Industry 2.0 August 2011 by bhupinder sharma

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A 99 MEDIA PUBLICATION

VOLUME 10

ISSUE 12

august 2011 PRICE 100

august 2011 VOL 10 ISSUE 12 INDUSTRY 2.0 - Making the Right Bond

Making the Right Bond Improved adhesive formulations enable innovative products

` 100

Strategy Small town manufaturers aspire for global recognition

Supply Chain Making your fulfilment operations more productive and efficient

Technology Voltas rejigs HR systems to boost employee delight

editorial Vol. 10 | Issue 12 | august 2011

Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: R Giridhar Design Sr. Creative Director: Jayan K Narayanan Art Directors: Binesh Sreedharan & Anil VK Associate Art Director: PC Anoop Visualisers: Prasanth TR & Anil T Chief Designer: N V Baiju Sr. Designers: Joffy Jose, Chander Dange & Sristi Maurya Designers: Suneesh K, Shigil N & Charu Dwivedi Chief Photographer: Subhojit Paul Sr. Photographer: Jiten Gandhi brand management General Manager: Ankur Agarwal Sales & Marketing General Manager - Nabjeet Ganguli (09820060094) National Manager - Events & Special Projects: Mahantesh Godi (09880436623) Assistant Brand Manager: Maulshree Tewari GM (South & West): Vinodh Kaliappan (09740714817) South: Farooq Faniband North: Madhusudan Sinha East: Jayanta Bhattacharya (09331829284) Production & Logistics Sr. GM - Operations: Shivshankar M Hiremath Manager - Operations: Rakesh Upadhyay Assistant Production Manager: Vilas Mhatre Assistant Manager - Logistics: Vijay Menon Executive - Logistics: MP Singh, Mohamed Ansari & Nilesh Shiravadekar

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Managing

the Energy Deficit

rocess-oriented manufacturing industries like paper and pulp, steel, textiles, pharmaceuticals, chemicals, tires and cement are significant consumers of energy. Consequently, it is no surprise to find senior manufacturing managers in these organizations obsessing over the tiniest fluctuation in energy prices, or the hint of a shortage. Many of them spend considerable time and effort scouring the globe to lock in supplies of coal, oil and gas in a bid to keep input costs predictable—and more importantly—ensure steady availability. Now, the energy problem is affecting other industries as well. Almost all states routinely have power cuts and fixed days when no power is provided to the industry. This makes it hard to plan efficient schedules, and compels manufacturers to use expensive diesel generators. The allocation, availability and pricing of hitherto cheap natural gas (CNG) has become embroiled in controversy and government decision-making. So, if you were counting on cheap gas to fire your furnaces and boilers, then you are probably out of luck. With environmental concerns looming large, coal mining has been curtailed. That means that thermal power plants are in a limbo—unless they import coal. Big hydel power projects (especially the ones planned in north-east India) are also out—and no one wants a nuclear power

industry 2.0

R Giridhar editor@industry20.com

plant in their backyard. So, just as the economy is getting into gear, the brakes are being applied. In fact, the situation is so acute that the 12th Five Year Plan is likely to make a special mention of energy efficiency, and target a reduction of 12,000 MW. The implication is that more manufacturers will face compulsory energy audits, and be subject to energy reduction norms. It is probably a good idea to be prepared. To begin with, conduct an energy audit and consider replacing old and inefficient boilers, motors, drives, transformers and other energy guzzlers. A change in the plant layout or re-orientation of production lines could also help streamline material movement and save energy. You will need to closely examine the heating, lighting and cooling inside the plant, and seek opportunities to save energy. Waste heat recovery systems can be another way to generate savings. Contrary to popular perception, plant and machine automation can often help save energy. That’s because automated systems are far better at monitoring and regulating processes—and reducing waste and re-work. This cuts overall energy use. By plugging loopholes in existing systems and adopting best practices, you can make a difference in energy use. Write in, and let us know what you are doing to combat the looming energy deficit.

- technology management for decision-makers | august 2011

contents facilties & operations 37 Overhauling the Infrastructure

CFO Ganesh Bhat discovers that effective people and expectation management is the key to successfully implementing a scalable ERP system at infrastructure major, Gammon India.

supply chain & logistics 39 Improving Your Fulfillment Operations

A structured operations assessment helps you gauge how effectively you are serving your customers—and to take steps to improve your warehouse operations.

32 cover story

Making the Right Bond

Adhesives are replacing mechanical joining techniques on the assembly line because they deliver greater reliability, simplify operations, and reduce production costs. Advanced adhesive formulations and improved application techniques are also facilitating new kinds of products, and the use of innovative materials in traditional ones.

information technology 46 Happy Employees, Happy Enterprise

human resource management systems to enhance employee satisfaction, and boost operational efficiencies.

management & strategy 50 The IT Factor

Cover design: Binesh Sreedharan Picture courtesy: Henkel AG

Voltas has dramatically improved its

Replacing legacy IT systems to implement standardized operating processes around the globe is a daunting task. Lenovo’s

opinion

CIO, Xiaoyan Wang, describes how this got done at one of the world’s largest PC manufacturing companies.

54 Hometown Heroes

Away from the spotlight, entrepreneurial manufacturers in small cities are leveraging the advantages of their home bases to design successful international strategies. Three intrepid leaders recount their travails and experiences.

departments

Editorial.......................................01

“India will see an organic bottom-up approach to entrepreneurship”

“Stay focussed on the long-term horizon and have a solid plan”

Industry Update.......................... 04

Alok Mittal Managing Director Canaan Partners, India

James W Owens Former Chairman & CEO Caterpillar

Bookshelf................................... 59

august 2011 | industry 2.0

- technology management for decision-makers

Techwatch.................................. 12 Advertisers’ Index...................... 53 Product Update.......................... 60

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industry update

Objet Unveils Compact 3D Printer

bjet Asia Pacific is offering the Objet260 Connex, a multi-material 3D printer, in India. This machine employs the company’s patented inkjet 3D printing technology, and is capable of 16-micron print layer accuracy. The printer offers users a choice of over 60 different build materials, and can simultaneously incorporate 14 different materials into a single model part. The materials that can be simulated range from rubber to transparency to rigid

ABS-grade engineering plastics. Commenting on the new 3D printer, Ashan Dhunna, Sales Director for India & ME at Objet Geometries AP says, “India has huge potential for 3D printing and prototyping. The compact Objet260 Connex brings our high-resolution, multimaterial 3D printing to new levels of accessibility for front-line designers and engineers who demand the highest quality prototypes and trueproduct representation.”

DARCL Buys Tractor Trailers from Mahindra

ahindra Navistar Automotives has delivered twenty MN 40 Tractor Trailers (equipped with 210 HP engine and cabin with factory-fitted ACs) to DARCL Logistics. Speaking on the occasion, Dr. Pawan Goenka, President, Automotive and Farm Equipment Sectors, Mahindra & Mahindra, said, “These

products are manufactured in Chakan where we have set up a manufacturing facility for trucks at a cost of `950 crore. I am glad that our superior product performance coupled with sound value proposition is already helping customers across India outperform, earn higher profits and get better ROI.”

Granules India Forms Joint Venture with OmniChem

harma manufacturer Granules India has formed a joint venture with Ajinomoto OmniChem of Japan to offer high value active pharmaceutical ingredients (APIs) and intermediates to pharmaceutical companies. The new company, Granules-OmniChem, will offer contract manufacturing services. The joint-venture will be equally owned by both companies. Granules OmniChem will operate this facility in the Pharmacity SEZ zone in Vishakhapatnam. The construction of the plant will commence by November 2011 and is expected to be completed by late 2012. The $20 million facility is likely to start production by January

august 2011 | industry 2.0

2013. The company will initially focus on high-value, low-volume APIs and intermediates for existing customers, and will custom manufacture new chemical entities in the future. The pharmaceutical industry is increasingly focusing on the $234 billion generics market, in particular, API production. Additionally, an increasing number of pharmaceutical companies are looking at outsourcing their manufacturing needs. The two companies anticipate that the JV will be well positioned to address the outsourcing requirement in the market. Granules posted consolidated revenue of `476 crore for the year ended 2011.

- technology management for decision-makers

Sage Geode Enhances Warehouse Optimization

he Sage Group has announced Sage ERP X3 Warehouse Management System (WMS) - Sage Geode. This new release brings greater warehouse and logistics optimization to organizations that need distribution and logistics services. Sage Geode 6.1 provides the tools to streamline, process, and optimize the management of the warehouse; improving the quality and reliability of logistics flows, providing transaction traceability, maximizing warehouse floor space and enhancing productivity. As a module of Sage’s global ERP solution, the warehouse management system can be deployed across multiple sites using Sage ERP X3. Geode 6.1 has many logistical features such as transparent transaction tracking both inside and outside the warehouse, people movement and space optimization. Other features are Radio Frequency (RF) tag-based resource and material management.

Chiller Rental Services for Outages

rane (a brand of Ingersoll Rand) is offering chiller rental services to help building owners and facility managers in India maintain optimal operating performance during a breakdown, or planned outage. The solution can also be used to supplement existing infrastructure during periods of extraordinary demand for power and/or cooling beyond the capacity of existing systems. Trane will provide temporary chillers, power generators and onsite services for events, commercial buildings, factories, warehouses and healthcare facilities.

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industry update

Omron Develops Electroformed Miniature Connnectors

apan-based Omron has developed a sophisticated electroforming process to fabricate a connector with sub-miniature contacts. Electroforming is a metal fabrication process that forms thin parts using an electroplating process. The parts are created by plating a layer of metal onto a base form (master). Once the plated layer has been built up to the desired thickness, this newly formed part is stripped off the master substrate. Electroforming enables highprecision production of extremely small, thin and fine parts. Omron also produces dies using micro fabrication technology to meet more exacting needs for shapes and sizes, thus enabling transfer of a pattern with submicronscale (1/10,000mm) accuracy. Omron’s technology enables the use of diverse metals, as well as production of numerous electroformed alloys. Connector terminals are usually formed by a pressing process, but currently available pressing technology has several drawbacks, making greater miniaturization difficult. Electroforming technology enables production of finely curved shapes with a radius as small as 40µm. This makes it possible to create new and extremely complex shapes that

were unimaginable using the conventional pressing process. Omron’s proprietary micro-shape formation technology enables die-cutting to a width as small as 1/3 of the metal plate thickness. For example, if a 250µm-thick plate is used, pattern and slit widths can be reduced to 80µm, which is impossible with ordinary pressing. This greatly contributes to miniaturization of components. The FPC connector created by Omron through this process has surfaces free from failures associated with pressing, such as fractures and burrs, thus leading to enhanced reliability. The electroformed material features higher strength (yield strength of 1,100 MPa minimum) compared to conventional press materials. Omron’s FPC connector using this material has improved contact force by approximately 30 percent (when compared to a FPC connector using pressed parts). The increased contact force greatly contributes to enhanced reliability of the connection section even with miniaturized parts. These connectors are suitable for smartphones, mobile phones, portable game machines and other compact high-performance mobile devices, inspection tools, and contact probes for inspection systems.

Dow, Ube To Manufacture Electrolytes for Batteries

ow Chemical and Ube Industries are forming a joint venture to manufacture and market formulated electrolytes for lithium-ion batteries (LIBs). The new company, Advanced Electrolyte Technologies will address the rapidly expanding energy storage industry. “The growing demand for alternative energy production and energy storage systems places technologies such as advanced batteries at the center of global mega-trends,” explains Heinz Haller, Dow executive

august 2011 | industry 2.0

vice president and chief commercial officer. “Partnering with Ube gives Dow the ability to provide cell manufacturers with a robust offering of material technology that meets demanding battery performance equirements.” The partnership will also allow Ube to strengthen its global supply network and improve cost competitiveness for its electrolyte technology outside of Japan. The joint venture’s first manufacturing facility is expected to be built at Dow’s Michigan site for startup in 2012.

- technology management for decision-makers

Dantherm, Delta Collaborate on Fuel Cells

antherm Power, a Danish system integrator, has signed an agreement with Delta Power Solutions (India) to market clean energy fuel cell power solutions to the Indian telecom industry. The deal was announced by Ballard Power Systems, which has a controlling interest in Dantherm Power. Under this agreement, Dantherm Power and Delta will jointly deploy product field trials comprising Dantherm Power’s direct hydrogen 2 kW DBX2000 fuel cell system, and the 5kW DBX5000 fuel cell system. These will be integrated by Delta and deployed at telecom customer sites in India. Delta will be responsible for installation, commissioning, maintenance and management of these field deployments. The sites will be remotely monitored through Delta’s Network Operation Centre (NOC).

GippsAero Signs Deal with Rolls Royce

ippsAERO, the aircraft manufacturing division of Mahindra Aerospace has signed an agreement with Rolls Royce to integrate the M250 B-17F/2 Rolls Royce engine into the GA10 aircraft. The GA10 is currently being developed by GippsAero at its Australia plant. The GA10 project is currently in the prototype design phase, with certification process to begin in March 2012 and entry into service scheduled for 2013. The two parties will work together to obtain Type Certification for the new 10-seat turboprop STOL aircraft. The agreement also provides Rolls-Royce with the opportunity to examine the potential of using the RR500 turboprop engine, currently in development, for future applications. n

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industry update

Tecumseh To Make DC Compressors

ecumseh Products has announced the availability of new line of direct-current (DC) Masterflux compressors in India. These compressors are specifically designed for battery cooling applications in the telecom sector. The new product, manufactured in India for the first time, features a Tecumseh “THK” reciprocating compressor specially fitted with a brushless DC motor (BLDC) and an additional controller for correcting DC power to three-phase power. The product will have both fixed speed and variable speed capability. This range of DC compressors can be used for cooling solutions in the telecom industry, refrigeration systems for beverage and marine applications, and mobile refrigeration systems. They are also suited for solar powered refrigeration systems. The first product will be a 48V model capable of delivering 500W of cooling capacity. Additional models are being developed for both 12V and 24V applications to address other market segments.

“This is just the beginning of our initiative to launch innovative and valueadded products in the Indian market,” says R Ravi, Managing Director of

Denso Uses CAE Tools to Speed Product Development

eading automotive supplier, Denso, is using ANSYS finite element method (FEM) software to standardize and expedite product development. This is enabling the company cut costs and boost competitiveness. Denso will use the CAE software for designing automotive power trains, advanced electronics, thermal systems, refrigerators and air conditioners. “Competition in the automotive industry has become fierce,” observes Shigeru Akaike, general manager, CAE design promotion, Denso. “To achieve the levels of quality and efficiency necessary to thrive against

august 2011 | industry 2.0

global competition, we need to ensure that we have best-in-class simulation software capabilities. With ANSYS, we are equipped with the right tools to expedite our product design and development process and ensure product quality and integrity. Crucially, this will afford us a competitive advantage as the automotive sector continues to face uncertain times.” Headquartered in Japan, Denso is a leading supplier of technology, systems and components to all the world’s carmakers. The company has more than 200 subsidiaries and affiliates in 35 countries and regions, and employs approximately 120,000 people.

- technology management for decision-makers

Tecumseh Products India. “Our goal is to soon have an expanded offering of high efficiency DC solutions for many telecom, solar and mobile applications.”

Nokia Siemens Networks Expands Chennai Plant

okia Siemens Networks (NSN) has increased its Chennai (Oragadam) manufacturing facility from 35,000 to 55,000 square meters, and the number of product lines to 33. The expansion will enable the company to manufacture and distribute new multiradio and LTE products, among other equipment such as GSM and LTE-ready 3G base stations and its FlexiPacket radio. NSN plans to export approximately 37 per cent of the facility’s production across the Asia Pacific. “This expansion will strengthen India’s position as one of our major manufacturing hubs in the Asia Pacific,” says Ashish Chowdhary, Head of India and customer operations, NSN.

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industry update

Smart Truck Enhances Green Logistics

HL and Blue Dart are piloting the Smart Truck technology in Bengaluru. The DHL Smart Truck is a pick-up and delivery vehicle combining a number of innovative

technologies including a route planner. Launched in Germany in 2010, the Smart Truck cut the number of miles traveled by 15 per cent and length of average route by 8 per cent,

reducing both fuel consumption and CO2 emissions. The Smart Truck technology is designed to provide solutions to urban logistic challenges such as traffic restrictions, density and clogging, while ensuring environmental protection and fulfilling customer need for on-time delivery. This solution was developed by DHL Solutions & Innovations in Germany in collaboration with a number of partners. The pick-up and delivery vehicles compute delivery deadlines by calculating the correct sequence for shipments, and use real-time GPS to avoid jams and optimize routings, thereby enabling flexibility and last-minute pick-ups. The Smart Truck technology also enables a more efficient sorting by synchronizing the data and physical flow, while real-time communications and visibility of services avoid ‘missed’ pickups and delayed deliveries. Together, this provides better customer service and a more cost-effective operation as a result of optimum use of vehicles with less wasted miles.

Kemrock Offers Utility Model Law Will Carbon Fiber Encourage Innovation Products

emrock Industries and Exports (KIEL), a leading manufacturer of fiber reinforced polymer (FRP) composites, has developed a range of carbon fiber products for industrial applications under the brand name “JAITEC”. The new range of products was launched by Ashok Nayak, Chairman of Hindustan Aeronautics (HAL). Kemrock has a fully integrated plant at Vadodara that includes polymerization, wet spinning, & carbonization. This `200 crore plant was set up with technology know-how from CSIR- National Aerospace Laboratory, Bengaluru, with an initial capacity of 400 tonnes per annum. The company has a MoU with HAL to develop, manufacture and market aerospace grade carbon fiber pre-pegs.

august 2011 | industry 2.0

ndustry association Assocham is in favor of adopting a utility model law to provide quick, low-cost protection to technical inventions and encourage innovation by Indian entrepreneurs. A utility model is an intellectual property right similar to a patent but usually has a shorter term (often 6 to 15 years), and less stringent requirements. Nearly 55 countries follow the utility model. Assocham feels that such a law is required in India where people are inherently innovative, but have not been able to commercially exploit their inventions for various reasons. Many industry experts, academi-

- technology management for decision-makers

cians and government officials opine that stringent patent laws play spoilsport in blocking almost 50,000 grass-root innovations from seeing light of the day. Section 3(d) of the Patents Act is thought to be at the centre of the problem in recognizing incremental innovations as patentable subject matter. According to the World Intellectual Property Organisation, utility models are primarily used for mechanical innovations, and are particularly appropriate for small and medium enterprises that make minor improvements to and adaptations of existing products.

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techwatch

Robots Get Sensitive Skin

obots will soon be able to feel heat or gentle touch on their surfaces. Researchers of the Excellence Cluster CoTeSys at the Technical University Munich (TUM) are now producing small hexagonal plates which when joined together form a sensitive skin for “machines with brains.” This development will not only help robots to better navigate their environments, but also enable robot self-perception. As with human skin, equipping robots with a tactile sensor could enable them spontaneously retreat (when the robot hits an object), or cause the robot to use its eyes to search for the source of contact. A single robotic arm has already been partially equipped with sensors to prove the concept. The centerpiece of the new robotic skin is a 5 square centimeter hexagonal circuit board. Each circuit board contains four infrared sensors that detect anything closer than 1 centimeter. “We thus simulate light touch,” explains Dr Philip Mittendorfer, a scientist working at the Institute of Cognitive Systems at TUM. “This

Reseacher Philip Mittendorfer with the Bioloid Robot that has 31 hexagonal sensor modules distributed throughout its body. The sensor modules measure temperature, touch and speed. corresponds to our sense of the fine hairs on our skin being gently stroked.” There are also six temperature sensors and an accelerometer. This allows the machine to accurately register the movement of individual limbs, for example, of its arms, and thus to learn

what body parts it has just moved. The boards are placed together to form a honeycomb-like, planar structure to be worn by the robot. For the machine to have detection ability, the signals from the sensors need to be processed by a central computer.

Alloy Converts Waste Heat to Electricity

esearchers at the College of Science and Engineering, University of Minnesota, have discovered a new alloy that converts heat directly into electricity. This revolutionary energy conversion method is in the early stages of development, but it could have wide-ranging impact on creating environmentally friendly electricity from waste heat sources. Researchers say that the material could potentially be used to capture waste heat from a car’s exhaust for charging the battery in a hybrid car. Other possible future uses include capturing rejected heat from industrial and power plants, or using temperature differences

august 2011 | industry 2.0

in the ocean to create electricity. “This research is very promising because it presents an entirely new method for energy conversion that’s never been done before,” says Professor Richard James who led the research team. “It is also the ultimate ‘green’ way to create electricity because it uses waste heat to create electricity with no carbon dioxide.” To create the material, the research team combined elements at the atomic level to create a new multi-ferroic alloy, Ni45Co5Mn40Sn10. Multi-ferroic materials have unusual elastic, magnetic and electric properties. The alloy Ni45Co5Mn40Sn10 achieves multi-ferroism by undergoing a highly reversible phase

- technology management for decision-makers

transformation where one solid turns into another solid. During this phase transformation, the alloy undergoes changes in its magnetic properties that are exploited in the energy conversion device. In a small-scale demonstration at the University of Minnesota lab, the new material begins as a non-magnetic material, then suddenly becomes strongly magnetic when the temperature is raised a small amount. When this happens, the material absorbs heat and spontaneously produces electricity in a surrounding coil. Some of this heat energy is lost in a process called hysteresis. A critical discovery of the team is a systematic way to minimize hysteresis in phase transformations.

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techwatch

Making Textiles Permanently Germ-free

Anti-microbial coating inventor Jason Locklin with members of his project team, Vikram Dhende and Ian Hardin.

University of Georgia researcher has invented a new technology that can inexpensively render medical linens and clothing, face masks, paper towels—and even diapers and socks permanently germ-free. The simple and inexpensive anti-microbial technology works on natural and synthetic materials. The technology can be applied either during the manufacturing process, or at home, and it does not dissipate in the wash. Unlike other anti-microbial technologies, repeated applications are unnecessary to maintain effectiveness. “The spread of pathogens on textiles and plastics is a growing concern, especially in healthcare facilities and hotels,” says Jason Locklin, the inventor. The anti-microbial treatment effectively kills a wide spectrum of bacteria, yeasts and molds that can cause disease, break down fabrics, create stains and produce odors. Locklin is an assistant professor of chemistry in the Franklin College of Arts and Sciences, and on the Faculty of Engineering at the university.

august 2011 | industry 2.0

Consumers’ concern about harmful microbes has spurred the market for clothing, undergarments, footwear and home textiles with antimicrobial products. However, to be practical, both commercial and consumer antimicrobial products must be inexpensive and lasting. “The advantage of this technology over competing methods, is that the permanent antimicrobial can be applied to a product at any point of the manufacture-sale-use continuum. In contrast, competing technologies require blending of the antimicrobial in the manufacturing process. Similar technologies are limited by cost of materials, use of noxious chemicals in the application or loss of effectiveness after a few washings,” explains Gennaro Gama, senior technology manager at UGARF. “In addition,” said Gama, “If for some reason the antimicrobial layer is removed from an article—through abrasion, for example—it can be reapplied by simple spraying.” Gama said the technology is simple to apply in the manufacturing of fibers,

- technology management for decision-makers

fabrics, filters and plastics. It also can bestow antimicrobial properties on finished products, such as athletic wear and shoes, and textiles for the bedroom, bathroom and kitchen. Other markets for the anti-microbial technology include military apparel and gear, food packaging, plastic furniture, pool toys, medical and dental instrumentation, bandages and plastic items. Locklin said the antimicrobial was tested against many of the pathogens common in healthcare settings, including staph, strep, E. coli, pseudomonas and acetinobacter. Moreover, in testing, the treatment remained fully active after multiple hot water laundry cycles, demonstrating the antibacterial does not leach out from the textiles even under harsh conditions. Thin films of the new technology can also be used to change other surface properties of both cellulose- and polymer-based materials. “It can change a material’s optical properties—color, reflectance, absorbance and iridescence—and make it repel liquids, all without changing other properties of the material,” says Gama.

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techwatch

Innovative Process Makes Carpets Greener with a paste made of natural phenolic compounds and oxidative enzymes that polymerise the paste. This process produces a powerful adhesive that creates the platform to which the fibers are attached. The wool is bound in a more compact, durable way, yielding a product that beats durability standards for carpets made using conventional systems by Researchers Carlos Díaz and Tzanko Tzanov develop an innovative system to attach backing to wool carpets two points. The enzymatic treatment takes 30 minutes and comprises system saves a great deal of energy, two stages. In the first, the carpet completely closes the biological cycle must be kept at a temperature of 45°C for wool, and significantly reduces the for 15 minutes, and in the second, a final cost of carpet products. temperature of 95°C is maintained for The research team focused on haran additional 15 minutes. The process nessing enzymes in the production process. The process starts with a thorough uses 50 per cent less energy than the conventional treatment, which requires check of the wool used, which comes vulcanization at 100°C to treat latex. from New Zealand sheep that graze on A wool carpet manufactured using organic pastures free of pesticides and this innovative system is a completely heavy metals. When the wool reaches natural and biodegradable product. the production facility, it undergoes an At the end of its useful life the entire enzyme-based pre-treatment process that cleans the material and removes all product can be shredded and turned into organic material, which can then be the impurities found in raw wool. After used, for example, as fertilizer for growthe wool is spun and cross-linked to the ing plant products. carpet base, the backing is impregnated Picture Courtesy: Universitat Politècnica de Catalunya

uropean manufacturers produce 700 million square meters of wool carpets each year, and use a lot of lot latex in the process. Conventional manufacturing of carpets involves a system for binding the material using a layer of latex that impregnates the backing to which fibers are attached. This layer of latex (a very costly material) accounts for 70 percent of a carpet’s weight, and must be applied by means of high-temperature vulcanization. When a carpet reaches the end of its useful life, it needs to be destroyed by incineration, a process that generates greenhouse gases. Only 20 per cent of the product is recycled. The “back to nature” concept is at the heart of the research project commissioned by the Netherlands companies Bond Textile Research, Best Wool Carpet and James, who asked the team to come up with a technology for manufacturing wool carpets that would close the biological cycle for wool, and avoid the use of latex. The outcome is an enzyme-based biological technology that paves the way for manufacturing carpets that are much lighter, sustainable, biodegradable, and 100 percent recyclable. The

Clay Nanofiller Improves Fire Resistance

aterials scientists at the US National Institute of Standards and Technology (NIST) and the University of Maryland (UMD) have jointly discovered that widely and uniformly dispersed nanoscale plates of clay in a polymer can significantly improve the fire protection the material provides. In the NIST/UMD experiments, the material of interest was a polymer—a type of polystyrene, used in packaging, insulation, plastic cutlery and many other products—imbued with nanometer scale plates of montmorillonite, a type of clay with a sandwich-like molecular structure. The combination can create

august 2011 | industry 2.0

a material with unique properties or properties superior to those achievable by each component—clay or polymer--on its own. Polymer-montmorillonite nanocomposites have attracted much research and commercial interest over the last decade or so. Studies have suggested that the way in which clay plates disperse, stack or clump in polymers dictate the properties of the resultant material. However, the evidence—especially when it comes to the flammability properties of the nanocomposites--has been somewhat muddy. Led by NIST guest researcher Takashi Kashiwagi, the NIST-UMD team

- technology management for decision-makers

subjected their varying clay-dispersion samples to an exhaustive battery of characterization methods and flammability tests. The researchers found that with better dispersion, clay plates entangle more easily when exposed to heat, thereby forming a network structure that is less likely to crack and leading to fewer gaps in the material. The result, they say, is a heat shield that slows the rate of degradation and reduces flammability. The team, led by Rick Davis, is now exploring other approaches to reduce flammability, including the use of advanced materials and novel coating techniques.

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techwatch

Proper Placement Can Enhance WindTurbine Output

he power produced by wind farms can be increased by an order of magnitude by simply by optimizing the placement of turbines on a given plot of land, say researchers at the California Institute of Technology (Caltech) who have been conducting a field study at an experimental two-acre wind farm. John Dabiri, Caltech professor of aeronautics and bioengineering says that despite improvements in the design of wind turbines that have increased their efficiency, wind farms are rather inefficient. Modern farms generally employ horizontal-axis wind turbines (HAWTs)-the standard propeller-like monoliths that you might see slowly turning, all in the same direction. In such farms, the individual turbines have to be spaced far apart—not just far enough that their giant blades don’t touch. With this type of design, the wake generated by one turbine can interfere aerodynamically with neighboring turbines, with the result that “much of the wind energy that enters a wind farm is never tapped,” says Dabiri. He compares modern farms to “sloppy eaters,” wasting not just real estate (and thus lowering the power output of a given plot of land) but much of the energy resources they have available to them. Designers compensate for the energy loss by making bigger blades and taller towers, to suck up more of the available wind and at heights where gusts are more powerful. “But this brings other challenges,” Dabiri says, such as higher costs, more complex engineering problems, a larger environmental impact. Bigger, taller turbines, after all, mean more noise, more danger to birds and bats, and—for those who don’t find the spinning spires visually appealing—an even larger eyesore. The solution, says Dabiri, is to focus instead on the design of the wind farm itself, to maximize its energy-collecting efficiency at heights closer to the

august 2011 | industry 2.0

Vertical-axis wind turbines can be clustered closer together in wind farms for greater efficiency. ground. While winds blow far less energetically at, say, 30 feet off the ground than at 100 feet, “the global wind power available 30 feet off the ground is greater than the world’s electricity usage, several times over,” he says. That means that enough energy can be obtained with smaller, cheaper, less environmentally intrusive turbines—as long as they’re the right turbines, arranged in the right way. Vertical-axis wind turbines (VAWTs) are ideal, Dabiri says, because they can be positioned very close to one another. This lets them capture nearly all of the energy of the blowing wind and even wind energy above the farm. Having every turbine turn in the opposite direction of its neighbors, the researchers found, also increases their efficiency, perhaps because the opposing spins decrease the drag on each turbine, allowing it to spin faster. At the Caltech’s Field Laboratory for Optimized Wind Energy (FLOWE),

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Dabiri and his colleagues measured the rotational speed and power generated by six turbines when placed in a number of different configurations. One turbine was kept in a fixed position for every configuration; the others were on portable footings that allowed them to be shifted around. The tests showed that an arrangement in which all of the turbines in an array were spaced four turbine diameters apart (roughly 5 meters, or approximately 16 feet) completely eliminated the aerodynamic interference between neighboring turbines. By comparison, removing the aerodynamic interference between propeller-style wind turbines would require spacing them about 20 diameters apart, which means a distance of more than one mile between the largest wind turbines now in use. The six VAWTs generated from 21 to 47 watts of power per square meter of land area; a comparably sized HAWT farm generates just 2 to 3 watts per square meter.

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Hydraulic Machine Vise

Graphene Nanocomposite Enables Better Batteries

esearchers at the U.S. Department of Energy’s Lawrence Berkeley National Laboratory (Berkeley Lab) have created a graphene and tin nanoscale composite material for highcapacity energy storage in renewable lithium ion batteries. By encapsulating tin between sheets of graphene, the researchers have constructed a new, lightweight “sandwich” structure that should bolster battery performance. Graphene is a single-atom-thick, “chicken-wire” lattice of carbon atoms with stellar electronic and mechanical properties, far beyond silicon and other traditional semiconductor materials. In this study, the team assembled alternating layers of graphene and tin to create a nanoscale composite. To create the composite material, a thin

film of tin is deposited onto graphene. Next, another sheet of graphene is transferred on top of the tin film. This process is repeated to create a composite material, which is then heated to 300° Celsius (572° Fahrenheit) in a hydrogen and argon environment. During this heat treatment, the tin film transforms into a series of pillars, increasing the height of the tin layer. “The formation of these tin nanopillars from a thin film is very particular to this system, and we find the distance between the top and bottom graphene layers also changes to accom-

modate the height change of the tin layer,” says Liwen Ji, a post-doctoral researcher at the Berkeley Lab’s Molecular Foundry. The change in height between the graphene layers in these new nanocomposites helps during electrochemical cycling of the battery, as the volume change of tin improves the electrode’s performance. In addition, this accommodating behavior means the battery can be charged quickly and repeatedly without degrading—crucial for rechargeable batteries in electric vehicles.

Berkeley Lab researchers have assembled alternating layers of graphene and tin to create a nanoscale composite.

Vascular Composites Enable Dynamic Structural Materials

aking a cue from biological circulatory systems, University of Illinois researchers have developed vascularized structural composites, creating materials that are lightweight and strong with potential for self-healing, self-cooling, metamaterials and more. Composites are valued as structural materials because they can be lightweight and strong. Many composites are fiber-reinforced, made of a network of woven fibers embedded in resin—for example, graphite, fiberglass or Kevlar. The Illinois team, part of the Autonomous Materials Systems Laboratory in the Beckman Institute for Advanced Science and Technology, has developed a method of making fiber-reinforced composites with tiny channels for liquid or gas transport. The channels could wind through the material in one long line, or branch out to

august 2011 | industry 2.0

Researchers have developed a class of sacrificial fibers that degrade after composite fabrication, leaving hollow vascular tunnels that can transport liquids or gases. form a network of capillaries, much like the vascular network in a tree. “We can make a material that’s truly multifunctional by simply circulating fluids that do

- technology management for decision-makers

different things within the same material system,” says Scott White, Professor of aerospace engineering, who led the group. The key to the method is the use of sacrificial fibers. The team treated commercially available fibers so that they would degrade at high temperatures. The sacrificial fibers are no different from normal fibers during weaving and composite fabrication. But, when the temperature is raised further, the treated fibers vaporize—leaving tiny channels in their place— without affecting the structural composite material itself. Next, the researchers hope to develop interconnected networks with membranes between neighboring channels to control transport between channels. Such networks would enable many chemical and energy applications, such as self-healing polymers or fuel cells.

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Picture Courtesy: DOE/Lawrence Berkeley National Laboratory

techwatch

opinion

Organic Entrepreneurship

India’s sheer diversity allows bottom-up entrepreneurship. But governments and institutions must pave the way for mainstream capital to reach smaller cities.

Alok Mittal

Managing Director Canaan Partners, India

he visibility and acceptance of entrepreneurship has multiplied several fold in the past two decades. From a point where an entrepreneur was perceived as a “promoter with a scheme” to a point where most students in colleges outline entrepreneurship as their ultimate pit stop, India has come a long way in making entrepreneurship respectable and aspirational. The emergence of successful role models, who came without much family backing and yet managed to

august 2011 | industry 2.0

create leading global enterprises, has contributed immensely to this change in perception. At the same time, the inflow of institutional capital in the form of venture capital and private equity has provided the required ammunition. However, the bulk of these success stories are still confined largely to the top 10 cities. Sixty per cent or more of private equity investments continue to be focused in the top five cities (Q1 2011: VC Circle). By the time one adds up numbers from the top 10 cities, precious little is left for even Tier II cities, let alone smaller towns. To understand this concentration, and how entrepreneurship may be fueled in smaller cities, we need to analyse the entrepreneurship phenomenon in smaller cities.

Consumer Demand and Diversity

It is a well-recognised fact that India is going through a secular developmental path which is creating considerable disposable income. This is leading to the demand for new products and services, as well as raising the standards of quality that an Indian consumer expects. This is a fundamental opportunity that Indian markets will offer over the next 50 years, if not more. This explosion

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in demand is happening not just across the top 10 cities, but deep into the hinterlands. Thus, there are white spaces that need to be filled in addressing consumer sectors directly. There is also huge derived demand in industrial and other business sectors. Also, sheer diversity is India’s most unique characteristic. There is a new flavour to India every few 100 kms—be it in terms of regions, languages or cultures. Unlike the large developed countries, India remains a largely “nonstandardised” market. Thus, there is an opportunity for entrepreneurs to spring up in every part of the country, solving the same problems, but with unique sociocultural flavours. Thus, unlike a top-down model of entrepreneurship, where one model is created and then replicated across a country, India will probably see a more organic bottom-up approach over the next several years. Specialised businesses will come up to tackle the unique needs across geographies and economic reach. Businesses in retail, vocational training and healthcare are classic examples where local tastes and preferences drive success.

Supply constraint in capital Against the backdrop of exploding demand, the flow of venture

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capital and private equity remains supply-constrained. This is on two distinct counts. First, the absolute amount of dollars flowing into the market in the form of institutionalised private equity is too small— last year the $8 billion in private equity investments corresponds to about 0.5 per cent of GDP. In markets such as the US and UK, this number hovers in the 3 per cent zone. The second key supply constraint has been the accessibility of these funds to Tier II markets. Private equity as a form of capital tends to target companies that can be national and global leaders in future—in a diverse and fragmented market like India, this leaves many viable businesses at a regional scale out of the ambit of private equity. The fact that most private equity managers are thinly staffed in line with their business model compounds the problem. These managers tend to evaluate the “return on time”, which is optimal in larger high-concentration cities, rather than in smaller ones. In a classic Indian paradox, while penetration of private equity remains low, and there are “too few deals and valuation pressure” in the top 10 cities, in the smaller towns, deserving entrepreneurs continue to be strapped for capital. This actually represents a market failure in organising capital where it might be most productive.

Making Capital Accessible

I believe that governments, especially at state and city level, need to play an important role in bridging the capital divide. There are several measures, some short term and others long term, which need to be taken. One of the earliest sources of venture capital in the country have been state sponsored funds. Many of them have been successful in supporting businesses at state level—the few that come to mind include

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those from Gujarat, Rajasthan and Punjab. While some of these have been Some of the world’s largest companies were born beyond partially privatised over the usual hubs time, they continue to have a strong regional presence. Airbus These initiatives need to be Toulouse, France strengthened across states. While such funds may not necessarily employ the best talent or produce the best financial performance, the social return they generate must be factored into their contribution. Nestlé Several other governVevey, ment agencies are also Wipro Switzerland Amalner, taking steps to encourage Maharashtra entrepreneurship. For example, DST has a programme to put 1000 incuSyndicate Bank bators across the country. Manipal, Karnataka There are technology funds available from TDB. The list goes on. Such initiatives must be focused to support Nokia Tammerkoski Rapids, entrepreneurship in Tier II South Western Finland cities—in fact, the quantum of funds themselves can be multiplied by extending such support. Finally, the government should metros. For decades, organised pave the way for mainstream commercial activity has been capital to reach their cities and concentrated around large cities states over time. The incentives in India and entrepreneurship is that state governments are willing following the same path. Howto provide for large industries are ever, one can now see entreprewell known. States which believe neurial ambitions bubble up from in the power of entrepreneurship, various other parts of the counnot just to create businesses but try. Like organic farming, organic to solve the key problems of their entrepreneurship is harder, takes people must develop programmes more investment and time, and and incentives, be it setting up involves short term trade-offs. of entrepreneurship development And like organic farming, organic boards, incentives for developing entrepreneurship is more healthy local angel investors, publicand sustainable over a longer private partnerships around key span of time. Not unlike other start-up clusters, or facilitating pieces of infrastructure, it is time expert resource groups. Over a to start building the entreprelonger period, building entreneurial infrastructure in every preneurial ecosystems in Tier II corner of India. cities will have multifold returns. Alok Mittal is the managing director of CaIt’s not an accident that naan Partners, India. He is also a co-founder organised entrepreneurship is of Indian Angel Network, and is on the board first showing its impact in larger of TiE (The Indus Entrepreneurs), Delhi.

Big Fish, Small Ponds

industry 2.0

- technology management for decision-makers | august 2011

opinion

“Stay focussed on the long-term horizon and have a solid plan” During his 38-year tenure at Caterpillar, James W Owens saw the construction-equipment company recover from the financial brink to become an industry archetype in today’s emerging-market growth story. Caterpillar’s former chairman and CEO reflects on an unconventional career path, organizational change, and how and where to stay competitive over the long term. by hans-werner kaas

James W Owens

Former Chairman and CEO Caterpillar

Unlike most CEOs, you are an economist by training. How has that unique background shaped your views on the global economic crisis? Jim Owens: In terms of the economic side of it all, here at Caterpillar, we think about scenarios. And so, we kind of set those trend levels, if you will, and then the high-lows that we will have to deal with. And really, within the firm, we break that down into the sub-elements of our business, because the assets to support the business are tied to that. In our strategic planning

august 2011 | industry 2.0

process at Caterpillar over the years, we’ve really worked on that high-low mentality with a lot of emphasis, because everybody is inclined to be optimistic. In many of the industries we serve, be it global oil and gas industry, mining industry—certainly construction, housing—these industries are highly cyclical. And the capital goods dimension, you know, fluctuates even more than the macroeconomic, GDPtype dollars associated with it. So, we just have to be prepared for those kinds of extremes. And has the economic crisis shifted any of the more fundamental strategic priorities? Jim Owens: No. You know, I think, interestingly enough, we put together our Vision 2020, our long-term strategy, back in 2004-05. I think it’s stood the test of time very well. We knew there was a megatrend afoot in the global economy, of emerging markets growing at two to three

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times as fast as the Organisation for Economic Co-operation and Development (OECD) countries. We felt they were driving commodity markets, so a lot of that was embedded in our strategy, as was the need to be prepared for extreme fluctuations and a trough scenario of a deep global recession. Now, it turns out that the deep global recession of 2009 was considerably worse than we expected. I mean, the worst since 1938. I wouldn’t be facetious enough to say we put that into our plan back in 2004, but we did put a deep world recession in there, and we forced all of our business units to think about how we would deal with that if it occurred simultaneously globally. And that served us very well, you know, as we went through the trough. Now, I think we have to keep in mind and be mindful of the fact we’re likely going to have a longer period at below

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C Y MK

trend levels of sales in many of the industries we serve. But we’re also likely to see a correction back to that trend level that’ll be rather abrupt when it does occur. From a personal standpoint, the lessons learned during the economic crisis—has it changed the way you have been leading the organization? Jim Owens: Not really. I got a lot of my management training, if you will, in the economic crisis of the early 1980s—a very painful lesson for us because we went through a period of almost three years of losing a million dollars a day. And it was seared in my mind, certainly from the financial side

our period cost structure inside of four months. We encouraged a significant inventory reduction because we didn’t want things building up in the wrong places that we’d have to discount. We radically reduced production. All those built-in mechanisms for cost flexibility that we thought we had, we were able to exercise and execute on. And we actually never had a quarter even of operating loss. We sustained profitability for the year, near the target levels that we had for just a normal deep, worldwide recession. So if I learned anything, it’s that staying focused on the longterm horizon—where you want to go—and having a solid plan to deal with the extreme edges

It’s hard for most US citizens to come to grips with the reality that we’re 5 percent of the world’s population. I think we’re going to be dealing in a world in the future that’s—in terms of its economic centers of gravity—is going to be very multipolar. The emerging-market theater now has more than 50 percent of GDP globally. They’re growing much faster. So, the game has changed. The need to think about global competitiveness is ever greater.

Harnessing megatrends Talking about the great rebalancing between emerging economies, developed economies—in terms of absolute GDP but also GDP growth—what implications

“We encouraged a significant inventory reduction because we didn’t want things building up in the wrong places that we’d have to discount.” of the company, that Caterpillar had gone through 50 years of the Depression, and world wars, and sustained profitability, and we had now allowed ourselves to get into a position where we couldn’t sustain profitability in the early ’80s crisis. It was a tough decade. But I came out of that with a great resolve that we would build in flexibility that would allow the company to sustain profitability and, ideally, cover the cost of capital in the worst-case scenario. And I think, you know, this is not a cyclical or a quarterly thing; this is a long-term journey and positioning ourselves to do that. And I am actually very proud of what we delivered in the global financial crisis of ’09. We were able to take about 30 percent out of our—what accountants would have called—

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of what you may have to deal with in terms of the macroeconomic environment. Which remaining uncertainty, do you still see in the global economic recovery? Jim Owens: Well, I don’t think it’s a steady path. And I think we’ve got to kind of rebalance the world economy. We’ve got to come back to, in the western world, a fiscal discipline—at least over the course of the business cycle. We’ve got to get back to—in the United States, certainly—to significantly more savings, more investment in our future. We’ve got to improve our trade balance by increasing our exports—not by becoming protectionists, but by staying open to the world market and aggressively working on [the] global competitiveness of our economy.

does that have for Caterpillar? Jim Owens: It’s very beneficial to Caterpillar in the sense that— this megatrend, the emerging market country growth and the large population Asian countries, particularly India and China, [are] now at a stage of economic development where their middle class is greater than most any European country, and that middle class is growing quite rapidly in those countries, a trend toward mass urbanization, both of which drive demand for commodities. We think that trend is going to continue, and that reasonably higher growth rate, at least two times the OECD world for another decade or two. That tends to keep commodity prices at a high level. So, the higher prices drive economic wealth in those countries. That wealth enables them

industry 2.0

- technology management for decision-makers | august 2011

opinion to invest in creating development of the natural resource base as well as infrastructure. And then, the demand—consumer demand for housing and other things that follows on. So, it’s kind of a virtuous circle. Very good thing for Caterpillar because the oil and gas industry—energy, in general—is one of our most important industries worldwide. Global mining is one of our most important industries worldwide. And of course, big infrastructure development and housing are all our sweet spots. At the same time, we recognize our big manufacturing operations have been in the United States and Western Europe. And even though we started a move to the emerging-market theater

participant. And we’re very much focused, strategically, on being sure we end up with a leadership position across the emergingmarket theater. What are the challenges you see or the concerns you have to really execute that holistic business model? Jim Owens: Probably the big risk, if you will, is the evolution of the customer base. And by that I mean, we’re used to serving large, sophisticated contractors who look at total owning and operating cost over the life cycle of a project, who understand that very well, who understand owning and operating cost, who understand what the uptime of equipment— you know, the value of having 24-

“I’d like to see the three FTAs passed, the US moving forward with the Doha Round of trade negotiations, because I think we need an international framework for WTO.2” 50 years ago—we’ve been in Brazil now for 55 years, we’re domestically a leader there. And we’ve been investing in China and India for a while, but it’s at relatively modest levels. Over the last five or six years, we’ve put about another billion dollars of investment in new plant and equipment in those countries and there’s more on the table coming right now. We recognize we’ve got to create a competitive manufacturing base to compete effectively in those countries, and we’ve got to aggressively develop our dealer infrastructure. We have relatively lower market share in those countries, though we’re a good

august 2011 | industry 2.0

hour parts availability and getting it fixed on the weekend and being sure it’s always producing. I worry in a place like China, sometimes, that—the way contracting is done, there are, you know, contractors and subs and subs and subs and subs. And by the time you get down to the owner of the machine, he’s a very small businessman who maybe is overly focused on just the initial price of the equipment, and he kind of can’t see his way through to residual values and owning and operating cost and a lot of things that are important to our business model. That’s changing in most of these key developing countries.

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You know, I’ve spent a lot of time in a place like Indonesia, where I’ve seen the emergence of a very strong customer base that does buy into the concepts of our business model. And we need to help that emerge in other places. What role do you see for manufacturing, especially in our developed economies? Jim Owens: I think, in an economic context, manufacturing’s a little misunderstood. The US is still the largest manufacturing economy in the world, and we’re still one of the leading exporters of manufactured products in the world. As a percent of GDP and certainly of the labor force, it’s radically reduced from what it used to be. On the other hand, you know, a company like Caterpillar—we used to count the cafeteria workers and the lawn-care workers and everything else as “manufacturing employees.” Today, they’ve been outsourced, and they now work for a service company that provides that service for us instead of us doing it directly, and this is true across all manufacturing employers in the country. And of course, there’s also been incredible productivity growth. All the information technology that’s come along that we’ve leveraged into enhanced manufacturing capabilities. Quite frankly, you cannot produce the quality of products that we, in many cases, are producing—the machining tolerances, et cetera—without very sophisticated, automated machining capabilities. It can’t be done by hand anymore. So, we’ve taken a lot of blue-collar work and made it white-collar work.

Walk the talk

How would you define your own personal leadership style? Jim Owens: You know, I was asked by a group of students recently

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if I had a lot of management training prior to coming here, and, quite frankly, my training was more in the textile engineering, and in economics and econometrics. And I think there’s certain values you learn even as a youth, you know, be it from scouting or whatever other activities—team sports—that you’re involved in, about how to get teams working well together. I very much believe in teamwork and I think a values-based management style that really is as simple as the golden rule. You want to treat people as you’d like to be treated. And if you keep that in mind, and really value and respect other people’s opinions, then you can get the kind of teamwork, I think, that it takes to be successful over time in the economy we’re competing in today. To me, any great company—it’s not about a great individual leader; it’s about a leadership culture within the company. And it’s about establishing a leadership culture that does value people. And that draws out the best in, literally, a cast of—a company the size of Caterpillar—thousands of leaders around the world who are making decisions every day. So, it’s about getting that kind of passion and enthusiasm for winning brought out in people all across your enterprise. Every CEO, once he takes over his new role, has a plan for his first 100, first 200 days. Did you have a plan for your last 100 days? Jim Owens: We had a lot of discussion about that between myself and the board. The last two transitions at Caterpillar, we had a relatively abrupt transition between the time that the new, incoming chairman knew that he was going to get the job, and when he actually had the job. In my case, literally, I found out at 10:00 at night that I was going to be the next chairman and CEO. It was announced the next morning, and, you know, ten days later, my [predecessor]—I mean, ten work days—was kind of moving aside. And he didn’t want to be a lame duck, and that’s an understandable reaction. But I thought that this isn’t really about what I want and what I’m comfortable with, but really about what’s the best thing for the enterprise. And having spent 12 to 18 months on strategy once I got settled into the job, I felt it would be extremely beneficial to the enterprise if the person who was going to replace me knew it at least 9, 10 months ahead of time so that he could work on refreshing the strategy. And then we would transition by when he was ready to roll out the strategy at midyear. He would roll out the strategy to our global supply chain, so

It doesn’t get hot. It doesn’t touch the component. So how can a coil heat metal cherry red in a few seconds? The answer is surprisingly simple: induction exploits the laws of electromagnetism in order to produce heat directly in the workpiece. But what’s really interesting is how heating patterns can be controlled, and how they can be localized and repeated over and over again. Of course, the technology behind induction heating is rather advanced. But after 50 years in the induction business, we’re experts at making user-friendly solutions. And at integrating them into existing or planned production lines. EFD Induction is Europe’s no. 1— and the world’s no. 2— induction company. Our systems are used to harden, temper, braze, weld, anneal, melt, forge, bond, cure and pre- and post-heat. They’re also used to produce plasma. So whatever your needs, there’s a good chance we can devise a solution. And since we’re present in the US, Europe and Asia, your solution is probably closer than you think. Contact us, let’s see how induction can boost your business.

Putting the smarter heat to smarter use www.industry20.com

industry 2.0

- technology management for decision-makers | august 2011

www.efd-induction.com

opinion our employees, our dealers, and our key suppliers would get the rollout message from the chairman elect and new CEO, and he would become CEO at the end of June. And quite frankly, you know, by the time we get to June, I had pretty much handed over all the reins. It’s not as much fun to be leaving as it is arriving. On the other hand, it’s not so much about fun for the outgoing CEO as it is about a seamless transition and having an enterprise that has traction with the new strategy right out of the box. So, there’s not time wasted, there’s no big shifting of gears down the road. And I think

the performance of the company in the most difficult and severe recession since 1938. What I’d like to be most remembered for, of course, is the people side of the equation. Great communications, values-based management, walking the talk on our values in action, and a highly ethical company, you know, are the kind[s] of things that I’m proudest of.

Management lessons

If you think back over your career, what was the most important key lesson you learned as an executive, as a manager? Jim Owens: You know, if I had to cite one that was particularly searing and impactful on maybe

“The only way to get from being a good company to a great company is just to go to uncommonly high levels of engagement with all of your people. that’s, as I look back on it, I feel—and I told the board, this is art more than science. We’ll kind of look back in a couple of years and say, did that work better than our previous transitions? And a lot depends on the people and how they work the transition. As the outgoing CEO, you’ve got to stay engaged long enough, but you’ve got to know when you need to get out of the way and let the new team take over. And I think the organization can only look at one leader at a time. What do you want your legacy at Caterpillar to be? Jim Owens: I think I will probably be most remembered for

august 2011 | industry 2.0

changing me, the two years that I came back from Europe as an economist and went into accounting, but I was charged with working across the company and forging a make-buy strategy at a time when we were under intense global competitive pressure. We knew we had a cost problem. This was the period of time we were losing a lot of money. And we had to really change our mindset from a sort of a functional discipline to a real business discipline. And I didn’t have anybody working directly for me, but I had division managers—from manufacturing, engineering, purchasing, accounting, and our parts and service group—on a commit-

- technology management for decision-makers

tee that I chaired that reported to a group of officers of the company. And working through that dilemma and thinking about how to reposition Caterpillar—and really having to lead with just the power of ideas, because none of these people worked directly for me—was a period of stress and one that I learned a tremendous amount in. And I think, in the end, we got a lot done. And so, you begin to take a lot of pride at what you can get done with leadership without position power. What corporate culture have you built over the years at Caterpillar, and if you look back, would you change anything? Jim Owens: You know, I don’t want to sound facetious here, but probably not. I think Caterpillar has a very rich culture that’s been built up over many, many years. We tend to attract and retain employees that join the company right out of college or within the first ten years of their working career. And most we tend to keep and retain over time. Over the recent years I have been very concerned about— we’ve had some we-they-isms in the culture, particularly when it comes to production workforce and management workforce, union versus non-union, in some of our facilities. And one of the things I really emphasized and recognized is [that] united teams win, divided teams lose. Early on I felt, from a people dimension, the only way to get from being a good company to a great company is just to go to uncommonly high levels of engagement with all of your people. We wanted to go from sort of good-average on safety to one of the very best in the world. And this is back to that we-they attitude. I didn’t want this to be something that we did jointly with the union or something.

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They’re Caterpillar employees. We needed to go out and stake out the ground that we were going to look after everybody all day. And we’re going to look after our fellow employee workers, and it’s a joint initiative. And we held management accountable for delivering steady improvement in safety performance and for moving Caterpillar to one of the best in the industrial world. And I’m very proud to say we got that done. But it sent a very loud message to our employees about how much we cared about them. And it helped us purge that we-they-ism that was residual in some of our operations. We also said, you know, we want to set an expectation that we do walk the talk with our values in action. And through our employee survey, we’re going to measure how well our leadership team does at engaging employees. How do you expect employees to help you deliver on your goals and to move you to your future vision if they don’t understand what that vision is? If they don’t understand what their unit has to do to contribute to achieving that vision? If they don’t feel that their manager walks the talk day in and day out on values-based management? If they wouldn’t recommend it as a place to work to a friend or colleague? So, you know, when we started rolling out our strategy, the outside groups that we consulted with said, “You know, if you could get to 65 with positive feedback on your employee survey, that would be approaching really outstanding company status.” We set 90 as our goal. We said, “How can you be a great company if at least 90 percent of the people don’t understand what you want do, how you’re going to get there, and what role they have to play in helping you get

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“How can you be a great company if at least 90 percent of the people don’t understand what you want do, how you’re going to get there, and what role they have to play in helping you get there? there? And they’re enthusiastic about you as an employer.” And I’m very proud of the fact that over the last seven years, we improved every single year. We were at 82 at the end of ’09 in the most horrific business conditions you can imagine. You know, people were rolling up their sleeves and thinking about how I can make this company better. What has been the most important lesson you have learned to engage people and lead people? Jim Owens: I think it takes very intense communications and very transparent communications, that are delivered by the senior-most leaders with conviction on a regular basis. When we got into the global financial economic crisis I delivered that initial, very difficult message that all of our employees need to understand and the difficult decisions that we were having to take. I then put on an officer of the company, one of the group presidents, every single month for an all-employee, town halltype meeting to talk about the state of play, where we were, what was happening—our successes and what we needed to do better. And I think that was immensely helpful to our people. None of us liked the fact that we had to downsize the workforce. But I think the candor and honesty that we dealt with it was extraordinarily helpful in helping

keeping everybody on board, rowing together, to keep our boat sailing through these very turbulent waters. You’re nearing the end of a remarkable and exceptional career at Caterpillar. What advice would you have for other executives within your company or institution but also beyond? Jim Owens: I’ve been asked a lot lately, you know, did you come to Caterpillar back in 1972 aspiring to be the CEO? And not surprisingly, the answer was no. I mean, in fact, I came to Caterpillar, I didn’t even know what a CEO was. I came aspiring to be a great business economist and to really learn the tricks of the trade and how to leverage the energy I put into getting my doctorate in economics, and the econometric tools that I had developed, and how to apply those in a business setting. And along the way, you know, I took the opportunities that presented themselves. And I think at each step of the ladder, I looked for ways to do my job uncommonly well. How I could expand, sort of, the scope of my job and do more things for the company. I began to think about my success as organizational success. How can I make the organization more successful? I never really thought about chairing the company, at least [not] until I was CFO of the company. And by then, I’m over 20 years into the company and into my job. So, I think I very much

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opinion believe in, sort of, the Jim Collins mantra of really putting the organization first and thinking always about what you can do to make the organization successful. Thinking in terms of we, not I, all along the way.

Business in society

Business leaders play important roles in advancing the welfare, and also the thinking, of societies. What is or should be the role of the CEO in advancing societies? Jim Owens: I think business leaders in the post-Enron world have kind of stepped to the background. What I worry about is: we don’t want to address the difficult issues, and we’ve become politically polarized to where we can’t have an adult conversation about some of the things that we need to do better as a country in terms of economic policy. I think the business community just has to get more engaged in helping educate the public. The CEO gets one vote, but we have an opportunity to enhance economic understanding about good economic policy that will promote growth and economic prosperity in our countries—not

august 2011 | industry 2.0

only in the United States, but around the world. So, how do we go about doing that? I mean, in the United States right now we’ve got big issues. We have a large fiscal deficit right now that’s driven by a severe recession. We have a long-term structural deficit because we don’t have a tax revenue base that’s going to cover the entitlement programs that are basically in place, and the baby boom generation that’s coming. So, we need to thoughtfully sit down with our government leaders and think about how we’re going to get the economic policies in place to do what needs to be done to have a sustainable economy. And the longer we wait and the closer we get to the train wreck, the harder it is to deal with. You’re a member of the president’s economic advisory board. In that role, Jim, can you influence economic policies better than not being on that board? Jim Owens: You know, I think the PERAB, the President’s Economic Recovery Advisory Board, includes such an eclectic group of

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special interest groups. I mean, there are business people, there are labor unions, academics, investment professionals, entrepreneurs from Silicon Valley, and Council Economic Advisor’s Chair from the Democratic and Republican administrations. It’s really hard to get a consensus on an economic recommendation. I mean, a good example might be: I’m a very strong advocate for trade agreements. So, I’d like to see the three FTAs passed, the US moving forward with the Doha Round of trade negotiations, because I think we need an international framework for WTO.2 And I think there’s a real win–win proposition for the United States and [the] rest of [the] world— and economic prosperity in the world—by getting that done. The labor union groups involved with the PERAB are vehemently opposed to virtually any trade agreement. So, you know, we’re not making the kind of forward progress I’d like. This article was originally published in November 2010 on The McKinsey Quarterly, www.mckinseyquarterly.com. Copyright (c) 2010 McKinsey & Company. All rights reserved. Reprinted by permission.

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Picture Courtesy: Henkel AG

cover story

Making the Right Bond In an ongoing search for ways to design lower cost, lighter weight, more durable products, appliance and subcomponent manufacturers are increasingly substituting plastic components for ones made of metal or glass. This has helped manufacturers compete more effectively in the global marketplace by consolidating parts, reducing the need for machining, and providing environmentally-friendly, recyclable materials for post-consumer disposal. New adhesive formulatives are helping speed the transition to plastics by prioviding quick, clean and efficient joining techniques.

by pat gilson

august 2011 | industry 2.0

- technology management for decision-makers

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Assembling Appliances

For appliance manufacturers that require a method of assembly that is suitable for automation and results in a durable, aesthetically

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Light Cure Adhesives Made DVDs Possible

igital Versatile Discs (DVDs) are similar in many ways to CDs, but offer greatly increased storage capacity and are more userfriendly. For a manufacturer, DVDs present significant challenges for assembly and in-line inspection. A DVD is consists of two 0.6 mm polycarbonate discs with the same diameter as the single 1.2 mm CD. The basic manufacturing process for DVD’s is very similar to that of CD’s except that additional equipment and tighter process controls are necessary to minimize tilt (warpage). To manufacture the DVD, polycarbonate material is injection molded into a master disc. After injection molding, a layer of aluminum is vacuum deposited onto the information encoded side of the disc, and the disc is then coated with a UV protective lacquer and cured. The 0.6 mm disc is then ready for bonding. Some DVD manufacturers have eliminated the lacquer coating step and instead have the adhesive double as a protective coating. The adhesive technology used for DVD bonding must be compatible with the substrate components, and be easily optimized and integrated into replication lines. The adhesive must also meet cycle time requirements, allow for easy handling and dispensing, maintain adequate environmental conditioning resistance, and produce minimal degradation of the performance of the disc. Adhesives currently used to bond DVD’s include UV curing acrylics, cationic UV epoxies, and hot melts. Hot melts can be used effectively only on DVD-5 single layer formats; cationic UV epoxies are effective on both DVD-5 single layer and DVD-10 double sided discs but require a UV lacquer protective coating prior to bonding. Free radical UV acrylics are the only adhesives currently on the market that can be tailored to meet the refractive index requirements necessary to allow the DVD reader to access information on all four layers of a double sided DVD-9 disc. Free radical UV acrylic adhesives can be applied via spin coating or capillary flow methods. Spin coating is the application method most common in the industry. The adhesive is applied to one disc half, the mating disc is then placed on top of the adhesive, and the assembly is spun at a high rpm to distribute an even film throughout the 120 mm disc. Once adhesive coating is completed, the mated discs are irradiated under UV light on an in-line conveyor system or rotary index table. The discs are then inspected to detect any defects that occurred during the assembly process.

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- technology management for decision-makers | august 2011

Picture Courtesy: Huntsman

he appliance industry was one of the first to recognize the benefits of using plastics to reduce manufacturing costs while delivering stylish, safe and durable products. The durability, impact strength, dimensional stability, insulating qualities, low cost, and good processing characteristics of plastics ensure its growing popularity in major appliances and electrical housewares. For instance, in refrigerators, a variety of plastics are found in crisper drawer sliders, compressor covers, door liners, door stops, ice maker gears and ejector mechanism components, and transparent interior parts and food liners. Washing machines incorporate plastics into agitators, control knobs, suspension systems, drive components and transmission parts, drive pulleys and cam inserts. Electric motors, gears and drive components used in various household appliances are increasingly made of plastic. The applications of plastics both in major and small appliances continues to grow as new and better formulations are developed. By nature, plastics are highly corrosion resistant and require no surface treatment to withstand exposure to corrosive materials. In an industry looking to reduce costs, lightweight plastics make appliances easier to handle and reduce shipping expenses. Plastics can be easily formed into complex shapes; this conformability also allows appliance designers to reduce the number of parts that go into an assembly by molding several components into a single plastic part. Plastics are given their aesthetic qualities—color and gloss—as they are molded; therefore, no time-consuming secondary operations such as painting or varnishing are required. Finally, plastics can be tailored with great precision to meet the specific needs of appliance manufacturers. Virtually limitless combinations of plastic types, fillers, and additives are available which can be compounded at relatively low costs and processed by a variety of methods. By properly selecting plastic types/blends, additives and fillers, the physical, chemical and thermal properties of the plastic can be made to meet or exceed the performance requirements of almost any application.

cover story

In-Place Compression Gaskets Increase Production

august 2011 | industry 2.0

- technology management for decision-makers

Picture Courtesy: Henkel

ecoh Sangyo, a leading manufacturer of pneumatic blowers, uses cured-in-place compression gaskets to significantly reduce material and labor costs, and to increase overall productivity on their line of diaphragm blowers. The blowers are employed to pump and filter ambient air, and are an integral component in jacuzzi manufacturing. Earlier, the companyâ&#x20AC;&#x2122;s polypropylene blower units were assembled manually by three workers. Two O-rings made of pre-cut EPDM were used for each unit: one on the housing case and the other on the inside chamber flange. The company had to maintain an in-house inventory of each gasket, which was made by a contracted vendor from a mold die. The company now uses gaskets that are formed from durable silicone gasketing materials that are dispensed, and then cured under UV light in less than 30 seconds. This eliminates the need for inventories of different sized gaskets, speeds assembly, and reduces placement error. In deciding whether to use a liquid gasketing material, Secoh Sangyo had three requirements: it must seal the outer case to protect the blower from rain and dust; maintain a tight seal, keeping the inside pressure at 0.2 kg/cm2; and stick bond-free, since opening the hood is required for maintenance. To form the gaskets Secoh Sangyo uses an in-house, automated application process. The adhesive is dispensed with a robotically-operated pneumatic pump directly to the chamber flange and the housing case. Each blower travels via conveyor through a UV curing furnace for 30 seconds. The case hood is then manually assembled. Secoh Sangyo has realized the following benefits from the change in the assembly process: 1) reduction in gasketing material costs by 11.5 percent 2) lower labor costs, only one worker is needed for the gasketing process 3) enhanced productivity thorough reduction in application time by 3 minutes 4) elimination of waste and cut gaskets

Hot-melt adhesives are a low-cost alternative to mechanical fastening techniques. pleasing end-product, fastening with adhesives offers the most versatility. Whether bonding plastic to plastic or plastic to another material, adhesives offer several major benefits. While mechanical fastening methods concentrate the stress in one spot, with adhesives, the load is spread over a wide area, reducing the amount of stress on the joint. As adhesives are applied inside the joint itself, they become an invisible component in the assembly. Mechanical fasteners such as rivets, nuts, and bolts require holes to be drilled into the assembly, and frequently interfere with the aesthetic styling of the product. Neither ultrasonic nor solvent welding can bond plastic to metals or glassâ&#x20AC;&#x201D;only adhesives can provide such a bond. Also, adhesives are a lower cost fastening methodâ&#x20AC;&#x201D;mechanical fasteners must be inventoried, require pre-assembly preparation, and are labor intensive. Adhesives are onesize-fits-all, and assembly can be easily automated. While the limitless variety of plastics is an invaluable asset to an appliance designer, it is also the biggest limitation when selecting an adhesive to bond a plastic assembly together. The countless adhesives available, coupled with the virtually limitless grades of plastic, make it difficult to determine the bond strength data for the adhesive/plastic combination designed into a specific appliance. However, by analyzing the fillers and additives that have been formulated into the plastic, the adhesive manufacturer can help to pinpoint the adhesive with the best bond strength for a specific application. To keep abreast of the latest developments in plastic materials, certain adhesive formulators have formed alliances with major plastics manufacturers to ensure the compatibility of their adhesive products, as well as the continued development of new adhesives for the fu-

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ture. However, an adhesive cannot be selected for an application solely on the basis of bond strength. Other important factors play a critical role in determining the best adhesive for an application. These factors include cure speed, environmental and thermal resistance, and manual versus automated application methods.

New Developments

The newest and fastest growing adhesive technology for plastic bonding applications are ultraviolet (UV) and visible light curing adhesives. Light curing

adhesives were first introduced approximately 30 years ago and are ideally suited for in-line, automated dispensing and curing. These adhesives cure or harden when exposed to light sources of the appropriate wavelength and intensity. The primary advantage of light cure processing is cure speed. Depending upon the product and system, cures can be achieved within seconds. Light cure adhesives are one-part systems with no need to measure or mix, and no pot life concerns. They contain no solvents and, therefore, are environ-

Adhesive System Helps Create Advanced Wheels

RG Wheels Ltd, based in the UK, specializes in designing, manufacturing and marketing structural composites for the automotive industry. A few months ago the company created a carbon-magnesium car wheel to deliver a better driving experience based on improved handling, higher impact resistance and greater fuel economy. The company achieved this by focusing on the two main components of the wheel; the hub and the rim. The forged, magnesium alloy-based hub of the wheel has been designed to reduce the porosity of the normal cast magnesium and its corrosion potential to zero. The other major feature of the wheel is the carbon composite rim NRG Wheels developed and produced the wheel rim with the support of Huntsman Advanced Materials who selected and provided an Araldite resin system especially adapted for the Resin Transfer Molding (RTM) process. In the RTM process, aerospace-type carbon fabrics are put into a mould, and injected with epoxy resin. Specially coated titanium fasteners working within specially bonded bushes fasten the hub to the epoxy carbon fiber rim, so no additional auxiliary component bonding or finishing is required. The finished rim has an aesthetically pleasing surface finish, showing the carbon fiber pattern. The surface is protected from UV light and other environmental elements with a tough, high-gloss lacquer paint finish. NRG Wheels worked with Huntsman Advanced Materials to choose and develop a specialized resin system for high performance, increased toughness and better impact resistance. The carbon-magnesium wheel is 40 percent lighter than the lightest aluminium or magnesium wheels. This weight reduction has a noticeable effect on a car by reducing fuel consumption and emissions, and enhancing performance and handling. When tested on a Porsche with a 380 bhp engine, the carbon-magnesium wheels demonstrated power savings of around 43 bhp, equating to an approximate fuel saving of 10 percent. These wheels also exhibit reduced gyroscopic

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effects and moment of inertia. This results in better acceleration and braking with reduced stopping distances, better grip, lighter, sharper steering, improved wheel and tire balancing, and more stable tire temperatures and pressures. Coupled with reduced fuel consumption and engine emissions, the reduced energy requirement for composites manufacturing compared to aluminium alloy manufacturing results in significant energy savings during the life of the product. The carbon-magnesium wheels are also much safer. The wheels can withstand more than double the impact force of metal wheels, allowing the vehicle to be driven safely even after a major incident. “The special resin for this application enables the high strength-to-weight ratios required for improved impact resistance,” explains Bevis Musk, Research and Development Director at NRG Wheels Ltd. “The wheel demonstrates resistance up to an impressive 1600 joules. In contrast to metal wheels, cracks do not increase and the wheel reverts to its round shape while retaining great strength, rigidity and the flexibility required for both road and track. This makes the wheel safer in road impacts as the tire retains its air and the car can be driven safely.” The overall potential for carbon composite wheels is large, but specific. The wheels are not only suitable for high-value and high-performance vehicles but also delivery vehicles and buses. The reduced moment of inertia generated by using composites makes the wheel suitable for applications with frequent stopping and starting. For military applications, not only could carbon composite wheels prove useful in improving overall vehicle performance, it could also prove beneficial in ballistic response settings. When compared to metal wheels in extreme blasts, less shrapnel penetrates the vehicle equipped with carbon composite wheels. The new wheel design won a JEC Innovation Award 2011 for use of composites in high performance vehicle applications. Source: Huntsman Advanced Materials

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- technology management for decision-makers | august 2011

cover story

Improving Flexible Food Packaging

Picture Courtesy: Henkel AG

urope has stringent regulations governing the manufacturing of food packages. They stipulate that food packages or individual components of a package must not affect the contents of the package in any way. This requirement also applies to the use of flexible packages that are constructed by combining different materials such as plastic films, metal foils and paper into laminates. To bond the individual materials in flexible package to one another, the current practice is to use polyurethane adhesives based on isocyanates. When fully cured, these polyurethane adhesives are safe for human health. However, if the adhesive has not fully cured when the flexible package is filled, the residual isocyanate monomers can migrate into the food and react with the water there to form aromatic amines. These amines are classed as carcinogenic by the WHO. To prevent the formation of amines, adhesives must be given enough time to cure fully. Depending on the adhesive used, the film and foil combination, and the curing temperature, this can take up to three weeks. The time factor is of major significance to packaging manufacturers, because long cure times mean that working capital is tied up, which has a negative impact on costs—especially in highly competitive businesses. Packaging manufacturers who rely on reactive two-component adhesive systems normally have to wait at least three days before the laminate meets the quality requirements for further processing. Before then, there will not be sufficient adhesion between the layers or the necessary temperature stability for sealing. So, it is not surprising that the industry is perennially on the lookout for faster curing options. A new option is a single component, solvent-based laminating adhesive from Henkel. “Our goal was to develop an adhesive that would enable just-in-time manufacturing of flexible packages,” says Georg Kinzelmann, Corporate Director Research & Development. The adhesive isocynate-free, and cures chemically. In addition to quick curing, the solvent can be re-used in the production process. This makes the system greener.

mentally friendly. Light cure adhesives offer a very rapid (2 to 60 second) room temperature cure and require substantially less equipment space and energy than ovens. These adhesives cure “on command,” allowing the manufacturer as much time as necessary to align parts. Once cured, bonded parts can be tested immediately after assembly, eliminating the possibility of large quantities of work-in-process scrap. In order for light cure adhesives to function, the uncured adhesive must “see” or be exposed to the suitable type and intensity of light. This means that at least one of the substrates being bonded must be capable of transmitting light. Assemblies with shaded areas require a secondary cure mechanism for the adhesive to completely solidify. Three light cure adhesive technologies are popular among today’s appliance manufacturers. Light cure acrylics are one-part, solvent free liquids with typical cure times of 2 to 60 seconds and cure depths in excess of .5 inch. Available in a wide range of formulations which provide cured properties from very rigid, glassy materials to soft, flexible elastomers, light curing acrylics provide good environmental resistance, superior gap filling properties, and clear bond lines for improved end use aesthetics. The second type are the UV light cure silicones. These are one-part, solvent-free materials which rely on UV light as the primary curing mechanism, and moisture for secondary curing in shadowed areas unexposed to the light source. Used in the appliance industry primarily as sealants and gasketing materials, UV curing silicones are designed to cure tack-free in less than one minute when exposed to a suitable light source. This relatively new technology is ideal for high volume production environments, as UV cure silicones can easily replace traditional room temperature vulcanizing (RTV) silicones which require one hour to achieve handling strength and up to 72 hours to cure fully. UV cure silicones speed production time and reduce work-in-progress and production costs, yet offer all the benefits of RTV silicones—thermal resistance to 400°F, excellent moisture and electrical resistance, and superior gap filling capabilities. The third type are the light cure cyanoacrylates (CA’s). Light cure cyanoacrylates offer all the performance benefits of regular instant adhesives—rapid room temperature cure, excellent adhesion to most substrates, easy dispense via automation, and excellent bond strength— along with the added benefit of instant, tack-free cures when exposed to UV or visible light. Light cure CA’s solve two problems associated with standard cyanoacrylates—they do not require the use of solvent-borne accelerators to speed the cure process, and they minimize or completely eliminate problems with blooming. Any shadowed areas not exposed to light will continue to cure using the CA’s normal moisture cure properties. Pat Gibson is Marketing Manager at Henkel Corporation

august 2011 | industry 2.0

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facilities & operations

Overhauling The Infrastructure The challenge

► Overhaul the IT set-up to increase business efficiency Time Period

► January 2011Till date People Involved

► Top management, entire IT and finance teams, experts from IBM, Microsoft, etc Key Takeaways

Photograph by: Jiten Gandhi

► Show risk appetite and ability to dream. Have a strong EQ. There is nothing more important than managing and convincing people

s a former Cadbury man used to state-of-the-art technology and infrastructure in his previous assignments across Europe and South East Asia, the soft spoken Girish Bhat found himself in the midst of almost another era when he joined infrastructure major Gammon India in late 2010. He soon realised that the biggest

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and most urgent challenge for him was to overhaul the Information Technology (IT) set-up and enhance business processes. It is a challenge that has taken up a lot of his time in 2011. But seven months into the year, he sounds happy at the turnaround that is already evident in the company’s performance. The biggest victory is that almost everyone

When he took over as CFO at Gammon India in late 2010, Girish Bhat realised that the infrastructure firm needed an overhaul. The most important challenge for the new CFO was setting up a new best-in-class IT system and enhancing business processes. by dhiman chattopadhyay

industry 2.0

- technology management for decision-makers | august 2011

facilities & operations within the organisation is happy with the new-look workplace and the company today is proud of its IT infrastructure.

The Challenge

When he joined Gammon from Cadbury, the new CFO realised that one of the reasons the company had low margins was a below-par IT set up. “As a business we did not have a sufficiently scalable ERP platform. Nor did we have the best-in-class IT infrastructure,” says Bhat. “The first big challenge for me was to build IT for the benefit of the business. Enabling services were in a poor shape because we were an oldschool engineering firm that had ignored many of the advantages of information technology so far,” he says candidly.

the entire team, both internal and external, was clear. He wanted the office to work seamlessly, so that the finance team as well as others could do project reviews, future planning and get real-time information, making it an enjoyable place to work in. The next challenge for the management was to create a blueprint that would set standard benchmarks for each of Gammon’s infrastructure projects—a process that would help manage costs, ensure quality and make clients happy. “We wanted a new ERP system to build a standardised matrix. In short, an IT solution for the benefit of the business,” he says. Bhat figured that for this to happen, the finance and IT teams had to work in tandem and be kept motivated. “We, therefore,

“Any transformation will face resistance. Your ability to

influence people, communicate and make an impact is critical” Tackling the Problem

As a first step, Bhat tied up with some of the established market leaders in IT solutions. “To have the best IT set-up, you need to partner with the best in the world. So, we brought in the likes of Microsoft, IBM, Tata Communications and Airtel, to improve connectivity and set up new software,” he says. The decision to outsource much of the IT-related work was deliberate by the Gammon management. “As the CFO, I felt it was important that we outsource IT as much as possible, since I wanted the internal team to focus on other challenges, such as enhancing business processes,” he says. However, Bhat’s message to

august 2011 | industry 2.0

did a competency mapping exercise of all staff and developed specific training modules for each one. To build a company that sets new standards, I have to surround myself with the best people—with the right skills. And, for this, a proper training module is essential,” he explains. Finally, to build superior shareholder value and reinforce the reputation of the company, certain values had to be re-established and recreated in the organisation, says Bhat. Of course, none of these steps could be implemented before encountering some degree of opposition from one quarter or another. “Any transformation will face resistance. Your ability to influence people, communicate and

- technology management for decision-makers

make an impact is critical. Often the resistance does not come from the junior or middle level executives, but from senior colleagues. So, convincing everyone, from the management to the juniors, is extremely important. Their questions need to be answered and fears overcome,” says Bhat. Equally important, he recalls, was convincing the CEO, because at the end of the day, any such large-scale overhauling effort means big spending with no guarantee that the returns will be evident quickly. Luckily for him, the CEO and MD agreed to his proposition that it was time for a complete overhaul of the system and the work culture. “The complete support of the management has helped me and my core team to work with passion and give more than 100 per cent to this exercise. Most of the challenges have been met and things are already looking up. Long-term success will depend on how well these changes are executed over time,” he says.

Lessons Learnt

The exercise was an eye-opener for the CFO. “Even after over two decades in the field, there is still so much to learn from each experience,” he says. “For instance, I had to display a risk-taking ability and dream big to ensure success of the project.”Bhat also discovered that a strong Emotional Quotient (EQ) is an asset. It helps one tide over the bad days, he says. The ultimate epiphany for him, though, was the realisation that at the end of the day, to be successful in any endeavour, one has to master the difficult art of people management and effective communication. “It is all about managing people, communicating every decision truthfully and transparently and earning their confidence. Once you do that, success is just a matter of time,” he concludes.

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Picture courtesy: www.photos.com

supply chain & logistics

How Well Are Your

Customers Being Served? Is your fulfillment operation as productive and effective as you want it to be? Is it meeting your expectations, and those of your customers? In todayâ&#x20AC;&#x2122;s challenging and competitive world, not knowing where you stand on these important questions can be fatal to your success. by curt barry

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ne way to gauge the effectiveness of your fulfillment operations in meeting customerâ&#x20AC;&#x2122;s expectations and your business objectives is to conduct an operations assessment. An operations assessment involves a systematic review of the warehouse and call center functions, and looks for improvements in efficiency and service. The process makes a quantitative and qualitative assessment of the productivity and service levels of your fulfillment operation.

If your goals are to reduce costs, better satisfy customers and boost profits, you have to measure the various components of the operation before you can begin to make meaningful improvements. A good operations assessment enables you to measure productivity and service and identify patterns and trends. It also allows you to compare your measurements with your own in-house goals as well as industry benchmarks. (How do you stack up against comparable companies? Are you in the ballpark? Are

industry 2.0

- technology management for decision-makers | august 2011

supply chain & logistics you meeting your company goals and objectives?). Combining this measurement with a structured approach to develop improvements is the key to successfully acting on the assessment findings. Once you gather the information and make the comparisons, you will be able to draft an action plan. Remember, if you canâ&#x20AC;&#x2122;t measure something, it is difficult to improve it.

Getting Started

An operational assessment is a thorough analysis that tells you exactly where you are and what you need to do to meet your goals. The assessment is ideal for all sorts of fact-finding assignments; the question whether the operations side is keeping your marketing promises is just one example. Operational assessments also can help you improve productivity; use distribution center space more efficiently; improve throughput and capacity of orders processed in the warehouse; streamline work-flow by reducing steps; improve service levels, processes and costs; and generally achieve higher profits and lower costs. The five basic components of the assessment are: 1. Walkthrough and observation of the operation 2. Data gathering of necessary information and metrics 3. Interviews with staff members 4. Determine productivity and service levels 5. External benchmarking to look for areas of improvement One of the first steps in the assessment is to take time to walk through the facility, and

august 2011 | industry 2.0

observe the general operating conditions and effectiveness of the processes being used. This is not a detailed analysis, but rather an activity that involves developing overall impressions that can guide the more detailed steps of the assessment to be completed later. Many times the initial walkthrough and observations help focus and direct the assessment process. After you have seen enough facilities, it is possible to form initial opinions as to the current level of productivity and service very quickly. The general cleanliness of the facility, employee attitude and morale, overall work pace, information posting for employees, congestion, use of automation, bar code applications, space and cube utilization, etc., can provide clues as to the appropriate focus for the assessment.

Making the Assessment

Though an assessment will often involve some new research, the chances are youâ&#x20AC;&#x2122;ve already been collecting a lot of the data for other purposes. Designing an assessment is a matter of putting it all together. Most assessments are a combination of research analysis, report review and onsite fact-finding. Regardless of the specific goals of the assessment, the first step is to gather all the research you already have and collect any that you are missing. It is always necessary to establish expectations or standards as the baseline for any comparisons to be made. Measurement against these standards as part of the assessment process identifies areas where

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expectations are not being met and action is required. Among the type of reports you should consider are basic operations performance reporting. These internal reports cover the major performance metrics in all departmentsâ&#x20AC;&#x201D;including call center representatives; customer service representatives; service levels such as abandonment rate, time to answer, order shipping accuracy, order turnaround time, etc.; receiving; quality assurance; stock putaway; returns; inventory control; replenishment; and picking, packing and shipping. Examining these reports can help reveal which departments are reaching desired levels and which ones need some attention. The reports will usually include information relating to budgets or expectations, and comparisons to actual results in key areas of the business covering productivity as well as service metrics. Your source materials should include, among others, internal operations reports, returns reports, customer satisfaction cards, secret shopper studies, quality assurance sampling, and where applicable, call center customer reports and call center monitoring reports. Another important step in the assessment process is to talk to those staff members directly involved in the activity being assessed. Interview key management staff to gauge their perspective on the operation, and any future plans for growth, product changes, or planned process changes. Then talk to the workers in the call center and warehouse. If anyone knows where the

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problems and opportunities lie, it is the people who live with the issues, day in and day out.

Creating and Using Benchmarks

Your assessment should compare your desired standards of service and productivity with your actual performance. Comparing your own figures—both actual and goals—to that of other companies can help you evaluate your performance, too. Just be careful to compare “apples to apples”, and pick companies that are as much like yours as possible. External comparisons can lead you to certain areas or processes within your operation that are candidates for further study. Remember, you cannot take someone else’s standards or performance expectations and make them your own. There are always too many differences in operations to do this. For example, consider differences in apparel pack rates. Packing of apparel merchandise on the hangar, wrapping it in tissue paper and giving extra care and attention might allow for completion of only 15 orders per hour. On the other hand, flat-storage merchandise that is packed in plastic and inserted in envelopes for shipping allows for the movement of 100 orders per hour. It is always better to compare your results against yourself and against a set of standards or expectations over an established time period. This permits the identification of trends as well as snapshot evaluations. It is really desirable to combine both internal and external

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benchmarks to evaluate where you stand.It is very important to make sure you measure activities and costs that are relevant and actionable. Reviewing true productivity metrics in terms of work units and man-hours is better than looking at a percent to sales measure. Unfortunately, the percent measure is dramatically affected by price points and labor market conditions—factors that are usually are out of the operations control. Emphasis should be placed on comparable benchmarks, which can lead to some action steps by the operations group. Examples of metrics commonly found in a warehouse benchmark assessment include total warehouse cost per order/ line/unit, units per man hour (receiving, putaway, replenishment, picking, packing, shipping), outbound shipping costs, orders and net sales per unit area of warehouse space, order turnaround time, order and inventory accuracy, utilization of available space, etc.

What to Assess?

As part of your assessment, you will need to look at four keys of the fulfillment operation: labor, facilities, workflows and systems. Let’s look at each of them.

Labor: Labor is often the most expensive area relating to fulfillment. There are four important areas to consider for the labor portion of your operations assessment. The first two can be easily quantified; the others are more difficult to quantify but should not be ignored.

A. Productivity: Productivity is simply a measure of the number of work units processed in a given amount of time, either by employee or by department. Work units can be orders, calls, shipments, lines, etc. as appropriate for each fulfillment function. Pickers may be measured on the basis of lines or units picked, while packers may be held accountable for cartons packed. The exact metric varies within companies, and between functional areas based on what they deem critical to their particular business and function. B. Cost of labor: The cost of labor can be divided into two major parts. Direct labor (or “touch labor,” as it’s called) is the part of your labor force that is directly involved in physically moving merchandise. It can account for as much as 50 percent of your overall fulfillment costs. Indirect labor (clerical workers, managers, supervisors, administrative staff, security, etc.) makes up about 17 percent of your overall fulfillment costs. Both direct and indirect labor need to be evaluated in the assessment process. The relationship of labor cost and labor productivity is critical to understanding where to place your emphasis. C. Turnover and training: While the effect of turnover rate is difficult to quantify, it is quite real. The turnover rate itself can be derived from a simple calculation, and should not be overlooked. If your work force changes frequently, productivity is likely to suffer, as group after group of new employees work through the learning curve to reach full

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supply chain & logistics competence. In addition, the cost of hiring is also escalating. By contrast, a stable work force that knows the system and processes can continually work toward new efficiencies. You should ask yourself what can be done to reduce the turnover rate in your operations. When you train employees—whether new hires or long-term employees learning new procedures—how efficient is your training process? Are your training procedures documented? Do you have enough training materials and manuals on hand? All of these factors will make a difference in the effectiveness of your training efforts. D. Local labor market: Your local labor pool will also affect productivity and costs in a way that is likewise hard to measure but nevertheless real. A low unemployment rate may mean that in order to hire the quality of worker who can achieve the productivity levels you desire, you will have to pay higher wages. A higher unemployment rate may have the opposite effect. The local economy is largely beyond your control, yet it can have a profound influence on your operations.

Facilities: The fulfillment facility itself needs to be evaluated. Specifically, whether you have enough space, and whether you are using the available space efficiently and cost effectively. The factors that matter here are the cube, costs, seasonality and maintenance. A. The Cube: First, evaluate the storage capacity of the facility. Are you using the whole “cube” (square footage and height) effec-

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tively? Or is there something you can do to optimize stacking height with racking or layout changes. Typically, storage and picking and packing areas together account for 70 to 80 percent of the warehouse space. The focus of cube utilization should be on these areas. Does each department have enough space to function effectively? It is necessary to evaluate both today’s needs and tomorrows planned requirements. One outgrowth of the assessment is the ability to maximize the use of the existing facility or resource before spending money and effort to add new resources. By making sure that existing resources are utilized, any future justifications for expenditures will be valid and generate an accurate Return on Investment (ROI). If you justify expenditures using a sub-optimized current operating base, a false justification can result. B. Costs: Typically, occupancy costs (lease or depreciation costs of building and equipment, utilities, maintenance, taxes and insurance) can add up to a considerable fraction of the fulfillment dollar. Beyond that, there are many ways to map your facility’s costs and compare the results to other companies. Calculating the occupancy cost per order is one way to chart the productivity of the facility. Or you can use the number of orders processed. You should also calculate costs based on conventional versus automated warehouse benchmarks. Comparing your own actual results with industry benchmarks will help you get an idea of whether your costs are in line.

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The difficult aspect of external benchmarking is to ensure the “apples to apples” comparison based on examining companies with like characteristics. Differences in product price points and characteristics can dramatically affect the benchmark metrics. The classic example is the TimexRolex example where the same amount of labor and expense is required to process either watch, while a comparison to the percent to sales or sales per square foot will yield dramatically different results. Make sure you do not reach false conclusions when you perform external benchmarking. C. Seasonality: Your warehouse will operate differently in peak and off-peak seasons. Your assessment should take both scenarios into consideration. In fact, peak season is a good time to assessment; during this period of frenetic activity, you’ll see whether your space is sufficient and whether your systems hold up. Whenever you perform your assessment, keep your peak-season needs in mind: Do you have enough storage capacity? Do your procedures change during peak season? How long does it take to pick, pack and ship an order from in-stock merchandise in peak versus non-peak season? Will your overall productivity numbers change during peak periods? D. Maintenance: What are the overall conditions of the property? Is trash removed promptly? Is it clean? Are there areas of clutter that create bottlenecks? Is the lighting adequate? Is the floor in good condition? Your cost of occupancy goes up as housekeeping standards go down. Conges-

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tion, too-low lighting, floors in poor condition and lack of proper maintenance will slow work and put your work force at risk of costly accidents that drain profits. Dirty conditions can negatively affect product cleanliness, which in turn, can result in costly returns. Dirt and dust can also adversely affect the operation of bar coding equipment, automated conveyances, and mechanical sorting devices. Besides, cleanliness is next to godliness, as the saying goes; the attitude, productivity, morale and retention of your work force will be higher in a tidy workplace. Once you’ve considered the present, think about the future. Is your facility flexible enough to handle changes in your business? Can it accommodate growth? You might not need more space immediately, but it is not a bad idea to have a contingency plan that allows room for growth.

Workflow and Procedures: These areas are

often the easiest in which to make improvements. Most applications of the assessment process to workflow occur in the warehouse. Your goal here is to minimize the number of times a product is handled, and the number of steps the crew has to take to move the product through the facility to be shipped. All processes should be assessed with the viewpoint of determining how much flexibility is provided for future changes. Few processes stay the same over extended time periods. Providing the potential to match future needs is critical. A. Flow charts: Develop two flow charts: one detailing how

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product moves from receiving and returns through replenishment, and the other detailing how customer orders move from pick ticket generation to shipment. These charts will help you identify problems. Create a checklist of items to consider as you trace the movement of goods through the facility. Take note of how the layout helps—or hinders—workflow. What is the “level of interference” in the flow of merchandise and what are its causes? Do departmental workflows contradict each other and impede progress? Are you using the right material handling equipment? Do you have the best storage methods (pallet rack, flow rack, floor or bin storage) for your product? Work paths should be designed to minimize travel time and merchandise movement. Departments should be located logically in relation to one another to minimize travel between them. B. Slotting systems: Your slotting program will determine how efficiently your staff can pick. You can choose from velocity slotting (based on how fast specific SKUs are moving), weight and volume slotting (based on SKUs’ size and heaviness) or other methods. But, your choice of slotting method should not be cast in stone. The ideal slotting system gives you flexibility. Do your primary pick areas have different sizes and types of slots? Are fast-moving items located near the shipping area? Can backorders be cross-docked directly to the packing station? How often do you re-profile your primary pick slots? This should be a dynamic process.

Finally, is it easy to identify merchandise and locations quickly? The goal of slotting systems should be to insure product is available when the picker reaches the pick slot and to manage the number of replenishment of product to the pick slot. Proper slotting is a key to another important warehouse function, replenishment. C. Packaging materials: For some companies, productivity suffers because they forget the obvious: they don’t keep enough materials on hand—right at the work station—for the warehouse crew to do their jobs (e.g., shipping cartons, dunnage, taping, picking tote boxes, labels in receiving area, etc.). Failure to do so will mean that workers lose valuable time gathering materials or waiting for them. D. Quality control: Identifying errors early saves money and should be a part of your process. The cost of an undetected error is typically $25 to $50. Can you identify errors? How frequently do they occur? Where do errors most often take place? What is their cause? How can you reduce the incidence of errors? How easily can you correct them once they are identified (e.g., purchase orders, receiving product identification, pack verification, etc.). Don’t rely just on returns from customers to gauge your accuracy or quality performance. Make sure you are measuring and reporting internal quality checks, and taking action as needed. The assessment should review both incoming quality as well as outgoing quality. Vendor compliance

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supply chain & logistics manuals should be reviewed as part of the assessment.

Systems: Your order management system should provide the necessary functional components to permit easy and accurate entry of orders. Easy and timely access to customer, order, and inventory information should be provided. Your warehouse management system (WMS) should be the brain that guides your entire operation. Does your system give you the functionality and flexibility you need? Does it support your efforts to maximize space and labor efficiency? Is it easy to

track product by SKU, quantity, location and transactions against the location. It should ensure inventory accuracy. B. Bar coding: Bar coding will help you track productivity in two areas: four-walls inventory tracking (receiving, stock putaway, pick, pack and ship), and productivity by individual, activity and/ or department. Paperwork can be dramatically reduced through the use of bar codes. C. Replenishment: Your WMS should control bulk-to-forward movement of goods, through the use of minimum and maximum inventory triggers. It should also monitor demand quantity in

Distribution Center Benchmarks Receiving

150-170 units/hour

Picking

140-180 units/hour

Packing

25-35 boxes/hour

Manifesting

140-160 boxes/hour

Returns

Apparel 15-20 per hour Hard Goods 35-50 per hour

Accuracy

Controllable Pick and Pack Error rate: <0.5%

Inventory accuracy rate

Bar code inventory systems: <0.1%; Conventional inventory 0.5%

Order fill time

24 hours for in stock items

Dock-to-stock Time

8 to 24 hours from dock receiving to stock putaway

make adjustments? How fast and flexible are pick generations? Does your system provide reports that are adequate to monitor performance? Is your system compatible with the use of bar codes? Can it support the growth of the business? In most warehouse operations, the three key areas of concern are slotting, replenishment, and location control. Control these three and you will be well on the way to controlling your warehouse operation. Your basic WMS functionality should include: A. Inventory: Inventory management is your WMS’s most important function. The WMS should

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waves of pick tickets, to make sure sufficient quantities are in the forward pick location. Look for opportunities for cross-docking back orders. D. Pick ticket selection: The WMS should enable you to print and sort pick tickets in a variety of ways, depending on order priorities and resource availability. E. Pack verification: You should be able to scan items to check accuracy before shipping. F. Tracking: Your WMS should track orders throughout the fulfillment process and integrate order status to your customer service department. G. Returns: Your WMS should

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minimize steps for processing returns to keep costs low.

From Assessment to Action

Once you have gathered and analyzed all the information, patterns will emerge and you’ll have a quantifiable picture of what you do well and what needs to be improved. But your assessment isn’t over. The final step—the action plan—is what will make your assessment yield meaningful results. In creating your plan, remember the old saying that Rome was not built in a day. Focus on areas that will yield the greatest benefit. Before you tally up a long list of changes that will leave your team feeling overwhelmed, recall that Pareto’s 80/20 Law usually works. Where can you get the biggest improvements from the smallest number of changes? Finally, write your action plan so that it provides for continual improvements over time. It should include detail action steps, assignment of accountability, and expected completion dates. Manageable changes introduced gradually will be more effective and more readily accepted by your workforce than one massive overhaul. Gradual change helps make continual improvement a part of your corporate culture. Make sure any plans you develop include clear action steps, accountabilities, and timelines. Finally, don’t assume that one operational assessment is enough. Comprehensive assessments should be conducted on an ongoing basis to stay in touch with customer needs, accommodate your company’s growth, keep pace with your competition’s improvements— and to keep up with whatever promises your marketing department is dreaming up right now. Curt Barry is president of F. Curtis Barry & Company, a fulfillment consulting firm for catalog, e-commerce, and retail businesses. He can be reached at cbarry@fcbco.com.

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information technology

COMPANY Voltas Ltd. Established 1954

Products Heating, Ventilation, Air conditioning and Refrigeration

Asmita Junnarkar

Photograph by: Jiten Gandhi

Headquarters Mumbai, India

CIO, Voltas, integrated the entire HR operations across different locations and platforms.

Happy = Happy Employees

enterprise

Voltas eliminated a significant fraction of employee HR issues by consolidating multiple HR systems into a single SAP instance across locations. This not only brought in greater transparency, but also improved employee satisfaction. by varun aggarwal

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mployee satisfaction is one of the biggest goals of any HR department. However, much of the HR department’s time is spent in data entry and validation, leaving little room for employee engagement and strategic initiative planning. Similar was the situation at Voltas, where a central HR team had to manage payroll, appraisals and vacation records by fetching data from different databases for more than eleven thousand employees. Since, overseas locations had their own payroll system for each country, it was hard for the management to obtain a central view of the entire organisation. Distributed systems led to inconsistent databases, wastage of time in managing everything and loss of productivity for the HR department. Moreover, the employees had to courier their reimbursement claims, and follow up with the HR department to ensure it was received. When there was an error in the forms filled in by the employee, multiple iterations were required to fix it. To solve all these issues, Voltas decided to centralise the entire HR system on a single platform, which would contain every detail of the employee—right from his joining to exit.

Selecting the Platform

Voltas was an early adopter of SAP software. Its first SAP implementation was done in 2003-04. Over the following years, other divisions also added SAP solutions, increasing the SAP software footprint. When the company wanted a new HR solution to help improve its employees’ quality of life at work and address the challenges of exponential growth, it looked at SAP. The SAP ERP Human Capital Management (HCM) solution was finally selected to transform the corporate HR function. The goal was to streamline the IT landscape by moving to a single system that would provide end-to-end automation of the entire employee lifecycle from hire to retire.

Key Challenges ► Replace manual processes and multiple stand-alone applications ► Achieve an integrated IT platform ► Standardize processes in HR and reduce staffing cost ► Heighten transparency across the organization ► Improve employee satisfaction by leveraging self-service technology ► Adopt a common database for all MIS

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Financial and Strategic Benefits ► Greater employee satisfaction with realtime access to HR services and information via a self-service portal ► Greater transparency for decision making ► Better consistency achieved by centralizing and standardizing HR guidelines and deployment of HR policies ► Reduced process time in the areas of recruitment, hiring/separation, performance management, and payroll ► Single source of data for management decisions

In addition, Voltas wanted to improve employee satisfaction by offering self-service. “Before SAP ERP HCM, I used to personally spend at least one day per week resolving HCM data-related issues. Now, I hardly spend any time on such issues,” remarks Asmita Junnarkar, chief information officer at Voltas. With SAP ERP HCM, Voltas was able to phase out its multiple IT systems. By standardising all the processes of human resources—including time management, training, performance management, expense management, and recruitment—the company was able to improve productivity and reduce staffing costs.

Transforming the HR Department

Voltas first impolemented SAP ERP HCM for its Indian operations. The Indian implementation went live in six months, after which it was rolled out in UAE and Qatar in four months. As Swapnil Navalkar, General Manager—Corporate HR, points out, “SAP ERP HCM has brought all the HR processes across India and overseas into one system. This makes it easier for us to deploy policies and carry out transactions, creating greater transparency and reducing the cycle time for processing information and transactions.” Junnarkar adds, “Earlier, any policy change meant changes in multiple systems and checking data consistency across these systems. This has become so much simpler and faster today.” HR self-services have been a hit among the employees. Today, self-service portals provide them with real-time access to HR data. Managers can now approve training and leave requests through e-mails with the click of a button. The platform also includes data validation so that the

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information technology

“Earlier, any policy change meant changes in multiple systems and checking data consistency across these systems. This has become so much simpler and faster today.” Asmita Junnarkar CIO, Voltas Ltd.

employee is reminded about incorrect data entries; this reduces the time that would otherwise be consumed in clarifications with the accounts and HR departments. This has lead to increased employee satisfaction at Voltas. The IT team at Voltas also built two custom applications on the SAP ERP HCM platform for employees: Transit Houses: Voltas owns multiple guest houses that can be used by the employees while in transit. However, one needed to call and check for availability, before booking the guest house. Now, a new online booking system lets the employee know about the availability of the transit house, and book online. Critical Incident Diary: Annual appraisals often take into account the performance of an employee only in the past few months because of lack of documentation on key achievements and failures.

“To bridge this gap, we built an online app within the SAP HCM where employees and supervisors can document their own and their subordinate’s key achievements and failures when they are observed. “The system automatically retrieves all such incidents during the time of appraisals making it easier for the management to take informed decisions, and eliminate any room for conflict,” explains Junnarkar.

Way Forward

Voltas is expanding its SAP software footprint by implementing SAP solutions to cover learning management, employee onboarding and e-separation. The company is also rolling out SAP ERP HCM to its subsidiaries and joint ventures, starting with Universal Comfort Products and Rohini Industrial Electricals. Voltas also plans to use SAP BusinessObjects business intelligence solutions to create role-based dashboards for Key Performance Impact senior management. Navalkar Indicator explains, “Our vision for Monthly payroll processing time From 4 hours to 30 minutes the future is to have reports available on the desktop in Increase in employees served From 6.9 HR staff per 1,000 employees to 4.5 the form of dashboards.” per HR team member HR staff per 1,000 employees Voltas is currently in the pro Improvement in internal cess of identifying the paramcustomer satisfaction index for From 2.64 to 3.16 on scale of 4 eters that should be included employee self-service in each dashboard, since they Time required to process leaves From 2 hours to 1 minute will vary from department to Time to generate HR-related department and between dif Faster delivery with lower turnaround time reports ferent job roles.

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IT Factor

The

management & strategy

enovo’s 2005 acquisition of IBM’s PC operation set up a far-reaching business challenge—how to create a new global operating model that would meet two critical goals. The first was effectively managing the company’s business diversity: a range of customers in more than 160 countries, two distinct product brands, and multiple marketing models. The second was how to meet senior management’s desire for greater standardization and efficiency by consolidating supply chains and financial management and coordinating product sales more tightly. For Lenovo’s IT organization, charting how to support the new operating model was daunting. Inherited legacy IT systems had to be replaced by an enterprise-resource-planning (ERP) system that could foster standardized processes yet remain flexible enough to handle important variations in local markets. Rolling out a global IT system is an enormous challenge that many CIOs have taken on but few have managed to pull off. Xiaoyan Wang became Lenovo’s CIO in 2009 to lead the company’s global transformation. She understood that to introduce it on time and on budget, she would have to prioritize tasks and wouldn’t be able to accommodate every business demand. Her slogans became

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In a global operating model, IT must deliver the efficiencies of standardization but respect local business needs. by kevin wei wang

“Schedule is king” and “100 percent IT solutions aren’t possible.” Xiaoyan Wang, describes the challenges in transforming the company’s business.

What were Lenovo’s strategic goals in launching this transformation? Xiaoyan Wang: First of all, we needed to migrate from multiple sets of legacy IT systems onto one strategic platform using SAP. In the meantime, we wanted to provide the IT solutions to enable the company’s global operating model, which offered new business capabilities, such as management of global accounts and electronic transactions with our channel partners. What were the key challenges Lenovo faced during this ambitious transformation? Xiaoyan Wang: It was challenging in a number of ways. The legacy IT systems we inherited had high maintenance costs and could no longer support new business capabilities after running for more than 20 years. So there was an urgency to migrate from them. At the same time, we had no system ready that could support the new operating model. Our SAP system in China was a good base, but

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it needed to be enhanced so it could support our diversified customer base and our global backend operations. The PC market, of course, is very dynamic, with razor-thin profits. So we have to link our IT transformation road map closely with business priorities and adjust when necessary. Finally, our people were from different cultures and were just learning to work with each other. Most of us were new to a transformation on this global scale.

in the US our business relies mainly on direct sales to business customers, which have very specific requirements on how they want to make PC purchases. So our IT systems need to have the flexibility to deal with local requirements, such as opportunity management and pricing approvals. To do this, we chose to deploy one instance of SAP to support the global operating model while allowing some justified differentiation that is needed to operate in different geographies.

One of the big stumbling blocks to implementing ERP systems globally is that they are either too centralized, and thus diluted in terms of local impact, or too local, and thus very complex. How have you approached this problem? Xiaoyan Wang: The key has been balancing the demands of operations such as finance and the supply chain that can be globally standardized with those of areas such as sales and marketing, which have specific local requirements. For example, the PC industry is global, with commoditization of products and pressure on margins. So you need to leverage the global scale of manufacturing and supply chains. Similarly, sourcing components and manufacturing in Asia while delivering to customers in the US means centralizing information systems to get accurate product cost and supply chain information when executing global order transactions. At the same time, we need to acknowledge that there are still regional differences in our markets, involving requirements for customer interactions, go-to-market structures, and pricing practices. For instance, we have well-established business practices for working with channels in China, while

How did the IT leadership decide on the road map and timetable? Xiaoyan Wang: When we defined our road map, we found there really wasnâ&#x20AC;&#x2122;t a highly relevant industry case for us to follow. We learned that it normally takes five to seven years to replace a global IT system of a similar scale, even without the complexity of postmerger business integration that we have faced. But we chose that time frame as a target. The path we chose started with an upgrade of our China IT platform to make it a solid foundation to support the overall global operating model. We piloted the system template for factories with our Shanghai plant, and used a pilot in Canada to create the templates for sales. Then we moved on to areas that required global standardized operations, such as the supply chain and finance, separating them from their legacy systems. For sales and marketing areas where local differentiation was important, we prioritized emerging market countries, where requirements were lower and there was a business need to move urgently. Our next push will be in mature markets, where complexity is higher and thereâ&#x20AC;&#x2122;s a demand for IT capabilities that support more sophisticated types of sales interactions.

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- technology management for decision-makers | august 2011

management & strategy We agreed to do all of this within the boundaries of IT funding constraints, knowing we would have to deal with the tough cycles of the PC market. So we had to slow down for three quarters during the 2008–09 recession. Was there pushback from businesses as you rolled out the program? How did you manage to control the scope? Xiaoyan Wang: It’s true that scope control is essential. As a result, I have established some key principles for achieving business–IT alignment. The first is that we are not providing a 100 percent solution—we only target delivery of the critical capabilities for running the business. Enhancements can be done later. “Schedule is king” is another principle. We have to do whatever we can to keep our schedule commitments. Everyone in the business has built their plans around our release dates for the new IT systems. If we change schedule commitments for one business, that will cause disruptions with significant consequences. It’s easy to get bogged down by complexities in transformations of this scale. So you need to have a top-down view of how the business actually runs in order to navigate all the complexities and to make fact-based decisions on trade-offs affecting businesses and IT implementation. CIOs need to have a clear understanding of the business model, as well as a deep understanding of the legacy systems they are phasing out and the multitude of IT cost drivers that come into play. And of course, on

top of this, you have to earn the trust of business executives to push the transformation forward. Tell us more about how you influenced the appetite for change among Lenovo’s business leaders. Xiaoyan Wang: You need to create a top-down alignment on the necessity of the changes. Senior business executives must acknowledge the urgency of the changes and act as the sponsors to drive them through their organizations. For example, in our transformation journey, our finance–CFO function was a strong sponsor of consolidation of the financial operating model and worked with IT on two rounds of dry runs when we changed our ledger systems. You also need to plan and drive the business change management effort well before you start implementing any new IT. Customer migration and user behavior changes—things like placing an order on our new online e-commerce tool—require a long lead time. So IT needs to articulate, in advance, the major things that will change and to plan backward to be sure businesses can execute their change-management activities and stay on the agreed-to path. How much of the culture did you need to change to accomplish all of this? Xiaoyan Wang: Before the acquisition, our leadership and management teams were predominantly Chinese. We had an almost military-style, very efficient execution. However, we realized that would not work after globalizing. In running a global busi-

Xiaoyan Wang Vital Statistics Born 1962, in Rongcheng, Shandong, China Education Graduated with an MA in mechanical technology and automation in 1988 from Beijing Institute of Technology Earned an executive MBA in 2004 from China Europe International Business School (CEIBS)

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Career highlights Lenovo (1994–present) • Senior vice president and CIO (2009–present) • Various roles, including chief administrative officer for a range of corporate functions and technicalservice organizations (1994–2009)

ing, technical services, and project management Fast facts Honored by the Chinese Academy of Science as one of its outstanding women in 1999 Trustee of the CEIBS Education Charity organization, which supports education for underprivileged children

Prior to Lenovo, Ms. Wang worked in various areas, including R&D engineer-

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“CIOs need to have a clear understanding of the business model, as well as a deep understanding of the legacy systems they are phasing out and the multitude of IT cost drivers that come into play.” ness, we needed to build a leadership team with various cultural backgrounds and different prior experiences. The result was that we learned to be more patient in order to build buy-in for decisions and to be more open-minded in adopting a different leadership and communication styles. Since your base was legacy systems, did you have the right people with the right skill levels for the new environment? Xiaoyan Wang: As far as capability building goes, we clearly have the advantage of being based in China, where we have a good-quality and great supply of IT talent. However, our local team lacked the experience of managing a large global transformation program and supporting IT systems for a global base of users. So our people strategy has been to gradually build the internal IT team. At the beginning, we needed external IT professionals to augment capabilities in areas like architecture, design, and testing. In the meantime, our internal teams got on-the-job training during the projects. As we have moved into the later stages, our internal team scaled up to take more “ownership” in the projects and became skilled in managing programs on a global scale. Our development costs went down accordingly. Have you seen any payoff or benefits yet? Xiaoyan Wang: Since 2009, we have had three major releases of the new system, and they have been on schedule and on budget. We have launched standardized global operations for finance and the supply chain and successfully migrated all emerging markets onto the strategic platforms, leaving the US and Western Europe as the last two regions to be migrated, within the next 24 months. Despite the ongoing transformation programs and the spending they require, overall IT spending at the company as a percentage of revenue has dropped from 2.8 percent in 2008 to 1.3 to 1.4 percent in 2010, lower than the PC industry average of 1.5 to 2 percent.

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Can every CIO do this? What are some lessons from your playbook? Xiaoyan Wang: To do a major transformation, you need a deep understanding of your industry characteristics, your company’s strategic priorities, and the business operating model. You also need to have an understanding of the capabilities and constraints of the legacy systems you currently have, and the new systems you are targeting. Finally, you need to be decisive. As CIO, you are the architect and executive of the transformation. But remember that you’ll need a lot of support from other business executives. Kevin Wei Wang (Kevin_Wei_Wang@McKinsey.com) is a principal in McKinsey’s Shanghai office. This article was originally published in Mckinsey on Business Technology Summer 2011, and is also available on the The McKinsey Quarterly Web site, www.mckinseyquarterly.com. Copyright (c) 2011 McKinsey & Company. All rights reserved. Reprinted by permission.

Advertiser Index CHEP.......................................................................24 – A Diesel .................................................................9, 40-43 EFD.............................................................................. 27 GW Precision................................................................ BC HAAS.............................................................................. 5 Havell’s India................................................................ 11 KMT.............................................................................. 13 Mitsubishi...................................................................... 3 National Instrument......................................................IFC Omron.......................................................................... 64 Premium Transmission...................................................17 S & T Engineers............................................................. 19 Schneider....................................................................... 7 Siemens....................................................................... 15 TaeguTec...................................................................... IBC

industry 2.0

- technology management for decision-makers | august 2011

management & strategy

hometown

heroes

Exciting companies are not always in the big metros. Away from the bright lights and choked roads of the big cities, entrepreneurship is being polished to a shine by savvy manufacturers working their home locations to a formidable business advantage. And their goal is to conquer the world with products made in India. by meenakshi kumar & sunaina sehgal

Tex Savvy in Karur S. Susindran has woven a multinational success story with his textile business from a small town in Tamil Nadu. And, he’s not stopping till he reaches the `1000 crore milestone

he next time you stop by a posh home furnishing shop on your trip abroad, take a closer look. Chances are that the beautiful rug you are eyeing was woven at a textile mill in the small south Indian town of Karur. What’s more, it’s likely that it has been spun at the looms of Sabare International. Karur houses a multi-billion dollar textile industry. Here, the clacking noise of looms almost serves as a background score. So it’s easy for Sabare to get lost in the crowd. But S. Susindran, the man behind this 200-crore company, has woven a beautiful fabric of success, patterned richly with technology, quality and smart thinking. Sabare counts Walmart, JC Penney and Target, among its clients today. Susindran says thinking out-of-the-box wasn’t a luxury. It was the only way to succeed. So, after quitting his job as a chartered accountant in the early 1990s, the young man set out to do things differently. Growing up in Karur, he knew nothing

august 2011 | industry 2.0

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hummed better than a textile mill. He got to work and set up the basics of a working mill in 1994. Once that was done, he began tweaking his business proposition. Susindran didn’t want to be just another supplier; he wanted to stand out. “I didn’t want to just export. I wanted to be a small multinational company even then,” recalls the 45-year-old. Plus, there was no better way to catch the attention of the international brands than by being close to them. “I started by setting up a small office in the US. It was a big risk but I knew I had to do it”. The gamble paid off. Susindran managed to convince Walmart to give him a small order to start with. Susindran proved to Walmart that he could increase their margins with his total retail solution. In this model, Sabare would take orders from retailers but instead of just delivering stock, he would help them out with management of inventory and supply directly to individual outlets. Walmart was impressed with his confidence and his ability to deliver what he promised. He soon landed bigger orders from the global giant. This value-add he gave his clients helped him pull away from the competition. In the past few years, Sabare has expanded its international presence and now does considerable business with retailers in Canada, Germany, Italy, France and Mexico. To cope with rising demand, manufacturing operations have spread to Panipat, Noida and Alleppey. But there’s no time for celebration till he reaches the `1,000 crore milestone, Susindran says confidently. He might have started out at home but this ambitious entrepreneur knows that to be in the big league, he needs to have a toe in the mega cities. “I’ve always looked out. The biggest hurdle in a small town is lack of talent. To be successful in business, you need great people. That’s more easily available in the cities.” You have to think globally and think big if you want to offer good products, he adds. Of course, like any entrepreneurial journey, his had several scary days too. Soon after he started out, Susindran faced his biggest setback when a US client went bankrupt. In the red, he knew he had to borrow to keep his business afloat. Also, he had to quickly shift focus to other clients. Did he ever think of giving up? “It was a terrible phase but fortunately I never got to the point when I thought of going back to a job,” he laughs. More recently, the recession tested him again. Sabare’s revenues tumbled from `378 to `250 crore within months, but Susindran hunkered down through the worst times. Today, that storm has passed and his ship is at full sail again. “My passion has kept me going. I don’t believe in giving up.”

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Say Cheese!

From plain milk to high-quality cheese, Devendra Shah at Parag Milk Foods is churning out a smooth success story in the quiet village of Manchar

he rustic setting of Manchar, a charming village that sits on a pristine stretch of the Western Ghats, has all the trappings of a weekend getaway. With the hills beautifying the landscape and green fields dotted with cows, it’s a surefire tourist destination. Yet, that’s not why India is talking about Manchar. A dairy-rich belt, Manchar is also the birthplace of Parag Milk Foods, a 19-year-old dairy company that has audaciously put Indian-made cheese on the world map. For those of you who still prefer Swiss-made cheese, bite into these facts. Parag Milk Foods is no new player in the game. The 628-crore company

industry 2.0

- technology management for decision-makers | august 2011

management & strategy has been exporting its Gowardhan brand of butter, milk powder and oil to nearly 47 countries since 2000. And now with its range of cheese products, sold under the brand “Go”, the company exports cheese to 15 countries. The company’s chairman, Devendra Shah, who has single-handedly steered his dream project into a global brand, says big-hitting global recognition was always his aim. The fire was ignited after watching a victorious Ravi Shastri drive around in his new Audi after India won the Benson & Hedges World Cricket Championship. Since that day in 1985, Shah knew he too wanted to be a “champion of champions”. He traces his interest in dairy and farming to his family which had been working with farmers for almost three decades. Back in the eighties and early nineties, the government was the sole agency collecting milk from farmers. Purchases would be limited, and the government often restricted collec-

days were run by co-operatives, Shah opted for private ownership. In 1998, he forayed into milk products under the Gowardhan brand. Today, his dairy farm boasts of over 3,000 cows, and sources milk from 10,000 farmers. In fact, Parag proudly claims it is India’s only all-cow dairy. Even his bold decision to manufacture cheese came from his characteristic derring-do. “We took this step at a time when the total cheese demand in the country was around 25 metric tonnes per day. We went ahead with plans to build cheese manufacturing capacity of 40 metric tonnes per day, which could be scaled up to 100 metric tonnes,” he says. He dreams of becoming the largest cheese player in the country. Over the last couple of years, he has invested nearly 200 crore in setting up a new cheese plant and processing facility at Palamner, a small town in

tion drives on what was then called “milk holidays”. Not only did large quantities of milk go to waste, farmers lost significant income too. Shah was drawn to figure out a solution to help the farmers. “As I started doing the business, I began to understand the unlimited potential of a dairy business in this country,” Shah recalls. He set up Parag Milk Foods in 1992 with an initial milk collection of 20,000 litres per day, and an investment of 1 crore. But setting the business into a mould wasn’t easy. First off, farmers had to be convinced to sell their milk to him. Also, he had to scope out reliable markets, else in the absence of proper storage facilities a lot of milk would have to be thrown away. “We also found it tough to get investment for building the plant. I had to sell some personal valuables to get the plant running.” Still, the roughand-tumble of the dairy business only added to his determination. Even though most dairies those

Andhra Pradesh. This is in addition to the existing facility at Manchar, near Pune. Till four years ago, despite the success of the brand, Shah chose to stay put at Manchar. He has believed all along that by being close to farmers, he can ensure that the best quality of milk is procured. “That’s the most important aspect of the dairy business. You have to be close to farmers to instill trust in them,” says Shah, who loves spending time with his cows. But a fast-growing business and the need to focus on brand building made opening a Mumbai office inevitable. The move has yielded bumper results. In addition to the west India markets where they reign, Gowardhan products are now available across the country. With this spread, Shah is confident of breaching 1,000 crore within a year. By 2020, he’ll multiply 10 times over, he claims, with a targeted 10,000 crore turnover. Still, what he most wants is for hardcore Swiss-cheese loyalists to give his brand a “Go”.

Set Well: Manchar

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Small Town, Big Heart Kiron Chopra’s business and heart are both in Lucknow. Initially, working from home did make international partnerships challenging. But those troubles have been overcome. Chopra’s rubber products company today supplies to iconic auto manufacturers like Aston Martin

s the summer heat was settling down in the dusty lanes of Lucknow last September, Kiron Chopra, chairman and managing director of Chopra Retec Rubber Products Limited (CRRPL), got an unusual call. On the other end was the UK head office of luxury carmaker Aston Martin, and they got straight to the point. The company wanted to know whether Chopra, whose firm supplies exhaust suspension parts, could manufacture 300 pieces of a particular suspension hangar for one of its most ambitious models—the One-77, a limited edition super-car. Aston Martin, Chopra learnt, was in a sticky spot. The One-77 had to be launched and they hadn’t been able to find any marquee suppliers who could deliver the parts they needed in such a small quantity. Also, they needed the parts immediately. If Chopra was keen to get the order, he would have to send Aston Martin a prototype within a week. Chopra knew this tiny order could accelerate him into another league. He worked with his 100-member team and despatched the first prototype in four days flat. Aston Martin was impressed with the speed and quality, and CRRPL secured the order. Since then, not only has the deal made a global car giant take notice of the manufacturing prowess of an Indian company in a Tier II city, it has also vindicated Chopra’s belief that he could reach for the stars right from home. “All my employees are locals. I want to be loyal to Lucknow. Many of my people have been with us since the company began.

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That belonging cannot be replaced. I want to see them grow and prosper,” says Chopra. CRRPL, earlier known as Autoflex, was established as a trading business in the seventies by Chopra’s father, J.C. Chopra. Growing up, Chopra knew he could engineer his ambitious dreams from rubber. So, he opted for a course in Rubber Technology from the UK-based National College of Rubber Technology. In 1975, at the age of 21, Chopra joined his family business. Autoflex was then supplying moulded rubber automotive parts such as rings, bushes, bellows and seals to Ashok Leyland, XLO India, API, Mico, Simpsons and later Scooters India. But the firm seemed to be landlocked by its small town reach, and a nascent Indian automobile industry. “In those days, there were only two brands of passenger cars available in India—Fiat and the Ambassador—and that too in small numbers. We

industry 2.0

- technology management for decision-makers | august 2011

management & strategy had to look at international markets to add volumes,” recalls Chopra, who began exporting parts. In 1978, Chopra participated in the Automechanika, an international trade fair for the automobile sector, organised in Frankfurt, Germany. It was here that their small outlet caught the attention of EEP (now Retec), a leading German distribution firm. The company, which had a joint venture with a Sri Lankan firm, had been scouting for a more adept, creative and versatile company to manufacture and export better-quality exhaust rubber hangers. Autoflex seemed to be a right-fit. But, they asked for a massive technology ramp up. “Ours was an ancient, hand-dominated pro-

Raring To Go Chopra’s company helped Aston Martin launch the One77 car on time. Priced at $2 million, this advanced super-sports model is the company’s most expensive car yet

Chopra supplied 77 suspension hangers at around `3,500 a piece

The small order is helping them add to their list of 25 global clients

CRRPL manufactures 6 million parts a year. Their next bolt—20 million parts

august 2011 | industry 2.0

- technology management for decision-makers

cess. EEP forced us to improvise and add technology. They were willing to add volumes if we could keep pace,” says Chopra. But, this wasn’t easy. The lack of industrial infrastructure—and limited modes of communication—in Lucknow posed several difficulties. “We couldn’t even get the right kind of nuts and bolts,” recalls Chopra. Sourcing them from Delhi added to the input cost. Getting the products out was another hassle. “Since there were no dry ports, we had to send off the goods to Mumbai first. This would take two weeks, and then another month for the shipment to reach the client.” Things got especially difficult as the rupee gathered strength. When the dollar became worth 13, EEP and other firms began pulling out of India. Overnight, Chopra’s fortunes plummeted. He took the blow but didn’t succumb to it. In fact, he continued his relationship with EEP. “Our relationship became stronger over the years,” says Chopra. That’s the small town thinking at work, he adds, of valuing relationships beyond their business utility. When the rupee devalued in the nineties, all his clients came back. In 1996, Chopra signed a joint venture agreement with Retec and renamed his firm. Business grew exponentially. Retec was a market leader in Europe and was also rapidly expanding in other global markets. On his part, Chopra worked his limitations into an advantage to speed up his business. When the big car companies started going to China en masse, Chopra quickly figured out that his quality matched those of Chinese manufacturers. Plus, he could also offer his clients the advantages of being small and nimble. “The Chinese had zero flexibility with regard to product lines, delivery and minimum orders. They won’t take orders for less than 5,000-10,000 pieces. I knew I could make small quantities work,” he says wisely. The strategy helped him wean away many global brands from the Chinese market. “Nobody cares where you’re from, as long as you can cater to their needs in the best possible way,” Chopra asserts confidently. Clearly, that’s what got Aston Martin dialling a Lucknow number in September of 2009. Ever since, his company’s been on a song. Another windfall deal followed soon after—a 4.5 crore contract for exhaust suspension parts with the US-based Tenneco Corporation. He is now looking ahead to trebling his annual turnover of 10 crore in the next two years. There is no limit to a vision anywhere in the world. For Kiron Chopra the horizon is only limited by his dreams.

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bookshelf Handbook for Supply Chain Risk Management By Omera Khan & George Zsidisin Price: $79.95 Hardcover: 320 pages Publisher: J. Ross Publishing

Failure to manage supply chain risk effectively can have a significant negative impact on an organization. This book has a comprehensive coverage of supply chain disruptions and risks. It features more than 30 international authors to provide a set of best practices, processes, tools and techniques, supported by cases and illustrative examples, that can be adopted to proactively evaluate, manage, or mitigate risk in their supply chains and to improve overall business performance.

Essentials of Supply Chain Management By Michael H. Hugos Price: $39.95 Paperback: 352 pages Publisher: Wiley; 3rd edition

Presenting the core concepts and techniques of supply chain management in a clear, concise and easily readable style, the third edition of the book outlines the most crucial tenets and concepts of supply chain management. The new edition provides the tools, guidance, and examples to help maximize business performance and create competitive advantage. It introduces new material on the latest technology and practices available for supply chain management, and features new cases and executive interviews.

Design, Analysis and Optimization of Supply Chains By William R. Killingswort Price: $29.95 Paperback: 200 pages Publisher: Business Expert Press

Intended for an audience of graduate students, and mid-to upper level

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government and corporate managers, this book examines the complexity of the types of organizations that comprise a modern supply chain, the problems that arise as a result of this complexity, and the solutions and analytical approaches available to managers that can help resolve these real world problems and dilemmas. This book incorporates real-world examples and cases, representing actual complex enterprise systems including firms involved and with long lead times, to illustrate the multi-faceted activities occurring within a modern supply chain and the challenges they pose to managers. Simulation and optimization techniques are introduced and used to develop strategies for improved performance.

Green Supply Chain Management By Hsiao-Fan Wang & Surendra Gupta Price: $130.00 Hardcover: 320 pages Publisher: McGraw-Hill Professional

This detailed resource provides a stage-by-stage production methodology within the life cycle of a product to ensure environmental compliance and economic goals. After covering basic concepts and background, this tome looks at green engineering technologies, green value chain management, and green information management systems. The book also has information on quantifying the environmental impact on supply chains, and identifying opportunities for making improvements.

Supply Chain Innovation By Pietro Evangelista, Alan McKinnon, Edward Sweeney & Emilio Esposito Price: $180.00 Hardcover: 350 pages Publisher: IGI Global

This book focuses on supply chain integration from both strategic and operational perspectives, and analyzes the impact of information technology-related innovation in supply chain and logistics service industries. It also looks at how environmental innovation affects logistical decisions throughout the supply chain, and the strategies employed in managing logistics-related environmental impacts. Finally, the book explores theoretical and practical implications of innovation in the management of supply systems.

industry 2.0

- technology management for decision-makers | august 2011

product update Light Tower

Connector System

amtec has introduced a new right-angle Q Rate connector system suitable for micro backplane and other high speed applications where space is limited. The ground/ power plane of the QRM8-RA and QRF8-RA Series allows contacts to be placed close together without degrading signal performance. The result is a slim 5 mm body design that minimizes PCB real estate. The smooth, broad, milled surface of the Edge Rate contacts increases wear life, and minimizes the effects of broadside coupling to decrease crosstalk for superior signal integrity performance and impedance control. This contact system is also robust when mating and unmating, and features a long contact wipe, which improves the mating angle tolerance. The 0.8 mm pitch right-angle system is dual-row, and is available in 1, 2 or 3 banks with up to 78 positions per row. Optional guide posts for blind mating are also available. The space-saving Q Rate connector is also available in a vertical orientation with stack heights from 7mm to 14mm.

arson Electronics has announced the EPL-LM-36-4-MH light tower for providing illumination in large hazardous areas. Capable of being extended to 36 feet in total height, this light tower allows operators to quickly and easily deploy four 1,000 watt metal halide lamps with minimal effort. The extendable tower portion of these units are constructed of square steel tubing for high strength, and can be extended to a maximum of 36 feet during light deployment and collapsed to 16 feet for transport. Designed to withstand demanding working conditions and the rigors of transport, these light towers are fitted with metal halide fixtures to produce 440,000 lumens of light in a wide flood pattern for maximum coverage of the work area. Elevation of these light towers is accomplished through the included 1,000 lbs hand winch. The most commonly used configuration for these towers includes mounting them to trailers or other stable surfaces. Consequently, the towers are designed with a 12 inch square, Â˝ inch thick mounting base-plate drilled to accept four mounting bolts. Larson Electronics Tel: +1-903-4983363 Website: www.magnalight.com

Wireless Sensor

mega has designed a new infrared sensor with a wireless transmitter. The unit can transmit process temperature, ambient temperature, signal strength, and battery status. It features an adjustable emissivity ranging from 0.10 to 1.0, and one receiver can work with up to 48 transmitters. The low power operation and sleep mode feature allows for a long battery life. The package ships with free software that converts a PC into a multi-channel chart recorder or data logger.

Samtec Inc. Tel:+1-800-7268329 Website: www.samtec.com

Voltage Regulator

Omega Engineering Inc. Tel:+1-203-3591660 Website: www.omega.com

ricsson has launched Power Modules 3E series BMR462, digital point-of-load (POL) regulators. The device offers wide range of control and monitoring functions, enabling designers to configure their power systems to dynamically minimize energy consumption under varying load conditions. This simplifies thermal management requirements and reduces CO2 emissions. Although primarily designed to meet the needs of information communications technology (ICT) applications, the BMR462 can also be used as a power conversion device for industrial applications and automation systems. The unit features integral signaling for remote control, current sharing, voltage tracking, voltage margining and remote sense. Voltage setting is achieved using pin strapping, or via the PMBus. The device has comprehensive circuit protection built in. The configuration of the power system is simplified through Ericssonâ&#x20AC;&#x2122;s PMBus graphical user interface. Ericsson Inc. Tel: +1- 972-5830000 Website: www.ericsson.com

august 2011 | industry 2.0

Conveyor Cleaner

uperior Industries, a manufacturer of conveyor systems and components, has a new primary and secondary belt cleaning system called Exterra SFL Dual Belt Cleaner that share the same, common mounting point. With one pole, maintenance workers can avoid adding to their conveyorâ&#x20AC;&#x2122;s structure to accommodate secondary cleaners. Another key feature is the tensioning system; the design creates a pressure that is set once, for the life of the blade, during installation. The belt cleaner is designed to eliminate material carry-back from the top cover of conveyor belting after it passes over the head pulley. When left unchecked, carry-back causes material buildup on idlers, pulleys and other components leading to mis-tracking or belt damage. The cleaner is designed with segmented blades to withstand vibration and impact from belt splices during operation. Superior Industries Tel :+1-320-5893876 Website: www.superior-ind.com

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Parts Washer

raymills has launched TL Series Liftkleen semi-automatic, immersion parts washer, which offers operating capabilities and features commonly only found in high end equipment. The series features heavy gauge metal construction with durable powder coated exteriors. For water-based (aqueous) applications, the series adds stainless steel construction, an insulated tank, and thermostatically adjustable heat up to 180F. Powerful electro-pneumatic lift mechanisms provide 300 lbs of weight capacity with adjustable stroke and speed settings. Generous platform and tank dimensions accommodate large parts up to 47”L x 18”W x 24”H. The automatic open-and-close lid and deluxe, filtered detail brush and recirculation pump allow spot cleaning of difficult to reach areas, and add to the functionality of this multi-use equipment.

Packer

rones has announced its new Evolite packer, comprising a container infeed module and a container strapping module, which provide the technology required for handling the new LitePac packaging design. In the infeed module, the containers are divided into two continuous lane flows. Four strapping units then create the LitePac packs in the container strapping module. The machine also meets energyefficiency and eco-compatibility norms.

Graymills Corp. Tel:+1-773-4774100 Website: www.graymills.com

Welding Electrode

elect-Arc has introduced a self-shielded, flux cored stainless steel electrode, SelectAlloy 316LT0-3, which is designed to resist creep and intergranular corrosion. The material is composed of a nominal weld metal composition of 19 per cent chromium, 12.5 per cent nickel, 2.5 per cent molybdenum and a maximum carbon content of 0.03 per cent. The presence of molybdenum improves resistance to pitting and delivers increased creep resistance. The low carbon content minimizes carbide precipitation and makes it more resistant to intergranular corrosion. The electrode produces a flat, well washed bead and enables a globular arc transfer with low spatter. Suitable for surfacing or welding over gaps, this austenitic electrode can be used to weld Type 316 stainless steel as well as for the cladding of carbon steels.

Krones AG Tel:+1- 414-4094585 Website: www.kronesusa.com

Select-Arc Tel:+1- 800-3415215 Website: www.select-arc.com

Ladle Temperature Monitor

Telecom Testing Aids

lectro Standards Laboratories has introduced a cable kit with two mini-grab test hooks. This enables the user to “spring hook” onto hard-to-reach circuit points. The cable consists of a miniature 3-conductor nickel phone plug connected to two mini-grab test hooks having one red and one black body. The cable is 26 AWG, shielded, twisted pair with high-flex PVC jacket. The kit includes a selection of telephone and telecom patch cables for compatibility with standard telephone systems; data and voice test equipment, and interconnect devices. Types of cables in the kit include: bantam plug/bantam plug; bantam plug/two telco piercing alligator clips; WE-310 plug/bantam plug; WE-310 plug/two telco piercing alligator clips; DB-15 female/two bantam plugs T-1; DB-15 male/two bantam plugs, T1; and RJ-48 plug/two bantam plugs.

and Instruments has developed a new system to monitor temperature change over the surface of molten metal ladles. The system is useful for steel mills, copper smelters and other molten metal processes. It comprises multiple thermal imaging cameras positioned to view the entire exterior surface of a molten metal ladle. Temperature information is collected each time the ladle passes a measurement station, allowing assessment of the extent and distribution of wear to the ladle lining. The software accompanying the system enables accurate statistical measurement of lining wear. This allows managers to set realistic relining schedules. Constant measurement of temperature changes helps identify ladles that are threatening to fail earlier than predicted, lessening risk of plant damage and worker injury. By identifying the exact location of unexpected hot spots in a specific ladle, the system enables partial re-lining to extend the life of the ladle.

Electro Standards Laboratories Tel:+1- 401-9431164 Website: www.electrostandards.com

Land Instruments International Tel: +91-80-67823232 E-mail: ravi.m@ametek.com

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industry 2.0

- technology management for decision-makers | august 2011

product update Power Substation

arson’s MGS-15KVA-120-240-30AFT 15 KVA power substation enables users in industrial settings to convert 480 VAC single phase or three phase electrical supply to single phase 120V AC and 240V AC. This unit is suitable for applications where users need to use generators or high voltage power sources.The power transformer substation can handle feed-through power distribution, allowing users to connect equipment such as welding substations in series with the unit. This power transformer distributes 120 VAC through 10 GFCI protected receptacles and 240 VAC through two GFCI protected outlets, essentially providing the capability for multiple connections from one power source. The distribution unit is mounted to a coated steel frame with integrated skids, a top mounted loading eyelet and flat all-terrain tires. These units can also be used in hazardous locations to power explosion-proof lighting and equipment, and are well suited to industrial applications requiring reliable power under demanding conditions. Larson Electronics Tel:+1- 903-4983363 Website: www.magnalight.com

ewson Gale has developed a portable multimeter that provides readings of DC voltage and amperage, capacitance, frequency, temperature, duty cycle, pulse width and an event counter. It is suitable for checking permanently bonded equipment or temporary devices such as grounding clamps, cables and reels. The multimeter can also be used to ensure the grounding of conductive or semiconductive hose assembles used for transfer of flammable or combustible products where it is important to achieve continuity over the complete hose length, including fittings. It provides accurate confirmation of a low-resistance path to verified ground points, as well as confirming the integrity of existing bonding/grounding conductors. It comes with a 300-hour alkaline battery and a rugged carrying case. Options include a hand-rewind 30-meter extension reel and heavy-duty crocodile test clips. Newson Gale Inc. Tel: +1-732-9877715 Website: www.newson-gale.com

uel purifier manufacturer, RCI Technologies, is offering an entry-level line of its Automatic Fuel Recirculating Systems (FRS). The system automatically cleans and circulates the customer’s stored fuel on a preprogrammed schedule; is PLC-controlled; has a key switch and a 24-hour, seven-day programmable clock; is UL-listed; and is housed in a NEMA 4 key-lockable cabinet. The EL series is available in three flow rates: 5 gpm (FRS 660-5-EL-UL), 11 gpm (FRS 660-11-EL-UL) and 25 gpm (FRS 660-25-EL-UL). RCI Technologies Tel:+1-909-3051241 Website: www.rcitechnologies.com

utomation Systems Interconnect has released a new fuse holder. The US101 model accepts 10x38 mm midget fuses and has a voltage rating of 800AC/1000DC. Available in single pole versions, the fuse holder features an easy-to-use lever that inserts and removes the fuse from the circuit. The product has screw clamp box connections, which make it easy to install with minimum wire preparation. The unit accepts rigid wires from 1 to 16 mm2, (18-6 AWG) or with multistrand wires from 0.75 to 10 mm2 (18-8AWG). The product is UL rated. Automation Systems Interconnect Tel: +1-877-6505160 Website: www.asisolarproducts..com

Have you LAUNCHED an INDUSTRIAL product recently? august 2011 | industry 2.0

Fuse Holder

Multimeter

Fuel Recirculating System

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TaeguTec India P Ltd. Plot Nos.119 & 120, Bommasandra Industrial Area, Phase 4, Bangalore 560 099, India Tel: +91-80-2783-9111 E-mail: sales@taegutec-india.com http://www.taegutec-india.com