Category: Analysis

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Leveraging the Technology & Digitization to Disrupt and Stay Relevant, Innovative and Creative

The Corporate World is replete with examples of many a large that have gone into oblivion like Xerox, Nokia, Kodak, Motorola, Blockbuster, Blackberry Motion, Sears etc. What made them obsolete is change in technology, innovation and digital disruption. These were all iconic brands of their time gave way to indifference to embrace change. If we dig deep in to these companies (those who missed the bus) for example, say Kodak the pioneer in the photographic film market, was so engrossed in film marketing success that despite them inventing the first digital camera it ignored the digital revolution happened through photography and instead remained focused on film market apprehending of losing it and ultimately had to file for bankruptcy. Another example could be Nokia, despite being the global leader in mobile phones (20-25 years ago) at one point of time the company ignored the software development part of the technology, that not only the voice but data, messages, photo and videos also could be sent through mobile phones leading the advent of Smart phones which Nokia ignored and kept focusing on the hardware technology alone. There are other examples of Xerox losing out by focusing on copying business alone ignoring the opportunity in digital communication which eventually is replacing paper or say about Blockbuster, the largest video rental company having large stores all across US unable to foresee the Netflix’s rising in terms of on line streaming and eventually lost out.

Contrary to this if we see the most successful companies of say 2019 the names go like Google, Amazon, Facebook, HP, Cisco, GE, MasterCard, Volkswagen, Starbucks and so on. What did they do differently that they are thriving and kicking alive? The answer is that they all have invested in research and development of technology, keeping a close track of customers/consumers’ needs and behaviors, are open to experiment new opportunity, adapting to change by offering disruptive solutions with agility and not risk averse. The companies like Amazon, Facebook, Google, Cisco all of them are in fact pioneers in all the aspects as mentioned above and have created an ecosystem of idea generation, innovation platforms and fast enough adopt new technology always which has led them to reign the business and are phenomenal brands to reckon with. It is not the question of a big or small organization but the organization/s who could sense the opportunity and leverage it by becoming the first and prime mover.

Let’s think of the unprecedented crisis and challenge we are facing now due to the advent of Corona virus (Covid 19) which has put almost all the economic activities to a screeching halt. There’s a fear for loss of lives, loss of business and even fear of unprecedented job cuts which may run in to several millions across the globe. The whole world is now waiting with bated breath as to when the much sought after Corona vaccine would see the day’s light, investing heavily in research and development, in medical and healthcare. Many a small disruption have started happening in terms of inventing small low cost ventilators, Covid 19 testing kits, e-health options like teleconferencing with doctors, further proliferation of e-commerce, e-logistics, e-learning platforms with new solutions and various other technological advancement for customer interface. The main objective is to have an increased technology and customer reach to stay alive and stay relevant now and even afterwards when social distancing perhaps may become the order of the day.

If we think it rationally, the challenge is the changing habits and behavior of people which is going to shape the future of our business. Unless the businesses are able to track such behavior changes of people, customers precisely we wouldn’t be able to come out with our new and improvised offerings in terms of products, services and solutions. It is said that our ability to see the behavior shits in people would be the key to success at this juncture. And technology has a big role to play in it e.g., starting with Covid 19 only, where Contact Tracing, a project pursued by both Google & Apple together to identify the people infected with Corona and track where are they moving. The objective is to provide protection to the community by making both the infected and the contacted individuals alert about it and advising them to go for medical help and/ or self-quarantined. Similarly google mobility data which is capturing mobility change of people by workplace, by retail and recreation and even by country during this pandemic is throwing us clear insight about how effective the lockdown is. This is really unprecedented in a sense that it is even able to monitor the closeness of contacts and the duration also with GPS & blue tooth technology. With such new technology tools we are now able to generate more information (data) and are using the data for public good. This is a combination of technological breakthrough coupled with innovation and creativity which has pivoted personal medical healthcare and safety of the humankind steering it to a new dimension.

Now since peoples’ behavior and habits are changing we do not know how it is going to shape the demand for various goods and services in future. The demand sensing thus becomes an important task for any industry, businesses going forward because with low or no demand leading to loss of revenue, loss of business the organizations have started responding with job and or pay cuts. And internally within most of the organization the strategy is to preserve cash and reduce costs. Although preserving cash could be a short run strategy there’s nothing better than income generation which would be a long run strategy. And how do we reduce costs, may be by embracing more and more technology and automation of the existing business processes which will ultimately going to impact employment, jobs at one hand but is going to make us efficient and competitive on the other. We’ve seen in the past how technology and innovation has led us to so many industrial revolutions including the Industry 4.0 which is the current day buzzword. The industry 4.0 as stated to be the latest and fourth industrial revolution which refers to transformative technology which has and is changing the course of the industry. It is basically a whole network of them like smart factories interconnected with intelligent machines, the internet of things (IoT), Big Data, Block chain, Artificial Intelligence and Machine Learning etc. which is revolutionizing both the industry and human evolution. Looking back at the industrial revolution so far, we see the first one in 1770 which has led to the introduction of hand to machines and firms to factories for the first time. This was followed by the second one 100 years later in 1870 when the usage of electricity, steam, water power etc. was making a modest beginning of automation and assembly lines in factories. Another 100 years later we had the third one (1970) when Computers, desktops etc. have come up to replace largely the routine, repetitive and time consuming jobs and thereby enabled us to rethink and reshaping our business model when the globalization was setting in. And then came the fourth one, as we call it as industry 4.0 which is a very recent origin and has revolutionized almost all the aspects of businesses like production/manufacturing, sales, supply chain and logistics, research and development, and many more. The manufacturing including production and the supply chain fields are one of the major beneficiaries of industry 4.0 initiatives so far as we mentioned above. Let us discuss these with a few and concrete examples say, predictive maintenance as implemented by the oil giant Royal Dutch Shell Plc. Shell’s predictive maintenance is driven by the Artificial Intelligence (AI) wherein the AI powered tools can precisely predict when maintenance is required for its compressors, valves and can even alert the station employees of various risks it is running. The tool can also anticipate and inform Shell about which of the vast numbers (around 3000) of oil drilling parts can go wrong, highlighting the need for replacements and their available places of storage across all Shell locations and can even trigger purchasing and shelving of such spare parts in advance and at one go. This has resulted in attaining robust efficiency in inventory management where the inventory analysis time got reduced drastically from 48 hours to 45 minutes and saved millions of dollars on account of reduced cost of moving and reallocating various inventory. Another example could be Amazon Fresh (whole foods) where by focusing on big data analytics they were able to understand the customers’ grocery buying behavior and how the suppliers are interacting with the grocers’. And subsequently with the help of these data driven logistics it has been able to create more value for customers in terms of product development, delivery and where to initiate the further changes etc.

Now coming from global to local our own Axis Bank the largest private sector Bank in India has implemented robotic automation processes and deep learning to better understand the customer behavior patterns to respond to them with clear value propositions like streamline the document processing, shorter response time, identifying events which may lead to their leaving (customer turnover) etc. and accordingly offer them with special and customized sales promotion scheme, say customer retention schemes. They are now also developing some chatbots to engage with the customers and to reduce their waiting time for service in their busy branches especially during peak hours. The field of supply chain and logistics all across industries are having innumerable examples of how AI and Big Data has pitched for performance whether it is drones making loading of cargo into ships in mid sea or an AI sensor at the warehouses are keeping a hawk’s eye on stacking heights and sending alerts when it is about to topple and injures warehouse employees thereby removing safety hazards. The use of bots for unloading, loading (from and to the shelves) and transporting in to the loading bay is also increasing and becoming popular. The overall inventory management in several industries have undergone radical changes with the advent of data analytics, machine learning and automation and contributed towards significant reduction in inventory carrying cost and lead time.

Also while we talk about generating revenue through customer reach, service, sales, branding and marketing there are umpteen example of organizations using various CRM (Customer Relationship Management) platforms to tactically ensure customer reach, sales pitch, promotion, delivery and closing the sales in terms of the targeted outcomes. These customer interface (whether external customers like consumers, influencers. opinion makers, channel partners and/or internal customers like front line sales and customer service team members, various departments, business partners etc.) in terms of application software like say, provides to plan the customer journey (Planned Journey Cycle), also provides with the required on line data to initiate dialogue with the customers, reminds them about  jobs to do during the visit, review the  targeted  milestone achievements status, checking the status of various hygiene level of requirements like in shop branding, stock at hand, updated sales, delivery and service requirements etc. The Asian Paints example is worth mentioning here, the company has made this digital integration of its channel network with the salesforce seamlessly. Today the company, it’s top management at the HQ and its salesforce can able to track and monitor the channel (dealer and retailer) performance in terms of their sale, % of target achievement, status of stock and sundry debtors, utilization of sales promotion scheme (if, any), service and delivery on real time basis. This is now replicated in many organizations cutting across the industry sectors. It would also be worth mentioning here that companies like Hindustan Unilever as learnt from them that they’ve mapped all their retail outlets in the country (those which are called Mama Papa shops and approximately 5.0 lakh in numbers) during this lockdown to have a better understanding of their buying pattern, stock movement, customer behavior, future demand etc. to effectively serve the grocer/ stationery shop ( i.e., the retailer) in terms of technology enabled tracking and monitoring of customer and consumer habits, optimism, adaptation in the changing circumstances to accurately forecast the demand, better management of inventory and also meeting the delivery and service level expectations with more value added and customized offering which otherwise would perhaps done physically.

Customer and technology are the cynosure of all our business activity and today’s emergent leadership calls for more focus on innovation, idea generation and more to come out with technology based solutions. It should strive to create an ecosystem/service oriented platform, to have more focus on basic internal functions & processes and also taking due ownership of digital skills development for it’s employees/team as that would really pave the way for leveraging the entire gamut of what industry 4.0 offers to us in terms of technological breakthrough and adoption.

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Cement: An Industry Perspective of Economic Development vis-à-vis Mitigating the Climate Change

A decade has just now ended and we’ve got in to a brand new year 2020. One of the biggest challenge our mother earth facing today is climate change. The earth is getting more than two (2) degrees warmer every year, Amazon has burnt, bush fires in Australia is wreaking havoc, Middle East, Africa and some parts of our South East Asia is witnessing rages of war, large scale deforestation, massive industrialization at the emerging economies are leading to global warming, greenhouse gas emissions and major depletion of flora and fauna at an alarming rate.

The table below shows the total global emission as 36153 MTCO2 as per the 2017 data and the share of emissions across the world where China, US and India were seen as the major three contributors leading the pack. Globally the large and heavy industries with no or low substitutes (like cement/concrete) are facing the major challenges to reduce the emissions and positively contributing towards making a greener planet earth.

Carbon Emissions Around the world

Contrary to the flip side mentioned above there are also opportunities for growth and development in terms of technology, infrastructure, human capital, innovations and various disruptions happening across these spectrums. And industries like Cement which is in the core sectors of any country’s economy is a classic case of dichotomy wherein at one hand it provides the very basis of development, building & infrastructure, real estate, housing, logistics etc. and on the other hand contributes to Co2 emissions having a major environmental impact. Today globally 30 bn. MT of cement based materials like concrete, plasters. mortars, concrete, tiles, bricks etc. is produced and consumed annually. After food and water cement is the third most item of human usage across the globe. Cement being the large global industry faces the toughest climate challenge since it has got very low substitution. Ever since Portland cement is invented in 1924 or even before that when lime and brick dusts were used in construction cement forms a major ingredient in concrete thus being responsible for the Co2 footprint. Presently cement contributes around 5-7% of the global Co2 emissions after fossil fuel and was one of the major agenda for discussion during the Paris climate change talks in 2019.

The cement industry if we take the example of India have been consciously making efforts to work around the challenges of reducing Co2 emissions. Ever since the industry was deregulated in 1989 it has progressed a lot towards making lesser carbon footprints in terms of many a disruption which has happened in production, sourcing MIC (mineral ingredients and constituents), raw materials and in pollution control measures. The industry over the years have migrated from wet process plants to semi dry process and finally to dry process plants which does the preheating of raw meal (mixture of limestone, shell, alumina, bauxite etc.) before it enters the kiln (furnace) for making clinker which is the main raw material for manufacturing cement and thus contributes to reducing the energy consumption and costs in terms of coal usage. Alternate fuels (like rice husk, soya hush, lime sludge, red mud tyre chips, rubbers, plastic, polythene, ETP sludge, waste oil etc.) or AFR as it is known is also now being extensively used these days to increase the thermal substitution rate (TSR) and in turn reduce Co2 emissions. The major breakthrough in fact happened when the industry started moving from producing Ordinary Portland Cement (OPC) to blended cements like Portland Slag Cement, to Portland Pozzolana cement (PPC) and to very recently Composite cement which uses more cementitious materials (also known as Mineral Ingredients and Constituents-MIC) like fly ash, slag which replaces the clinker usage without diluting the strength, quality and durability aspect in cement and concrete. The blended cement (Portland Slag Cement) got produced in Germany way back in 1885 and made it’s beginning in India in 1951. The Portland Pozzolana cement (PPC) is comparatively came in vogue during the last two decades as gargantuan volume of fly ash generated by the thermal power plants posed a real environmental hazard and need to be mitigated. Further research and development has brought us the Composite cement which makes use of both fly ash and slag along with clinker as per BIS (Bureau of Indian Standards) specifications. Alternatively, in many a sites or in RMX (Ready Mixed Concrete) batching plants these MICs (say, Fly Ash and /or Slag) is mixed with Ordinary Portland Cement to make durable concrete. Currently approx. 60% of India’s cement production is blended cement which is cost efficient and environment friendly cement, reducing carbon footprint and many harmful emissions, conserving depleting limestone reserves and fossil fuels and mitigating soil pollution and erosion. Moreover, to successfully dispose of several thousand tonnes of blast furnace slag generated by the country’s steel plants and the huge fly ash generated by the thermal power plants is a huge challenge which was also effectively mitigated by using it in producing blended cement and thereby achieving the dual objectives of its successful disposition and substituting it against the clinker (limestone) which is a precious resource and expected to last for not more than 40-50 years unless new deposits are found out and permitted to make use of. The efficiency & emissions are the two major midterm goal for the industry at present and both positively contributes to lessen the industry’s adverse impact on the environment. There are various other disruptions happened within the industry worth mentioning is like replacing bag filters by ESPs (Electro Static Precipitators), usage of LD slag (Linz Donawitz process), usage of pet coke, use of high efficiency boilers in captive power plants, closed circuit mill & vertical roller mill (VRM) to ensure better grinding and control of dust particles inside the mill, reduction in fossil fuel consumption through Waste Heat Recovery System (WHRS), solar power plants and alternate fuels is immensely contributing to high energy efficiency and to effectively control emissions.

Cement as a product (making a transition from commodity to product and therefore brand) is highly logistics driven and we could see that both clinkerization and grinding units near to raw material and MIC sources and thus involves a major amount of transportation of inbound raw materials and outbound dispatches of cement inventory to various warehouse, depot, project sites and to various end customers including RMX plants, Large Buyers and individual house builders. And these gives opportunity for green transportation like using of waterways to move cement and clinker, split manufacturing units near Grinding Units (MIC & Market), palletization, mobile silo and mobile packers etc. to make it near to the market (thereby reducing the transportation footprint, cycle) and thus reducing the diesel emissions to a large extent.

Although a modest beginning is already made and continuing however the magnitude of the challenge is quite big. The industry captains as a responsible corporate citizen is making relentless efforts to make quick wins’ in terms of using the supplementary cementitious materials (SCMS) for making more and more blended cements, investing in research and development to come out with green concrete, self-healing and self-compacting concrete etc., encouraging sustainable construction in terms of design, use of eco-friendly materials and robust construction practices to supplement our efforts sustainable and get going.

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