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  • The Right Way to Navigate Cost Reduction: Prioritizing Process Improvement

    In today's challenging economic landscape, businesses face the dual challenge of rising inflation rates and escalating expenses. Business leaders recognize the need for cost reduction to maintain profitability. However, it's all too common for these cost-cutting efforts to focus solely on downsizing the workforce without giving due attention to enhancing operational processes. While this move achieves the targeted cost reduction, it inevitably heaps a heavier workload on the remaining staff. Compounding the issue, the remaining employees are expected to adhere to long-established, unaltered processes. These workflows have remained unchanged, lacking the necessary efficiency enhancements to adapt to the evolving demands of the business. The result is frustration and dissatisfaction among the employees who must grapple with increased workloads. This unbalanced approach can set off a detrimental chain reaction. It is of critical importance to combine cost reduction with process improvement. The Way Forward: Prioritizing Process Improvement The fundamental lesson is that cost reduction should not be considered a mere exercise in financial belt-tightening. Instead, it should be closely intertwined with process improvement. The pivotal question that should guide this approach is, "Why do we perform tasks the way we do? What is the rationale behind our current work methods?" This introspection should lead to the redesign and simplification of operational procedures. Failing to undertake this critical step may lead to detrimental consequences for the company's future. The Benefits of Process Improvement When businesses choose to couple cost reduction with process improvement, they unlock a range of significant benefits: Efficiency Enhancement: Streamlined processes save time, resources, and effort, allowing employees to focus on value-added tasks and boosting overall productivity. Cost Savings: By eliminating waste and inefficiencies, organizations can significantly reduce operational expenses and allocate resources judiciously. Quality Assurance: Refined processes lead to consistent, higher-quality outputs and enhance customer satisfaction. Customer Satisfaction: Optimized processes result in quicker responses and improved service, driving customer satisfaction and loyalty. Competitive Advantage: In a competitive landscape, organizations that foster a culture of continuous improvement are better equipped to outperform their rivals. In conclusion, the critical lesson for businesses facing the challenge of cost reduction is that it should go hand in hand with process improvement. The wise approach is to foster a culture of continuous improvement, constantly asking, "Why do we do what we do?" This mindset will lead to the redesign and simplification of processes, securing a brighter and more prosperous future for businesses and their stakeholders in an ever-evolving market.

  • Would paying 25 cents for a to-go coffee cup make you bring your reusable coffee mug?

    I recently purchased a cappuccino at Starbucks, Vancouver, and after enjoying a few sips, I saw a label on the cup saying an extra 25 cents for the to-go cup. Until I had read this label in small font, I wouldn’t have realized I had paid 25 cents extra for the cup. There was no visible information about the additional cup fee at the cafe to increase consumer awareness. Curiously, I enquired at the billing counter, and the lady mentioned that Starbucks is charging an extra fee for to-go cups, but it has been offering 10 cents off the regular price if you bring your reusable coffee mug. Being a sustainability enthusiast, I further explored and found a rule issued in Vancouver City: Effective January 1, 2022, a minimum fee of $0.25 must be charged for each single-use beverage cup distributed. Businesses keep the cup’s fees and are encouraged to provide reusable alternatives. Revenue from cup fees is not remitted to the city. Is this strategy of charging extra cents encouraging consumers to use reusable cups since many consumers are okay to pay an additional fee of 25 cents? Is there enough consumer awareness about extra cents charged? Are businesses making efforts to encourage consumers to use reusable cups? Are there any alternatives for reducing cup usage? What is required for the desired change? Businesses must increase consumer awareness about the additional fee and encourage reusable cups through informational display boards rather than just pocketing extra cents. Businesses should use biodegradable or recycled cups/lid covers. This will also improve the ecological footprint of the brand. The government should promote such initiatives to increase consumer support. Offer lucrative consumer benefits to increase consumer adoption of such initiatives. Consumers should support adopting such initiatives and at the same time be curious about extra charges being charged to increase self-awareness. Just charging an extra few cents doesn't encourage consumers to use reusable coffee cups. In my opinion, it doesn't solve the problem, or does it? What are your thoughts? Reference: #sustainability #coffeecups #consumerawareness #sustainabilitystrategy #vancouver #environmentalimpact

  • Oversized product packaging versus Sustainability?

    I recently purchased a fruit snack that served tiny pieces of dried pineapple. It is indeed a delicious product, but comparing the size of the packaging versus the quantity served in it, I was left pondering over: Why do small things come in oversized packages? (The brand name is intentionally hidden since the purpose of the article is to increase awareness about oversized product packaging rather than to target any brand) Does such large packaging make justice for packaging only 20 gm of tiny pieces of dried pineapple? Isn’t the answer very much straightforward? Oversized packaging used to attract consumers does not help in long-term customer retention. After considering today’s conscious customers, companies need to rethink and avoid oversized packaging. To mention a few benefits for the companies: Sustainability: Opting for the right-size packaging (while still meeting functional needs) helps to minimize the amount of packaging material required, reduce the environmental impact of plastic package disposal, and support the company’s sustainability strategy. Cost: Smaller packaging is less expensive, as less material is needed reducing the operating costs. Customer experience: Right-size packaging goes a long way in creating a more thoughtful customer experience (and yes, these small details get noticed!). Isn’t opting for the right-size product packaging a win-win strategy for the company that will reduce packaging cost, enhance customer experience, and reduce environmental impact? #environmentalimpact #oversizedpackaging #sustainability #packaging

  • Western Digital factory named World Economic Forum Sustainability Lighthouse

    The World Economic Forum has recently recognized and awarded Western Digital's factory at Batu Kawan, Penang, Malaysia as a Sustainability Lighthouse. By leveraging its vertically integrated smart factory model and implementing 4IR (Fourth Industrial Revolution) technologies such as IoT sensors, digital twin modeling, analytics-powered plant management system, and lights-out automation with machine learning, the site achieved: Normalized (per unit) reduction in energy by 41 percent, Reduction in water consumption by 45 percent and Material waste reduction by 16 percent, while growing 43 percent (Compound Annual Growth Rate) in the last four years. Key highlights of the strategies implemented at the site are: The site has implemented the Lights-Out manufacturing concept, which transforms the entire manufacturing system with the use of advanced 4IR technologies. This concept creates an environment where manufacturing processes can operate more efficiently without the lights on, allowing the site to reduce energy consumed per unit produced. The site is equipped with an advanced Building Monitoring System (BMS) that is integrated with a proprietary optimizing model to effectively manage the use of energy throughout the facility. The site is reserving water and recycling wastewater generated from its operations via a multi-layer recycling system with the use of algorithm-based control models. The facility's second building was designed and constructed with a roof-top solar farm that generates 1MW/Hr solar energy to supplement the overall energy requirement for the site Western Digital relies on 4IR technologies to drive its eco-efficiency. These technologies have helped boost the productivity and efficiency of their operations. They have deployed more than 1000 Industrial IoT sensors to more than 500 pieces of equipment and 15 utility systems to gather data and generate analytics insights. This allows them to optimize energy consumption across the entire factory. Western Digital is setting up a good example of how the latest technology can be used to accelerate on the path toward sustainability. Sources:

  • How to capture the potential of the circular economy?

    Many of the larger product-based companies have invested to put in place circular supply chains for recovery and recycling. But to fully deliver value to people and the planet- circular efforts need to expand beyond the low-hanging fruit like recycling and more to other circular business models. To capture the full potential of the circular economy, companies need to widen their circle by asking questions and pursuing higher and more complex value initiatives: START THE CIRCLE FROM THE TOP Leadership at the very top of the company must create business imperatives, cultural changes, and governance to promote circular objectives—and integrated goals and metrics. That requires taking traditional metrics—like EBITDA, gross margin, etc.—and blending them with new metrics including take-back quantities, the degree to which materials were effectively refurbished or reused, and resource productivity. QUESTIONS TO ASK: • What does success look like in the long term? • How do we know our efforts are achieving their goals? • What are the new metrics we need to measure circular impact? BREAK DOWN SILOS Companies that will gain the greatest value from circular will be those that look for opportunities that impact the very core of their operating models and seek to build an ecosystem of partners across multiple functions QUESTIONS TO ASK: • Which parts of the company need to work together to bring circular initiatives to fruition? • What external partnerships could enable and bring value to the circular business model? • Do we have the right capabilities that effectively deploy and operate circular economy principles? LEVERAGE DIGITAL Technologies like IoT, RFID, and analytics are critical for embedding circularity across operations and ecosystems to increase the ability to track resources and monitor things like utilization and waste capacity. Digital allows companies to have a much more granular understanding of the value of materials, and to gauge the condition of assets and products—determining when they’ll need service or replacement, for example. Gaining these capabilities is quickly becoming “table stakes” to engage in a fuller circular economy supply chain. QUESTIONS TO ASK: • Which technologies can we leverage to enable circular business models including resource recovery, product life extension, and products as a service? • What do we need more insight into (i.e., tracking products, waste), and how can we get it? CAPTURE THE FULL VALUE OF CIRCULAR TRANSFORMATION Companies need to focus on innovation for sustainable business models. This includes owning the full cycle, the whole cycle of the product, and thinking about designing for reusability. Then how can they think about re-localizing or re-regionalizing the supply chains today that are stretched all around the world leading to building a sustainable supply chain? QUESTIONS TO ASK: • What are the largest areas of waste in the supply chain and how can we extract value from them? • Where are low-cost rivals encroaching on our territory? • Which resource-related bottleneck of the linear model can be addressed through a new business model Sources/Notes: Accenture Circular Economy in Supply Chain #businessmodels #zerowaste #upcycling #recycling #circulareconomy #entrepreneurship #sustainability #circularity #reducewaste #circulardesign#sustainablebusinessstrategies #circularbusinessmodels

  • Circling Success - Circular Business Models

    According to Accenture Strategy Research, 94% of companies surveyed, report implementing elements of circular supply chains. Out of which 44% have invested in circular supply chains for recovery and recycling and only 18 % of companies have put in efforts in reusing or refurbishing materials they have captured at the end of life. Recycling waste materials within a company's operations only scratches the surface when it comes to capturing value out of the circular economy. While many companies remain at surface level, first movers go beyond basic recycling and realize significant value by closing the loop. The first movers have a holistic vision, coupled with effective leadership, that lets them move to circular business models and sets them apart from others. To fully deliver value to people and the planet -circular efforts need to expand beyond the low-hanging fruit like recycling and more to other circular business models like: Circular Supplies: Provide renewal energy, bio-based, or fully recyclable input material. Resource recovery: Recover useful resources out of disposed products or by-products. Product Life Extension: Extend the working lifecycle of products and components by preparing, upgrading, and reselling. Sharing Platforms: Enable increased utilization rate of products and components by making possible shared use/access/ownership. Product as a Service: Offer product access and retain ownership to internalize the benefits of circular resource productivity. Download: Sources/Notes: Accenture Circular Economy in Supply Chain #businessmodels #zerowaste #upcycling #recycling #circulareconomy #entrepreneurship #sustainability #circularity #circulardesign #sustainablebusinessstrategies #circularbusinessmodels

  • Creating value from waste

    With a passion for creating value for things that have been labeled useless, Fruitleather Rotterdam based in The Netherlands has placed itself in today’s circular economy. Their vision is not only to spread awareness of the food waste issue but also to show how waste, in general, can be used positively. The cofounders Koen Meerkerk and Hugo de Boon are a Rotterdam-based designer duo who came up with a circular idea in 2015. They saw an increasing problem of leftover fruits at the Rotterdam market and Harbor. The fruit sellers had to pay per kilo to dispose of the wasted fruits in the market. The duo saw tremendous potential in the fruits being wasted and thought of converting this into a business opportunity. They started collecting the discarded mangoes from the fruit seller at no cost which turned out to be a win-win situation for them as well as the fruit seller. They settled on mangoes because the fruit was easy to work with and contained a lot of fibers useful for making leather. How leather is made? The discarded mangoes are collected by Fruitleather and processed which involves de-stoning and then crushing the fruit into a pulp. A bunch of natural additives is added so that the pulp turns into a leather-like material. The mixture is then poured onto metal baking trays that stay in a dehydrator overnight. Depending on the type of mango used, the color of the material changes after dehydration. A machine presses a thin layer of protective coating onto the leather and then passes through the oven. The sheets are then dried and undergo the same process multiple times until the leather becomes durable. Pressure is applied to combine the layers of coating. Then the leather is sold to designers around the world. This helps to reduce emissions and create value from the waste. Takeaway: Thoroughly understanding the problem and then innovatively thinking about a triple-bottom-line solution is critical for creating a circular economy. Food waste makes up about 8% of all greenhouse gas emissions, making it a top contributor to climate change. In today’s world, we need such innovative businesses to address this crisis and reduce our carbon footprint. References:

  • SMART DRONES that deliver life-saving medical supplies

    On-demand delivery of medical services is crucial during emergencies and disaster relief scenarios. Zipline is one such company that supports this service with the help of a combination of industry-leading technology. Their mission is to “provide every human on Earth with instant access to vital medical supplies”. Since its founding year 2014, they have built the world's fastest, reliable, smart drone that delivers life-saving medical supplies. The company has focused on the delivery of blood and lifesaving medical supplies to areas that are hard to reach in Rwanda, Africa but soon will expand to other countries. Zipline uses fully autonomous drones to deliver 1.8 kilograms (3.9 pounds) of cargo up to an 80-kilometer radius away from the launching location, dropping the cargo via parachute and then returning to base. The mini plane has GPS circuitry connected to the battery which keeps the GPS always ON and connected reducing the launch preparation time which is critical during emergencies. The plane has separated components for easy tracking of issues. Using a mobile app, the preflight services connected to the launching system of the plane can be checked and validated. The launch technicians through their mobile camera can scan the QR code on each part sending a signal to the plane to actuate the control service. The phone then uses a computer vision algorithm to make a pass or fail judgment for each control service before the launch. A simple pulley & motor combination is used for the launch of the plane that helps to quickly & safely get the plane up to the required speed. The plane is communicating its location in 3D space with radio receivers. This could eventually grow into the supply chain allowing drones to hop between base stations and get their batteries swapped out in minutes and be on their way. This technology is helpful in the case of disaster relief scenarios where roads are flooded due to water. Zipline can help in the centralization of emergency supplies help reduce human exposure to contagious diseases and stop the spread of disease. For more information please check their website: References:

  • Brewing Data With Coffee - Starbucks

    Starbucks investments in customer-centric innovations have helped them identify their sweet spot and achieve a competitive advantage. Starbucks willingness to adapt and invest in its digital technology has placed them at the forefront of applying data and analytics to create and capture enormous value for both customers and the company. Starbucks uses DeepBrew (AI-based tools) to keep operations efficient, free up time for partners, engage customers and improve sales. Aside from offering coffee, Starbucks focuses on brewing data for three main entities where both value is created, and captured: 1. Operations: Massive data is analyzed to carefully identify the new coffee store locations. With the help of AI tools company can design store planning models considering various parameters like population, income levels, traffic, competitor presence, etc. It also helps them to predict economic factors like revenue, profits, etc. The AI tools further help to optimize store labor allocations and help manage inventory within the stores. 2. Customers: Starbucks Digital Flywheel program creates tremendous value for customers and helps the firm in capturing the value. There were almost 19 million loyalty program users in early 2020. Understanding customers' buying patterns and knowing in advance individual customer order preferences allows Starbucks to provide a “radically personalized” and warm experience to customers. With the help of AI, Starbucks customers are presented with thoughtful, personalized choices based on their preferences, weather, and times of the day on the Starbucks app or the drive-thru menu. This helps customers to make quick choices and eases the customer buying experience. 3. Partners: Maintaining good customer throughput is critical for a store’s success. If a machine breaks down, it can significantly disrupt a store’s operations. The conventional approach of data and machine parameters collection, repairs required, etc. is very time-consuming. Starbucks AI tools help in predictive maintenance and forecasting failures of Expresso machines. The new range of expresso machines is equipped with sensors. Every shot of espresso is logged and analyzed centrally to assess potential areas for tuning and maintenance. This Internet of Things (IoT) technology is combined with Deep Brew to give a prediction of which machines need maintenance and when. Starbucks Deep Brew is a fine example of leveraging AI and Analytics to improve efficiency and provide personalized services to create great customer experiences. #artificalintelligence #digitalstrategy Sources:

  • How John Deere is leveraging AI, IoT, and data analytics?

    John Deere is a global leader in agricultural machinery manufacturing and for many of us, this name recalls bright green and yellow tractors. Over the past two decades, Deere has made significant investments in building its internal capabilities around data science and analytics. The company’s acquisition of Blue River Technology in 2017 is now empowering its entrance into AI and computer vision to see and measure data on individual crops with the goal of autonomous decision-making. Leveraging AI, IoT, and data analytics has helped John Deere transform from a pure equipment manufacturer into a data-driven technological manufacturing company. Their vision is to improve customer productivity and help deliver more value to farmers, helping them to collect data and harness it for improved farm management. The John Deere Operations Center delivers value to farmers with tools and features that enable them to easily access farm information to better manage their daily operations. Through dashboards, farmers can see what is happening in real-time, analyze performance, and collaborate with partners to gain insights, increase profits, and direct their plans with more precision in the field. All types of data e.g. fuel level, location, and machine hours, are collected primarily from sensors embedded both in the machines and in the field (soil) and also pulled from external sources e.g., weather prediction data, and commodity pricing. Data is then automatically uploaded onto the cloud via the cellular network, Wi-fi, or Bluetooth. Farmers can access and manage the data through the portal. Through an app, farmers can monitor activity in real-time, analyze performance, determine how best to utilize equipment, and collaborate with partners for insights that help the farmer decide what to plant, where, and when with the optimized condition. The value created for farmers is improved productivity, increased efficiency, improved operations, decreased downtime, and reduced costs to ultimately maximize profitability. (Dashboards on tractors displaying information. Source: Blue River Technology has developed a solution using advanced machine learning algorithms to enable robots to make decisions, based on visual data about whether or not a plant is a pest, and then deliver an accurate, measured blast of chemical pesticides to tackle the unwanted pests. The aggregate machine data is also used for predictive maintenance by Deere to find patterns that indicate a machine or sensor problem and notify failures in advance. Remote diagnostics save time and money from technician visits and reduce downtime. Deere also used the data internally to improve product quality and enhancements, as well as to advise the next generation of new product and service development. Check out the video how the future of farming looks like: References: 1. 2. 3.

  • 2004 financial crisis: The transition of LEGO from survival to growth

    The Lego Group began manufacturing the interlocking toy bricks in 1949. It is a renowned Danish brand in construction toys known for its interlocking plastic bricks that can be assembled and connected in many ways to construct objects. At the beginning of the 2000s, LEGO was facing the most serious financial crisis to date. By 2004, things had gone awfully wrong at the LEGO group. Their products were competing for retail space on shelves already overstocked with unsold merchandise They had too much capacity and too much stock. It was sitting in the wrong countries. The retailers were very unhappy. The company had over-diversified its product lines into areas such as apparel & retail stores, and theme parks. The cash sources were being invested in low revenue-generating themed parks which were becoming an expensive distraction to management. The company was struggling with two fundamental challenges that grew out of this period: over-stretching and over-expansion. To survive through this sinking phase, the company needed to halt a sales decline, reduce debt, and focus on cash flow. In 2004, Jørgen Vig Knudstorp was appointed as the CEO of the LEGO group and was handed over the responsibility to lead through this survival phase. In one of the interviews, Jørgen said “You can really only build an adjacency to your core business every 3-5 years because it’s such a major undertaking in terms of culture and capabilities. Rather than doing one adjacency every 3-5 years, we did three to five adjacencies every year. So I think that’s what nearly killed us”. So how did LEGO transition from survival to growth successfully? In search of the basics, Jørgen asked- Why does Lego Group exist? What do we do better than anyone else? What makes us unique? Ultimately, the answer was: “to offer our core products, whose unique design helps children learn systematic, creative problem solving—a crucial twenty-first-century skill. We also decided that we wanted to compete not by being the biggest but by being the best.” Lego sold its theme parks business to Merlin Entertainments for about £250 million in July 2005 while in crisis. Selling off Legoland solved the company’s short-term debt crisis and enabled it to focus on the longer-term problem of falling sales. Lego avoided bankruptcy by doubling down on its core products: the bricks. They spent a couple of years stabilizing the business and restoring profitability. To rebuild profitability, the company had to refashion every aspect of its supply chain. They approached it holistically, analyzing every aspect of the company’s product development, sourcing, manufacturing, and distribution. The focus of the years from 2004 to 2007 was not on growth but rather manifold increased productivity. The main focus was on managing the business for cash rather than sales growth. In 2013, the company achieved $4.5 billion in revenues and profits of $1.5 billion. LEGO became the largest toy company in the world. Return on sales had increased to 33% and sales per employee had doubled. Lego savior, Jørgen in one of the interviews has shared the golden rule in business during a challenging period: “Most companies don’t die from starvation but they die from indigestion. People lose focus on their core business as they pursue new adjacencies. The core business is the most exciting and hence continue to reinvent it every year”. References: #LEGOSuccessStory,

  • Scenario planning – tool for uncertain future

    During uncertain economic situations when long-term business planning fails, companies need to be resilient and adapt to survive in the competitive market. The recent lockdown imposed by many countries across the world due to COVID - 2019 is one such example of an uncertain situation. Many companies struggle to survive during such uncertain times and seek tools or advice that can help them make better critical decisions. Scenario planning is a planning tool used to make flexible business plans to deal with major, uncertain shifts in the organization’s environment. It helps to determine what is required for the organization to succeed if potential changes occur and update the strategy accordingly. What is Scenario planning? Scenario planning can be used to identify uncertainties by scanning the current situation (internal & external factors) and predict the plausible potential futures to help understand how different situations will affect the business. It allows a company to create a resilient strategy & review the flexibility of the existing strategy against the various possible future alternatives. It helps to identify & address business challenges beforehand that otherwise could be neglected. The steps in the scenario planning process are explained below: Identify the big shifts in society, technology, economics & politics, etc. in the future and how they will affect the company. Brainstorm the uncertainties caused due to these changes and identify the top 2 critical uncertainties. Then develop a two-by-two matrix with the top two uncertainties as to the axis. Depending on which direction each of the uncertainties will take, draw four possible scenarios for the future as shown below: Analyze each of the 4 scenarios by focusing on the major company’s issues at stake. The whole motive is to challenge the assumptions in a hypothetical environment before managers decide on a certain course of action by raising and testing various “what-if” scenarios and their implications. Discuss the various implications and impacts of each scenario and shape the ongoing company’s strategy taking into account every scenario. Iterate the process as often required. Scenario planning is certainly one of the tools to manage for the uncertain future. References: #ScenarioPlanning, #Uncertainty, #BusinessStrategy

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