Professional Documents
Culture Documents
BUSINESS
NOVEMBER 2010
COO INSIGHTS
Companies
have made
sustainability
a business
model
and a very
profitable one!
But that's not
the only reason
why there is
no turning back
for Bayer
Management
Board Member
Wolfgang
Plischke
Wol
EU-27
EVALUATION OF CHANGE
* EU-15
SUSTAINABLE DEVELOPMENT
THEME
HEADLINE INDICATOR
SOCIOECONOMIC DEVELOPMENT
SUSTAINABLE TRANSPORT
RESOURCE PRODUCTIVITY
NATURAL RESOURCES
PUBLIC HEALTH
SOCIAL INCLUSION
RISK OF POVERTY****
DEMOGRAPHIC CHANGES
GLOBAL PARTNERSHIP
LEGEND:
Why
But the question is, how? What does sustainability have to do with core business?
How can environmental and social management be integrated into conventional business management? How can we think in a
new way and inspire the whole organization
when we do so? Practical questions that are
often asked and just as often answered.
You will find a few examples in this magazine: Bayer, SAP and Volkswagen serve as blueprints for profound sustainability management in sourcing, manufacturing, logistics
and R&D. Sustainability is not just for big
business. On the contrary, small and
medium-sized enterprises are at the forefront. Scent specialist Symrise, with its white
biotechnology, will be a key to growth in the
coming decades, according to the German
government.
This second issue of think: act business is
therefore not merely a passionate defense of
sustainability management, but also a practical guide to all aspects of sustainable business showing you how this principle of
success is already gaining a foothold in companies.
I hope this will give you some valuable
insight and knowledge in the field of sustainability.
Axel Schmidt
Global Head of Operations Strategy
Order: You can also order this magazine as a PDF file in English and German at:
COO_Insights@rolandberger.com
Why
Editorial
Thought Leadership
Sustainability: From fair weather topic
to paradigm shift
Management
6 sustainability factors govern
sustainability excellence in operations
Guest commentary
Invest early: Prevention is better than cure
How
In practice
Interview with Bayer Management
Board Member Wolfgang Plischke:
"A job for marathon runners, not sprinters"
Volkswagen: Green grandeur
Symrise: White hart
SAP: Blue power
Study
The rise of sustainability as a factor
in business
3
4
10
14
20
24
28
31
Who
7 questions for Otmar Hauck, COO KION AG 32
What
36
Automotive suppliers
In the wake of the crisis
37
Working Capital
Hidden treasure
37
Cross-functional working
In their own juices
39
Kiosk
China's Management Revolution
Green Growth, Green Business
think: act CONTENT Supply chain management
think:act BUSINESS COO Insights
Publisher: Axel Schmidt
Overall responsibility: Roland Schwientek
Project management: Dr. Katherine Nlling
Layout: Roland Berger DesignTeam
Roland Berger Experts:
Marcus Berret, Sebastian Durst,
Jochen Gleisberg, Robert Grimm,
Thomas Hollmann, Florian Kaiser,
Felix Mogge, Robert Ohmayer,
Thomas Rinn, Axel Schmidt,
Roland Schwientek, Christian Steinbach
Why
Success through
sustainability:
Learn from the
champions
The majority of
companies have committed
themselves to sustainability. Nearly two
out of three companies have maintained or
even intensified their commitment to sustainability despite the crisis. Yet the value-adding potential
of sustainable business has not yet been fully tapped
21
Why
Sustainability: >>
from fair weather topic
>> to paradigm shift
Still just a stylish trend for a few; for many, a paradigm shift. Sustainability is influencing
companies' business models, shifting the balance between industries and recasting
relations in supply chains. A six-point plan helps to clarify.
"
"
We here at Siemens
clearly endeavor to act in
the interests of future generations financially, environ-
our responsibilities to the environment, our employees, our shareholders and society. Using
energy-efficient technology, for example, makes good financial sense: the potential savings mean
acquisitions soon pay for themselves. So "green" technology will be one of our major growth
drivers in the future. And our customers profit with us, by saving
considerably on CO2 emissions and costs. Ultimately,
it makes a valuable contribution to protecting the
climate and environment which is particularly
important to me.
www.siemens.com/sustainability/report/09/pool/pdf/siemens_nb_2009.pdf
ow thoroughly sustainability is
actually embedded in the global
manufacturing and services
sector may depend on the industry concerned and where it is based.
Consumer goods manufacturers and business-to-consumer companies are generally
more sensitive than capital goods manufacturers and business-to-business, partly
because their customers apply pressure
directly and are quick to switch products.
European companies in Europe are further
ahead than their challengers in the emerging
economies, Brazil, Russia, India and China
(BRIC). Even progressive companies, socalled sustainability champions, vary in
terms of how mature their sustainability
"It's important to me
to help those I'm
closest to."
"I think the government
and companies should
support culture, sports and
health."
21,2% 19,9%
DEDICATED
VOLUNTEERS
TRADITIONAL
SELF-CENTRICS
CRITICAL
CONSUMERS
BELIEVERS IN
HARD WORK AND
PROGRESS
RESPONSIBLE
FAMILY PEOPLE
Why
"
"
ses relevant to sustainability. Reporting directly to the Chairman of the Board, this body
coordinates major sustainability initiatives worldwide and assists operating divisions in implementing them. Our Sustainability Board has formulated the claim to be among the best in the
industry when it comes to sustainability. To this end, both the Board and the office that supports
it were restructured to further improve relevant central areas, established bodies and important
decision makers from all segments. The Sustainability Board analyzes and assesses how
Daimler is performing in terms of sustainability, prepares executive submissions on the
Chairman of the Board's instructions and assists the Management Board, together with the
Sustainability Office, with second opinions.
The Board also organizes and coordinates
the annual "Sustainability Dialog" event.
http://nachhaltigkeit.daimler.com
The more important sustainability management is, the greater the challenges. Companies
are asking themselves how they can
Combine ever-shorter development times while at the same time spending heavily on developing sustainable
products
Meet stringent sustainability criteria
"
http://www.basf.com/group/corporate/de/
sustainability/index
Harald Schwager,
Executive Board, BASF AG
There are
success factors
that govern sustainability excellence in operations
guidelines that follow a clear business logic:
1. TOP-DOWN APPROACH
Sustainability is an integral part of a company's basic strategy. This creates goals for all
operating departments which are ambitious
"
Why
2.
EMBEDDED IN THE
ORGANIZATION
Putting a Chief Sustainability Officers at
top management level reflects a credible,
irreversible sustainability strategy.
Clear responsibilities are also required
at different operating levels: that's the
only way to overcome conflicts and
implement sustainability across all
departments and functions. Sustainability is not something you can compromise on.
3. NETWORKING
4.
LIFE-CYCLE-BASED
OPTIMIZATION APPROACH
Optimizing sustainability performance
can only succeed if it covers a product's
5.
CONSISTENT
IMPLEMENTATION
Sustainability as a corporate goal must
be implemented both continuously and
consistently. Sustainability champions
are always reviewing how close they
are getting to their ideal goals, and
penalize failures and backsliding.
This affects both their own staff and
outside partners. Incentives can give the
process wings, such as variable salary
or fee components linked to achieving
specific sustainability targets.
6.
CONTINUOUS
IMPROVEMENT
Sustainability champions want everyone
involved to be constantly improving.
They identify areas for improvement
together each year and incorporate them
in future targets. To pass on technological innovations and improved know-how
to partners in our networks, news needs
to be communicated regularly and main
partners need active support in implementing improvements.
Invest early:
Prevention
is better
than cure
Sustainable development cannot be
tacked on to the start or the end of the
production process. It must become
part of corporate DNA.
by Professor Stefan Schaltegger*
Sustainable production and business processes are usually the point of departure. Their
aim is to substitute problematic substances
or alter certain patterns of behavior. Once
business processes have a sustainable
design, the products should naturally follow
suit. "Designing for sustainability" can optimize the social, ecological and economic impact
of new products throughout their entire lifecycle from the earliest phases of development. On the other hand, good product design
can only be realized responsibly if it is backed by sustainable supply chain management.
Social and environmental checklists for the
purchasing department, regular supplier
audits and a management focus that aligns
the entire supply chain with sustainability criteria are all part and parcel of this redesign.
The business model is the core of these
management processes, affecting all the
aspects discussed above in many different
ways. Companies keen to shoulder social and
environmental responsibility should therefore
ask themselves some fundamental questions: In what ways does our current value proposition affect sustainability? How do these
effects help make the company unique?
How
Searching for a ne
ROLAND BERGER STRATEGY CONSULTANTS
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13
How
"
A job for
marathon runners,
not sprinters
"
worldwide and the numerous funding activities of our two charitable foundations.
RB: Are you driving this process or driven
by it?
Plischke: Both, actually. On the one hand,
we pursue our strategies out of conviction
and want to set standards. On the other,
we're quite certain there's no alternative.
The world has radically changed. Customers
and investors now demand responsible
corporate governance, and policymakers
are setting new frameworks. Huge changes
are taking place. Sustainability has become
the prerequisite for economic success. And
success is the basis for delivering sustainability.
RB: Changing the corporate philosophy is
one thing. Living it in practice is quite
another. There are those who say that it's
How
" "
Sustainability
is far more than
climate protection
3,3
HEALTH
approach.
RB: In view of the frequency with which the
topic of sustainability comes up, one wonders when the hype will subside. This trend
has been described as a "medialization" of
sustainability. Do you think the concept now
stands for a fashion?
Plischke: That would indeed be fatal.
It would mean we've learnt absolutely nothing and that we're only playing games with
our future. But I admit, there is a danger of
puffing up the concept and paying only
lip-service to the real issues. All the more
reason for getting it right. Sustainability is
not a passing fad. It has to be integrated into
business. Every company must work on it
rigorously.
How
"
"
CLIMATE
This all started with the zero-energy company kindergarten in Monheim, where Bayer CropScience is based.
The building uses renewable energy and has optimal
insulation made from polyurethane raw materials.
A second pilot project was launched, this time close
to India's capital near New Delhi. Bayer's administration
office there is especially designed to deal with the subtropical conditions. Bayer's new office building in Belgian
Diegem promptly won the country's Energy Award.
Its energy consumption is only half that of comparable
buildings. These pilots are to now serve as the basis for
a business model. Retail chains are just one group that
has expressed keen interest in this model. Whats just
for buildings is equitable in industrial production.
40%
of India's population
about 500 million people
are vegetarians
NUTRITION
ment benefits from this too. The pre-germinated, drysown rice requires much less water.
Another effect: Methane, which is harmful to our environment and which is produced by enteric fermentation
in standing water, is reduced by 30%. The program also
The demand for food is rising but arable farmland will
includes an integrated offer of seeds, seeders, plant-proremain constant at best. The climate change is threatetection products and training programs for the farmers.
ning harvests. Almost a billion people are starving. The
The goal of Bayer CropScience's "Food-Chain-PartnerCongo ranks last among 84 countries according to the
ship" program is to ensure sustainable vegetable proGlobal Hunger Index. One in five children dies before the
duction. This partnership brings the entire food chain
age of five.
together farmers, suppliers, the food processing induIn Indonesia, more than 40 million people live on rice, but stry, retailers and exporters.
the harvests are poor.
Experts support farmers in cultivating land according
to profitable and sustainable agricultural practices.
A new farming method rolled out as part of the Bayer
More yield per hectare protects Mother Nature.
sustainability program is designed to improve the crop
yields and income situation of rice farmers. This method This is good for biodiversity, the preservation of which is
involves converting production from conventional trans- a very challenging and important task, especially in
emerging countries such as India. Food-Chainplanted to direct-seeded rice.
Partnership projects have been launched. This number
should rise to 125 by the end of 2012.
The result: yield increase of about 10%. And the environ-
How
Green grandeur
BY 2018 AT THE L ATE
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THE PLAN IS FOR THIS STRATEGY TO DELIVER ON AMBITIOUS GROWTH AND PROFIT TARGET
SAME
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MAXIMIZING T HE DIVERSIT Y OF BRANDS AND MODELS AND
TIME.
itself rests on three pillars: environmentally compatible solutions and proautos, of which some three million are sold every year). Across the group as
ducts, the behavior of the individual, and environmental initiatives.
a whole, this strategy will enable the company to launch more than 40 new
For Winterkorn, "sustainability is a fundamental principle of corporate
models in the medium term. The new Audi A3 was first off the blocks. The
management and the key to lasting success." Profitability, environmental
Golf VII the group's flagship volume model is also based on the transverprotection and social responsibility: these are the three aspects that, througse matrix. Even a sports car matrix is conceivable. If this idea is taken up,
hout the world, must be brought into harmony in the long run." For mass proPorsche too will soon be on board.
ducers like Volkswagen, that is a very tall order. True, automotive engineering
Less effort, more flexibility, greater diversity in brands and models: on paper,
is one of the main drivers of economic development in emerging markets.
Volkswagen's module strategy is already freeing up a lot of cash. One-time
But rapid growth in mobility is throwing up major challenges of its own. While
costs and unit costs can both be cut by 20%, while engineered hours per
harmful emissions must be reined in quickly, finite fossil fuels are threatevehicle can be reduced by as much as a third. Production times and the comning to run out. And then there is the problem of congested traffic in megaciplexity of production can likewise be scaled back substantially. The number
ties such as Beijing and Mumbai, which are on the verge of
grinding to a complete halt.
Volkswagen's growth strategy is rooted in a new platform
Sustainability is a fundamental principle
architecture that combines what it calls a modular transof corporate leadership and the key to
verse matrix with a modular longitudinal matrix. Winterkorn
long-term
success. Profitability, environmental
sees these matrices as the key to sustainable industrial production: "They will allow us to realize the group's ambitious
protection and social responsibility.
growth and profit targets, uphold its brands and maximize
Martin Winterkorn, CEO, Volkswagen
the diversity of brands and models while reducing complexi-
" "
of variants has fallen sharply by more than 70% in the case of air-conditioning systems. Above all, the company's matrices are combining with thinned-down, highly effective turbocharged gasoline and diesel engines, innovative transmissions and electric motors to expedite Volkswagen's lofty consumption and emissions targets. Models in the new small family generation
are also playing their part. Key features of this generation include compact
How
size, eco-friendly engines and a lightweight design. Right now, more than 170
of the group's model variants already give off less than 140 grams of carbon
dioxide per kilometer. (The EU prescribes a ceiling of 130 grams for new cars
as of 2015.) The highlight of the BlueMotion range is the Polo, whose 87
grams of carbon emissions make it the most environmentally friendly fivedoor model in the world.
A recent Roland Berger study affirms that German automakers are now out in
front in terms of their electromobility expertise too. This achievement is no
coincidence. Volkswagen already works with an intelligent mix of different
propulsion models: advanced combustion engines, low emissions, hybrid
engines and electric drive systems.
Production fits seamlessly into this strategy. The impact of production processes and products on all areas of life is factored into advance planning
preparations. Integrated environmental protection is the magic word. All
fields of responsibility and all processes worldwide are precisely defined
and accredited in line with both the international ISO 14001 standard and
the European EMAS (Eco-Management and Audit Scheme) eco-audit standard. In accordance with Volkswagen's sustainability strategy, the responsible use of resources safeguards "the future of the company". For Europe's
biggest automaker, eco-friendly production begins with product develop-
ment. It is here and only here that the environmental impact of subsequent production and recycling processes can be influenced by design decisions and the choice of materials, for instance. Corporate environmental protection focuses on energy efficiency and climate protection, but also homes
in on issues relating to water and air, wastewater and waste in general. The
same ecological standards are applied to all 61 Volkswagen facilities in 27
countries worldwide, including those in the fast-growing US, Chinese, Russian
and Indian markets. All existing facilities are accredited under international
environmental management standards; all new ones rapidly follow suit.
A rewarding exercise, as it turns out: In 2008, Volkswagen won the German Sustainability Prize in
the category "Most Sustainable Brands".
40%
of Germans
one of the biggest energy guzzlers in
want to buy an electric
vehicle production. While painted bodies
vehicle in the next three are being dried, thermal afterburning
to ten years
systems inevitably generate more heat
NEW DIMENSIONS OF
EFFICIENCY IMPROVEMENT
The six-generation Golf has improved
on nearly all features of the third
generation, while its fuel consumption
has been reduced by almost a quarter.
Performance
Weight
Length
Width
Height
Consumption
+ 64 %
+ 13 %
+ 4,5 %
+5%
+6%
24 %
1Mio.
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INTO SUSTAINABLE INDUSTRIAL PRODUCTION IN GERMANY.
SCENT SPECIALIST
SYMRISE, A PROM
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EASON TO
LEAST, HAS R
ONE DEER, AT
t has no antlers, the ears of a hare and the grace of a youthful roe deer.
Yet its tusk-like canines resemble those of a wild boar. It roams the
highland regions of Central and East Asia in search of food and constantly fleeing from humans. It is the only deer that can effortlessly
scamper to the very top of inclined trees to eat their leaves, twigs and
lichen. A gland the size of a walnut, located just above its genitals, is what
makes this shy creature the object of man's desire. For the gland gives off a
very special secretion: musk, the queen of aromas and a legendary ingredient
used in traditional Chinese medicine. The gland of the male musk deer, normally used to attract mates, yields up to 30 grams of the precious substance.
But the deer pays with its life.
Musk has been the most prized animal product since ancient times. In the
Middle Ages, physicians prescribed it as a general-purpose remedy for mental
illness and nervous disorders. Worn in a pomander around the neck, it was
believed to ward off the plague. Long before the Dark Ages, however, Chinese
BE GRATEFUL.
medicine valued its effect on the nervous system, perspiration, the pulse and
the respiratory system. Crusaders were the first to bring musk to Europe as
an aphrodisiac.
Like ambergris, civet and castoreum the three other primary animal scents
musk exudes warmth and a sense of safety. It keeps perfumes on the skin
for longer and invigorates aromatic compositions. Haircare and bodycare
products use it, as do detergents and household products. Musk perfumes
emphasize the substance's potent erotic allure. Estimates put the number of
Chinese and Korean medicines that contain animal musk at over 400. The
substance is equally indispensable to the Indian natural medicine philosophies Ayurveda and Unani. In its pure form, animal musk is as costly as gold.
To make sure the supply never runs out, stags are "milked" three times a year
at breeding farms, and kept alive. Since demand consistently outstrips supply, however, most of the musk in use today is synthetic. In 1926 the chemist
Leopold Ruika first described the structure of muscone and later produced
Over
20 Mio
copies of the book "Perfume"
were sold worldwide
and it was translated in
47 languages.
3000
the first synthetic variants. Not that that has really helped the deer, some
species of which are threatened by extinction. Protective laws have been put
in place to keep the worst from coming to the worst.
White (or industrial) biotech should help. It might even make it possible to
do without the natural musk suppliers entirely. As part of the BIO2021 project
initiated by Germany's Federal Ministry of Education and Research, developers at scent specialist Symrise in Holzminden the beating heart of the
country's fragrance industry have developed an independent and competitively priced biotechnological musk production process that can also substitute for the artificial musks hitherto synthesized from petrochemicals.
"We are moving into completely uncharted territory," says Johannes Panten,
Project Manager and Director of Technology Scouting at Symrise. "No-one has
ever yet explored the paths of natural biosynthesis."
Symrise is a global leading manufacturer of aromas, perfume compositions
and cosmetic ingredients. Its customer list includes big-name food producers
and the perfume industry. The company processes around 10,000 raw
materials. Its R&D effort is increasingly focusing on the use of renewable
resources.
Biotechnology is widely tipped to be the pivotal technology in the 21st century. Red biotech seeks to derive medical applications from research into biotechnology and genetic engineering. Green biotech is used in agriculture,
primarily to improve cultivated crops. Following in their footsteps, white biotech aims to use microorganisms, enzymes and other natural production
systems to replace chemical production processes. The German government
sees in white biotech "highly promising growth potential for branches of indu-
WHAT IS A PERFUME?
Perfumes contain 20% to 30% aromatic substances and are mixed
with 95% alcohol volumes.
Eau de parfum (also referred to as esprit de parfum or parfum
de toilette) is a weaker variant of the perfume containing a
concentration of aromatic substances of around 15% to 25%.
Eau de toilette contains 10% to 20% aromatic substances.
Eau de cologne contains only 2% to 5% aromatic substances and
is blended with 70% to 80% alcohol. This designation is often used
for men's fragrances.
Perfume gels contain 5% to 7% perfume oil and little alcohol,
but also contain gelling agents.
After shave (aprs rasage) contains at least 3% to 5%
aromatic substances.
stry with a significant impact on the economy." In line with its high-tech strategy for Germany, Berlin will pump EUR 100 million into white biotechnology
between now and 2012.
Biotechnology already significantly affects products and processes in many
industries. Strictly speaking, however, it is anything but new. Some 8,000
years ago, the Sumerians in Mesopotamia are known to have brewed an
alcoholic beverage the world's first beer from germinated barley. There
would be no wine, leavened bread or cheese without microorganisms. Today,
white biotech is all around us: in the enzymes used in household detergents,
in the dyes and leather treatment products used in the textile industry and in
substances used to decontaminate waste. Now, however, it is the turn of
the chemical industry to benefit. This aspect of the discipline is
young indeed. Yet the benefits of the processes
used are plain to see. Large numbers of white
biotech processes are catalytic and highly
selective. In many cases, there are no byproducts at all. Better still, white biotech
frequently gets by without the use of
individual aromas combine
hazardous chemicals.
to form the unmistakable
400
taste of vanilla
particular are coming under pressure from consumers who want natural, ecofriendly foodstuffs that are traded fairly and are above all affordable. "That is
why at Symrise we factor sustainability into the development of flavorings
and ingredients from the word go," explains Dr. Claus-Oliver Schmidt, in charge
of Global Quality Control and Innovation Management at the fragrance and
flavoring factory in Holzminden. "People don't just expect the ready-made
products they find on supermarket shelves to have been produced using
sustainable methods. They are paying more and more attention to the individual ingredients." Nor is the matter confined to cutting the consumption of
water and energy and reducing carbon emissions. Nowadays, the issue at
stake is "sustainability in every product development cycle."
Take vanillin, for example. More than 400 distinct aromas contribute to the
unique flavor of vanilla which, in its natural form, is derived from the pod of
a species of orchid. Vanillin is the most important sensory component of
vanilla. Wilhelm Haarmann succeeded in synthesizing it as far back as 1874.
This first revolution is now being followed by a second: biocatalytic synthesis.
The flavor is derived from rice. Natural ferulic acid is converted to vanillin with the aid of enzymatic fermentation,
a process that yields several benefits all at once. First,
the substance used is a natural, renewable resource, so there is no need
for chlorous inputs. Second, the process takes place at room temperature,
so considerably less energy is consumed.
Third, the wastewater is pH-neutral.
Wherever possible, Symrise adopts a "farm-to-fork"
policy, using locally cultivated raw materials. This
keeps transportation costs to a minimum and optimizes
supply chains. Local farmers supply onions, Savoy cabbage
and beetroot to the company's headquarters in Holzminden.
The company and the farmers together decide on the choice of
seed, use of fertilizers and timing of the harvest. The pomace left
over from production is spread on the fields as an eco-friendly fertilizer. Since Symrise acquired raw materials supplier Aromatics S.A.S. in
Madagascar, vanilla pods too have been processed where they are grown.
Symrise is thus the only flavoring company committed to backward integration in this discipline. Citrus flavorings are another of Symrise's core competencies. It is only logical, therefore, to find that citrus the most successful
taste in the beverages sector is an important element in the company's
sustainability strategy. Shipping is minimized thanks to a global citrus center
in Brazil. Exemplary energy standards ensure "clean" production. And sustainable extraction processes use environmentally friendly solvents.
Innovative technologies support these processes. One of them is SymTrap,
a system that recovers the high-quality flavoring molecules that are normally
lost during the industrial processing of fruit and vegetables. The use of the raw
materials is optimized, albeit without consuming a lot of energy. The result is a
natural, authentic flavor profile. SymTrap can be used for fruits, various types
of vegetable, herbs, other natural crops, and even fish and meat.
USD
" "
2.350
Naturalness:
New rules in the EU
How
Blue power
AUTOMAKERS ARE KNOWN TO RUTHLESSLY EXPLOIT THE PURCHASING POWER THEY HAVE
OVER SUPPLIERS. NOW, HOWEVER, IT IS THEY WHO ARE COMING UNDER PRESSURE.
AND THEY ARE NOT ALONE: COMPANIES SUCH AS SOFTWARE GIANT SAP ARE CONSCIOUSLY
USING THEIR INFLUENCE TO FURTHER THE CAUSE OF SUSTAINABILITY
AND ADDING A NEW DIMENSION TO MANUFACTURER/SUPPLIER RELATIONS
50%
50%
less greenhouse gases
SAP's target for 2020.
The base value is 540,000
metric tons,
what it was in 2007
bility (see , p. 11). Yet Schmid believes the recent economic crisis clearly
showed "that companies who sensibly manage all their risks and opportunities put themselves on a sounder economic footing."
"For SAP, sustainability is part of strategic planning. Both for us and for our
customers it is an essential factor, because we target long-term business
success," says Peter Graf, Chief Sustainability Officer and Executive Vice
President Sustainability Solutions. Back in March 2009, SAP set up a crossfunctional Sustainability Business Unit headed by the Chief Sustainability
Officer. Graf's mandate is to coordinate all initiatives that relate to the environment, social commitment and economic development, both inside the
group and in the global business community. The unit is attached to other
functions within the SAP organization. Its aim is to implement sustainability
initiatives on every level.
At all its facilities worldwide, SAP is, for example, committed to environmentally friendly, energy-saving and sustainable construction. Compliance with
at least the silver certification level of "Leadership in Energy & Environmental
Design" (LEED) is the minimum requirement. SAP's Newtown Square facility
in the US state of Pennsylvania actually won platinum certification. Here,
geothermal installations use constant geothermal energy for heating and
cooling. Lighting systems linked to daylight levels combine with light sensors to regulate indoor lighting. A hybrid air-conditioning system uses ice to
cool the building during the day. At night, when energy consumption and
electricity costs are lowest, the melt water is then recooled.
sustainable business +++ Tougher regulations, increasing operating costs and constantly +++
successfully master these challenges +++ The sustainability strategy at SAP +++ Economies ++
How
A solar system on the roof of SAP's premises in Palo Alto, California, should
shave 154 tons off annual CO2 emissions. The installation also means that
the data center one of the hungriest power users no longer feeds off the
power grid. In Brazil, SAP operates its own sewage treatment plant.
All the electricity needed by the plant is generated from
renewable sources.
not over yet, he admits. "But the goal is to rigorously align our value chain
with these criteria. Customers and employees alike expect a lot of us." SAP,
too, is clearly feeling the pressure on its own sustainability performance.
22.000
"
Sustainability at SAP
doesn't stop at the wall of the
company building
it stretches across the entire
value chain
recouped thanks to lower operating, maintenance and recycling costs. For the first time,
SAP is aligning the purchase of IT equipment
with these lifecycle costs.
HOW SAP
MANAGES SUSTAINABILITY
In March 2009, SAP introduced a governance model for sustainability.
One aspect of this model is the
Sustainability Council, which is empowered to take key decisions relating to
sustainability. Board members (including the two CEOs) and other senior
executives sit on the Council. The governance model also creates a number of
top management functions, including
Chief Sustainability Officer (Peter Graf),
Head of Sustainability Operations
(Daniel Schmid) and Vice President
Green IT (Timo Stelzer). SAP defines
sustainability as increasing short-term
and long-term profitability by actively
managing all aspects of ecological,
social and economic opportunities and
risks.
www.sapsustainabilityreport.com
38%
of companies that
participated in the study
include their direct
suppliers in their
sustainability
activities
of the purchasers
surveyed by Roland Berger
and the BME named
"economic calculations" as
the main driver of their
sustainability efforts
83%
Who
7
3.
HOW WOULD YOU DEFINE YOUR ROLE?
The most exciting thing about my job, as
I see it, is translating market opportunities
or demands into a real, tangible, superior
product that comes in at cost, or, even better, below it. This incredibly complex task is
the real challenge in this job, and what actually motivates me at the same time. You
never stop moving.
4.
1. WHY DOES
KION NEED YOU?
I'm what holds the three core areas of our
company together, that is, development,
procurement and production. What really
matters here is whether the aims of our
extremely ambitious Operational Excellence
Program are actually being achieved. A COO
doesn't just manage an across-the-board
process, he is much more: the key to operational success. The products Kion is involved
with are complex and technically sophisticated. Having development, procurement and
production mesh closely is absolutely
essential, but it doesn't just happen.
2.
DO YOU HAVE A FUTURE
AT THE COMPANY?
Oh yes. I believe that the title of COO is
something only the Anglo-Americans are
familiar with so far. This role even seems
rather exotic in Germany. That's changing
fast, though. Not every company needs a
. WHAT OCCUPIES
YOU MOST?
We seem to have got through the global
economic crisis, if you believe what the analysts and forecasters are saying. We can feel
that, too. But we're going into the upturn
with our eyes open, which means we will
continue consistently with the program of
reducing costs and optimizing processes
we started early on. At the same time, we
are also working within my area of responsibility to exploit the clear growth opportunities in regions such as Asia, Eastern Europe
and South America to the full. So we're
looking in two directions: we're rearming
ourselves, while remaining growth-oriented
at the same time. That's not as easy as it
sounds, but our aim is clear: we want to be
the world market leader.
6.
7.
ployees generated
In 2009, KION's 20,000 em
ion with its Linde,
net sales of over EUR 3.1 bill
Still, OM and Baoli brands.
i. In the
m the language of the Massa
The word "Kion" is taken fro
gozi)"
on(
"Ki
,
n warriors and nomads
tongue of these East Africa
p".
means "Take the leadershi
www.kiongroup.com
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35
What
EUROPE
100
25
AMERICA
45
JAPAN
55
70
20 40
2007 2008 2009
25
25
About 350 suppliers around the world were not able to survive the global economic crisis
Source: Roland Berger
"The automotive industry is on its way to recovery. But the suppliers now face significant
challenges," concludes a study by Roland
Berger and US investment bank Lazard. Ever increasing pressure on the part of the carmakers
is squeezing the margins. At the same time,
suppliers around the globe are having to shoulder an estimated refinancing volume of some
EUR 130 billion up until 2015 no mean task.
Nevertheless, the industry still has every reason to be satisfied with itself, despite some
gloomy figures. Worldwide losses during the
crisis included some EUR 200 billion in revenues, EUR 75 billion in EBIT and EUR 15 billion in
equity. 350 companies fell victim to the
plummeting global car markets. In the meantime, however, the situation has eased considerably, and in Europe and North America
remarkably so.
Even during the catastrophes of 2009, the
industry maintained positive free cashflows.
Investments were reduced, working capital
actions optimized and costs rescaled. The
result: "Supplier sales worldwide have almost
regained pre-crisis levels. Profitability will possibly even reach an all-time high with EBIT
margins of approx. 6% in 2010," says Marcus
Berret, Partner at Roland Berger Strategy
Consultants.
The study has consequently come to the conclusion that the suppliers must continue to
improve their performance, increase their discipline in parts pricing and focus on profitable
business instead of fighting for each project.
Moreover, they need to search rigorously for
new sources of financing.
Berret: "At the same time, carmakers
should switch to a more collabora-
Hidden treasure
THE CRISIS HAS ERODED LIQUIDITY.
MANY SMALL AND MEDIUM-SIZED ENTERPRISES
MOAN ABOUT THE CREDIT CRUNCH.
WHAT THEY OVERLOOK IS THAT THERE ARE RESERVES
TO BE FOUND IN THEIR OWN COMPANY
SMEs on a strict diet: Around 60 billion
euros, says Roland Berger Strategy Consultants, is the sum companies need to spend
on raw materials, operating resources and
capital goods by 2012 money that is not
there. The crisis has eroded their liquidity
cushion. Many companies are victims of the
credit crunch. And it's when the economy
starts to pick up again that they frequently
have no means to make any financial outlay,
thus impeding their recovery.
In many cases, the money is right in front
of their noses. In a wide-ranging survey conducted over the past four years taking in the
views of 2,500 companies and 300 executives, Roland Berger and information and
collection agency Creditreform found that
unused liquidity reserves are enormous.
Working capital the management of inven-
60
120
billion euros
remains untapped in
liquidity reserves, estimates
Roland Berger
What
Throughout history,
only a very few
have dared to look beyond
and broaden their
horizons.
39
Kiosk
Chinas
Management Revolution
OUR EXPERIENCE WORKING IN CHINA FOR
OVER A QUARTER OF A CENTURY SUGGESTS
THAT A NEW MANAGEMENT APPROACH IS
EMERGING FROM CHINA.
The recent global economic crisis has called
into question the way business is done.
Governments and business leaders the world
over are asking how they can make their
http://think-act.com/fresh-thinking-for-decision-makers/think-act-books/chinas-management-revolution/content.html
ply chain fits! The highly interesting new findings of an exclusive study conducted by
Roland Berger in collaboration with WHU Otto
Beisheim School of Management in Vallendar
near Koblenz, the Swiss Federal Institute of
Technology Zurich and Stanford University in
California show: The former cost killer is turning into profit driver! Best practice companies that rigorously segment their supply
chains and align them to product characteristics reap greater benefits than the market
in general. These companies generate twice
http://www.think-act.info/