Welcome to today s webinar How to achieve revenue growth from resource efficiency

Transcription

1 Welcome to today s webinar How to achieve revenue growth from resource efficiency Presenters Dr Greg Lavery, CEO of Lavery Pennell and lead author of the Next Manufacturing Revolution Tracey Rawling Church, Head of CSR, Kyocera Document Solutions (UK)

2 Revenue Growth from Resource Efficiency Dr Greg Lavery, Lavery Pennell 1 April 2014

3 About Lavery Pennell Strategy advisors assisting clients to substantially increase profits while becoming more sustainable. We bring top tier corporate strategy, engineering and subject matter experience Co-authored the Next Manufacturing Revolution report with the University of Cambridge s Institute for Manufacturing and 2degrees Clients our team has served include: 2

4 Four ways to use resource efficiency to increase revenues Most resource efficiency discussions consider energy, materials, waste, transport and packaging reduction as cost saving opportunities But leading sustainable companies also capture profitable revenue growth from resource efficiency They do this in four ways: 1. More efficient products 2. Lower footprint products 3. Servitisation 4. Reuse/sharing of products 3

5 1. More Efficient Products Product features: Lower resource (e.g. energy) consumption during in-use phase Example: Compact fluorescent and LED lights Fuel-efficient cars Customer value proposition: Saves the customer money over the life of the product Benefits for manufacturer: Grow market share and profits from sharing the additional value with customers 4

6 2. Lower Footprint Products Product features: Lower resource use embodied in the products Example: Produce grown locally Customer value proposition: Better for the planet and local economy at the same price Benefits for manufacturer: Greater market share as customers choose more sustainable products at the same price point Can reduce production and distribution costs 5

7 3. Servitisation Product features: Selling a service instead of a product Customer value proposition: Lower cost because manufacturer designs and maintains product for maximum output Reduced waste to manage Example: Selling finished coated area instead of paint Benefit for manufacturer: Greater customer loyalty Recurring service revenues Capture end-of-use product for reuse/recycling/remanufacture 6

8 4. Reuse/Sharing of Products Product features: Used by multiple users only when they need it Example: Zipcar Customer value proposition: Only pay for what they use Not have to own, store, maintain and insure products Benefit for manufacturer: Able to trial new products Brand exposure to many more customers Higher revenues (if continue to own the product) 7

9 These offerings drive greater revenue growth Compound annual growth rate Green Growth Premium 1 8% 7% 6% 5% 4% 3% 2% 1% 0% DuPont Dow POSCO P&G GE Akzo Nobel 0% 10% 20% 30% 40% 50% Green Portfolio as % Revenues (2011/2012) Philips Siemens Premia in range of 1-2% Note: (1) defined as average annual revenue growth rate for entire product portfolio average annual revenue growth rate for non- green portfolio Source: Company websites, Annual Reports and Sustainability Reports 8

10 Consider, for example, the rapid growth of servitisation Estimated Chemicals Management Services Market Size ($bn) Rolls-Royce TotalCare (share of total R-R engine fleet) $bn % CAGR % of fleet 60% 50% 40% 30% TotalCare is now used on 90% of new civil large engine aircraft 43% CAGR ~50% % 10% 0% 2% Sources: Chemicals Strategies Partnership, Chemicals Management Services Industry Reports 2000, 2004, 2009; Houses of Parliament, PostNote number 420, September 2012, Advanced Manufacturing. 9

11 Not all offerings are possible for all product types Product Types Food, beverage and tobacco 1. More Efficient Products 2. Lower Footprint Products 3. Servitisation 4. Re-Use & Sharing Textiles, apparel and leather products Wood, paper products and printing Chemicals and chemical products Pharmaceutical products Rubber, plastic and other non-metallic mineral products Basic metals and metal products Electrical, electronic and optical products Other machinery and equipment Transport equipment 10

12 More information: The Next Manufacturing Revolution report, available at Contact me at 11

13 REVENUE GROWTH FROM RESOURCE EFFICIENCY Tracey Rawling Church FRSA Head of CSR, Kyocera Document Solutions (UK) Ltd

14 CONVENTIONAL PRINTER CARTRIDGE RESOURCE INEFFICIENT BY DESIGN OVER 70 COMPONENTS, MANY DIFFERENT MATERIALS, HARD TO RECYCLE

15 REPLACING ALL THESE COMPONENTS EVERY TIME YOUR TONER RUNS OUT IS LIKE REPLACING YOUR CAR ENGINE EACH TIME THE FUEL RUNS OUT IT S EXPENSIVE

16 AND BECAUSE THEY ARE HARD TO RECYCLE, IT MEANS 47 MILLION CARTRIDGES ENOUGH TO COVER 17 FOOTBALL PITCHES GO TO LANDFILL IN THE UK ANNUALLY Source: UK Cartridge Recyclers Association

17 IN 1992, KYOCERA S USE OF AN INNOVATIVE, HIGHLY DURABLE DRUM MATERIAL ENABLED RESOURCE-EFFICIENT CARTRIDGE-FREE PRINTERS TO BE INTRODUCED

18 CONSU- MABLES CARBON FOOT- PRINT DOWN 55% TOTAL COST OVER 500,000 PAGES DOWN 54% WASTE DOWN BY UP TO 85% CONSU- MABLES COST DOWN TYPICALLY 50% Figures derived from independent analysis by : Buyers Lab International, Aston University, Best Foot Forward and TCP Global

19 80% OF PRODUCT IMPACTS ARE DETERMINED AT DESIGN STAGE Quote from The Design Council Presentation title 02/04/

20 INVESTMENT IN CONTINUOUS IMPROVEMENT New energy-saving controller reduces standby power consumption to below 1W Using white LEDs instead of a xenon lamp reduces power consumption by 80% Reducing the size of toner particles and making them more regular in shape not only reduces the amount of toner needed to create the image, but also cuts the heat needed to fuse them to the paper, reducing energy consumption by 15% 19

21 IT S NOT ALL ABOUT THE HARDWARE THINK PERFORMANCE, NOT PRODUCT 20

22 Presentation title 02/04/

23 ACTUAL CUSTOMER OUTCOMES Average downtime 2.8hrs

24 LOOKING ACTUAL FORWARD CUSTOMER RE- USE AND OUTCOMES RECOVERY Average downtime 2.8hrs PROJECT RECOVER AND UNBUILD EXPLORED THE POTENTIAL FOR IMPROVING RE-USE RATES FOR BOTH EQUIPMENT AND PARTS, AND BETTER MATERIALS RECOVERY

25 CONCLUSION - OPPORTUNITIES FOR REVENUE GROWTH FROM RESOURCE EFFICIENCY Design products to use fewer resources throughout their lifecycle, improving their cost of ownership while reducing the need for deep discounts Design products to use fewer resources in manufacture, reducing manufacturing costs Create new performance-business models that open up profitable new revenue streams Increase value that can be recovered from end of (first) life equipment and materials, turning WEEE compliance from a cost into a revenue opportunity

26 COMMERCIAL REALITIES RESOURCE-EFFICIENT DESIGN AND BUSINESS MODEL INNOVATION IS HELPING KYOCERA TO THRIVE IN A MATURE, COMPETITIVE AND PRICE-SENSITIVE MARKET

27 THANK YOU Tracey Rawling Church FRSA KYOCERA Document Solutions (UK) Ltd