Efficiency startup penetrates deep inside Chinese factories

Most students of Chinese and Asian studies at The George Washington University's Elliot School of International Affairs do not parlay their degrees into stints as factory workers in Chinese manufacturing facilities. But then, most students of Chinese and Asian studies are not Taryn Sullivan.

Thirty-year-old Sullivan is the founder of Efficiency Exchange (EEx), a software developer that in September released its first product, an energy management system designed to help Chinese factory managers cut waste and boost efficiencies. The product was many years in the making, insofar as it grew from Sullivan's experiences working with Chinese factories, first as a sourcing specialist for Ohio-based house-wares catalog company Improvements and later in a similar role with Pacific Trade International, a wholesale manufacturer for big box stores such as Target and Walmart. But before launching EEx, Sullivan decided to experience Chinese factories from the other side of the business.

"I worked every factory job, from incoming quality inspections, to running an ERP [enterprise resource planning software], to soldering PC boards on an electronics production line, to stamping, to metal work. I did it all because I needed to see where all the data was and how you can capture that, and most importantly, how to use that to make these jobs easier, more efficient and help the factories save money," Sullivan says.

It was not all hard work. "Almost every factory has a basketball court, so I would go play basketball with these guys after our shifts, and get to know them. They loved that," she adds.

It helps that Sullivan, a Caucasian who grew up in Arizona, Michigan and Florida as an Air Force brat (her dad was a pilot, her mom worked in Intelligence) speaks fluent Mandarin -- not just business speak, she can recite ancient Chinese poems to her factory cohorts -- and spends the better part of each year in China. To say she is committed to her work and enthralled with Chinese culture is an understatement.

Sullivan's interest in Asia sprouted at a young age. She thinks it has something to do with the Asian influences in the work of Frank Lloyd Wright, who designed a home for her grandfather, a Michigan businessman. During high school, she took an immersion study program in Shanghai in 1999, and returned to China the next year. "Everything in Shanghai was different the next year; I knew something was happening there. I needed to be able to communicate, I needed to understand the culture and politics," she remembers. "I've always been an entrepreneur. I didn't study business in college because I knew I could figure that part out, so I studied Chinese and classic Chinese literature."

What she found as she began her career was that when the United States and other Western, industrialized nations outsourced manufacturing to countries such as China, they also outsourced their management systems. Decades later, factories are still using those now antiquated systems, and in many cases are tracking records "with chicken scratch, on paper," Sullivan says, rather than automating to boost efficiencies and competitiveness.

With no consultancies serving these factories, and with an astounding potential client base potential of 5 to 7 million factories in China alone, the business opportunity was quite clear.

When she learned many plant managers didn't even know how to read their energy bill, Sullivan saw an entry point. "It's hard to get people to change a big cost center, like sourcing or labor systems, so I started with something that was not a big concern." By helping managers read and understand electricity bills, fix charge errors and make easy infrastructure changes, EEx's cloud-based energy management system can save a factory around 10 or 25 percent of its electricity costs out of the gate, she says. After that, more efficiencies can be developed through the addition of smart meters that let plant managers isolate and better understand what systems are the biggest energy hogs in the factory.

But if so many factories don't even have visibility into their energy use, what about all the big flashy American brands touting clean, green supply chains? Sullivan feels that is more messaging than substance.

"Right now there is massive opaqueness in Chinese factories. People think they know where their products are made, but I can show you pictures and tell you stories that show the opposite. It's still kind of like the Wild West out there," she says.

Brands are trying to get a handle on things, but the audits they're using are based on simple binary, yes/no questions that do not delve into how factories really operate, she says. "We turned that strategy on its head and said, 'Let's help factories and then be able to share this data upstream,'" Sullivan explains.

Next up, Sullivan and her small team of American and Chinese programmers, researchers and marketers -- all of whom are required to work in the factories they serve, to better understand work flow and how resources are used -- will develop programs to manage water and other resources that factories consume.

Mixed in with all that work, Sullivan will be sure to spend some time on the basketball court.

(Photos courtesy of Efficiency Exchange)

This post was originally published on Smartplanet.com