Perpetual Innovation

Author: PiAdmin

  • New Look at Oil Reserves, Renewables and Climate Change

    New Look at Oil Reserves, Renewables and Climate Change

    There is a long term energy competition battle ahead between renewables and fossil fuels.  Just as the prices for renewable energy sources, mainly solar and wind, have fallen markedly, our irrepressable technolgy advances have enabled us to find vast new oil reserves under our feet.  Check this out to see what we have in billions of barrels:  http://www.usnews.com/news/blogs/data-mine/2014/12/04/us-oil-reserves-hit-38-year-high

    So, this likely means the prices of gasoline and home heating oil will stay low for some time and it is also likely that Congress will get around to lifting the ban on exporting oil.  Good for the consumer? Yes and very much ‘no.’  From an out-of-pocket perspective, lower costs, more disposable income.  From the standpoint of the environment, more oil means more carbon emissions for a longer period of time even considering the ongoing sustainability efforts of large companies and many cities around the world.
    It seems we have our feet planted firmly in mid-air on the dilemma of climate change, human activity causation and the profit motive.

  • Energy Efficiency & Renewables… Good signs for both.

    In one recent edition of the New York Times, there were two very positive articles on energy efficiency and improving the cost/kwh of renewables.  The Monday, November 24, 2014, issue featured “Good News on Energy,” by Ralph Cavanagh of theNatural Resources Defense Fund, http://www.nytimes.com/2014/11/24/opinion/good-news-on-energy.html? and “Solar and Wind energy Start to Win on Price vs. Conventional Fuels,” by Diane Cardwell, http://nyti.ms/1yJq2r0.

    From Cavanagh, peaked energy use occurred in the US in 2007 and has trended downward since with a small increase in 2013.  And, economic growth is increasing more rapidly than the growth in energy usage because technology is making energy sources more efficient.  The LED light bulb is a good example.  Improvements over the last 40 years have done more to meet US energy needs than the combined contributions of oil, coal, natural gas and nuclear power.

    Electricity consumption has decreased since 2000 despite the introduction of new consumer electronics.  Moreover, oil consumption by homes, businesses and vehicles is down 12% since the peak in 2005.  June, 2013, began a 12-month period in which the combined usage of renewables exceeded hydroelectric power.  More than 12% of our energy supplied comes from renewables and that category is growing faster than the others.

    In her article, Cardwell confirms that the cost of providing electricity from wind and solar has dropped significantly in the last five years, so much so that in some markets renewable generation is now cheaper than coal or natural gas.  Several utility companies in the Great Plains and Southwest where wind and sunlight are abundant have signed power purchase contracts, known as “power purchase agreements,” for solar and wind at prices below that of natural gas.

    According to Lazard, an investment banking firm, the cost of utility-scale solar energy is 5.6 cents/kwh with wind as low as 1.4 cents/kwh.  Without federal subsidies that are up for renewal by Congress in 2016, solar costs are about 7.2 cents/kwh and wind would be 3.7 cents/kwh.  Natural gas is at 6.1 cents/kwh on the low end and coal is at 6.6 cents.

    Both renewables and fossils have limitations.  For renewables, the wind has to blow and the sun has to shine as electrical storage technology needs a break through.  For the fossils, there are regulations and costs due to carbon emissions pollution.  One can expect this hybridization of fossils and renewables to continue for a considerable period of time.
    Minor edits: 12/17/2014.

  • Survive or Thrive in times of Economic Uncertainty

    Posted on August 12, 2011 by Dr. Edward F. Knab

    It doesn’t matter if they call it a recession, depression or something else, the world economies are on the brink of a double dip recession. Consumer confidence is is now at its lowest level in 50 years and companies must develop effective strategies in order to survive these challenging times.

    While there is little wrong with prudent cutting costs, the companies who emerge from economic downturns quickest and gain the most market share are those who applied innovation during the downturn to add value to their business and their customers. It is during these challenging times that companies often separate themselves from mediocrity by integrating high degrees of innovation.

    Generally, in time of economic uncertainty, the concept of innovation is not even up for discussion, whereas it should be the basis for all ‘going forward’ decisions. Traditional supply chain issues such using innovative means to get products people want to buy to them faster and cheaper is the foundation for improving the value equation we bring to the table. Our focus should be on adding value to the customer rather than cutting costs. All of our focus as innovators should be directed at “added value”; even the act of cutting cost is in reality adding value.

    Supply Chain innovators provide value to their customers by improving systems which result in improving profits. The great majority of all improvements are of an incremental nature rather than a single “big bang”, they are a result of constant and never ending improvements (CANI). Companies that can integrate some simple philosophic approaches into the customer relationships can create greater value for their customers and themselves, and will gain competitive advantage in the marketplace, especially as the economy improves.

    Listen to your Customers.
    Get to really know them, live with them, understand their opportunities and support them. Most companies will tell you they know their customers but it reality they know the statistics of what and when they buy but do not know what their customers’ problems and challenges are. Often, the answer is Supply Chain related, businesses need to be asking their customers; what worked? what didn’t? and what next? and often the result is technology-assisted collaboration which creates a foundation for a new and improved relationship. It starts with demand signals – knowing what quantities and mix of products are selling in each store or region for you, your customer, or your customer’s customer. Supply chain integration and visibility applications can be the conduit making channel collaboration possible.

    Reduce Transportation Time and Cost
    Fluctuating energy cost are an underlying cause of our current economic turbulence, with supply chains lengthening and fuel costs on a roller coaster ride, transportation costs and risks are areas that must be stabilized first. Some of the strategies that can help in the long term are network design, near-shoring, and local production and distribution. In the short term Transportation Management Systems can help reduce cost and optimize efficiency. The concept of shippers co-operatives are gaining new traction as volumes decrease and in stock inventory is a mandate. Eliminating empty miles through arranging back-hauls and continuous moves, automating yard movements and appointment scheduling, and providing portals for carrier and customer communication can significantly improve efficiency.

    Optimize Working Capital and Reduce Cost
    The economic challenges should result in a good long look in how we are leveraging out capital and help us identify area where we may improve our utilization. Cost reduction programs that mandate cost cutting percentages across all departments only reward those who ran too fat in the first place. More importantly, they are not geared to adding value to the customer. In fact, the opposite is usually true. The right way to reduce cost is to start with customer demand signals. Follow the demand signal up through the demand chain to manufacturing and suppliers, then down through distribution to the customer or the store shelf. Examine each point along this journey to see what adds value and what doesn’t. Cut everything that does not add value. That is the principle of lean supply chains.

    Streamline Processes
    Innovation requires improving processes by leveraging best practices and technology to create better flows of product, people and information. Look at order management, manufacturing and procurement, distribution and transportation. There are significant new developments in technology supporting these areas. For example, using a single system to track raw materials and purchased components, sequence them into and through production, and then tracking the combined output through distribution improves manufacturing and distribution efficiency, and has huge traceability benefits in case of recall.

    Make Good Decisions based on Good Data:
    Often ERP systems have failed to live up to their promise of integrated and assessable supply chain data and management has been hard pressed to make good decisions. Management needs real-time access to accurate, meaningful information which was supposed to be the promise of ERP. However, the batch nature of ERP and its lack of supply chain detail have shown the reality to be less than optimal. What are needed are business intelligence tools that link, sort and analyze data from all the supply chain systems and trading partners to present meaningful, personalized information to executives in real-time. This information is displayed on graphic dashboards that are easy to comprehend and act upon, yet can be used to drill down to get to the root cause of problems. The good news is these business intelligence systems are available today. They give supply chain management the tools they need to respond with agility to the ever-increasing variability of demand and take advantage of new market opportunities before the competition.

    After years of down-sizing, right-sizing and lean, most companies are already running full out. Cutting heads may cut costs, but it also cuts customer service while raising overtime expense and blood pressures. Go from survival mode to competitive advantage by empowering your employees through a performance-focused culture. Look to innovate, everywhere! It won’t all work but your organization will learn from it, they will learn that controlled failure is acceptable providing there is a plan with predefined outcomes and a method of coordination. Promote learning to insure your organization is in tune with the latest supply chain innovation in the market. Challenge the organization to get closer to the customer at every touch point; senior management, buyer/seller, AP/AR, SCM/Customer Service and others.

    If your company is attempting to cope with turbulence in your supply chain the Supply Chain Experts can help you design a program that satisfies the requirements of your customers while insuring the optimal data flows to accurately control your global supply chain.

    Dr. Edward F. Knab
    Productivity Constructs, Inc.
    800 660 8718 office
    949 413 7333 mobile
    ed@edwardknab.com
    www.productivityconstructs.com
    More Supply Chain Experts Blogs
    edwardknab.com

    Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of job satisfaction. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at ed@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.

  • Survive or Thrive in times of Economic Uncertainty

    Posted on August 12, 2011 by Dr. Edward F. Knab

    It doesn’t matter if they call it a recession, depression or something else, the world economies are on the brink of a double dip recession. Consumer confidence is is now at its lowest level in 50 years and companies must develop effective strategies in order to survive these challenging times.

    While there is little wrong with prudent cutting costs, the companies who emerge from economic downturns quickest and gain the most market share are those who applied innovation during the downturn to add value to their business and their customers. It is during these challenging times that companies often separate themselves from mediocrity by integrating high degrees of innovation.

    Generally, in time of economic uncertainty, the concept of innovation is not even up for discussion, whereas it should be the basis for all ‘going forward’ decisions. Traditional supply chain issues such using innovative means to get products people want to buy to them faster and cheaper is the foundation for improving the value equation we bring to the table. Our focus should be on adding value to the customer rather than cutting costs. All of our focus as innovators should be directed at “added value”; even the act of cutting cost is in reality adding value.

    Supply Chain innovators provide value to their customers by improving systems which result in improving profits. The great majority of all improvements are of an incremental nature rather than a single “big bang”, they are a result of constant and never ending improvements (CANI). Companies that can integrate some simple philosophic approaches into the customer relationships can create greater value for their customers and themselves, and will gain competitive advantage in the marketplace, especially as the economy improves.

    Listen to your Customers.
    Get to really know them, live with them, understand their opportunities and support them. Most companies will tell you they know their customers but it reality they know the statistics of what and when they buy but do not know what their customers’ problems and challenges are. Often, the answer is Supply Chain related, businesses need to be asking their customers; what worked? what didn’t? and what next? and often the result is technology-assisted collaboration which creates a foundation for a new and improved relationship. It starts with demand signals – knowing what quantities and mix of products are selling in each store or region for you, your customer, or your customer’s customer. Supply chain integration and visibility applications can be the conduit making channel collaboration possible.

    Reduce Transportation Time and Cost
    Fluctuating energy cost are an underlying cause of our current economic turbulence, with supply chains lengthening and fuel costs on a roller coaster ride, transportation costs and risks are areas that must be stabilized first. Some of the strategies that can help in the long term are network design, near-shoring, and local production and distribution. In the short term Transportation Management Systems can help reduce cost and optimize efficiency. The concept of shippers co-operatives are gaining new traction as volumes decrease and in stock inventory is a mandate. Eliminating empty miles through arranging back-hauls and continuous moves, automating yard movements and appointment scheduling, and providing portals for carrier and customer communication can significantly improve efficiency.

    Optimize Working Capital and Reduce Cost
    The economic challenges should result in a good long look in how we are leveraging out capital and help us identify area where we may improve our utilization. Cost reduction programs that mandate cost cutting percentages across all departments only reward those who ran too fat in the first place. More importantly, they are not geared to adding value to the customer. In fact, the opposite is usually true. The right way to reduce cost is to start with customer demand signals. Follow the demand signal up through the demand chain to manufacturing and suppliers, then down through distribution to the customer or the store shelf. Examine each point along this journey to see what adds value and what doesn’t. Cut everything that does not add value. That is the principle of lean supply chains.

    Streamline Processes
    Innovation requires improving processes by leveraging best practices and technology to create better flows of product, people and information. Look at order management, manufacturing and procurement, distribution and transportation. There are significant new developments in technology supporting these areas. For example, using a single system to track raw materials and purchased components, sequence them into and through production, and then tracking the combined output through distribution improves manufacturing and distribution efficiency, and has huge traceability benefits in case of recall.

    Make Good Decisions based on Good Data:
    Often ERP systems have failed to live up to their promise of integrated and assessable supply chain data and management has been hard pressed to make good decisions. Management needs real-time access to accurate, meaningful information which was supposed to be the promise of ERP. However, the batch nature of ERP and its lack of supply chain detail have shown the reality to be less than optimal. What are needed are business intelligence tools that link, sort and analyze data from all the supply chain systems and trading partners to present meaningful, personalized information to executives in real-time. This information is displayed on graphic dashboards that are easy to comprehend and act upon, yet can be used to drill down to get to the root cause of problems. The good news is these business intelligence systems are available today. They give supply chain management the tools they need to respond with agility to the ever-increasing variability of demand and take advantage of new market opportunities before the competition.

    After years of down-sizing, right-sizing and lean, most companies are already running full out. Cutting heads may cut costs, but it also cuts customer service while raising overtime expense and blood pressures. Go from survival mode to competitive advantage by empowering your employees through a performance-focused culture. Look to innovate, everywhere! It won’t all work but your organization will learn from it, they will learn that controlled failure is acceptable providing there is a plan with predefined outcomes and a method of coordination. Promote learning to insure your organization is in tune with the latest supply chain innovation in the market. Challenge the organization to get closer to the customer at every touch point; senior management, buyer/seller, AP/AR, SCM/Customer Service and others.

    If your company is attempting to cope with turbulence in your supply chain the Supply Chain Experts can help you design a program that satisfies the requirements of your customers while insuring the optimal data flows to accurately control your global supply chain.

    Dr. Edward F. Knab
    Productivity Constructs, Inc.
    800 660 8718 office
    949 413 7333 mobile
    ed@edwardknab.com
    www.productivityconstructs.com
    More Supply Chain Experts Blogs
    edwardknab.com

    Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of job satisfaction. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at ed@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.