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More Resources, More Problems

Danielle Beurteaux

This is the second of a two-part series on resource volatility. As noted in the first post, globalization has created an environment of resource volatility. This post, with numbers 11 through 20 on the list, describes resources that are more stable than the previous 10. However, that doesn’t mean there isn’t turmoil, whether that’s environmental concerns in Indonesia’s palm oil production industry, or community organization for water rights in Chile. And, of course, whatever China does, the markets follow.

Top resources and trends

11. Natural Gas

According to the International Energy Agency, most natural gas comes from Russia, the United States, Canada, Qatar, and Iran, and the countries that use the most are the U.S., Russia, China, and Iran. There are sufficient reserves of natural gas, again according to the IEA’s projections, that should last past the year 2040. Liquefied natural gas, which is produced mostly by Qatar, with Australia set to overtake Malaysia for second place, has had a flat market recently. There isn’t the demand to keep up with increased production, so liquefied natural gas producers are looking for new markets, like cruise lines, to grow demand.

12. Tin

Most of the world’s tin comes from China and Indonesia. The tin market tanked last year because of less demand and lots of tin, although it did rally in July and then improve earlier this year, mostly because Indonesia is exporting less and easing the flood of tin on the market.

13. Gold

It seems like everyone’s crazy for gold right now. The precious metal is often perceived as a safer investment than other asset classes, and it’s up 20% this year. Famed investor George Soros just bought $264 million worth of shares in Barrick Gold. The Toronto-based gold-mining company is the world’s largest. Gold prices bumped down a bit while the market waited on the Federal Reserve’s meeting minutes, but some are saying gold will soon recover – and then some.

14. Nickel

Russia, Canada, and New Caledonia are the largest producers of nickel. Most is used to make stainless steel. Like several other commodities we’ve examined, there is more production than demand of nickel at the moment, which has led to depressed prices. China is a big consumer of nickel for stainless steel, and the country is using less because of a slowing real estate market.

15. Beef

The global demand for beef is up, but production is down due to a variety of factors. One is Australia’s decreased production due to drought conditions, which will mean 300,000 tons less beef for export this year. As Australia is a favored trading partner of the U.S., that will affect the American beef market. A recent study from Radobank predicts that China will increase live cattle imports for domestic processing, and Brazil will enter the U.S. market as well.

16. Wheat

It’s a good year for wheat. North American wheat production is doing well, although levels are down from the previous year, with five percent less planted in the U.S. and six percent less in Canada. According to the most recent USDA World Agricultural Supply and Demand Estimates report, total U.S. wheat supplies and use are up six percent and seven percent, respectively. Globally, the report projects a two percent increase in wheat supplies, and consumption will increase, too.

17. Iron Ore

Earlier this year, the iron ore market jumped, reportedly because of the Chinese government’s moves to help along the country’s economy. Things have settled down since then, with recent trading sending the per ton price downwards 22.9% from its high in April, which seems to be due to China’s increased crude steel production and also the government’s stopping speculative trading. They’ve also committed to transportation infrastructure projects, but there is still too much iron ore compared to demand.

18. Copper

As with iron ore, China’s announcement that it would be investing in transportation infrastructure affected the price of copper recently. This is likely a welcome piece of news, as copper had been trading at the lowest levels since March 2009. Output and demand are both projected for small increases this year. Chile has the largest open pit mine and the largest global reserves of copper, but it’s been facing difficulties in recent years including lack of water, which is essential for mining, and local community resistance.

19. Palm oil

Palm oil is a global big business to the tune of $50 billion, which is projected to increase to $88 billion by 2020. It’s in almost everything these days because it’s inexpensive, stable, and can be used for many applications. (It’s not always listed on ingredient labels as palm oil).  Most is produced in Malaysia. It’s also a bête noire of environmentalists – it’s linked to deforestation, the recent massive forest fires in Indonesia which were set, it’s thought, to clear land for plantations, and lost habitat for orangutans and increased worries about their extinction.

20. Aluminum

Aluminum rose overall in 2015, but took a dive in the last few months of the year. Market-watchers are hoping that China’s announcement that it will reduce aluminum output will help energize the market once oversupply is balanced. But one of the world’s biggest producers, Alcoa, is reorganizing, which could be an indication that the company is preparing for an era of depressed prices, despite continued healthy demand.

Digital transformation is affecting different industries at different speeds and on different scales. IDC reveals how in The Internet of Things and Digital Transformation: A Tale of Four Industries.

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Is This Winning Business Formula The Greatest Thing Since Sliced Bread?

John Ward

Sometimes lasting success starts off with one really, really good idea.

That’s the case with the Hansaloy Corporation of Davenport, Iowa. In fact, this family-owned business is based on what is perhaps the granddaddy of all great ideas: sliced bread. Hansaloy began making the specialized knife blades used in automatic bread-slicing machines back in 1933. Today, the company is still an industry leader. Its loyal customer base includes large wholesale bakers around the globe.

Yet Hansaloy remains a modest-sized company of only about 60 employees.

How does a small manufacturing company maintain this kind of business success? Hansaloy’s president, Kim Brenner, is happy to share a few of their secrets.

Stick to purpose-driven design

“First, we make sure we fully understand the needs of our customers,” says Brenner. “Each of our blade edges is designed with consideration for the type of crust, texture, and grain of the breads being sliced.”

These razor-sharp blades utilize proprietary steel alloys that produce very consistent slicing and excellent product cycle life. “Our blades are extremely sharp and extremely strong,” Brenner says. “Our technology continues to set us apart from the competition.”

Stay flexible

Hansaloy has also redesigned its manufacturing operations over time to better support the company’s evolving business model. As Brenner explains, the company’s global business is now essentially split equally between two major markets.

For domestic accounts, Hansaloy usually builds-to-order and ships the blades directly to the end user in custom package sizes. Customers in foreign countries, on the other hand, are typically served through local distributors who order stock in bulk, maintain inventory, and handle the final shipments.

Products for both markets are made at Hansaloy’s single manufacturing location. “We need to stay flexible,” Brenner explains. “And our current manufacturing systems and processes allow us to quickly accommodate changes in product specs, bill of material, packaging, or routing as new requirements come up.”

Partner for success

Though the customized business systems that Hansaloy had been using in the past once served them well, these aging solutions were beyond their support cycle and not adaptable to changes in manufacturing. Hansaloy reached out to CONTAX Inc. – a global consulting services provider with local offices right in Davenport – to help find a more standardized and sustainable solution.

Establishing this strategic partnership was yet another good idea. “A business transformation project is never just about technology,” says Corey Herchenroder, a Director at CONTAX. “It is also about the process, the business, and the collaboration.”

Together, the Hansaloy and CONTAX teams rolled out an ERP platform designed specifically for small to midsized industrial manufacturing companies to improve production planning, scheduling, and control.

Hansaloy once spent considerable time on tasks such as tracking small components and manually cross-referencing the production and material information to a customer’s shipment. “Now, instead of using an array of user-specific spreadsheets and filing systems, we can focus on the overall process and manage what’s most important,” Brenner says.

Find the right combination

It usually takes more than one good idea to achieve sustainable business success – especially when you’re a small or midsize manufacturing company.

Hansaloy seems to have found a winning formula: Combine superior product technology with agile manufacturing practices and strategic partnerships.

Why, that idea could be the greatest thing since . . . well, you know.

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Leading In Digital Manufacturing: Overcoming Challenges In A Time Of Automotive Disruption

William Newman

Today’s manufacturing leader is confounded by a modern-day “who moved my cheese” dilemma. As automakers increasingly move from traditional personal vehicle sales – what you and I buy today and drive and keep in our garage overnight – to a more robust set of rideshare vehicles and autonomous “living spaces” that are constantly in use in a large population fleet – complexities arise around not only what to make but also how and when to make. In fact, data suggests that those personal vehicle sales will account for only two percent growth from now until 2030 (McKinsey, 2016). Where will the new revenue come from? All the digital services that you and I will consume while we rideshare and transit in our mobile living spaces – to the tune of $1.5 trillion in consumer services.

This leaves manufacturing leaders with a dilemma. As traditional business models of personal vehicle sales (i.e, OEMs sell a vehicle to you, and you own and operate it) and their associated value chains continue to be a significant but stagnant growth market, emerging business models and those new digital services and value chains will account for the lion’s share of 50x industry growth in digital services and transportation – and ultimately the future of Automotive 4.0 companies. While we are in this transition, manufacturing leaders will need to maintain their profitability in current business operations while ramping up and capturing those new digital markets. Specifically, manufacturing leaders that thrive and survive will need to be quick and agile at determining what to make, how to make it, and when to make it. But how does a manufacturing leader transform its operations?

modes of automotive manufacturing

We need to go back over 100 years to understand this long structural change in automotive manufacturing. In the early years of the industry, expert craftsmen built vehicles by hand and created modern luxury machines. This represented Mode 0 manufacturing, with a lack of automation. With automation in the 1960s and 1970s came Mode 1 manufacturing, whereby machines and tools were automated to perform tasks based on operator programs. Today, new concepts in machine learning, artificial intelligence (AI), and predictive processes present manufacturing leaders with new complexities – and opportunities – to move from Mode 1 manufacturing to Mode 2 operating models and processes. This represents a natural progression from original manual operations and work tasks to taking advantage of advances in technology, integration, and Big Data.

This enables manufacturers to consider a brand new operating model of what to build, how to build, and when to build that were never before possible. As automotive manufacturers move to Mode 2 operations and address vehicle-market opportunities that the new automotive market offers, manufacturing leaders also must consider the current revenue market during the shift. The ability to operate in a “bimodal” manufacturing environment allows carmakers and suppliers to build vastly different components and assemblies within a confined, integrated, and flexible environment.

Mode 2 manufacturers can create standard-capability vehicles alongside those completely outfitted for ridesharing and digital services. Additive manufacturing allows 3-D printed tooling to build plastic parts as and where needed, reducing vendor-managed inventories, production constraints, and bottlenecks.

difference between mode 1 and mode 2

As the need to maintain current production volumes remains while traditional automotive vehicles give way to more advanced transportation, connected vehicle automakers and suppliers are creating bimodal manufacturing capabilities. Both Mode 1 and Mode 2 manufacturing capabilities coexist, driving manufacturing executives to manage assets, processes, and talent flexibly with greater plant integration.

Today, leading Mode 2 automotive manufacturers are taking advantage of flexible, intelligent operating models to drive profit and increase competitiveness while taking advantage of new market opportunities in the rideshare, electrification, and connected vehicle segments. But why change? Perhaps Harvard Business School’s Clayton Christensen – who introduced the theory of disruptive innovation 20 years ago – says it best: “The incumbent leaders never see it coming. They focus on their best customers and try to provide what they need [today]” versus what the market needs to deliver tomorrow.

For manufacturing leaders, it will indeed be a wild ride until 2030 and beyond.

Learn more about the changing nature of vehicle ownership in Enter The Digital Consumer, Driver, Services Buyer.

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William Newman

About William Newman

William Newman is a Strategic Industry Advisor, providing industry perspective, strategic solution advice, and thought leadership to support SAP automotive and discrete industry customers and their co-innovation programs. He helps build and maintain SAP's leadership position in the automotive industry and associated industry segments. He manages SAP’s annual digital aftermarket survey program and serves as the ASUG Point of Contact for the NA Automotive SIG. He is the author of two SAP Press books and a LinkedIn Editor’s Choice contributor.

Taking Learning Back to School

Dan Wellers

 

Denmark spends most GDP on labor market programs at 3.3%.
The U.S. spends only 0.1% of it’s GDP on adult education and workforce retraining.
The number of post-secondary vocational and training institutions in China more than doubled from 2000 to 2014.
47% of U.S. jobs are at risk for automation.

Our overarching approach to education is top down, inflexible, and front loaded in life, and does not encourage collaboration.

Smartphone apps that gamify learning or deliver lessons in small bits of free time can be effective tools for teaching. However, they don’t address the more pressing issue that the future is digital and those whose skills are outmoded will be left behind.

Many companies have a history of effective partnerships with local schools to expand their talent pool, but these efforts are not designed to change overall systems of learning.


The Question We Must Answer

What will we do when digitization, automation, and artificial intelligence eject vast numbers of people from their current jobs, and they lack the skills needed to find new ones?

Solutions could include:

  • National and multinational adult education programs
  • Greater investment in technical and vocational schools
  • Increased emphasis on apprenticeships
  • Tax incentives for initiatives proven to close skills gaps

We need a broad, systemic approach that breaks businesses, schools, governments, and other organizations that target adult learners out of their silos so they can work together. Chief learning officers (CLOs) can spearhead this approach by working together to create goals, benchmarks, and strategy.

Advancing the field of learning will help every business compete in an increasingly global economy with a tight market for skills. More than this, it will mitigate the workplace risks and challenges inherent in the digital economy, thus positively influencing the future of business itself.


Download the executive brief Taking Learning Back to School.


Read the full article The Future of Learning – Keeping up With The Digital Economy

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About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

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Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte


Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.

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