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PUBLISHER’S LETTER B ack on March 12, 2012,
President Obama formally
2 INDUSTRY TODAY proposed a new National
Network for Manufacturing
Innovation (NNMI), a joint federal
effort involving the Department of
Defense, Department of Energy, NSF,
and NIST that called for the creation
of a network of 15 regional Institutes
for Manufacturing Innovation (IMI).
Funded by a one-time investment of $1
billion to be carried out over a period
of ten years, the institutes represented a
call to action to drive more sustainable
manufacturing and industrial
ingenuity across the United States in
the face of increased global competition
and a widening skills gap within the
nation’s workforce.

In this edition’s Focus article, we
take a look at five such institutes that
have been announced, and the impact
they look to make on both a state and
national level. Examined at the recent
Industrial and Systems Engineering
Research Conference (ISERC) in
Nashville, Tenn., a national panel
was held, titled, “Discussion on the
National Network for Manufacturing
Innovation (NNMI)”. Speakers on
the ISERC panel included Dr. Janis

PUBLISHER’S LETTER

Terpenny (Industrial Manufacturing difficult objective, it’s the kind of multi-
Engineering at Iowa State University) level interaction and engagement that
and Dr. Paul Cohen (Head of the manufacturing in the United States
Edward Fitts Department of Industrial needs to become better versed in, as the
and Systems Engineering at NC State), future of our country’s industry is a
with the event chaired by Dr. Richard fight that impacts nearly every market.
Wysk (Edward P. Fitts Department of
Industrial and Systems Engineering at But the institutes, operating under
NC State). their own specific set of rules and
structure, are aggressively tackling
“There are currently five announced technology breakthroughs in their
Institutes for Manufacturing respective fields, as Wysk goes into detail
Innovation and two new or expected describing the range of innovation
institutes,” Wysk says, continuing, being pursued by them, from America
“Each IMI will be independently run by Makes’ focus on expanding the
a non profit organization and will form relationship between manufacturing
a public-private partnership designed to technology and 3D printing, to the
leverage existing resources and promote Advanced Composites Manufacturing
collaboration and co-investment Innovation Institute’s goal of elevating
between industry, universities, and the application and performance of
government.” advanced fiber-reinforced polymer
composites.
The ensuing partnership amongst
public and private entities that Wysk Manufacturing serves as one of
endorses is perhaps the most critical step the foundational blocks of the U.S.
for theses institutes to take going forward, economy, and these institutes are an
as while the federal government has exciting and tangible form of what
promised to provide up to 50 percent is a nationwide effort to protect and
of the funding, IMI’s are tasked with strengthen such. Looking ahead,
securing the remainder of the support however, the independent sustainability
from state or local governments or and evolution of these IMI’s is essential
private sector sponsorship. While to finding a long-term solution, and not
this initially may seem like a bit of a just a quick, momentary fix.

INDUSTRY TODAY 3

CONTENTS

06 FOCUS: NNMI

16 F EATURE: TELSTRA

26 FEATURE: ADIDAS GROUP

34 F EATURE: ACCENTURE SUPPLY
CHAIN

Managing Editor: Susan G. Poeton Production: Melissa S. Burge Project Managers:
Editor: Steven Engelhardt, Art Director: Seema Mazhar Renata Furtado, Christopher
Project Director: Brian McMillan Contributing Designers: Gaudio, Renata Ginter,
Jorge Leandro Rodrigues Jonathan Listig.
www.industrytoday.com
Profile Writers: Reuben Ford, Lorie Greenspan, Michael Sommers, David Soyka
[email protected]

65 Madison Avenue, Suite 510, Morristown, NJ 07960 Ph. 973.218.0310 Fax 973.455.0205

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consent from the publisher and payment of the agreed fee. ISSN # 1521-8058

4 INDUSTRY TODAY

VOLUME 18 • ISSUE 5

70 NAUTIQUE BOATS
MAKING BOATS
VIDEO

44 GM CHEVY

CONNECTING THE SILVERADO VIDEO

58 JAY PLASTICS

INJECTING QUALITY

128 NOR-CAL 104 SURFACE EQUIPMENT
FLUID RESPONSIVENESS Vessels of Excellence
114 VON ROLL
96 CASCADE DIE CASTING Insulation Innovation
Cascade Away
84 RAVEN INDUSTRIES View Our
Covering the Field
VIDEOS

INDUSTRY TODAY 5

FOCUS
NNMI

NNMI: INVESTING
IN THE FUTURE OF
U.S. MANUFACTURING
COMPETITIVENESS
AND LEADERSHIP
R ecently in Nashville at the Industrial
and Systems Engineering Research ing Innovation (NNMI).” The motivation for
Conference (ISERC), I had the hon- the panel was to address the new NNMI pro-
or of chairing a national panel titled, “Discus- gram that President Obama formally proposed
sion on the National Network for Manufactur- on March 12, 2012. The President’s propos-
al called for a joint federal effort between the

6 INDUSTRY TODAY

FOCUS
NNMI

DoD, DoE, NSF and NIST to create a net- President Obama’s fiscal year 2014 budget
work of 15 regional Institutes for Manufactur- formally requested $1 billion in congressional
ing Innovation (IMIs), funded by a one-time funding for the NNMI. On July 30, 2013,
investment of $1 billion carried out over a pe- President Obama called for tripling the pro-
riod of 10 years. posed number of IMIs established throughout

INDUSTRY TODAY 7

FOCUS
NNMI

the country from 15 to 45. It was clear that hubs. Each IMI will be independently run by
manufacturing was becoming a national focus a nonprofit organization and will form a pub-
and one of the few topics that our federal repre- lic-private partnership designed to leverage ex-
sentatives could support. isting resources and promote collaboration and
co-investment between industry, universities
The NNMI is modeled after the Fraunhofer and government.
Institutes of Germany. According to the origi-
nal proposal, it will consist of up to 15 linked Speakers on the ISERC panel in Nashville
IMIs with unique research concentrations that included Dr. Janis Terpenny (Joseph Walkup
will serve as regional manufacturing innovation Professor and Chair, Industrial and Manufac-

8 INDUSTRY TODAY

FOCUS
NNMI

turing Engineering at Iowa State University) and from state and local governments or private sec-
Dr. Paul Cohen (Edgar Woolard Distinguished tor sponsorship. Each institute is funded by $70
Professor and Head of the Edward Fitts Depart- million from the Defense Department and $70
ment of Industrial and Systems Engineering at million in non-federal resources. Participants in
NC State). The panelists provided an overview the NNMI must find matching support for re-
of the status of the NNMI initiative, including search that will be supported by the IMIs.
the progress of the awards for the program and
the technical focus of the types of manufactur- The first IMI, America Makes, was established
ing that have been proposed and supported. in Youngstown, Ohio, and is focused on the
new manufacturing technology of 3D printing.
There are currently five announced Institutes America Makes has been in operation for more
for Manufacturing Innovation and two new or than two years focusing on enabling the use of
expected institutes. Part of the requirements for this new technology for commercial products.
the IMIs is that the federal government will pro- One if its objectives is to reduce the cost of 3D
vide up to 50 percent of the funding, and the printing, while connecting small businesses like
IMIs must secure the remainder of the support rp+m and M7 with new opportunities, and

Dr. Richard A. Wysk is the Dopaco Distinguished
Professor at NC State’s Edward P. Fitts Department
of Industrial and Systems Engineering.

His research and teaching interests are in the gen-
eral area of Computer Integrated Manufacturing
(CIM) and medical device design and man-
ufacturing. In particular, he is interested in
lean manufacturing, product/process engineer-
ing, Computer-Aided Manufacturing, Flexible
Manufacturing Systems planning, design and control, and most recently, the
engineering and manufacturing of medical products, including regenerative
medical products. Dr. Wysk is an IIE Fellow, an SME Fellow, a member of
Sigma Xi, and a member of Alpha Pi Mu and Tau Beta Pi. He is the recipi-
ent of the IIE Region III Award for Excellence, the SME Outstanding Young
Manufacturing Engineer Award, the IIE David F. Baker Distinguished Research
Award and the IIE Albert Holzman Outstanding Educator Award. He has
also served on the faculties of Virginia Polytechnic Institute and Texas A&M
University where he held the Royce Wisenbaker Chair in Innovation.

INDUSTRY TODAY 9

FOCUS
NNMI

training American workers to master these so-
phisticated new technologies. America Makes
has research underway that will help accelerate
the speed of 3D printing in metals by a factor
of 10. The institute is working to provide more
than 1,000 schools with access to 3D printers,
and has launched new workforce training pro-
grams that have trained over 7,000 workers in
the fundamentals of 3D printing [1].

The second IMI was announced at NC State.
Power America, the Next Generation Pow-
er Electronics Innovation Institute, an energy
research consortium to be led by NC State is
focused on making wide bandgap (WBG) semi-
conductor technologies cost-competitive with

10 INDUSTRY TODAY

FOCUS
NNMI

the silicon-based power electronics that are DMDII is a unique public-private partnership
currently used. Power America is establishing a acting as a world-class, first-of-its-kind manu-
collaborative community that will create, show- facturing hub. Based in Chicago, the DMDII
case, and deploy new power electronic capabil- has the capabilities and collaborative expertise
ities, products, and processes that can impact to transform American manufacturing with its
commercial production, build workforce skills, focus on design and automation. Headed by
enhance manufacturing capabilities, and foster UI Labs, DMDII is comprised of 73 participat-
long-term economic growth in the region and ing businesses, universities and organizations
across the nation. including Cincinnati Inc., a machine tool com-
pany based in Harrison, Ohio.
The third IMI is the Digital Manufacturing
and Design Innovation Institute (DMDII). The fourth is the Advanced Composites
Manufacturing Innovation Institute (ACMII).
Pictured above: A photo of the printing head ACMII focuses on advanced fiber-reinforced
of a FELIX 3D Printer in action. Image Credits: polymer composites, which combine strong
3D Printer via Wikimedia Commons.

INDUSTRY TODAY 11

FOCUS
NNMI

fibers with tough plastics, that are lighter and led by Ohio State University, the University of
stronger than steel. It also looks into mini- Michigan and Edison Welding Institute of
mizing the cost curve for these materials to Columbus, Ohio.
enable their use for a broader range of products,
including lightweight vehicles with re- The IMIs define their own administrative
cord-breaking fuel economy, lighter and longer structure, and actively solicit participating
wind turbine blades, high pressure tanks for members from industry, academe and gov-
natural gas-fueled cars, and lighter, more effi- ernment. Again, each IMI has its own rules,
cient industrial equipment. policies and costs associated with membership.
Most of the IMIs are expert in a specific man-
The fifth IMI will expand the use of light- ufacturing technology, and have as a common
weight, high-performing metals. The Ameri- objective to advance the role of this type of man-
can Lightweight Materials Manufacturing In- ufacturing in the U.S. and world economy. The
novation Institute (ALMMII) will be jointly principle focus of the developmental needs for

12 INDUSTRY TODAY

FOCUS
NNMI

the IMIs has been on the “valley of death”, the
period of technology that occurs after a method
has been demonstrated but before it has been
commercially established. This is an area in
which the U.S. has not done as well as other
countries, requiring more attention and gov-
ernmental support to maintain U.S. compet-
itiveness.

Dr. Cohen of NC State spoke about how
universities and colleges can benefit from these
activities while still providing quality manufac-
turing instruction. He indicated that several
engineering departments at NC State have been

Pictured: Students and faculty are building
the electric power grid of the future at the
FREEDM Systems Center;
President Barack Obama announces the cre-
ation of the Next Generation Power Electron-
ics Innovation Institute, an energy research
consortium to be led by NC State.

INDUSTRY TODAY 13

FOCUS
NNMI

involved in the IMIs, and that the NC State gineering is also a partner in Power America as
Department of Electrical and Computer well as in America Makes. One of the projects
Engineering was the central research partner from America Makes focuses on the finishing of
for Power America. The university’s Edward P. metal parts that have been 3D printed at NC
Fitts Department of Industrial and Systems En- State. New automation technology has been

14 INDUSTRY TODAY

FOCUS
NNMI

to other university professors about how they
can get involved in this important program.

Dr. Terpenny spoke about Iowa State’s involve-
ment in these IMIs, noting that ISU is a partner
in America Makes, the Digital Manufacturing
and Design Innovation Institute (DMDII),
and the Institute for Advanced Composites
Manufacturing Innovation. She indicated that
ISU strongly encouraged her to participate in
NNMI, and helped to secure matching finan-
cial support. The university has already received
more than $7 million for research efforts con-
nected to the program, and both ISU and the
state of Iowa feel that it has strengthened their
competitiveness in manufacturing innovation.

While each IMI has its own unique focus and
structure of how it plans on succeeding in grow-
ing its overall impact on its respective industrial
focus, it’s clear that when looking at the insti-
tutes as a whole, they will have equally critical
roles in ensuring the sustainability of manufac-
turing in the United States. The key is effec-
tive and ongoing collaboration between public
and private entities, and securing the necessary
funding to make certain that these relatively
new programs become firmly entrenched as
pillars of industrial innovation for the United
States and its manufacturers to draw from for
many years to come.

applied so that the parts can be digitally finished 1. White House Brief, Office of the
on Computer Numerically Controlled Machin- Press Secretary, https://www.whitehouse.gov/the-press-
ing Centers so that the planning for manufactur- office/2015/01/09/fact-sheet-president-obama-an-
ing time can be almost completely eliminated. nounces-new-manufacturing-innovation-hub-kn
During the panel discussion, Dr. Cohen spoke

INDUSTRY TODAY 15

FEATURE
TELSTRA

MAKING
THE MOST OF
MOBILE IDENTITY

16 INDUSTRY TODAY

FEATURE
TELSTRA

For many years, the concept and use of
biometric identification has been the
stuff of fantasy, with retina scanners
and fingerprint identification only seen in sci-fi
movies. Today, however, these once far-fetched
ideas are fast becoming realities and financial
institutions must be poised to utilise these de-
velopments in order to make the most of the
potential benefits.

A Changing Landscape

The smartphone has become the device of
choice for connecting the consumer with their
financial institution and therefore interaction is
more personal and instant than ever before, even
replacing our wallets when making payments.
Couple this with the growing dissatisfaction
with passwords, which despite still being the
go-to method of authentication are viewed as
flawed and easily penetrable, and there is con-
siderable change ahead.

For financial service providers, this un-
doubtedly presents opportunities. With more
than two thirds of UK consumers feeling that
biometric technologies – such as fingerprint and
voice recognition – offer a safer, more secure al-
ternative to passwords, engaging with custom-
ers on a more personal, increasingly secure level
could lead to significant gains in revenue.

As part of my recently released report, Mobile
Identity – The Fusion of Financial Services, Mo-
bility and Identity, Telstra conducted a quanti-
tative study of financial institution executives
between November 2014 and January 2015.
We wanted to determine where the industry is

INDUSTRY TODAY 17

FEATURE
TELSTRA

in its transition from traditional security mea-
sures to advanced techniques like biometrics
and how best to monetise the opportunities.

The research has shown that, globally, cus-
tomers still trust financial institutions more
than other organisation types when it comes
to personal information and this is reflected in
the industry’s reluctance to adapt to the chang-
ing consumer landscape. The results from our
sample of 318 executives from a cross section
of financial service businesses show that, while

18 INDUSTRY TODAY

FEATURE
TELSTRA

financial institutions have under-invested, they main driver for existing identity systems and
are transitioning into a new phase of identity. processes (43 per cent), followed by Custom-
However, a disconnect remains between where er Experience (27 per cent) (see Figure 29).
financial institutions are today and the expec- Interestingly, though, when it comes to Pure
tations of their Gen X and Y customers. Play Online/Mobile Banks/Neo Banks/Fin-
Techs, Customer Experience was ranked as
Across the industry and regions as a whole, the main driver (see Figure 30).
Fraud and Risk Management has been the

INDUSTRY TODAY 19

FEATURE
TELSTRA

Addressing Customer Needs strategies, acquisitions and operationally sepa-
rated divisions and channel strategies have pos-
Moving forward – and reflecting the increasing- sibly hindered this pursuit. It is therefore unsur-
ly tailored experience offered by financial appli- prising that 32 per cent of institutions reported
cations on smartphones – customer experience multiple identity strategies with little to no
is likely to emerge as the most important driver alignment and only 24 per cent reported their
for investment in identity systems and processes institution as having a single enterprise-wide
right across the industry, with 87 per cent of identity strategy (see Figure 32).
respondents predicting that this will become
even more important as further developments This disconnect is particularly acute in the
are made (see Figure 31). insurance and investment banking parts of
the industry with only six and two per cent,
For many institutions, the pursuit of a single respectively, reporting single enterprise-wide
customer view and experience has been a strate- identity strategies. The relatively new entrants
gic – yet elusive – priority. Vertical integration

20 INDUSTRY TODAY

FEATURE
TELSTRA

in the form of Pure Play Online/Mobile Bank/ identity strategies, it is clear that the Informa-
Neo Banks/FinTechs, perhaps unencumbered tion Technology function leads and drives the
by legacy systems, lead the way with 57 per way, with 44 percent of respondents suggesting
cent reporting a single enterprise-wide identity that the initiatives are led by that department
strategy (see Figure 33). (see Figure 34).

Adapting the Strategy This is more so for Investment Banks, In-
surers and Wealth Management but less so for
When it comes to responsibility for customer Credit Unions, Pure Play Online and Retail

INDUSTRY TODAY 21

FEATURE
TELSTRA

ROCKY SCOPELLITI

Rocky Scopelliti is Telstra’s global thought leader
and industry expert in the banking, finance and
insurance industry. His pioneering work and
membership on the innovation council of a major
bank, has delivered five industry first innovations.
He is also a non-executive director on the board
of Sydney’s largest credit union.

Rocky has more than twenty years senior manage-
ment experience in the Information Technology
and Financial Services sectors covering product development, strategy and
planning, business development, research and strategic marketing.

Over the past seven years, Rocky has authored ten thought leadership
research reports covering retail banking, business banking, insurance and
wealth management that have become widely acknowledged for their contri-
bution to digital transformation.

Educated in Australia and trained in the USA at Sydney and Stanford
Universities, he has a Graduate Diploma in Corporate Management and
an MBA. He is also a graduate and member of the Australian Institute of
Company Directors (AICD).

Commercial Banks where the line of business but also makes the industry susceptible to
was reported as the main functional leader for complacency in its current authentication
customer identity strategies (see Figure 35). systems.

A Question of Trust According to Gartner, 60 per cent of all
digital identities interacting with enterprises will
When it comes to the question of trust in iden- come from external identity providers by 2020
tity providers, financial services executives in (up from 10 per cent in 2014). With 16 per
all regions and business types clearly view their cent of institutions already allowing access from
institutions as being the most trusted (70 per third-party identity providers and 48.6 per cent
cent), when compared to other providers (see intending to (see Figure 37), caution will need
Figure 36). This reflects consumer perceptions to be exercised on the choice of identity services

22 INDUSTRY TODAY

FEATURE
TELSTRA

INDUSTRY TODAY 23

FEATURE
TELSTRA

24 INDUSTRY TODAY

FEATURE
TELSTRA

providers. Our research also identified that financial services organisations are the most
consumers have very clear preferences about trustworthy providers of mobile identity
who they trust to provide these services. services may also be hindering progress
somewhat.
Regardless of whether financial service organ-
isations seek to become consumers of exter- As these services deliver a wide-ranging pay-
nal identity service providers, become external load – from the acquisition and retention of Gen
identity providers themselves or both, strong X and Y customers and state-of-the-art security
and coherent identity management capability measures to improved customer satisfaction and
will be critical if they are to maintain their cur- increased levels of trust in protecting personal
rent position of trust in the eyes of consumers. information – the financial industry should be
under no illusion that this needs to change.
Reaping the Rewards
The sooner organisations adopt these changes,
The air of complacency that comes from con- the sooner they will be able to reap the rewards.
sumers’ and institutions’ shared opinion that

INDUSTRY TODAY 25

FEATURE

ADIDAS GROUP CUTS
ENERGY USE IN ITS
GLOBAL DISTRIBUTION
CENTERS

26 INDUSTRY TODAY

FEATURE

…Savings Come From I n 2014, the company generated sales of
Changes Big and € 14.5 billion and produced more than
Small… adidas Group 660 million product units. These prod-
is, by all measures, a ucts were received, packaged and shipped
distribution powerhouse. in adidas Group’s 15+ million square feet of
owned or leased distribution space globally.

The company’s Energy and Environment
Team knew that its distribution centers could
be more energy efficient. The team had made
investments in LEDs, building automation
and efficient ventilation, but the largest ener-
gy user in these facilities is often the Material
Handling Equipment (MHE). The team’s goals
were to improve existing MHE efficiency and
to set smart guidelines for new construction.

Enter Eric Shrago of Columbia University.
Shrago was a 2014 EDF Climate Corps fel-
low, spending his summer as an energy man-
agement resource to adidas Group through
Environmental Defense Fund’s unique fellow-
ship program. He led the investigation into the
Energy and Environment Team’s two key goals
by using adidas Group’s Spartanburg, South
Carolina distribution center as a model.

The Spartanburg facility has 2 million square
feet of distribution space that sorts and ships
hundreds of thousands of items of apparel,
shoes and sports equipment daily. Twelve miles
of conveyor belts and two large sorters are pow-
ered by 1,600 motors. The site is considered
“semi-automated” and spends roughly half of
its electricity bill on its MHE.

The Energy Investigation Begins

Shrago focused on several major target areas:

INDUSTRY TODAY 27

FEATURE

28 INDUSTRY TODAY

FEATURE

Motor Efficiency: Shrago first looked at the the life of the equipment.
efficiency of the motors that drive the convey- Runtime: Shrago found that, in general, the
or belts. He found that there would be energy
savings from upgrading the motors, but at Spar- MHE was running more than necessary and
tanburg’s relatively low electricity rate of $0.08/ that several belts ran nonstop. If these belts only
kWh, the energy savings did not justify a proac- cycled on as needed, Shrago estimated that run-
tive retrofit. That said, when a motor died, there time could fall by half and deliver a proportion-
was a compelling business case to replace it with ate energy savings. There would also be addi-
a “premium efficiency” motor, which would pay tional maintenance savings from reduced motor
for itself in approximately two years. runtime.

Belts & Rollers: The Spartanburg facility Warehouse Management System: Perhaps
mostly has “roller belts,” a relatively efficient Shrago’s key finding – and one that resonated
belt type. However, the most efficient convey- with distribution center managers at other sites
or is the “Motor Driven Roller” (MDR). These – was the hidden energy savings available in
systems have no belt, and each roller only runs the MHE’s complex Warehouse Management
when triggered by a sensor. While there is a cost System (WHS). For example, Shrago watched
premium for MDR up-front, there is consid- as the WMS software counted down, which
erable electricity and maintenance savings over should have shut off a section of conveyor due
to inactivity. Instead, the clock reset and the

EDF Climate Corps: In Search of
Energy Savings

EDF Climate Corps – now in its eighth year -- has just embedded its 2015
fellows with their host organizations in the United States, Mexico and China
to begin the critical work of identifying, analyzing and reducing energy costs
and carbon emissions through improved energy management.

EDF Climate Corps matches graduate students from the country’s top colleges
and universities with private companies, municipalities and non-profit orga-
nizations to surface and implement practical energy management strategies
within their host organizations.

Since 2008, EDF Climate Corps fellows have identified nearly $1.4 billion in
cumulative energy savings for host organizations, with the potential to reduce
climate harming emissions by over 1.8 million metric tons per year.

INDUSTRY TODAY 29

FEATURE

belts continued running. Shrago observed this Success is in the Details
cycle play out several times. He found that a
secondary software condition was preventing Shrago’s investigation also identified other
several conveyor sections from turning off when leading practices that could transfer to existing
inactive. Reprogramming the WMS would save and future distribution centers.
the Spartanburg facility tens of thousands of
dollars annually. Interchangeable Workstations: Worksta-
tions like Seeding, Packing and Value-Add
should be functionally interchangeable, rather

30 INDUSTRY TODAY

FEATURE

than individualized for a specific task. This en-
ables a smaller facility footprint and a more re-
silient operation.

Weight Sensors: Sorters are typically designed
so that the belts at the base run constantly.
When a wave of product cascades through the
sorter, the belts are on and ready to take the car-
tons away. At the end of a product wave there is
often a period of inactivity. Adding weight sen-
sors to the belts to detect the product flow could
result in a 30-50 percent savings.

Employee-activated Controls: “Green cords”
are pull cords that start a belt, allowing an em-
ployee to turn on a section of conveyor for a
set time. This is useful in areas with sporadic
demand.

Employee-led Night Audits: Since most fa-
cilities operate at a reduced pace during the
night, distribution centers benefit from sending
staff into the operation after hours with a criti-
cal eye towards unnecessary energy uses.

Moving Forward

Retrofitting MHE systems is complex and
facility downtime is very expensive; there is a
clear business case for designing and install-
ing efficient equipment and controls during
construction.

Victoria Mills is managing director of Environmental Defense
Fund (EDF)’s Corporate Partnerships program and directs
EDF Climate Corps. EDF, a leading international nonprofit
organization, creates transformational solutions to the most
serious environmental problems. EDF links science, economics,
law and innovative private-sector partnerships.

INDUSTRY TODAY 31

FEATURE

adidas Group’s key message is this: Reducing and check MHE systems for efficiency.
first costs during construction won’t optimize
efficiency over the long term. Model and com- A Scalable Solution
pare lifecycle cost of MHE systems and hold
vendors to high standards as partners in energy Warehouses and distribution centers are a key
management.

adidas Group talks a lot about lifecycle cost.
Operating costs like energy and maintenance
are typically multiples of the initial equipment
cost over the life of an operation. It is smart
business to carefully consider these cost impli-
cations when designing systems.

Here is how adidas Group is thinking about
new distribution center construction:

• Design systems that are right-sized for the
job, have inherently high energy efficiency,
and only run when needed;
• Make workstations interchangeable;
• Enable granular controls – even if they cost
more initially – so segments of the operation
can easily power up and down;
• Install sensors on all belts. Link these to the
WMS and carefully consider conditions for
shutdown;
• Prefer Motor Driven Rollers (MDR) unless
belts are absolutely required by the operation;
• Specify premium efficiency motors with soft
starters, except for specific zones where lower
runtimes do not warrant the upcharge;
• Designate a professional responsible for en-
ergy management at each facility. Key tasks-
monitor the cost per item shipped, hold reg-
ular efficiency check-ins with maintenance
and engineering staff, refine and adjust WMS
settings based on trends and operational needs

32 INDUSTRY TODAY

FEATURE

link in the global supply chain: Virtually every in its Spartanburg distribution center. As the
vendor that that sells to the public has products company rolls out the lessons learned to its oth-
flowing through such facilities. er distribution centers worldwide, that number
will continue to grow.
adidas Group has reduced energy and costs

INDUSTRY TODAY 33

FEATURE

BEYOND VISIBILITY:

TURNING EXCEPTION
MANAGEMENT INTO
A GROWTH DRIVER

W ith demand so unpredictable and chain growth industry that has spawned armies
supply increasingly subject to the of supply chain fire fighters dedicated to excep-
risks of distant sources, most sup- tion management in many companies. Most
ply chain planners today are struggling to cope. of them work in organizational siloes, saddled
Exception management has become a supply with IT systems threatened with obsolescence

34 INDUSTRY TODAY

FEATURE

Globalization and the quest for cost reduction
have extended supply chains into far-reaching
and often fragile geographies. Coupled with an

increasing reliance on a multitude of
contract manufacturers, these forces made
supply chains much more unstable. At the
same time, a digital revolution is empowering
customers to change product preferences in the

blink of an eye. The result: Significant
volatility in short-term demand and

dramatically shorter product lifecycles that is
making exception management the norm, not

the exception. But, as we’ll discuss,
disruptive digital technologies, such as
analytics, real-time data exchange, mobility
and data captured and transferred from or
to any device or asset can help organizations

move from reactive, ad hoc exception
management to proactive planning and agile

configuration of the value chain.

as newer digital technologies enable sophisticat- nologies and the obsolescence of their existing
ed sense-and-react capabilities that can lead to IT are having a high impact on their supply
proactive planning in the current environment. chain organization, the need is clear. The situa-
tion has created a headache for many managers
With 52 percent of operations and supply – a situation that can be addressed. By accepting
chain executives reporting that new digital tech-

INDUSTRY TODAY 35

FEATURE

that sequential planning is dead, organizations be built.
can take steps to turn exception management
into a proactive planning capability. The End of an Era

Orchestration is the key to success. With ad- Recognizing that sequential planning – a mat-
vanced digital technologies, sense-and-react ter of matching supply with demand in a linear,
capabilities agile enough to drive growth can forecast-based, sequential process is no longer

36 INDUSTRY TODAY

FEATURE

“An orchestrated approach would help make every
element of the business more connected, responsive
and agile as it turns threats into growth opportunities

– even in the face of difficult circumstances.”

the straightforward business that it once was – growth in the volume of exceptions.
exceptions threaten to overwhelm the planning S&OP organizations now look more like a
process. Even sales and operations planning
(S&OP) capabilities developed in the 1980s “war room” where teams regularly operate in a
to enable re-planning across an agreed, rolling crisis mode. They can no longer afford to patch
horizon can’t deal effectively with exponential up an outdated planning approach – especially
as Accenture research found that 72 percent of

INDUSTRY TODAY 37

FEATURE

supply chain executives now consider market Thus the growing popularity of supply chain
uncertainty to be a threat to their business per- control towers with monitoring hubs that de-
formance. liver visibility across the supply chain.

Visibility: Just the Beginning for But visibility in and of itself will not create a
Planners panacea for planners. In fact, it may compli-
cate the task. Not all data is useful information.
Most organizations are anxious to gain visibil- Important risks might not be highlighted, and
ity into their supply chain – and small won- that could lead to incorrect decisions.
der. Having an end-to-end view of their supply
chain could dramatically aid decision-making. That is why companies are beginning to look
beyond gaining visibility. Only two percent

38 INDUSTRY TODAY

FEATURE

By accepting that sequential
planning is dead, organizations
can take steps to turn exception
management into a proactive

planning capability.

of operational and supply chain executives see
the “lack of visibility across the business” as
the biggest obstacle to optimizing their supply
chain. Inability to respond rapidly to market
volatility, inadequate risk mitigation and in-
ability to quickly expand into new markets are
considered far more important, as each is a top
issue for 64 percent or more of the executives
who participated in Accenture’s supply chain
control tower survey.

Clearly, companies increasingly see the need
to be able to act on what the data gathered as a
result of having end-to-end visibility tells them.

Orchestration: Made Possible By Plugging
into the Digital Supply Network

Orchestrated planning and execution is a capability new technologies are
enabling across emerging digital supply networks. Connected, intelligent,
scalable and rapid, these networks help today’s businesses move fast to take
advantage of growth opportunities.

The design of these new networks begins with the acceptance of a perma-
nent uncertain environment where agility and flexibility are at the core of
the model, as they capitalize on the connectedness of all the functions along
the networked supply chain. The key to their success involves seeing how the
critical value-creating activities, across functions, can come together in a
configurable manner by business segment, to move from cost efficiency to
actively contributing to business growth.

INDUSTRY TODAY 39

FEATURE

By combining visibility with alerts driven by captured and transferred from or to any device
business rules and analytics, planners’ attention or asset can help organizations move from re-
could be focused on what really matters. active, ad hoc exception management to proac-
tive planning and agile configuration of their
Ushering in a New Era: Proactive value chain.
Planning
With analytics-enabled segmentation leverag-
Disruptive digital technologies, such as analyt- ing a catalog of automated protocols, governed
ics, real-time data exchange, mobility and data by business rules, planners can tackle exceptions

40 INDUSTRY TODAY

FEATURE

individually, based on the value of the partic- of data into feasible solution scenarios. Connec-
ular customer to the company. A low impact tivity to vehicles, logistics partners, plants and
issue might be resolved automatically. However, even clients would facilitate real-time commu-
planners might need to intervene in a medium nication and execution of a chosen scenario. Us-
impact situation, such as an ocean freighter de- ing such advanced digital capabilities also could
layed due to local customs inspection issues. allow planners to detect short-term changes and
react to them through orchestration, a robust
Planners could use scenario modelling, using process and new decision-making mechanism.
real-time information, to compute large volumes

INDUSTRY TODAY 41

FEATURE

As a result, meaningful visibility would provide manages exceptions and measures performance,
the basis for decisions, and service, cost-to-serve according to Accenture research. As more com-
and inventories could be optimized. panies recognize that exception management
can be transformed into proactive planning,
Still, situations might arise that require esca- these numbers are likely to swell.
lation for review, and the planning team could
do so, attaching modelled response scenarios for Building an Orchestrated Approach
leadership to consider. In all events, however, the
existence of a centralized, cross-functional plan- For those now thinking about creating an or-
ning team, equipped with the ability to analyze chestrated approach, it is important to under-
exceptions, identify root causes and launch ini- stand how many resources are currently dealing
tiatives to address them in a constantly updat- with exceptions. Is the situation sustainable?
ed, iterative process designed to improve perfor- Chances are the answer is “no.” Moreover, if too
mance, is essential to effective execution. much of management’s time is being consumed
in dealing with requests to resolve complex ex-
Today, only 12 percent of companies orches- ception challenges it’s time to move beyond
trate their supply chain process in a central orga- supply chain visibility.
nization that makes and implements decisions,

Jose Bleda and Pablo Caballero are managing directors in Accenture
Strategy. Based in Barcelona, Spain, they work with organizations around the
world to help them transform their operations and use new digital technologies
to create a competitive advantage.

42 INDUSTRY TODAY

“Exception management FEATURE
has become a supply
chain growth industry INDUSTRY TODAY 43

that has spawned armies
of supply chain fire
fighters dedicated to

exception management in
many companies.”

Volatile, complex conditions in today’s busi-
ness world require the ability to detect changes
that could threaten tomorrow’s business perfor-
mance and to re-plan rapidly as circumstanc-
es change. Only an orchestrated approach can
build the truly proactive supply chain planning
capable of fulfilling those needs.

An orchestrated approach would help make
every element of the business more connect-
ed, responsive and agile as it turns threats into
growth opportunities – even in the face of diffi-
cult circumstances. Supply chain planners could
manage workflows digitally and dynamically
change product flows to suit shifting customer
needs. They also would be enabled to transcend
individual supply chain and business functions.

To support profitable growth and enable time-
ly decision making in an environment when
change continues to be the norm, the time is
ripe for companies to create their ability to or-
chestrate their supply chain operations.

PROFILE • CHEVROLET SILVERADO

Chevrolet Silverado was named 2014 North American Truck of the
Year. Not surprising, considering that Chevy has been in the truck-build-
ing business since 1918. David Soyka reports on the road ahead for the
Silverado in 2016 in fulfilling Chevy’s commitment to providing a
demanding customer segment with the vehicle they need to transport
people and cargo with the greatest possible connectivity, efficiency and
durability in the most challenging environments .

44 INDUSTRY TODAY

CHEVROLET SILVERADO • PROFILE

hat’s the largest and most profitable American Truck of the Year by a panel of 50
segment for all five North Ameri- automotive journalists, as well as the Highest
can vehicle manufacturers? Full- Ranked Light Duty Pickup in Initial Quality
size trucks. (The other two largest are compact by J.D. Power in 2015—blazes the competi-
SUVs and midsize cars.) Consequently, there’s tive trail by delivering what truck owners look
a lot of tough competition for market share. for in a vehicle used for both rugged work and
Chevrolet Silverado—named the 2014 North rugged pleasure. As Car & Driver put it, “In a

INDUSTRY TODAY 45



CHEVROLET SILVERADO • PROFILE

changing large-truck market, the Silverado has In comparison to our competition, we all are
evolved like a rock; it’s a geological commodity pretty much at similar price points. Our cus-
meticulously polished by time. In focusing on tomers know exactly what they are looking for,
the fundamentals, Chevrolet passed on the lat- how much they want to spend to get what they
est trends but delivered a pragmatic truck that want, and aggressively negotiate with dealers
gets the core attributes right.” to get it.”

“It’s an interesting market segment,” notes So how does Chevrolet differentiate it-
Tom Wilkinson, communications manager for self from other manufacturers offering
Chevy trucks. “MSRP can range from the mid- roughly equivalently equipped and capable
$20,000 for a basic two-wheel drive pickup all trucks with comparable pricing to such savvy
the way up to the luxury end of over $60,000. customers?

Pictured: 2015 Chevrolet Silverado 1500 “Chevy is, of course, a well-established
brand, particularly in trucks,” Wilker-
Custom. son points out. The 1936 Suburban was a

INDUSTRY TODAY 47

PROFILE • CHEVROLET SILVERADO

forerunner of today’s SUV (as well as one the tal model that continues to drive today’s trucks,
longest-lived, continuous production automo- albeit with an assortment of modern technol-
tive nameplate in the United States). The 1948 ogies. “It’s still most popular engine in motor
Chevrolet Pickup was a restyled version of the sports as well as for commercial use,” Wilkin-
highly dependable trucks used during World son says. “Today we have our world-class Eco-
War II, not to mention farmers and tradespeo- Tec3 engines in both V6 and V8 versions that
ple, aimed not only for commercial use but as a feature sophisticated direct fuel injection, ac-
second family (the redesign featured a roomier tive fuel management (which deactivates cyl-
cab with three-across seating). inders to run in 4 cylinder mode when full
power isn’t needed) and variable valve timing
Perhaps most significantly, Chevy’s 1955 that creates high torque (the V6 in fact offers
small block V8 engine serves as the fundamen-

48 INDUSTRY TODAY