In the final week leading up to the Sustainable Brands Innovation Open (SBIO) finals on June 5th, where the runner-up will be decided via live online public vote, we will feature daily articles introducing our semi-finalists. Today, meet Efficiency Exchange.
Efficieny Exchange (EEx) is an organization dedicated to assisting companies overcome the challenges of building efficient and sustainable global supply chains. Specifically, its goal is to reduce risks within supply chains by starting at the bottom, with factories, by providing easy-to-use, customized tools for factory workers.
While the overall goal of EEx is to comprehensively address compliance issues, the team is first focusing on increasing energy efficiency within global supply chains. To that end, EEx chose China as its first geographic focus for EEx Charge, its new online tool designed to help factories save money on utility costs by increasing efficiency. This was a logical choice for the company because of the large number of multinational firms that rely on production from Chinese factories. In fact, approximately seven million factories produce many of the world's consumer goods in the country. Founder and CEO Taryn Sullivan also has extensive experience working with suppliers in the region thanks to her previous career and is fluent in Mandarin, having learned the language throughout high school and college.
EEx Charge comes equipped with reference materials and step-by-step assistance for “everything from entering an electricity bill to examining a transformer.” The product also allows suppliers to pinpoint exactly where they can save costs, increasing the incentive for factory managers to implement changes.
“In the past, little attention was paid to energy costs, but as systems become increasingly more automated to reduce labor costs, energy costs have been rising significantly and are becoming a serious area of concern for companies,” says Sullivan.
Before founding EEx, Sullivan spent several years working in supply chain management for various retailers, and working directly with factories all over the world. She realized there was significant room for improvement within supply chains, as a result of “poor communication and a failure to understand how factories really operate.” She particularly noticed the need to improve the auditing process.
“Audits may find out what problems are occurring within factories, but unfortunately they do not fix them and frequently do not produce sustainable changes in operations,” she says. In addition, audits are not only expensive, they do not track continuous progress, nor do they provide the tools necessary for workers to find solutions.
As a result, no formal training or extensive paperwork is required for using EEx Charge, as training and analysis has been built into the tool. Also, on top of generating reports, the app provides specific recommendations to its users and tracks future progress.
Furthermore, the fact that the product is digital reduces costs instantly for users.
“Charge is hosted and doesn't require installation, local hardware, support contracts, or anything customers might expect from a big ERP system from a traditional vendor,” says Sullivan.
She also notes that there is a major shortage of trained energy managers in China, which exacerbates energy inefficiencies within the supply chain. Therefore, energy management training is embedded into the EEx Charge app so factories can learn about these issues when it is most relevant to them — when problems arise everyday — rather than just in a classroom during periodic formal training.
The EEx team says that they have been able to create such a truly customized product for the customer because their consistent attention to the needs of factory workers. In fact, EEx has a policy of working side by side with factory workers to better understand their daily challenges.
“You can never know too much about your customer,” says Sullivan. “Each EEx employee is required to spend at least one week working in a factory when they first join the team.”
This includes Sullivan herself, who has spent a week working every job in a Chinese factory — from soldering on the assembly line to running the ERP systems — while living in the dorms and eating in the cafeteria.
It is this primary research data complemented by a shared wealth of experience in supply chain management and technology, that has enabled EEx to report a 100 percent success rate from their pilot factories, which translates into reduced costs for all the test factories.
The product, which has now been officially launched, had been piloted in 11 factories in China. EEx’s current goal is to deploy Charge, which is available as an annual subscription, in 5,000 factories within the next twelve months.
The company also plans to further push the needle on the change that Charge can drive within supply chains by integrating smart meters and increasing the analytical output on the device. EEx will also continue to work on its overall goal of providing comprehensive compliance solutions by adding features to address water management and social issues.
In addition, EEx plans to make retail-focused services available to brands and other non-factory customers as it continues to develop the applications of EEx Charge.
“Private label product development from brands and retailers is definitely way, way bigger than it was ten years ago,” Sullivan says. “It is often higher margin business, and given how tough the retail business is these days, that's hugely important for a lot of brands.”
EEx has already finalized a partnership with one of the world’s largest apparel retailers, which will be recommending Charge to its Top 50 Suppliers. The EEx team hopes that this will be first of many retail partnerships.
Other key partnerships for EEx include several key channel agreements in China to help deploy Charge to thousands of qualified factories, including the EHS Academy (funded by the Institute for Sustainable Communities); and the Taiwanese Manufacturers Association of Shenzhen has also agreed to promote Charge to its 20,000 members.
Overall, as an inexpensive, in-house, digital energy manager for factories, Charge is positioning itself to disrupt and vastly improve the supply chain management industry.
For more on EEx Charge, check out this case study video from one of its pilot factories, Circle Furniture.
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Published May 27, 2013 3pm EDT / 12pm PDT / 8pm BST / 9pm CEST