Reverse Supply Chain Spurs Business to Reduce Waste, Lower Costs

I have repeatedly said that business, not government, will help us find our way out of the environmental crisis we find ourselves in at the moment. That’s because business sees many crises as new market opportunities, and is willing to seize on them. I don’t think it’s a case of preserving the environment versus doing what’s good for business, because business will find opportunities in the current environment to do what business does best — innovate. Thus the concept of the “reverse supply chain,” which is gaining traction. In the reverse supply chain, companies lower costs, increase customer service and help the environment by reusing nonproductive assets and waste. Nike, for example, takes the rubber soles from recycled footwear and turns them into playground surfaces. Other companies “re-manufacture” returned goods.

According to Third Eyesight, a consultancy that works with short-use consumer products, it’s not even primarily environmental concerns that are prompting reuse and recycling. “1) World wide economic environment has made cost saving initiatives more attractive in many industries (such as high tech and aerospace). 2) Better management of the reverse supply chain translates into a higher level of customer service and, consequently, higher customer satisfaction. 3) Industries and the enterprises within them are realizing that management of the reverse supply chain is a revenue opportunity. For example, GE Aviation makes more revenue for servicing its aircraft engines than it does when initially selling them. Companies are able to reduce their costs, increase revenue and increase customer service.”

In other words, there is value to be captured from waste. Companies are starting to think of waste as valuable, and thus will begin to design products and processes to manufacture without reducing the integrity of ingredients, such as water, so they may be reused more often.

No offense to government, but I believe government’s function is to protect, while it is business’s responsibility to advance us on the way to sustainability. I think creativity and innovation will do it.

Add comment October 31st, 2007

Service-Oriented Architecture Goes Corporate Mainstream

Web 2.0 (user-generated content) has come to the enterprise in a big way. Far from merely looking the other way while employees spend time on Facebook, Web 2.0 for the enterprise means companies are creating internal social networks for employees, customers, and vendors and customers are taking a larger and larger role in product development.

The buzzword for all this is SOA (service-oriented architecture), which actually has little to do with software design, and everything to do with listening to the customer and involving customers in how applications are developed.

For now, the ideal application architecture is SOA. All corporate application developers want Web 2.0 and business process management (BPM), along with SOA in order to satisfy the short-term and long-term needs of their clients.

Thus, it’s critical to understand that SOA is a term of art that applies not only to software development, but to customer relations as well. It involves making the entire enterprise aware of the customer at every moment.

ESS has a long history of asking its customers to participate in the design of its products. In the early days of the company, we actually sent our customers faxes on a weekly basis, asking for their input! We then moved our efforts to the quickly-emerging Internet. So it isn’t surprising that we are now a leader in rolling out SOA and creating a platform that takes advantage of the insights and needs of our customers.

We are implementing SOA now and are on a five-year plan to continue rolling it out in the technology development of our software. SOA enables us to take information from our customers about emerging issues and problems in their businesses and produce the right solution. This is our strategy to maintain industry leadership and our commitment to enable our customers to solve their real world GRC and EHS problems.

1 comment October 25th, 2007

New PetroChina Oil Reserves Expected to Generate Increased Profits

The Chinese stock markets have been on fire this year, producing a new class of affluent Chinese investors. This is unusual for a country in which all businesses were formerly owned entirely by the government, and all jobs provided by the government.

Among the companies about to go public in China is PetroChina, whose shares are already traded on the New York Stock Exchange and the Hong Kong Exchange, and now they will also be traded on the more mainstream Shanghai Stock Exchange.

PetroChina expects to undertake six new projects with the proceeds from the offering, all of which will help it boost output of both oil and gas.

The company believes that a recent oil discovery at its Jidong Nanpu oil field, off China’s northeast coast in the Bohai Bay, could be found to have considerable reserves, the state-run newspaper China Daily reported:

“We estimate that eventually, we could have proven reserves of as much as 1 to 1.6 billion tons (oil equivalent) from the offshore blocks of our Jidong Nanpu oilfield in the Bohai Bay area,” Jia Chengzao, vice-president of PetroChina and academician at the Chinese Academy of Sciences, told the China Oil and Gas forum on Saturday.

“Including reserves from onshore, the ultimate proven reserves of Nanpu oilfield are expected to hit around 2 billion tons.”
The Jidong Nanpu oilfield has combined proven, probable and possible reserves of 1.18 billion tons of oil equivalent, the Ministry of Land and Resources certified in August. The present proven reserves are certified at 445 million tons oil equivalent.

PetroChina has been preparing its facilities for global scrutiny for quite some time now; it has deployed our enterprise software throughout the country. The company is working to become a model of corporate social responsibility and environmentalism.

The company has demonstrated its leadership by deploying a corporate wide software platform that consolidates all of their environmental, health and safety-related data in a single database across all of the operating facilities in China. The system provides senior managers with full visibility of their progress toward meeting performance goals through company wide metrics and key performance indicators. This is a good move on their part, as stakeholders all over the world have pinpointed sustainability criteria as an important aspect of any investment they make.

1 comment October 22nd, 2007

Blog Action Day - Focusing On The Environment

I have been thinking a lot about the significance of Al Gore winning the Nobel Peace Prize. In awarding this prize, the Nobel committee acknowledged that global climate change is a truly critical challenge facing future generations.

This fits in with my thinking that sustainability is a philosophical and a strategic issue for businesses, rather than just a tactical one. Finding better ways to address climate change is not simply a matter of monitoring emissions to comply with government regulations. It’s about companies doing the right thing in order to protect the environment and the health of their employees, customers, and communities.

Yesterday was Blog Action Day and the topic was the environment. The idea of Blog Action Day is to raise awareness for a particular topic. I try to do that in the GRC Blog by discussing environmental, health, safety and crisis management and how they relate to business sustainability and a safer world.

Please continue the movement. Post to your own blog, in your own way, about what the environment means to you on any given day. Together, we can make an impact!

Add comment October 16th, 2007

Key Elements of Change Management: Standardize, Centralize, Simplify

I just read an interview featuring Bob Otto, the retiring CIO and CTO of the U.S. Postal Service in CIO Insight, and it excited me because I just know he is right on the money. If you want people to accept new technology it must be standardized, centralized and simplified.

After a discussion of the pace of change in technology during Otto’s tenure, interviewer Brian Watson asks him how he gets his people to accept change:

“I have three guiding principles—principles I’ve used since I was young. First, standardize everything. If you find a process you like, standardize it. Second, centralize everything you can. If you have services in five different places and you can centralize them, you will have reliability, predictability. Third, simplify. The computer has taken over your life, so I want it to be intuitive [for people to operate and manage]. I also test my own dog food. Everything we build has to pass the “Bob” factor. I put myself in the place of the lowest common denominator, of someone who might not have a high school degree. I look at how people could be intimidated by technology, and I don’t want them to have a hard time.”

I like the part about testing his own dog food; I’ve always tried to do that as well. Those are the same guidelines we use when we develop our enterprise software. We are aiming for a centralized information repository that enables our customers to look at a global enterprise from one dashboard.

Meanwhile other organizations are learning to standardize, centralize simplify when managing change based on new technology. Last year, ESS went into a Fortune 500 company and replaced 67 separate applications that were being used to monitor environmental health and safety, crisis management, waste and emissions. Replacing all those disparate applications with our integrated GRC platform, thereby standardizing and centralizing the operation, saved the company $1.5 million in support costs, upgrade costs and other direct costs associated with deploying those applications.

In addition, the company was able to redeploy 200 people who had previously been engaged merely in supporting those applications.

It goes without saying that the company was thrilled, but as I was driving home from the office yesterday it occurred to me that we had also minimized their risk.

How? It’s simple. All those applications prevent a company from having a holistic view of its business risk. Every silo of data is viewed separately, without the strategic overall perspective the company really needs.

What’s more, every separate application actually increases the risk involved in data integrity. When all that data is imported into a tool that does give an overall view, how do C-level managers know whether the data has become corrupt on its journey through the applications to the dashboard?

So I’ve come to the conclusion that our unified platform is itself a risk manager — preventing the corruption of data by giving the enterprise a way to look at all its data through the same lens.

So standardize, centralize and simplify works.

Although I am technical, much of our software is deployed at the plant level by people who do not have time to struggle with new technology and would rather ignore change if it doesn’t simplify their lives. They are busy. Ease-of-use is a must. What good is an all-in-one dashboard if the relevant information can’t be accessed by the guy in the plant as well?

2 comments October 8th, 2007