Digital Transformation In Discrete Manufacturing

Stefan Krauss

Forklifts might be the best example of how technology is shaping the future of discrete manufacturing. Consider these two companies.

  • Company A looks to increase profits by cutting costs and asking employees to find ways to make forklifts cheaper. It seeks to increase market share by offering steeper price discounts.
  • Company B has asked customers, employees, and suppliers whether forklifts will be needed in the next decade. Should the company just be selling forklifts? Should it consider becoming a “warehouse as a service” provider instead, running warehouses for other businesses?

Which company is forward-thinking, recognizing that automation, smart products, and innovation will drive new business models? Which company is considering how to best provide the services that customers expect in addition to the products sold?

The answer is clear. For companies that recognize the pivotal role that digital transformation plays in driving innovation, the future is bright.

CIO role transforming with digital change

For CIOs, digital transformation changes their roles within organizations. The CIO of tomorrow must bring his or her skills and insights on new digital technologies to bear on the rest of the organization.

Instead of staying in traditional silos, transformative CIOs will lead engagements that bring IT departments together to collaborate deeply with other parts of the organization – sales, marketing, research and development, software development, manufacturing, and supply chain.

When successful, CIOs will help organizations rethink business models and business processes. Digital transformation will change how people are hired, trained, and deployed, leveraging the use of business networks and contingent workers to ensure companies are ready for the future.

While technology is enabling companies to reconsider their businesses, the fundamentals remain relevant: how companies can grow the business and improve efficiency. The difference is that digital changes are critical to that growth.

Automakers, high-tech companies offering services

Consider the automobile industry. Nontraditional competitors such as Google, Tesla, and Uber are causing consumers to ask, “Do I need to own a car?” Particularly in urban, congested areas, mobility is more relevant today. What’s important is optimizing the way to get from point A to point B. That demand means rapid flexibility and service. It may mean using different car models for different seasons.

Automakers are responding by thinking about services that eliminate or reduce the costs of taxes and parking. Connected vehicles are placing more emphasis on services rather than horsepower. Consumers, they realize, want services such as pre-ordered parking spots, gas station location services, or prepaid coffee in their favorite drive-through.

High-tech companies are leveraging the Internet of Things in two significant ways. Companies are producing not just hardware, but also pure or embedded software built into products. This means they can offer services in addition to or instead of just selling. For example, a printer company is now giving companies the option to purchase printing services instead of printers. The manufacturer owns and maintains the printers, using embedded software to detect needed maintenance, such as toner replacement, and replaces the printers as needed. It’s selling output, not the printers themselves.

Industrial machines, aircraft companies rethink business models

Similarly, in industrial machines and components companies, the business models are changing. One compressor manufacturer we work with is shifting its business to selling not air compressors, but air itself.

Customers purchase an amount of compressed air, with the company controlling costs via predictive maintenance software. Many call this shift Industry 4.0, allowing manufacturers to have more flexible manufacturing processes that can better react to customer demands.

The aircraft and defense industry has been at the forefront of digital transformation for years, using sensors to track and assess performance and improve safety. With such increased demand for new airplanes and passenger capacity, some OEMs are considering not selling aircrafts and engines, but rather the performance of those machines.

For the CIO of the future, a top-down approach is crucial. CIOs need to consider how to inspire and lead other C-suite executives to an innovative, connected future.

For more on how Innovator CIOs are reimagining business models to uncover new revenue, read the Digital Bridge report on Digital Business and CIO Innovation Imperative

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Stefan Krauss

About Stefan Krauss

Stefan Krauss is the general manager for Discrete Industries at SAP. Together with his team, he is responsible for the integrated management of the industries Aerospace & Defense, Automotive, High Tech and Industrial Machinery & Components – spanning development, solution management, sales and marketing, value engineering, partner management, services and support. The mission of this unit is to deliver industry cloud solutions that help SAP customers sustainably innovate and grow their business, operate safely, and develop their people.

Blockchain: Why Coders Are The New Cowboys

Maggie Nelson

We have all been asked, “If you could go back in time and live in a particular era or decade, which would you choose?” If you’re like me, you carefully weigh the pros and cons: The roaring 1920s would offer great music, but also prohibition. In the Jurassic period, you could camp with dinosaurs, but that also means THERE WOULD BE DINOSAURS! After careful thought, I tend to favor the Wild, Wild West. Riding horses, shooting guns. and exploring the undiscovered… this sounds like my kind of adventure.

Nevertheless, until Santa brings me a DeLorean for Christmas, I will not be time-traveling anytime in the near future. Presently, I feel like we are at a point in time that resembles the Wild, Wild West when it comes to blockchain. Some articles link blockchain to the Internet in the 1990s, but I prefer to live in a more sensationalized state of mind, where coders are cowboys and the new gold is cryptocurrency.

Blockchain is not just Bitcoin or cryptocurrencies; it is so much more. The power of blockchain’s distributed ledger technology has applications across every kind of digital record and transaction. The potential use cases are limitless, which translates into a great new frontier (cue the Davy Crockett theme song).

Blockchain uniquely ties together the transformation of a digital ecosystem, and as such, the opportunity that lies within industry innovation. As Pat Bakey, president of SAP Industries, put it, “Blockchain’s innate versatility means that it truly has the ability to reshape nearly any industry if put to use correctly.”

The technology has significant potential, just like what the gold rush offered prospectors: the opportunity of unimaginable fortunes. Similarly, while not all prospectors found fortune, blockchain is not a good fit for every process or transaction. Converting this promising technology into a legitimate business reality will come from industry expertise and collaboration.

Within the aerospace and defense (A&D) industry, conversations vary from, “What is blockchain?” to full blown co-innovation initiatives. Use cases our team is exploring include:

  • Building trust and transparency in aircraft manufacturing and operations by leveraging credential verification tools to maintain secure certifications for parts, products, personnel, and organizations.
  • Increasing security and trust in a complex, multi-tier supply chain with end-to-end data integrity and provenance.
  • Simplifying contract management with collaborative “smart” contracts for a scalable system of record.

By exploring the use cases specific to the A&D industry ecosystem, or by joining the SAP Blockchain Co-Innovation Program, A&D companies have the opportunity to slip on our cowboy boots, mount our horses, and begin exploring the new frontier.

So the only question that remains is: When the dust settles, where will you be? On the Oregon Trail without an ox or a passenger on the Transcontinental Railroad?

See how you can turn insight into action, make better decisions, and transform your business.

This story also appeared on the SAP Community. Published with permission of the author.

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Maggie Nelson

About Maggie Nelson

Maggie Nelson is the Solution Manager of the Aerospace & Defense Business Unit at SAP.

How to Take Advantage Of 3D Printing Service Parts In Aerospace

Thomas Pohl

The time of 3D printing being a hobbyist’s plaything is in the past. Not only has additive manufacturing come into its own, but it is rapidly gaining ground as a more sustainable technology than centralized systems that require shipping networks to get goods to market. In the aerospace industry, we’re seeing more use of 3D printing than in the past; for example, GE has produced a 3D-printed 1,300 HP advanced turboprop engine. But one area where 3D printing technology is expected to have the largest impact on the aerospace industry is in parts printing.

The aerospace industry was one of the first adopters of 3D printing technology, beginning in 1988, only four short years from the first patent registration for the technology. At the time, it was only used for modeling and prototypes. A little over a decade later, industry leaders started to explore the full potential of the technology.

Today, it’s clear there are a number of areas where 3D printing of service parts can benefit the aerospace industry.

Increased asset uptime

Because airline fleets are always on the go, it can be difficult to anticipate in what locations and at what times specific parts may be needed. Internet of Things (IoT) technology improves inventory tracking, but that isn’t the solution when you don’t have the right part where it’s needed. Aircraft-on-ground delays can cause serious problems in a number of areas, and 3D-printed parts help avoid this issue and improve overall fleet uptime. Personnel in the hanger can simply print a new part instead of maintaining an exhaustive inventory or hoping the part comes in quickly.

Reduced cost

Beyond the problems of grounded assets, 3D-printed parts also reduce costs. When an asset is grounded, it can quickly become an expensive problem. A typical “B check” maintenance issue that grounds a plane has an average cost of $60,000. The crew must be moved to other aircraft or lodged locally; replacement parts need to be shipped in (if they’re not on location); fleet coordination is impacted; flight schedules are thrown off; and service-level agreement (SLA) compliance becomes an issue. And that’s before you deal with the resulting customer service issues.

Lighter components

In aeronautics, weight is money, and 3D-printed parts could lighten the components used in aircraft. Reducing the weight of your components means using less fuel to get off the ground. A recent contest by GE challenged designers to create an engine bracket designed for production with a 3D printer. The winning entry produced an 83.4% reduction in weight, from 2 kg to a svelte 327 grams. That may not seem like much on a 400-ton aircraft, but it’s just that much less weight to get in the air.

More durability

It’s much easier to design 3D-printed components for strength and durability versus manufacturing ease. “We get five times the durability. We have a lighter-weight fuel nozzle. And we frankly have a fuel nozzle that operates in an environment more effectively and more efficiently than previous fuel nozzles,” Greg Morris, head of GE Aviation’s additive printing division, said in an interview. The ability to design and print parts remotely makes updates to fleet assets much easier to implement.

Improved customer satisfaction

In aeronautics, customer satisfaction has a huge impact on a company’s bottom line. It’s estimated that in 2016, flight delays cost airlines $25 billion in actual expenses, and that figure does not include damage to an airline’s reputation. If an airline becomes known for flight delays and maintenance issues, it’s less likely to be used by consumers. Having 3D printing capabilities for a number of parts helps reduce flight delays and keeps cancellations to a minimum. It also helps improve overall fleet uptime and reputation for excellence.

By adding 3D printing capability, aeronautics companies can enjoy lean operations with better flexibility and resiliency. It provides a range of benefits, including avoiding aircraft-on-ground problems. By placing a 3D printer at the hanger or a nearby distribution warehouse, response time is drastically improved, costs are reduced, and excess inventory is eliminated.

Digitization and disruption require businesses to be lean and agile. This is true of all industries, including aeronautics. While 3D printing was initially used for out-of-production or slow-moving inventory parts, it’s progressing into more complex parts as the technology has improved.

As part of an overall digitization plan, 3D printing allows companies to respond faster to industry changes. Imagine a scenario where sensors in your assets sense a problem in a particular part of your aircraft. Those sensors automatically contact the arrival airport, which 3D-prints the part while the plane is still in the air. Wait time decreases and the plane gets back in the air faster. The future of aeronautics is now. Where does your business stand?

Read this whitepaper to understand how a digital world in aerospace and defense industry can help you to reinvent products, services, and core business processes.

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Thomas Pohl

About Thomas Pohl

Thomas Pohl is a Senior Director Marketing at SAP. He helps global high tech and aerospace companies to simplify their business by taking innovative software solutions to market.

Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

Link to Sources


From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

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Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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Blockchain: Much Ado About Nothing? How Very Wrong!

Juergen Roehricht

Let me start with a quote from McKinsey, that in my view hits the nail right on the head:

“No matter what the context, there’s a strong possibility that blockchain will affect your business. The very big question is when.”

Now, in the industries that I cover in my role as general manager and innovation lead for travel and transportation/cargo, engineering, construction and operations, professional services, and media, I engage with many different digital leaders on a regular basis. We are having visionary conversations about the impact of digital technologies and digital transformation on business models and business processes and the way companies address them. Many topics are at different stages of the hype cycle, but the one that definitely stands out is blockchain as a new enabling technology in the enterprise space.

Just a few weeks ago, a customer said to me: “My board is all about blockchain, but I don’t get what the excitement is about – isn’t this just about Bitcoin and a cryptocurrency?”

I can totally understand his confusion. I’ve been talking to many blockchain experts who know that it will have a big impact on many industries and the related business communities. But even they are uncertain about the where, how, and when, and about the strategy on how to deal with it. The reason is that we often look at it from a technology point of view. This is a common mistake, as the starting point should be the business problem and the business issue or process that you want to solve or create.

In my many interactions with Torsten Zube, vice president and blockchain lead at the SAP Innovation Center Network (ICN) in Potsdam, Germany, he has made it very clear that it’s mandatory to “start by identifying the real business problem and then … figure out how blockchain can add value.” This is the right approach.

What we really need to do is provide guidance for our customers to enable them to bring this into the context of their business in order to understand and define valuable use cases for blockchain. We need to use design thinking or other creative strategies to identify the relevant fields for a particular company. We must work with our customers and review their processes and business models to determine which key blockchain aspects, such as provenance and trust, are crucial elements in their industry. This way, we can identify use cases in which blockchain will benefit their business and make their company more successful.

My highly regarded colleague Ulrich Scholl, who is responsible for externalizing the latest industry innovations, especially blockchain, in our SAP Industries organization, recently said: “These kinds of use cases are often not evident, as blockchain capabilities sometimes provide minor but crucial elements when used in combination with other enabling technologies such as IoT and machine learning.” In one recent and very interesting customer case from the autonomous province of South Tyrol, Italy, blockchain was one of various cloud platform services required to make this scenario happen.

How to identify “blockchainable” processes and business topics (value drivers)

To understand the true value and impact of blockchain, we need to keep in mind that a verified transaction can involve any kind of digital asset such as cryptocurrency, contracts, and records (for instance, assets can be tangible equipment or digital media). While blockchain can be used for many different scenarios, some don’t need blockchain technology because they could be handled by a simple ledger, managed and owned by the company, or have such a large volume of data that a distributed ledger cannot support it. Blockchain would not the right solution for these scenarios.

Here are some common factors that can help identify potential blockchain use cases:

  • Multiparty collaboration: Are many different parties, and not just one, involved in the process or scenario, but one party dominates everything? For example, a company with many parties in the ecosystem that are all connected to it but not in a network or more decentralized structure.
  • Process optimization: Will blockchain massively improve a process that today is performed manually, involves multiple parties, needs to be digitized, and is very cumbersome to manage or be part of?
  • Transparency and auditability: Is it important to offer each party transparency (e.g., on the origin, delivery, geolocation, and hand-overs) and auditable steps? (e.g., How can I be sure that the wine in my bottle really is from Bordeaux?)
  • Risk and fraud minimization: Does it help (or is there a need) to minimize risk and fraud for each party, or at least for most of them in the chain? (e.g., A company might want to know if its goods have suffered any shocks in transit or whether the predefined route was not followed.)

Connecting blockchain with the Internet of Things

This is where blockchain’s value can be increased and automated. Just think about a blockchain that is not just maintained or simply added by a human, but automatically acquires different signals from sensors, such as geolocation, temperature, shock, usage hours, alerts, etc. One that knows when a payment or any kind of money transfer has been made, a delivery has been received or arrived at its destination, or a digital asset has been downloaded from the Internet. The relevant automated actions or signals are then recorded in the distributed ledger/blockchain.

Of course, given the massive amount of data that is created by those sensors, automated signals, and data streams, it is imperative that only the very few pieces of data coming from a signal that are relevant for a specific business process or transaction be stored in a blockchain. By recording non-relevant data in a blockchain, we would soon hit data size and performance issues.

Ideas to ignite thinking in specific industries

  • The digital, “blockchained” physical asset (asset lifecycle management): No matter whether you build, use, or maintain an asset, such as a machine, a piece of equipment, a turbine, or a whole aircraft, a blockchain transaction (genesis block) can be created when the asset is created. The blockchain will contain all the contracts and information for the asset as a whole and its parts. In this scenario, an entry is made in the blockchain every time an asset is: sold; maintained by the producer or owner’s maintenance team; audited by a third-party auditor; has malfunctioning parts; sends or receives information from sensors; meets specific thresholds; has spare parts built in; requires a change to the purpose or the capability of the assets due to age or usage duration; receives (or doesn’t receive) payments; etc.
  • The delivery chain, bill of lading: In today’s world, shipping freight from A to B involves lots of manual steps. For example, a carrier receives a booking from a shipper or forwarder, confirms it, and, before the document cut-off time, receives the shipping instructions describing the content and how the master bill of lading should be created. The carrier creates the original bill of lading and hands it over to the ordering party (the current owner of the cargo). Today, that original paper-based bill of lading is required for the freight (the container) to be picked up at the destination (the port of discharge). Imagine if we could do this as a blockchain transaction and by forwarding a PDF by email. There would be one transaction at the beginning, when the shipping carrier creates the bill of lading. Then there would be look-ups, e.g., by the import and release processing clerk of the shipper at the port of discharge and the new owner of the cargo at the destination. Then another transaction could document that the container had been handed over.

The future

I personally believe in the massive transformative power of blockchain, even though we are just at the very beginning. This transformation will be achieved by looking at larger networks with many participants that all have a nearly equal part in a process. Today, many blockchain ideas still have a more centralistic approach, in which one company has a more prominent role than the (many) others and often is “managing” this blockchain/distributed ledger-supported process/approach.

But think about the delivery scenario today, where goods are shipped from one door or company to another door or company, across many parties in the delivery chain: from the shipper/producer via the third-party logistics service provider and/or freight forwarder; to the companies doing the actual transport, like vessels, trucks, aircraft, trains, cars, ferries, and so on; to the final destination/receiver. And all of this happens across many countries, many borders, many handovers, customs, etc., and involves a lot of paperwork, across all constituents.

“Blockchaining” this will be truly transformational. But it will need all constituents in the process or network to participate, even if they have different interests, and to agree on basic principles and an approach.

As Torsten Zube put it, I am not a “blockchain extremist” nor a denier that believes this is just a hype, but a realist open to embracing a new technology in order to change our processes for our collective benefit.

Turn insight into action, make better decisions, and transform your business. Learn how.

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Juergen Roehricht

About Juergen Roehricht

Juergen Roehricht is General Manager of Services Industries and Innovation Lead of the Middle and Eastern Europe region for SAP. The industries he covers include travel and transportation; professional services; media; and engineering, construction and operations. Besides managing the business in those segments, Juergen is focused on supporting innovation and digital transformation strategies of SAP customers. With more than 20 years of experience in IT, he stays up to date on the leading edge of innovation, pioneering and bringing new technologies to market and providing thought leadership. He has published several articles and books, including Collaborative Business and The Multi-Channel Company.