Innovation Evaluation - Sime Darby - Fuji Xerox - Wall Mart And Hewlett Packard - Food Packaging Industry

Wall Mart and Hewlett Packard: Innovation in designing and packaging is indispensable component of modern day lifestyle. Furthermore, customers are also increasingly becoming aware of the importance of sustainable development to a healthy environment and robust economy. Producers, or manufacturers, are starting to minimize the environmental impact of their products by using more recycled materials and making them more efficient during use. More consumers are incorporating environmental considerations into their purchasing decisions and thinking more about how they dispose of a product when they no longer need it. Thus, one such report suggest that Global re-designing and environmental packaging industry sales touched over US$1,254 billion in 2006, up by 4.1 per cent in current terms from 2004. (Ahmed, Naser and Ahmed Salman, 2007). Walmart's Home Entertainment Design Challenge 2008 was open to all suppliers of consumer electronics products and three criteria were used to evaluate the submissions: Great design that attracts consumers, Product innovation that reduces the environmental impact for its product category and Packaging design that facilitates reuse and recycling, reduces waste, and reduces or eliminates the use of toxic materials. In accordance with its long-standing design strategy, HP (Hewlett-Packard), wins the challenge. HP, radically redesigned the packaging of the HP Pavilion notebook by replacing conventional protective shipping materials and boxes with the HP Protect Messenger Bag, a stylish and protective accessory with fabric made from 100 percent recycled materials. This allows for a dramatic reduction in overall packaging content and size while delivering equal, if not better, product protection when compared to conventional packaging. (CSR wire, 2008). This redesign packaging is available nearly 1,700 Walmart stores and 594 Sam's Club locations across the U.S. Moreover, HP notebook will be displayed on shelves wearing only the HP Protect Messenger Bag. Customers who purchase the HP notebook will leave the store with the computer and its accessories cushioned safely in the notebook bag. This makes it easier for consumers to make a more environmentally responsible choice for example, by removing the burden of disposing of the cardboard, foam or plastic typically found in consumer electronics packaging.

Product Design: Product Design is one of the most important non-price factors which determine the success of a product. The role of product design changes throughout the life-cycle of a product. In the initial product development stage, the role of design is to create a marketable product from an innovation. The product may create a need where none existed before, (for example when the Sony Walkman was introduced) or quite different products may be competing with others in the same market (for example trams, cars and buses compete for urban transport). As the product life cycle matures, more competitors enter the market and the chief role of design is in product differentiation; through quality, appearance, performance, ease to use, reliability, reparability and so on. In UK, studies of the return of investment in product design have been carried out by the Design Innovation Group of Open University and Manchester Institute of Science and Technology. One study showed that 'Design Conscious Firms' had a three per cent higher return on capital, one per cent higher profit margin, 28 per cent higher Turnover growth and a seven per cent higher capital growth than a representative sample. (Murray, 2005). Furthermore, in industrialized countries, the link between design of products and industrial competitiveness has increasingly been acknowledged by economists and policy makers themselves. For example in England two important reports stimulated debate into the important role of design in competitiveness. (The Corfield Report, 1979) on Product Design and the Finniston Report, (Engineering our Future, 1980). The reports suggested that Britain was declining industrially through loss of market share to other countries, especially Germany and Japan, both of which were renowned for the high quality and design of their products. The reports pointed to a cause being the UK's relative lack of investment in Research and Development and Product Design (Rua-design, 2004). Such has been the concern with the country's decline in the share of the world's manufactured products, that during the 1980s, the Conservative government significantly departed from their policy of reducing public spending when they funded a new initiative to directly subsidize product design within firms. (Rua-design, 2004). Critically, different cultures perceive and see various roles for design in a different way. For instance the UK is seen as having a more analytical and marketing approach to design, whereas in Japan, design is more concerned with what 'could be'; therefore in Japan design is seen as being more of a creative process.

Japanese management system is based on a replacement of the mass production system with a flexible specialisation system (JIT) Just–in– Time management. The mass production system emerged as the dominant mode of production in the last century through the realization of economies of scale through standardization of components and processes. The system has become increasingly obsolete due to the increasing volatility of markets which increases the cost of large inventories and a greater (continued)

demand for differentiated products. A further factor is that firms were traditionally seeking to reduce labor costs through the 'dumping down' of the labour force and the introduction of automation. This was causing labour unrest, whereas in Japan the emphasis was in using labour as a resource to be maximized. The basis of the new Japanese paradigm is in the reduction of product inventories. The system is based on the following eight points: -Reducing inventories in order to 'pull' production through the factory [In contrast, in a mass production system,

production is maximized in order to optimize machine use]. -Making quality a responsibility of every worker at every stage of production – in order to reduce reworking and reduce inventories. -Having a cellular production system rather than a linear production system. - Reducing batch size. - Reducing the changeover time for machinery through a flexible labour system whereby workers are given the responsibility of intervening in production and are trained in multiple tasks -Optimization on a system wide basis rather than at an individual plant, worker or machine level - Closer co-operation between the company and its suppliers. - Making change continuous. In a case study of Mauritius, World Bank has highlighted important role of design. Bank concluded that there has been downward pressure on wages since companies profit margins have been reduced by international competition after markets were liberalized. The bank suggests that investment in product design will upgrade products, increase workforce productivity thereby maintain or increase both profit margins and wage rates. Therefore, in developing industrial strategies, the role of product design must be seen as an important element for success. Developing countries need to invest in improving the quality and design of their products in order to remain internationally competitive. There exists the opportunity to create new employment and provide products which meet the needs of people in developing countries through product design. Therefore capacity needs to be developed in order to educate a body of designers who understand the role and process of design in the development of individual companies' products for both domestic and export markets.

Green Advantage: Building construction and motor vehicles are two high profile industry sectors where companies are utilising (DfE) Design for Environment Strategies (Table-1), to incorporate eco-efficiency principles into their product development processes, thereby strategically reducing the environmental impact of a product or service over its entire life cycle, from manufacture to disposal. Companies that are incorporating DfE are at the forefront of innovative business management in Australia for example. As the link between business success and environmental protection becomes clearer. Companies have the opportunity to improve business practices to be more competitive in a global economy and increase their longevity. As every organisation's operations are different, so too are the strategies and tools that may be used to achieve greater eco-efficiency. A suite of suitable tools is available to increase company's ecoefficiency that includes: DfE, environmental management systems, product stewardship programs, public environmental reporting, environmental auditing, environmental accounting and supply chain management. DfE is a critical tool for manufacturers wishing to become more eco-efficient. (Environment Australia, 2001). Table -1: DfE Strategies

Source: Environment Australia, (2001), “Product Innovation the Green Advantage: An Introduction to Design for Environment for Australian Business”, Retrieved from http://www.environment.gov.au/settlements/industry/finance/publications/producer.html Viewed at 12th Oct 2008

Food Packaging Industry: West European and Asian markets sales driven by increased demand for both healthy and easy-to-prepare packaged food, and premium and indulgent brands in staple sectors such as dairy and bakery products. The key trends fostering growth in developed packaged food markets are convenience, functionality and indulgence. The most successful new product developments suggest increasing consumer demand. Convenient, portable, easy-to-prepare meal solutions that lessen the hassles of time-starved modern urban life and the inevitable limitations on food preparation and shopping time that distress consumers (Euromonitor, 2004). The real value of packaging is that the package is an integral part of the product, while corporate functions divide the component parts, the consumer does not differentiate between the product, the package and the equity, they are one. The package is the product delivery system it’s also a communication device providing details about the product, including price, contents, ingredients and nutritional value as well as cooking instructions and recommended use by dates. (Richmond, 2004). Moreover, author suggest that consumers are more likely to stimulate the aspects of how a product looks, tastes, feels, smells, or sounds while they are viewing a product picture on the package. (Underwood, 2001). Hence this necessitates R&D for designing and re-designing the product and package delivery system in today’s organization to meet customer’s increasingly diverse demands and customer retention while exploring potential customers. However, food-marketing systems from varying cultures, one must consider the political, economic, cultural, and environmental aspects of the countries involved. In addition, for the food industry to improve further, it needs to adopt the best practices. In particular, more food companies should think of using self-assessment as a method for recognizing improvement opportunities and evaluating their progress towards business excellence. Moreover, while going for product innovation, some critical success factors must be taken into account. Furthermore, the objective of all quality assurance systems exercised by food manufacturers and processors is to produce safe products, which comply manufacturer’s specifications, including the requirements established by governments. On the top of that, the companies that are the most progressive in the management of the supply chain are expected to be the most successful and profitable. Last but not least, companies should look forward to emerging trends for business success. Failure to do so will result in companies being overtaken by events and their competitors. All these critical issues must be observed in packaged food business whether going for successful venture from scratch or trying to improve overall business performance of existing ones.

Fuji Xerox Re-manufacturing Strategy: Fuji Xerox's global benchmark operation in the re-manufacture of office machines, parts and development of new re- manufacturing technology and programs. Remanufacturing is the process of restoring used products to ‘as new' condition through refurbishment and partial rebuilding. Furthermore, remanufactured product will serve the same function and be of the same quality as a new product. However, it takes far fewer resources to remanufacture a product than to produce a new one (Xerox, 2008). Achieving reduced costs for materials, energy and waste disposal through the prolonged life of their products. These cost benefits also directly translate into environmental benefits through reduced demand for raw materials, reduced energy consumption and less waste being sent to landfill. Benefits including. • • •

Increased profitability return, to date, of $26 million on a $2 million investment; Increased design expertise; and New markets, serving in Asia Pacific, part of worldwide network of re-manufacturing facilities. (Xerox, 2008)

Benefits for customers including: • •

Significant savings on the price of a new machine or part. Upgraded machines with the same warranty as new machines (remanufacturing operations are certified to ISO 9001 and ISO 9002, which ensure performance and quality are maintained at a world-leading standard. (Xerox, 2008)

Broader Benefits: • • •

Value-added export potential and reduced imports remanufacturing activities now supply over 60% Globally. Increased in local employment and labour force skills. Reduced pollution and volume of waste to landfill. For example in 1997, more than 2 600 machines and 28 000 cartridges were re-manufactured, reducing waste to landfill by 600 000 kilograms; and 90 per cent of all waste generated by the remanufacturing process is recycled. (Xerox, 2008)

Sime Darby: Forest products require processing before markets will buy them. Forest processing industries have developed around existing natural forests or large plantation forests and there are limited market openings for small forest growers in Malaysia. One strategy is for forest growers and plantation for example SIME Darby to process timber on-site at the time of harvesting. On-site processing of farm-grown timber has been suggested as a means of overcoming marketing difficulties experienced by SIME Darby poor timber quality, and inaccessibility of some farm forest plantings for commercial harvesting. Sime Darby introduces innovative product processing portable saw-milling. The advantages are as under: Table -2 Table – 2: Advantages of Portable Saw-milling

Source: Rural Industries Research, (1999) , “Designing Blue Gum Alley Farms”, Retrieved from http://www.rirdc.gov.au/pub/shortreps/sr99.html Viewed at 15th Oct 2008

Nevertheless, portable sawmills have a number of disadvantages, including relatively low productivity, high labour intensity, and a requirement for heavy lifting at or close to ground level. In addition, the working environment may not be comfortable with best industry practice for occupational health and safety. In Netherlands, the packaging industry from retailer to raw packaging material manufacturer and from branded goods manufacturer to packaging equipment supplier employs about 150.000 people. Every Euro spent on packaging material, contributes to about 13 Euros of added value of the packaged product at the packer-filler companies. Furthermore, NVC stimulates knowledge development through projects on multiple subjects. Examples are RFID, in Gillette innovative packaging in Supply Chain Management, sustainability decrease the labour activities and traceability. (WPO, 2008) NVC (Netherlands Packaging Centre) chairs the National Standardization Committee “Packaging”. Through this committee the Netherlands participates in the development of the European (CEN) and worldwide (ISO) standards on packaging.

Examples are the testing of packaging, hygiene and environmental friendly packaging and the use of RFID. Moreover, accessible design is designing packaging in a way that the packaging is also accessible for people with limited functions, for example blind persons, children, elderly people, people with limited strength in their hands, or in fact everyone who is ‘not standard’. In Japan a lot of progress has been made by the Japan Packaging Institute (JPI). The NVC and JPI are working closely together to develop worldwide standards (ISO) on the accessible design of packaging (NVC, 2008).

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