California Zero Net Energy Program: Part 2

By tchenwa | Published: September 23, 2016 – 4:38 pm

The California Zero Net Energy program discussed in the previous post will have a significant impact on new construction. The average residential electric power usage in the State of California is 6,741 kWh per year (U.S. Energy Information Administration) or 18.5 kWh per day on average. Presumably a residential home will generate electric power using a PV (solar) system. The average PV system is rated at 5 kWh (approximately 400 SFT of solar panels). This would appear to be sufficient to offset any usage but depending upon PV module efficiency, which will vary with time of day and weather, the electric power produced will be significantly less than rated. The difference will have to be made up through energy efficiency and the shifting of usage from the time of day with peak loads (e.g. evening) to time of day with peak generation (e.g. mid-day). I would think that from an electric utility perspective, electricity available at 7pm to 10pm during peak usage will be worth a lot more than electricity available at 12:00 noon. Time of day rates may become the norm. TC

California Zero Net Energy Program

By tchenwa | Published: September 16, 2016 – 1:56 pm

I recently read an article about the California Zero Net Energy program whose stated goal is that all new residential construction in California will be zero net energy by 2020. All new commercial construction will be zero net energy by 2030. Zero Net Energy (ZNE) is defined to be that the building will produce as much energy as the building uses over a one year period. This goal will be achieved through a high level of energy efficiency and through the addition of clean, on-site renewable power generation, presumably solar PV. Wow … The implications are dramatic for both the home owner and the electric utilities that service the building. As we discussed in previous posts, the electric utility distribution networks have been designed over the last 100 years or so to be a one-way street. The regulated electric utilities built huge electric power generating plants that transmitted the electric power through a network of power transmission lines at ever decreasing voltage levels until the power arrives at the home at typically 120VAC or 240VAC. Balancing the power requirements for the service territory is the support base provided by the large electric power generation capability augmented with “standby” generators for peak loads. A fairly predictable power distribution model. What happens when a significant share of the end electric power user base becomes at times a power generator? Is the sun shinning in Los Angeles but Santa Barbara is overcast? (FYI Santa Barbara is northwest of LA along the Pacific coast). The source of the electric power generation becomes highly volatile and variable. More information can be found on the ZNE web site www.CaliforniaZNEhomes.com . TC

"Partners in Wealth – The ins and outs of collaboration"

By tchenwa | Published: February 10, 2006 – 11:19 pm

“Partners in Wealth – The ins and outs of collaboration” (The Economist, January 21st-27th 2006) is the title of an article that I found very intriguing. This article was part of a section in that issue of The Economist entitled “The new organization”.

The article quotes from a paper entitled “The Strategic Enterprise: Rethinking the Design of Complex Organizations” by Mercer Delta. In the paper is a description of “… its vision of the organizational architecture of the future, made up of a number of strategically aligned business ‘linked closely where there are opportunities to create value by leveraging shared capabilities, but only loosely where the greater value lies in differentiated focus.’ In other words, close and loose relationships will exist within the same organization.”

I believe that the point is that the differentiation between “We” (those of us within the organization) and “Them” (those outside our organization such as suppliers, vendors, customers(?), …) has become blurred.

“One of the most contentious of these new relationships is outsourcing – the handing over to others of what were once considered to be core functions of the company.”

The article makes the point that outsourcing is a fluid activity … that what makes business sense today, may not make business sense tomorrow. At sometime in the future, it may make strategic business sense to bring that particular function back in-house. The example that the article gives is the handling of payment processing. This activity would appear to be a natural choice for outsourcing to a low cost labor market. Apparently banks have begun to realize that by outsourcing this activity, they have given up a valuable information source. With available data mining applications, they have discovered that they are able to identify new products and/ or markets.

The example that the article gives for these “close and loose” organizational structures is the design by Boeing of their new 787 model. In a break from past aircraft development projects where the entire design work was performed in-house, Boeing is designing this aircraft with the active participation of its 787 partners in the design process. “The main reason to change, says Mike Blair, head of the 787 development team, was that the company realized it had to trawl the world and find the best suppliers in order to compete with its main rival in the market for commercial aircraft, … it scoured the globe for new partners … some in Europe, some in Japan … in the United States.” The company significantly reduced the number “partners” from previous aircraft development projects and asked “partners (to) share the responsibility for a project.” Each partner is “responsible for all aspects of their piece of the puzzle.” “As Mr. Blair says, ‘it puts a high premium on the choice of partners in the first place.’ “

In summary, I believe the implications are that organizations must remain flexible, constantly reforming the teams that will tackle each business opportunity with the team members (both internal and external partners) that provide the best value to the customer.

Globalization – Where clients get the most value!

By tchenwa | Published: December 12, 2005 – 6:03 pm

I read two articles recently in two different publications that refined the concept of globalization.

The Rise of Central Europe – Deep reserves of educated, ambitious, and affordable workers are driving the region (Business Week – December 12, 2005).

The rise of nearshoring – Ex-communist Europe is grabbing a lucrative niche in the global outsourcing business (The Economist – December 3rd-9th 2005).

First some data (Business Week):

Country

Factory Worker

Engineer

Accountant

Middle Manager

Poland

$3.07

$4.32

$4.03

$6.69

Czech Republic

2.81

5.38

4.10

6.81

Bulgaria

0.73

1.43

0.83

2.80

China

0.80

3.50

3.20

4.42

India

0.43

2.40

1.93

3.13

Germany

18.80

38.90

26.40

40.40

Data: Compiled by Ariba Inc. using national sources

On the surface, one would assume that the price advantages offered by the China/ India competition would overwhelm any attempt by the East European countries to compete in an open market. After all, I occasionally tell of my personal experience while working for a large multi-national U.S. corporation in a fabrication facility in Brazil. The facility was manufacturing products that originated in a U.S. facility, subsequently were moved to Scotland, then to Brazil. The Brazilian facility eventually lost the business to a facility in India because the Brazilian factory workers were paid US$1 per hour and the Indian factory workers were paid US$0.25!

How do you compete?? Proximity … leverage the fact that your are;
  • Physically close,
  • Perhaps a member of or soon to be member of the European Union,
  • Have employees that are fluent in German, French, Italian, Spanish, etc.

In fact these countries are starting to see investments not only from western companies, but from companies based in China, India and Turkey that seek access to the European Union market.

What are the challenges?? Most are hold over’s from the communist controlled economy mentality;

  • Stifling bureaucracy, corruption, etc.
  • Lack of investment in infrastructure, higher education, etc.
  • Complacency (don’t worry we will get it right eventually!)
  • Shallow talent pool (e.g. middle managers with customer/ quality focus, …)
The key is does your company offer the best value to your customers??

Definition of Globalization

By tchenwa | Published: December 6, 2005 – 10:11 pm

A definition that is given for the term “Globalization” is demand seeking the most cost efficient resource.

I believe that cost efficient does not necessarily mean the lowest $$ purchase price. In addition to the obvious other costs of shipping expense, importation expense, handling … are the difficult to measure; product quality consistency, delivery consistency, engineering support.

Product Quality Consistency: As an OEM integrator, you would like every component product that is provided to be of equal to or better than, the First Article samples provided for qualification. Anything less impacts your integration manufacturing process, decreasing yields, adding rework expenses. Incoming inspection is the traditional approach to reducing the impact. The better approach which controls WIP (Work In Process) levels and Quality Control costs is to select suppliers dedicated to providing high quality products. (Note that I do not use the concept Quality Assurance. I believe Quality Assurance is total project activity, from the beginning engineering design, to vendor audits, to integration manufacturing audits).

Delivery Consistency: Any OEM integrator that competes in a competitive market employs Just-In-Time materials management principles. WIP inventory represents cash investment, cash costs $$ money. Suppliers must be selected that;
1) Have the capability to be integrated into your materials requirements planning system and have their own systems in place to assure the timely reflection into their materials requirements planning system of all your requirements changes. Give up on the idea of a “Firm Production Schedule” that covers full leadtime. The existence of these schedules are a myth. The only reasonably firm schedule is booked customer orders.
2) Have the quality systems in place to assure consistent yields.

Engineering Support: The manufacturing engineering, industrial engineering, quality engineering resource must be available to handle and resolve the day to day process issues. Nothing continues to work forever without some attention!

In summary, cost efficient does not necessarily mean cheapest.

New competitor??

By tchenwa | Published: November 30, 2005 – 8:43 pm

I recently read an article in The Economist – Israel‘s technology industry – Punching above its weight (November 12th-18th, 2005). The article begins by making the statement that “… Israel is second only to Canada in the number of companies listed on the NASDAQ, and (that) the country attracts twice the number of venture-capital investments as the whole of Europe, …”. Several reasons are given for the development of their technology industries, the most intriguing is the army. According to the article, universal conscription has allowed the army to select those individuals that “… have a glimmer of potential, catalyses(ing) their transformation into engineers or scientists”. After their service in the army, these individuals arrive at university with “… practical experience and a problem-solving mentality.”

Israel has 135 engineers per 10,000 employees, compared to 70 in America, 65 in Japan, and 28 in Britain.” “Tech giants such as IBM, Motorola and Cisco have research centers in Israel, which is also where Intel developed its Centrino chip.”

New competitor!? Apparently not … apparently they have been there for some time.

Shift in market

By tchenwa | Published: November 18, 2005 – 12:18 am

I was struck with a “wow” moment the other day when my wife got on the Internet to listen to a “real time” pod cast of a public radio program she likes from Houston, Texas (we live in the northwest of the United States). I realized that the Houston radio station has essentially expanded their radio audience beyond the reach of their physical radio signal, essentially to anywhere accessible through the Internet. Since their market has expanded, what is/ will be the potential impact to their approach to fund raising, advertisements, programming, etc.

This is an example of how technology has eliminated a limitation to their business market. Formerly in order to expand, a radio station business would have had to purchase another radio station in a different geographical area and/or their radio frequency license. This process is an expensive and time consuming effort.

Certainly, I have used the Internet as a marketing/ sales tool. However, since our firm markets and sells physical product, we are unable to deliver our product through the relatively inexpensive Internet medium as the radio station has accomplished. Is there more that can be accomplished that I have failed to see?? Where is that Star Trek “transporter technology”??

Strange Partnerships

By tchenwa | Published: October 18, 2005 – 6:32 pm

This morning I read an interesting newspaper article relating to globalization in The Seattle Times (October 18, 2005) – Parent of Airbus to build portion of 787’s fuselage by Dominic Gates, Seattle Times aerospace reporter. The gist of the story is that European Aeronautic Defence & Space (EADS), the company that owns 80% of Airbus, will build a major portion of the rear fuselage for Boeing’s future 787 Dreamliner. If you follow at any level the global commercial aircraft industry, you are aware that Boeing and Airbus are fierce competitors.

The way the story unfolds is that Boeing outsourced the entire rear fuselage to Texas, USA based Vought Aircraft Industries. Yesterday, Vought released a list of their second-tier suppliers which included the EADS role.

The Boeing spokeswoman was quoted as saying “it’s one of ‘the ironies of life’ in the new global manufacturing market that the parent of Boeing’s nemesis is now a partner on Boeing’s newest jet. But Boeing doesn’t have an issue with that outcome …”

It would appear that the goal of achieving greater efficiency and productivity in the manufacturing process, won out over politics and nationalism. As the saying goes … the proof will be in the pudding … hopefully, the global partnership will work from the first aircraft through to 100th, 200th, etc.

TIC

Other Resources

By tchenwa | Published: October 12, 2005 – 7:26 pm

I am not sure where I have been, but I just became aware of search engines for BLOGs. The Blogging program I use (www.blogger.com) has a modest search function which identified several Blogs relating to the topic of globalization. The Blog which caught my eye is Outsourcing/Offshoring Information and Resources. This site provides links to other online resources. Though I have not had a chance to explore these links … the descriptions sound interesting.

I also read an article in the current edition of The Economist. There are several other Blog search engines which are mentioned in the article … Technorati, IceRocket, DayPop, Bloglines.

So what does this have to do with globalization? Low cost region outsourcing??

Just another example of the astonishing amount of information (good and bad, true and not true, …) available on the Internet.

The Angst Associated with LCR Sourcing

By tchenwa | Published: September 2, 2005 – 9:56 pm

I have been reading many articles, as I am sure everyone else has, about the difficulties, negative impact, angst that has result from the upsurge in Low Cost Region (China, India, etc.) sourcing of products. To paraphrase a laid off manufacturing worker in Ohio, she “blames consumers like herself for wanting cheap foreign goods”. This movement is no longer just impacting the hourly production worker, but has begun to have an effect on highly skilled service workers such as programmers and financial analysts. Yesterday, my wife was telling me how her hair stylist has decided to have some needed dental work performed in Mexico for 20% of the price it would cost here in the Northwest USA. Imagine dental work plus a vacation in Mexico for less than the price in the USA!!

I personally do not see myself or my fellow Americans changing our desire for bargains (quality products at inexpensive prices), do you??

How does a business survive and prosper in this type of business reality??

I am not a proponent of “bury your head and hope LCR competition does not affect the business”!

I suggest that the business aggressively adopt several strategies:

1) Out source non-core sub assemblies, manufacturing, business processes to improve margins and/or starve the competition. Focus the business on its core competencies.

2) Step up internal innovation development to stay abreast or slightly ahead of the market (not to far ahead, remember the old adage “the leader takes the most arrows!”).

3) Establish a “brand” for your product, an image that entitles your product to be worth premium pricing in the market.

· Perceived superior quality (e.g. Lexus,… )

· Superior customer service (e.g. Whole Earth grocery stores, …)

· Leading edge technology (e.g. Google, …)

· Life style image (e.g. Coca Cola, )

I do not believe that doing nothing is a reasonable approach for your employees, business and customers.