Friday, December 31, 2010

Cars in India will come with Star ratings on Energy efficiency

From 2011 Cars in India will come with Star ratings on Energy efficiency. One is definitely aware and is accustomed to see the logo of Energy Star on Laptops and other home appliances. But the Bureau of Energy Efficiency (BEE) along with Road and Surface transport has finalized the norms. However it might take some time to implement. Prime Minister’s office has mandated BEE to get this implemented under the Energy Conservation Act.

Smart Grid : Answer to the malice of global warming, energy independance.

Smart Grid is being actively promoted by many governments and organizations as an answer to the malice of global warming, energy independence etc. This has been made possible by the use of advanced digital technology, which tries to enable a two-way communication between the supplier of energy and the consumer. Sensors, intelligent meters, control devices form an intelligent grid and network which can adapt quickly to the changing pattern of consumption, generation and distribution.
Smart grids also make it feasible to integrate Solar and Wind power generation units to be integrated to the mainstream energy grids. The Smart Grids can also adapt to the events like breakdown of transformers, power generation units etc. A Study by the United States (US) Department of Energy calculates the modernization and smart grids would lead to savings of 46 to 117 billion dollars of savings in the next 20 years.

Thursday, December 30, 2010

ERP Increases Organization Efficiency : ERP is a must for managing a lot of your Green and Sustainability Initiatives

Increasing Organization Efficiency : ERP is a must for managing a lot of your Green and Sustainability Initiatives, ERP, the Resurrection:

The Internet boom had written off the ERP, but here we are and we see the ERP in its new incarnation is making a serious comeback, especially in the SME segment. But don’t be allured into the land of Eldora do. Even though some people would differ but ERP is one of the most potent weapons that IT has given to the business and the industry. There are a lot of success stories with ERP implementation but there are even more stories which can send the shivering chill down your spine. According to industry estimates, the global ERP market was about 30 billion USD, which included 4.84 billion in software licensing and 25.36 billion in information service. On an average, appalling 70 percent of all ERP implementation projects fail to meet their objectives. A quick back of the envelope calculation shows that this has cost the industry world wide about 21 billion USD directly even if we don’t add to it the indirect damage and irreparable loss that such failed ERP implementation causes to the firm and the business. The following might look as a spoof but more often than not this is what a panoramic view of ERP implementation looks like from the top.

1. Follow competitors, if they have gone for ERP. The ‘me too’ syndrome.
2. The budget is at the mercy of the top management; generally if the company is cash rich then go in for the most expensive ERP package otherwise go in for the exotic ones, which no one has heard.
3. No tangible targets set; no one knows where this ERP journey will lead the firm.
4. Form core ERP teams consisting of people whom you need to get rid off from the firm and what reason could be better than a failed ERP implementation.
5. Appoint the cheapest external implementation partner, not necessarily the best fit.
6. After few years abandon the project or go in for an upgrade if you are around and justify the money spend on it to the stakeholders of the firm with esoteric financial figures.
Jokes apart, an ERP implementation doesn’t come cheap, ERP implementation projects can go up to several million dollars. The world is replete with white papers, case studies and repots which preach on how to go about a successful ERP implementation. I don’t want this to be just another article. Here I list down a few innocuous looking DO’s but with profound implication from the firms’ perspective.

The Ten Commandments:

1) Think twice before you leap: Carefully decide the ERP package that you select. It is often seen that the IT budget drives the selection process. If you do this, this might very well be the first step towards writing your own epitaph. Each and every ERP package has its own advantage and disadvantage. One should carefully access the firms’ needs and the benefits that the firm is looking forward to reap from the ERP implementation. If you have a fat IT budget then think twice before you narrow down on the expensive package. It might be an over kill. If you are short of money wait, don’t go in for the second choice. There is no dearth of ERP packages with more than twenty packages available in the market, but only a few of them are serious players namely SAP, Oracle, PeopleSoft, Baan etc. Also keep in mind the legacy systems that you have already in place. Data migration and connectivity with existing systems can play havoc if not taken care off.

2) Carefully decide the modules: One must be very careful while selecting the modules. Don’t pay if you don’t need all the modules and don’t implement just because you have got all the modules. Excess might be the last straw on the camels back. It is not only important to carefully decide on what you want but it is even more important to know exactly what you don’t need and you can leave out.

3) End user involvement: Everyone will talk about involving all the stakeholders. I would go a step further. Make sure that you involve the very end user right from the first step that is when you select the package. The end user experience in ease and comfort in using the package would be one of the most critical inputs required for selecting a package. Experience tells that organizations had to go in for a costly affair of building a wrapper on top of an ERP just to make it user friendly. Never neglect the peoples factor.

4) Freeze the scope: Make sure that you freeze the requirements early. The earlier the better. Frequent changes in scope and requirements can jeopardize the project. Also keep in mind that business process re-engineering (ERP driven - BPR) in any ERP implementation is vital. Even though ERP packages try to bring in the industry best practices, but no two organizations in the world are same and hence either the ERP package or the business processes of the firm needs to be tailored.

5) Implement in phases: Are you the one who believes in the Big Bang theory? Go live in a single shot. Well I would suggest that always go for a phased implementation. Prioritize the development and phases. The benefits of such an approach is:
a. You can rectify the mistakes and take corrective action in the next phase.
b. You can start getting the end user feedback, as they start using them.
c. It gives the top management a feeling that things are moving.

The following grid might just help in deciding the phases.
The above grid might look incongruous with the prevalent wisdom, but it is always better to go in for the simple requirements initially so that the system can go live as soon as possible and the end user can be familiar with the package. Of coarse the firm should never loose the bigger picture and should keep in mind all the issues that might arise in all the subsequent phases. If the ERP rollout has to be done at many sites then with the help of the above grid the following implementation chart may be drawn. This chart will help us to map the three important dimensions of ERP implementation.

6) Short and Sweet: Try to make the duration of the project short. Long stretched projects often fall in a spiral trap and loose steam.

7) Important Bridge: The IT team from your side plays a vital role. They should not only be technically competent but also understand the business needs of the firm. They act as an important bridge between the firm and external implementation partner (who is implementing the ERP). Being insider to the organization they can feel the pulse of the firm and can help the external partner to understand the implicit needs of the organization. They are also the people who act as the backbone during the support and maintenance phase. This team should also look into enhancements if needed. Often this is the most neglected part, but it becomes the most crucial issue once the ERP is all set to go live.

8) Succession in Place: There should always be a succession plan in place for the project director or project manager (your key person) who is heading the project. Many a projects have failed because the key person left the organization during the crucial phase of the project.

9) Loads of Data: Often armed with an ERP implementation the firm doesn’t know what to do with the tons of strategic data that it has gathered from the ERP. Reports come as an answer to this issue. Try to have as many important reports as you need. Often the reports are sacrificed to fit the budget of the project. Reports help the top management to appreciate the importance of the project and it also helps the firm to reap the full benefits of an ERP system.

10) Last but not the Least: It is very important to have a few experienced people in your team i.e. the ones who have had the implementation experience of ERP in the Industry from a End Users perspective. They are the ones who can identify the pitfalls and issues. Armed with experience they bring in valuable suggestions, which helps to enhance utilization of the ERP system.

The final word, ‘Believe in yourself’ am I joking, not really, ‘You know your business the best’. Take the help of external consultants for they can bring in the unbiased view, but you should have the final word. You don’t need to work hard but you need to work smart.

Wednesday, December 29, 2010

Spend Analysis as a strategic cost advantage driver in Supply Chain Management

Procurement and Supply Management function plays a key role in manufacturing as well as services supply chains. Over a period of time, the function tends to become a support function to areas such as production, services, quality, maintenance and other key line functions and continues to perform a transactional role.

While in an upward inclined economy, most organizations focus on value creation through top-line growth, aggressive marketing plans, extensive ATL communications and new product launches, there is always an opportunity to unlock potential value through cost reduction initiatives in the procurement and supply management area to register higher levels of operating profits. The need to undertake such strategic cost reduction programmes becomes even more pronounced during downturns, when opportunities to grow by the top-line diminish and the organization may compete in the marketplace by harnessing the cost advantage and being more profitable than peers.

The paper discusses Procurement Spend Analysis as a technique and tools to achieve cost advantage in the supply chain. Organizations derive potential benefits from undertaking such strategic cost reduction programmes to provide impetus to its bottom-line.

The views expressed in the paper do not represent the views of the organizations that the authors work in. They are personal. Figures and Charts provided are illustrative to explain the concept and do not represent actual data of any organization.   
This paper has been selected for publication in the proceedings of Biennial Supply Chain Management Conference at IIM Bangalore in Jan, 2010 - Authors: Subhajit Mazumder and Anand Chatterjee

Sweden Central Bank's Approcah : Quantitative easing and Asset Bubble

Quantitative easing and Asset Bubble
Many of the economists are of the view that Quantitative easing is giving rise to unsustainable growth and may result in the growth of other unforeseen problems. Central Banks closely follow the inflation and price index, which fail to capture the unreasonable rise in asset prices. This lopsided increase in asset prices can lead to the kind of financial meltdown problems that we have seen in the recent times. Sweden’s Central Bank has been very cautious of the developments have been closely monitoring the asset prices. More Central Bank’s need to be aware of this factor and consciously monitor the asset price movements.

Sustainability and Stock performance:Is there a correlation between an organizations involvement in sustainability initiatives and the performance of its stock in the stock market

Sustainability and Stock performance:
Is there a correlation between an organizations involvement in sustainability initiatives and the performance of its stock in the stock market? It may not be an easy question to answer. Most of the work in this area has failed to establish a direct correlation between the two. Some research work has been able to establish a relationship between ESG factors (Environment, Social and Governance) with the stock market performance. It is obvious that companies, which are able to manage their risks and environment, have a better chance of performing in the stock market. Sustainability reporting initiatives are evolving and slowly catching on the attention of the corporate world. However, these reporting initiatives rarely have the mindshare of the CFOs. The challenge here lies in the fact that organizations need to show the investor world that their sustainability values and initiatives are an integral part of their strategy to unlock the value in the organization.

Tuesday, December 28, 2010

Economics of Sustainability

I have been reading some stuff on The Economics of Sustainability. It looks interesting to me that most of the economic theories are actually based on the assumption that resources are infinite or at least in the short run that will not prove to be a constraint. But the reality is that economic development needs to be connected to the finite capacity of the nature to accommodate human development. There is a school of thought that technological development will help the humans to substitute one for of consumption by another which defies this limitation. But human beings are far from being rational. The whole concept of economic well being is based on the idea of production and consumption and does not do much justice to stable communities, environment, healthy and wholesome development, social justice etc. The world is facing a chronic problem of faster economic development and consumption where as the natural supplies are decreasing.

Friday, December 24, 2010

Walmart's Green Index : Embraced itself for a sustainability rating system for all it products.

Walmart has embraced itself for a sustainability rating system for all it products. It plans to collect data from the suppliers on various parameters of sustainability and how do they make an impact on the environment. The initiative could change the way consumers buy a product as the sustainability index of a product could influence the consumers buying pattern. Even though on a short term it could add cost to the whole value chain but this is the broad direction towards which all should be moving towards.

The company plans to introduce the index in three stages. The first involves sending more than 100,000 of its suppliers around the world a 15-question survey asking about the suppliers’ energy and climate practices, material efficiency, sourcing of natural resources and ensuring responsibility and proper ethics with people and community.

Step two involves the creation of a consortium of universities that will collaborate with suppliers, retailers, government and nongovernment organizations to develop a global database of information on the lifecycle of products. According to the release, Wal-Mart has provided initial funding for the consortium.

The third step is to develop a tool whereby consumers can obtain and translate the information in the database about sustainability of products. Creating a set of standards for nearly every consumer product certainly is a big undertaking.

In addition to those long-term goals, the company has taken on a slew of more immediately actionable initiatives:

* Encouraging suppliers to drop polyvinyl chloride (PVC) packaging.

* Installing efficient LED lighting, eliminating 35 million pounds of carbon dioxide annually.

* Helping to educate consumers about compact fluorescent lightbulbs (CFLs), selling hundreds of millions of them, and saving the equivalent output of several coal-fired power plants.

* Teaming up with BP and SunPower to put solar systems on the rooftops of stores in California and Hawaii.

Wednesday, December 22, 2010

Sustainability is here to Stay

Mother Nature does not do bailout. A very profound and forceful statement from a very famous personality Al- Gore. If you have not seen his award winning documentary on Mother Earth please do see it. It is there on the web free to view. The Environment around us in grave danger because of the limitless Human Greed. Nobody doubt s the enormity of the problem and that is why everyone is more that eager to save the world. Government is bringing in legislation to make people and corporate become more sensible and responsive when they talk about growth and development. Sustainability is the next Big thing. It talks about Environment, Social and Economic development. Growth should be inclusive and all encompassing. Various organizations are doing many things, which help them to cut costs, improve their Brand Image, and adhere to laws and regulations.

Tuesday, December 14, 2010

The Cancun Agreement : $100 Billion Green Fund

With the Kyoto protocol ending in 2012 everyone had an eye on how to restrict emissions og Green house gasses. Rich and the poor buried their differences and worked on a $100 Billion Green Fund. The fund will be used for limiting global warming by protecting forests, advising nations on adapting to higher temperatures. The Cancun Agreements help the world to work towards a common goal of saving the earth for future generations. Last year the talks in Copenhagen collapsed because the countries could not work on a common agreement. In addition to the fund, the agreement has a wider scope of helping nations to adopt clean technology.

Monday, December 13, 2010

CRC : Carbon Reduction Commitment, mandates the organizations to measure and report all emissions related to energy use to the Environment Agency

The Carbon Reduction Commitment (CRC) 2010, mandates the organizations to measure and report all emissions related to energy use to the Environment Agency . Organizations who consume more than 6000 MWh of energy pre annum are bound under this commitment. By the end of July 2011 CRC organisations will have to submit a Footprint Report of their total energy and emissions during the Footprint Year (April 2010–March 2011). Annual reporting will also be required. CRC organisations will have to monitor and report their emissions from all fixed point sources (not just electricity) annually and a director of the CRC organisation will have to sign a ‘statement of records’ confirming that adequate records have been kept.

Friday, December 10, 2010

CDP : Carbon Disclosure project United Kingdom making earth Green

CDP Carbon Disclosure project is an organization based out of United Kingdom whose mission is to “collect and distribute high quality information that motivates investors, corporations and governments to take action to prevent dangerous climate change.” They believe that this will help the world to manage and reduce emissions and climate change impacts. An organization is expected to share with CDP information on Risk, climate change, Greenhouse gas emission,corporate governance. The information is stored with CDP and is share with investors and other stakeholders.

Wednesday, December 8, 2010

UN Global Compact

The world's larget initiative on human rights, labour, environement anti corruption is the UN Global Compact. The CEO has to aling his organizations operations based on the the ideals propagated by the initiative(including the Millennium Development Goals), advance the ideals of the UN Global Compact and communicate annually on progress. Business participants are required to submit an annual Communication on Progress (COP) on the Compact website and to share the COP widely with their stakeholders.

Tuesday, December 7, 2010

GRI : Global Reporting Initiatives , Global Reporting Initiative (GRI) is a network-based non governmental organization that aims to drive sustainability and Environmental, Social and Governance (ESG) reporting.

Global Reporting Initiative (GRI) is a network-based non governmental organization that aims to drive sustainability and Environmental, Social and Governance (ESG) reporting. GRI produces the world’s most widely used sustainability reporting framework to enable this drive towards greater transparency. The framework, incorporating the ‘G3 Guidelines’, sets out the principles and indicators that organizations can use to measure and report their economic, environmental, and social performance. GRI is committed to continuously improving and increasing the use of the Guidelines, which are freely available to the public.

Sustain2Green : The global reporting initiative (GRI) is the most recognized framework for sustainability reporting. The third version of the reporting framework popularly known as G3 guidelines was published in 2006 and is freely available. The other components are the sector and nation specific annexes. The framework covers various industries like tourism , finance , telecommunications, mining, logistics, apparel and public services.