November 27, 2007 - Kuala Lumpur, Hong Kong
On November 17, EcoGlove Chairman Patrick Hampe has been invited by YB Dato' Sri Dr Jamaludin Jarjis (Minister of Sciences, Technology and Innovation) to present at the National Innovation forum organised by MOSTI ( Ministry of Sciences, Technology and Innovation) how EcoGlove transforms a commodity product (single use gloves) into an innovation.
Bellow is the presentation:
I have been asked to speak on the:
"Transformation of a commodity into an innovative product"
I am more than happy to do, specifically, of course, in relation the activities of my company, EcoGlove. To start with some definitions might help. The dictionary says:
A commodity is anything for which there is demand but which is supplied without qualitative differentiation across a given market. Commoditization occurs as a goods or services market loses differentiation across its supply base, often by the diffusion of the intellectual capital necessary to acquire or produce it efficiently. As such, goods that formerly carried premium margins for market participants have become commodities. Examples include generic pharmaceuticals and silicon chips and of course the disposable gloves of the type we all know today.
Innovation, on the other hand, means "a change that creates a new dimension of performance" (management guru Peter Drucker) - something new, something that must be substantially different, not an insignificant change. In economic terms the change must increase value, customer value, or producer value. Innovations are intended to make someone better off, and a succession of many innovations will always grow an economy as a whole. • To elaborate a little further, the term innovation may refer to both radical and incremental changes to products, processes or services. The often unspoken goal of innovation is to solve a problem. Innovation is also considered a major driver of the economy, the factors that lead to innovation are also considered to be critical to policymakers. It is also true that participants in long-standing industries, develop their own very inward-looking traditions that stifle original thought and reduce sensitivity to the realities of what is happening in the market place, It happened to IBM and it killed Digital Equipment Corporation as an independent entity.
In these cases it mostly needs someone from the outside to be able to take a fresh look at a company or industry and see where a misfit has already developed or is developing between what it does and the realities of the market outside.
The world of commodities presents a particular challenge to innovation, because, by definition, the diffusion of intellectual capital surrounding their production has usually squeezed out of them anything much new that can be done to them. But that was the challenge we set ourselves in EcoGlove.
As a result we came up with not just one but three major innovations that we are quite sure, especially with the practical encouragement the Malaysian government is now promising, will progressively transform the world of disposable gloves use in the high volume user sectors such as health care.
To back up a bit though, this all started some years ago at IBM's disk manufacturing facility in Hungary, the success of which and the inescapable world trends that have developed ever more urgently since then encouraged us to go on to achieve what we have.
Some history here would be appropriate. The IBM story:
We were supplier of standard clean room gloves they wanted better gloves for less cost - set us off on the path find out how this could be done.
We developed the technologies and reprocessed many millions of gloves with great results.
The IBM conclusion: (I) glove cleanliness improved by a factor of four, (2) scrap volume reduced by 53% or 35 tons/year, (3) glove waste emissions reduced by 65 tons/year (4) 195 tons/year ofC02 emissions prevented (5) saved $94,000 in annual cost.
They moved to China (meaning new management that needed to be convinced, having to create clean room conditions - and it was just too far away!), we couldn't follow and our method was too expensive to apply to lower cost glove use sectors .
Looking back, what's interesting, is how aware IBM was even 5 or 6 years ago of the need to control waste and C02 emissions. Cost reductions were of course a major consideration but no means the only consideration. Having been so close to IBM, we knew however that sooner or later their waste and C02 concerns would become a growing concern everywhere so we set off to create a totally automatic reconditioning process that would solve the cost problems of our previous more labour intensive approach.
Our aims were to
- Reduce new glove needs by 75% through reuse
- Reduce typical usage costs by 30%
- Provide a better quality and a safer glove
- Reduce waste disposal to zero
- Reduce carbon footprint on glove usage by 80%
And this is how we did it.. ... ..
Tr@ce, the reusable exam glove – multiple single usage- made of Loprol (deproteinised latex) which would not exist without the Malaysian Rubber Board fantastic’s contribution in its development.
GRU, the automated glove reconditioning unit cleansing, testing, sterilizing every glove and packing them by size. The GRU, EcoGlove development, came to live thanks to the contribution and the vision of CB Chua, Executive Chairman of Pentamaster.
The GRU, is an innovation in every sense of the word, but it’s not the only one we have originated.
The second innovation (there’s another one later) is to completely transform the glove supply model. Today it’s here’s a box of gloves, cheapest we could do and goodbye The distributor who supplies the gloves knows nothing about what happens to them after that - the simplest form of commodity business - ignorance and low margins.
EcoGlove is transforming this into a high margin service business with just in time supply, Full responsibility for waste recovery and reuse, Usage and management statistics never before available, User cost savings (but more on this later), Higher margins in the supply chain from manufacturer to provider.
This brings us to the third innovation, without which none of this would be possible:
EcoData, an internet based software system that tracks everything that is happening in our supply model anywhere in the world. Our patent attorneys have compared it to the innovative supply models used by the likes of eBay and Amazon and we are following their recommendations to patent this also.
So where do things stand today?
Preproduction GRU prototype used by MRB for successful testing of Trace gloves, first two production models in final test before pilot hospital schemes agreed in Malaysia and Belgium and starting in January.
Our business projections are VERY conservative anticipating only 4% penetration in 2012 of what will by then be a $7BN market.
More, customers are already lined up to enjoy the benefit of the technology as soon as it will be available. We believe it will be commercially available in Asia and Europe in the course of Q2 and in the USA from Q3.
At the same time, with the enthusiastic support of the Malaysian government, for which we are extremely grateful, we see a more broadly based opportunity for Malaysia:
Higher value sales, A recognized Malaysian brand of glove, Practical and measurable contribution to reducing world C02 emissions in manufacturing and transportation, which are practical and measurable contribution to reducing landfill waste, tremendous PR benefits in promoting its glove business in Europe and the USA.
The means for meeting growing world demand without new glove manufacture volumes having to keep up at the same rate.
The means to be more competitive against the other producing countries and gain market share.
So, without appearing immodest, I think EcoGlove Ltd Hong Kong can justifiably claim to have taken a commodity and transformed it into an innovative product in every sense of the word.
Finally let me thank again the Malaysian Government, the management and staff of the MRB and Pentamaster for the outstanding support they provided for this project.
The additional support now anticipated will without doubt allow EcoGlove to accelerate the commercialization of this venture for the benefit of all concerned.
For More information:
EcoGlove Limited: +852 8120 7555 / www.ecoglove.com
Nice 2007: external link