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Revenue growth from resource efficiency

Resource efficiency is traditionally associated with cost reduction. But leading companies have also used non-labour resource efficiency to drive sales. Watch this webinar recording to hear how Kyocera successfully do this and how your company can too. The Next Manufacturing Revolution conservatively estimated additional profits worth £325M p.a. from revenue growth from resource efficiency through: • Improved product performance • More efficient delivery models such as ‘servicising’ • Collaborative consumption business models Quantifying these additional revenues can boost the economics of resource efficiency and should be included in sustainability-related business cases. In this webinar, Dr Greg Lavery from Lavery Pennell, lead author of the Next Manufacturing Revolution, presents the revenue growth opportunities available from resource efficiency and how to succeed followed by Tracey Rawling-Church, Head of CSR at Kyocera Document Solutions UK, presenting Kyocera’s...

New Industrial Model Identified

A new, more profitable and sustainable model for industry has emerged estimated to be worth, for Europe, €100bn in additional profits, 168,000 new jobs and a 14.6% reduction in greenhouse gas emissions. It involves three stages which respond to today’s business challenges. REDUCE – improving non-labour resource efficiency* REPLACE – reinvesting some of the efficiency savings in sustainable inputs (materials and renewable energy) RE-OFFER – developing innovative new products and capturing market share growth   The report on the model is available here: new industrial model report. The logic for the new model is compelling: increased profits, more jobs and reduced environmental impact. Leading companies including Unilever, Body Shop, Patagonia, Ecover and Interface have recognised the power of the new model and are capturing value through its implementation. Interface, the world’s largest producer of carpet tiles, is a case study of the benefits available. In its European manufacturing operations, Interface has reduced energy and yarn usage per unit of production by 40% and 12% respectively since 1996, switched to 100% renewable energy for its Scherpenzeel site, and replaced 43% of its raw materials with bio-based or recycled alternatives. This has reduced Interface’s costs by €7.6 million p.a., as well as reduced life cycle greenhouse gas emissions by 35,500 tCO2e p.a. and enabled the company to remain the world’s leading manufacturer of carpet tile in a highly competitive industry. The potential of the new industrial model for the whole of the European manufacturing sector is estimated to be: €100 billion p.a. profit before tax improvement from materials efficiency, energy efficiency and renewable energy – at a capex cost of €66...

Radical Strategy: Disrupt before you are disrupted

The traditional response to earnings downturns is to hunker down and defend the status quo. But if the downturn is caused by a structural disruption this is the wrong response. This discussion presents a better response that finds opportunities within challenges – and describes what it takes to capture them. How does your company respond to a downturn in earnings? The traditional approach is to reduce headcount (often middle management), shrink non-operating spending, reinvest some savings in advertising and exhort the salesforce to sell more great product; e.g. Coca Cola, late February 2014. But what if the downturn has been caused by a growing trend that will eventually undermine your business (i.e. a structural disruption)? Then the traditional response to an earnings dip is unhelpful – cutting the company’s ability to respond to a disruption and reinforcing the company’s commitment to the current course. Instead, when these sorts of disruptions occur (and ideally before), it is time for open-mindedness to new ideas and allocation of resources to respond with a better business model. We call this sort of step-out thinking ‘Radical Strategy’ because it steps beyond the incremental improvements/optimisation of the existing business model – where most corporate strategy work is focused. Consider some of the disruptive business model types that are emerging – and which are very difficult to answer by optimising existing approaches: Distributed production – local production of raw materials including food and energy – e.g. farmers markets; rooftop solar photovoltaics Peer to peer networks – directly connecting producers/providers and customers/users cutting out the ‘middleman’- e.g. Zopa Product aggregation and comparison – Where comparable products are...

Remanufacturing – A low risk source of additional profits

Remanufacturing allows manufacturers to increase profits while reducing supply risks of raw materials. However remanufacturing accounts for just 1% of UK manufacturing sector turnover. Watch this video to: Learn about the pros and cons of remanufacturing and how to succeed. Hear insights from Caterpillar Reman on their experience of remanufacturing. Background Remanufacturing is defined as returning a product to the Original Equipment Manufacturer performance specification and providing a warranty close to that of a newly manufactured equivalent. Pioneers in remanufacturing are capturing 95% of accessible products and using them to generate substantial additional profits. Companies including Fuji Xerox, Ricoh, Sony, Maersk, Renault, leading breadmakers and Caterpillar are leading this form of circular resource use and are reaping the benefits. Recent research by the Next Manufacturing Revolution shows that remanufacturing has the potential to create £5.6bn p.a. of value for UK manufacturers, support over 310,000 new manufacturing jobs and reduce UK greenhouse gas...

Six themes for business success after the financial crisis

Our work with business and thought leaders has identified a profound change in the way that businesses are run in the after-financial-crisis (afic) world. On the input side, capital is scarce, resource prices are increasing and becoming more volatile, externalities (such as carbon dioxide) are beginning to be priced into the economy, new technologies are emerging with increasing rapidity and talent is becoming increasingly discerning – motivated by a ‘higher purpose’ that most companies did not provide before the financial crisis (befic). The output side of the equation is changing as well, with volatile and uncertain orders, increasingly demanding customer mandates (e.g. Wal-Mart, P&G), and consumer and community pressure to improve corporate responsibility. The business context is changing as well, with increasing shareholder activism, greater corporate transparency demanded by the community and regulators in the light of recent events such as phone hacking and LIBOR fixing, emerging new business models, and expectations that business drive the reduction of the world’s footprint to within the carrying capacity of the planet now that the Conference of the Parties and Rio +20 have demonstrated the inability of global politics to develop workable solutions. The most thoughtful – and usually most profitable – companies and a range of clever start-ups have already begun to develop new approaches to the afic world. They use six themes for success: Low cash. Afic leaders recognise that cash is scarce and use a range of approaches to minimise their need for cash to improve their businesses, including revolving funds, leasing, vendor financing, PACE funding, asset sharing and virtualisation. Resource efficiency. Many companies are not even aware of...

Creating Value Through Innovation

Innovation is often poorly understood and rarely harnessed to unlock the full value potential available within companies. In this discussion, Nick Pennell and Greg Lavery present the value of innovation and how to capture it, reflecting on their recent work in the field. Innovation is simply about harnessing good ideas and seeing them through their development and implementation across a company. Done properly, such ideas can increase revenue, reduce costs, improve competitive advantage, improve company sustainability – and in doing so lift staff productivity and morale through seeing their ideas come to life. An effective innovation process must follow three principles: Inclusivity: best practice innovation companies (e.g. 3M, Google) make innovation part of everyone’s job description; after all, good ideas can come from anywhere and everywhere. Strategic fit: Innovation priorities must fit with the corporate strategy and vision. We have seen numerous examples where priorities for innovation are not set clearly, leading to sub-optimal cost and resource allocation.  Linked to this, motivating staff participation often works best where innovation is connected to both the corporate strategy and a ‘higher purpose’ – this is where a sustainability lens can be invaluable. Tightly defined innovation brief:  big picture, ‘blue sky’ thinking has its place early in priority setting, but results occur much more quickly if staff are focussed on solving well-defined challenges. Applying these themes, we recommend that companies adopt an innovation cycle which includes four key processes: Priority setting to ensure that the whole organisation, including senior management, share the same innovation goals. The bigger the organisation, the more important this is to ensure that parts of the organisation do...