN TECH Writ ten by HARRY MENE AR
CITY FOCUS PLAYING HOST TO Harvard, MIT, and over 70 technology, life sciences, and business schools, Boston, MA, has access to as much raw intellectual potential as anywhere on the planet according to bostontechguide.com. The Greater Boston Area is the birthplace of worldwide tech and e-commerce giants, such as Wayfair, Akamai, and TripAdvisor, all of which predicted revenues in excess of $1.5bn in 2016. Additionally, tech giants Uber, Facebook, and Spotify, to name but a few, all have a major presence in the city. Boston’s tech industry has actually struggled in the past five years, with
50
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many companies relocating assets to the booming San Francisco Bay Area and Silicon Valley. The industry reached a five-year low at the beginning of 2013, with a gross venture capital investment of $3.4bn. However, recent disruptive developments in the life sciences and tech sectors have seen venture capital investments rise to a high of $4.7bn, according to Forbes. While the largest growth sector in the past two years has been life sciences, technology-based ventures have also seen steady expansion. This is primarily due to an increased emphasis on Intelligent
BOSTON
Systems (IS), from dataprocessing and cloud storage to robotics. Todd Hixon of Forbes claims that Boston’s startup ecosystem is uniquely qualified to profit from an investment resurgence centered around IS, citing the foundation of the MIT Artificial Intelligence Lab in 1959 as the genesis of the city’s long relationship with cutting edge IS R&D.
- THE FACTS
Enter Nara Tech startup Nara Logics was co-founded in Cambridge, MA, in 2011 by ex-MIT research scientist Nathan Wilson. Wilson, now serving as CTO, has brought his research in brain and cognitive science to Nara, using synaptic-mapping to create software mimicking the way neural networks make connections and sort data.
Population: 673,184 Area: 232 sq km Population density: 5,344 per sq km Unemployment rate: 4.2% Average income per capita $34,770 – that’s over $6,000 higher than the American average Highest areas of employment: healthcare and social assistance (18.42%), educational services (13.36%), professional, scientific and technical services (11.68%).
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CITY FOCUS
The result is a computational AI, bearing similarities to the in-house software used by Google, Facebook, and other tech giants to sort data and customize user experience. Nara Logics is, in many ways, similar to other tech startups since acquired by tech giants. Where the company sets itself apart is in Wilson’s stated intent for Nara. “We’re building a 52
January 2018
pipeline, and taking insights out of the lab to intelligent, applied use cases… Nara is an AI for the people.” Nara Logics’ customer-facing model currently takes the form of Nara. me, a recommendation-generator engine for movies, restaurants and hotels. The algorithm inputs positive-negative reactions to films, cuisines, etc. and hones its
“ Recent disruptive developments in the life sciences and tech sectors have seen VC investments rise to a high of $4.7bn” – Nathan Wilson, CTO at Nara Logics
recommendations accordingly. It can also create recommendations based on particular short-term preferences, adapt to location changes, and combine its suggestions (eg. Chinese food and action movies). Nara maintains, however, that its focus is on developing more accurate information sorting in its systems, rather than growing a brand and customer base. The company’s intention is to grow its portfolio as a third-party contractor to extant companies, revealing this year that it has begun working with
a major international banking house, “managing the institution’s reward points and recognizing customers’ preferences; assessing loan approvals based on detailed financial history; and analyzing user transactions for the bank in real-time to detect fraud”, according to Wired magazine. Additionally, Nara Logics has reportedly begun working with a major healthcare company and a major airline, examining past customer data in order to improve future experiences. Nara’s AI specializes in establishing relationships between large numbers of entities (restaurants, movies, abstract concepts) and assembling them into a knowledge graph that can establish links between these. With small amounts of inputted user information, the pre-existing synaptic connections can more easily identify and build upon preferences. This sort of programming should, posits Richard Socher, CTO at MetaMind, allow for more accurate recommendations than previous methods. “Using the Nara platform, companies can leverage relevant data across multiple lines of business, with the goal of making the customer 53
CITY FOCUS
experience simpler, cleaner and more personal,” says David Herrick, who has held senior executive positions at American Express and Barclaycard, told MarketWired. “Nara Logics builds a synaptic network of explicit and inferred connections to create an intelligence layer on top of chaotic, siloed enterprise data for real-time, context 54
January 2018
relevant recommendations.” The ability to create specific, contextualized output from vast amounts of raw data is becoming an increasingly valuable ability. Cisco predicts that global internet traffic will increase nearly threefold in the next five years, with total traffic in 2021 estimated to reach 3.3 zettabytes per year. Such drastic
“ Using the Nara platform, companies can leverage relevant data across multiple lines of business, with the goal of making the customer experience simpler, cleaner and more persona� – David Herrick, former executive at American Express and Barclaycard
growth in the amount of readily available data suggests comparable growth in multi-market data-parsing services, with room for specialization beyond the in-house AI projects under development by tech giants. Nara Logics, with direct access to an increasingly vibrant tech-based startup scene, could be poised to take advantage of this growth market.
Providing practical decisions for businesses in the entertainment, financial, healthcare, travel, defense, and manufacturing industries, by creating recommendations based on raw mined data is predicted to be growth industry. Nara Logics obtained $13mn in startup funding and is estimated to be drawing an increasing annual revenue of $2mn. 55
Top 10 fastest growing
companies
in the US
We plucked the top 10 US companies from the 2017 Forbes ranking of the Global 2000: Growth Champions
Writ ten by ANDREW WOODS
09 TESLA www.tesla.com
10 WORKDAY www.workday.com Workday, a company founded in 2005 and headquartered in Pleasanton, California, employs some 6,600 people. Providing enterprise cloud applications for clients in the human resources and finance sectors, Workday also provides analytic applications, financial management and human capital management for educational institutions, governmental agencies, and the largest companies across the globe. In addition to garnering the number 44 spot on Forbes list of Growth Champions, Workday also ranked number 54 on the magazine’s list of America’s Best Midsize Employers. The company reported sales of $1.5bn, market capital of $16.6bn, and assets of $3.17bn, according to data gathered in May 2017. 58
January 2018
Tesla’s CEO Elon Musk founded the company – along with Martin Eberhard, Jeffrey B. Straubel and Mark Tarpenning – in 2003. Based in Palo Alto, California, Tesla specializes in the development, sale, design, and manufacturing of electric power train components and electric vehicles, as well as the manufacture and sale of solar roof panels and home batteries. The company reported sales of $7bn, assets of $22.66bn, and a market capital of $49.3bn. Tesla captured the number 42 spot on Forbes’ list of Growth Champions. It also ranked number two on its list of Innovative Companies and number 324 on the list of America’s Best Employers.
TOP 10
07 CHARTER COMMUNICATIONS www.charter.com
08 FACEBOOK Facebook is based in Menlo Park, California and employs 17,048 people. The social networking company – the most popular of its kind in the world – includes other popular holdings such as Instagram, WhatsApp, Messenger and Oculus. As of May 2017, its market cap was $407.3bn with revenues of $27.64bn, assets of $63.96bn and profits of $9.49bn. In addition to garnering the number 41 spot on Forbes Growth Champions list, Facebook has secured a slew of other notable spots including number 55 on its list of Top Regarded Companies, number four on the World’s Most Valuable Brands, number 35 on the list of America’s Top Public Companies and number 119 on the Global 2000 list.
Charter Communications, a Stamford, Connecticut-based company, offers broadband communication services including Spectrum Voice, Spectrum TV and Spectrum Internet. Employing 91,500 people, Charter Communications is listed as number 38 in terms of growth and number 41 on Forbes’ list of Top Public companies. Founded in 1999, the company posted revenues of $29bn, assets of $153.24bn and a market cap of $101.6bn.
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05 LIBERTY EXPEDIA HOLDINGS
www.libertyexpedia.com
06 CENTENE CORP. www.centene.com
Based in St. Louis, Missouri, Centene Corp. was founded in 1984 and has 30,500 employees. With $40.61bn in sales, a $12.2bn market cap, $20.2bn in assets, and $558mn in profits, the company earned the number 36 spot on the Forbes list of Global 2000: Growth Champions. Centene Corp. provides services and programs to healthcare programs within the government sector utilizing two segments – specialty services and managed care.
MEET CENTENE
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Founded in 2016, Liberty Expedia Holdings comprises principal assets in Expedia, Inc. and Vitalize, LLC. The company boasts ownership of 16% of Expedia, a business specializing in online travel, giving it about 52% voting interest. It also wholly owns Vitalize, a company focused on the fitness, media-related, and health industries. Liberty Expedia Holdings reported $1.58bn in revenue, $34.59bn in assets and $2.29bn in profits as of May 2017.
TOP 10
03 CHENIERE ENERGY, INC. www.cheniere.com
04 VEREIT www.vereit.com Operating in two segments, Cole Capital and real estate investment, Phoenix, Arizona-based Vereit was founded in 2010 and has 350 employees. Focusing primarily on commercial tenants and raising capital for real estate investment trusts, Vereit posted revenues of $1.45bn, assets of $15.59bn and a market cap of $8.5bn.
Headquartered in Houston, Texas, Cheniere Energy, Inc. employees 911 individuals and was founded in 1996. In addition to being recognized by Forbes as number 21 on its Growth Champions list, Cheniere Energy was also number 46 on the 2016 list of Innovative Growth Companies. The company posted revenues of $1.29bn, assets of $23.7bn and a market cap of $11.3bn. Cheniere Energy focuses on operating, constructing, and developing liquified natural gas (LNG) terminals as well as the marketing of both natural gas and LNG.
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02 NEW RESIDENTIAL INVESTMENT www.newresi.com Securing the number 13 spot on the Forbes list is New Residential Investment. Founded in 2011, the real estate investment trust company has just three employees. It boasts a $5.2bn market cap, $18.38bn in assets, $504.5mn in profits and $1.24bn in revenue.
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01 XPO LOGISTICS www.xpo.com Coming in at number eight on the Forbes Global 2000: Growth Champions list, XPO Logistics was the only US-based company to break the top 10. As of May 2017, the company – which employs 87,000
people – posted a market cap of $5.3bn, revenues of $14.62bn, assets of $11.7bn, and profits of $63.3mn. Specializing in providing logistics and transportation solutions that support their customers’ supply chain operations, XPO Logistics also secured the number 17 spot on Forbes list of Innovation Growth Companies in 2015.
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HOW AVERY DENNISON STAYS AHEAD THROUGH PROCUREMENT INNOVATION Written by Nell Walker Produced by Denitra Price
Roland Simon, VP Global Procurement Materials Group & Corporate Sustainability at Avery Dennison, explains how the company has remained the leading industry name after spawning its own market 80 years ago
The Pallet Alliance takes a holistic approach to pallet program management that’s far more than just quoting pallet prices. Managing cost drivers like sourcing, design and implementation delivers a comprehensive solution tailored to fit operational requirements. But it doesn’t stop there. Customized reporting and unmatched re expertise drive ongoing improvement for ongoing value, year after year.
Pallet Program Management Regulate Cost Drivers Tailored Solutions Advanced Information Services
Transform the way your business moves.
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S U P P LY C H A I N
A
Fortune 500 giant in the pressure-sensitive adhesive labelling, tags, and inlays industry, Avery Dennison has grown exponentially from its humble beginnings. Founded in 1935 in Los Angeles, California, the business now operates in over 50 countries and employs around 25,000 talented staff. One might assume that a business of this size could find procurement challenging, or be laden with outdated legacy processes; for Avery Dennison, the opposite is true, thanks to a strong sense of continuous improvement, innovation, and people power. An integral part of driving these advantages is VP Global Procurement Materials Group & Corporate Sustainability, Roland Simon. Notably, Simon spent 23 years with Goodyear, honing his management skills. While he entered the business with a degree in physics, he was
looking for an opportunity to work in a factory environment, and went on to spend over two decades as an expat in Europe and Thailand. Along the way, Simon was able to get more of a taste of procurement and manufacturing, and repatriated to the USA in 2003 in a procurement role. During a four-year stint as Chief Procurement Officer at Ferro Corporation, Simon’s future Avery Dennison boss, who was particularly skilled at networking, began communicating with Simon about what he was doing at Avery Dennison. Similarly to Ferro, the company was trying to build a centralised system on top of an old procurement organisation, and worked across a similar footprint. This led to Simon forming a close relationship with him, and becoming fascinated in the vision that he had for Avery Dennison. It
“R. Stanton Avery had a vision that the best way he could serve his community was through building a business, creating jobs, and building an economy” – Roland Simon, VP Global Procurement Materials Group & Corporate Sustainability
Pallet Alliance Brings Pallets into the Digital Supply Chain For Avery Dennison, integrating pallets into its digital supply chain was a natural step. Its pallet program is the product of more than 12 years of collaboration with Pallet Alliance, and was built from the ground up to take fr advantage of emerging advances in procurement and information technologies, delivering significant, sustainable cost reductions. Leading manufacturing companies across America turn to Pallet Alliance for custom pallet programs that evolve in response to changing manufacturing environments and products. With the ability to integrate into online ab procurement and in-house ERP platforms alike, as well as to provide industry-leading dynamic reporting solutions, Pallet Alliance provides standardization, transparency a nd control. and Among companies that think the pallet spend starts and ends at the pallet itself, periodic RFP’s are the main cost-cutting tool. These consume valuable internal resources and produce only marginal savings on dated ma products and processes. Forward-looking companies like Avery Dennison—who
919.442.1400
make sizable investments in modernizing their supply-chains—turn to Pallet Alliance to take control of their pallet spends. The Pallet Alliance process begins on the plant floor and progresses through the entire supply chain. Solutions include process transformation, equipment modification, pallet redesign, sourcing changes, and IT so integration. Through identifying and mitigating factors that drive cost, Pallet Alliance delivers sustainable savings. The end result is a fully customized and optimized pallet program, with a single accountable entity for consolidated ordering, billing, reporting, and project management.
solutions@tpai.com
tpai.com
Pallet Alliance has retained its three largest customers for an average of 15 years. MMH annual reader survey for 2017 identified Pallet Alliance as the top-ranked management company ma for custom national pallet programs. Category leaders in American manufacturing turn to Pallet Alliance for truly custom solutions to manufacturing and distribution challenges. Visit tpai.com to transform the way your business moves.
Roland Simon
VP Global Procurement Materials Group & Corporate Sustainability
Roland Simon is responsible for strategy and management of the Label and Graphic Materials Group global spend for both direct and indirect materials. Prior to Avery Dennison, Roland held the CPO position at Ferro Corporation for four years after spending 23 years at Goodyear Tire & Rubber Company in a variety of manufacturing and procurement positions in Asia and throughout Europe. Roland earned his bachelor’s degree in Physics-Engineering from Washington & Lee University and a master’s of business administration from the Durham Business School. Roland joined Avery Dennison in 2011 and is based in Mentor, Ohio.
AV E RY D E N N I S O N
happened to align with what Simon was interested in and capable of. Soon after, Simon was offered a job by the same man, and was initially placed in charge of global raw material procurement. Once his boss moved on two years later, Simon stepped into his role and took over the Procurement Materials Group, including responsibility of corporate sustainability. Industry pioneer So, over 80 years since its inception, how exactly has Avery Dennison impacted and contributed to the industry? “Avery Dennison is the creator of the industry that we’re in,” says Simon.
“R. Stanton Avery was the founder of the company, and he invented the self-adhesive label products that were used to build the company. He had a vision that the best way he could serve his community was through building a business, creating jobs, and building an economy. Avery Dennison has evolved in every direction since, and Avery Dennison is widely considered to have a continuing large influence on the industry. Since Simon became an integral part of the business, the strategy has been to continue leading the existing market, to grow into higher value segments, and expand applications of functional materials to which adhesives can be applied.
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S U P P LY C H A I N
Its work in creating specialised adhesives is one example of the company’s high levels of innovation. “In the automotive industry there is a big push for improved fuel economy,” Simon explains. “Automobile companies are interested in reducing the weight of the vehicle, so they’re beginning to substitute mechanical fasteners – which are made of metal – with structural adhesives. “At Avery Dennison, we are experts at developing specialised adhesives that can be coated in what we would call a substrate, that you can peel and stick.” The power of procurement Simon’s procurement role has been a vital component to these ongoing changes, because Avery Dennison integrates all functions into the business. There are two fundamentals which the procurement division tries to fulfil as a function, and these are to be a strategic partner to the business, and to be a valuable thought partner. “Integration is about the way we are structured; the way we perform our roles,” Simon explains. “We want to be close to our internal stakeholders. We also want to be as valuable to our suppliers as we can be, and to fulfil the biggest promises
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Science that sticks Better adhesion is closer than you think. Resins & Resin Dispersions for Adhesives: PINEREZ™ and SNOWTACK™. Snowtack dispersions utilize the ROBUST™ manufacturing process technology, which produces tackifier dispersions with finer particle size and virtually zero grit. Adhesive manufacturers can produce high-quality adhesives by incorporating these SNOWTACK™ tackifier dispersions in their formulations. With better science, manufacturers limit defects, improve coating characteristics and enhance line performance on high-speed coaters.
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S U P P LY C H A I N
possible to those suppliers. We can offer more and more value to them through growth in our channels, our footprint, and access to our newer technologies, meaning they are able to participate in our vision and growth.” It’s a refreshing position, because procurement is all too often considered an afterthought. For Avery Dennison, it is a valuable part of its success. In Simon’s words, “the root of integrating with the business is the foundation of how we developed the powers within our function”. A huge focus for Simon in this area is recruitment of skilled employees. To him, the quality of his people directly correlates with the group’s success; he personally oversees around 70 people across the world, and leans towards those with a broad range of professional experience. “A large proportion of them have former marketing experience, finance experience, manufacturing experience, and we have some procurement specialists mixed in,” he says. “So we have a function of people with different backgrounds and the capability to be business thought partners as opposed to simply one half of a functional transaction. We do a lot more than just place purchase orders.” Indeed, Simon and his team translate the realities of the company’s materials markets
Avery Dennison wa founded in 1935 in Los Angeles, USA
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LAMINATION SPECIALIST
... .. . . . . w.....q .pp.. ...... .. .. .... .. p..... .... . .... . . .. ...ti.. p.... . F.. .. .. CellograямБca Gerosa S.A. ............................................... .........................................
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www.upmspecialtypapers.com
S U P P LY C H A I N
and supply chain capabilities to marketing and R&D, and together, the information is translated to added value solutions for its customers – global converters and brand owners. Simon’s goal is for his team to be influencers; in fact, employees even undergo influence training. “For a long time, for procurement people it was all about how to influence stakeholders,” he says. “In my team, I feel we’re beyond that, in the sense that my message to my team is that, to reach the maximum amount of growth, they need to allow themselves to be influenced.” Simon believes it shows particular maturity to be confident enough to be influenced by someone else’s thought process. “If I allow my supplier to influence me with a good idea they have had with regard to what our customers need or what solutions might resonate in the market, or we influence each other and come up with an innovative material or process – and we marry those things – that’s the golden chalice.” Of course, this is an ongoing
desire with no finishing line, because collaborative relationships are what Avery Dennison strives for as a company. High levels of communication mean that procurement aligns neatly with innovation, and so Simon’s department ends up working on leading edge technologies in a collaborative way. Harnessing technology One component of this is implementing technology to work out aggregated costs of materials that go into a product. “For example, we have people in our business who sell labels,” Simon explains. “The label might have three components: a film face, an acrylic adhesive, and a release liner. It doesn’t do me much good, when I’m talking to the product manager, to tell him ‘your base off price is going down two cents’; the release liners might be going up five cents, but he thinks his costs are going down. So when I talk to a product manager, I actually want to be able to talk to him about the aggregated cost of
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LAMINATION SPECIALIST
Partnering with Avery Dennison has been an EXCELLENCE of our forward ... .. . . .important . w.....qstep .pp.. ...... ..strategy. .. .... At IS OUR STANDARD Manucor, we.take carep.... to create .. p..... .... . .... . ..special ...ti.. . value IN MANUFACTURING, for our key customers and we are committed F.. .. .. ....... ... TYRE, FOILS, FRUIT TAG, BAG TAG to making their innovation process as timely PRODUCT COMPLIANCE, and efficient as possible. LEARN MORE. QUALITY AND SERVICE. Cellografica Gerosa S.A. ............................................... .........................................
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SUSTAINABLE SOLUTIONS. ENDLESS INNOVATION. At Kraton, innovation is driven by creativity, passion and active assessment of market trends. We encourage close cooperation, knowledge-sharing and transparency in our relationships with customers, favoring our combined strengths. We work in state-of-the-art laboratories on technology platforms focused on our engineered polymers and bio-based tackifiers to ensure that our innovation takes emerging customer needs and regulatory changes into account. www.upmspecialtypapers.com
Our innovative focus targets safer and cleaner technology solutions, enabling the formulation of adhesives tailored to meet your challenges: from difficult-to-bond substrate to increasing process speed as well as alternative functionalities. tm
©2017 Kraton Corporation.
S U P P LY C H A I N
this product and about his overall costs compete in the market.” This is the communication which leads to increased innovation. The product manager might come back to Simon and tell him that the cost of a product is no longer something that will drive growth, so a different solution is required, and they might ask for help to develop something that performs better.
“We will go back to wherever we’re getting the adhesives from, and we’ll work on an innovation. It could be a cost-weight reduction; it could be a different formulation – whatever it takes to perform better in the market.” The procurement process is, after all, dictated by what is happening in the market. The marketing team tracks how Avery Dennison needs to compete, and that is communicated
“We want to be as valuable to our suppliers as we can be, and to fulfil the biggest promises possible to those suppliers” – Roland Simon, VP Global Procurement Materials Group & Corporate Sustainability
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LAMINATION SPECIALIST POLIFILM is one of the leading German manufacturers of polyethylene extrusion film and surface protection film delivering worldwide. With extensive knowledge and expertise, POLIFILM delivers top-quality solutions for a very wide range of applications for flexible packaging such as Food and Drink, Medical, Pharmaceutical and beyond. Technical Films are used in the Self-Adhesive Label industry, Automotive Learn More. or Steel industry.
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S U P P LY C H A I N
across the chain until a solution is created. Simon and his group try to be specific in the procurement strategy, and focusses on solutions where real-time aggregated cost can be seen. While this is a challenge, Avery Dennison is continuing to work on the technology that will enable this process to be as simple and accessible as possible. This is by no means the only new use for data that the company has embraced. Over the past 18 months, Simon and his team have been working on a set of metrics and a data platform with the supply base. “We have maybe 180 of our suppliers on there, which represents well over 80% of our supply base from a spend perspective,” Simon explains. “On this system, we’ve begun to measure them across a platform of sustainability metrics. “We communicated it right from the start that we weren’t implementing this tool for the purposes of side-byside comparison or even purchase decisions,” he continues. “We were trying to create a baseline on which we could continually improve.”
Sustainable guardian Avery Dennison has been working on the continuous improvement of its own sustainability for many years, and considers this approach with its partners a way to work more collaboratively on the same issues. “We’re becoming more aggressive and we want sustainable products to be a larger component of our own development,” Simon explains. Every sustainable initiative that has been implemented has proved positive for the business, and for Simon, sustainability begins at the source. “A lot of the perceptions of sustainability has a lot to do with being responsible, in terms of socially and in the environment,” he says. “I see a third component to this, which is being responsible to your business and your stakeholders. Your people. “And so, when we look at the concept of sustainability, we’re always looking at the innovations that are going to be the long-term drivers in the business. The innovative process we have with the supply base is, more and more, also about different sustainable solutions. Things that
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AV E RY D E N N I S O N
AVERY DENNISON IS PRESENT IN MORE THAN 50 COUNTRIES WORLDWIDE are recyclable, renewable, that reduce our carbon footprint – and it’s for the purpose of being socially responsible, but also for the purpose of being a sound business.” Simon considers this a unifying quality for the business, both internally and with suppliers. It is appealing to any business for a partner to be green; everybody wants to be associated with a company that embraces its sense of responsibility. And Avery Dennison’s position on
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this is paying off. With waste reduction and improved efficiency considered cornerstones of the business, employees have the freedom to become involved with sustainability projects, and what’s more, they are excited by the prospect. The sense of unification has had a ripple effect through the entire company. Avery Dennison is also a very strong operations organisation, and boasts a worldclass Recordable Incident Rate on
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its safety. As a standard part of its DNA, the company continues to do more with less in its innovation, and considers quality of leadership to be a vital component of its success. “I’m not talking about myself, but all of my colleagues, all of my peers,” says Simon. “We have an exceptional group of people.” He concludes: “What we do here
between our people and with our people can be something very difficult, and not too many industries could replicate it. One of the convictions we have at Avery Dennison is that we believe the quality of our internal collaboration and cooperation across functions and boundaries, is a competitive strategy.”
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AGCO’s
transformational
path to true supply chain excellence Written by Nell Walker Produced by Denitra Price
Challenger - 1000 Series HHP
Greg Toornman, Director, Global Materials, Logistics and Freight Management at AGCO, describes the business’ supply chain transformation and the incredible impact of the overhaul
AGCO
A
leader in the agricultural equipment world, AGCO was founded in 1990 and has been developing a global network ever since. Of course, the quicker a business grows – particularly at the rate AGCO has done – the more often its processes need to be overhauled and improved, at which point talented transformation specialists must be recruited. Enter Greg Toornman, an AGCO employee since 2004 who stepped into his current role as Director, Global Materials, Logistics, and Freight Management six years ago after a trio of successful transformational assignments within the company’s Global Purchasing organization. He is responsible for leading the transformation of AGCO’s Global Materials and Logistics functions, the issues inherent in which were identified back when Toornman was first hired. In 2004, AGCO realized that the mergers and acquisitions approach was having a huge impact on the top revenue line. With the view to create greater synergy, two SVPs were brought in – one to focus on manufacturing, one on purchasing and materials management – and AGCO embarked on integrating its operations in North America, South America, Europe, and Asia. “That took from 2005 until about 2012,” Toornman explains. “In 2012, we saw that there were still opportunities within the materials management and logistics, and that the tools we utilize in supporting our factories from a global-wide network perspective were not well integrated
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“If you are part of the ownership and you embrace the change, typically you’re more open to delivering solutions rather than pointing the finger, because it’s your project” –Greg Toornman, Director, Global Materials, Logistics, and Freight Management
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and not well connected. The product development roadmap direction we embarked upon was moving towards a global platforms strategy, similar to what you’d find in the automotive industry where you have a similar platform produced in multiple regions with a common supply base.” Looking at the options the business had, the team came up with a global material management transformation initiative called GMMT. This initially involved bringing in experts from within manufacturing, logistics, IT, finance, and purchasing to brainstorm where to focus first. In 2013, a vision was in place to have a globally-integrated network for all inbound and outbound transportation, plus all B2B information exchange (forecasting, releases, order confirmations, ASN’s) required for supplier relationships, by 2018. All the regions AGCO operates in were invited to develop what the future of the business would look like; rather than a top-down approach, the company worked with a tactical execution layer to understand the challenges involved and ensure a
Greg Toornman
Director, Global Materials, Logistics, and Freight Management
better service would be provided. The plan and approach proved so successful that, rather than being a challenge, it was very efficient to move forward with the globally aligned five year strategy as the regions were key contributors to the future state vision. “In any type of corporate-led global initiative, typically you’re fighting with the regions or sites for them to embrace it,” Toornman explains. “In
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this case, we had to fight high demand because we couldn’t implement it as quickly as everyone wanted. So that was kind of a good problem to have.” The inbound-outbound transformation became standard after its success in Europe; it has since been successfully implemented in China, and is currently in the implementation phase in North America. South America will follow, with implementation starting there in January 2018. No large-scale change ever happened without hiccups.
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However, with AGCO’s Supply Chain leadership team being entirely behind Toornman’s plans, the company was able to work through the obstacles as they emerged. “If you are part of the ownership and you embrace the change, typically you’re more open to delivering solutions rather than pointing the finger, because it’s your project,” he explains. “Really, the key strategies
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AGCO Corporation - Group Picture
that we focus on are within various levels of the organizational function are 1. to believe in it, 2. to understand it, 3. to embrace it, and 4. to enable it.” This cooperation has to extend away from the company itself, of course, and through the supply chain. “We paint a picture to the supplier, saying ‘yes, we hear you as a collective group – here are the things we are doing and investing in to make
it easier for you, as the supplier, to do business with AGCO’,” says Toornman. “You start working on that a year in advance, and when you then reach out to those suppliers and ask them to change what they do, how they do it and when they do it, they are aware of why you’re doing it because it helps them satisfy their opportunities or the needs they’re expressing to you.” It’s all about teamwork and collaboration for AGCO. Thanks to this approach, when the initial European regions inbound 4PL freight initiative roll-out occurred, only 10 suppliers out
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Greg Troornman and colleague posing in front of grain trailer
of 1,550 proved resistant. Toornman says: “We were very happy with that because we focused on how to get supplier participation and compliance to the level we needed beforehand.” It worked so well because AGCO’s ideas benefitted the suppliers too. Under the previous logistical infrastructure, a supplier would have an AGCO truck show up at each factory door, but it could be 20+ different trucks over the course of a week. Now, it’s one truck per day picking up for 20+ factories across the globe. This mutually beneficial type
of partnership stems from AGCO’s core values, all of which embrace ethical working – which, again, extends to suppliers. “In our supplier performance manual, there is an expectation and understanding of what it means to do business with AGCO, to grow your business alongside us, and what happens if you are not in line with our values,” Toornman explains. “Transparency, integrity, respect – basic things that are just part of doing business with AGCO and how our team members operate when engaging both internally and
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AGCO Corporation - Group picture on trailer
externally. To us, it doesn’t matter much who you’re engaging with – it’s the way you do that thing, the way you say the thing, and how you deliver on your commitments.” Technology helps AGCO interact with every faction of the supply chain, from freight management tracking through the company’s performance measurement system, to openly sharing of AGCO’s own performance
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statistics. Whether purchasing, quality, logistics, materials, or engineering, there is one transparent, standardized way that supplier performance is evaluated and made easily visible both internally and externally. AGCO has seen great improvements in its direct material suppliers as well as its freight carrier performance over the past few years as the business has
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“Our path is to be number one in customer-perceived quality, and with that, we’re on a very strong journey and making good inroads” –Greg Toornman, Director, Global Materials, Logistics, and Freight Management
started to measure, track, and drive delivery performance improvements. “The freight carrier performance is something that we have truly realized the benefits of taking a global approach to evaluation and awarding,” says Toornman. “A great example of this is our partner, ACL (American Container Lines) who handles our
transatlantic shipments of our agricultural equipment. We have seen great level of ongoing and sustained performance from ACL over the past years. AGCO provides a consistent set of expectations, this makes it more efficient and subsequently effective for our suppliers to meet or in the case of ACL, exceed our overall performance expectations. “ACL has set high service level standards during their seven-year partnership with AGCO and raised the bar on expectations of what a freight partner should look like. ACL
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has improved AGCO’s supply chain through expedited product release, export clearance services and special project support in addition to services such as loading/off-loading, tire mounting, washing and storage.” Dustin Barney, AGCO N.A. Materials Management Director at AGCO, adds: “With its latest fourth generation ConRo vessels, ACL provides a solution that is faster and more fuel efficient while providing increased space and easier loading and offloading. Investing in its equipment and technology while remaining focused on value added services for the customer is what
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makes ACL a great partner for AGCO.” AGCO is able to share all of this gathered information crossfunctionally, Toornman says. “A lot of times some of the supplier engineering team members or sales engineers may not know how their company is actually doing in terms of quality, purchasing, or logistical performance. At the same time, on our side, if we have an engineer developing a new product with a supplier that has terrible quality or delivery, we don’t want that.” The main advantage of this visibility is that it makes both the suppliers and AGCO itself work harder and forge stronger relationships, both internally,
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AGCO Your Agriculture Company
MF7715S -Grain Trailer
at every level, and externally. This is all part of AGCO’s Supply Chain digitalization initiative, which focusses on elements of what Toornman calls ‘truly innovative manufacturing’, utilizing such advancements as Google Glass and IoT. “We have many companies wanting to come and see our sites’ digitalization levels; this is occurring across global level we share what we have done, how we have done, and also learn from these visits,” says Toornman. “All those different elements have what we call a ‘center of excellence’
that develops them on behalf of the rest of the global organization,” he explains. “Our most mature facilities within a particular activity develop, do discovery work, perform the initial discussions, and conduct he initial internal pilots – whilst sharing the results – on a specific digitalization element before the global roll-out process starts.” A great example of this is how AGCO develops its returnable container projects. Three years ago, the company was looking to develop returnable packaging solutions
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between the Chinese and European operations. It piloted a concept with a company named Goodpack Ltd, which supported AGCO with creative options that proved to be very successful led out of its Changzhou, China site. The concept was to rent the large steel containers from Goodpack’s China operations and utilize the containers for shipments between the Changzhou facility and two European sites. Goodpack would then pick up the empty containers in France and Finland. “We saw an 18% improvement in our sea container density, significant improvements in product quality, major waste reduction, and container unloading efficiencies,” Toornman says. “Within six months of the pilot’s very successful start, we were able then to develop and implement similar solutions with our products shipping from Brasil into Mexico and Argentina. “AGCO is realizing a huge level of value and return from our relationship with Goodpack,” he continues. “This type of approach only works if a company has a strongly aligned communication methodology and
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global network of relationships. This enables much more to get done as we do not see solutions to the same opportunity being developed independently. Our leadership teams talk on a regular basis on our global logistics alignment calls; these sessions are essentially a status update for various initiatives that are ongoing across the AGCO globe.” The work AGCO is doing to increase its digital capabilities is viewed by Toornman as an “opportunity to differentiate ourselves from what our competition is doing at a much more intimate level,” because customers spend a lot of hours in the machines AGCO sells, and when the process of acquiring the high-quality item is as simple as it can be, brand loyalty is born. “Sometimes a customer gets so excited about their new tractor or combine coming up the line that they want to visit the factory,” Toornman says. “We want that too. Our path is to be number one in customerperceived quality, and with that, we’re on a very strong journey and making the best in class product inroads.”
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Group Picture inside AGCO Corporation’s facility
vPurchasing decisions tend to be based on recent experience in this industry; from a sales and marketing perspective, one may be selling a product, but from the point of view of service and aftermarket support, one is maintaining customer repurchase and loyalty. AGCO aims to create a proactive customer experience that includes preventative maintenance and limiting downtime for the customer. “By proactively ensuring the customer is not having an unplanned breakdown, we’re able to maintain a stronger level of repurchase
loyalty because the customer’s recent experience is positive,” Toornman says. “We manage the complexity of customer need through innovation, and we’re more agile and adaptable than bigger companies. “We are really proud of what we’re doing,” he concludes, “but at the same time we have a long way still to go in our journey to supply chain excellence.”
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STANDARDIZED AND
RE-ENERGIZED
Inside AkzoNobel’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
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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 EMPLOYS
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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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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
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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 O’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.
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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
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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
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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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A STORY OF
TECHNOLOGY TRANSFORMATION
AT RUBIE'S COSTUME COMPANY
Rubie’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.”
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“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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R U B I E ’ S C O S T U M E C O M PA N Y
“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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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
P E L L A C O R P O R AT I O N
“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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“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
CONSTRUCTION
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
CONSTRUCTION
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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THE SUPPLY CHAIN RUNS THROUGH HERE
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About WERC 2018 The supply chain is a vast universe of industries, people and information. At WERC’s Annual Conference, warehousing and logistics professionals like yourself are the center of it all. From our peer-to-peer education sessions and facility tours, to our Solutions Center with leading suppliers, WERC’s Annual Conference is the premier educational and networking event for logistics professionals. It offers expert examination of our multi-dimensional industry, with key topics such as: Omni-channel
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Join us at the Charlotte Convention Center in Charlotte, North Carolina from May 6-9, 2018.
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