Industry 2.0 October 2011 by bhupinder sharma

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A 99 MEDIA PUBLICATION

VOLUME 11

ISSUE 02

October 2011

PRICE 100

OCTOBER 2011 VOL 11 ISSUE 02

StrategY Energy and environmental risks govern long-term viability of industries

SuPPLY cHain Mastering reverse logistics can be key to profitability INDUSTRY 2.0 - TECHNOLOGY MANAGEMENT FOR DECISION-MAKERS

green tecHnOLOgY Connected products bring new opportunities and challenges

Manufacturing Systematic reduction of energy and material costs yields big benefits

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editorial VOL. 11 | ISSUE 02 | OCTOBER 2011

Managing Director: Dr Pramath Raj Sinha Printer & Publisher: Kanak Ghosh Editorial Group Editor: R Giridhar dEsign Sr. Creative Director: Jayan K Narayanan Art Director: Anil VK Associate Art Director: PC Anoop Visualisers: Prasanth TR, Anil T & Shokeen Saifi Chief Designer: N V Baiju Sr. Designers: Joffy Jose, Chander Dange & Sristi Maurya Designers: Suneesh K, Shigil N, Charu Dwivedi Raj Verma, Prince Antony & Binu MP 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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A Policy Boost for Manufacturing?

he Union Cabinet has finally approved the National Manufacturing Policy (NMP). The goal of this policy, a first for India, is to significantly increase the share of the manufacturing sector in the nation’s GDP, create new jobs and add new capabilities. Taking a cue from China, the policy envisages the creation of National Investment and Manufacturing Zones (giant industrial parks) in collaboration with the private sector. But, it is not the creation of the seven NIMZs that is the focus of interest. It is the government’s urge to unfetter the manufacturing industry from the onerous, and at times, contradictory regulations that are constraining the growth of the sector. To start with, the government wants to make it easy to enter (and exit) the business of manufacturing. So, the policy proposes the creation of a new body to provide onestop clearances for setting up operations in the NIMZ. Since the policymakers want to encourage the SME sector, they want to offer tax incentives to smaller companies to set up operations in the new parks. While the objectives of NMP are laudatory, there continues to be a great deal of scepticism about what the policy will deliver. That’s because fiscal incentives, in themselves, have not always worked. Remember the tax holiday schemes, backward area concessions, and the like? Once the incentives ran their course, manufacturing companies promptly

industry 2.0

R Giridhar editor@industry20.com

scouted for new options. Neither have industrial estates set up to satisfy political constituencies worked. Setting up a mega greenfield industrial park is a daunting task. It is not quite clear how land for the new NIMZs will be obtained, and how long it will take. Some arms of the government are unhappy that their powers to regulate industries will be curtailed by the NMP. Trade unions fear that the special regulations governing the NIMZs will offer fewer protections to workers. Then there are multi-jurisdictional problems to be resolved — who will arbitrate between central ministries and state government departments on issues like taxation, environmental clearances, etc.? I expect that legal and political challenges will muddy the waters for a while. To energise the economy we need to think about a National Manufacturing Mission (like Operation Flood) that will encompass both existing industrial clusters, and promote new industrial areas. We need to improve and build-out whatever we already have (leverage existing investments), shut down unviable industries and clusters, and quickly expand into new regions and sectors based on economic viability. We need a charismatic leader to drive this goal — with the support of the entire bureaucracy and the political establishment. Otherwise, the NMP will come to naught.

- technology management for decision-makers | october 2011

contents opinion 38 The focus is on promoting the green economy Lynda Gratton, Professor of Management Practice, London School of Business

management & strategy 40 Nice is Overrated Leaders who understand their people and listen to grievances are great leaders. But being the ‘nice guy’ isn’t always a great reputation for a leader to have By David Lim

42 Pricing the Planet Understanding a company’s full exposure to energy and environmental risks will in many cases be a decisive factor, determining its long-term viability

cover story 28 Preparing for a Green Future

More objects are becoming embedded with sensors and gaining the ability to

Growing public awareness of environmental issues is making it imperative for manufacturers to focus on controlling and reducing green house gas (GHG) emissions. Around the world, manufacturing executives are adopting a variety of approaches to address issues like carbon accounting, environmental and regulatory compliance. They are also examining cost reduction initiatives and the adoption of Clean Development Mechanisms (CDMs)

32 Businesses Need to Care

The 2011 Carbon Disclosure Project Global 500 report shows that many organisations have finally realised the value of reducing their carbon footprint. Increasingly, commercial interests are driving the reduction of greenhouse gas emissions at the world’s largest companies. India Inc needs to catch up quickly

communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks

profile 56 Manoj Agarwal, Adhunik Group 58 Rajeev Samant, Sula Vinyards supply chain & logistics 61 Understanding Reverse Logistics

Assimilating two often-incompatible objectives — lowering carbon emissions and reducing waste, while at the same time raising productivity and revenue — continue to dominate discussions even at global climate summits

36 Green can be Profitable

information technology 48 The Internet of Things

Product returns are only a small fraction of the reverse logistics puzzle — and it

is important to master this area of the supply chain to save costs and improve customer service

departments Editorial ......................................01 IndustryU pdate......................... 04 Techwatch.................................. 16 Sector Update ........................... 22 Advertisers’ Index ..................... 53

Cover design: Peterson Picture courtesy: photos.com

october 2011 | industry 2.0

- technology management for decision-makers

Bookshelf .................................. 65 Product Update ......................... 69 www.industry20.com

industry update

New Air Freighter Connects Bangalore, Leipzig

HL has launched a Boeing 777F freighter service between Bangalore and Leipzig, in response to the growing air cargo demand. The flight will initiate from Bangkok and Singapore, and will operate five times a week between Bangalore and Leipzig, Germany. The freighter will be operated by AeroLogic, a joint venture cargo airline of DHL Express and Lufthansa Cargo. The B777 freighter, which offers more than 100 tons capacity, will boost transit times on key trade routes between Europe and Asia. With direct connectiv-

ity to and from South India locations, this new freighter service will provide enhanced flexibility in cut-off times for shipment pick-up in South India. Commenting on the new initiative, RS Subramanian, Country Head for DHL Express India says, “Our focus is to align our network to the needs of our customers. The freighter service will help customers in South India reduce transit times to Europe, which is a key market for textiles, automotive and leather industries. It will also provide improved connectivity from key Asian markets into South India.”

Biocon to Begin Malaysian Operations by 2014

Lanco Tanjore recognised for cLean TechnoLogy Use

he National Award for Prevention of Pollution for the year 2009-2010 from the Ministry of Environment & Forests for the Thermal Power category was awarded to Lanco Tanjore Power (Formerly known as Aban Power). The award was collected by P Panduranga Rao, whole-time director of the company. Commenting on the win, G Venkatesh Babu, Managing Director, Lanco Infratech, said, “Lanco Tanjore Power has deployed an advanced gas turbine that uses natural gas as fuel, and has installed dry, low NOx burners. As a result, the plant has achieved substantial reduction in NOx emission levels, water consumption and effluent generation. In fact, the unit even meets the standards prescribed by European Union”. The Lanco Tanjore Power Project is the first gasbased project to be registered with UNFCCC for CDM, and is regularly getting carbon credits for reduction in carbon dioxide emissions.

BeML To Make dredging Machines

iocon recently organised a project commencement ceremony for its biopharmaceutical manufacturing and research and development facility in Bio-XCell, a biotechnology park and ecosystem in Iskandar Malaysia, Johor. The Chief Minister of Johor, YAB Dato’ Haji Abdul Ghani bin Othman unveiled a plaque commemorating the initiation of the project. Biocon proposes to invest approximately $161 mn in this facility (in the first phase), which is targeted to be operational by 2014. “The facility will cater to the global requirements for Biocon’s range of Biosimilar insulin and insulin analogs for diabetes treatment, being commercialised by Pfizer,” explained Biocon Chairman and Managing Director, Kiran Mazumdar-Shaw. At a later phase, Biocon expects to conduct research and development, and the production of other biopharmaceutical products at the facility.

october 2011 | industry 2.0

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EML has entered into a technology tie-up with Netherlands company Vosta LMG to enter the dredging business. Under the agreement, BEML will design, manufacture and market a range of dredgers and other vessels using technology transferred from Vosta. It will also market them to customers located in India and South-East Asia. BEML has a presence in Indonesia and Thailand. BEML expects the new stream of business to generate an additional Rs 220 crore in revenue over the next two years.

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industry update

Tata Power Boosts Renewable Energy Portfolio

ata Power now has 300 MW of wind power capacity, with farms are spread across Maharashtra, Gujarat, Tamil Nadu and Karnataka. The company has an additional 64.5 MW capacity under execution that will be commissioned in Q3 of FY2011 in Tamil Nadu and Maharashtra. Tata Power is also acquiring 20.95 MW operating wind assets in Maharashtra from Niskalp Energy, and is expecting to place orders for 150 MW wind capacity in Maharashtra and Rajasthan. These new capacities will be commissioned during FY2012 and FY2013. According to the company, the collective generation its wind farms was 349 MUs during FY 2010-11 as against 320 MUs in FY 2009-10. Anil Sardana, Managing Director, Tata Power, says “Today, almost 21 per cent of our power

is generated from clean sources. We are are committed to adding a sizable capacity every year to maintain a significant wind portfolio.” Banmali Agrawala, Executive Director, Strategy and Business Development, Tata Power, said, “We want to ensure that 25 per cent of our power capacity comes from clean technologies. This may go down in the near term, but we aim to have at least one-fourth of our power through such sources.” While the wind power generated in Gujarat, Tamil Nadu and Karnataka is sold under a long-term Power Purchase Agreements (PPAs) to the state DISCOM’s (i.e. BESCOM in Karnataka, TANGEDCO in Tamilnadu, and GUVNL in Gujarat), the wind power generated in Maharashtra is sold to Tata Power’s distribution business unit in Mumbai.

DHL, OPPI Analyse Life Science Logistics

he Organisation of Pharmaceutical Producers of India (OPPI) collaborated with DHL on a report titled, ‘Transforming Life Sciences Logistics in India.’ This was based on a study that examined the competitive landscape of the life sciences industry in India, and logistics can become a crucial enabler. Based on detailed secondary research, the study is backed by DHL and OPPI’s collective insight into the life sciences industry and its supply chain. According to the study, the domestic Indian life sciences market is currently valued at Rs 2,767 bn, and is set to reach Rs 3,127 bn by 2015 (reflecting a 13% CAGR). This makes India the 6th fastest growing life sciences and healthcare consumption market in the world. As an exporter, India is expected to register double digit growth (23% CAGR) until 2015, thus cementing its dominance in the global life sciences

october 2011 | industry 2.0

market. The study also reveals that the country is registering strong growth in the manufacturing of medical devices as well. Speaking at the launch of the report, Christoph Remund, Chief Executive Officer, DHL Global Forwarding India said, “India is well positioned in the life sciences and health care sector, both as a producer and as a consumer of pharmaceuticals. In this study we closely examine India’s life sciences logistics set-up and benchmark these against the best practices across the globe. Thus, we have been able to provide a realistic roadmap for India’s growth and progress in the life sciences logistics sector.” Tapan Ray, Director General for OPPI adds, “The joint study proposes actionable recommendations to make India more competitive and achieve global competencies in life sciences logistics.” The study highlights 12 assets and enablers that need to be implemented

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jUBiLanT To ManUfacTUre oTc heaLTh ProdUcT

ubilant HollisterStier, a contract manufacturer in North America, has secured a multi-year deal from a US pharma company to manufacture a prominent over the counter (OTC) women health and personal care product at its Montreal facility in North America. Jubilant HollisterStier is a subsidiary of Jubilant Life Sciences. The contract is a ‘take or pay’, with a minimum quantity commitment and has a total value of over $70 mn for a period of four years with a possibility of extension for another 2 years. Production under this agreement has already started at the Jubilant HollisterStier manufacturing facility in Montreal, Canada. Shyam S Bhartia, Chairman & Managing Director and Hari S Bhartia, Co-Chairman & Managing Director, Jubilant Life Sciences, commented on the development, “This contract is an outcome of our strategy to expand our offerings across products and geographies. We are happy to extend our CMO services for an OTC women’s health product with a leading customer in North America. Over the years we have successfully helped provide safe and effective products to consumers and are committed to do so for this product as well.”

to achieve world-class life sciences logistics in India. These include setting up dedicated pharma zones at airports, GST implementation, faster co-ordination amongst all ground handling agencies, multi-user warehouses, shared reefer vans and ocean freight containers. Maintaining the supply chain integrity by using latest technology such as RFID, GPS and anti-counterfeit equipment can also improve the standards for life sciences logistics in India.

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industry update

Hay Group Identifies Leadership Competencies

anagement consultancy firm, the Hay Group, has identified the six most significant trends that will affect organisations, employees and managers over the next two decades — and the key competencies required of successful future leaders. These predictions were released in a report, Leadership 2030, that examines six global trends — globalisation 2.0, climate change, demographic shifts, digitisation, individualisation and technological convergence — and their impact on leadership and organisations. Hay Group believes that as globalisation accelerates, the new business world will be characterised by increasingly diverse teams and declining loyalty between organisations and employees. The balance of power will shift to Asia, a global middle class will rise, and greater inter-connectedness will result in greater volatility in the economic markets. Companies will need to be more agile and collaborative to manage the global/ local divide; their leaders will need to be flexible, internationally mobile and culturally sensitive, and they must have strong conceptual and strategic thinking capabilities in order to manage risk and cope with the dangers and uncertainties associated with globalisation. Rising emissions and temperatures will be further aggravated by grow-

ing residential and industrial waste in developing nations. The scarcity of strategic resources like water, minerals and fossil fuels could trigger price hikes and violent conflict. Organisations will be forced to lower their eco-footprint, adapt to rising operational costs and restructure along sustainable lines; leaders will need outstanding cognitive skills to balance the competing demands of financial success, social responsibility and environmental custodianship, and must act as change agents, advocating environmentally responsible business practices. As the world population grows and ages, demographic imbalances are emerging, leading to skills shortages in some areas and increasing migration. For organisations, fewer people means the war for talent will continue to rage; leaders will need to attract, motivate and retain increasingly diverse teams and find ways to develop and promote the growing numbers of international migrants, women and older people into leadership positions. Technology will continue to blur the boundaries between private and work lives, will broaden generational divides, and will shift power to employees with extensive digital skills — particularly the rising class of ‘knowledge workers,’ who can work anywhere. As organi-

sations become increasingly virtual, leaders must recognise and harness the critical skills of digital natives, foster collaboration between them and traditional workers, and encourage high levels of openness, integrity and sincerity to build reputation in a more transparent world. “Shifting trends indicate that the next generation of leaders will need to be adept conceptual and strategic thinkers, have deep integrity and intellectual openness, and find new ways to create loyalty among employees,” says Gaurav Lahiri, Managing Director, Hay Group India. “Managers will need to relinquish their own power in favour of collaborative approaches, both inside and outside their organisations. In some cases, this means abandoning many of the behaviours that propelled leaders to the top of their organisations in the first place.” “These trends are not only transforming our businesses, governments and societies, they are significantly impacting the characteristics we will associate with successful leadership in the decades ahead,” added Gaurav. “To thrive in the future, leaders will have to become more nimble and adaptable, guiding organisations to revolutionise their cultures, structures, systems and processes.”

Free Trial of 3D CAD Software Offered

n association with NX NASTRAN, Siemens PLM Software is offering a 45-day free trial of its Solid Edge CAD package and the Femap software. The offer provides free trial licences for the full production versions of Solid Edge ST4 and Femap 10.2, and includes access to extensive learning resources. Users have the option to download either or both applications (at www.siemens.com/plm/ free-solid-edge and www.siemens.com/ plm/free-femap). Solid Edge ST4 users can experience 3D computer-aided design (CAD) including part modelling, surfacing, sheet

october 2011 | industry 2.0

metal design, assembly design, drafting, assembly applications, simulation, rendering, mould tooling design, web publisher, and data translators. The software incorporates synchronous technology that combines the speed and flexibility of direct modelling with the precise control of dimension driven design. Femap users can test high-powered computer-aided engineering analysis (CAE) in an easy to use application. The Femap trial includes all finite element modelling (FEM) pre and post processing capabilities necessary to use the NX Nastran finite element analysis (FEA) solver.

- technology management for decision-makers

“The most effective method of evaluating CAD and CAE software is to use the production versions in your own environment,” explains John Fox, Vice President of Velocity Series Marketing, Siemens PLM Software. “By providing a free download of Solid Edge and Femap, along with access to tutorials, user forums and other resources; we are making it easier to perform that evaluation, while at the same time enabling an exceptional user experience. Anyone can download the full production versions of Solid Edge and Femap, and try them out.”

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industry update

DIESL Bags Top Honours for Logistics Excellence

reLiance coMMissions 400 kV TransMission Line

rive India Enterprise Solutions (DIESL), a logistics company of the Tata group, won top honours at the 5th ELSC Awards. The company was rated as the best 3PL of the Year. Ajay Chopra, Chief Executive Officer of DIESL also received the ‘Face of the Year Award’ at the same event. Chopra received the award for his contribution as a spokesperson for the industry, and his efforts to professionalise the Indian

logistics industry through the IILF (India International Logistics Forum), and the ‘Captains Of Logistics’ series of multi-city events. The ELSC conclave recognises and showcases logistic companies and supply chain led businesses that have set new benchmarks in the delivery of logistics solutions. The winners of the awards are selected by a panel of industry leaders.

Summit Focusses on Productivity Enhancement

he Indian Machine Tool Manufacturers’ Association (IMTMA) recently organised a summit in Chennai themed “Unleashing the Power of Productivity in Metalworking.” The vent examined a wide array of productivity-related issues through case studies and keynote talks by renowned experts. More than 200 delegates from south India including practicing engineers, middle level managers and supervisors participated in this event. The inaugural and keynote session was presented by P Kaniappan, whole-time director of Wabco India on

october 2011 | industry 2.0

the topic “Leadership perspectives on productivity in the increased global competition.” The highlight of the summit was the ‘IMTMA-SIEMENS Productivity Championship Awards 2011’, that acknowledged the creativity and innovativeness of Indian manufacturers. Eight companies made case study presentations in Chennai, including Ashok Leyland, Bosch Automotive Electronics India, Hema Engineering Industries, L&T Komatsu, Sundram Fasteners, Titan Industries and Wheels India. An awardwinning presentation by TVS Motor Co made earlier was discussed.

- technology management for decision-makers

eliance Infrastructure (RInfra) has commissioned a 136 km long 400 kV double circuit transmission line between Parali and Solapur in western Maharashtra. This transmission line is part of the Western Regional System Strengthening (WRSS) project that has an outlay of about Rs 1,400 crore and a total length of 1,500 km. It is the country’s first 100 per cent privately owned transmission project on a Build, Own and Operate (BOO) basis. RInfra’s wholly owned subsidiary, Reliance Power Transmission (RPTL), has already commissioned first three transmission lines of the project, viz. Solapur-Karad; LimdiRanchodpura and Lonikand-Kalwa. The company expects to finish the entire project by FY2012. Commenting on the development, RInfra’s CEO Lalit Jalan said, “Successful commissioning of the project before the scheduled time reflects inherent strengths of the company in executing projects.” The WRSS is expected to facilitate the free flow of 4,000 MW from the power rich eastern region of the country to the west, and benefit all regional utilities.

BeML To Make dredging Machines

weden headquartered Alfa Laval intends to obtain full ownership of its Indian subsidiary and seek delisting of shares from the Bombay Stock Exchange and the National Stock Exchange of India. This action was necessitated by regulatory changes in India that requires Alfa Laval India to have a minimum public float of 25 per cent, or seek delisting.

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industry update

Europe to Regulate Airline Carbon Emissions

he European Union is planning to charge airlines, including non-EU airlines, for carbon emissions despite growing international opposition. A joint statement by a group of 26 non-EU countries, including India, described the plans as discriminatory, following a meeting in New Delhi. The new EU regulations are due to come into effect at the start of next year. A European Commission spokesman said the EU would continue with its plans to implement the legislation, which was adopted three years ago. “We are willing to discuss and engage constructively with our partners — India and others — but our intentions are very clear,” he said. He attributed the EU’s decision to take unilateral action due to lack of progress in international talks. From 2012, under the Emission Trading Scheme (ETS), airlines will

need to hold permits to emit carbon above a certain cap — and will face stiff penalties should they fail to comply. This plan is being fiercely opposed by many non-EU states and their airlines, with warnings that it will cost the industry billions a year. Opponents

of the legislation argue that — among other things — it violates various international standards including the aviation industry’s Chicago Convention. The Air Transport Association of America, is challenging the legislation in court.

Cloud Services Provide Design Capabilities

utodesk has launched a cloud service that enables customers to extend their desktops with new viewing and sharing capabilities, and more computing power. Autodesk Subscription customers will have exclusive access to cloud-based, high-performance rendering and design optimisation, and enhanced collaboration capabilities. The service provides 3 GB of online storage for each software licence to enable access to design documents, anywhere, anytime. “For more than a decade, Autodesk has embraced the power of the cloud to extend the functionality of our design solutions and help our customers work more effectively,” says Amar Hanspal, Senior Vice President for Platform Solutions and Emerging Business at Autodesk. “We believe the time for cloud has arrived in India,”’ explains Jayant Keswani, Head of Marketing, Autodesk India & SAARC.

Honeywell Unveils First Vendor Neutral Suite

oneywell has recently unveiled the process industry’s first vendor-neutral process control suite, which allows plant operators to centrally monitor and control both Honeywell and non-Honeywell process control systems within their plants. The suite lets operators and management break out of the information silos that can often occur with Advanced Process Control (APC) systems. Suitable for all industrial applications, the Honeywell Process Solutions’ (HPS) suite revolutionises performance monitoring with its ability to span not only multiple APC technologies, but also multiple processing facilities, giving consistent performance benchmark-

october 2011 | industry 2.0

ing across the enterprise and ensuring proper corrective action is taken when and where necessary. HPS studies have shown the solution can increase service factor and application utilisation by 25 per cent while reducing troubleshooting time by up to 50 per cent, allowing proactive maintenance practices to improve utilisation and increase application service factors. The suite includes three software products: Honeywell Loop Scout, which gives control engineers the ability to identify and correct poorly performing control loops; Honeywell Profit Expert, delivering multivariable controller monitoring for Honeywell’s Profit Controller; and Control Performance Monitor, an

- technology management for decision-makers

application that monitors, identifies, diagnoses and remedies regulatory and APC asset issues throughout the plant. “This new software suite is a first in the process control industry, which means that our customers will have unprecedented flexibility in the management of their assets and the most holistic view yet of their plant operations,” said Donald Morrison, Senior Product Marketing Manager, Honeywell Process Solutions. “The recent addition of Matrikon to the Honeywell portfolio brings together the vendor independence of Matrikon’s monitoring technology with Honeywell’s expertise in the deployment of Profit Suite applications.”

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industry update

Industry Body Welcomes NMP The Confederation of Indian Industry (CII) believes that the government’s National Manufacturing Policy (NMP) has the potential to dramatically alter India’s manufacturing sector. “While some fiscal incentives have been provided, the simplification of administrative procedures and creation of world-class infrastructure facilities will encourage incremental investment in manufacturing,” observes President B Muthuraman. Among the proposed fiscal measures in the NMP are exemption of capital gains tax on sale of plant and machinery for units in the National Investment and Manufacturing Zones (NIMZ); exemption to individuals from long term capital gains on sale of property, if the proceeds are invested if the sale proceeds are reinvested in the equity of a new start-up company; third party inspections with for environment compliance and simpler clearance processes. The NMP will also focus on ‘green manufacturing’, and proposes to establish a Technology Acquisition Fund to acquire global technologies and build a patent pool especially for equipment manufacturing that seeks to reduce energy consumption. “Along with existing schemes for manufacturing, we believe that the NIMZ can push manufacturing growth to 12 to 14 per cent,” says Chandrajit Banerjee, Director General of CII. “The emphasis on boosting small and medium enterprises is particularly welcome, with steps for reducing compliance burden and improving access to finance. In fact, many of the steps proposed in the NMP were noted in the CII-BCG report published last year, titled Indian Manufacturing: The Next Orbit.”

Companies Switching to Eco-friendly Packaging A large number of Indian companies are opting for eco-friendly packaging amid rising environmental concerns, according to a recent study by apex industry body ASSOCHAM. A new study, Domestic Green Packaging Industry, indicates that the sustainable packaging sector is growing at about 25 per cent per year, with the the overall packaging industry growing at about 20 per cent annually. Consumer behaviour has a huge impact on the packaging industry. Rising environmental concerns about carbon emissions, dearth of natural resources together with increased health awareness and waste reduction targets are key growth drivers for green packaging innovations in India, highlights the ASSOCHAM survey. Nearly 45 per cent of manufacturers surveyed said that they were increasingly adopting renewable packaging technologies, environmentally friendly light materials and cost effective methods that lead to reduced fuel and water consumption. Over half of the respondents said they have started using bio-degradable materials like sugarcane and bio-plastics, and putting more emphasis on upgraded packaging material for all products. ASSOCHAM interacted with about 1,000 representatives of food and beverage companies, consumer packaged goods, shopkeepers, wholesalers and retailers across major metros to ascertain the impact and advantages of sustainable packaging on highly fragmented Indian packaging industry. About 75 per cent of respondents said they are gradually reducing usage of non-decomposable plastic bags and seeking support of local grocery stores, vegetable and fruit vendors, hawkers to promote usage of paper bags. About 30 per cent of respondents said that they are working towards developing newer technologies based on the properties of plastic for increased revenue growth as it is a significant constituent for packaging.

october 2011 | industry 2.0

- technology management for decision-makers

MoBiL offers energy saVing LUBricanTs

xxonMobil Lubricants has expanded its line of energy efficient industrial lubricants with the addition of two new synthetic oils for circulating and gear applications. The Mobil SHC 600 series oils are suitable for use in more than 1,800 gear, hydraulic and circulation applications, and are estimated to deliver energy savings of up to 3.6 per cent when compared to conventional mineral oils. According to Dr Ian Davidson, Global Industrial Lubricants Marketing Manager at ExxonMobil, “This lubricating solution will not only enhance the life and performance of critical circulating equipment, but also reduce waste and maintenance.” The oil chemistry is specifically formulated to yield a low traction coefficient. This results in low fluid friction in the load zone of nonconforming surfaces such as gears and rolling contact bearings. Low fluid friction produces lower operating temperatures and improved gear efficiency, which translates into reduced power consumption. The new oil extends part life, and allows for more economical equipment design. The base oils used in the Mobil SHC 600 also have higher resistance to oxidation and sludging, especially at high temperatures. The additives in the oil also provide superior resistance to rusting and corrosion, and have good demulsibility, foam control and air release properties. According to the company, in addition to improving operational efficiency of equipment, the new MHC 600 series of synthetic oils last nearly six times longer than comparative mineral-based gear and lubricating oils. This significantly reduces the number of oil changes and minimises risks of spills.

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How does engineering efficiency increase my competitiveness?

Totally Integrated Automation Portal â&#x20AC;&#x201C; the framework that will maximize your engineering efficiency. With the Totally Integrated Automation Portal, Siemens has launched the industryâ&#x20AC;&#x2122;s first automation software with one engineering environment and one software project for all automation tasks. Combining logic control, HMI, drives, safety, and networking, the TIA Portal enables you to efficiently manage all software development within one engineering framework throughout the complete life cycle of your automation system. The TIA Portal helps to increase competitiveness by reducing the complexity of software development and maintaining multiple software packages, making the engineering process more efficient. www.siemens.com/tia-portal

Answers for industry.

techwatch

Instant Identification of Unknown Liquids

aterials scientists and applied physicists collaborating at Harvard’s School of Engineering and Applied Sciences (SEAS) have invented a device that can instantly identify an unknown liquid. The compact instrument fits in the palm of a hand, and requires no power source. It exploits the chemical and optical properties of precisely nano structured materials to distinguish liquids by their surface tension. Just like the litmus paper used in chemistry labs around the world to detect the pH of a liquid, the new device changes colour when it encounters a liquid with a particular surface tension. A single chip can react differently to a wide range of substances; it is also sensitive enough to distinguish between two very closely related liquids. According to the researchers, the device offers a cheap, fast, and portable way to perform quality control tests and diagnose liquid contaminants in the field. “Digital encryption and sensors have become extremely sophisticated these days, but this is a tool that will work anywhere, without extra equipment,” explains Co-principal investigator Marko Loncar, Associate Professor of Electrical Engineering at SEAS.

When dipped in varying concentrations of ethanol, the 3D-nanostructured device reveals different parts of a secret message. A customdesigned ‘W-Ink’ can detect and identify many different types of liquids on a single chip The chip can be customised with a hidden message that is revealed only when exposed to exactly the right substance. Dipped in another substance, the chip can display a different message altogether. “This highly selective wetting would be very difficult to achieve on a two-dimensional surface,” explains Ian Burgess, a doctoral candidate in Loncar’s lab. “The optical and fluidic properties we exploit here are unique to the 3D nanostructure of the material.” The device relies on a precisely

fabricated material called an inverse opal. The inverse opal is a layered glass structure with an internal network of ordered, interconnected air pores. “Two factors determine whether the colour changes upon the introduction of a liquid: the surface chemistry and the degree of order in the pore structure,” says Mishchenko, who works in the Aizenberg lab. Burgess and his colleagues discovered that selectively treating parts of the inverse opal with vaporised chemicals and oxygen plasma creates variations in the reactive properties of the pores and channels, letting certain liquids pass through while excluding others. Each chip is calibrated to recognise only certain liquids, but it can be used over and over (provided the liquid evaporates between tests). “If you want to detect forgeries,” says Burgess, “you can tune your sensor to be acutely sensitive to one specific formulation, and then anything that’s different stands out, regardless of the composition.” One immediate application would allow authorities to verify the fuel grade of gasoline right at the pump. Burgess also envisions creating a chip that tests bootleg liquor for toxic levels of methanol.

Heat-Regulating Material Saves Energy

new material that can retain and release heat according to specific temperature requirements could make a significant difference to the cost of heating and cooling buildings, scientists say. Researchers at the University of Nottingham Ningbo China (UNNC) have developed a non-deformed energy storage phase change material (PCM) that possesses large energy storage capacity with faster thermal response than existing materials. It is also cheap to manufacture. The heat-regulating material can be applied anywhere, from walls and roofs to

october 2011 | industry 2.0

wallpaper since it can be manufactured in a variety of shapes and sizes. The scientists responsible for the breakthrough are project leader Professor Jo Darkwa, who is Director of the Centre for Sustainable Energy Technologies, Research Associate Oliver Su and, PhD student Tony Zhou. Professor Darkwa says, “This material, if widely used, could make a major impact in the world’s efforts to reduce carbon emission.” The basic structure of the material has to be engineered for a specific temperature before use. “The material won’t make

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air conditioners obsolete, because you still need to control humidity and air movement. It purely reduces the amount of excessive heat energy in a room,” clarifies Professor Darkwa. The university is looking to develop the material further, as well as commercialise it. It already has a number of sponsors and partners involved in the research, and has applied for patents. The researchers believe that the new material could potentially save up to 35 per cent of energy in a building, and enhance the efficiency of alternative energy technologies.

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techwatch

Making PU Foam Flame Resistant

ovel carbon nanofiber-filled coatings jointly devised by researchers from the US National Institute of Standards and Technology (NIST) and Texas A&M University dramatically reduce the flammability of polyurethane (PU) foam in upholstered furniture and mattresses. The impressive test results, reported in the Polymer journal, suggest that significant fire-safety advantages can be gained by coating PUF with a club-sandwich-like arrangement of thin layers containing carbon nanofibers and polymers. The upshot, says NIST researcher Rick Davis, is that the experimental coating seems to create the equivalent of a “fireresistant armour” on the porous foam. Currently, recipes for making PUFs result in foams in which fire retardants are embedded in the interior. In contrast, the new technology uses the carbon nanofiber fire retardant as a coating that covers all the nooks and crannies on the sponge-like PUF surface. The new approach, says Davis, should be attractive to PUF manufacturers because the surface treatment has the potential to

deliver a low flammability PUF without major change to the foam manufacturing process, thus saving time and money. The NIST-Texas A&M team coated square samples of commercially avail-

Making Tougher, Lighter Wind Turbine Blades

ast efforts to build larger wind turbines that can capture more energy from the air have been stymied by the weight of blades. A Case Western Reserve University researcher seems to have solved the conundrum with a blade design that is substantially lighter, eight times tougher, and more durable than currently used blade materials. Marcio Loos, a post-doctoral researcher in the Department of Macromolecular Science and Engineering has built the world’s first polyurethane blade reinforced with carbon nanotubes. “Results of mechanical testing for the carbon nanotube reinforced polyurethane show that this material outperforms the currently used resins for wind blades applications,” said Ica Manas-Zloczower, Professor of macromolecular science and engineering and Associate Dean in the Case School of Engineering. Carbon nanotubes are lighter per unit of volume than carbon fibre and aluminum, and have more than five times the tensile strength of carbon fibre and more than 60 times that of aluminum. Fatigue testing has show that the reinforced polyurethane composite lasts about eight times longer than epoxy reinforced with fiberglass. The new material was also about eight times tougher in delamination fracture tests. Loos and the rest of the team are continuing to test for the optimal conditions for the stable dispersion of nanotubes.

october 2011 | industry 2.0

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able PUF with four bi-layers of a carbon nanofiber-polymer combination. The average thickness of the coating was about 360 nanometers, increasing the mass of the foam by only three per cent. By themselves, the carbon nanofibers accounted for 1.6 per cent of the foam mass. Since the carbon nanofibers are only in the coating, all the carbon nanofibers are clumped like matted whiskers within the top 360 nanometers of the surface — assembled into the fire-blocking armor. The carbon nanofiber coatings reduced PUF flammability (measured as the peak heat release rate from an ignited specimen) by 40 per cent. That result was more than three times better than achieved by putting the same carbon nanofibers in the foam (part of the foam recipe). The carbon nanofiber coating also significantly outperforms three classes of commercially available flame retardants commonly used in PUF. Additionally, the experimental coating “prevents the formation of a melt pool of burning foam, which in a real fire scenario, may further reduce the resulting fire threat of burning soft furnishings,” the authors say.

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We complete 50 golden years due to your patronage.

Thank you, Dear Customers!

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techwatch

Picture Courtesy: Felizitas Gemetz/Fraunhofer IWM; Martin Hörner/ Fraunhofer IWM

Tough Coating Makes Plowing Easier while plowing, and make it easier to till the ground. Nearly one-half of the energy in plowing or harrowing is lost as a result of friction between the plowshare and the soil. To change this, scientists at the Fraunhofer Institute for Mechanics of Materials IWM in Freiburg are working on DLC-coated plowshares. They have already been able to reLeft: Experimental DLC-coated tools after use. Top: Initial duce friction by half. This test results; the improved coatings after the same plowing has reduced tractor power distance are shown in the bottom of the picture. Right: DLC- requirements significantly — coated plowshare for test purposes by more than 30 per cent in some tests. For farmers, the smoothly cutting xtremely hard, diamond-like plowshares mean either a time gain carbon (DLC) coatings are because they can use wider equipment, used to protect hard disks in or lower costs for fuel, machinery and computers and ensure that maintenance. The tractors can be smallsliding bearings remain smooth. In the er or can operate in partial load, with future they could help farmers save fuel

longer repair and maintenance intervals. “From the environmental point of view it would be better for the tractors to be smaller,” says physicist and fruit farmer Martin Hörner from Fraunhofer IWM. Lighter machines mean less soil compaction, and the looser the soil, the less power is needed to work it. An additional advantage of DLC coatings on ground working equipment is the protection they provide against corrosion and wear. Plowshares have to be hard and sturdy but also resilient, so that they do not break if they hit a rock. Even high-durability steels suffer visibly if they are used for a prolonged length of time in the ground. “A tine on a circular harrow can lose 50 per cent of its mass through wear every season,” states Hörner. But soil, sand and stones wear down conventional coatings within a very short time. DLC coatings, however, can withstand the extreme stresses and strains.

ood that is free of imperfections is essential for house building, window construction and furniture. Research scientists from the Fraunhofer Institute for Wood Research, WilhelmKlauditz-Institute (WKI) in Braunschweig are now able to pinpoint defects in wood that cannot be seen with the naked eye. Using a technique called ultrasound thermography, they have been able to reliably identify material defects during the production of wooden items. The technique enables the detection of longitudinal and transverse cracks, gluing errors, de-laminations and black knots. This allows rejects to be caught quickly and eliminated, and faulty goods to be repaired in good time. To identify the problems, researchers vibrate wooden items using a 20 kHz sonotrode, or ultrasound agitator. At the

october 2011 | industry 2.0

locations with defects, the different parts of the material rub against each other and produce heat. This heat is picked up by a thermal imaging camera connected to a monito. High-power ultrasound thermography even allows the researchers to probe beneath the surface to uncover dowels that have not been glued, and defects hidden under coatings. “We can spot the imperfections in raw timber. That is crucial for rejecting defective wood before time and money have been invested in processing it,” says physicist Peter Meinlschmidt at the WKI. The type of wood, or its condition does not affect the detection; defects in damp parts show up on the thermal imaging camera too. The depth to which the wood can be analysed depends on its thermal conductivity, but up to 20 mm is possible. “Our process is especially suited for finding defects in high-quality solid

- technology management for decision-makers

Picture Courtesy: Fraunhofer WKI

Spotting Weaknesses in Solid Wood

The ultrasound agitator causes the wood to vibrate, which generates frictional heat wherever there are cracks. A thermal imaging camera shows these defects up wooden parts and window frame squares and to detect badly glued joints. Applying the ultrasound agitator leaves small pressure marks,” explains Meinlschmidt.

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sector update

Geared Right Machine tools is one of the fastest growing segments of the manufacturing sector

ccording to an Exim Bank of India report ‘Indian Capital Goods Industry — A Sector Study’, the machine tools sector is one of the important segments of the capital goods industry in India. The sector is recognised as a provider of cost-effective high quality lean manube over US $40 bn in 2007, a growth of 18 per cent facturing solutions. The sector manufactures almost over the previous year. The Indian machine tools the complete range of metal-cutting and metal industry has been successful in developing the abilforming machine tools. Customised in nature, the ity to design and produce special purpose machines products from the Indian basket comprise convenfor customers in almost all industry segments. A tional machine tools as well as computer numerinumber of machine tool builders now cater to the cally controlled (CNC) machines. requirements of the automobile, consumer and There are other variants offered by Indian manudefence sectors. Indian-made machine tools are curfacturers too, including special purpose machines, rently exported to over 50 countries; the major ones robotics, handling systems, and TPM-friendly mabeing the United States, Italy, Germany, the SAARC chines. In India, there are about 450 manufacturers countries and the Middle East. In 2002, the governproducing complete machines, or their components. ment launched the National Programme for DevelThere are 150 units in the organised sector. Almost opment of Indian Machine Tool Industry (NPDMI) three-fourths of the total machine tool production in to strengthen the competitive India is contributed by 10 major position and technological and companies in this industry. The market development capacity industry has an installed capacof manufacturers and to estabity of over Rs10 bn and employs lish the ‘Made in India’ label a workforce totalling 65,000. manufacturers are in machine tools. The governThe hub of manufacturing producing complete ment worked with United Naactivities is concentrated in machines, or their tions Industrial Development Mumbai and Pune in Macomponents in India Organisation (UNIDO), Exim harashtra, Jalandhar and Bank and the Indian Machine Ludhiana in Punjab, AhmedTools Manufacturers Association (IMTMA) to design abad, Baroda, Jamnagar, and Rajkot in Gujarat, the programme. Coimbatore and Chennai in Tamil Nadu, BengalAccording to a report by consulting firm IMaCS uru and Mysore in Karnakata, and some parts of Virtus Global Partners, India ranks 17th in produceastern India. tion and 12th in the consumption of machine tools in All the global leaders namely Makino, DMG, the world. Quoting US government research figures, Yamazaki, Haas, Trumpf, Daewoo, Agia Charmilles the report ‘Indian Machine Tools Industry - Opportuand Schuler are present in India either through nities for US Companies’, said India is set to become their marketing agents, technical centres, service a key player in the global machine tools industry centers or assembly centers. and is likely to see substantial high end machine According to the department of Heavy Industry, tool manufacturing. Ten major Indian companies the total market size of this sector stands at constitute almost 70 per cent of the total producRs 5,212 crore. The consumption level for India is tion. The public sector Hindustan Machine Tools around US $1 bn, thus being the 11th largest conLimited (HMT) alone accounts for nearly one-third of sumer of machine tools. machine tools manufactured in India. World export of machine tools is estimated to

450

october 2011 VoL. ii | industry 2.0

- technoLogy management for decision-makers

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PHOTO BY PHOTOS.COM

by sangeeta shaukand

sector update

A Well-knit Industry From humble beginnings over a century ago to competing for a bigger share of the global market, the Indian hosiery industry has come a very long way by charu bahri

Advantage India

India scores high with knitwear manufacturers for various reasons. The country produces plenty of raw materials for the industry, it is one of the largest cotton producers in the world and also a manufacturer of fibres like polyester, silk, viscose, etc. Skilled manpower is available at lower wage rates than in some competitor countries â&#x20AC;&#x201D; Hong Kong,

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Bangkok, and Taiwan. This gives export units an edge in bargaining prices of finished goods. The industry structure also goes in its favour. In northern Ludhiana as in Tirupur, textile (including knitwear) manufacturing centres are organised in clusters of small, medium and large units. It is estimated that about 70 textile clusters produce 80 per cent of the countryâ&#x20AC;&#x2122;s total textiles. The cluster framework helps protect small and medium enterprises from the disadvantages of operating in an isolated environment.

PHOTO BY PHOTOS.COM

he Indian knitwear industry traces its origins to Calcutta, now Kolkata, when a foresighted entrepreneur launched a small scale hosiery unit in the year 1893. Since then, the industry has fanned out across the country, most significantly to Ludhiana in Punjab, Tirupur in Tamil Nadu, leading metros like Ahmedabad, Bangalore, Delhi, Kolkata and Mumbai, and a few towns in Uttar Pradesh, namely Varanasi, Kanpur, Saharanpur, and Bellary. Together, these production centres of woollen, synthetic, and cotton knitwear are making an appreciable contribution to the Indian economy. The last decade has seen good things happening for the industry. Starting with the announcement of the National Textile Policy at the turn of the century, it has become clear that competing for a bigger share of the global textile pie is priority agenda. Today, textiles account for a significant chunk of the countryâ&#x20AC;&#x2122;s total exports, and knitwear boasts a share of close to half of total textile exports in volume terms. Indian hosiery manufacturers are booking orders from sophisticated markets such as the European Union, USA, Canada, and Japan etc. World renowned brands are sourcing products from India including sportswear providers like Adidas, Nike and Lacoste, as well as leading apparel retailers such as Benetton, Jockey, Marks & Spencer, JC Penny, Wal-Mart, Mother Care, Tommy Hilfiger, Diesel, etc.

Cluster Framework

Differently-sized units making up a cluster work well in tandem. Large and medium sized manufacturers are served by smaller ancillary units supplying essential add-ons such as knitted and customised collars and cuffs, buttons, laces, hangers, labels, and accessories like 3D patches, embroidery patches, zippers and motifs. From the socio-economic perspective, smaller and medium enterprises also play an important role in decentralising economic wealth and providing employment to many (due to their labour-intensive character). Small and medium sized manufacturers are also more capable of servicing custom-orders quicker, and at lower costs. This advantage goes down well with retailers such as Zara and H&M that have redefined the shelf-life of fashion trends. Now, trends barely stay in vogue for more

industry 2.0

- technology management for decision-makers | october 2011 Vol. ii

sector update than two months whereas they used to be around for five to six months. In Ludhiana, the city famously alluded to as India’s Manchester as it enjoys a 90 per cent share of the lucrative woollen hosiery industry, ancillary units clustered around larger outfits help produce fashion knitwear worth a staggering Rs 2,600 crore, for high-end markets in western Europe and USA. This is despite the city not being close to any port. Recognising the advantages of the cluster structure, the government has sought to further the development of 20 clusters across the country by offering technical assistance and subsidies for technology upgradation and marketing support. The support would also strengthen the competitiveness of the smaller and medium units and help them consolidate their position in the global value chain.

Proactive Industry

What stands out about the Indian hosiery sector is the industry’s proactive approach to improving its prospects. Nowhere is this more visible than in Tirupur, the knitwear capital of the country and a city boasting of units all along the knitwear value chain. Last year, the export-oriented Tirupur cluster alone comprising more than 6000 manufacturing units exported knitwear worth thus accounting for about 40 per cent of the country’s total knitwear exports. Many fully vertical companies like Eastman Clothing, Centwin, Poppy’s Knitwear, Dhanam International, Kaytee Corporation, and Network Clothing Company have integrated the complete manufacturing process from spinning, knitting plants, textile processing to garment making units. Tirupur’s futuristic knitwear industry representatives are looking to boost their marketing capacity and sales by establishing a warehouse in Antwerp, Belgium. Local storage facilitates negotiations since ready stocks can be made available for buyers to peruse and buy. Brand enhancement activities are also helping boost the town’s image as a base for quality knitwear encompassing 100

per cent cotton fibre product range as well as variations of cotton blends with polyester or viscose fibres and treated yarns boasting of features like zero twist, feather touch softness, anti-bacterial, bio-degradable, flame retardant or resistant, etc. Overseas and local agents have been appointed to improve marketing networks and correctly identify fashion trends to increase sales. Back home, a trade fair complex in the town and merchandise testing laboratories are also playing a role in promoting the industry. Testing infrastructure helps build the buyer’s comfort level and reduce the product rejection percentage. In the last decade, the rejection percentage in terms of volume order has come down from about five per cent to a more nominal 1.5 per cent. Going forward, Sanjay Kumar Gupta, CEO, Tirupur Exporters Association’s E-Readiness Centre (TEA is an association for Tirupur based cotton knitwear exporters), would like to see manufacturers focus on further streamlining their operations and improve transparency – “It’s not enough to invest in contemporary machineries. Proper systems must be put in place on a top priority basis, which must cover the complete supply chain. Then only can the industry face the competition from multinational corporation brands entering country and tap emerging opportunities, which will be aplenty considering that even today, India’s total share in the global textile trade is minimal.” A major step in this direction is the launch of a fully integrated software solution (cloud-based) in association with Wipro on Microsoft’s Dynamics AX platform, which would address operations and processes across the garment industry, and thus help establish vital links between all the processes and stakeholders across the value chain. The system will be based on best practices of the industry. Small and medium units that cannot afford expensive high-end solutions will also reap a host of benefits at an affordable cost.

million people employed in the textile sector

october 2011 Vol. ii | industry 2.0

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Testing Times

Although good things are happening for hosiery manufacturers in India, in Uttar Pradesh and, units are facing challenges on account of rising input costs. Prices of raw cotton and yarn have more than doubled in recent years, including prices of manmade fibres, necessitating finished goods price hikes of 30 to 50 per cent. Also, a 10 per cent excise duty on apparel, hosiery and made-up garments has been factored into prices of finished goods. Price rise can adversely impact domestic demand. The country’s third largest manufacturing centre in Uttar Pradesh is also battling financing woes, power crunch and increase costs due to hike in employees’ dearness allowance to help them tide over inflationary trends. In Ludhiana as well, irregular power supply is preventing knitwear units from realising their production capacities. “Units are investing in automation as this helps enhance productivity – one machine replaces 15 hands. Introducing machines also makes sense since skilled labour is in short supply and wages are hovering around twice the normal rates. But power fluctuation has caused some units to suffer losses from malfunctioning sensors,” observes Vinod Thapar, president, Ludhiana’s Knitwear Club and managing director, Ludhiana Integrated Textile Park. Some of these problems are expected to be resolved once the Ludhiana Integrated Textile Park, coming up on 69 acres at an investment of around Rs 115 crore, is opened. Thapar sees room for many more such initiatives: “Such parks would ease out the textile units from the city and also help them in expanding their business.” Parks would also help textile units learn about funds made available by the textile ministry under the Technology Upgradation Fund Scheme (TUFS) and various other schemes. We expect 85 small and medium sized units to shift into the upcoming park. Hopefully, the Ministry of Textiles will extend its Scheme for Integrated Textile Parks (SITP).”

In order to ensure the industry does not suffer from want of trained manpower, 16 institutions have been established in Tirupur. These educational centres offer both part-time and full-time courses. For instance, the NIFT-TEA Knitwear Fashion Institute offers courses in knitting, fashion-designing, merchandising, apparel manufacturing and management. It is estimated that four out of five of the 200 students who graduate every year are absorbed by the local industry. Other institutions include ATDC-Tirupur, PSG College of Engineering, Institute of Chemical Engineering at Erode, Tamil Nadu Engineering College in Coimbatore etc. A graduate course in Fashion and Apparel Design is also on the anvil in Bharthiyar University. In West Bengal, the Apparel Export Promotion Council has lent its existing training facilities in Kolkata to workers in the hosiery sector. Thapar looks forward to the commissioning of the first institute to train local hands for the knitwear industry in Ludhiana. “Following this, we would like to expand facilities for more girls to come forward and join the industry.”

The country’s third largest manufacturing

centre in Uttar Pradesh is also battling financial woes, power crunch and increased costs

Training Manpower

Efforts are also underway to resolve the manpower shortages plaguing the industry. Overall, the textiles and clothing industry in India employs about 50 million people and provides a living to eight per cent of the population. In south India, women dominate the workforce.

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Luxury Knitwear

As the domestic knitwear market matures, more overseas brands are expected to see benefit in entering the country’s competitive yet extremely lucrative market. According to Abhay Gupta, executive director, Blues Clothing Company Ltd, “Luxury knitwear made of fine blends like cashmere-merino, silk-merino, and silk-merino-cashmere is seeing wider acceptance. Demand is also growing for heavy wrap knits. Consumers are developing more refined tastes and are ready to experiment with the latest trends and fads set out by the fashion industry.” Besides, surveys reveal that consumers are growing more luxury knitwear brand conscious. Hence, Gupta’s strategy is based on the understanding that high-end customers seek an entire range of premium goods, made of a variety of fibres and fabrics, under one roof. With the passage of time, the luxury segment will mature.

industry 2.0

- technology management for decision-makers | october 2011 Vol. ii

PRESENT

High Performance Manufacturing: Report Launch

(L to R) Rohtash Mal, ED & CEO, Agri Machinery Group, Escorts, Ashok Taneja, MD & CEO, Shriram Pistons, Ritchie Rice, Senior, ENO Operations, Nokia, Mini Menon, Executive Editor, Bloomberg UTV, Dr. V. Krishnamurthy, Chairman, National Manufacturing Competitiveness Council (NMCC) India, Richard Bergmann, Senior Partner, Supply Chain Operations, Accenture, Sanjay Dawar, Lead, Management Consulting, Accenture, India, S. Gopal, Chief Executive, Larsen & Turbo - Komatsu Ltd.

Industry leaders, policy makers, and experts from the manufacturing domain discuss Accenture’s "High performance Manufacturing" report, in a panel discussion moderated and televised by Bloomberg UTV. Since the early 1990s, the Indian economy has progressively liberalized and integrated within the global economy. While this period has provided an opportunity for the growth and expansion of the manufacturing industry, the potential will only increase as the Indian market grows. This growth will further ensure India turns into a manufacturing hub and generate employment opportunities. However, the impact of the downturn, rising wages in many manufacturing hubs, growing resilience within the Indian domestic consumer market, an increasingly diversified consumer base have forced

manufacturing firms to re-look at the new realities and the potential of India's competitive environment. In a bid to identify the strategic priorities, key challenges and action agenda of manufacturers in India over the next five years, Accenture commissioned a survey and embarked on conducting rigorous discussions with senior business executives, policymakers and academics. Current Scenario India remains caught in a manufacturing performance paradox. When measured by output, India is steadily emerging as a manufacturing powerhouse: in 2010, India became the ninth largest manufacturer in the world. However, the contribution of manufacturing to country’s GDP continues to remain very low in

comparison to China and Republic of Korea, the other two emerging manufacturing destinations in Asia. For example, from 2001-2010, agriculture, industry and services have on an average respectively accounted for around 20%, 27% and 53% of India’s GDP. Compare that with China where the average numbers are 12%, 46% and 42%, in the same order. These numbers make it evident that the non-agricultural composition of China’s GDP is far more balanced than that of India. Dr. V. Krishnamurthy, Chairman, National Manufacturing, Competitiveness Council (NMCC), India, suggested, “For a balanced GDP, the contribution from manufacturing and services should be 40% each, while that from agriculture should stand at 20%.” However in India, considering the growth of the services peaking in the range of 9-11%, and agricultural productivity not showing sustained improvement, over the last decade, it is manufacturing that will have to shoulder additional responsibility of helping India sustain a high growth trajectory. Additionally, the manufacturing sector will also need to be an employment engine, generating opportunities for India’s emerging young workforce and absorbing its surplus agricultural labour. In such circumstances, the role of manufacturing sector in providing the necessary balance and inclusive character to India's macroeconomic growth is undisputed.

Accenture’s High Performance Business Manufacturing Framework The Accenture research study aimed to discover how—given a certain set of macro constraints— some manufacturers in India are overcoming firm-level challenges in order to continue to outperform their peers and sustain high performance. Drawing insights from a survey of 100 respondents including business leaders, policy makers and academics and Accenture’s proprietary High Performance Business Research (which has examined more than 8000 companies globally), Accenture has developed a proprietary ‘High Performance Business Manufacturing Framework’. This framework provides manufacturers with insight into the three essential building blocks that are critical to become high performance manufacturers in India: Market positioning: For a manufacturer, the journey to high performance begins with a very clear articulation of the core differentiation strategy. Manufacturers should therefore focus

on investing in strategic priorities supporting their core differentiation strategy. Accenture research suggests that high performing manufacturers in India focus on investing in strategic priorities (such as, launching new products, raising productivity, scaling capacity, entering new consumer markets) supporting their core differentiation strategy. Distinctive capabilities: Accenture has identified four distinctive capabilities manufacturers need to build to effectively deploy their core differentiation strategy: 1. A smart shop floor, which allows companies to integrate lessons from past operations to balance technology and labour and to consistently deliver productivity improvements. 2. Market-driven innovation infrastructure that helps companies build an agile and cost-efficient innovation engine capable of responding to shifting customer demands. 3. Data-based decision making, which raises the level of service and productivity in the

supply chain by making optimal use of information. 4. Responsive relationships that reduce supply chain risk and help companies scale while maintaining quality. Performance culture: In order to support and exploit the distinctive capabilities that can lead to high performance in manufacturing, companies must also have the right culture – a culture of high performance. The four actions that can nurture such a culture: 1. Build manufacturing’s brand image in India within and outside the traditional boundaries of the firm. 2. Invest in a best-in-class operating environment that gives workers the incentive to offer their best on the shop floor and be loyal to the firm. 3. Use sustainability to build competitiveness, by using lessons from sustainability initiatives to strengthen core differentiation. 4. Develop leaders across the organization with the right skill sets at all levels.

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HIGH PERFORMANCE MANUFACTURING

INDIA’S NEXT OPPORTUNITY The Challenges Currently, there are numerous challenges that daunt the Indian manufacturing industry including insufficient investments, due to which, businesses in the manufacturing space prefer importing and trading goods rather than manufacturing them. As Dr. Krishnamurthy points out “The investment needed in order to modernize our industry, and create the necessary capacity is not adequate. As a result, dependence on manufactured goods through imports is increasing, and we are developing a trade culture rather than a manufacturing culture.” Apart from investments, the key challenges cited by Accenture’s report are poor infrastructure, corruption, and lack of policy coordination. As Ashok Taneja, MD & CEO, Shriram Pistons highlighted, “There are several factors which are not allowing the manufacturing sector to grow at the rate at which it could and ought to. The most important is infrastructure deficit, where, I would place the availability and quality of power at the forefront.” Apart from these issues there are other serious problems the industry faces regularly as Taneja added, “The education system is somehow disconnected with the needs of the industry. So while we have large numbers of engineers coming from institutions every year, they are not plug-and-play kind of engineers. They need to go through an extended training program before they are useful to the industry.” There are also concerns of the widening gap between emoluments and labour productivity. For instance, since 2007-08 the growth in average emolument has exceeded labour productivity and this dangerous trend was exacerbated in 2008-09. Moreover, manufacturing companies are often unable to attract and retain the best talent due to stiff competition from the service industries. This trend of talent scarcity has its repercussions on other aspects as well, such as scalability. “There is a huge demand, but the ability to scale-up is a big challenge, due to shortage of talent in the manufacturing sector,” said S. Gopal, Chief Executive, Larsen & Turbo - Komatsu Ltd. The Opportunities Despite weaknesses, 98% survey respondents saw India as an increasingly attractive destination for manufacturing. They pointed at several reasons for this high level of optimism. Chief among them: proximity to the expanding domestic consumer market and access to high-end skilled talent, such as engineers and managers.

However, it is the demand that makes manufacturing in India lucrative. “As demand actually grows the manufacturing does catch up and is catching up with it,” remarked Rohtash Mal, ED & CEO, Agri Machinery Group, Escorts. The Solutions To hone their performance across the value chain, it is time Indian manufacturers adopt a studied and systematic approach. Accenture offers one such approach through its proprietary ‘High Performance Business Manufacturing Framework’. (See box below) Additionally, there is lot India can learn from the German manufacturing sector’s growth story during the last decade and China’s “SunShine Project.” As in India, family-owned SMEs make up the backbone of German manufacturing. They have historically specialized in machinery and other heavy equipment. But in recent years, these enterprises—with active support from large industries (their customers) and government—have turned manufacturing into an art form. Additionally, they found unique ways to cut labour costs by sometimes providing an employment guarantee for a fixed period as a quid-pro-quo for less. The result of such strategies is evident. Germany has emerged as the most competitive industrial economy within EU, with a GDP growth of 3.6% during 2010, and unemployment declined in spite of the global economic crisis. Dr. Krishnamurthy said, “Innovations takes place in the SMEs, who provide the components to larger industries. There has to be greater emphasis in terms of nurturing the SMEs.” On harnessing and creating a talent pool, there are some interesting lessons to be learnt from China’s SunShine Project, which productively integrated surplus agricultural labour into its manufacturing sector. When China initiated the program, it left the majority of training to market-driven non-governmental educational institutions, which tended to be the most responsive local manufacturers skill requirements. In India to address the issue of talent scarcity, Taneja suggested that instead of poaching talent, companies should ideally create surplus talent. While, L&T’s Gopal citied an example of his company, which offers its employees training, retraining, fast track and refresh courses to retain them.

Going Forward The mammoth investments being made by the private sector and financial institutions in creating manufacturing capacities clearly exhibit that there is too much at stake to risk failure. The ability of large manufacturers to drive growth among India’s SME manufacturers by achieving high performance will determine India’s ability to fully realize its inclusive growth agenda.

Advantage India The success of Chinese and American manufacturers show there is a close link between high performance and a manufacturer’s ability to make the most of the unique strengths of its local environment. Indian manufactures too, have their own set of strengths, which they need to further leverage with the motive of making the country a global manufacturing hub. “We are among the top ten manufacturing nations in the world today, having moved from the 13th position in 2000 to the 9th position in 2010. I feel there is a lot Indian firms can do themselves and collaboratively in an eco-system of the industry to ensure further growth,” said Sanjay Dawar, Lead, Management Consulting, Accenture, India. In India, the unique character of three key business levers—business technologies and processes, labour and talent, and partner networks—provide manufacturers with the opportunity to distinguish themselves from competition both at home and abroad. As Ritchie Rice, Senior, ENO Operations, Nokia said, “The skill set of the (Indian) labour force such as engineers, middle-management are readily available. We were able to ramp up here 5 years ago, virtually with no influence from our sister sites. There is quite abundant workforce available, they may not necessarily be industry ready and it takes a few months to get them ready.” Agreeing with Rice, Richard Bergmann, Senior Partner, Supply Chain Operations, Accenture said, “The population and resources India has is extraordinary, considering the collaboration, the coexistence, and the level of importance education in India has had for years.” Moving forward, manufacturers can improve competitiveness by drawing on India’s world-class service sector for cutting-edge technologies to improve performance management and enhance service levels across their value chain.

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& prashant kumar

Preparing

for a

Green Future 28

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rowing public awareness of environmental issues is making it imperative for manufacturers to focus on controlling and reducing green house gas (GHG) emissions. Around the world, manufacturing executives are adopting a variety of approaches to address issues like carbon accounting, environmental and regulatory compliance. They are also examining cost reduction initiatives and the adoption of Clean Development Mechanisms (CDMs). The demand for greening of business practices continues to gather steam. Every day we hear of a new development, a corporate commitment, a technological breakthrough,

a new partnership addressing environmental challenges, or a new finding from various agencies, labs or research groups about the progress being made. While there is little doubt that organisations are getting cleaner and more efficient, this change is often incremental. That’s because many of the gains are offset by the growing scale of operation — and economic growth. There is no denying of the fact that a greener company, with greener products and services, is more desirable to a growing segment of customers. The prominence of global warming concern has also made going green a part of many Corporate Social Responsibility (CSR) agendas to enhance customer and public perception. Some companies are led by ‘true believers’ who

simply want to do the right thing for the environment. In other cases, the shift in attitude is being driven by the realisation that greening is not cost, but it is a way of doing sustainable business. And that a systematic approach can offer substantial cost reductions — and enhance the company’s competitive advantage. In a few cases, companies are realising that the environmental impact of manufacturing activities now represents a serious business risk — and they need to do something about it.

Why Go Green? * Government mandates * Improved energy efficiency * Enable product and company differentiation * Enhance corporate social responsibility (CSR) * Ensure corporate sustainability

The Manufacturing Challenge

Becoming a green manufacturer is big challenge — especially if you are in a traditionally ‘dirty’ industry like mining and metal (M&M) production. This industry that has

Understanding the causes of GHGs in metals and mining industry can help institute better controls and effective reduction programmes

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By implementing a “green” dashboard, you can quickly identify the sources of emissions expanded significantly in capacity and geography over the last 50 years. Powered by demand from newly industrialising countries like India and China, it is expected that M&M will continue to grow — and emit large quantities of GHGs. According to the Intergovernmental Panel on Climate

Change (IPCC), the steel industry accounts for between four to five per cent the of total world GHG, with 1.7 tons of carbon dioxide emitted for every ton of steel produced. Almost 90 per cent of the emissions in the steel industry comes from iron making, and 60 to 70 per cent of the emission in

aluminium industry is from smelting operations. Reducing GHGs in M&M industries is a significant challenge-and requires a combination of reduction efforts and offsetting. The entire metal producing value chain has to be examined to identify and minimise the ‘bad inputs and outputs’, and maximize on the ‘good outputs’. To do this effectively, you need to perform carbon accounting across the metal producing value chain, and use the information to control and develop Clean Development Mechanism (CDM) projects. By implementing a Carbon Emissions Management System (CEMS) you can standardise and improve processes, manage environmental compliance, supply emission data for carbon credits trading, and strategically link carbon accounting into company’s risk management framework.

Getting the Facts

To start off, you need to gather the

The supply chain offers a number of opportunities to save costs and energy; and reduce waste

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Green initiatives demonstrate the alignment and commitment of the organisation to protecting the environment data — preferably in real time from all GHG contributing process parameters. For example, in the steel industry you need to capture data from a variety of iron making operations (blast furnace, coke making, sinter making), steel making, hot rolling and cold rolling. If the data can be directly collected from process equipment, PLCs, and shop-floor systems then you will have real-time role-based visibility of GHG emission drivers. This data can be used to operations, improve efficiencies and drive changes.

Tackling Transportation Sources

In the M&M industry, material transportation frequently accounts for a significant chunk of the costs. In a scenario of rising energy and fuel costs and tougher regulations on carbon footprint it is important for the M&M industry to focus on greening and leaning of the transportation and logistics (T&L) services too. To make T&L activities greener and leaner, you can use techniques like network planning, route optimisation, better scheduling, utilisation monitoring of equipment, usage based insurance, emissions calculation, etc. Corporate executives expect both financial and public relations payback in adopting a green initiative. It is important that becoming a green manufacturer should be a competitive advantage, not a cost burden. By using systematic processes, you can optimise your energy use and cut GHC contributions. The savings can then be ploughed back into more greening initiatives as new investments. By using appropriate IT-enabled solutions, you can effectively track the carbon footprint across the entire manufacturing value chain, and institute better internal controls. This article excerpted from a report titled “Greening for Future” from Tata Consultancy Services. Sanjeev Ranjan is Head of Growth Initiatives, Resources at TCS. He has more than 22 years of cross-functional experience in business strategy and operations. CSR KRISHnan is Global Sales and Delivery Head, IT infrastructure consulting with 17 years of experience in computer architecture and technology. PRaSHanT KumaR has 10+ years of experience in the mining and metal industry across a variety of functions.

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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.efd-induction.com

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Picture Courtesy: Photos.com

Businesses Need to Care Assimilating two often-incompatible objectives â&#x20AC;&#x201D; lowering carbon emissions and reducing waste, while at the same time raising productivity and revenue â&#x20AC;&#x201D; continue to dominate discussions even at global climate summits

by steve starbuck

october 2011 | industry 2.0

- technology management for decision-makers

nited Nations delegates from 191 countries met in Cancun, Mexico in December 2010, with an aim of working towards a global agreement to mitigate climate change. The United Nations Climate Change Conference, known as the Conference of Parties (COP), has taken place each year since 1995. The primary focus of recent conferences has been on negotiating a new, comprehensive agreement that would include commitments from all major economies, including the United States and China. Achieving such a comprehensive agreement has proven difficult. No new agreement was created during the summit in Cancun. As a result, there is a growing sense of urgency to create a new accord as the commitments from the last global climate change agreement, the Kyoto Protocol, are set to expire by 2012 end. The next COP is scheduled for Durban, South Africa in December 2011. While the UN negotiators struggled to reach a consensus in the halls of the Cancun convention centre, leaders from businesses all around the world met in different forums outside the convention centre to observe the proceedings and assess their own evolving roles on climate change. One of the largest side events was the World Climate Summit, a business conference that took place in between the two weeks of UN

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negotiations. During this event, executives candidly discussed how the business community can realise the ultimate ‘win-win’ — to improve financial performance while reducing carbon emissions and waste. Despite the lack of progress on a global climate change agreement and the related regulatory uncertainty, corporate executives in Cancun expressed a commitment to investing proactively in environmentally sustainable business practices that simultaneously meet the bottom-line growth expectations of their stakeholders.

Driving Business Benefits

Momentum for corporate action to combat climate change is increasing, in part because businesses recognise they can no longer afford to wait for guidance from the public sector. Jose Maria Figueres, the former president of Costa Rica and leader of the UN Information and Communication Technologies task force, summed up the matter at a speech during COP 16: “The war on climate change is too big to be left in the hands of government.” The role of business in relation to climate change was expanded upon during a keynote speech by Christiana Figueres, Executive Secretary of the UN Framework Convention on Climate Change that opened the World Climate Summit. Figueres demonstrated an understanding of the pressure on the corporate community to balance being responsible environmental citizens and achieving strong financial performance, as she urged businesses to intensify efforts to counteract climate change by taking concrete steps in three targeted areas that can generate significant financial returns. In the workshops that followed, attendees discussed the role of business in the battle against climate change, noting that the ac-

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tions they take will need to make good business sense that result in revenue generation, cost reduction or risk mitigation in addition to the environmental benefits.

Implementing Nonregrettable Initiatives

Figueres identified environmentally friendly initiatives that are inherently beneficial to the bottom line as ‘non-regrettable’ measures, including energy-efficiency technologies, as one way the climate change agenda can easily become part of cost-savings strategies, particularly in terms of infrastructure costs. To lower their carbon footprints and reduce costs, leading companies are implementing energy-efficiency measures, such as investment in new lighting technologies, data centre improvements and other green building mechanisms. Executives at the World Climate Summit from a variety of industries highlighted the significant savings that energy-efficiency investments have yielded over short and long periods of time. As exemplified by many companies, investments that meet acceptable RoI hurdle rates can and should be made without regret. To do this effectively, financial executives should make sure that all internal stakeholders are at the table in the RoI discussions, including facility managers, purchasing professionals and an integral functional group, the tax department. Return on investment modelling should include the various relevant incentives, such as local utility company programmes, as well as federal, state and local tax incentives.

Seizing Opportunities Along the Entire Value Chain

Figueres pointed to the entire value chain as a second area to iden-

tify cost savings through the environmental lens. In many industry sectors, the biggest factors in a company’s environmental footprint fall outside of its direct control. The bulk of a company’s emissions often result from processing, packaging, transportation or other activities undertaken by its suppliers. Additionally, in many cases, the carbon footprint created by the use and disposal of a company’s product is bigger than the footprint created when the product was manufactured. Consequently, businesses are looking at the value chain in its entirety, analysing the impact of their products and services at every stage of production, from sourcing of raw materials to end-of-life product disposal. Figueres urged companies to ‘look upstream’, searching for opportunities to work with suppliers to reduce greenhouse gases and implement sustainability strategies. A global survey of 300 corporate executives, conducted in 2010 by Ernst & Young, found that two-thirds of companies are already discussing climate change programmes with their suppliers. More than one-third (36%) are working directly with suppliers to wring carbon emissions from their value chains. Executive focus on greening the value chain can result in cutting costs out of the supply chain and increasing revenue by meeting the preferences of more environmentally conscious consumers. Financial executives can play an invaluable role in this effort by helping to measure the economic impacts of the potential ways to cut carbon emissions and waste from a value chain. The opportunities exist, for instance, to cut carbon and waste through various activities, such as purchasing, storage handling and asset recovery.

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cover story Investing in Pioneering Technologies

place. However, there is a tremendous amount of additional opportunity. Notable transformations have taken place in the footwear and, food and beverage industries. More recently, the transportation industry is assuming entirely new product segments based on clean technologies, such as electric vehicles and biofuels. Transformation comes about in many ways — in some cases, it occurred when an individual company shared

In the words of Lord Nicholas Stern, a British economist attending the Cancun summit, “The new industrial revolution has begun, and the business world is leading this challenge.” Financial risks and opportunities will need to be evaluated as companies debate the options for investment in new technologies. The evaluation of new risks and opportunities can be done through innovations that transform a company and, ultimately, an entire industry. This was the third area that Figueres raised as the most ripe for corporations, as it can benefit both the environment and company While government financials. She challenged support is necessary to attendees at the World address the challenges Climate Summit to work posed by climate within their industries to change, there is no drive sector-wide transreason for businesses formation through envito wait for a global ronmental innovation. accord to implement Implementing that have strategies the non-regrettables mutual economic and greening the value and environmental chain will have meabenefits surable impacts on the environment. Business leaders can have an even greater influence, she noted, by investing in a best green research and development. R&D through an environmen- practice. In tal lens can enable a company to the case of the bring about new consumer prod- automotive indusuct segments, new strategies for try, rapid competicost-effective energy management tion for the most economic and and new operational efficiencies. efficient vehicle is accelerating At a company level, this process eco-friendly industry change. Additionally, industry-wide transibegins when environmental sustainability risks and opportuni- tions to more environmentally sound ties are considered as part of the standards can take place through corporate and financial strate- collations and partnerships. gies. Opportunities to implement company-wide transformation Why Not Now? could take place throughout an Though leaders across all sectors organisation from its supply chain recognise the critical need for to infrastructure management to a global agreement among the energy usage, among other areas. world’s major economies to reIndustry-wide transformations duce carbon emissions, there have and are currently taking was consensus in Cancun that

october 2011 | industry 2.0

- technology management for decision-makers

the business community should act on its own and not wait for others or governments. Numerous business drivers — including internal and external stakeholder demands — are currently creating pressure to propel the US and global business response to climate change. Increasingly, corporate stakeholders (investors, customers and employees) expect a focus on environmental sustainability, as well as transparent and readily available in information about companies’ progress. And while government support is necessary to address the challenges posed by climate change, there is no reason for businesses to wait for a global climate change accord to implement strategies that have mutual economic and environmental benefits. They can take steps now in the areas of implementing energy-efficiency measures, seizing opportunities to lower carbon emissions along the entire value chain and investing in pioneering technologies to generate industry-wide transformations. With a focus on lowering their carbon emissions and reducing waste in the three areas, companies tap new potential to make money, save money and manage risk. Bottom line, it’s about finding balance between environmental and economic benefits.

STEVE STARBUCK, the America’s Leader of Climate Change and Sustainability Services at Ernst & Young LLP, attended the United Nations Climate Change Conference as an observer and facilitated an executive discussion at the World Climate Summit, the largest gathering of business executives during COP 16. ©2011 Financial Executives International | www. financialexecutives.org

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Managing Variability x Reducing Uncertainty = Increased Sales + Increased Profitability

Future Supply Chains distribution centre at Bhiwandi

Only an expert can help achieve this profitable equation At Future Supply Chains, we provide complete visibility, thereby reducing uncertainty and managing variability in the supply chain, leading to increase in sales and profitability. We have the best-in-class Technology, Automation, Infrastructure, Systems, Processes, People, Knowhow, Expertise and Network. Our services include Contract Logistics, Express transportation services and International Logistics. Our Integrated Network of movement, storage and fulfillment services include Storage capacity of over 6 million, strategically located across India Robust Express service, supported by Transportation Management System and GPS-enabled Vehicle Visibility System Warehousing facilities equipped with best-in-class Warehouse Management System (WMS) and Indiaâ&#x20AC;&#x2122;s first Put-to-Light Sortation system (PTL) Our Infrastructure and Automation takes efficiencies in service to a new level

With Future Supply Chains, you not only store and move goods, but also move up your sales and profitability.

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An ISO 9001:2008 certified company

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Green can

be Profitable

or the first time in the 10 year history of the survey, the 2011 edition of the annual Carbon Disclosure Project (CDP) Global 500 report has found that the majority of the companies surveyed have climate change actions embedded as part of their business strategy. The report, written by global professional services firm, PwC, on behalf of CDP, attributes this to growing board-level awareness of the link between energy efficiency and increased profitability. The report, entitled Accelerating Low Carbon Growth, analysed disclosures from 404 of the world’s largest companies (representing 81% of the Global 500), which revealed 68 per cent have climate change at the heart of business strategies, compared to just 48 per cent in 2010. There was also a marked rise in the number of companies reporting reduced greenhouse gas emissions, as a result of emissions reduction activities (45%, up from 19% in 2010). A correlation was also established between higher stock market performance over time, and representation on CDP’s Carbon Performance Leadership Index (CPLI) and the Carbon Disclosure Leadership Index (CDLI). Companies with a strategic focus on climate change provided investors with approximately double the average total return of the Global 500 from January 2005 to May 2011. Asked what his conclusions were based on in the report, Paul Simpson, CEO of the Carbon Disclosure Project told CFO India, “The improved financial performance of compa-

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nies with high carbon performance is a clear indicator that it makes good business sense to manage and reduce carbon emissions. This is a win-win situation for business — the short returns on investments (RoIs) many emissions reducing activities have, can help increase profitability. Companies yet to take action on climate change will have to work hard to remain competitive as we head towards an increasingly resourced constrained, low carbon economy.” Agreeing largely with Simpson, Alan McGill, Partner, Sustainability and Climate Change, PwC said, “Historical financial performance is being exposed by climate change as an outdated model to assess long term business profitability and growth, when you consider the much wider range of financial and nonfinancial risks associated with business today. Today’s investors have different information needs, which are leading to tougher verification regimes, more emphasis on executive and staffing responsibilities and incentives, and much more unforgiving examinations of the contribution of business to society. We are accelerating towards newer reporting models that better balance financial and non-financial performance.”

Martin and Morgan Stanley from USA; Honda Motor Company and Sony Corporation from Japan; SAP from Germany; AXA Group and Schneider Electric from France; ENEL and FIAT from Italy, British American Tobacco, BG Group and Glaxo SmithKline from UK and Novartis from Switzerland. Speaking at a global video conference held simultaneously across nine cities and three continents, that brought together the CDP leadership, UN officials heading the climate change projects and CXOs from some of the world’s largest corporations, Peter Graf, Chief Sustainability Officer, SAP said, “We have not only helped our customers to reduce their energy use and related carbon emissions through our software, but also used it ourselves to avoid 185 mn in cost as we reduced our footprint by 25 per cent since 2007.”

How it woRks

CDP’s Carbon Action initiative was launched in 2011. A request was sent to the Global 500 on behalf of a vanguard group of 34 investors with US $7.6 tn in assets asking companies to implement greenhouse gas emissions reduction targets and cost-effective reduction activities. CDP asks almost 6,000 of the world’s largest companies to report on their climate strategies, GHG emissions and energy use in the standardised Investor CDP format. A total of 551 financial institutions with assets of US $71 tn were signatories to the CDP 2011 information request. Low carbon growth is now widely accepted as fundamental to generating long-term shareholder value, avoiding dangerous climate change and helping the global economy recover from recent turmoil. It is for these reasons that in 2011, CDP sent its annual request to a pre-selected 500 companies on behalf of 551 investors with US $71 tn of assets, asking them to measure and report what climate change means for their business. This year, 81 per cent (404) of corporations from the Global 500 responded to the CDP questionnaire.

“The improved financial performance of companies with high carbon performance is a clear indicator that it makes good business sense to manage and reduce carbon emissions” —Paul Simpson, CEO, CDP

RisinG AwAReness

Rising oil prices, energy supply risks and growing recognition of the commercial returns on investments in emissions reduction activities contributed to the growth in importance of climate change as a boardroom issue. Over half (59%) of reported emissions reduction activities delivered payback in three years or less, according to company submissions. These include energy efficiency projects (building fabric, building services and processes), low carbon energy installations and staff behavioural change. Employee incentives to reduce emissions are now offered by 65 per cent of companies, compared with 49 per cent in 2010. The Carbon Performance Leadership Index and Carbon Disclosure Leadership Index are revised annually based on company submissions and present the leaders of the Global 500 in carbon performance and disclosure respectively. There are 14 new entrants to the 2011 Carbon Performance Leadership Index, which counts just 29 companies due to more demanding criteria applied by CDP. These are: Air Products & Chemicals, Lockheed

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tHe Bottom Line

India is still grossly under-represented as far as the practice of carbon disclosure is concerned, with a mere 18 corporations listed in the 2011 CDP report. Some of the largest coprorations in fact are still not reporting their carbon emissions or have a clear strategy to reduce emissions. The challenge before CFOs across India Inc now is to prepare and execute an effective strategy so that they can get on board in the global fight to reduce greenhouse gas emissions and at the same time increase their bottom line — before it gets too late.

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keY FinDinGs oF tHe 2011 RePoRt PositiVes

• 73 per cent of respondents reported emissions reduction targets (65% in 2010) • The majority of respondents (93%) reported board or senior executive oversight for climate change (up from 85% in 2010) demonstrating the importance of climate change as a management issue • Over 30 new companies targeted by CDP’s Carbon Action request have now set reduction targets, implying growing recognition by companies of the commercial benefits of emissions target setting

neGAtiVes

• Telecommunications is the only sector not represented in the CPLI this year • The energy sector lags behind other sectors with only 55 per cent of companies setting targets and is underrepresentated in both the CDLI and CPLI • Just 37 per cent respondents verify their emissions to acceptable standards, despite the importance of providing investors with validated climate data

- technology management for decision-makers | october 2011

opinion

“The focus is on promoting the

green economy” Lynda Gratton, Professor of Management Practice, London School of Business spoke to Dhiman Chattopadhyay about how demographic and sociological trends will help companies reduce carbon footprints

ow is India perceived as a business destination? What are the things India is doing right and what are the challenges ahead? I think India is achieving amazing things. Considering its history, it has managed to establish a firm economic base, and is gradually moving up the value chain. Its demographic forecasts look promising too, with its working population overtaking that of China by 2030. A young population is already helping India push ahead in terms of technology adoption — India’s Generation Y is the most technologically demanding in the world according to a recent Accenture survey. A few tensions, though, will need to be resolved to ensure that rapid growth continues. The first is that the government will no longer be able to manage economic growth as much as it has previously. The focus will have to be on the nation’s infrastructure and on promoting the green economy. The second challenge is closely linked to this issue of infrastructure: Behind the headline news

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of strong growth rates is a crisis of increasing income disparities. The physical infrastructure of roads is vastly underdeveloped and has left many rural areas excluded from the exciting economic activity of the urban centres. Why are demographics and the environment so important today? Why would organisations need to factor in these issues when budgeting for or planning a new project? By 2025, we can expect that people will be more individualistic and increasingly prepared to forge lifestyles based on their own needs and to reduce their carbon footprints. I predict that, in 2025, many people will live their lives alone or in small family groups and some of these relationships will become more virtual. It will increasingly be the norm to work much of the time from home or in small community hubs to avoid the carbon costs. Younger men will have decided to spend more time at home and to take a more active part in caring for their children. More people will work as freelancers and ‘neo-nomads’, expecting increasing autonomy and freedom. As families become smaller and more dislocated, friends (and

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what I have termed the ‘regenerative community’) will play an increasing role in individual happiness. This is something HR and indeed, the CFO and his finance team, will have to start working on when planning for the future. You spoke about reducing carbon costs. Where does India stand in the war against carbon emission? What are some of the best practices and how how can organisations stand to gain by reducing their carbon emissions? India, along with China, is treating the issue of climate change with a level of sincerity not yet seen in some Western nations.

at low cost — has its roots in India, and is inherently efficient. Even large companies such as TCS are embedding the notion of sustainability into their development strategies: look at Yantra Park, the TCS green campus near Mumbai, that places a premium on reducing the carbon footprint. These developments are just part of a gradual shift towards a sustainable world. Though low carbon issues have traditionally been seen as challenges to be addressed, companies and their CFOs are now seeing them as opportunities to be embraced. Think of the new green economy —

Ms Lynda Gratton

Is Professor of Management Practice, London School of Business, and an authoritiy on people in organisations. An author of six books on the subject, her recent research is on The Shift: How investors and governments will put The Future of Work in billions of dollars into sectors Is Here Now. and organisations that use alternative sources of energy and are carbon neutral. The organisations and indeed the nations that join the war against carbon the fastest, will benefit from being an integral part of this future.

“It will increasingly be the norm to work much of the time from home” Government and industry have not only acknowledged the challenges ahead, but have started to realise the opportunities of a low carbon future. Investment in advanced low carbon technologies are being made all throughout India. The emphasis on frugal innovation — creating robust products

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- technology management for decision-makers | october 2011

management & strategy

Nice is Overrated Leaders who understand their people and listen to grievances are great leaders. But being the ‘nice guy’ isn’t always a great reputation for a leader to have By DaviD Lim

ne of the most impactful news stories recently was the death of Apple cofounder Steve Jobs. As a personal fan of the Macintosh, and all its variants of the desktop computer, I credit him (and his teams) for shaping how we actually live and work. The next time you drag a file into the trash bin on your desktop — well, that was Apple’s creation, the famed GUI — graphic user interface. With a sharp business acumen, Jobs was a CEO who thought like a CFO (with all due respect to Peter Oppenheimer, Apple’s CFO), a showman, a tech visionary and a ruthless business developer. I want to talk about the lessons we can learn from the flipside of Steve Jobs, or what I call the Dark Side. Recently, articles from the Huffington Post have painted a contrarian view of the man. In my humble opinion, we all have a Dark Side. Our success in life depends on how we manage it. Jobs himself was described by many former employees and associates as ruthless, rude, hostile, spiteful. Fortune quotes a story where he gave a half-hour dressing down of his staff. Jobs berated them: “Can anyone tell me what MobileMe is supposed to do?” He got an acceptable answer, and then continued, “So why the f**k doesn’t it do that? You’ve tarnished Apple’s reputation,” he told them. “You should hate each other for having let each other down.” He then fired the group leader on the spot. So here’s my take on managing this:

Focus on outcomes and be harsh on behaviours that don’t support this After all, people are in a business to achieve specific goals, and by keeping criticism focussed on outcomes and behaviours, you avoid upsetting people by keeping the criticism away from their personalities or personal values.

Understand that greatness and excellence was never derived from a softly-softly approach Jobs knew this as well. You need to take a robust approach, and have great laser-like clarity in your dealings and behaviours. Sometimes, this will put off people who are less committed and less hard-

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- technology management for decision-makers

working. Being uncompromising also means you are willing to affect the quality of certain relationships. Are some tennis champions ‘bad boys’ for swearing and cursing? You bet. But does this detract from their excellence and achievements? No way.

Be ruthless on outcomes, as well as acknowledging failure Remember the failed Apple product, the Newton? Hailed as a step forward, the tablet that came out in 1983, was a market failure. Jobs took the blame and moved on. Mukul Deva, a friend of mine, is a technothriller author in India. He says that once a book is written and sent off to the publishers, he moves on. When we are ruthless for outcomes, we push our people — not that we want to break them, but so that we can help them find what they are capable of. Not everyone you deal with is as committed as you are. You can choose to be ‘nice’ or you can push them hard when the situation demands. You may be surprised at the outcome.

Being a CXO isn’t about popularity I’m sure many of you reading this may have fired staff in the past. It’s never an easy task, but made easier if you consider this guideline: If all the coaching and training doesn’t produce the outcomes you want with respect to a staff member, only three things can happen to resolve the impasse: a) you leave, b) they leave, c) you fire them. Many CXOs could be much more effective if they were brave enough to have clarity about this and fired more toxic workers. Many years ago, I used to be given a dressing down in college by my English professor who hated the word ‘nice’ when I used it in literature. To her, nice was the vaguest of descriptions of just about anything. When I die, I’d like to be described in a variety of ways: driven, motivated, decisive, but never ‘nice’. So, get in touch with your Dark Side. Nice is overrated. David Lim is a leadership and negotiation coach, best-selling author, and two-time Mt Everest expedition leader. Check out a free e-book segment of his latest book How Leaders Lead at http://www.howleaderslead.com Contact: david@everestmotivation.com.

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management & strategy

Pricing the

Planet Understanding a companyâ&#x20AC;&#x2122;s full exposure to energy and environmental risks will in many cases be a decisive factor, determining its long-term viability by peter bisson, elizabeth stephenson, and s patrick viguerie

he tension between rapidly rising resource consumption and environmental sustainability is sure to prove to be one of the next decadeâ&#x20AC;&#x2122;s critical pressure points. Natural resources and commodities account for roughly 10 per cent of global GDP and underpin every single sector in the economy. No one will sit on the sidelines in this debate. The interplay of three powerful forces will determine what resources we use, how we use them, and what we pay for them:

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1. Growing demand. Even the most conservative projections for global economic growth over the next decade suggest that demand for oil, coal, iron ore, and other natural resources will rise by at least a third. About 90 per cent of that increase will come from growth in emerging markets. 2. Constrained supply. As easy-totap and high-quality reserves are depleted, supply will come from harder-to-access, more costly, and more politically unstable environments.

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3. Increased regulatory and social scrutiny. Around the world, political leaders, regulators, scientific experts, and consumers are gravitating to a new consensus that is based on fostering environmental sustainability. Climate change may be the most highly charged and visible battleground, but other issues loom: water scarcity, pollution, food safety, and the depletion of global fishing stocks, etc.For businesses, this new sensibility will present itself in two ways: stricter environmental regulations and increasing demands from consumers and employees that companies demonstrate greater environmental responsibility. To understand how the world

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is likely to change as these forces collide, start by distinguishing between resource stocks, which are not likely to change much over the next decade, and resource flows, which will change enormously. Despite huge investments in clean energy, in 2020 the ratio of fossil fuel consumption to renewable and nuclear power will remain roughly 80 per cent. No realistic scenario will move the needle: the embedded resource infrastructure is so large that any transition away from fossil fuels will take decades. But the view changes dramatically when you look beneath the supply stock to the flows of new investment. Suddenly, clean tech emerges as one of the next decade’s biggest growth industries. Upward of $2 tn will probably be invested in building clean-energy capacity globally over the next ten years. In the United States, 90 per cent of this expanded capacity will be in renewable or nuclear energy — 66 per cent in the European Union and China. Before 2020, this investment will probably create a clean-tech industry generating well over $1 tn a year in sales. No country better epitomises this contradictory dynamic than China, which in recent years has emerged as both the world’s biggest carbon emitter and — if future actions speak louder than words — arguably its leading clean-energy champion. Buoyed by strong economic tailwinds, Chinese electricity demand is growing by 15 per cent a year, creating the world’s largest market for power generation equipment. To date, China has kept pace by adding a slew of coal-burning power plants that emit a lot of carbon. But motivated both by the huge costs of environmental degradation and by fears of overdependence on Middle Eastern oil, Beijing has

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the fossil fuel consumption infrastructure is so large that, despite recent clean-energy investments,

the ratio of fossil fuel to renewable and nuclear power use in 2020 will still be 80 per cent, as it is today moved decisively to support the development of clean-energy technologies. China may be the world’s number-one polluter, but it is also the world’s largest consumer — and manufacturer — of wind turbines and solar panels. And it will soon take a commanding lead in the use of clean-coal and nuclear technology. In fact, China is building the clean-energy businesses of the 21st century — not just locally but globally too. Suntech Power, China’s largest manufacturer of solar panels, now commands 12 per cent of the US solar market. The company, which will soon open its first factory in the United States, hopes to capture 20 pecent of the US solar-panel market over the next two years. As a result of this enormous

shift in flows, some business models will be obliterated, others will thrive, and yet others, especially outside the resource sector, may barely change. For CEOs, understanding their true exposure to energy and environmental risk will require more sophistication than ever and will emerge for many as a — if not the — decisive factor determining the long-term viability of their companies.

Commodity prices will rise higher — and fall harder

For most resource commodities, the question is not whether supply will be sufficient but rather what will happen to the price. And that depends in part on what it takes to gain access to resources.

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- technology management for decision-makers | october 2011

management & strategy Just four countries — Iran, Iraq, Saudi Arabia, and Venezuela — hold some 50 per cent of known oil and gas reserves. Nationally owned oil companies now control over 85 per cent of them. Many of the key providers are highly exposed to broader geopolitical instability, which makes security of supply a major risk. Meanwhile, new supply is proving harder to find. Most new sources, such as deep-sea reserves or oil sands, require high-priced, environmentally controversial approaches to extraction. These factors all suggest that oil prices will be both higher and more volatile. Adding to the complexity is the fickle nature of global commodities markets.

The number of ‘virtual’ barrels of oil, in the form of futures and derivatives, traded on global exchanges each day exceeds the number of real barrels by an estimated ratio of 30 to 1. This ‘market effect,’ enabled by the global grid, amplifies any market tremor — a key reason oil prices collapsed to just 20 per cent of pre-crisis levels in the immediate wake of the financial crisis, falling from above $150 to roughly $30 a barrel. Few other industries could experience such pricing changes in just six months. Yet oil isn’t the only commodity susceptible to wild price swings. For example, more than half of the world’s copper

With 12 per cent of the US solar market, China’s Suntech

Power leads the country in solar-panel manufacturing and in building the 21st century’s clean-energy businesses, both at

home and abroad

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- technology management for decision-makers

production is concentrated in a handful of countries with limited infrastructure and high extraction costs. Producers know that over the long term, demand for copper can only grow. At the same time, they’re wary of investing in infrastructure ahead of the demand cycle — a strategy that practically guarantees future pricing volatility.

In uncertain times, the need to plan for widely different outcomes is the one clear certainty

Regulation will prove another wild card. Virtually every major economy in the world is contemplating stricter rules, but there’s little consensus over which regulatory schemes will be adopted, much less how they will be enforced. Some could dramatically transform business models. How, and if, carbon is priced, for example, could fundamentally alter many industries. The same is true with water. Large regulatory changes are sure to disrupt entire value chains. Agriculture, for example, is one of the world’s leading carbon emitters. If it becomes regulated under a carbon regime, that will affect not just farmers but also their suppliers — for example, equipment manufacturers, seed producers, and fertiliser providers — as farmers scramble to adopt emissionreducing agronomic techniques, such as no-till planting. Consumer behaviour may prove the great unknown. Although consumers are becoming much more environmentally aware, to date they have not shown much proclivity either to reduce their resource consumption or to pay for environmentally friendly products — and certainly not if such products cost more. (There are some notable excep-

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tions, such as the Toyota Prius, which captured more than two per cent of the US market, despite being 20 per cent more expensive than a similar vehicle powered only by gasoline.) That resistance could change dramatically as we have seen before: recall the backlash against chemical companies in the 1960s, following the publication of Rachel Carson’s Silent Spring. The implication: companies can no longer rely on businessas-usual scenarios when it comes to resources; they must factor in higher base-level prices and increased volatility. They also need to weigh any number of factors that are not yet — but may become — priced in the future, such as carbon and water. And they need to understand how customers might respond. Since these are huge uncertainties, companies will have to consider their options and outcomes under multiple scenarios.

Business models that drive resource productivity will be just as important as those that drive labour productivity

Despite the hype over clean energy, the biggest impact from rising pressure to price the planet may well come from something much more mundane: conservation. Boosting resource productivity — like labour productivity — will become an increasingly important way for businesses to reduce both their costs and their pricing exposure. Many of these gains require low capital investments and are comparatively easy to adopt. Advances in fields such as environmental product design and ‘green software’ (which helps optimise resource usage) will become important ways for companies to reduce resource consumption. UPS, for example, has saved two per cent on fuel

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Future natural disasters seem inevitable, and so does

the rise of ‘adaptation’ businesses and

offerings — for instance, new insurance and building products that respond to environmental challenges costs by using software that helps plan delivery routes with fewer left turns (which use more fuel than right turns). Similarly, Apple has created approaches to reduce waste in its products: since it launched the iMac, it has reduced raw-material content by 50 per cent and energy consumption by 40 per cent. Boeing designed its new Dreamliner with both the environment and costs in mind: by using lightweight composite materials, the company improved fuel efficiency by more than 20 per cent, reducing both a customer’s lifetime ownership costs and potential future environmental exposures. Regulatory decisions will foster clean-energy innovation as

well. Long-term Spanish subsidies of wind power are major reasons for the rise of two Spanish companies, Iberdrola Renewables and Gamesa, as global leaders in wind energy. Customers, too, are pushing companies to become more environmentally friendly — and helping to spawn some great new businesses. Clorox, for example, captured 40 per cent of the US natural-cleaningproducts market within the first quarter of launching its GreenWorks line, increasing the size of the overall category substantially. Moreover, it did so by offering a suite of products that were up to 25 per cent cheaper than other natural products.

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- technology management for decision-makers | october 2011

management & strategy

The Impact of Global Forces on Business % of executives who say this force . . . Is important for business

Forces reshaping the global economy

Will have a positive effect on profits 85

The great rebalancing

The productivity imperative

Pricing the planet

The market state

The global grid

Is being actively addressed by their company

23 57

51 39

Source: Mar 2010 McKinsey global forces survey of >1,400 executives

That made customers happy, and GreenWorks pleased shareholders as well by generating margins 20 to 25 per cent higher than the company’s average. Of course, not every green investment is a good investment, so companies need to assess the puts and takes on their options carefully. The future of some green businesses, such as carbon trading, depends hugely on stillmurky regulatory environments. Other opportunities, particularly in clean energy, will take years to scale. Still others, such as ‘smart’ building technologies, may have an immediate payoff today, both for customers adopting them and businesses selling them.

Plan for regulatory change — but don’t count on global consensus

Governments everywhere hear the clamour for sustainability, but most also know they will retain power only if they keep delivering economic growth. Couple that imperative with the high coordination costs and fundamental resource usage inequities that persist across countries

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— China, for example, emits less than a fifth of the carbon dioxide per capita that the United States does — and it’s hard not to conclude that while broad agreements may be possible, they will more likely prove elusive, as first Kyoto and now Copenhagen have demonstrated. Nonetheless, we should fully expect a flurry of environmental regulations at the regional and local level. Local environmental problems, especially those (such as water safety) with immediate health consequences, will be solved more easily than global ones. Companies should identify where regulation is most likely to occur and get ahead of potential challenges — not always by taking action but, at least as a first step, by having a plan for what to do if laws change. Without coordination, this likely future patchwork of varied global regulatory standards may create unexpected opportunities. The model example is hybrid-electric-motor technology. First commercialised in Japan in response to stricter emission guidelines there, it later proved a commer-

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cial hit with US consumers, even though US regulations did not require the same standards. Expect more such arbitrage plays in the years ahead. Finally — and sadly for regions especially exposed to climate change and other forms of environmental degradation — we should prepare for the strong likelihood that an effective global regulatory regime will not appear in time. Look for the emergence of ‘adaptation’ businesses, which develop in response to environmental disasters or challenges. New kinds of insurance products, building products, commercial fisheries, and other businesses designed to respond to tomorrow’s environmental realities may well grow and thrive. The authors would like to acknowledge the contributions of Rik Kirkland to the development of this article. Peter Bisson is a director in McKinsey’s Stamford office, Elizabeth Stephenson is a principal in the Chicago office, and Patrick Viguerie is a director in the Atlanta office. Copyright © 2010 McKinsey & Company. All rights reserved. This article was originally published in McKinsey Quarterly, www.mckinseyquarterly. com. Copyright (c) 2010 McKinsey & Company. All rights reserved. Reprinted by permission.

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management & strategy

The Internet of Things More objects are becoming embedded with sensors and gaining the ability to communicate. The resulting information networks promise to create new business models, improve business processes, and reduce costs and risks by michael chui, markus löffler, and roger roberts

n most organisations, information travels along familiar routes. Proprietary information is lodged in databases and analysed in reports and then rises up the management chain. Information also originates externally — gathered from public sources, harvested from the Internet, or purchased from information suppliers. But the predictable pathways of information are changing: the physical world itself is becoming a type of information system. In what’s called the Internet of Things, sensors and actuators embedded in physical objects — from roadways to pacemakers — are linked through wired and wireless networks, often using the same Internet Protocol (IP) that connects the Internet. These networks churn out huge volumes of data that flow to computers for analysis. When objects can both sense the environment and communicate, they become tools for understanding complexity and responding to it swiftly. What’s revolutionary in all this is that these physical information systems are now beginning to be deployed, and some of them even

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work largely without human intervention. Pill-shaped micro-cameras already traverse the human digestive tract and send back thousands of images to pinpoint sources of illness. Precision farming equipment with wireless links to data collected from remote satellites and ground sensors can take into account crop conditions and adjust the way each individual part of a field is farmed — for instance, by spreading extra fertiliser on areas that

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need more nutrients. Billboards in Japan peer back at passersby, assessing how they fit consumer profiles, and instantly change displayed messages based on those assessments. Yes, there are traces of futurism in some of this and early warnings for companies

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too. Business models based on today’s largely static information architectures face challenges as new ways of creating value arise. When a customer’s buying preferences are sensed in real time at a specific location, dynamic pricing may increase the odds of a purchase. Knowing how often or intensively a product is used can create additional options — usage fees rather than outright sale, for example. Manufacturing processes studded with a multitude of sensors can be controlled more precisely, raising efficiency. And when operating environments are monitored continuously for hazards or when objects can take corrective action to avoid damage, risks and costs diminish. Companies that take advantage of these capabilities stand to gain against competitors that don’t. The widespread adoption of the Internet of Things will take time, but the time line is advancing thanks to improvements in underlying technologies. Advances in wireless networking technology and the greater standardisation of communications protocols make it possible to collect data from these sensors almost anywhere at any time. Eversmaller silicon chips for this purpose are gaining new capabilities, while costs, following the pattern of Moore’s Law, are falling. Massive increases in storage and computing power, some of it available via cloud computing, make number crunching possible at very large scale and at declining cost. None of this is news to technology companies and those on the frontier of adoption. But as these technologies mature, the range of corporate deployments will increase. Now is the time for executives across all industries to structure their thoughts about the potential impact and opportunities likely to develop from the Internet of Things. We see usix

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Putting the Internet of Things to work: Information and analysis Tracking behaviour

Monitoring the behaviour of persons, things, or data through space and time

Examples: Presence-based advertising and payments based on locations of consumers Inventory and supply chain monitoring and management

Achieving real-time awareness of physical environment

Enhanced situational awareness

Examples: Sniper detection using direction of sound to locate shooters

Sensor-driven decision analytics

Assisting human decision making through deep analysis and data visualisation

Examples: Oil field site planning with 3D visualisation and simulation Continuous monitoring of chronic diseases to help doctors determine best treatments

distinct types of emerging applications, which fall in two broad categories: first, information and analysis and, second, automation and control.

Information and Analysis

As the new networks link data from products, company assets, or the operating environment, they will generate better information and analysis, which

can enhance decision making significantly. Some organisations are starting to deploy these applications in targeted areas, while more radical and demanding uses are still in the conceptual or experimental stages.

1. Tracking Behaviour When products are embedded with sensors, companies can track the movements of these

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- technology management for decision-makers | october 2011

management & strategy products and even monitor interactions with them. Business models can be fine-tuned to take advantage of this behavioural data. Some insurance companies, for example, are offering to install location sensors in customers’ cars. That allows these companies to base the price of policies on how a car is driven as well as where it travels. Pricing can be customised to the actual risks of operating a vehicle rather than based on proxies such as a driver’s age, gender, or place of residence. Or consider the possibilities when sensors and network connections are embedded in a rental car: it can be leased for short time spans to registered

RFID (radiofrequency identification) tags placed on products moving through supply chains, thus improving inventory management while reducing working capital and logistics costs. The range of possible uses for tracking is expanding. In the aviation industry, sensor technologies are spurring new business models. Manufacturers of jet engines retain ownership of their products while charging airlines for the amount of thrust used. Airplane manufacturers are building airframes with networked sensors that send continuous data on product wear and tear to their computers, allowing for proactive maintenance and reducing unplanned downtime.

In the B2B marketplace, sensors are used to track RFID tags placed on products moving through supply chains, thus improving management while reducing working capital and logistics costs members of a car service, rental centers become unnecessary, and each car’s use can be optimised for higher revenues. Zipcar has pioneered this model, and more established car rental companies are starting to follow. In retailing, sensors that note shoppers’ profile data (stored in their membership cards) can help close purchases by providing additional information or offering discounts at the point of sale. Market leaders such as Tesco are at the forefront of these uses. In the business-to-business marketplace, one well-known application of the Internet of Things involves using sensors to track

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2. Enhanced Situational Awareness Data from large numbers of sensors, deployed in infrastructure (such as roads and buildings) or to report on environmental conditions (including soil moisture, ocean currents, or weather), can give decision makers a heightened awareness of real-time events, particularly when the sensors are used with advanced display or visualisation technologies. Security personnel, for instance, can use sensor networks that combine video, audio, and vibration detectors to spot un-

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authorised individuals who enter restricted areas. Some advanced security systems already use elements of these technologies, but more far-reaching applications are in the works as sensors become smaller and more powerful, and software systems more adept at analysing and displaying captured information. Logistics managers for airlines and trucking lines already are tapping some early capabilities to get upto-the-second knowledge of weather conditions, traffic patterns, and vehicle locations. In this way, these managers are increasing their ability to make constant routing adjustments that reduce congestion costs and increase a network’s effective capacity. In another application, law-enforcement officers can get instantaneous data from sonic sensors that are able to pinpoint the location of gunfire.

3. Sensor-driven Decision Analytics The Internet of Things also can support longer-range, more complex human planning and decision making. The technology requirements — tremendous storage and computing resources linked with advanced software systems that generate a variety of graphical displays for analysing data — rise accordingly. In the oil and gas industry, for instance, the next phase of exploration and development could rely on extensive sensor networks placed in the earth’s crust to produce more accurate readings of the location, structure, and dimensions of potential fields than current data-driven methods allow. The payoff: lower development costs and improved oil flows. As for retailing, some companies are studying ways to gather and process data from thousands of shoppers as they journey through stores. Sensor readings and

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videos note how long they linger at individual displays and record what they ultimately buy. Simulations based on this data will help to increase revenues by optimising retail layouts. In health care, sensors and data links offer possibilities for monitoring a patientâ&#x20AC;&#x2122;s behaviour and symptoms in real time and at relatively low cost, allowing physicians to better diagnose disease and prescribe tailored treatment regimens. Patients with chronic illnesses, for example, have been outfitted with sensors in a small number of health care trials currently under way, so that their conditions can be monitored continuously as they go about their daily activities. One such trial has enrolled patients with congestive heart failure. These patients are typically monitored only during periodic physician office visits for weight, blood pressure, and heart rate and rhythm. Sensors placed on the patient can now monitor many of these signs remotely and continuously, giving practitioners early warning of conditions that would otherwise lead to unplanned hospitalisations and expensive emergency care. Better management of congestive heart failure alone could reduce hospitalisation and treatment costs by a billion dollars annually in the United States.

Putting the Internet of Things to work: Automation and control

Process optimisation

Examples: Maximisation of lime kiln throughput via wireless sensors Continuous, precise adjustments in manufacturing lines

Control of consumption to optimise resource use across network

Optimised resource consumption

Examples: Smart metres and energy grids that match loads and generation capacity in order to lower costs Data-centre management to optimise energy, storage, and processor utilisation

Complex autonomous systems

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Automated control in open environments with great uncertainty

Examples: Collision avoidance systems to sense objects and automatically apply brake

Automation and Control

Making data the basis for automation and control means converting the data and analysis collected through the Internet of Things into instructions that feed back through the network to actuators that in turn modify processes. Closing the loop from data to automated applications can raise productivity, as systems that adjust automatically to complex situations make many human interventions unnecessary. Early adopters are ushering in relatively basic applications that provide a fairly immediate payoff. Advanced automated systems will

Automated control of closed (self-contained) systems

Clean up of hazardous materials through the use of swarms of robots

be adopted by organisations as these technologies develop further.

1. Process Optimisation The Internet of Things is opening new frontiers for improving processes. Some industries,such as chemical production, are installing legions of sensors to bring much greater granularity to monitoring. These sensors feed data to comput-

ers, which in turn analyse them and then send signals to actuators that adjust processes â&#x20AC;&#x201D; for example, by modifying ingredient mixtures, temperatures, or pressures. Sensors and actuators can also be used to change the position of a physical object as it moves down an assembly line, ensuring that it arrives at machine tools in an optimum position (small deviations

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- technology management for decision-makers | october 2011

management & strategy in the position of work in process can jam or even damage machine tools). This improved instrumentation, multiplied hundreds of times during an entire process, allows for major reductions in waste, energy costs, and human intervention. In the pulp and paper industry, for example, the need for frequent manual temperature adjustments in lime kilns limits productivity gains. One company raised production 5 per cent by using embedded temperature sensors whose data is used to automatically adjust a kiln flame’s shape and intensity. Reducing temperature variance to near zero improved product quality and eliminated the need for frequent operator intervention.

shut down air conditioners or delay running dishwashers during peak times. Commercial customers can shift energy-intensive processes and production away from high-priced periods of peak energy demand to low-priced off-peak hours. Data centres, which are among the fastest-growing segments of global energy demand, are starting to adopt power-management techniques tied to information feedback. Power consumption is often half of a typical facility’s total lifetime cost, but most managers lack a detailed view of energy consumption patterns. Getting such a view isn’t easy, since the energy usage of servers spikes at various times, depending on workloads.

The most demanding use of the Internet of Things involves the rapid, real-time sensing of unpredictable conditions and instantaneous responses guided by automated systems 2. Optimised Resource Consumption Networked sensors and automated feedback mechanisms can change usage patterns for scarce resources, including energy and water, often by enabling more dynamic pricing. Utilities such as Enel in Italy and Pacific Gas and Electric (PG&E) in the United States, for example, are deploying ‘smart’ metres that provide residential and industrial customers with visual displays showing energy usage and the realtime costs of providing it. (The traditional residential fixed-priceper-kilowatt-hour billing masks the fact that the cost of producing energy varies substantially throughout the day.) Based on time-of-use pricing and better information residential consumers could

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Furthermore, many servers draw some power 24x7 but are used mostly at minimal capacity, since they are tied to specific operations. Manufacturers have developed sensors that monitor each server’s power use, employing software that balances computing loads and eliminates the need for underused servers and storage devices. Greenfield data centers already are adopting such technologies, which could become standard features of data center infrastructure within a few years.

3. Complex Autonomous Systems The most demanding use of the Internet of Things involves the rapid, real-time sensing of

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unpredictable conditions and instantaneous responses guided by automated systems. This kind of machine decision making mimics human reactions, though at vastly enhanced performance levels. The automobile industry, for instance, is stepping up the development of systems that can detect imminent collisions and take evasive action. Certain basic applications, such as automatic braking systems, are available in high-end autos. The potential accident reduction savings flowing from wider deployment could surpass $100 bn annually. Some companies and research organisations are experimenting with a form of automotive autopilot for networked vehicles driven in coordinated patterns at highway speeds. This technology would reduce the number of ‘phantom jams’ caused by small disturbances (such as suddenly illuminated brake lights) that cascade into traffic bottlenecks. Scientists in other industries are testing swarms of robots that maintain facilities or clean up toxic waste, and systems under study in the defence sector would coordinate the movements of groups of unmanned aircraft. While such autonomous systems will be challenging to develop and perfect, they promise major gains in safety, risk, and costs. These experiments could also spur fresh thinking about how to tackle tasks in inhospitable physical environments (such as deep water, wars, and contaminated areas) that are difficult or dangerous for humans.

What Comes Next?

The Internet of Things has great promise, yet business, policy, and technical challenges must be tackled before these systems are widely embraced. Early adopters will need to prove that the new sensor-driven business models create superior

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value. Industry groups and government regulators should study rules on data privacy and data security, particularly for uses that touch on sensitive consumer information. Legal liability frameworks for the bad decisions of automated systems will have to be established by governments, companies, and risk analysts, in consort with insurers. On the technology side, the cost of sensors and actuators must fall to levels that will spark widespread use. Networking technologies must evolve to the point where data can flow freely among sensors, computers, and actuators. Software to aggregate and analyse data, as well as graphic display techniques, must improve to the point where huge volumes of data can be absorbed by human decision makers or synthesised to guide automated systems more appropriately. Within companies, big changes in information patterns will have implications for organisational structures, as well as for the way decisions are made, operations are managed, and processes are conceived. Product development, for example, will need to reflect far

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greater possibilities for capturing and analysing information. Companies can begin taking steps now to position themselves for these changes by using the new technologies to optimise business processes in which traditional approaches have not brought satisfactory returns. Energy consumption efficiency and process optimisation are good early targets. Experiments with the emerging technologies should be conducted in development labs and in small-scale pilot trials, and established companies can seek partnerships with innovative technology suppliers creating Internet-of-Things capabilities for target industries.

Advertiser index BFW............................................................................. 19 Bloombert UTV .......................................................26-27 CHEP ........................................................................ 24-A Diesl ...................................................................9, 61-64 EFD ............................................................................. 31 Elcon ............................................................................41 Fuji Electric .................................................................. 21 Future Supply Chain ..................................................... 35 GW Precision ............................................................... BC HAAS ............................................................................. 5 Havell’s India ............................................................... 11 KMT ............................................................................. 13 Mitsubishi ..................................................................... 3 National Instruments ...................................................IFC Omron ......................................................................... 72

The authors wish to thank their McKinsey colleagues Naveen Sastry, James Manyika, and Jacques Bughin for their substantial contributions to this article. Michael Chui is a senior fellow with the McKinsey Global Institute, Markus Löffler is a principal in McKinsey’s Stuttgart office, and Roger Roberts is a principal in the Silicon Valley office. This article was originally published in McKinsey Quarterly, www.mckinseyquarterly.com. Copyright (c) 2010 McKinsey & Company. All rights reserved. Reprinted by permission.

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PCI Electrical ............................................................... 25 Premium Transmission ..................................................17 Schneider Electrical ....................................................... 7 Siemens ...................................................................... 15 Taguetec ..................................................................... IBC

- technology management for decision-makers | october 2011

DO YOU WANT TO BE FOUND?

JURY Mr. Debabrata Gupta COO USV Limited

Dr. Armin Bruck Managing Director Siemens Ltd, India

Mr. Anirban Ghosh VP â&#x20AC;&#x201C; Strategic Planning & Business Development Mahindra and Mahindra

Dr. Arup Basu COO (Chemicals) India Tata Chemicals Ltd

Mr. Rakesh Makhija President, Asia SKF Group

Mr. P J Swamy Managing Director Varroc Elastomers Pvt Ltd

Mr. Kumar Kandaswami Senior Director Deloitte Touche Tohmatsu India Pvt Ltd

Mr. Arnab Banerjee Executive Director Operations CEAT Ltd

Mr. Jayaram Sridharan President, World Class Manufacturing Aditya Birla Management Corporation

NOMINATIONS OPEN TILL OCTOBER 31ST. APPLY/ NOMINATE NOW!!! For further information please email at maulshree.tewari@9dot9.in or call +91 9717597903 For partnership opportunities please email at nabjeet.ganguli@9dot9.in or call +91 9820060094

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0094

MANUFACTURING LEADERSHIP

AWARDS & CONCLAVE 2011 Honouring the Top 100 Manufacturing Professionals in India Manufacturing Leaders are truly the master of all trades, dealing with multiple, complex, interlinked issues through the daily course of their jobs. However, there are hardly any platforms that publically recognize and honour these inspiring individuals. Manufacturing Leadership Awards 2011 is a cross-sector platform to recognize these Leaders of today and tomorrow, and to share their stories with the broader manufacturing community

HIGHLIGHTS 100 awardees 10 award categories Eminent jury panel Open nomination process (including self nomination) Day-long, exclusive conference for winners to enable knowledge sharing Sharing of awardee stories via a special publication, distributed to top 1,000 manufacturing companies

WHY PARTICIPATE Get recognized as a star, by Leaders of the industry Join an exclusive club of achievers Learn from successful peers in an exclusive knowledge forum Share your company's success story

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WHO CAN APPLY Senior-level manufacturing executives (with 10+ years of experience in leading teams) Leaders of projects implemented at a manufacturing facility in India Leaders of achievements accomplished on or after April 1, 2010; and currently operational

AWARD CATEGORIES Manufacturing Strategy and Management Manufacturing Innovation and Design World-Class Manufacturing and Operational Excellence Manufacturing Collaboration and Partnership Manufacturing IT and Automation

Manufacturing Safety and Risk Management Green and Sustainable Manufacturing Energy Efficiency in Manufacturing Manufacturing Supply Chain Management People & Skill Management in Manufacturing

* All entries submitted should be independently verifiable * Multiple entries are permitted for any individual * Applicants can be domiciled anywhere or be citizens of any country

visit http://www.industry20.com/MLA100-2011

profile

Steely

ReSolve It’s been less than nine years since a Kolkata-based family of steel traders decided they couldn’t grow till they became manufacturers themselves. So they set up Adhunik Metaliks, a steel manufacturing company. In the short span since, Adhunik has grown into a roaring `3,500-crore giant with interests in steel, mining and power. The excitement is only beginning, says Manoj Agarwal, the group’s managing director, and the architect of its recent strides, as he launches a plan to take his family firm global by dhiman chattopadhyay

fter I completed my schooling in Kolkata, I decided to test the notion that Indians in the northern and western parts of the country were smarter entrepreneurs. That is what I was often told. So I took admission in NIT Kurukshetra to study engineering. I subconsciously picked up the business acumen of North Indians. It was a good addition to my already born-for-business Marwari genes. In 1993, I joined a family rolling mill business in Punjab to learn the ropes of the business. I worked there for six months before returning to Kolkata. I was immediately packed off to Jamshedpur where the family’s main trade was with the Tatas. I spent the next seven years setting up six service centres and improv-

october 2011 | industry 2.0

ing trade relations with the Tata group. At that time, the Indian economy was opening up. Demand for steel was rising rapidly. I realised there was ample space for another mid-sized steel maker in the market. It was also a necessary business adaptation. By the end of the 1990s, most large

- technology management for decision-makers

and mid-sized Indian steel plants had modernised their production processes. Traders like us had no future in the new scheme of things. However, we did have an opportunity staring right at us if we dared to become manufacturers. It wouldn’t be easy but it could be rewarding. We spent two years research-

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ing how to build and operate a steel plant. Another impetus was that government policies were beginning to change. Banks were becoming more open to lending and encouraging entrepreneurship. A crucial decision that we took was that we’d set up plants near existing and well-established steel plants. Our logic was simple. We’d automatically receive access to a running ecosystem and a trained manpower base. We began with constructing plants in Rourkela (Orissa) and Jamshedpur (Jharkhand) in 2002-03. The decision stood us in good stead. We later acquired iron ore mines. We formally launched Adhunik Metaliks Limited, our flagship company, in 2002. We signed an MoU with the Orissa government and invested around Rs 35 crore as seed capital. Luckily, State Bank of India sanctioned our loan a month before the project. We started making profits from the first year itself. By 2004-05, we began working on phase II of our growth plan. We finally started producing quality alloy from the Rourkela plant. In 2005, we also inked an agreement with the Orissa Mining and Mineral Company for supply of iron ore. That was a critical partnership. Things have moved briskly for us. We have signed on large clients. Today we are one of the biggest suppliers of steel alloy to the Indian Railways, the Indian Armed Forces, and to oil companies and auto manufacturers. We went public in 2006. The listing was great for us. We were subscribed six times over. That was a good year actually. Celebrations continued right up to December when our Rourkela plant became operational. Incidentally, ours was the last steel company to go for an IPO. By 2007, we were growing rapidly. Our challenge was to

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break into the auto sector where established players such as Kalyani Steel and Usha Martin dominated. We marketed ourselves aggressively and offered lucrative discounts. Now, we’re one of the major players. Half of the steel we produce goes to auto manufacturers. In the same year, we acquired the Orissa Steel and Mining Company for a throwaway price of Rs 60 crore. Thus, we no longer need to depend on anybody for our raw material. But, my real “yahoo” moment was towards the end of that year when our stock crossed the Rs 250-mark for the first time. We all had tears of joy. The entire office was celebrating. We’d justified the faith that our shareholders had in us. By mid-2008, we had not only grown the steel business manifold, but had diversified into mining. Adhunik started to plan

conglomerate, we didn’t have cash surplus. We urgently needed cash to fund our growth. Finally, in mid-2009 there was a respite as a handful of banks agreed to lend to us again. We survived by slowing down our steel manufacturing. However, we ensured that we kept a huge stock of raw material so that we had the first mover advantage when markets returned to normality. We still suffered derivative and inventory losses. Today, we are a Rs 3,500-crore company, less than a decade after we started operations from scratch. We are proud of how we’ve grown. It’s not a small achievement. In 2012, our youngest baby — Adhunik Power — will begin operations. In the next three years, we want Adhunik Group to be a global infrastructure giant. There’s no reason why we can’t be

“I believe fortune favours the bold. But people who are both bold and wise are the real achievers” a foray into the power sector. Over 67 per cent of India’s coal reserves are in the eastern part of the country. We had the three big prerequisites to get into this sector: we had land, raw material and water reserves. We founded our power company and acquired a forging company. Till then, we had depended on smaller forging firms. By doing away with this need to outsource, we rationalised costs, improved efficiency and had greater control over the product quality. We were on a high when the global economic crisis hit. The first three months of 2009 were the toughest. Banks were reluctant to lend. To make matters worse, as an infrastructure

a Rs 10,000-crore firm by 2015. To get there, setting up operations in mining-rich countries (Canada, Australia and South Africa) is on our agenda. We’ll then list on the London Stock Exchange. I am still 42 years old. Having spent close to two decades in this business, almost half of it running Adhunik Group, I’ve picked up valuable lessons. I’ve taken calculated risks and gambled on key decisions. I allow myself to be driven by my guts. I believe fortune favours the bold, but people who are both bold and wise, are the real achievers. There’s no substitute for hands-on experience. The best entrepreneurs have their ears to the ground.

industry 2.0

- technology management for decision-makers | october 2011

profile

A perfect

blend

It’s impossible not to envy Rajeev Samant, founder and CEO of Sula Vineyards. His business ‘cando’ is admirable, of course. In just 11 years, he’s used his smarts and the grapes on his family’s Nashik farm to create a new industry for India. Since 2000, when Sula launched its first white wine, Samant has splashed the warm and rich colours of wine across our big cities. Today the company holds over 65 per cent of the market share and thanks to Samant, Nashik is India’s wine capital. But it isn’t the 10 million bottles he hopes to sell annually by 2013, that is enviable. It’s the fact that Samant has blended for himself a perfect life — part urban business tycoon and part earthy grape farmer — that makes one go green by shreyasi singh

leep is very important to me. I need at least seven hours of sleep every night. Any less and I’m sleep deprived. That’s a childhood habit. Typically, I am awake by 7:30am. A cup of black coffee later and I’m ready to hit the gym by 8.30am. I visit the gym at least three to four times a week. After an hour of weights training with my personal trainer, I follow it up with half an hour of cardio. Fitness has been an important part of my life since I was 12. You can’t neglect your body. Do that, and you’re taking 10 years off your life. Because I’m rushed most mornings, there’s never enough time for a sit-down breakfast. All I manage to grab is a fruit smoothie — typically a seasonal fruit — often from my own orchard. One of my life’s joys is my organic orchard and vegetable

october 2011 | industry 2.0

garden at the Nashik vineyard. We grow a lot of tropical fruits. Once in office, I have a bowl of fruits or muesli. This is my routine most mornings. It changes a bit during winters though when I prefer a run around the Mahalaxmi Race Course rather indoors exercise. When I’m in Mumbai, which is about 15 days of the month, I’m at work by 10:45am. I work a little less than eight hours a day. But my pace is intense and it doesn’t flag through the entire day. I don’t believe in wasting time. Often, we hold standing meetings. It’s like boom, boom, boom — action points done, targeted and move on to the next meeting. In Nashik, at the vineyards, where I spend around eight days a month, the pace is very different. I slow down there. There, my home is a five-minute walk from the vineyards and office. When I walk over to the winery, my dog

- technology management for decision-makers

comes with me. It’s a different way of life. It’s very rejuvenating. One of the reasons behind setting up Sula Wines was that I wanted a life both in the city and the country. It’s not a geographical distinction of two locations. It’s like a left-brain, right-brain balance. In Mumbai, I focus on sales, marketing, branding, strategy and legal or board issues. Nashik is different — it’s quality, wine-making, production, cultivation, farmers, hospitality, beauty and landscaping. It’s like keeping two jobs. In the evenings at Nashik, I call my senior management over for strategy meetings or just a round of gossip over dinner. We uncork a bottle of wine that we haven’t tasted before, in my outdoor dining area. It’s a beautiful place with a patio that has bougainvillea and passion fruit growing on trellises. This life has been tailor-made

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by me for me. I’ve always envied the European way of life. When I came back to India from California in the early 1990s, I knew I wanted something similar. At the time, I was also reading a book which philosophised that people shouldn’t live their entire lives in cities. It shrivels your soul. But whether in Mumbai or Nashik, one thing’s absolutely sacrosanct — my afternoon nap. After a light lunch of salad or steamed veggies and dal, I need my 20 minutes of power nap. I have a couch in my office and woe to any employee who disturbs me then. I put on my earplugs at 2 pm, and in three minutes flat, I’m oblivious to the world . Twenty minutes later, my alarm wakes me up. The power nap has been part of my work day ever since I began working. I used to take my shut-eye even when I worked for Oracle in California. At that time I didn’t have a couch — I wasn’t senior enough — but fortunately I had a room with a wooden door that could be shut. I had a pillow stashed away under my desk. I’d shut my door, put the pillow on the carpet and take a nap. My colleagues would laugh but everyone was allowed a 45-minute break during lunch. I’d grab a quick sandwich and use the rest of the break for the nap. Till today, if I don’t grab my winks, my productivity plummets in the afternoons. And that’s not an option right now. Sula Wines is growing frenetically. This year alone, we will sell more than five million bottles. Last year we sold four million and the year before three million bottles. The pace has been incredible. Eleven years into the business and we are still growing at the speed of a start-up. Within two years, we should be hitting the 10-million bottles mark a year. I don’t see too many challenges in getting to that point as far as production is concerned.

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daunting for new employees.

I can be

I don’t tolerate mediocrity

That’s why my current focus is on creating new markets and figuring out a new business strategy. We’ve done a great job so far in making wine popular in Mumbai and in western India. Slowly, Delhi and the NCR are catching up as well, as is Bengaluru. However, these pockets need to grow bigger. The deep red of wine

needs to spread across India. China, now one of the top 10 producers and consumers of wine, has shown that you just need to put wine in front of people, and they’ll take to it. My biggest concern: how do you get a whiskey-drinking state to sip wine? Say Punjab for instance. It has the lowest per-capita wine

industry 2.0

- technology management for decision-makers | october 2011

profile consumption. But boy, they do love their drink there. We have planned to do 1,500 tastings across the country this year. Ideally though, we should follow the Chinese and conduct over 5,000 tastings per annum. We recently had great success with one of our cheaper wines — a port. We promoted it with soda and ice in a regular whiskey glass in the permit rooms of Mumbai. And it took off like nobody’s business, so much so that the whiskey guys have been left wondering what happened. How could port wine be so popular? I was deeply involved in the promotion. I told

avenues of growth, new ways to augment our offerings. Sula is going through a transition right now. At the size we are in, we need a good blend of both professionals and those who are more daring and entrepreneurial in their way of thinking. It’s a good place for a company to be in and I hope we can be in this place for a long time. I’d hate to have just professionals who are running systems. I’m sure that’ll get boring. I’m told I’m a tough boss. I can be daunting for new employees. I expect excellence and don’t tolerate mediocrity. I’ll spot a

Sula is going through a transition right now. At the size we

are in, we need a good blend of both professionals and and those who are more daring and entrepreneurial in their way of thinking my people clearly that we couldn’t expect “permit people” to pour wine into fancy glasses and taste it. It just wouldn’t happen. So I called my entire sales force team over. I was the bartender for that meeting. I served them this ice, soda and port combo. It tasted great. So we began giving out whiskey glasses and little recipe leaflets with our port wine bottles. Sales have gone through the roof. We need other creative ideas like this to grow. I am very entrepreneurial at heart. Fresh ideas and experiences keep me going. I start to fret if something new doesn’t happen. It’s a good thing, I think. It imbues the organisation at every level. We are constantly looking for new

october 2011 | industry 2.0

missing figure in a spreadsheet. Those who work with me quickly realise what I expect and they adapt. I absolutely hate it when people don’t take ownership. I don’t let people get off the hook. On a weekend, I sometimes go through my sent emails to check which ones didn’t receive a response to. I forward them to the same people, asking them what happened. I don’t like doing this. But I want people to tell me if they have a problem. Staying quiet doesn’t help. In business, all pieces need to come together. Everybody needs to respond. That’s not to say I never procrastinate. I have to confess that when it comes to writing a difficult e-mail or a representa-

- technology management for decision-makers

tion letter to a state government, I try and put it off. I tend to avoid meetings with bureaucrats and government departments. But you can’t get away from it. I have a full life beyond work. The minute I’m out of office, I prefer to be untethered. I don’t answer every call or every text. If you start doing that, you’re finished. You have to let go. Also, I’m an incorrigible optimist. Once I’ve done something, I don’t see the road behind. I also take out time for things I like to do. I’m a voracious reader. I subscribe to The Economist which I read cover to cover. Online, I subscribe to Financial Times and The New York Times. I’m always trolling for bits of information on social media and quirky marketing tricks. In fact, I am curious about everything. At some point, it all just comes together. Every summer I take a month or two off. I spend this abroad, maybe in the US or, more and more, in Europe. I love Paris. On a holiday, I taste a new bottle of wine every day. I don’t go to formal dos or wine events. I just try everything I can get my hands on. While visiting a friend in Valencia (Spain) in July this year, the first thing I did after getting out of the airport was to visit the supermarket. I bought 12 bottles of wine and loads of cheese. Even when I’m in London, I typically get a small service apartment and try out a new bottle with friends before going out for a meal. I’m quite social. I like to go out, meet people and party. In fact, I prefer my city life on the weekends. I’m still single. Nashik isn’t the best place for a Friday and Saturday night. On weekdays in Mumbai though, I’ve begun a peaceful yoga routine in the evening. I think I need to meditate. And some gentle asanas are the perfect way to end the day.

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supply chain & logistics

Understanding Reverse Logistics When manufacturing executives are asked about their reverse logistics strategy, many feel that they donâ&#x20AC;&#x2122;t have enough returns to justify spending any time on the subject. However, product returns are only a small fraction of the reverse logistics puzzle â&#x20AC;&#x201D; and it is important to master this area of the supply chain to save costs and improve customer service

anufacturers are often hesitant to invest in their reverse logistics programmes. This is often because the senior leadership team does not understand the actual cost and associated risks of product returns. Usually, they look at the amount of actual defective customer returns, and conclude that the impact of reverse logistics is simply immaterial to their business. What

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they often do not understand is that defective customer returns on average accounts for less than 25 per cent of the assets that flow through the reverse pipeline. The remainder consists of parts that go to the field for repair. On an average, one out of six parts is returned. Parts are returned because they were not needed, a wrong part was ordered, or because excess parts were ordered. Processing re-

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turned parts efficiently and effectively is key to an economic parts management programme. Another aspect of reverse logistics that is often overlooked by many manufacturers is end-of-life strategies and seasonal recalls. These are recalls that are generated when new models are sold, a product expires (e.g. pharmaceuticals and food), or there is a change in season (e.g. apparel). The product in the field or on the shelf is in

- technology management for decision-makers | september 2011 Vol. i

Picture courtesy: www.photos.com

by curtis greve and jerry davis

september 2011 Vol. i | industry 2.0

question is when will you have a product recalled off the market. Because of the very real possibility of being forced to recall product from the market, and the potential for financial liability and damage to your reputation, manufacturers must have a sound plan in place to ensure they have a means to process recalls on very short notice. Studies have found that on an average, manufacturers spend between eight to 15 per cent of sales on returns. When manufacturing executives understand that these returns include much more than simple customer defective returns they suddenly find the time and resources to focus on improving their reverse logistics

- technology management for decision-makers

processes. These efforts often result in increasing profits by as much as three to five per cent of sales! In addition to the financial impact of returns, there can be an even bigger impact on customer satisfaction. In fact, a study completed by the Aberdeen Group in February 2010 found that manufacturers that were rated best-in-class in reverse logistics had, on average, a 12 per cent advantage in customer satisfaction over their competition. Another study published in the spring 2010 MIT Sloan Management Review found that focussing efforts to improve and manage customer returns actually increased overall profits, even during tough

Picture courtesy: www.photos.com

great condition, it just didnâ&#x20AC;&#x2122;t sell and now needs to come out of the market. Many companies such as Walmart require manufacturers to have end-of-life strategies and plans in place to process recalls before they will agree to purchase from them. Product recalls can be another big contributor to the reverse pipeline. Last year the US Government ordered over 1,000 products recalled off the market. Empirical evidence shows that for every government mandated recall there is at least one non-mandatory recall made by either the manufacturer or their customers. For every manufacturer, the question is not if you will have a product recalled off the market. The

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Using a 3PL

Reverse logistics is increasingly outsourced to third party logistics service providers (3PLs) — even when the company has an in-house large, sophisticated logistics department. Reasons for outsourcing this activity vary. Some companies feel that return centre operation can operate independently of normal supply chain operations, so there is little need to link them. Others need quick volume or geographic expansion. Some are looking to cap inventory shrinkage, or avoid the cost of setting up a new operation. But, to ensure that the outsourcing of reverse logistics to a 3PL operates successfully, the agreement must clearly articulate the level of service (LOS) goals,

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Picture courtesy: www.photos.com

economic times. When we say ‘manage returns’ we do not mean reject returns or make it harder for customer to return goods. This same study found that a lenient return policy actually increased total sales and profits, while a more restrictive policy has a detrimental impact on both the top and bottom lines. Reverse logistics will have a significant impact on every manufacturer. The question is whether returns will have a negative impact or if it will provide a competitive advantage. Developing and investing in your company’s reverse logistics processes can improve sales, reduce risks, and increase profits. It takes a long term dedicated commitment to be best-in-class and proper resources but in the end it will be well worth it.

budgets, and the other metrics. LOS goals used by the 3PL must be in alignment with the organisation’s goals. The incentive systems and payment terms for performance must parallel and support the same financial impact on the outsourcing company. In other words, contract terms and conditions must incentivise the 3PL to perform the stated duties in a manner that is in the best interest of the company. We have seen that the outsourcing of return centre management to a 3PL usually goes badly for one of four reasons: 1. The level of service requirements and scope defined in the contract are not in alignment with the financial justifications used to outsource initially. 2. The recovery rates on returned inventory, which justified higher 3PL costs and fees, are below expectations. 3. The volume and timing of the flow of returns is much higher and more condensed than anticipated, causing problems with

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customer service, space, and escalating processing costs. 4. The contract does not provide the flexibility necessary for a reverse logistics operation. Many companies new to outsourcing don’t include key metrics in the contract. Often they don’t have good benchmarking data for items such as damage rate, inventory shrinkage, annual inventory turns, and throughput numbers to ensure they are getting what they expected from the 3PL returns operation. These details have to be carefully spelled out, along with who will be responsible for the associated costs if the LOS goals are not met. Supply chain managers need to realise that reverse logistics operations are completely different from distribution operations or transportation. The contract that governs reverse logistics outsourcing to a 3PL must be specifically designed to ensure these differences are addressed. Reverse logistics contracts need to provide greater flexibility to the 3PL, and that

- technology management for decision-makers | september 2011 Vol. i

supply chain & logistics Getting Reverse Logistics Right

Identify the right source of the returned assets: Determining who returned the product is perhaps the most critical step in any returns or reclamation process. In a returns process, the receiving process is what triggers the financial transaction with the customer. The customer can be impacted directly, or in the case of retail returns, the store’s inventory will be negatively impacted. Crediting the right entity for the assets they returned is critical.

Diagnose the right condition of the goods returned: Determine whether the item is new, used, defective, abused, etc. Recognising the condition will drive proper classification of the goods. Properly diagnosing the condition of any returned asset will impact the OEM, subsequent recovery rates if liquidated, or will increase disposal costs. If, for example, an item is new and has never been used, it might be returned to the OEM for full cost credit. But, if the condition is misdiagnosed, it may end up in the trash. This results in a loss of value on the item plus additional removal fees.

Determine the right disposition of goods processed in the reverse pipeline: There are only six dispositions for any asset flowing through any reverse logistics pipeline. These are: return to OEM / ODM for full or partial cost credit; return to warehouse for distribution next season; sell on the secondary market for anywhere between two to 90 per cent of original value; donate to charity; recycle; or destroy. As you can clearly see, determining the “disposition bucket” for the returned goods will have dramatic impact on whether a company pays additional costs, or if they receive significant credit for parties down the line.

Design the right process to efficiently process returned assets in a timely fashion: Returns processing is critical to ensuring companies maximise the value of goods flowing through their reverse logistics/reclamation pipeline. Many companies do not appreciate the importance of timely processing of returned goods. Keep in mind that returned assets are not like wine — they don’t get better with age. Typical returns do not come in good packaging, and their condition will deteriorate over time as will their value. For example, electronic returns will lose 10 per cent of their value per month on the secondary market. Similarly, the per cent of product that has to be recycled or thrown in the trash will increase the longer product sits on the dock. Processing goods efficiently and learning to deal with seasonal spikes is critical to the overall contribution from the reclamation centre or returns process.

Ensure the right amount is charged to the right party for the processed returns: Once the goods have been received, sorted, and processed, the final step is to ship product to the next party in the reverse supply chain. With returns, this is more complicated than in distribution because the value of the goods will vary based on disposition, the ship to point will depend on the disposition, and the charges for the items depend on the returns agreement and the party receiving the goods. There are some companies that give credit for goods but only want specific models sent back to them. The other models not returned to the OEM might be recycled, destroyed, or liquidated. The variations are endless and often there are consolidation fees, disposal fees, and packaging fees that complicate the final billing even more.

september 2011 Vol. i | industry 2.0

- technology management for decision-makers

must be reflected in the financial terms and conditions. 3PL outsourcing agreements should include language addressing how costs will be paid based on a wide range of unique returns related metrics, the biggest of which is volume. Many companies use volume bands to calculate variable costs. Some companies use a fixed fee for the provider. Many 3PL contracts are cost plus with a budget cap. All of these methods can work in the right situation, with the appropriate means of adjusting the terms and conditions built into the contract. There is another thing to think about when you sign a contract with a 3PL — how are you going to dismantle the operations if it fails? Many companies that outsource don’t think about what they are going to do if they have to fire the service provider. Make no mistake, terminating a contract can cost you a lot of money. You need to think about what happens to the inventory, the capital equipment, the building, ongoing worker costs, shut down and closing costs, and what you are going to do after the 3PL is gone. There are many valid reasons to outsource reverse logistics to a 3PL. The key is to have a good contract that will protect everyone’s interest, achieve the original goals that drove the decision to outsource, and ensure a win-win relationship between the parties. Curtis Greve and Jerry Davis are logistics consultants with more than 50 years of combined experience. They have worked with leading retailers and manufacturers companies like Walmart, Best Buy, Target, Dell, HP, Philips, Sony, Acer, P&G, 3M and Seagate to improve reverse logistics capabilities and aftermarket services.

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bookshelf The Decision to Trust

by Robert F. Hurley Price: $27.95 Hardcover: 256 pages Publisher: Jossey-Bass

In this book, Robert Hurley explains the new culture of cynicism and distrust creates many problems, and why it is almost impossible to manage an organisation well if its people do not trust one another. High-performing, world-class companies are almost always high-trust environments. Without this elusive, important ingredient, companies cannot attract or retain top talent. Hurley reveals a new model to measure and repair trust with colleagues, managers and employees.

Streetlights and Shadows by Gary Klein Price: $15.95 Paperback: 352 pages Publisher: MIT Press

An expert explains how the conventional wisdom about decisionmaking can get us into trouble — and why experience can’t be replaced by rules, procedures, or analytical methods. Klein takes 10 commonly accepted claims about decision-making and shows that they are better suited for the laboratory than for life. We can make better decisions, he tells us, if we are prepared for complexity and ambiguity — and stop expecting the data to tell us everything.

The Innovator’s Dilemma by Clayton M. Christensen Price: $17.99 Paperback: 336 pages Publisher: Harper Paperbacks

Innovation expert Clayton M. Christensen says outstanding companies can do everything right and still lose their market leadership—or worse, disappear

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altogether. And not only does he prove what he says, but he tells others how to avoid a similar fate. Focussing on “disruptive technology,” Christensen shows why most companies miss new waves of innovation. Using the lessons of successes and failures from leading companies, the book presents a set of rules for capitalising on the phenomenon of disruptive innovation.

The Third Industrial Revolution by Jeremy Rifkin Price: $27.00 Hardcover: 304 pages Publisher: Palgrave Macmillan

The author explores how Internet technology and renewable energy are merging to create a powerful “Third Industrial Revolution.” He describes how the five-pillars of the Third Industrial Revolution will create thousands of businesses, millions of jobs, and usher in a fundamental reordering of human relationships, from hierarchical to lateral power, that will impact the way we conduct commerce, govern society, educate our children, and engage in civic life.

Stealth of Nations by Robert Neuwirth Price: $25.95 Hardcover: 304 pages Publisher: Pantheon

When we think of the informal economy, we tend to think of crime: prostitution, gun running, drug trafficking. This book delves into this underground realm, and shows how the worldwide informal economy deals mostly in legal products and is, in fact, a 10-trillion-dollar industry, making it the second-largest economy in the world. The author makes clear that this informal business economy dates back as far as humans have existed and traded, that it provides essential services and crucial employment that fill the gaps in formal systems, and that this unregulated market works smoothly and effectively, with its own codes and unwritten rules. Neuwirth gives us an eyeopening account of a world that is always operating around us, hidden in plain sight.

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- technology management for decision-makers | october 2011

Security Leadership Awards 2011 Recognising the best minds in Security Leadership & Innovation

CMY

In an attempt to recognise those individuals who have contributed and succeeded in pushing the boundaries when it comes to innovation in information security, CSO Forum, brings to you, the 1st Annual Security Leadership Awards. Judged by our esteemed council, the Security Leadership Awards bring those individuals to the forefront who are constantly innovating and pushing the boundaries of security within the enterprise.

CMY

December 2, 2011 â&#x2C6;&#x17E; Pune, India For details log onto

http://www.thectoforum.com/csosummit2011

About the Security Leadership Awards Security management is now recognised as a key business enabler. Forward-thinking security leaders have made tremendous progress in driving tighter linkages between business excellence goals and security actions. Their contributions need regular industry driven; peer-acknowledged awards to highlight the best successes; recognise the function and provide encouragement for future innovations in Security Management The Security Leadership Awards is a dedicated platform to recognise such security executives; their teams and organisations for outstanding achievement in the areas of risk management, data asset protection, compliance, privacy, physical and network security.

Highlights

• Six Award categories • Eminent jury members • Transparent nomination process • Awards ceremony on 2nd December, during the 4th Annual CSO Summit, 2-3 December, 2011 at Pune

Why participate

• Get recognised as a star by leaders of • • •

the industry Join an exclusive club of achievers Learn from successful peers in an exclusive knowledge forum Share your and your company’s success stories

Award Categories 1. Security Practitioner of the year 2. Security Innovator of the year 3. Security Project of the year 4. Security Organisation of the year 5. Promising star 6. Security Visionary of the year

Who can apply?

• CSO's and CISO's • Heads of Information Security /

Information Risk & Compliance and their team members of companies operating in India.

Nominations open! To nominate yourself or your CISO/CSO logon to http://www.thectoforum.com/csosummit2011 or contact Vinay Vashistha at +91 9910234345 or email at vinay.vashishta@9dot9.in

bookshelf How to Measure Anything

by Douglas W. Hubbard Price: $49.95 Hardcover: 320 pages Publisher: Wiley

Anything can be measured. This bold assertion is the key to solving many problems in business and life in general. Building up from simple concepts to illustrate the handson yet intuitively easy application of advanced statistical techniques, this book reveals the power of measurement in business. The text shows you how to measure those things you may have considered “immeasurable,” including technology RoI, organisational flexibility, customer satisfaction, and technology risk. Offering examples that will get you to attempt measurements — this book provides you with the substantive steps for measuring anything, especially uncertainty and risk.

Change by Design

by Tim Brown Price: $27.99 Hardcover: 272 pages Publisher: HarperBusiness

The myth of innovation is that brilliant ideas leap fully formed from the minds of geniuses. The reality is that most innovations come from a process of rigorous examination through which great ideas are identified and developed before being realised as new offerings and capabilities. This book introduces the idea of design thinking‚ the collaborative process by which the designer’s sensibilities and methods are employed to match people’s needs not only with what is technically feasible and a viable business strategy. In short‚ design thinking converts need into demand. This is a book for creative leaders seeking to infuse design thinking into every level of an organisation‚ product‚ or service to drive new alternatives for business and society.

october 2011 | industry 2.0

- technology management for decision-makers

Where Good Ideas Come From by Steven Johnson Price: $16.00 Paperback: 336 pages Publisher: Riverhead Trade

This sweeping study of the history of innovation breaks out the seven patterns of innovation like “the slow hunch” and “serendipity.” Johnson shows how understanding the roots of innovation can lead to our own creative breakthroughs.

Building Lean Supply Chains by Mandyam Srinivasan Price: $60.00 Hardcover: 384 pages Publisher: McGraw-Hill Professional

With an emphasis on systems thinking, Building Lean Supply Chains with the Theory of Constraints (TOC) illustrates how these two philosophies complement and reinforce each other to create the smooth flow of goods and services through the supply chain. The majority of the chapters draw on the tools and techniques of TOC, including throughput accounting, drum-buffer-rope, TOC in distribution and replenishment, the thinking process, and critical chain project management. All the topics are presented in the context of building and managing a lean supply chain to achieve true bottomline results.

The Toyota Way to Lean Leadership by Jeffrey Liker & Gary L. Convis Price: $30.00 Hardcover: 272 pages Publisher: McGraw-Hill

Despite the fact that companies worldwide have adopted lean production, none has sustained the same levels of excellence as Toyota. The answer lies in leadership. The authors explain how you can get employees to refocus their efforts from simply performing their singular function to continuously improving in collaboration across the organisation. Case studies from Toyota llustrate the methods that create powerful lean leadership.

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product update Video System

T Metal Separators

riez’s PN metal separators remove contaminants like steel, aluminium, brass, copper, and stainless steel from pneumatically conveyed materials, plastic pellets and regrind. The separators can be installed in vacuum and pressure pipelines to protect plastics processing machinery, prevent downtime and improve product purity. The modular design is flexible enough to adapt to different conveying methods. Options are available to accommodate hot, abrasive and powdery bulk materials. The unit can be integrated into either horizontal or vertical vacuum and pressure-pipes. The separator features a 304 stainless steel separation unit and material contact parts, and is available in four pipe sizes from approximately 1.6 to 2.8 inches diameter. Eriez Magnetics Tel: +1-814-8356000 Website: www.eriez.com

Current Regulator

n Semiconductor has announced the NSI50350A, a device designed to provide a thermally efficient and cost-effective alternative to passive/discrete components or driver integrated circuit (IC) solutions for current regulation of Light Emitting Diodes (LEDs). The device is suitable for a variety of 1W lighting applications including automotive, architectural lighting and signage. The device features selfbiased transistor (SBT) design, and regulates current over a wide voltage range. It is designed with a built-in LED driver, and has a negative temperature coefficient to protect LEDs from thermal runaway at extreme voltages and currents. The 350 mA steady state regulation current (Ireg) is ideal for driving 1W LEDs; for applications requiring 2W LEDs, two NSI50350A CCRs can be placed in parallel. The device has an operating temperature range of -55°C to +175°C. The device requires no external components, enabling it to be deployed as either a high or low-side regulator. The high anode-cathode voltage (Vak) rating of 50V maximum enables the device to withstand voltage surges that are common in automotive, industrial and commercial signage applications. The device turns on immediately and is at 20 per cent of full regulation with only 0.5V Vak applied. On Semiconductor Tel: +1-602-2446600 Website: www.onsemi.com

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he Digital Media Presentation System (DMPS) 300-C can handle many types of source signals, process, mix, amplify and transmit them over a single CAT5e wire. The system enables users to equip any classroom or conference room for high-quality HD presentations. The DMPS is a high-definition presentation and signal routing solution that integrates a control processor, multimedia matrix switcher, mic mixer, audio DSP and amplifier integrated into a single component. The product provides high-performance matrix switching of seven simultaneous analog or digital sources to up to four HDMI or DVI display devices, plus up to three analog audio components. Crestron Electronics Inc. Tel: +1-201-7673400 Website: www.crestron.com

Signal Gateway

he NET Concentrator System (NCS) provides a real-time signal gateway between the field or factory floor and control strategies. The product is designed to work in demanding industrial applications, including locations where ambient temperature ranges from -40°C to +85°C (-40°F to +185°F). Its 20-bit input and 18-bit output resolution matches or exceeds the accuracy of the most precise process transmitters. In addition to an EMM interface module, the product comes standard with an Ethernet port and dual, independent MODBUS RTU ports. One or both MODBUS RTU ports can be configured as MODBUS master ports, allowing NCS to poll other MODBUS RTU slaves with network polling functions. Moore Industries International Inc. Tel: +1-800-9992900 Website: www.miinet.com

Thermoplastic Elastomers

tar Thermoplastics developed a new range of thermoplastic elastomers for the design and processing of medical products. Called StarMed TPEs, the styrenic-based thermoplastics can be used for a wide variety of end use applications, since they are offered from a soft 8 Shore A to a hard 60 Shore D, and meet FDA and medical grade requirements. Applications range from physical therapy straps and medical pads to PVC tube replacement applications that need to be injection moulded or extruded. The units are available in clear or translucent grades, are easy to colour, nonallergenic and customisable and their ability to replace latex or silicone. Softer grades offer a rubbery feel. All grades are recyclable. Star Thermoplastics Tel: +1-708-3431100 Website: www.starthermoplastics.com

industry 2.0

- technology management for decision-makers | october 2011

product update Pushbutton Switch

-Switch has developed the KJD17 series pushbutton switch that has a PVC cap for dust and water protection, and IP54 rating. The switch has 10,000 cycle life expectancy, and an internal electromagnet provides automatic safety protection against power outages and restarts. Contact ratings include 16A at 12 Vac and 16A at 220/240 Vac. Dielectric strength is 1,500 Vac for 1 min. E-Switch Inc. Tel: +1-800-8672717 Website: www.e-switch.com

Pharma Checkweigher

ettler Toledo Garvens has launched its XS2 Pharma Checkweigher in India. The system enables weighing of units with the utmost precision, while handling them with care and moving through the line at high conveyor speeds. The device employs precise product transfer units (top and bottom belts) to offer optimum product guidance for pharmaceutical goods of various sizes, ranging from the smallest up to products that weigh 600g. Products are processed with high stability. The top and bottom belt can be easily adjusted to take over the products from the previous packaging machine. Perfectly synchronised conveyor motors avoid any damage or deformation caused by unequal pressure during product gripping. Further, the XS2 Pharma’s refined weighing and outfeed conveyors feature small rollers to ensure smooth passage for even the most delicate packages. XS2 Pharma is easily adjustable, allowing manufacturers to tweak weighing requirements and line setups for maximum performance. A clear, 15” color touchscreen puts all necessary information at the operator’s fingertips for easy product changeover. Simple conveyor belt replacement reduces inspection and routine maintenance downtime. Mettler-Toledo India Tel: +91-22-42910111 Website: in.mt.com

Strobe Beacon

arson Electronics has unveiled a magnetically mounted, battery powered LED beacon. The Magnalight CS-A24 LED can be mounted to any surface that will accept a magnet, and is powered by 4 AA batteries to deliver up to 40 hours of runtime. Visible for up to three miles, this unit provides a highly effective alternative to permanently mounted strobe lights that require wires and mounting hardware. The 70 pounds mounting magnet ensures secure placement, and makes this unit suitable for towing and equipment applications where a permanent mount strobe is not practical or desired. Capable of being operated in a strobe or constant on mode, operation is controlled by a simple push button mounted on the back of the housing. Sitting only 3.75 inches high and 7.25 inches wide by 1.75 inches deep, this unit is perfect tight locations where space is at a premium. Larson Electronics Tel: +1-903-4983363 Website: www.magnalight.com

Conveyor Belt Splice

axi-Lift, a manufacturer of elevator buckets, has introduced the Titan Ultimate Belt Splice for processing plants with thick elevator belts. The product comprises a central aluminium vice-grip section that is bracketed by two exterior aluminium clamps. Belt ends bend through a 75 mm radius to a 90°angle, and are secured through clamp force and friction to secure joint. The central wedge is equipped with rubber backing on the pulley side to prevent wear due to pressure or friction generated during operation. Maxi-Lift Inc. Tel: +1-972-7358631 Website: www.maxilift.com

Pneumatic Actuator

irpot has unveiled the Airpel Plus, a new line of high performance, low friction air cylinder actuators. Constructed with borosilicate glass cylinder and graphite pistons, the actuators feature max friction levels of 0.5 per cent of load, and can operate from -55 to 150°C. Units are available in four standard configurations as single acting extension models with bore diameters of 9, 16, 24, and 32 mm. Applications include filament and wire tensioning; positioning and manipulating optics, liquids, or other delicate devices; and measuring weight, creep, or tensile strength. Airpot Corp. Tel: +1-203-8462021 Website: www.airpot.com

october 2011 | industry 2.0

Halogen Transformers

ulham, a manufacturer of lighting solutions, has launched a series of dimmable electronic transformers ranging from 60W to 300W , in liner and circular units. The transformers can be used to operate multiple dimming and non-dimming MR16 and MR11 lamps, provide short circuit, overload and thermal protections. Fulham Worldwide Tel: +1-323-7792980 Website: www.fulham.com

- technology management for decision-makers

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Expandable Hose

Robotic Welder

lexaust’s new expandable hose, Flexadux PV R-4 Stretch, features a 7 to 1 expansion ratio for easy handling and storage in a wide range of vacuum and dust collection applications. The product is a medium weight PVC hose reinforced with a spring steel wire helix, and is resistant to many chemicals and moisture. The product is suitable for a wide range of industrial vacuum and woodworking dust control applications. The hose is clear and comes in 2 to 6-inch sizes in standard 10, 25, and 50ft lengths with a plain cut end finish. Flexaust Co. Inc. Tel: +1-800-3430428 Website: www.flexaust.com

Bulk Box

BB Robotics has launched the ArcPack Lean 1410, a fully configured, quick start robotic welding package with an array of options to suit the needs of many small to medium welding operations. The fully configured unit includes an IRB 1410 robot, the IRC5 compact controller, Fronius TransSteel 3500 power supply and wire feeder, and a Tregaskiss 500 Amp air-cooled welding torch. The six-axis robot is designed for arc welding, and features 5 kg handling capacity with a supplementary 18 kg load capacity on upper arm for application equipment. With positional repeatability of ±0.025 mm, the IRB 1410 delivers optimal welds in tight, restricted locations. ABB Robotics Tel: +1-248-3919000 Website: www.abb.com

uckhorn, a provider of reusable plastic packaging and material handling systems, has introduced a 48x45-inch bulk box, the BN4845. The container features sturdy, structural foam panel, drop down doors and a strong, injectionmoulded, two-piece welded base. The design suits manufacturing and automotive industries, and is available in 25 and 34-inch heights. It also includes ergonomic handles as well as four drain holes for better outside storage. The BN4845 nests with competitive bins when upright or collapsed, and it provides four-way forklift entry. Its full 31.7-inch wide dual drop-down doors are either 10.25 or 14.5 inches deep, based on the height of the box. The doors do not block fork openings, thereby minimising damage to the container. The bulk box is recyclable. It offers a 3:1 return ratio, with 234 collapsed containers fitting a 53-foot trailer. It also features added decoration areas often required for industrial applications, including multiple recessed ID tag areas on all four sides of the base and additional flat surfaces on the panels and doors for labels or RFID tracking. Buckhorn Inc. Tel: +1-502-6336500 Website: www.buckhorninc.com

he Personnel Strip Door (PSD) is an economy-grade strip door using eight-inch wide PVC strips, which helps control temperatures within a workspace. The PSD is designed for doors up to 40 inches wide, and is suitable for use in restaurants, warehouse offices, company kitchens and other common areas with consistent personnel traffic. The door is easy to clean, and has a low profile hardware design. TMI International Tel: +1-412-7879750 Website: www.tmi-pvc.com

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Strip Door

Why don’t you share its Features and Functionality with the readers of this magazine? Just send a detailed report to: editor@9dot9.in Don’t forget to attach - image. a high resolution 71

industry 2.0

technology management for decision makers | october 2011

R.N.I. No. MAH ENG/2001/4796 Tech/MH/MR/SOUTH-127/2006-08