Industry 2.0 May 2012 by bhupinder sharma

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A 99 MEDIA PUBLICATION

VOLUME 11

ISSUE 09

MAY 2012

PRICE 100

Strategy

Training and developing change leaders

Technology

Best practices for managing Big Data

Supply Chain

Optimising the design of your supply chain

At Your

Service Manufacturing companies add revenues by mastering the levers of service

editorial Vol. 11 | Issue 09 | May 2012

Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: R Giridhar Copy Desk Managing Editor: Sangita Thakur Varma Sub Editor: Radhika Haswani Design Sr. Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Director: Atul Deshmukh Sr. Visualiser: Manav Sachdev Visualisers: Prasanth TR, Anil T & Shokeen Saifi Sr. Designers: Sristi Maurya & N V Baiju Designers: Suneesh K, Shigil N, Charu Dwivedi Raj Verma, Prince Antony, Peterson Prameesh Purushothaman C & Midhun Mohan Chief Photographer: Subhojit Paul Sr. Photographer: Jiten Gandhi Sales & Marketing VP - Sales & Marketing: Krishna Kumar KG (09810206034) National Manager - Events & Special Projects: Mahantesh Godi (09880436623) Assistant Brand Manager: Maulshree Tewari GM (South & West): Vinodh Kaliappan (09740714817) South: Farooq Faniband (09886600175) North: Madhusudan Sinha (09310582516) East: Jayanta Bhattacharya (09331829284) Production & Logistics Sr. GM - Operations: Shivshankar M Hiremath Manager - Operations: Rakesh Upadhyay Assistant Production Manager: Vilas Mhatre Ad Coordination: Kishan Singh Assistant Manager - Logistics: Vijay Menon Executive - Logistics: MP Singh, Mohamed Ansari & Nilesh Shiravadekar

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Reaching an Inflexion Point

ecent reports about the manufacturing industry have been, for the most part, depressing. Production is down, costs are up, customers are postponing orders, and money is tight. There is little to cheer about the business environment either— infrastructure improvements have been patchy, the tax regime is still complex, and overseas markets are inert. But, it would be wrong to assume that nothing is changing. The change is happening elsewhere—in the digital domain. Today, many companies create a product design and test it in a completely virtual environment. They use sophisticated engineering software to accurately mimic the behaviour of parts and connected systems under a wide variety of operational conditions. This new style of engineering not only saves money, but also allows designers to improve products, test more alternatives and quickly meet customer demands. Software also levels the field for small companies. In a modern factory, software is everywhere—in control systems and automatic machines, to material handling systems and warehouses. By linking solutions like MES, ERP and supply chain software, companies are able to more efficiently manage materials and link factory production to actual demand. That’s helping them cut costs

industry 2.0

R Giridhar editor@industry20.com

and improve customer service. Collaboration between distributed design and operations teams, customers and channel partners has been dramatically improved though internet technologies. Even selling has been transformed. While some distribution channels are being disintermediated, new ones are taking their place. Manufacturing jobs of the future will require more skills, and probably different ones. That’s because increasing automation will render many blue-collar chores obsolete. Jobs on the factory floor will give way to ones in design, logistics, marketing and in the manufacturing organisation. New materials and fabrication techniques will change the way products are made and distributed. For instance, the ability to fabricate intricate products using techniques like 3D printing will eliminate many kinds of joining techniques, and the need to make and assemble discrete parts. Perhaps, in the future, manufacturers will be able to download a design to a remote machine, and make on demand. And as our cover story illustrates, the lines between manufacturing and services are becoming less distinct. Companies are no longer selling products—but are delivering benefits and performance. Taken together, these trends indicate that we are at an inflexion point—and that manufacturing is preparing to move into a different era. Are we ready for it?

- technology management for decision-makers | may 2012

contents advertiser index Komet India................................. FC Exxon Mobile............................. IFC Mitsubishi.................................... 03 Schneider........................ 05, 09, 19 Nokia........................................... 07 Reillo PCI Electrical.................... 11 Bonfiglioli Transmission............. 21 Ace Micromataic....................... 31 EMI Transmission...................... 35 Taguetec..................................... IBC GW Precision............................. BC

cover story

departments

22 The Journey to Service Excellence

Editorial...................................... 01 Advertiser Index........................ 02 Industry Update......................... 04 Techwatch.................................. 16 Event........................................... 30 Bookshelf.................................... 58 Product Update.......................... 62

Industrial manufacturers often focus on selling equipment, and limit their scope of services to the supply spare parts and providing routine maintenance. However, there are significant opportunities to improve revenues and customer relationships by improving and enhancing services. BCG consultants describe how you can master the levers of service for profit Cover design: Peterson

Opinion

management and strategy 40 Systematic Innovation

The best companies have developed and implemented a formal method to ensure that innovation processes yield value—and become more predictable

44 Developing Better Change 56 “Big data can enable new opportunities for organisations,” asserts Sundar Ram, VP of Technology Sales Consulting for Asia-Pacific at Oracle Corp

“We live in vibrant, volatile and interesting times,” says Sugata Sircar, Finance Director at Gujarat Gas

supply chain

32 Optimising Your Supply Chain

information technology 38 Managing the Data Deluge

The design of the supply chain must facilitate the company’s business strategy, operating model and performance goals. But getting it right can be a complicated affair

may 2012 | industry 2.0

Managing growing volumes of data, and deriving insights is becoming a challenge for organisations. Big Data techniques and technologies offer a way to master the problem

- technology management for decision-makers

Leaders Making leadership development a key company focus has paid big dividends for a global industrial giants

50 Overcoming Obstacles

Success doesn’t come through mere planning. You also need to follow through the plan and execute it

sector update

52 All is Well

Medical supplies industry gets a boost from new government schemes and growing access to quality healthcare

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industry update

Autodesk’s New 3D Design Suites Enable Collaboration

Ingersoll $20 Million Facility

echnology solutions major, Autodesk, has announced a new 3D design and engineering software portfolio for manufacturers, that simplifies design, visualisation and simulation workflows. The offerings include Autodesk Product Design Suite and Autodesk Factory Design Suite. Autodesk’s 2013 design suites integrate with Autodesk 360 cloud offerings to better enable collaboration by providing services to connect desktops and mobile devices. The included features and functionality help manufacturers efficiently design, build and deliver better products faster and at reduced costs. The included workflows enable users to develop complete definitions of product designs; integrate electrical and mechanical design; predict product performance; and visualise designs or complete factory layouts in 3D. “Autodesk’s 2013 portfolio provides our customers with a faster path to RoI for product development and delivery,” says Robert Kross, Senior VP for Design, Lifecycle and Simulation at Autodesk. “Our 2013 suites and scalable cloud services help manufacturers improve productivity and minimise upfront investment,” Kross added. The suite enhances AutoCAD and Autodesk Inventor software with exclusive access to interoperable, layout-specific workflows, new cloud-based factory asset resources and powerful visualisation and analysis tools that help increase design accuracy, efficiency and communication. Autodesk Product Design Suite 2013 includes updates to Autodesk Inventor software for 3D parametric design, AutoCAD Electrical software; Autodesk Inventor Routed Systems for tubing, piping and hydraulic systems; and Autodesk Navisworks Simulate for integrated electromechanical, markup and visualisation. Rajiv Bajaj, Head of Manufacturing for Autodesk India adds, “The new product range offers better accessibility and simplifies the process of visualisation and simulation.”

ngersoll Rand has laid the foundation stone for a new manufacturing plant in Mahindra World City, near Chennai. The company has leased 11 acres of land for the facility which will manufacture products for all Ingersoll Rand India’s businesses, including air quality, energy-efficiency, food preservation and security. Speaking on the occasion, CEO Michael W Lamach said, “Local manufacturing, innovation and market-centric product development are key focus areas for us in India. With the new manufacturing facility, we will be able to position ourselves better to achieve our growth goals.” Ingersoll Rand will invest in excess of $20 million in the new plant, and the facility is expected to open in early 2013.

Honeywell Simplifies Manufacturing Operations

oneywell has announced Intuition Executive, a suite of enterprise-wide information management, decision support and collaboration tools to help process companies achieve operational excellence. The software is developed on, and extends the functionality of, Microsoft technologies such as Microsoft SharePoint 2010, SQL Server and StreamInsight to meet the requirements of industrial operations. “Monitoring and analysing data in motion leads to earlier event detection and faster decision-making. Combining business intelligence and analytics tools with existing workflows empowers organisations to take immediate action and stay ahead in a highly competitive industrial marketplace,” says Caglayan

may 2012 | industry 2.0

Arkan, General Manager, Worldwide Manufacturing and Resources Sector, Microsoft. Intuition Executive is part of the growing family of Honeywell’s Intuition solutions that solve key industry needs such as operations monitoring, alarm management, asset management, remote operation centres, and business process optimisation. The solution, Intuition Executive, is vendor neutral. In order to manage complex production operations, monitor processes and make operating decisions, companies in the process industries often use systems that are usually either completely isolated or are connected with complex, customdesigned interfaces that make it difficult to use the data effectively and maintain data integrity. Intuition Executive solves this

- technology management for decision-makers

critical challenge. The software anticipates problems and identifies opportunities. Its collaboration tools highlight and capture expert knowledge, share information and help users to make more agile decisions and take action in order to drive intelligent operations and solve key challenges. For companies in the process industry this results in increased efficiency and the ability to manage and respond to volatile energy costs, regulatory changes, and safety challenges. “Data integration and visualisation is a must have for our customers today,” explains Ian Brown, Vice President & General Manager for Advanced Solutions with Honeywell Process Solutions. “The ability to see, understand and act on the relationships within critical data is key to creating competitive advantage and can only be achieved when all applications and underlying data are amalgamated.”

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When power is critical to your business, make sure it’s reliable

Trust Schneider Electric to provide the solutions that keep you up and running Power loss poses a threat to the equipment, people, and processes you rely on. And with today’s stricter security and safety regulations, process automation, and increasing dependence on sophisticated high-tech systems, the need for uninterrupted power is critical. Add the rising cost of energy and environmental concerns into the mix, and it becomes essential to protect your power with solutions that not only meet your availability demands, but are energy efficient too.

Why Schneider Electric is the right power protection choice You may know us as the market leader in delivering IT power protection. But we also offer a full range of reliable and highly efficient power protection solutions designed to safeguard business-critical applications and environments outside the IT room. Our innovative, best-ofbreed products, services, and solutions provide the secure and available power you need to keep your systems up and running, while increasing efficiency, performance, and safety.

Guaranteed availability for business-critical systems No matter what industry you’re in, our unrivaled portfolio offers a solution that’s guaranteed to suit your specific business needs and keep your power on. Thanks to Schneider Electric™ power and energy management capabilities, in-house expertise, broad investments in R&D, and global presence, you have a trusted resource for reliable power, anywhere in the world.

Secure power solutions that deliver the performance you need Products: Our complete catalogue of power solutions, featuring our leading brands such as APC™ by Schneider Electric and GUTOR™, offers an unmatched range of single- and three-phase UPS units, rectifiers, inverter systems, active filters, and static transfer switches from 1 kVA to several MVAs. Services: Schneider Electric Critical Power & Cooling Services can proactively monitor and maintain the health of your systems, protecting your investments, reducing total cost of ownership and operating expenses, and providing peace of mind throughout the equipment life cycle. Solutions: Choosing the right combination of products and services from Schneider Electric gives you the convenience of a total solution – systems, software, and services from a single source.

Make the most of your energy

Download our FREE White Paper #5, ‘A Practical Guide to Disaster Avoidance in Mission-Critical Facilities’. Visit www.SEreply.com Key Code 17691p Call 1800-1441-0535 ©2012 Schneider Electric. All Rights Reserved. All trademarks are owned by Schneider Electric Industries SAS or its affiliated companies. Schneider Electric India Pvt. Ltd., 9th Floor, DLF Building No. 10, Tower C, DLF Cyber City, Phase II, Gurgaon - 122 002, Haryana, India. Tel. 1800-4254-877/272 • 998-4981_IN-GB

industry update

ACMA Offers Special SAP APP Deals to Members

he Automotive Component Manufacturers Association (ACMA) is collaborating with SAP India to provide a customised package for its members that delivers ERP and business analytics applications. The solution is available either on-premise or as a cloud-based (subscription based hosting) solution, and is being offered at a special price. For ACMA members who are already using SAP solutions, additional licences of the software are also available at a discounted price. SAP is working with its partner ecosystem to deliver these services. “Enterprise-wide solutions are imperative to integrate the supply chain and efficiently manage and respond to dynamic business needs, “ says Arvind Kapur, President, ACMA. “A solution which is tailored to cater to the needs of the automotive sector will enable quick access to reliable business information, and enable us service our customers better,” he adds. “Our members have already shown keen interest in this offering,” he said.

Air Conditioner Industry Combats Slowing Sales

he Indian air conditioner (AC) industry has witnessed a significant drop in sales since manufacturers have increased prices by 20 to 25 per cent. According to a study titled ‘Demand of A.C Industry: An Analysis’ released by ASSOCHAM, the price increases are a consequence of compliance with new energy-efficiency norms prescribed by the Bureau of Indian Standards (BIS), and an increase in excise duty. ASSOCHAM’s paper highlights that the input costs have increased by more

than 15 per cent because components for energy efficient air-conditioners are more expensive. The additional burden on the consumer ranges from Rs 3,000 to 7,000. The price hike has hit sales in rural and semi-urban market, which account for about 35 per cent of total sales. The overall room AC market in India is estimated at 4.2 million units last year, and is valued at Rs 7,200 crore. It is growing at over 30 per cent annually. Split ACs model dominate the segment, accounting for more than 68 per cent of all units sold last year.

Manufacturing is Going Green

ccording to Frost & Sullivan, the adoption of green manufacturing practices is growing rapidly in India. Nitin Kalothia, Associate Director, Manufacturing & Process Consulting Practice, Frost & Sullivan, South Asia & Middle East, says, “There is an increase in the adoption of green technologies over the last decade.” But he adds, “The Indian companies are still at a nascent stage in terms of technology adoption. The key evaluation criteria driving green adoption are ‘return on investment’ and ‘regulatory requirements’. A positive development is that some companies are chalking out long-term sustainability plans and have modified their day-to-day activities keeping in mind the effect on the environment.” Frost & Sullivan has also released a market insight titled ‘Best Practices in Green Manufacturing’ which documents the activities being undertaken by Indian companies at the forefront of green manufacturing practices.

may 2012 | industry 2.0

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Altran Increases Focus on India, to Expand Base

uropean technology consulting firm Altran has announced plans to expand its India operations. “In India, aerospace engineering is growing. Going forward, there will be greater emphasis on technologydriven ventures as offset clauses gain momentum. We already have the capabilities to convert such deals into a win-win situation. We are working with some European aerospace companies in India. Our objective is to ensure that we serve both Indian as well as international partners from this geography,” says Sanjay Kumar, Chief Executive Officer of Altran India. The firm is looking at both organic and inorganic routes to scale up operations to reach a workforce of 2,000 high technology experts over the next two years.

Cease Fire Installs ERP for Business Efficiency

ease Fire Industries, a leading fire safety and security products company, has selected Epicor’s enterprise resource planning (ERP) solution to manage the company’s financials, sales, purchasing, inventory, logistics, service and project management processes. Amit Bajpai, Associate Vice President for Cease Fire Industries, explains, “We needed an ERP solution that would closely integrate our business processes and provide tighter control over key areas. We chose Epicor ERP primarily because it offers comprehensive functionality, cutting-edge technology and a reasonable total cost of ownership.” “The ERP solution will help Cease Fire achieve its objective of going global in the most efficient way,” adds Vineet Fogat, Country Manager for Epicor India. “Cease Fire will benefit from the experience of our implementation partner, Corporate Serve Solutions.”

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industry update E-waste Recycling Facility Receives Certification

ims Recycling Solutions’ e-waste recycling facility at Chennai has been certified to the Responsible Recycling (R2) Practices standard, making it the first in India to meet the ISO 9001, ISO 14001, BS OHSAS 18001and R2 standards. R2 is a standard that uses downstream auditing to ensure that elec-

tronics recyclers are operating to the highest international environmental, health, safety and security standards. This includes ensuring that customers who receive hazardous materials for export are fully compliant the relevant standards in environmental, health and safety performance. It also ensures that there are systems in place to track materials as they move down the supply chain, providing a fully auditable chain of custody. “As the world’s largest electronics recycler, we are used to operating in heavily regulated environments around

Tata Chemicals Boosts Facilities

ata Chemicals has installed two new facilities—a pump testing bed and a bearing installation room—at its Mithapur plant in Gujarat. The pump testing bed will enable the company evaluate various functional parameters of pumps, including vibration, flow, head, load, etc, prior to installation. The performance results will be recorded in the company’s ERP system and work orders. The commissioning of the bearing installation room facility at the company’s CMS (central maintenance services) will enable a dust-free environment for fitting of bearings. This will ensure longer service life of equipment, and improve key performance indicators such as MTBF (mean time between failure) and MTTR (mean time to repair).

PLL-GPL Pact for LNG Terminal

etronet LNG (PLL) and Gangavaram Port (GPL) have signed an agreement to develop a land-based Liquified Natural Gas (LNG) terminal at Gangavaram Port, Andhra Pradesh. The facility will have a capacity of 5.0 million metric tons per annum (MMTPA). The LNG terminal will comprise of facilities for receiving, storage and re-gasification of LNG, and is expected to cost nearly Rs 4,500 crores. This will be the third LNG terminal of PLL, the other two are operational at Dahej,

may 2012 | industry 2.0

Gujarat (10.0 MMTPA) and Kochi (5.0 MMTPA). The proposed terminal at Gangavaram Port will have a provision for expansion, like Dahej. The Gangavaram LNG Terminal will help meet the growing energy demand of the state of Andhra Pradesh, and will meet the gas requirements of eastern and central parts of India. At its full operational capacity the terminal is likely to contribute over Rs 2,000 crores as Value Added Tax (VAT) to the state government.

- technology management for decision-makers

the globe. We welcome the introduction of the new e-waste legislation in India. We are also delighted to have received R2 certification, and to be the most certified e-waste recycling company in India,” says Steven Joseph, head of business development in India for Sims Recycling Solutions. Sims Recycling opened its first site in 2007 at Chennai with the acquisition of Trishyiraya Recycling India. Since then, it has opened new sites in Bangalore, Pune and Delhi—and grown the company from around 15 employees in 2007 to 90 in 2012.

Blueflux Cuts Motor Energy Consumption

rundfos has developed, Blueflux, an advanced motor technology that reduces energy wastage in pumping applications by regulating motor speed in response to varying system demands. This ensures the motor never does more work than necessary, which in turn reduces the downtime and increases the operational lifetime. When this technology is used in conjunction with variable frequency drives (VFD), it results in significant reduction in energy consumption. VFDs can be programmed with Grundfos software. The company also offers complete solutions that include fully integrated pump, motor and VFD for commercial, industrial, public and water utility applications. The high efficiency motors have been designed to reduce energy consumption, and when they are used with Bluflux, can save up to 60 per cent energy consumed.

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industry update gSolid—Tool for Process Dynamics Engineering

rocess Systems Enterprise (PSE) has introduced gSOLIDS 2.0, a second-generation integrated drag and drop environment for modelbased engineering and optimisation of solids processes. Developed in conjunction with Procter & Gamble, Pfizer and Novozymes, gSOLIDS is aimed at process engineers and scientists in industries where particulate processes play an integral part, such as pharmaceuticals, fine chemicals, agrochemicals, food processing, consumer goods and minerals and mining. Ben Weinstein, Section Head of Corporate Function R&D Modeling & Simulation at Procter & Gamble, says, “A key advantage of

gSOLIDS is that it allows us to develop dynamic models of complex processes, and apply them to process dynamics.” The ability to exploit optimisationbased capabilities such as parameter estimation and dynamic optimisation using accurate models means that it is possible, for example, to determine optimal operating procedures. “This gives us a better likelihood that when we start up a new product line it will work as planned,” says Weinstein. New in gSOLIDS 2.0 is the ability to handle multiple solid phases, each with its own particle size distribution and size dependent composition, plus numerous new unit operation models.

There are enhancements to a number of gSOLIDS capabilities, such as use of dynamic modelling to handle batch, continuous and hybrid processes; advanced parameter estimation and optimisation capabilities; and integration with PSE’s gCRYSTAL advanced process modelling software and gas-liquid process models to enable simultaneous whole-process design and optimisation.

PET Packaging Grows Big in BRIC GBI

Research reiterates that fast growing economies and strong production will lead Brazil, Russia, India and China to become dominant forces in the global polyethylene terephthalate (PET) market. The demand for PET for flexible packaging has registered a growth of around seven per cent CAGR during the last decade, due to its diverse applications in fast moving consumer goods (FMCG) and food sector companies. A significant portion of demand for PET is from the AsiaPacific region, which accounted for 40.6 per cent of global PET demand during 2010. This is expected to increase to 47.8 per cent by 2020, as China is rapidly emerging as a global petrochemical products manufacturing hub. Production in China enjoys the advantage of relatively low operating costs and, as a result, there have been huge capacity PET capacity additions in the country, with the country accounting for almost half of Asia-Pacific’s import volumes during 2010. China is anticipated to be the PET market leader towards 2020. The announcement of anti-dumping duties on imports from other regions, alongside significant capacity additions, means that Brazil and Russia’s PET markets are also expected to expand towards 2020. In addition, India’s large population is causing consumption of packaged goods to rise, creating increased demand for PET capacity additions. Flexible packaging will continue to grow in importance as major retail chains demand greater product protection and longer shelf-life for various products. Carbonated soft drinks (CSD) accounted for an impressive share of 31.5 per cent in the demand

may 2012 | industry 2.0

- technology management for decision-makers

for PET during 2010, while the food and beer sectors accounted for respective shares of 22.4 per cent and 11.4 per cent. According to GBI Research’s analysis, PET packaging is expected to increase its share in the packaging sector towards 2020 due to better gas barriers and ultraviolet (UV) light protection, which extends the shelf-life of PET-packaged products, while new hot-filling processes are creating new opportunities for PET packaging for pasta and sauces. During 2011, beer distilleries have also adopted PET bottles for use as packaging, which is expected to continue towards 2020 due to advantages in product quality, transport and bar regulations concerning the use of glass in outdoor areas.

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industry update

PTC Gets New Country Head

ngineering software major PTC has appointed Jeffrey W Wilmot as Senior Vice President and Country Manager of PTC in India. Wilmot will manage PTC’s India operations, and will be responsible for all activities related to sales and marketing. Wilmot has been working with PTC for over 11 years, and during that time has held several senior management positions. Prior to joining PTC he worked for the US Congress, where he was a professional staff member for the Committee on Government Reform and Oversight. He also served as Chief of Staff for the House Minority Leader in Massachusetts, and has worked on several gubernatorial, congressional and state campaigns. Commenting on his new role Wilmot says, “I am enthusiastic about working in a dynamic market like India. I plan to capitalise on my experience to strengthen our presence in India, and also expand our business through investments.”

Glass Packaging Has Highest Green Potential

study carried out by PE International, to assess the environmental impact of glass as a packaging medium, has found that the human toxicity potential of glass packaging is the least when compared to plastic, metal and paper. The study was commissioned by the All India Glass Manufacturers’ Federation. The assessment says that glass packaging has the highest green potential and the lowest global warming risk, especially for processed food and beverages. Juergen Stichling, Global Director of PE International says, “Glass is the most suitable packaging medium for retaining product quality, and is the least damaging to the environment. Also, it is endlessly recyclable.” He adds that increased use of recycled

glass in India from the current 35 to 75 per cent will reduce the industry’s carbon footprint by almost 40 per cent. Mukul Somany, President of the federation says that the industry is planning to take additional measures to improve the green profile of glass. These include adoption of technology to reduce glass weight by five to 20 per cent, increase recycling from 35 to 50 per cent, and increase the use of natural gas as fuel instead of furnace oil. India’s glass packaging industry’s estimated at Rs 6,000 crore, and the country is among the global top 15 markets for glass packaging. However, plastic is still the preferred medium for packaging processed food and beverages in India, with 48 per cent market share, followed by paper, metal and glass.

Creaform Improves Inspection

reaform, a provider of portable 3D measurement technologies, has developed a system called C-Link which enables the networking of up to 4 C-Track systems and operate them simultaneously using a a HandyPROBE portable CMM (coordinate measurement machine) or a MetraSCAN 3D optical CMM scanner. C-Link functionality makes inspection of complex setups, jigs, tooling and prototypes faster and easier. It also allows the creation of fixed measurement rooms (virtual CMM), and can be used for the deformation analysis of large or complex objects.

may 2012 | industry 2.0

- technology management for decision-makers

DTDC Acquires Majority Stake in Eurostar

TDC Courier and Cargo, an Indian express courier company, has entered into agreement to acquire a majority stake in UAE-based Eurostar Express. The joint venture in Dubai will be 52 per cent owned by DTDC, 33 per cent by the UAE-based Eurostar group, and 15 per cent by DTDC’s local partner in UAE. Commenting on the acquisition, Suresh Bansal, Director and Head of International Business at DTDC says, “This acquisition will allows DTDC to penetrate and consolidate its presence all over the Middle East, including GCC and MENA areas more comprehensively. It will facilitate more feet on street, robust infrastructure, and quality delivery capabilities in developed markets like Dubai and Abu Dhabi”. DTDC’s UAE network will have a team of 100-odd professionals and a fleet of about 60 vehicles after the acquisition. The organisation will offer same day delivery, pick-up and return services across UAE for vital shipments, and delivery of shipments between major cities within UAE within three hours

Sundaram Clayton to Supply Die Castings

undaram Clayton has begun production of die castings at its new plant in Oragadam, near Chennai. The plant will mainly cater to the needs of the domestic market, and the company’s marquee customer, Hyundai. The company has invested nearly Rs 90 crore on the facility. “As the new plant is closer to the Hyundai factory, supply to Hyundai has been completely shifted out of our Padi (Chennai) plant to Oragadam,” says H Lakshmanan, Executive Director of Sundaram Clayton. The total production capacity at the new plant is 15,000 tons a year. “It will ramp up to full capacity in six months,” Lakshmanan adds.

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Yamaha Plans New Scooter Plant

ndia Yamaha Motor has decided to set up a new scooter manufacturing facility at Vallam Vadagal near Chennai. The company has signed a MoU with the Tamil Nadu Government to this effect. Roy Kurian, National Business Head, Sales, India Yamaha Motor, said that the company also intends to have a vendor park in the vicinity of the new facility. Hiroyuki Suzuki, Chief Executive Officer and Managing Director of India

Yamaha Motor, said that the company will invest Rs 1,500 crore over the next five years. The facility, to be ready by January 2014, will initially manufacture scooters. It will have an annual capacity

SCM Software Market Crosses $7.7 Billion

ccording to Gartner, an information technology research and advisory company, the worldwide supply chain management (SCM) software market reached $7.7 billion in 2011, a 12.3 per cent increase from 2010. This is the second year of double-digit growth for the SCM software as supply chain investments keep their priority status, despite caution from IT budget decision-makers. Chad Eschinger, Research Vice President at Gartner says, “Despite ongoing economic uncertainty, the market for supply chain applications showed itself to be pretty resilient in 2011 with most SCM providers continuing to expand their footprints. North America and Western Europe continued to be the prime consumers of SCM software in terms of dollars spent, with nearly 79 per cent of market revenue. However, European growth slowed in 2011 while AsiaPacific continued to experience robust growth that significantly outpaced the market average.” SAP continued to lead the SCM software market, accounting for 19.9 per cent of the worldwide market. Oracle next biggest vendor with 16.9 per cent market share. Ariba (recently acquired by SAP) experienced the strongest growth among the top five vendors with SCM software revenue increasing 46.5 per cent in 2011. “The SCM software market is fragmented, with a plethora of small and midsize vendors (with revenue of less than $50 million) across regions and its four primary market segments,” said Eschinger. He added that SCM offerings delivered as software-as-a-service (SaaS) subscriptions continued to bolster above-market growth in 2011 at 21 per cent and many best-of-breed point product vendors, with focussed capabilities, while perpetual licences also grew significantly at 15 per cent.

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of 400,000 units a year. The production will be increased in stages to reach an annual output of 18,00,000 units by 2018. Initially, the plant will employ 1,800 people, and will scale up to 6,500 in five years. “We expect the Indian twowheeler market to reach 20 million units by 2016, and we target to sell 20,00,000 units,” said Suzuki. Last year, Yamaha sold 520,000 units (including exports) and it hopes to achieve sales of 640,000 units in 2012.

Welspun Wins Solar PV Project

he Welspun Group has bagged a 125-MW solar photovoltaic project in Madhya Pradesh. Welspun Energy Managing Director, Vineet Mittal esimates that the project will cost about $225 million, and says that the project will be set up on barren tracts of land in Mandsaur and Neemuch districts of Madhya Pradesh within 18 months. Mittal adds that Welspun Energy plans to add about 250 MW in new and renewable energy projects during the current fiscal. By 2015-16, the company is targeting a portfolio of 1,750 MW, 60 per cent of which will be wind energy and the remaining 40 per cent solar power projects.

Adhunik Metaliks to Sell Forging Unit

olkata headquartered Adhunik Metaliks is planning to sell its subsidiary Neepz V Forge (India). The subsidiary operates forging and machining facilities at Aurangabad, and manufactures automotive products such as crank shafts, under brackets, steering knuckles, steering arms, tie rod arms, cam shafts, spindles and several other forgings. It is a supplier to Tata Motors, Ashok Leyland, Mahindra & Mahindra, John Deere, Escorts, Dana Spicer among others. The plant has a fully robotised 8,000 ton press line, and has an installed production capacity of 56,000 tons per annum. Neepz also caters to the non-automotive sector, and supplies companies like Tractors Engineers and Greaves Cotton.

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- technology management for decision-makers | may 2012

industry update

TEMA Contests Analyst Report

he Telecom Equipment Manufacturer’s Association (TEMA) of India has expressed its dissatisfaction with a recent report produced by consulting firm, Booz & Co titled the ‘Indian Telecom Equipment Manufacturing Sector’. It says the report is an attempt to polarise and paralyse the efforts of Government of India to incentivise the local innovation and manufacturing of telecom equipment. The study by Booz & Co was sponsored by the Cellular Operators Association of India (COAI). According to TEMA, the report appears to portray that there is not much scope for Indian telecom equipment manufacturing in the current world scenario. According to the Booz & Co report, “India will account for only three per

cent of the global market by 2020, therefore self-reliance is not a viable tool to drive the globally competitive economies of scale.” According to TEMA, the telecom equipment market is expected to reach $40 billion by the year 2020 (from the current $10 billion) making it attractive for foreign equipment suppliers. Ashok K Aggarwal, Honorary Director General, Telecom Equipment Manufacturers Association (TEMA), says, “The report is based on surmise and conjecture, and completely ignores the growth potential of domestic manufacturing in India.” TEMA’s communication to the government suggests that policymakers should not pay attention to the report since it is against national interest.

ExxonMobil Introduces Online Industrial Lubricant Selector

o help maintenance professionals make informed lubricant decisions that will optimise equipment performance and minimise unplanned downtime, ExxonMobil has unfurled Looble, a user friendly, online industrial lubricant selector. The solution simplifies the lubricant selection process by providing targeted Mobil-branded product recommendations with performance ratings based upon users’ specific industries, applications and equipment. Paul Grives, Global Industrial Marketing Advisor, ExxonMobil says, “With the introduction of Looble, maintenance and production professionals now have readily accessible resources for lubricant and maintenance best practices that can help them optimise equipment performance. Looble is powered by our application-specific expertise and unique insights.”

Intertek Improves Tirupur Lab

ntertek, a provider of quality and safety solutions, has expanded its consumer goods testing laboratory in Tirupur to 37,000 sq ft. The facility now offers enhanced chemical management and analytical laboratory services for the textile and apparel industry. The lab aims to help textile manufacturers and processors reduce the use of hazardous chemicals in the supply chain to meet increasingly stringent international environmental standards

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and regulations. The Intertek lab can test textile products in accordance with a variety of product safety regulations, including REACH, SvHC and CPSIA, as well as customers’ own restricted substance lists to ensure banned chemicals are not being used in production. The lab is located in close proximity to manufacturing sites and buying offices, facilitating quick response to ever-changing textile and apparel regulations, as well

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Mahindra Enters UPS Business

ahindra Powerol, a manufacturer of generator sets, has expanded its product portfolio with uninterrupted power systems UPS and inverter batteries for the home and small office segments. P Palaniappan, Business Head for Mahindra Powerol says, “We plan to become a pan-India solutions provider by 2014, and garner a bigger share of the business.” The company has begun sourcing inverter batteries and marketing them under the Mahindra brand. Referring to the UPS systems for telecom networks where Mahindra has a 45 per cent market share, Palaniappan said the company teams were working on solar powered back up systems for telecom towers.

as global industry standards. Paul Yao, Chief Executive of Intertek’s Consumer Goods business line, commented, “As the knitwear capital of India, Tirupur, is the ideal location for the expansion and enhancement of our textile and apparel testing laboratory capabilities.” He added, “There is a real need in the region to manage and reduce waste in the form of hazardous chemicals, dyes and other water pollutants and Intertek can ensure compliance with global environmental standards for a more sustainable industry.”

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Siemens PLM Enhances Teamcenter 9.0

iemens PLM Software has improved and enhanced its product lifecycle management (PLM) software, Teamcenter. The latest version provides a fullyintegrated approach to requirements management. It enables a common view of the system up and down the value chain, helping to eliminate costly latestage system integration problems that

DIPP to Prepare National IPR Strategy

he Department of Industrial Policy and Promotion (DIPP) has set up a Sectoral Innovation Council on IPR with the objective of preparing a National IPR strategy to incentivise innovation and promote the diffusion of new technologies. Speaking at the Conference on National IP Policy, organised by FICCI, DIPP and Intellectual Property India (IPI), Secretary Saurabh Chandra pointed out. “Companies that wish to sustain themselves will need to continuously innovate in production processes, products and services.” Chaitanya Prasad, Controller General of Patents, Designs and Trade Marks, observed that a National Intellectual Property Policy should seek to develop an ‘IP culture’ of creativity, protection and exploitation of IP. It should build confidence and assurance in the investors that India has an environment that respects the resources that are our legacy while promoting innovation and creativity. The IP policy should ensure that the efforts of creative minds are recognised and secured. It must strike a balance between the creator in IP and society; promote and encourage technology transfer and take into account the flexibilities in international IP agreements.

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result from requirements not being tied to physical implementation. Teamcenter ensures all departments and disciplines are using synchronised product information. The enhanced integration of content management in Teamcenter 9 allows product documentation to be created in parallel with the design process. The new solution also integrates the service scheduling and

execution management solutions, enabling companies to effectively control cost by defining and efficiently scheduling service orders and tasks. Teamcenter tracks and captures execution of these service tasks to maintain an accurate history of assets and service records. Service personnel can use the feedback capability in the software to provide input to engineers.

CVRDE Phase I PLM Solution

he Combat Vehicles Research and Development Establishment (CVRDE) has completed the first phase of one of the largest PLM implementation projects in India. The project was executed by PTC and its partners, ITC Infotech. PTC’s Windchill product was selected for CVRDE after extensive benchmark testing and a rigorous selection process by the Defence Research & Development Organisation (DRDO). CVRDE is one of DRDO’s key divisions, responsible for designing, developing and testing of armored fighting vehicles and tanks. The project comprises the implementation of hardware, software, training programmes and post implementation

support along with five years of maintenance. The Windchill software is being implemented by ITC Infotech, a strategic services partner for PTC’s enterprise business market in India. Dr P Sivakumar, Director, CVRDE commented, “Phase 1 of the implementation has gone live, marking a major milestone for us. We are very impressed with the speed at which ITC Infotech has executed the project.” Ashwani Maheshwari, Chief Executive Officer, India Business, ITC Infotech, adds, “Our partnership with PTC over the last 10 years has helped us to implement DRDO’s requirements without much customisation. That was one of the key factors in delivering the services within the stipulated time.”

Consumer Electronics Segment Clocks Steady Growth

ccording to a study titled ‘Emerging trends in Consumer Electronics and Durables Industry,’ released by ASSOCHAM, the consumer electronics and durables sector in India is likely to reach Rs 52,000 crore by 2015 (from the current Rs 34,000 crore). “Demand is driven by a young demographic population, coupled with rising disposable incomes amid skilled and highly educated workforce,” says DS Rawat, Secretary General, ASSOCHAM. The consumer electronics and durables market in India is divided into three segments—white goods, brown goods and consumer electronics. Television sets, audio and video players, personal computers, laptops, cell phones, digital cameras, camcorders and other electronic accessories fall in the category of consumer electronics. MNCs with superior technology and quality control account for nearly 70 per cent market share, and have a strong hold on the urban middle-class segment that is growing at about 12 to 15 per cent. The rural and semi-urban areas account for nearly 40 per cent of the overall market, and is growing at 30 per cent CAGR.

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techwatch

Advanced Plastics Exhibit Skin-like Behaviour

new genre of plastics that mimic the human skin’s ability to heal scratches and cuts, offers the promise of endowing cell phones, laptops, cars and other products with self-repairing surfaces. The team’s lead researcher described the plastics, which change colour to warn of wounds and heal themselves when exposed to light. “Mother Nature has endowed all kinds of biological systems with the ability to repair themselves,” explains Dr Marek W Urban. “Our new plastic tries to mimic nature, issuing a red signal when damaged, and then renewing itself when exposed to visible light, temperature or pH changes.” Urban, who is with the University of Southern Mississippi, foresees a wide range of potential applications for plastic with warn-and-self-repair capabilities. Scratches in automobile fenders, for instance, might be repaired by simply exposing the fender to intense light. Critical structural parts in aircraft might warn of damage by turning red along cracks so that engineers could decide whether to shine the light and heal the damage or undertake a complete replacement of the component. Plastics have become so common,

replacing steel, aluminum, glass, paper and other traditional materials because they combine desirable properties such as strength, lightweight and corrosion resistance. Self-healing plastics have become a Holy Grail of materials science. One approach to that goal involves seeding plastics with capsules that break open when cracked or scratched and release repairing compounds that heal scratches or cuts. Another is to make plastics that respond to an outside stimulus—like light, heat or a chemical agent—by repairing themselves. Urban’s group developed plastics with small molecular links or ‘bridges’ that span the long chains of chemicals that compose plastic. When plastic is scratched or cracked, these links break and change shape. Urban tweaked them so that changes in shape produce a visible colour change—a red splotch that forms around the defect. Urban cites other advantages of the new plastic. Unlike self-healing plastics that rely on embedded healing compounds that can self-repair only once, this plastic can heal itself over and over again. The material also is more environment friendly than many other plastics.

New Fabric Coating Shrugs Off Tough Stains

cientists are reporting development and successful testing of a fabric coating that takes an active role in sloughing off grease, dirt, strong acids and other gunk. The report, which shows that the coating is even more water-repellent than car wax or Teflon, appears in ACS’ journal Langmuir. Tong Lin and colleagues explain that a method called ‘layer-by-layer’ (LbL) self-assembly produces films and coatings that can be customdesigned for specific applications by selecting the composition of each layer. The downside: These multilayer films are not very stable and eventually come apart. Lin and colleagues claim to have developed a way to stabilise those layers with UV light to form a ‘superhydrophobic coating. Laboratory tests showed that the new coating, applied to cotton fabric, repelled water, acids, bases and organic solvents. It was also durable, remaining intact on the cotton fabric after 50 washes in the washing machine and was more repellent than car wax and Teflon. x

Controlling Light at Will

uke University engineers Picture courtesy: Stephane Larouche believe that continued advances in creating evermore exotic and sophisticated humanmade materials will greatly improve their ability to control light at will. In their latest series of experiments, they demonstrated that a metamaterial could create holograms in the infrared range of light—something that has not been done before. The Duke engineers point out that while this advance was

may 2012 | industry 2.0

achieved in a specific wavelength of light, the principles used to design and create the metamaterial can be applied for controlling light in most frequencies. “In the past, our ability to create optical devices has been limited by the properties of natural materials,” said Stéphane Larouche, research scientist in electrical and computer engineering at Duke’s Pratt School of Engineering. “With the advent of metamaterials, we can do whatever we want to with light. The metamaterial device fashioned by the Duke team doesn’t look any-

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thing like a lens, though its ability to control the direction of rays passing through it surpasses that of a conventional lens. While traditional lenses are made of clear substances—like glass or plastic—with highly polished surfaces, the new device looks more like a miniature set of tan Venetian blinds. These metamaterials are constructed on thin slabs of the same material used to make computer chips. Metal elements are etched upon these slabs to form a lattice-like pattern. The metal elements can be arranged in limitless ways.

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Nanosponges Efficiently Soak Up Oil

esearchers at Rice University and Penn State University have discovered that adding a dash of boron to carbon while creating nanotubes turns them into solid, spongy, reusable blocks that have an astounding ability to absorb oil spilled in water. The team discovered that boron puts kinks and elbows into the nanotubes as they grow, and promotes the formation of covalent bonds which give the sponges their robust qualities. Rice University professor P Ajayan explains that multi-walled carbon nanotubes grown on a substrate via chemical vapour deposition usually stand up straight without any real connections to their neighbours. But the boron-introduced defects induced the nanotubes to bond at the atomic level, which tangle them into a complex network. Nanotube sponges with oil-absorbing potential have been made before, but this is the first time the covalent junctions between nanotubes in such solids have been convincingly demonstrated, he said. “The interactions happen as they grow, and the material comes out of the furnace as a solid,” Ajayan said. “People have made nanotube solids via post-growth processing but without proper covalent connections. The advantage is that the material is created during growth and comes out as a cross-linked porous network.

Adding boron to carbon nanotubes creates superhydrophobic sponges that have a remarkable ability to soak up oil from water Picture courtesy: Jeff Fitlow/Rice University

The nanosponges, which are more than 99 per cent air, also conduct electricity and can easily be manipulated with magnets. Daniel Hashim, a graduate student in at Rice University says that the blocks are both superhydrophobic (they hate water, so they float really well) and oleophilic (they love oil). The robust sponge can be used repeatedly, and stands up to abuse. The sponges can absorb more than a hundred times their weight in oil. The researchers have high hopes for the material’s environmental applications. “For oil spills, you would have to make large sheets of these or find a way to weld sheets together (a process Hashim continues to work on),” Ajayan said. Other applications are in manufacture of batteries, as scaffolds for bone-tissue regeneration, and in polymer composites.

Combustion Noise Absorber

sponge-like material developed by a University of Alabama engineering professor can significantly reduce combustion noise, possibly making work environments safer and extending the life of equipment. Dr Ajay K Agrawal, Professor of Mechanical Engineering, was recently

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Dr Ajay Agrawal, left, with graduate students Justin Williams, right, and Joseph Meadows, centre Picture courtesy: Zach Riggins, University of Alabama)

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granted a patent for decreasing the noise generated by combustion systems at the source by placing a sponge-like material directly in the flame. The patent is based on Agrawal’s work on jet engine combustion with Ultramet Corp, and funded by the US Navy. The combustion process in engines, especially those of jets, produces a deafening noise that can also be devastating to the engine. Because the noise level is so high, the sound waves produced can cause intense pulsations. These pulsations shake the engine and result in mechanical failure. The more the engine is exposed to these intense acoustic pulsations, the more likely it is to breakdown. So far, noise reduction has been addressed after-the-fact, suppressing the noise outside the engine after the combustion process takes place. Agrawal’s technology eliminates the noise at the source, during the combustion process. The challenge of cutting the sound level during the combustion process is that combustion happens at extremely high temperatures and pressure. Most material cannot withstand such conditions. However, Agrawal has found a porous material that can tolerate the conditions of jet engine combustion. This porous inert material, or foam, is a composite material made of hafnium carbide and silicon carbide. It can withstand intense levels of heat and pressure. The material is placed directly into the flame and acts like a sponge for the noise. Due to its high permeability, the foam allows gases to easily flow so combustion is not interrupted, yet is much quieter. The foam surrounds the flame, cuts the noise and eliminates the potential for engine instability. Since the technology reduces noise at its source, it minimises the need for bulky and expensive modifications to exhaust equipment. It also increases the uniformity of the combustion, and allows for retrofitting of existing systems. This technology will be useful in gas turbines, burners, furnaces, power generators and other industrial devices using combustion.

- technology management for decision-makers | may 2012

techwatch

Dip Chip Quickly Detects Toxicity

Scientists have combined biology and engineering to produce a biosensor device that detects toxicity accurately

Credit: Image courtesy of American Friends of Tel Aviv University

rom human-made toxic chemicals such as industrial by-products to poisons that occur naturally, a water or food supply can be easily contaminated. And for every level of toxic material ingested, there is some level of bodily response, ranging from minor illness to painful certain death. Biosensors have long been used to safeguard against exposure to toxic chemicals. Now Dr Yosi Shacham-Diamand, Vice Dean of Tel Aviv University’s Faculty of Engineering, along with Professor Shimshon Belkin of the Institute of Life Sciences at the Hebrew University of Jerusalem, have married biology and engineering to produce a biosensor device called the ‘Dip Chip’,

which detects toxicity quickly and accurately. The Dip Chip contains microbes designed to exhibit a biological reaction to toxic chemicals, emulating the biological responses of humans or animals. The biological reaction is converted into an electronic signal that can be read by the user. When perfected for commercial applications, the chip could be easily plugged into a mobile device to determine toxicity, says ShachamDiamand. The new chips employ genetically modified microbes developed in Belkin’s lab. When the modified microbes are exposed to toxic or poisonous materials, they produce a measurable biochemical reaction. “In my lab, we developed a method for communicating with the microbes, converting this biological response to electrical signals,” Shacham-Diamand explains. The device, which looks like a dip stick, immobilises these speciallyproduced microbes next to the sensing electrodes. Once the microbes come in contact with a questionable substance

they produce a chemical signal that is converted to an electrical current by a device that can interpret the signals, producing a binary ‘toxic’ or ‘not toxic’ diagnosis. One of the chip’s advantages is its ability to identify toxicity as a biological quality instead of specific toxic chemicals. There are already excellent detectors to identify specific toxic materials, says Shacham-Diamand. The Dip Chip is designed to alert the user to overall toxicity. And because the chip measures general toxicity, it will pick up on any and all toxic materials—even those that haven’t been invented yet. Beyond their ability to find toxic chemicals in the field, these chips can also be put to use in the cosmetics or pharmaceuticals industries. They could be used to detect the toxicity of new compounds, minimising the controversial use of lab animals. Using the same technology, the researchers have also developed a larger-scale device which allows water to flow continuously over the sensor, making it appropriate for online, realtime monitoring of water supplies.

A Little Water Speeds Chemical Reactions

Through an interaction with applications, the speed of catalytic n international team led by hydrogen atoms (green), a transformations is important, says Manos Mavrikakis, Profeswater molecule (magenta Mavrikakis. sor of Chemical and Biologiand blue) moves rapidly across a metal oxide sur “The rate at which the hydrogen cal Engineering at the University of face leading to efficient atoms diffuse on the surfaces of the Wisconsin-Madison, and Flemming chemical reactions catalyst determines, to a large extent, Besenbacher, Professor of Physics Credit: Image courtesy of University of Wisconsin-Madison the rate of the chemical reaction.” and Astronomy at the University of In their research, Mavrikakis and Besenbacher found that Aarhus, Denmark has discovered how adding trace amounts of the presence of even the most minute amounts of water can water can speed up chemical reactions. accelerate the diffusion of hydrogen atoms on iron oxide by 16 Hydrogenation and hydrogenolysis reactions have huge orders of magnitude at room temperature. In other words, waapplications in the petrochemical, pharmaceutical, food and ter makes hydrogen diffuse 10,000 trillion times faster on metal agricultural industries. “In the petrochemical industry, for eg, oxides than it would have diffused in the absence of water. upgrading of oil to gasoline, and in making various biomassWithout water, heat is needed to speed up that motion. derived products, you need to hydrogenate molecules—to add Essentially, when water is present, hydrogen diffuses via a hydrogen—and all this happens through catalytic transformaproton transfer in which hydrogen atoms from the oxide surtions,” says Mavrikakis. face jump onto nearby water molecules and make hydronium A chemical reaction transforms a set of molecules (the ions, which then deliver their extra proton to the oxide surface reactants) into another set of molecules (the products), and a and liberate a water molecule. catalyst is a substance that accelerates that chemical reaction, while not itself being consumed in the process. In industrial

may 2012 | industry 2.0

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Graphene Shows the Way to RustProof Steel

niversity at Buffalo researchers are making significant progress on rust-proofing steel using a graphene-based composite that could serve as a nontoxic alternative to coatings that contain Graphene, the thinnest and strongest hexavalent chromium. Graphene, the thinmaterial known to man nest and strongest material known to man, consists of a single layer of carbon atoms linked in a honeycomb-like arrangement. The material’s hydrophobic and conductive properties may help prevent corrosion, repelling water and stunting electrochemical reactions that transform iron into iron oxide, or rust, says Professor Sarbajit Banerjee. Bringing the coating to the market could not only benefit public health, but also save jobs, says Banerjee. “Our product can be made to work with the existing hardware of many factories that specialize in chrome electroplating. This could give factories a chance to reinvent themselves in a healthy way in a regulatory environment that is growing increasingly harsh when it comes to chromium pollution.” The scientists are testing how long pieces of steel coated with a high-tech varnish made of graphene remain rust free when immersed continuously in saltwater, an environment that accelerates corrosion. Currently, the researchers have found that the treated steel can survive in brine for about a month (because brine is an extremely harsh environment, the coated steel’s survival time in the realworld would be many times longer). As sponsors of the research and due to inventive contribution by Tata employees, Tata Steel also has certain rights to the technology. “Tata Steel has always displayed leadership in motivating innovative research and product development by leveraging partnerships with universities. UB has been one of our choices for cutting-edge coatings technology development on steel substrate,” says Dr Debashish Bhattacharjee, Tata Steel’s group Director for Research, Development and Technology

Acoustic Inversion Can Detect Pipeline Bubbles

he ability to measure gas bubbles in pipelines is vital to the manufacturing, power and petrochemical industries. Currently, the most popular technique for estimating the gas bubble size distribution (BSD) is to send sound waves through the liquid and compare the measured attenuation of the sound wave with that predicted by theory. The key problem is that the theory assumes that the bubbles exist in an infinite body of liquid. If, in fact, the bubbles are in a pipe, then the assumptions of the theory do not match the conditions of the experiment. That could lead to errors in the estimation of the bubble population. Now, a team led by Professor Tim Leighton from the Institute of Sound and Vibration Research at the University of Southampton, has devised a method which takes into account that bubbles exist in a pipe. Leighton and his team explored how measured phase speeds and attenuations in bubbly liquid in a pipe might be inverted to estimate the BSD. This new technique, appropriate for pipelines, gives good BSD estimations if the frequency range is broad.

Moth Eyes Inspire Anti-Reflective Plastic

esearchers from Singapore’s A*STAR Institute of Materials Research and Engineering (IMRE) and their commercial partners have developed a new plastic that reflects just 0.09 to 0.2 per cent of the visible light hitting its surface. This matches or betters existing antireflective and anti-glare plastics in the market. Such plastics are used in TV displays, windows and solar cells. Because of the unique nanotechnology method used, the new plastic developed by IMRE maintains very low

may 2012 | industry 2.0

Credit: IMRE

Credit: I Image courtesy of University at Buffalo

techwatch

SEM image showing anti-reflective nanostructures that mimic structures in a moth’s eye reflectivity (<0.7%) at angles up to 45˚. This means that TV viewers can have wider viewing angles with less glare. “The new plastic was made possible because of the unique nanoimprint expertise that we have developed at

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IMRE,” says Dr Low Hong Yee, the senior scientist who is leading the research. Several companies are in the process of licensing the anti-reflective nanostructure technology from Exploit Technologies Pte Ltd, the technology transfer arm of A*STAR. “We are also developing complementary research that allows the technology to be easily ramped-up to an industrial scale,” explains Dr Low. Nano-imprinting relies on engineering the physical aspects of the plastics rather than using harmful chemicals.

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cover story

The Journey to

Service Ex 22

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Industrial goods manufacturers often limit their scope of services to the supply spare parts, and providing routine maintenance. However, by striving for excellence across all areas of their service business, companies have the opportunity to reap significant financial rewards—and improve their relationships with their customers By Joerg Matthiessen, Peter Ulrich, Pekka Vanne Patrick Staudacher, and Felix Stellmaszek

Credit: Peterson

or industrial customers such as semiconductor companies, water treatment is critical to the production process but accounts for less than two per cent of total plant-operating costs. The treated water must meet certain quality standards, but exceeding those standards offers no competitive advantage. Hence, from the user’s perspective, there’s no benefit to developing an expertise in water treatment. Many water treatment companies, however, have not considered the customer’s point of view and, therefore, have not perceived the opportunity to offer a solution. Instead, they have focussed on selling new products, and viewed services in terms of spare parts, sold opportunistically. They have seen no need for dedicated service departments, which has resulted in their service activities being under-resourced and undermanaged. With this business model, the earnings before interest, taxes, depreciation, and amortisation (EBITDA) of water treatment equipment companies have shown lower single-digit margins.

A supplier that we will call WaterFlow adopted a different approach. It offered solutions, rather than only equipment. These solutions typically took the form of ‘build, own, operate’ contracts. That is, WaterFlow would provide its customers with a loan to purchase its water treatment equipment. Then, the company would run and maintain the equipment on-site on behalf of its customers. These water-by-the-hour deals allowed WaterFlow’s employees to remain in close contact with customers, advising them on retrofits, upgrades, and how to effectively treat water and wastewater in order to improve their sustainability record. WaterFlow also professionalised its service business by making it a discrete unit and setting ambitious revenue and margin targets for the head of service. This helped to align the entire organisation with the solutions strategy, and it encouraged employees to look for other service opportunities to grow the business, such as maintaining the equipment of WaterFlow’s competitors. WaterFlow’s ambitious service programme resulted in the company outperforming

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- technology management for decision-makers | may 2012

cover story

Committing to Service Excellence

Industrial goods companies that have understood this opportunity have turned their service operation into a competitive advantage, and some are achieving a level of true service excellence. They have moved from only manufacturing products to offering solutions, and as a result, they are outperforming their peers in terms of service revenues and profitability. The Boston Consulting Group conducted a benchmarking study of 50 manufacturers of industrial machinery that confirmed the attractiveness of establishing a service business. On average, services accounted for 30 per cent of companies’ revenues—and contributed up to 50 per cent of total operating profits at a profit margin of 24 per cent. However, for the service champions, the service business contributed an average of 47 per cent of revenues and had profit margins of 36 per cent. Obviously, these data vary significantly by industry, but they do suggest ample room to expand service operations in many industrial-goods companies—even if they already generate healthy service revenues and profits. Thus, we believe that the time is ripe for companies to start the journey towards service excellence. Since the financial crisis, business customers have been trading down in many markets, keeping their products for longer periods, and seeking out used rather than new products. In addition, the increasing number of environmental regulations along with the growing inter-

Services Account for a Sizeable Percentage of Companies’ Revenue and Profitability Service profit margin (%)

its peers in both EBITDA-margin and marketshare gains. This divergence in approaches holds a key lesson: industrial goods companies should broaden their view of service operations. When managers think about services, they should avoid focussing on only spare parts. Rather, after-sale services comprise a wide variety of activities—traditional technical services (basic installation and training), enhanced technical services (retrofits and upgrades), and business services (consulting, financial services, and outsourcing)—all of which can be profitable because they provide high value to customers.

Service champions’ average

Overall benchmarking average

Service champions ers outperform their pe 30

Average service share of companies’ revenues (%) Source: BCG benchmarking study of 50 manufacturers of industrial machinery. Note: All percentages have been rounded to the nearest whole number.

est in sustainability has created opportunities to promote retrofit and upgrade services. Moreover, it takes years to reach a level of service excellence, and we often see companies struggling in their effort. Part of the challenge is cultural: industrial managers typically view products as central—and the associated services as tangential—to the company’s identity. As a consequence, service businesses tend to be undermanaged and under-resourced. Additionally, companies encounter operational challenges related to standardising delivery processes, establishing systematic pricing, and instilling an active service culture. However, none of these problems are insurmountable.

Capitalising on the Opportunity

In the course of our work with industrial goods companies, we have identified a set of levers that have proved quite useful in building strong service businesses. Here, we discuss these ten levers that companies can pull to enhance service revenues and profitability. Typically, a company that wants to increase service revenue must focus on levers that are different from those it would emphasise to boost profitability. A manufacturer whose service lines

Servicing third-party products offers a way to spread into new markets, and generate additional revenues 24

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account for about one-tenth of total revenues but more than one-third of its margin should probably focus first on steps that will raise sales, whereas a company in the reverse situation should do the opposite. In either case, achieving true service excellence generally requires a command of all ten levers. Let’s look at each of the levers. 1. Define the Service Business Model The very act of recognising service activities as belonging to a different business model is a critical first step in defining a service business model. The next step is creating a new value proposition and supporting it with a distinct operating model. A global truck manufacturer experienced substantial margin pressure on its product sales in light of new competition from truck-leasing companies. As a consequence, after looking anew at customers’ needs and priorities, the company started offering fleet financing to its longest-standing customers, and expanded into fleet management. The latter included not only maintenance but also insurance, gas, and even driving services—all offered at a fixed price per mile driven, which provided customers full cost transparency. Furthermore, the truck manufacturer created a new organisational unit with its own P&L responsibility to manage this new solution-type offering so as to ensure that the effort would be sustained. To define a service business model, executives need to make purposeful choices along several dimensions, including service philosophy, financial aspirations, service offering, associated risk exposure, target customer segments, and organisation structure. If the service business is treated simply as a byproduct of the manufacturing business, it will forever be stuck in low gear. 2. Adopt Design-To-Service Principles In recent years, manufacturers have focussed on reducing complexity in their new product offerings. Automakers, for eg, have developed global vehicle platforms, because by standardising parts, they can produce lower-cost vehicles. The mantra has been ‘design to cost’. But cost is only part of the profitability equation, and adopting a ‘design to service’ approach can help maximise the total profit possible from a product or customer relationship. In our experience, captive original-equipment-manufacturer (OEM) services generate double or triple the margins of licenced or third-party-fulfilled services for industrial goods companies. To generate these healthy margins, manufacturers must inject a service perspective into R&D.

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Steps

to Service Excellence

Define the Service Business Model Adopt Design-to-service Principles Defend and Develop the Entire Installed Base Service Third-party Products Sell Proactively Employ Value-based Pricing Build a Service Factory Establish Clear Performance Metrics Empower the Service Organisation Instil a Service Culture

A design-to-service approach also increases the number of customer touch points, as it requires customers to contact the OEM for certain parts and service tasks throughout the lifespan of a piece of equipment. Done well, this approach raises customer satisfaction and cements customer loyalty to the brand. Done poorly through overpriced spare parts or unreliable service, this strategy has the potential to jeopardise long-standing customer relationships. On the cost side, a thoughtful design-to-service approach can also help raise productivity. A manufacturer made a machine that required a service engineer to use special tools to open the cover to access to the interior. After recognising that this slowed the servicing of the machine, the manufacturer changed the cover design so an engineer could open it easily and quickly. Another major new trend in many manufacturing industries is enabling the remote monitoring of a product through software that’s included in the original design. Remote monitoring sets up the possibility of a number of downstream repair and maintenance services by triggering ‘smart maintenance visits’. A service technician can arrive at the right time, and with the right replacement parts, to repair a machine that is critical to the manufacturing process and prevent an expensive breakdown. 3. Develop the Entire Installed Base The installed base constitutes one of a

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cover story manufacturer’s strongest assets, yet most companies don’t tap its full potential. In most cases, there is considerable room to enhance the quantity and quality of after-sale services offered to existing customers. At the same time, many companies don’t have a central, comprehensive view of their installed base. New equipment might be marketed to customers through third-party representatives, and used products might be resold several times over their lifespan. Some companies simply have not kept track of their installed base—especially if they have grown rapidly through acquisitions and never integrated their various customer lists. Scrubbing these databases and actively reconnecting with customers can be an easy and quick way to advance the service cause. A major machinery company offered a line of presses, and after years of selling through valueadded resellers, the manufacturer had lost track of where its products were installed. That made it difficult to offer retrofits and upgrades, and the company had become reactive in servicing older equipment—it only offered to service a press when a customer managed to locate the company headquarters and called with a problem. In addition, although the general technician dispatched to a customer’s site might be able to diagnose the problem, a dedicated engineer for the particular piece of equipment and another visit were often required before the issue could be resolved. By conducting a telemarketing campaign, the company was able to compile detailed data about its installed base. Technicians then paid a visit to most of the operators of its presses, affixing to the equipment a sticker with a service number and having low-key conversations with the customers. Service calls started to roll in, and the company was ready with a redesigned set of integrated services as well as with related pitches for upgrades.

Traditional technical services Lifetime services Beginning-of-life services

The

Universe

of Service

Opportunities Source: BCG analysis

may 2012 | industry 2.0

Enhanced Technical services Extend-life services End-of-life services Third-party services Business services Operational process outsourcing Business process outsourcing Financial services Consulting services

- technology management for decision-makers

The installed base is a manufacturer’s strongest asset. But only few companies tap its full potential 4. Service Third-party Products In our conversations with manufacturers, we often see a reluctance or outright resistance to providing services to competitors’ installed bases. As a result, this service business is picked up by competing manufacturers, or by independent service providers found in sectors such as construction technology and engine manufacturing. Yet servicing third-party products can offer a way to spread competencies to new markets and generate additional revenues. Consider the case of a building equipment manufacturer that also installs and services its equipment. The company saw a drop in new orders and installations when new construction slowed, so it decided to pursue servicing competitors’ products installed in commercial properties, such as department stores, hospitals, and office buildings. The company built an internal competence centre to develop methods for servicing competitors’ products and trained technicians. The regular presence of service representatives at these sites allowed the company to develop strong relationships with these customers. In addition, company representatives were able to gain insights into competitors’ installed equipment, giving them more ammunition to promote equipment upgrades and new services, such as remote monitoring and fault diagnostics. The representatives were also able to have conversations with customers about installing their own products when customers needed major upgrades. As a result, the company generated service revenues and upgrade revenues that were higher by nearly 30 per cent. To be sure, manufacturers that aspire to service third-party products will have to make a series of investments. After they do so, however, they can secure a steady stream of revenue, and they raise the odds of retrofitting the next piece of equipment or selling a new product. 5. Sell Services Proactively Successful service providers do not wait for customers to call. Instead, they initiate contact with their customers throughout the lifecycle of the product. Our benchmarking study revealed that selling proactively manages to raise revenues often

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by 20 per cent and boost profitability by more than 30 per cent. For eg, a leading industrialexample, the type of equipment and its membrane maker revamped its anagers who want to diagnose exact location? their current level of service and sales strategy after experiencing low • Go-to-market Approach. Do we have assess which capabilities will need to be implementation rates for new service specific sales targets for services and the augmented in order to perform at a high offers. The company’s revised right incentives? level should start by answering the folsales approach—supplemented by • Pricing. Do we apply a value-based priclowing questions, which are related to the a new incentive structure for the ing approach to our service offering? elements of the service value chain. sales force—started by identifying • Delivery Processes and Tools. Do we • Service Strategy. Do we set clear revprospective customers that were enforce standard operating procedures enue and margin targets for our service over or underservicing their for servicing customers’ equipment? business? equipment, or were concerned • Operational Excellence and Metrics. Do • Product Design. Do we apply design-toabout complying with regulations. we monitor our service performance service principles when developing new The company customised service using tailored KPIs? products? plans for those customers, • Service Organisation. Do we have a • Service Portfolio. Do we offer services benchmarked their operations, dedicated service department with clear that address the most pressing customer and made recommendations for accountabilities? needs? capital expenditures. This highly • Service Culture. Do our employees un• Customer Segments and Insights. Do targeted approach caused service derstand the importance of our service we have a comprehensive, integrated and new-product revenues to grow business? view of our installed base, including, for substantially. Proactive selling raises performance regardless of where a company stands in its service evolution. For a Service strategy company that’s starting to expand its S a l es service business, it may make sense Delivery Offering to train existing product-sales repDelivery Service resentatives or continue to rely on processes Go-to-market portfolio approach and tools Product third-party service reps or both. As design Customer Pricing Operational the service business matures branchsegments excellence es into more complex services, it and metrics and insights may be appropriate to hire dedicated service reps. Service organisation At some point, a separate sales organisation focussed on services Service culture could be created. But regardless Source: BCG analysis of how the effort is organised, the respective service-sales force will need the appropriate knowledge and tailored incentomer relationships—unless the price can be justitives. Service-sales managers should determine fied by a level of service that the customer values which customers to treat as key accounts and set considerably, such as same-day repairs. For examtargets for service sales for individual accounts. ple, when a broken conveyor belt shuts down the entire manufacturing process, the price of a spare 6. Employ Value-based Pricing part often takes a backseat to a speedy solution. In a service business with profit margins as high Value-based pricing accounts for such tradeoffs. as 60 or 70 per cent, the upside potential of valueAUS OEM took these principles to heart and based pricing may seem limited. However, by shiftintroduced an advanced pricing model that cating from traditional pricing paradigms to advanced egorised spare parts according to the three main value-based pricing, companies can actually contributors to its customers’ price sensitivity: increase both sales volume and margins. competitive intensity, price elasticity, and product In this case, it is critical to strike the right ballifecycle. Setting appropriate markups for each ance between pricing and customer retention. High spare-part category on the basis of these factors markups for crucial parts that can be obtained only helped the company offset a double-digit sales from the manufacturer may undermine future cusdecline in the wake of the recent financial crisis.

Getting Started

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- technology management for decision-makers | may 2012

Service excellence

The Service Value Chain

cover story 7. Build a Service Factory Many industrial-service leaders aim to establish a â&#x20AC;&#x2DC;service factoryâ&#x20AC;&#x2122; by standardising their offering and their delivery of services. The service-factory approach emphasises consistent processes, bestpractice sharing, and continuous improvement. Global hotel chains illustrate the benefits of a standardised approach. Travellers can count on finding the same quality and customer experience at every property in the chain, regardless of location. This uniformity rests on consistently deploying the same booking, housekeeping, and room-service processes worldwide. Although an establishment run by a leading hotel chain is not necessarily better than an independent hotel, the chainâ&#x20AC;&#x2122;s business model is scalable and allows for sharing of best practices and systematic improvement. The same rigour should apply to standardising industrial-service offerings. Too often we find that services provided by OEMs depend on the activities of the local head of service rather than on defined, standardised processes. Of the companies in the BCG benchmarking study, only about one-third had optimised their service networks through shared expertise to offer a consistent level of quality. A company that sells many uncoordinated variations of a service contract will find it more difficult to train service employees, to coherently explain the contract to customers, and to execute services in a way that optimises profit. Multinational customers, in particular, put a high value on receiving the same service and quality wherever they operate. Moreover, for every product-based service

bundle, there should be a catalogue that describes each included service and its intended outcome. To keep standardised offerings humming along, companies should strive to standardise their delivery processes and tools as well. Field-service personnel, for instance, could be equipped with mobile devices that provide technical information on all equipment types, details regarding past visits to a site, a spare-part ordering system, a GPS that tracks the location of personnel, and a list of tasks that specifies the order and time period in which they need to be done. 8. Establish Clear Performance Metrics Achieving true service excellence requires factbased decisions, which in turn call for key performance indicators (KPIs) that are different from those used to monitor a new-product business. Servicerelated KPIs encompass not only financial indicators, such as service share of revenues and service profitability, but also operational performance indicators, such as on-time delivery ratios, the time it takes to issue a quote, and stock out ratios. The information derived from service-specific KPI dashboards can then be used internally and externally to compare the performance of the service organisation across locations as well as with peers and service leaders in other industries. An engineered-products provider faced the challenge of higher service demands and low customer satisfaction. In response, it defined the key maintenance tasks and the associated processes in detail, such as taking the initial call, ordering the

Ten Ways to Improve Service Revenues and Profitability Levers 1. Define the service business model

Estimated Improvement Revenue Profit

2. Adopt design-to-service principles

Basic levers that define the opportunities and limits

Medium to Long

0%-20%

Short

3. Defend and develop the entire installed base 4. Service third-party products

0%-40%

Time Frame

20%-30% 10%-15%

5. Sell proactively

Short

20%-70% 30%-140%

Short

6. Emply value-based pricing

0%-10%

Short

7. Build a service factory

10%-35% 15%-70%

Medium

10%-35% 15%-70%

Medium

8. Establish clear performance metrics 9. Empower the service organisation 10. Instil a service culture Source: BCG analysis Results depend on using these levers in conjunction with each other

Required Investment

may 2012 | industry 2.0

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5%-15%

Core levers that ensure sustainbility and allow for continuous improvement

Not applicable

Low

High

Medium to Long Short: Less than one year Medium: One to three years Long: Three years or more

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materials, notifying the customer, and dispatching the service technician. Performance grades were based on key ratios, such as first-time fix rates, the number of visits per technician per day, and ontime delivery rates. After using pilot programmes to fine-tune the process steps, the company implemented a tool to track, continuously revisit, and lift the service KPIs in an intelligent fashion. The result: a step change in terms of productivity improvement paired with a continuous-feedback loop. Such rigour is standard for chief operating officers when it comes to manufacturing products, but few companies apply the same discipline to their service businesses. 9. Empower the Service Organisation Service businesses within industrial goods companies usually get scant management attention. For one thing, most companies focus first on new products, with services being an afterthought. For another, services tend to be highly profitable, and executives are often satisfied with their current performance level, not believing that there is much more room to grow. In many cases, though, companies could earn even greater returns by treating their service business as a separate entity that has profit and growth responsibilities. Virtually none of the service champions that we have worked with treat their service business as a cost centre or bury it within the newproduct organisation. In fact, in our benchmarking study, companies with separate service businesses earned service revenues that were 15 per cent higher than those with integrated businesses. A separate business sharpens both the focus and accountability of the service organisation. It also encourages more sophisticated processes, interfaces, and roles and raises awareness of the value of the service business throughout the company. At the same time, it’s important not to over steer and focus exclusively on services; companies must strike a balance between manufacturing new products and servicing them. Over the course of our work, we have encountered several companies that jeopardised their product business by making the service organisation too prominent, which in turn impeded new-product innovations. 10. Instil a Service Culture Service leaders also are characterised by a strong service culture. They view services not simply as a lever to sell more products but as a key differentiator relative to competitors. This attitude permeates the entire organisation, from senior executives to

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Successful service providers maintain contact with customers throughout the lifecycle of the product line managers and frontline employees. The cultural change required to get to this point takes time and substantial management effort to accomplish. Nonetheless, it is essential to ensure that the service excellence levers can be sustained over time. It helps to break up the challenging task of changing the culture of an organisation into small, steps. For instance, service executives should have veto rights across the chain of product development and manufacturing. The same applies to the compensation of service employees, which should be on par with their new-product counterparts.

Building Capabilities

As industrial goods manufacturers combat pricing pressures on the product side and tight spending by customers, a well-run service operation can provide a renewed source of profitable growth. Intelligent investments in service businesses can yield high and sustainable returns—and expanding service operations can often be done incrementally with modest resources. But achieving true service excellence requires companies to excel across all elements of the service value chain. It is essential to gain a deeper understanding of customer priorities, and then reconfigure offerings to address their most pressing needs. This requires a sales force with the right structure and incentives, systematic pricing of services, and a rigorous performance monitoring process. Joerg Matthiessen is senior partner and managing director in the Atlanta office of the Boston Consulting Group. Peter Ulrich is partner and managing director in the firm’s Miami office. Pekka Vanne is partner and managing director in BCG’s Helsinki office. Patrick Staudacher is a principal in the firm’s Munich office. Felix Stellmaszek is a principal in BCG’s Atlanta office.

industry 2.0

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event report A rapt audience listens with keen interest to the ideas and experiences shared by the experts at the event. The interactive forum at the conclusion of the event witnessed a volley of questions and spirited exchanges

Drawing on his varied experiences in the manufacturing sector, Winnie John, Planning & Logistics Director for GlaxoSmithKline Consumer Healthcare, gave an engaging talk on employing S&OP to deliver enhanced customer value

Atul Holkar, Senior Vice President & Head SCM for Varun Beverages, described how his organisation was able to achieve substantial operational flexibility through superior planning and execution

Nimish Desai, Sales Director for SCM Solutions with Infor India discussed how organisations are using technology solutions in the supply chain, and described some best practices for implementing S&OP

Creating greater visibility in the supply chain is critical to making the organisation agile and proftable. KY Shankar, Director of Supply Chain at Bausch & Lomb, shared his thoughts on how supply chain managers could work on improving monitoring and control

Improving

Supply Chain Operations 30

may 2012 | industry 2.0

- technology management for decision-makers

very manufacturing and distribution company faces the challenge of bridging the gap between the manufacturing, sales, product management, and logistics functions. Supply chain managers have to constantly struggle to balance constrained supplies with customer demand, and deal with inaccurate forecastsâ&#x20AC;&#x201D;while generating an optimum performance. Industry 2.0, in collaboration with Infor, organised an event in Delhi to provide a platform for supply chain experts and practitioners to exchange information and knowledge on using sales and operations (S&OP) practices to bridge the performance gap. The event was attended by more than 50 senior supply chain, logistics and operations managers who discussed practical problems and management issues relating to collaboration between teams involved in the supply chain. In their talks, the speakers at the event examined ways to streamline operations, reduce waste and costs, create more visibility, and measure the performance of the supply chain. They offered advice and tips, and also answered queries on deploying supply chain technology solutions.

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supply chain

Optimising Your Supply Chain T

he design of any supply chain must take into account the balance of customer service and cost. On the surface this might seem to be a simple task. However, design decisions are complex due to multiple, underlying variables. Likewise, the balance of these variables must also

may 2012 | industry 2.0

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take into account a view of future needs and alternatives that will drive various options in how best to develop a flexible, cost-effective, service-oriented, ‘implementable’ supply chain design.

Strategy Drives Design

It is from your business strategy, operating model definition, and performance targets that your

supply chain should be designed. Your design must also consider the broader definition of ‘supply chain’ to include supplier’s suppliers, customer’s customers, and key vendor relationships to ensure that the best balance between cost and service is achieved and that future supply chain requirements may be flexibly accommodated.

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Credit: www.photos.com

The supply chain must enable and support the business strategy, operating model definition, and performance goals. But getting it right can be a complex task

What are the key service metrics our supply chain must meet? A clear definition of service expectations drives the strategy. Where are our opportunities for improvement in costs, tax reduction, and asset utilisation? What investments will need to be made?

Service Requirements

Financial Management

What is the optimal flow of goods from suppliers to our customers? What are the optimum number, location, and types of facilities needed throughout the network to meet service targets at minimal cost and tax burden? How can we rationalise inventory levels at each site, maximise visibility, and ensure tight inventory control?

Distribution Network & Flow Path Design

Transportation Management

Financial Tactical

What enabling technology is needed for management, execution, and visibility? How will it interface with other core systems?

Supply Chain Information Systems

Technical

Key Questions

Area

Impact

How can we optimise mode, carrier and service selection at each of our facilities to minimise freight costs?

Inventory Deployment

Strategic

What capabilities must our facilities have? Who will manage them, and what expectations do we have for performance?

Warehouse Management

Organisa tional

Infographics: Charu Dwivedi

Stakeholder Management Business strategy can be defined as the intentional choice of where, how and when to compete as well as what not to do. The ‘how to compete’ question generally has the greatest impact on the development of a company’s business strategy, operating model and supply chain strategy. For eg, your method of competition reflects the value proposition your company offers to its customers (eg, lowest total cost, differentiation, etc). The operating model defines the approach and means by which a company organises and works with suppliers, internal operations and customers. For example, your decisions regarding geographical coverage, business unit structure and the use of ‘shared services’ in support of various internal operations (eg, procurement, supply chain planning, manufacturing, logistics, distribution) define certain boundaries and opportunities in how you go-to-market. Performance targets are defined as the desired, measur-

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able outcomes of your business actions. They drive behaviour throughout the organisation that leads to growing and sustainable shareholder value. For example, revenue growth, operating margin, inventory turns, and return on assets are critically dependent on your supply chain design. Hence, you must design, implement, and execute your supply chain strategy based on your business strategy, operating model definition, and performance targets. Likewise, your supply chain must be flexible. Changes will occur in your business, and your supply chain design must be able to best support ever-evolving market requirements, supplier capabilities, and customer needs.

Leading with Design

Typically, supply chain design initiatives are necessary for two key reasons: 1. Changes in the business, and 2. The need to adjust the balance of cost and service.

What organisational infrastructure do we need to implement, sustain, and continually improve the network? How can we best cultivate change?

Leading

companies tend

to look at their supply

chain strategy and design

as not only a means to balance cost and service, but also as a

competitive weapon. The question they ask is, “How can our

supply chain provide differentiated service, speed to market and flexibility while meeting service and cost goals?”

If done correctly, supply chain

management can be viewed not

only as a contributor to meeting cost and service goals, but also provide a means to enhance

revenue and provide enhanced market penetration and

branding. Think of companies like Walmart, Dell, and Best

Buy. Each of these companies

has leveraged their supply chain capabilities as a key instrument to their continued success. There are a number of

industry 2.0

- technology management for decision-makers | may 2012

supply chain key questions that need to be answered in support of supply chain designs. The

table highlights some of the key questions across multiple process and functional areas within a typical company.

Delivering the Service

Cost

Supply chain costs include a variety of variables that need to be understood and captured in order to properly define the impact of alternative designs and/or scenarios. Typical costs to consider and factors that impact them include: • Distribution centre costs Fixed costs—equipment amortisation, lease vs own, lease termination, capital depreciation Variable costs—labour, utilities, supplies • Transportation cost—mode, service level, distance, load factors •Inventory carrying costs—cycle stock, safety stock, in-transit

project management, change management, and material and equipment transfer must be considered if, when, and how to change the supply chain design.

Other Considerations

In addition to cost and service, there are other practical factors to consider when designing your supply chain. These include: • Growth plans • System capabilities • Accessibility to customers, suppliers, carriers and warehouses • Company culture and history An “optimal” supply chain design on paper that cannot be practically implemented or sustained is far from optimal to the business. Therefore, it’s imperative to weigh the sensitivity of these and other practical considerations in designing your overall roadmap for changes to your supply chain

The definition of service within supply chain operations is often measured by metrics like fillrate, lead-time, perfect order, etc. In the design of a supply chain strategy or distribution network, the definition of service is often measured in days to deliver to service areas. Unfortunately, ‘rules of thumb’ often drive design and implementation decisions, resulting in a ‘one size fits all’ approach. However, customers do not come in just one size, and when surveyed they will often indicate service expectations that are defined by goals like promise date, delivGetting Results ery windows, etc. This In summary, your • Rationalise inventory investments disconnect has led to supply chain design • Minimise transportation costs far too many supply must enable and • Minimise warehouse space or labor costs chains that have been support your business • Minimise administrative costs designed based on strategy, operating • Minimise tax burden ‘rules of thumb’ that model definition, and • Minimise fulfilment error rates are not meeting customperformance goals. • Increase on-time or fill rate percentages • Increase flexibility er desires because they Focus must extend • Minimise wastage, shrinkage have not accounted for beyond costs and and losses the ‘voice of the customer’. include the ‘voice of the Likewise, it is often customer’, tax implications, expected that improved services and alignment with the practical mean increased cost. However, constraints and capabilities of changing a distribution cenyour organization to support tre network can result in both • Systems—warehouse manrecommended changes in the improved service for a particular agement, transportation mansupply chain design. region of the country, and yield agement, yard management, However, only if the proper freight, tax or other savings that interfaces approach is applied and the offset or surpass the additional • Taxes—national, state and local balance of all variables are cost for distribution. tax rules considered will the results In short, an optimal supply The definition of supply provide a means to develop a chain design requires a clear chain costs provides a way to flexible, cost-effective, servicedefinition of service expectations create a ‘baseline’ by which oriented, ‘implementable’ supply and goals. Once defined, they all other alternatives and chain design. become the basis from which furscenarios can be compared. In ther analysis can be performed addition, implementation costs This report is courtesy of Fortna, Inc. (www. fortna.com) and decisions made. for one time investments and

Adjusting Balance of Cost and Service

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opinion Q: Many CIOs don’t understand what big data means, since there is no clear definition. Your views? A: Big data refers to large datasets that are chal-

“Big data can enable new opportunities for organisations” Sundar Ram is Vice President of Technology Sales Consulting for AsiaPacific at Oracle Corp 36

may 2012 | industry 2.0

- technology management for decision-makers

lenging to store, search, share, visualise, and analyse. Big data is all about finding valuable insights from unstructured information. The growth of big data is a result of the increasing channels and variety of data in today’s world. Some of the new data sources are user-generated content through social media, web and software logs, cameras, information-sensing mobile devices, aerial sensory technologies, genomics, and medical records. The decrease in the cost of both storage and compute power have made it feasible to collect this data which would have been largely ignored only a few years ago. As a result, more and more companies are looking to include non-traditional yet potentially very valuable data with their traditional enterprise data in their business intelligence analysis. When big data is distilled and analysed in combination with traditional enterprise data, enterprises can develop a more thorough and insightful understanding of their business, which can lead to enhanced productivity, stronger competitive position and greater innovation—all of which can have a significant impact on the top and bottom lines. Big data can enable new opportunities with new data sources such as tapping into web logs, location data, social networking, etc. Device generated data can enable remote patient monitoring, personal fitness activity, driving behaviour, locationbased stored movement, and predicting analysis, engineering change management from defect through enhancement in product lifecycle management, factory automation and quality management in manufacturing execution systems, and many more. CIOs have realised that there is competitive advantage in this information and it’s time for them to put this data to work.

Q: If everyone wants big data then you will need more storage, software, databases and processors. How does the CIO balance the budget? A: CIOs need to recognise that they can’t drive

big data with the economics as regular business data. For example in ERP, they have to store all the data for a certain number of years while in the case of big data, not all the data will need to be permanently stored. Most of the data may not have relevance, but CIOs can’t know in advance what to

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keep and what to discard. Also, in some cases, only summary data may need to be stored permanently. At the same time, the need for analytical tools has increased as a result of the deeper analytical processing required. So, CIOs need to carefully look at the data needs and decide on a few things like which sources have potential value, how to process those data streams, what to store in persistent storage, what kind of analytical tools to use, etc. Based on this they need to decide the investments in storage, processing power and software.

Q: What are the challenges due to the convergence of big data and cloud computing? A: Big data is a relatively new field. Past experi-

ence has shown that creating more silos of information with every new technology complicates matters. While cloud computing offers a relatively quick entry into big data analysis for customers wanting to experiment with this technology, they need to be careful not to create more silos in the process that will cause issues over time. Also, the security concerns over cloud computing apply to big data as well. So, CIOs looking at the cloud for big data need to carefully consider how much of risk they are putting their data to before deciding what aspects of big data to put on the cloud. For example, sending out data on products that customers surfed on some cloud-based big data analysis site to get some pattern recognition done is putting sensitive data at potential risk.

Q: How should CIOs approach the big data problem? A: To derive real business value from big data,

CIOs will require the right tools to help their organisations to capture and organise a wide variety of data types from different sources. Also, these tools should be able to analyse all their enterprise data. Some of the critical areas that they should keep in mind while approaching big data are:

1. Align big data initiative with specific business goals. Follow an enterprise architecture approach, and focus on the value it provides to the business. 2. User departments may be tempted to buy in a decentralised fashion which can result in IT standards and governance being compromised. It is critical, therefore, that CIOs insist on standards and governance not being compromised, while providing the agility. 3: Enterprises should invest in integrated security solutions to ensure that big data insights generated from the integration of old world structured data and the new world unstructured data is not compromised in any way. 4: Analysis from big data in itself has limited relevance. It is when such findings are correlated with the existing enterprise data such as past purchase history, customer demographics, etc, that the true value can be extracted.

Q: How is Oracle helping CIOs to manage big data? A: Oracleâ&#x20AC;&#x2122;s big data strategy is driven by its

overall approach to data management with engineered systems that balance performance, reliability, and scalability. We not only provide solutions that manage acquisition and extraction of meaningful information from big data streams but also integrate them into the existing data warehouses and feed the insights back into applications that drive customer interaction over different channels. Our platform includes the Oracle big data appliance which includes an open source distribution of Apache Hadoop, Oracle NoSQL database, and an open source distribution of R. This appliance is easily integrated with Oracle database 11g, Exadata database machines and Exalytics business intelligence machines to deliver extreme analytics on all data types. The solutions from Oracle are preconfigured, pre-tested and engineered for a certain classes of data management requirements.

Information Technology

Managing the

While there is an enormous increase in the amount of information available to organisations, making sense of it is becoming a challenge. A look at how they can master the data flood and keep it from overwhelming them By Mitesh Agarwal

esearchers estimate that enterprise data grows nearly 60 per cent per year (90% of that being unstructured), and the average amount of data stored per company is 200 terabytes. This growth is triggered by the increasing channels of data in today’s world. Examples include, but are not limited to, user-generated content through social media, web and software logs, cameras and intelligent sensors embedded in physical devices that can sense, create, and communicate data; process control systems; tracking systems, etc. Companies realise that they need to put this data to work.

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However, several obstacles limit their ability to turn this massive amount of unstructured data, often termed as big data, into profit. The most prominent obstacle being a lack of understanding on how to add big data capabilities to the overall IT architecture to build an all pervasive big data architecture. Companies that are planning a big data architecture need to figure out how to integrate the new with what’s already in place. Here are a few general guidelines to build a successful big data architecture foundation:

ALIGN BIG DATA TO SPECIFIC BUSINESS GOALS One of the key characteristics of big data is value—from low-den-

sity and high volumes of data. As you sort through the mountains of low-value-density big data and look for the gold nugget, do not lose sight of why you are doing this. Follow an enterprise architecture approach. Focus on the value it provides to the business. Question how it supports and enables the business objectives. Properly align and prioritise the big data implementation with the business drivers. This is critical to ensure sponsorship and funding for the long run.

CENTRALISED IT STRATEGY FOR STANDARDS Some of the recent analysts’ surveys indicate that one of the biggest obstacles for big data is a shortage of skills, with a 60

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per cent shortfall predicted by 2018. To address this challenge, you need to implement proper IT governance measures that increase skill levels, enforce standards, and reduce the overall risks and training costs. Another strategy to consider is the implementation of appliances that will give enterprises a jumpstart, and quicken the pace of developing in-house expertise.

CREATE A CENTRE OF EXCELLENCE

Establishing a Centre of Excellence (CoE) for sharing solution knowledge, planning artifacts and ensuring oversight for projects can help minimise mistakes. Whether big data is a new or expanding investment, the soft and hard costs can be shared across the enterprise. Another benefit from the CoE approach is that it will continue to drive the big data and overall information architecture maturity in a more structured and systematic way.

CORRELATE BIG DATA WITH STRUCTURED DATA Enterprises should establish new capabilities constantly, and leverage prior investments in infrastructure, platform, business intelligence and data warehouses, rather than throwing them away. Investing in integration capabilities can enable knowledge workers to correlate different types and sources of data, make associations and meaningful discoveries.

CREATE ANALYTICAL SANDBOXES

When problems occur, humans solve them through a process of exclusion. Enterprise IT needs

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to support this ‘lack of direction’ or ‘lack of clear requirement’ when planning information discovery projects. You need to provide a flexible environment for end users to explore and find answers. Such sandbox environments also need to be highly optimised for performance, and must be properly governed.

RESHAPE IT OPERATING MODEL

The new requirements from big data will bring changes to the enterprise IT operating model. Provisioning of new environments will need to be more timely and user driven. Resource management also needs to be more dynamic in nature. A well planned cloud strategy will play an integral role in supporting these changing requirements.

EMBED BIG DATA INTO BUSINESS APPS

To make big data operationally feasible, organisations will need to invest in solutions that enable embedding of insights generated from big data into front-end user applications. For example, a bank will need to put the insights obtained from big data into the call centre app, the web banking app and its core banking app as well. Solutions like Oracle Real Time Decision (RTD) and Oracle Complex Event Processing (CEP) can provide a readymade layer that abstracts the insights, making life simpler for the business to put the rules into a single engine from where they can be consumed by various front-end user applications in uniform fashion.

ENSURE SECURITY

Enterprises worldwide have

ranked IT security as one of their top priorities as increasingly sophisticated attacks, new data protection regulations, and most recently insider fraud and data breaches, threaten to disrupt and irreparably damage their businesses. Security in the big data world is even more crucial. Enterprises should invest in integrated security solutions to ensure that big data insights generated from the integration of old world structured data and the new world unstructured data is not compromised in any way.

BIG DATA IS AN EXTENSION

Enterprises should look at big data investments as an extension of their existing information architecture—not as a replacement or a standalone island. Invest in solutions that integrate Open Source and enterprise technologies. Look for economic advantages in the technology architecture that simplifies and standardises IT operations, reduces IT Investments, provides scale and resilience, enables unified development paradigms, and facilitates sharing of metadata at the enterprise level for integration and analytics.

INVEST IN SHAREABLE ARCHITECTURES

A lack of enterprise-ready statistical analytical tools often prevents the kind of analysis needed to spot trends. Enterprises should invest in shareable architectures to extend analytical capabilities in visualisation, semantics, spatial, and statistics analysis. Mitesh Agarwal is Chief Technology Officer for Oracle India

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management & strategy

rganisations are facing mounting pressure to innovate in order to spur growth and increase the bottomline. Despite belief to the contrary, the invention of new products and services does not occur spontaneously. There is a process involved, and organisations can take practical steps to ensure that their innovation processes yield maximum value. APQC has identified a number of key elements in the innovation processes at IBM Corp, Kennametal Inc, and Mayo Clinic that make these organisations best-in-class for innovation. This article focusses on some of these elements, and demonstrates how these organisations have incorporated the elements into their processes.

Drive Innovation from the Top and the Bottom

It is given that leadership support for innovation is important. Without it, few resources would be allocated to these efforts. However, support from employees who work closely with customers is also important. Without buy-in from these employees, it is difficult to source ideas and propagate a culture of innovation throughout the enterprise. Thus, support from both the top and the bottom is of the utmost importance to innovation. Securing buy-in from front-line employees while aligning innovation efforts with top-down strategy enables relevant ideas to surface and be taken through to production or implementation. For several years, IBM has stressed that innovation is the responsibility of every employee. Howev-

Systematic

Innovation

The best companies have developed and implemented a formal method to ensure that innovation processes yield valueâ&#x20AC;&#x201D;and become predictable By Becky Partida 40

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er, it recently shifted innovation accountability to focus more on employees who engage regularly with customers. This shift has given front-line employees greater decision-making power regarding innovation. However, even with the spreading of accountability, IBM holds that senior level sponsorship is vital to ensure that the organisation maintains support, guidance, and direction for innovation.

Imaging: Charu Dwivedi

Cross Traditional Boundaries

Innovation is not isolated to specific areas within an organisation. The best-practice organisations encourage innovation within areas of the business that may not normally be associated with innovative thought. They also facilitate innovation by creating collaborative teams comprised of members from multiple business units. Collaboration is vital to Mayo Clinic’s innovation strategy. The organisation has established cross functional innovation teams that meet regularly to analyse ideas generated by staff members and to identify strategic targets for innovative projects. Separate leadership teams, made up of physicians and non-physicians, also meet to brainstorm and execute new projects. These collaborative teams have generated ideas for new products and services, suggested quality improvements, and designed new business models for the organisation. In addition to the responsibility for innovation placed on each employee, IBM includes innovation as part of each business unit’s strategic focus.

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Using Customer Input

The best practice organisations make a point of gathering customer feedback, determining customer requirements, and aligning their processes with the customer in mind. In the end, the creation of new products and services means nothing if the organisation isn’t giving customers what they want. Kennametal is a maker of tooling, engineered components, and advanced materials consumed

organisation’s innovation objectives. Best-practice organisations focus technology adoption on the needs of the enterprise as well as individual innovation teams. The best-practice organisations favour tools that allow a large number of employees to capture and build on ideas. For eg, Mayo Clinic implemented a software application to capture, categorise, and archive ideas for innovation around a defined topic. Virtual events are held to

The best-practice organisations encourage innovation within areas of the business that may not be associated with innovative thought in the manufacturing process. It considers innovation to be a constant process focussed on the demands of the market. The organisation has developed the term ‘exciters’ to describe innovations that are radical in that they satisfy unarticulated needs. The organisation connects with customers at regular intervals to determine where the potential for exciters exists. IBM has implemented a programme called First of a Kind that relies on customer input for solution development. Here IBM conducts research in a customer’s own environment and applies technologies that it feels are appropriate solutions for the customer.

Embrace Technologies and Tools for Innovation Adopting the right enabling technologies for innovation can support the creative process, facilitate collaboration, and provide a way to capture new ideas. However, technology is pointless unless it matches an

drive brainstorming, and users can rate others’ ideas as well as submit comments, suggestions, and observations. Mayo also adopted social media tools to facilitate collaboration among employees. Wikis enable staff to capture and modify notes and other projectrelated communications. The organisation has created an innovation toolkit that serves as a central location for materials and resources needed during the innovation process.

Focus on Experimentation

For every successful idea, there are many ideas that do not make it through the process. Best-practice organisations accept this fact, and do not allow failure to hinder innovation. The organisations emphasise the effort behind the innovations, even if the ideas do not yield profitable results. This fosters a culture in which employees feel free to explore all creative solutions and ideas. IBM balances its research agenda among three groups:

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management & strategy • Exploratory research (understanding how nature works); • Applied research (connecting the understanding to issues); and • Development (making the research usable to IBM customers) The organisation measures success not only by the innovation but also by how its research increases scientific understanding. Unsuccessful projects are considered learning experiences and the lessons-learned can be applied to future work.

Recognise the Human Side of Innovation

The best-practice organisations use more than just financial rewards to encourage innovation. These organisations create spaces conducive to innovation, and tailor their rewards programmes to suit employee interests. To reward innovation, IBM uses internal programmes such as peer-to-peer awards, recognition of technical accomplishments in a particular research area, and an innovation client value award given to teams that exemplify dedication to client success. The organisation also

seeks publication in external journals and recognition through professional societies to gain external exposure for its employees’ efforts.

Keep Measurements Simple

IBM, Kennametal, and Mayo all recognise that no one metric can convey innovation success. However, when measuring innovation and its results, these organisations use only a select group of measures which are meaningful to users. Although innovation can involve multiple activities and processes, the metrics selected for use should be customised. Kennametal uses only a few high-level, cross-functional measures to evaluate the success of innovation. These measures include the percentage of revenue resulting from new products and the cycle time of new product development. By keeping measures high-level and simple, the organisation can easily communicate performance across the enterprise in a way that employees at all levels can understand. Kennametal also tracks three other groups of performance measures to obtain a more

detailed view of the innovation process and its outcomes: • Project metrics; • RD&E functional metrics; • Special focus metrics (such as the percentage of employees trained in Six Sigma). When developing measures and improvement plans, it can be easy to focus solely on results. However, the organisations studied by APQC emphasise predictive factors as well as outcomes when developing measures. The organisations look both at leading indicators that provide a foundation for performance (such as employee training and environmental conditions) and the results of innovation processes (such as cycle time and customer satisfaction). Most importantly, the best-practice organisations allow their measures to change over time to meet enterprise needs. Frequently updated measures are balanced with consistent measures to enable longer-term trending. Becky Partida is knowledge specialist with APQC, a member-based non-profit and a leading proponent of benchmarking and best practice business research. This article has been reprinted with permission from CIO Update.

management & strategy

Developing Better

Change Leaders Putting leadership development at the heart of a major operationsâ&#x20AC;&#x201D;improvement effort has paid big dividends for a global industrial company by Aaron De Smet, Johanne Lavoie and Elizabeth Schwartz Hioe

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ew companies can avoid big, periodic changes in the guts of their business. Whatever the cause—market maturation, a tough macroeconomic environment, creeping costs, competitive struggles, or just a desire to improve—the potential responses are familiar: restructure supply chains; rethink relationships among sales, marketing, and other functions; boost the efficiency of manufacturing or service operations (or sometimes close them). Such changes start at the top and demand a relentless focus on nitty-gritty business details from leaders up and down the line. Too often, however, senior executives overlook the ‘softer’ skills their leaders will need to disseminate changes throughout the organisation and make them stick. These skills include the ability to keep managers and workers inspired when they feel overwhelmed, to promote collaboration across organisational boundaries, or to help managers embrace change programmes through dialogue, not dictation. One global industrial company tackled these challenges by placing leadership development at the centre of a major operational-improvement programme that involved deploying a new production system across 200 plants around the world. While

the need for operational change was clear—the performance of the company’s factories was inconsistent and in many cases far below that of competitors in terms of efficiency, productivity, and cost—so too were the organisational obstacles. Drives for improvement, for example, carried a stigma of incompetence; current performance was considered ‘good enough’; conflict tended to be passiveaggressive or was avoided entirely; and shop floor employees felt that they were treated as cogs, and that their supervisors were enforcers. The effect of all this on employees was disengagement, a lack of trust in senior management, and a pervasive fear of making mistakes—a worry reinforced by the company’s strong culture of safety and risk aversion. These challenges were impossible to ignore, and that was probably a blessing in disguise: the senior team had to look beyond technical improvements and focus on helping the company’s leaders to master the personal behavioural changes needed to support the operational ones. To that end, the company mounted an intense, immersive, and individualised leadership programme. While the results are still unfolding, after three years the company estimates that the improvement programme has already boosted annual pre-tax operating income by about $1.5 billion a year. Furthermore, executives see the new leadership behaviour as crucial to that ongoing success. Indeed, the senior executive who launched the programme believes that without the inclusion of leadership development, it would have made only half the impact it actually did. She adds that the company has seen a tenfold return on its investment in each of the dozens of leaders trained thus far. In this article, we’ll share the stories of three such leaders and examine how the changes they made in their leadership styles contributed to improved business results. Then we’ll step back and offer a few general leadership-development principles that we hope will be useful to other organisations contemplating large-scale, transformational changes.

Making Sourcing More Efficient

An executive we’ll call Annie is the company’s director of sourcing and logistics. Her charge: to help the sourcing operation improve its performance, from the mid to the first quartile, without

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management & strategy additional resources. Annie and her supervisor (the group’s Vice President) concluded that the way to achieve this goal was to create a single global sourcing system instead of relying on the existing patchwork of regional and divisional ones. This approach would improve efficiency, take advantage of cheaper sources, and cut interaction costs. But that meant engaging a global group of stakeholders, many of whom preferred acting independently. Some even mistrusted one another. The Vice President knew that this problem would be very difficult for Annie; as he put it, “she used to move too fast, and people would miss her train.” Somehow, Annie had to build the skills—and quickly—to engage her colleagues on a journey where turning back was not an option. Annie realised she needed to engage them not just intellectually but also emotionally, so they would become committed to the new approach and understand why it was better, even though many saw it as threatening to their autonomy and their ability to tailor services to local needs. Annie also recognised that she had a strong tendency to do all the work herself to ensure that it was done quickly and correctly. Learning to overcome that inclination would help her to articulate a more inspiring vision and bring more people on board. Along with a colleague who was going through leadership training at the same time, Annie worked on a number of skills, such as how to keep discussions focussed on solutions and how to build on existing strengths to overcome resistance. She also developed 20 coaching vignettes, which helped her bring to life the mindsets and behaviour that had to change. These moves helped Annie establish the new vocabulary she needed to encourage colleagues to identify and eliminate issues that were getting in the way of the new sourcing approach. As more than 1,000 employees across four regions adopted the new system, operational efficiencies quickly started to appear. What’s more, the effort encouraged interpersonal interactions

that helped some employees overcome longstanding barriers to collaboration. The vice president highlighted the way the effort had encouraged North American employees to begin openly addressing issues they had with colleagues at a logistics service centre in India, for example, and to move beyond mistrusting the workers there and resenting them for holding ‘exported jobs’. Such engagement skills spread across the network and began to take hold. As collaboration improved, the cost savings grew: within 18 months, the sourcing group had eliminated the need for 50 positions (and helped the workers who held them to get new jobs elsewhere in the company). In the same time period, benchmarking suggested that the group as a whole had achieved first-quartile performance levels. What’s more, the experience strengthened Annie as a manager. “My answer might have been right before,” she says, “but it got richer. . . I feel more confident. It is not about needing to prove myself anymore. I have much greater range and depth of influence.”

Boosting Yields at a Factory

Conor, as we’ll call one European plant manager, needed to boost yields using the company’s new production system. In the past, the industrial giant would have assigned engineers steeped in lean production or Six Sigma to observe the shop floor, gather data, and present a series of improvements. Conor would then have told plant employees to implement the changes, while he gauged the results—a method consistent with his own instinctive commandand-control approach to leadership. But Conor and his superiors quickly realised that the old way wouldn’t succeed: only employees who actually did the work could identify the full range of efficiency improvements necessary to meet the operational targets, and no attempt to get them to do so would be taken seriously unless Conor and his line leaders were more collaborative.

Senior executives often overlook softer skills like ability to keep workers inspired, help managers embrace change programmes...

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Workers were sceptical. A survey taken at about this time (in 2009) showed that plant workers saw Conor and his team as distant and untrustworthy. Moreover, the company couldn’t use salary increases or overtime to boost morale, because of the ongoing global economic crisis. Conor’s leadership training gave him an opportunity to reflect on the situation and provided simple steps he could take to improve it. He began by getting out of his office, visiting the shop floor, and really listening to the workers talk about their day-to-day experiences, their workflows, how their machines functioned, and where things went wrong. They’d kept all this information from him before. He made a point of starting meetings by inviting those present to speak, in part to encourage the group to find collective solutions to its problems. Conor explained, “As I shared what I thought and felt more openly, I started to notice things I had not been aware of, as other people became more open. We’d had the lean tools and good technology for a long time. Transparency and openness were the real breakthrough.” As the new atmosphere took hold, workers began pointing out minor problems and additional areas for improvement specific to their corners of the plant. Within just a few months yields increased to 91 per cent, from 87 per cent. Today, yields run at 93 per cent.

Closing a Plant

Pierre, as we’ll call him, was managing a plant in France during the darkest days of the global financial crisis. His plant was soon to close, as demand from several of its core customers went into a massive and seemingly irreversible tailspin. The company was in a tricky spot—it needed the know-how of its French workers to help transfer operations to a new production location in another country. Despite its customers’ problems it still had €20 million worth of orders to fulfil before the plant closed. Meanwhile, tensions were running high in France. Other companies’ plant closures had sparked protests that in some cases led to violent reactions from employees. Given the charged situation, most companies were not telling workers about plant closures until the last minute. Pierre was understandably nervous as he went through leadership training, where he focussed intently on topics such as finding the courage to use honesty when having difficult conversations, as well as the value of empathic engagement. After a lengthy debate among company executives, Pierre decided to approach the situation with those values in mind. He announced the plant closing nine months before it would take place, and was

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Leaders often ask everyone else to change, but in reality this usually isn’t possible until they first change themselves open with employees about his own fears. Pierre’s authenticity struck a chord by giving voice to everyone’s thoughts and feelings. Moreover, throughout the process of closing the plant, Pierre recounts, he spent some 60 per cent of his time on personal issues, most notably working with his subordinates to assist the displaced workers in finding new jobs and providing them with individual support and mentoring (something other companies weren’t doing). He spent only about 40 per cent on business issues related to the closure. This honest engagement worked. Over the next nine months, the plant stayed open and fulfilled its orders, even as its workers ensured that their replacements in the new plant had the information they needed to carry on. It was the only plant in the industry to avoid violence and lockouts.

Lessons Observed

While every change programme is unique, the experiences of the industrial company’s managers offer insights into many of the factors that, we find, make it possible to sustain a profound transformation. Far too often, leaders ask everyone else to change, but in reality this usually isn’t possible until they first change themselves. Tie training to business goals. Leadership training can seem vaporous when not applied to actual problems in the workplace. The industrial company’s focus on teaching Pierre to have courageous conversations just as the ability to do so would be useful, for instance, was crucial as Pierre made arrangements to close his plant. In the words of another senior executive we spoke with, “If this were just a social experiment, it would be a waste of time. People need a ‘big, hairy goal’ and a context to apply these ideas.” Build on strengths. The company chose to train managers who were influential in areas crucial to the overall transformation and already had some of the desired behaviour—in essence, ‘positive deviants’. The training itself focussed on personal mastery, such as learning to recognise and shift limiting mind sets, turning difficult con-

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management & strategy versations into learning opportunities, and building on existing interpersonal strengths and managerial optimism to help broadly engage the organisation. Ensure sponsorship. Giving training participants access to formal senior-executive sponsors who can tell them hard truths is vital in helping participants to change how they lead. Moreover, the relationship often benefits the sponsor too. The operations Vice President who encouraged Annie, for example, later asked her to teach him and his executive team some of the skills she had learned during her training. Create networks of change leaders. Change programmes falter when early successes remain isolated in organisational silos. To combat this problem, the industrial company deployed its leadership-development programme globally to create a critical mass of leaders who shared the same vocabulary and could collaborate across geographic and organizational boundaries more effectively. When Annie ran into trouble implementing the changes in some of the company’s locations in Asia, the personal network she’d created came to her rescue. A plant manager from Brazil, who had gone through the training with Annie, didn’t hesitate to get on a plane and spend a week helping the Asian

supply chain leaders work through their problems. The company allowed him to do so even though this visit had nothing to do with his formal job responsibilities, thus sending an important signal that these changes were important. Another tactic the company employed was the creation of formal ‘mini-advisory boards’: groups of six executives, with diverse cultural and business perspectives, who went through leadership training together. The mutual trust these teammates developed made them good coaches for one another. Pierre, for example, reported getting useful advice from his board as he finalised his plans to talk with his plant employees. The boards also provide muchneeded emotional support: “The hardest part of being at the forefront of change is just putting your shoes on every day,” noted one manager we talked to. “Getting together helps me do that.” Aaron De Smet is a principal in McKinsey’s Houston office, Johanne Lavoie is a senior expert in the Calgary office, and

Elizabeth Schwartz Hioe is an associate principal in the New Jersey office.

management & strategy

Overcoming Obstacles Credit: www.Photos.com

Success doesn’t come through mere planning. You also need to execute By David Lim

etbacks can happen at anytime, and they have a habit of not giving you any warning. But what matters more is what you do about them that produces a good result. In 2009, we (my climbing partners Grant Rawlinson and Mohamed Rozani) had planned to visit a remote glacier in the Central Tien Shan Mountains in Kyrgyzstan. The ‘Heavenly Mountains’ as they are known, stretch over a zone including parts of Kazakhstan and far western China. It’s the most northerly mountain range with many peaks over 7000-metres. After some years of research, the benefit of a couple of aerial reconnaissance missions on our 2000 and 2005 climbing expeditions, we identified a number of handsome pointy peaks in the 4,000 to 5,000 metre range that were still ‘virgin’

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peaks. While up to 500 people may climb Everest each year, it’s amazing how little attention the hundreds of yet-to-be-climbed mountains of the world get. And that suited us fine. The mindset of a climber attempting these remote peaks however, needs to be different. These days, climbing the Everest is about maximising success through the employment of sherpas, fixed ropes, large numbers of bottled oxygen, weather reports via satellite phones, and all other means to help the average climber succeed. After all, very little documentation of climbs have ever been made of peaks that well, haven’t been climbed before. Our Kyrgyz Army helicopter dropped us off at the 3,950m point of the Mushketova Glacier, made its way down the glacier and disappeared from view. So there you are, the only humans

in a 100 sq kms, and a four-day walk to the nearest road should anything happen. And if you’ve forgotten something, there isn’t a 7-11 store around the corner. After some exploratory walks, we focussed on climbing a straightforward snowy peak. The weather was fine, the sky blue, and we puffed our way up a pretty ridge to top out in the late morning. We called the 4,468m peak ‘Kongsberg Peak’ after one of our premier expedition supporters, and returned to our humble tents below on the glacier. A peak that had merely an ‘X’ marked on the map now had a name. A real teachable moment happened a couple of days later when we awoke to attempt an ascent of the peak adjacent to Kongsberg Peak. It snowed all night, and at 3.30 am when we began to prepare for the ascent, it hadn’t stopped. This

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was not lethal weather, but just unpleasant and difficult. Rozani announced from the confines of his other tent that he wouldn’t be venturing out that day. And so I sat there, rocking back and forth blowing some warmth into my fingers. For a few moments, self-doubt and pessimism set in. That is, until Grant looked to me and said, with a hint of sarcasm, “Dave, mountains aren’t climbed while sitting inside a tent”. I turned to him and said, “You’re right. Let’s just go and see what happens”. And so we did, picking our way in darkness across the glacier, with the glow of our head torches; checking in with each other every hour or so. This nonstop team communication carried on as dawn broke. Then at 7 am, something happened— the sun came out, and the clouds broke apart. Within a short space of time, we were bathed in the

warmth of a fantastic sunrise. Soon we climbed, unroped up a rocky ridge, and made it to the summit in brilliant weather. We named the 4,447m peak Resilience Peak for obvious reasons, and returned to camp, elated that we had taken such a risk that morning. But more importantly, we had chosen to take our chances (versus being pessimistic), communicating as a team, and pulled off the second virgin peak ascent of the expedition. Later in discussions, we realised that mindsets on mountains mirror situations in life. How are you communicating in times of challenge? It’s about building trust by transparently communicating fears, opportunities, risks and progress. At a critical point in the morning, Grant had supported the idea of moving ahead, and assessing the situation as the elements of the climb revealed themselves.

By just taking that chance to go, instead of bemoaning our bad luck with the weather, we positioned ourselves to reach the top when it mattered. On our return, we explored the mindsets of success with Rozani, and several days later, as a united team of three, tackled our hardest climb yet on that trip, and summited the 5,000m Majulah Peak, the highest virgin peak yet climbed by South East Asian mountaineers. I don’t think this was by chance. You get more successful on purpose, not by accident. But most importantly, when it comes to seizing opportunities in the face of uncertainty, you won’t find success by sitting inside your tent. David Lim, Founder of Everest Motivation Team, is a leadership and negotiation coach, best-selling author and two-time Mt Everest expedition leader. He can be reached at david@everestmotivation.com

sector update

All is Well T

he booming healthcare sector has given a major impetus to the medical supplies industry. Demand is steadily increasing for a wide range of consumables that go into provisioning medical servicesâ&#x20AC;&#x201D;bandages, blood collection sets, catheters, intravenous cannulas, needles, scalpels, syringes, surgical blades, and so on. Combined with medical devices, the medical supplies market is expected to reach Rs 10,850 crore (US$ 2.2 billion), with supplies accounting for one-fifth of the total, or Rs 2,170 crore (US$ 440 million). The growth of the healthcare sector is closely linked to the higher uptake of health insurance in the country. Better coverage is enabling a larger part of the population to avail expensive medical procedures. The increase in the number of patients will mean that many will visit private hospitals for immediate and quality care. This has led to the

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Medical supplies industry benefits from government policies and increasing patient access to quality healthcare BY CHARU BAHRI

advent of large private sector healthcare providers, popularly known as corporate hospitals, which in turn are spurring demand for medical supplies. According to Pradeep Sareen, Senior General Manager, Hindustan Syringes and Medical Devices Limited: â&#x20AC;&#x153;Greater awareness of the utility of single use disposables is boosting demand for products like syringes, needles and surgical blades. The spread of hospitals is contributing to this demand as they focus on stringent as well as time-saving processes. Reusing products after sterilising them no longer blends in with these objectives.â&#x20AC;? The higher incidence of lifestyle disease mandating disposables, such as insulin dependent diabetes, and the changing profile of patients accessing health services, are also favouring the industry. Today, high income clients with greater awareness of the safety associated with using disposable consumables and the comfort of using

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ultra fine needles, for instance, are demanding better products. This in turn is driving demand for high-end medical supplies.

Favourable Environment

According to Manoj Gopalakrishna, Managing Director of Becton Dickinson India (BD India), “Apart from India’s healthcare expansion in the public and private sectors and the drive for patientcentric care, national disease control programmes and life science research have been major drivers of our growth in India.” Indeed, budgetary allocations to new government health programmes promise to raise the demand for medical supplies to unprecedented levels. As an example, Narendra Jain, Secretary of the All India Syringe and Needle Manufacturers Association and CEO, Iscon Surgicals Limited, points to how the Rajasthan government’s move to provide universal free medication has boosted demand for medicines, syringes, needles, and a whole range of other disposable medical supplies. “This single step is helping the people as well as favouring the industry, as budgets for medical supplies have increased manifold, much more than in previous years. Products are now being procured in large quantities. The state government is considering including diagnostic facilities in this scheme as well. If this happens, it will be a win-win situation for the people and medical supplies industry. If other states follow this lead, the sector will grow exponentially,” he explains. International guidelines that encourage national regulations are also playing a role in the development of the medical supplies sector. As a member of the United Nations, India is guided by the recommendations of the World Health Organisation (WHO), United Nations Children’s Fund (UNICEF), United Nations Population Fund (UNFPA) and the Red Cross. A decade ago, UN member countries were urged to use only autodisable (AD) disposable syringes for immunisation. The WHO defines ‘auto-disable’ syringes as those that are automatically rendered unusable after having delivered a prescribed dose of medicine. Subsequently, it was decided to extend the use of AD syringes to curative injections as well, albeit in a phased manner. Once this guideline is fully implemented in India, it will translate into

a huge demand for AD syringes from privately run hospitals, which account for four-fifths of the demand for syringes for curative purposes. In response to the UN instruction, the Union Ministry of Health has mandated the public health system to switch from using conventional disposable syringes to auto-disable disposable syringes for immunisation. This move brings innumerable government run hospitals and primary health clinics across the country within the ambit of AD syringe suppliers. Murali Nair, Partner Advisory Services, Ernst & Young, estimates that the market size of auto-disable syringes would increase to about 516 million units (at an estimated average use of five syringes per beneficiary) considering only the hospitals recognised by the Central Government Health Scheme (CGHS). In reality, the market is much bigger, he says. Jain says that when the government ordered the transition to AD disposable syringes in 2009, the capacity for manufacturing them was almost nil, prompting costly imports. In contrast, the manufacturing capacity for conventional syringes in India stood at almost a billion units per month. The shift created a huge opportunity for syringe-makers. Some of the nearly 40 syringe manufacturers in India, led by the Faridabad based Hindustan Medical Devices, upgraded themselves to manufacture AD syringes. These include public sector Hindustan Latex Limited, Ahmedabad based Tiger Surgicals, and Haryana-based Lifelong Meditech.

Combined with medical devices, the medical supplies market is expected to reach Rs 10,850 crore with supplies accounting for onefifth of the total

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Destination India

Earlier, the market for low-value medical supplies was dominated by domestic manufacturers while multinational corporations provided expensive and high-end medical equipment. Now, the situation has changed, sensing an opportunity to fill the gap in the market, a handful of leading overseas players have established a footprint in India, and are helping enhance acceptance of better medical supplies. Since its entry into India in 1995, BD India has created a team of clinical specialists who work closely with healthcare providers in upgrading clinical practices, delivering superior patient value and strengthening health systems. According to Gopalakrishna, “These endeavours come from our ability to create a positive and sustainable health impact in the region.” The positive efforts of big

industry 2.0

- technology management for decision-makers | may 2012

sector update players to boost awareness for the products they offer is beginning to pay off. In fact, early movers hold the biggest chunk of some segments of the medical supplies space. Sandeep Sinha, Director, Healthcare Practice, Frost & Sullivan, South Asia, Middle East and North Africa, points out that Johnson & Johnson has captured a staggering 55 per cent of the sutures (surgical stitches) market. Still, there is plenty of room for others. Sutures India, a Bangalore-based company, enjoys a 12 to 13 per cent share of the market, and is rapidly catching up. According to him, “Any company that can adapt global solutions to the domestic market in a cost-effective manner, can get ahead, and stay ahead. It’s all about understanding and adapting to the intricacies of local demand.” For this reason, some overseas companies are first focussing on making inroads into Tier I cities that have most of the big corporate hospitals. Sinha cites BD India as an example. It has a major share of the demand for vacutainers in the large cities. Vacutainer is a proprietary blood collection tube that employs vacuum for collecting blood.

Medical supplies industry is an attractive sector because India is becoming a base for medical supply exports India-specific Research

Know-how is as vital for new territory launches as it is for the development of new products. The development of local R&D is critical players looking to cement their position in the market. “We work to identify new opportunities to help address some of the world’s most important healthcare challenges. To accomplish this, BD is placing a greater emphasis on scientific collaboration, both within the company and the external community. We are investing in R&D for market-appropriate product solutions, and we have expanded R&D in the Asia Pacific region, including new capabilities in China and India,” says Gopalakrishna. 3M India has invested nearly Rs 98 crore (US$ 20 million) in a new state-of-the-art R&D facility in Bengaluru. Launched last year, the new centre aims at creating world-class innovative products and solutions to meet the needs of Indian customers. Healthcare is one of the focus areas. The new facility is expected to accelerate 3M’s localisation initiatives, and help the company achieve its aim of

may 2012 | industry 2.0

- technology management for decision-makers

earning 40 per cent of its revenues from a new line of ‘In India, for India’ products in the next 5 years. 3M also hopes to more than double its R&D personnel to 300 in the next 5 years. Dr Jay Ihlenfeld, 3M’s Senior Vice President for Asia Pacific believes “This facility will be a critical hub to contribute new product platforms for India and ultimately 3M’s global markets.”

Strategic Investments

The Indian medical supplies industry is an attractive sector for investors not only because of its domestic potential, but also because the country is becoming a base for medical supply exports. Cheaper production costs and the adoption of global quality controls make it worthwhile to export medical supplies made in India. Medical supplies players like Romsons, HMD, Sutures India and Terumo Penpol are exporting a major chunk of their production. Terumo Penpol, a leading blood bag-maker, exports blood bags to 62 countries worldwide, and earns 60 per cent of its income from exports. HMD is Asia’s largest syringe manufacturing company and known for its standard disposable syringe ‘Dispovan’. In India, HMD enjoys more than 60 per cent of the single use syringe market, numbering nearly 2.5 billion units per annum. But the company is strong on exports as well, which currently constitute one-fifth of its total sales. Other exports by the company include surgical blades, scalpels, intravenous (IV) cannulas and scalp vein sets. In some segments, such as surgical blades, IV cannulas, and scalp vein sets, HMD exports as much as half of its production. More than half of the overall exports from HMD are to developed markets like the USA and nations in Western Europe. In a bid to increase the share of exports to 30 per cent by the 2015, HMD has set up fully-owned subsidiaries in the UK and the USA. Aware of the role a wide distribution network plays in boosting sales—more than 4,000 dealers sell HMD products across India—the company is working on expanding its distribution channel in Western Europe. Sutures India exports to 50 nations in Europe, South America, Africa and Asia, and boasts of the capacity to manufacture about 20 million sterile sutures a year. Its subsidiary Truskin Gloves is a leading latex glove manufacturer. Opportunities in this business come in the shape of domestic firms looking for scale-up funds. Strategic as well as private equity domestic and overseas investors may be attracted to homegrown firms that have shown scale and profitability. They don’t have to look far, the domestic medical supplies industry is doing remarkably well.

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opinion Sugata Sircar, Finance Director at Gujarat Gas

Q: Where is the economic environment headed? A: The Indian economy is grow-

ing at about 7 per cent. The growth estimate of real GDP for the current fiscal year is 7.6 per cent and this is expected on the back of industrial growth at 6.7 per cent, services at 9.3 and agriculture at 2.4 per cent. This indicates a reasonable growth in demand. So, I would agree with the view that there is no cause for panic.

Q: In the current situation, how are companies making investment decisions? A: Investment decisions are

Turbulent Times Businesses should be able to change tactics quickly if circumstances change and improve their efficiencies

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- technology management for decision-makers

dependent on a number of factors. The primary factor is expected demand. Other important factors, depending on the industry and the business, would be cost of capital, requirement of permissions, land acquisition, etc. The challenge is the uncertainty around each of those factors. Demand, which is the primary driver, would be dependent on the prospects of the customer industries or consumers. It would also depend on the price of the product, which in turn would depend on cost of production and sales, and the desired margins. The Indian business environment is experiencing such a churn, that it is becoming increasingly difficult to project each of these variables. Past trends in demand are often not good enough indicators. Basing decisions on growth projections of target regions or industries and using the same to plan demand has equal uncertainties. Cost of capital is not only uncertain, but has proved to be volatile, as have exchange

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rates. Permissions if required from the government could be impacted by Central policy and politics. And projects may be stalled at different stages for want of permission, leading to idle capital.

Q: How can senior managements deal with this situation? A: I think, it is time for senior

executives to approach planning and execution with much more flexibility. Various possible scenarios have to be created changing the variables which have a critical impact on the outcome. Therefore, there could be a number of demand situations, cost of capital scenarios and a few different time scales for the execution of a project. The actual outcome would possibly lie within the range of scenarios. It is important to understand the likelihood of each of the scenarios and also to take specific measures to ensure that the outcome is as close as possible to the desired goal. This is a way of using risk management in planning. Course correction may be necessary while a project is under execution. The goal is to create value, so the business should be able to change tactics quickly if circumstances change. If there is a general increase in cost of capital, it should be understood that it would not only impact business but would also impact customers. This may delay the offtake of a product earlier envisaged, and hence may call for splitting the project into phases. So, progress review of a project and of circumstantial parameters against the projections used is very essential.

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Q. What can we expect in the months ahead? A: There are several challenges

in the operating scenario too. The depreciating Indian rupee is pushing up input costs in several ways. While this exerts pressure on margins, product pricing is seeing an upward trend. Customers have to adjust to a scenario of steadily increasing prices for the products and services that they buy. Price elasticity is factored in demand projections, based on the assumption that demand will react to price beyond a certain level. These levels are now being breached as customers adjust to a higher cost environment. So, price elasticity has to be reviewed and reset regularly. Pressure on costs brings in pressure on efficiencies. Businesses

“We live in vibrant, volatile and interesting times. Our success is limited only by the ability to understand the environment and adapt to changes”

which can improve efficiencies and transfer the same through their offerings to customers would have a strategic advantage. Process efficiencies can be copied by customers in time, so it is also important to have a culture of continuous improvement and of innovation. Investment is required in resources and in their development to raise the capability of a firm for innovation.

Q. How has the business risk changed? A: We live in an environment of

exponential increase in aspirations, temptations and peer pressure to continuously demonstrate success. These are all red flags in the context of fraud risk. Unreasonable pressure on people to ‘make their numbers’ increases the risk of fraudulent financial statements being generated based on inflated revenues or margins. While systems and processes must have adequate fraud control mechanisms like segregation of duties, system-based validation of transactions, independent checks, etc, it is necessary to have intervening assurance checks at random to minimize fraud risk. The whistleblower mechanism must be strongly propagated. It must be made clear that it is an employee’s duty to blow the whistle if s/he sees something amiss. A mechanism for investigation must exist. A lot needs to be done optically to demonstrate the management’s commitment to values in order to minimise fraud risk.

In a career spanning over two decades, Sugata Sircar, Finance Director at Gujarat Gas, has worked for organisations such as Madura Coats, Britannia and Dunlop in various capacities.

industry 2.0

- technology management for decision-makers | may 2012

bookshelf The Rules of Influence

The 20% Doctrine

By William Crano Price: $25.99 Publisher: St. Martin’s Press Hardcover: 288 pages

by Ryan Tate Price: $25.99 Publisher: HarperCollins Publishers Hardcover: 208 pages

No one doubts the power of the majority. It makes the rules and enforces them, and most of us are willing to go along with it. But what happens when you’re not? It doesn’t matter if you’re trying to sell a new product, persuade colleagues to try out a new business plan, start a revolution, or simply convince your family where to go for dinner. In all of these cases you’re going up against the majority—and your efforts are going to come up short. Dr William Crano an expert in the field of influence— explains the application of the science of persuasion to those moments when you find yourself outnumbered and overmatched. To do this, he has discovered proven strategies, such as working from the inside and changing the game from subjective preferences to objective decisions, and distilled these strategies and more into an extraordinary collection of rules that radically affect the likelihood of success. The Rules of Influence is a powerful guide to being persuasive even under the most inhospitable conditions. It gives you the tools to overcome overwhelming odds, and take back control in every situation.

The Hands-Off Manager by Steve Chandler Price: $14.99 Publisher: Career Press Paperback: 224 pages The principal reason cited in exit interviews by employees who quit is, “my manager”. Most managers and executives are not only aware of this obvious problem, but probably wouldn’t know what to do about it if they did. Today’s employees do not respond to the old hands-on, militaristic management styles. They are highly independent, individual professionals with their own fully-developed ideas. Leaders and managers who try to micro-manage them will inevitably confront widespread disgruntlement, absenteeism, and turnover—and increase their own and their employees’ stress levels. In The Hands-Off Manager, Chandler and Black offer a new vision. With stories, examples, and vibrant activities for the reader to practice, this book shows managers— new or seasoned—how to coach and mentor employees. In this system, each employee’s strengths are honoured and honed in a climate of partnership and mutual goal-setting.

may 2012 | industry 2.0

- technology management for decision-makers

This book is an inspiring exploration of how unorthodox business practices and the freedom to experiment can fuel innovation. The author demonstrates how the tectonic forces disrupting US corporations—ubiquitous bandwidth and computing power, cheap manufacturing and distribution—have enabled large organisations to foster new innovations and products through experiments that are at once more aggressive and less risky than they would have been 20 years ago. At companies such as Google, employees are encouraged to spend 20% of their work time on projects they’re personally interested in. Almost half of Google’s new product launches have originated from this policy, including Gmail and AdSense. Now other companies have adopted the concept, providing them a path to innovation and profits at a time of peril and uncertainty and offering employees creative freedom when many are feeling restless. The 20% Doctrine is about goofing off at work, and how that goofing off can drive innovation and profit. Ryan Tate looks at the origins and implementation of 20% time at Google, then examines how other organisations such as Flickr, the Huffington Post, and even a school in the Bronx have adapted or reinvented the same overall concept, intentionally and serendipitously. Along the way, he distills a series of common themes and lessons that can help workers initiate successful 20% style projects within their own organisations.

Before the Lights Go Out by Maggie Koerth-Baker Price: $27.95 Publisher: Wiley, John & Sons Hardcover: 304 pages Over the next 20 years, we’ll be forced to cut 20 quadrillion BTU worth of fossil fuels from our energy budget, by wasting less and investing in alternatives. To make it work, we’ll need to radically change the energy systems that have shaped our lives for 100 years. And the result will be neither business-as-usual, nor a hippie utopia. Koerth-Baker explains what we can do, what we can’t do, and why.

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Private Empire: ExxonMobil and American Power

Platform: Get Noticed in a Noisy World By Michael Hyatt Price: $24.99 Hardcover: 288 pages Publisher: Thomas Nelson To be successful, you must possess two strategic assets: a compelling product and a meaningful platform. In this step-by-step guide, Michael Hyatt, current Chairman of Thomas Nelson Publishers, takes readers into the new world of social media success. He shows you what bestselling authors, public speakers, entrepreneurs, musicians, and other creative people are doing differently to win customers in

today’s crowded marketplace. In Platform, Hyatt will teach readers not only how to extend their influence, but also how to monetise it and build a sustainable career. Hyatt speaks from experience. He writes one of the top 800 blogs in the world, and has more than 100,000 followers on Twitter.

The Loyalty Leap By Bryan Pearson Price: $25.95 Hardcover: 272 pages Publisher: Portfolio Technology has made it almost routine for companies to know exactly when, where, and how their customers shop, both online and off. As soon as someone pulls out a credit card—or even better, a membership rewards card—the data floodgates open. But after gathering and crunching all this customer data most companies have little or no idea how to use it. They either let it go to waste, or abuse it with ill-considered, irrelevant, or even creepy marketing pitches. There’s a much better option, as Bryan Pearson has discovered after 20 years of studying the hidden patterns of consumer behaviour. It really is possible to turn customer information into customer intimacy— systematically, efficiently, and without invading anyone’s privacy. And intimacy is the

key to long-term loyalty, growth, and profits. The Loyalty Leap will give you the tools to persuade customers to share more information in their own best interests. And it will help you make sense of all that data to build strong customer relationships. Pearson’s book will take you behind the curtain to show how the best companies are doing it.

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By Steve Coll Price: $36.00 Hardcover: 704 pages Publisher: Penguin Press Steve Coll investigates the largest and most powerful private corporation in the US, revealing the true extent of its power. ExxonMobil’s annual revenues are larger than the economic activity in the great majority of countries. In many of the countries where it conducts business, ExxonMobil’s sway over politics and security is greater than that of the US embassy. In Washington, ExxonMobil spends more money lobbying Congress and the White House than almost any other corporation. Yet despite its outsized influence, it is a black box. Private Empire pulls back the curtain, tracking the corporation’s recent history and its central role on the world stage, beginning with the Exxon Valdez accident in 1989 and leading to the Deepwater Horizon oil spill in the Gulf of Mexico in 2010. The action spans the globe, moving from Moscow, to impoverished African capitals, Indonesia, and elsewhere in heart-stopping scenes that feature kidnapping cases, civil wars, and high-stakes struggles at the Kremlin. At home, Coll goes inside ExxonMobil’s K Street office and corporation headquarters in Irving, Texas, where top executives in the “God Pod” (as employees call it) oversee an extraordinary corporate culture of discipline and secrecy.

The Art of Being Unreasonable By Eli Broad Price: $24.95 Hardcover: 192 pages Publisher: Wiley Eli Broad’s embrace of ‘unreasonable thinking’ has helped him build two Fortune 500 companies, amass personal billions, and use his wealth to create a new approach to philanthropy. He has helped to fund scientific research institutes, K-12 education reform, and some of the world’s greatest contemporary art museums. This book shares the ‘unreasonable’ principles—from negotiating to risk-taking, from investing to hiring—that have made Eli Broad such a success. If you’re stuck doing what reasonable people do—and not getting anywhere—let Eli Broad show you how to be unreasonable, and see how far your next endeavour can go.

industry 2.0

- technology management for decision-makers | may 2012

bookshelf The Reinventors By Jason Jennings Price: $26.95 Hardcover: 256 pages Publisher: Portfolio For most businesses, success is fleeting. There are only two real choices: stick with the status quo until things inevitably decline, or continuously change to stay vital. But how? Jason Jennings and his researchers screened 22,000 companies around the world that had been cited as great examples of reinvention. They selected the best, verified their success, interviewed their leaders, and learned how they pursue never-ending radical change. The fresh insights they discovered became Jennings’s “reinvention rules” for any business. The companies featured in the book include Starbucks, Apollo Tyres, Arrow Electronics, and Smithfield Foods.

Sleeping with Your Smartphone By Leslie A. Perlow Price: $27.00 Hardcover: 288 pages Publisher: Harvard Business Review Press Can’t resist checking your smartphone or mobile device? In Sleeping with Your Smartphone, Leslie Perlow reveals how you can disconnect and become more productive. In fact, she shows that you can devote more time to your personal life and accomplish more at work. In this engaging book, Perlow takes you inside BCG to witness the challenges and benefits of disconnecting. She provides a step-by-step guide to introducing change on your team—by establishing a collective goal, encouraging open dialogue, ensuring leadership support—and then spreading change to the rest of your firm.

How Will You Measure Your Life? By Clayton M. Christensen, James Allworth & Karen Dillon Price: $25.99 Hardcover: 240 pages Publisher: HarperCollins Publishers In 2010 world-renowned innovation expert Clayton M Christensen gave a powerful speech to the Harvard Business School’s graduating class. Drawing upon his busi-

may 2012 | industry 2.0

- technology management for decision-makers

ness research, he offered a series of guidelines for finding meaning and happiness in life. He used examples from his own experiences to explain how high achievers can all too often fall into traps that lead to unhappiness. In this groundbreaking book, Christensen puts forth a series of questions: How can I be sure that I’ll find satisfaction in my career? How can I be sure that my personal relationships become enduring sources of happiness? How can I avoid compromising my integrity— and stay out of jail? Using lessons from some of the world’s greatest businesses, he provides incredible insights into these challenging questions.

Uplifting Service by Ron Kaufman Price: $14.95 Paperback: 352 pages Publisher: Evolve Publishing Ron Kaufman takes you on a journey into the new world of service. Through dynamic case studies and best-practice examples, you will learn how the world’s leading companies have changed the game, and how you can successfully follow this path to an uplifting service transformation. Kaufman is a well-known thought-leader, educator, and motivator for uplifting customer service and building service cultures. He is the author of 14 other books on service, business and inspiration.

Word of Mouth Marketing By Andy Sernovitz Price: $15.95 Paperback: 240 pages Publisher: Greenleaf Book Group With straightforward advice and humour, Andy Sernovitz demonstrates how the world’s most respected and profitable companies get their best customers for free through the power of word of mouth. Understand why everyone is talking about a certain car or soft drink—and why others are ignored. Discover why some products become huge successes without a penny of promotion—and why some multimillion-dollar advertising campaigns fail to get noticed. Sernovitz describes the five essential steps that make word of mouth work, and explains everything you need to get started. The book will help you understand how easy it is to work with social media, viral marketing, evangelists, and buzz.

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Restaurant Man by Joe Bastianich Price: $27.95 Hardcover: 288 pages Publisher: Penguin Group How does a nice Italian boy turn his passion for food and wine into a nationwide empire? In his intrepid, irreverent, and terrifically entertaining memoir, Joe Bastianich charts his remarkable culinary journey from his parents’ neighbourhood eatery to becoming one of the country’s most successful restaurateurs, along with his superstar chef partners—his mother, Lidia Bastianich, and Mario Batali. Restaurant Man is not only a compelling ragù-to-riches chronicle but a look behind the scenes at what it really takes to run a restaurant in New York City, the most demanding, fickle, and passionate market in America. From dealing with shady vendors, avaricious landlords, and vitriolic food critics to day-to-day issues like the cost of linens (“the number-one evil”) and bread and butter. Writing vividly in an authentic New York style that is equal parts rock ’n’ roll and bottom-line business reality, Joe shares lessons learned from a lifetime spent in restaurants while recounting the stories of his own establishments—including how Del Posto managed to overcome a menu that was initially so ambitious that it could not be executed, to ultimately become the only Italian restaurant in America to be awarded four-stars from The New York Times.

China Airborne By James Fallows Hardcover: 288 pages Price: $25.95 Publisher: Knopf Doubleday Publishing Group More than two-thirds of the new airports under construction today are being built in China. Chinese airlines expect to triple their fleet size over the next decade and will account for the fastest-growing market for Boeing and Airbus. In 2011, China announced its 12th Five-Year Plan, which included the commitment to spend a quarter of a trillion dollars to jump-start its aerospace industry. Its goal is to produce the Boeings and Airbuses of the future. Toward that end, it acquired two American companies: Cirrus Aviation, maker of the world’s most popular small propeller plane, and Teledyne Continental, which produces the engines for Cirrus and other small aircraft. In China Airborne, Fallows documents the extraordinary scale of this project and explains why it is a crucial test case for China’s hopes for modernisation and innovation in other industries. He makes clear how it stands to catalyse the nation’s hyper-growth and hyper-urbanisation. Fallows chronicles life in the city of Xi’an, home to more than

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250,000 aerospace engineers and assembly workers, and introduces us to some of the hucksters, visionaries, entrepreneurs, and dreamers who seek to benefit from China’s pursuit of aerospace supremacy. He concludes by examining what this latest demonstration of Chinese ambition means for the US and the rest of the world.

The Responsible Company By Yvon Chouinard and Vincent Stanley Price: $19.95 Paperback: 150 pages Publisher: Patagonia Inc. Patagonia has earned a reputation for its ground-breaking environmental and social practices as for the quality of its clothes. Yvon Chouinard, Founder and owner of Patagonia, and Vincent Stanley, Co-editor of its Footprint Chronicles, draw on their 40 years’ experience at Patagonia and knowledge of current efforts by other companies—to articulate the elements of responsible business. In this Chouinard and Stanley recount how the company and its culture gained the confidence, by step and misstep, to make its work progressively more responsible, and to ultimately share its discoveries with other companies. The authors describe the current impact of manufacturing and commerce on the planet’s natural systems and how that impact now forces business to change its ways. The Responsible Company shows companies how to reduce the harm they cause, improve the quality of their business, and provide the kind of meaningful work everyone seeks. It concludes with specific, practical steps every business can undertake, as well as advice on what to do, in what order.

Engagement Marketing By Gail F. Goodman Price: $24.95 Hardcover: 198 pages Publisher: Wiley, John & Sons Stop worrying about the number of Facebook fans and Twitter followers you have (or don’t have). The secret to getting customers to care about your business is finding meaningful ways to engage them over the long term. Author Gail Goodman provides you with the inspiration, ideas, and motivation you need to grow your business by engaging your customers. Engagement Marketing explains exactly how to do it, with practical tips for using social media, email, events, and other activities to form creative, surprising connections with your customers.

industry 2.0

- technology management for decision-makers | may 2012

product update ESD Monitor

he Emstat Dual Band 35-013 is designed to safeguard an electrostatic protected area (EPA) in three zones: earth, mat, and wristband. The device constantly monitors a connection to ground, to operators’ bench mats and to dual wristband and cord configurations. Applications include disk drive assembly, semiconductor fabrication, flat panel fabrication, and electronics assembly. The unit delivers just 10 microamps of signal to the wrist strap, and offers dual wrist strap configurations to ensure a continuous resistivity check of the human body while continuously monitoring each operator’s body voltage. Gemini Integrated Electronics Ltd Tel: +44-118-9692233 Website: www.geminiintegratedelectronics.com

he new Walter Titex UFL HSS-E grade high-speed drill facilitates the drilling of deep holes. The Walter Titex UFL A1549TFP drill has a parabolic flute profile, and employs helix angle of 40° to optimise rigidity. In many applications, drilling to depth of 10 to 12xD without pecking is possible with the product. The drill’s cobalt content substrate provides heat resistance, while a TiAIN tip coating boosts cutting parameters and tool life. The drill is available in 1 to 12 mm diameter, and is suitable for all ISO material groups. Walter USA Inc Tel: +1- 800-9455554 Website: www.walter-tools.com

Static Monitor

ewson Gale has launched the Earth-Rite static electricity monitoring system that provides an enhanced margin of safety when Type C FIBC’s or similar static dissipative containers are used to transfer bulk powdered and other solid materials in hazardous area applications. The system consists of an enclosed power supply and an electronic monitor. The product continuously verifies the existence of a low-resistance path between the container’s static dissipative or conductive fibres, and a known grounding point. The system provides protection against an uncontrolled static discharge in a variety of hazardous atmospheres including combustible gas or dust, or a dangerous hybrid atmosphere of both dust and solvent vapours. In operation, as long as safe operating conditions are confirmed the system displays a pulsing green multi-LED display indicating that the transfer can proceed. The system is simple to install and operate, and is supplied with a special stainless steel grounding clamp assembly, purposely designed for clamping onto flexible/fabric static dissipative materials. Newson Gale Inc Tel: +1-732-9877715 Website: www.newson-gale.com

may 2012 | industry 2.0

eidmuller is offering the ESX10-T range of electronic circuit breakers that provides precise protection to 12V DC circuits. Approved for use in Zone two hazardous areas, the model is designed to ensure selective disconnection of 12V DC load systems in factory and process control applications. The DIN rail-mount device is 12.5 mm wide, includes remote reset control or on/off control, cross-connection busbars, and multicolour LED indicator. Weidmuller Inc Tel: +1-800-8499343 E-mail: abalcombe@weidmuller.com Website: www.weidmuller.com

Drill

Electronic Circuit Breaker

- technology management for decision-makers

Vacuum Recloser

BB has developed a 38 kV threephase vacuum recloser with single phase tripping capabilities. Equipped with the RER620 Intelligent Electronic Device, the product features a modular pole assembly. Offering integrated loop control, it comes standard with fully implemented IEC 61850 and GOOSE messaging features, as well as inrush detection for use in distributed generation applications, and high impedance fault detection for downed conductor detection. ABB Ltd Tel: +41-43-3177111 Website: www.abb.com

Current Transformer

enco Electronics has released its latest thru-hole current transformer, the RL-9740. Featuring an encapsulated design and a 3,750V hi-pot, the model is suitable for industrial monitoring controls and switched mode power supply applications. The model meets all IEC950 insulation and VDE requirements. Housed in 19 mm high package with 4 PCB pins, device operates from -40 to +130°C. Renco Electronics Inc Tel: +1-800-6455828 Website: www.RencoUSA.com

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Mid-feed Cutter

apra has announced new mid-feed cutters and inserts that allow for extreme feed rates in light to moderate-DOC milling applications. They are optimised for cuts measuring 1-3 inches in diameter, and a maximum depth of 0.045 inches, with 10 mm inscribed circle inserts featuring four usable edges. They adjust feed rates to compensate for chip thinning during high-feed milling when extreme lead angle is utilised. Dapra Corp Tel: +1-860-2428539 Website: www.dapra.com

Wire Cutter

uron’s ergonomic wire cutter features a bent handle that is designed to fit more comfortably in a user’s hand. The 8500 BioShear Flush Cutter employs bypass cutting to deliver a clean, square cut using shear action—with only about half the effort required by conventional compression-type wire cutters. The unit is suitable for arthritis sufferers and aging workers. The model’s design helps keep the user’s knuckles in a straighter line to maintain optimum comfort while cutting. The cutter is well suited for cutting soft wire up to 18 AWG and plastics. Applications include electronics assembly, hobbies and crafts. Xuron Corp Tel: +1-207-2831401 Website: www.xuron.com

Continuous Web Sealer

Fire Suppression System

iking has developed the VK-1230 clean agent system that features waterless fire suppression technology. The system is designed to protect sensitive environments, including hospitals, server rooms, data centres, security command areas, telecommunications equipment, museums, libraries, and other properties where the potential for water damage is a concern. Utilising 3M’s Novec 1230 extinguishing agent, the VK-1230 provides early suppression of fire in pre-combustion stage. After discharge, agent will not damage electronics or leave residue—minimising clean-up and downtime. With its low toxicity, zero ozone depletion potential, short atmospheric lifetime, and minimal global warming potential, Novec 1230 is safe for environment and offers long-term, sustainable alternative to halons. Viking Corp Tel: +1-800-9689501 Website: www.vikingcorp.com

Vacuum Cleaner

iger-Vac has launched the CD-4 EX (MFS) explosion proof vacuum cleaners fitted with a detachable filter and recovery tank assembly for easy maintenance and decontamination. Featuring an all stainless steel construction, the model is suitable for use in Class I, Div 1, Group D and Class II, Div 2, Groups F and G applications. The unit is designed with a static dissipating, washable Teflon-coated main filter; maintenance-free side channel blower; manual filter shaker; detachable filter and recovery tank assembly. For fine dusts, the vacuum is available with a Teflon-coated manual reverse purge cartridge filter featuring a minimum filtration efficiency of 99.95 per cent on 0.5 microns. Tiger-Vac Vacuum Cleaners Tel: +1-954-9253625 Website: www.tiger-vac.com

teelnor Systems has introduced the SS605 for producing header type seals. The machine has a main chassis constructed of aluminium and stainless steel, and employs a pneumatic valve to close the sealing jaws when running. Solid-state temperature controls moderate the upper and lower heating zones, while adjustable floor pads or mounting points can accommodate a web path of any angle. Fully adjustable sealing shoes allow contact angle and pressure to be set to end-user requirements.

hermo Fisher Scientific has introduced the Versa RxV checkweigher for track and trace applications in the pharmaceutical industry. The device is allin-one high-speed system (up to 550 bottles/cartons per min) that combines alpha-numeric and machine readable code printing and verification with check weighing. Customisable features and modular design enable manufacturers to select which code printer and vision system brand is added to check weigher frame.

Steelnor Systems Tel: +1-705-5277887 Website: www.steelnor.com

Thermo Fisher Scientific Tel: +1-763-7832500 Website: www.thermoscientific.com

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Checkweigher

industry 2.0

- technology management for decision-makers | may 2012

product update Level Sensor

aumer has introduced the LBFS level switch as an alternative to the widely used vibratory level switches. The LBFS sensor can also detect levels of viscous or dry materials, and can be fitted on tanks or pipes in any desired position. The sensor head resistant to media adhesion, and the unit is insensitive to flow, turbulence, bubbles or foaming, and suspended solids. Able to detect media levels in tanks, vessels, and pipes, the switch is suitable for dielectric constants ranging from 1.5 to 100+, enabling limit detection with all types of powders, granulates, and liquids. A sensor response time of 0.2s promotes accelerated detection and good accuracy. Baumer Ltd Tel: +1-800-937-9336 Website: www.baumerelectric.com

PVC Butterfly Valve

ayward Flow Control has developed a range of PVC butterfly valves that offer an economical yet corrosion resistant alternative to cast iron butterfly valves. Available in sizes ranging from 2 to 8 inches, with hand lever or gear operators, the valves feature a PVC body with PVC disc, an EPDM booted seat, and 410 Grade one-piece stainless steel stem. The maximum pressure rating is 150 psi for all sizes, and max service temperature is 140°F. The valves can be fitted to ANSI 125 or PN10 flange patterns, and the series features an ISO 5211 mounting pad, ergonomic red handles with lockout, and a 9-position throttle plate. Typical applications include marine and corrosive environments, pools, water parks, aquariums, aquaculture, and irrigation systems. Hayward Industrial Products Inc Tel: +1-888-4294635 Website: www.haywardindustrial.com

High Accuracy DC Motor

Caliper Disc Brakes

gura has developed two series of spring-applied, pneumatically released caliper disc brakes. The 1100-CP model has 11,000N of clamping force, while the 2300 provides 23,000N of clamping force. The brakes have stationary cylinders that make them highly reliable and very resistant to vibration. Even though the brakes can produce a tremendous force, they are relatively lightweight for their size, and take up significantly less space than an equivalent singleface brake. The units are suitable for applications, such as wind turbines and railcar shuttle equipment. Ogura Industrial Corp Tel: +1-732-2717361 Website: www.ogura-clutch.com

Solar Battery Charger

ulseTech Products is offering the SolarPulse SP-246, a military tested, solar panel system solution for charging and maintaining vehicles and equipment left outdoors in long-term storage. The system combines high frequency pulse technology with microprocessor-controlled intelligent charging algorithms, to charge, maintain and desulfate all types of generators and vehicles with 24V lead acid battery systems including standard, AGM, and gel types. It employs single-crystalline silicon photovoltaic cells. PulseTech Products Corp Tel: +1-817-3296099 Website: www.pulsetech.net

Stainless Steel Pump

EI Kimco Magnetics’ DXH15 series outer member rotating brushless DC (BLDC) motor meets the high accuracy requirements for a variety of industrial scanning applications. The motor limits inner rotational speed variations by maintaining shaft run-out of ±0.010 inches, resulting in jitter of less than ±0.1 per cent. Precision ball bearings and a balanced rotor ensure optimal operation at speeds in excess of 11,000 rpm under continuous duty over the life of the system. Measuring 1.5 inches OD and 1.0 inches in axial length, the motor incorporates a Hall commutation circuit that produces exacting switch points.

ilden PX800 advanced stainless steel pump series is suitable for liquid-transfer applications where product containment and high flow rates are required. The centre-ported units feature a bolted construction with 316 stainless steel wetted path, BSPT or NPT threaded inlet/discharge connections. The pumps deliver flow rates up to 176 gpm at operating pressures up to 125 psig.

BEI Kimco Magnetics Tel: +1-760-5976322 Website: www.beikimco.com

Wilden Pump & Engineering Co Tel: +1-909-4221730 Website: www.wildenpump.com

may 2012 | industry 2.0

- technology management for decision-makers