The One Thing Brands Need To Know To Deliver A Top-Notch Customer Experience

Carla Johnson

Before we can truly give customer experience the attention it deserves, we need to understand our customers’ path to purchase. If brands wait until consumers reach out, there’s a tremendous amount of ground to make up. That’s why enterprises need to see “invisible” activities as an opportunity to architect each stage of the buyer journey to understand the needs of the customer. Once that understanding is in place, they can work across all departments to deliver value at every step. If companies choose not to do this, their sales representatives will be woefully underprepared when prospects are ready to connect with them.

Interestingly, despite needing to understand the buyer journey to create experience, this is where most companies fall woefully short. It’s the exercise of mapping the buyer’s journey from beginning-to-end that forces most companies to begin collaborating across departments for the first time. Going through this process uncovers many of the frustrations that prospective customers experience.

While it’s hard for any company to create a consistent experience, it’s certainly possible. A big part of doing this is creating consistency across all of the touchpoints. In fact, consistency is the biggest predictor of the overall customer journey experience and potential for loyalty to the brand and ultimately, revenue.

Owning the experience

Sales teams are the front line to revenue. With that, there’s an enormous opportunity for sales people to lead customer experience. Instead of waiting for permission from executives, marketing departments, and even customers, many sales teams see this as an opportunity to hit sales targets with a new level of control and ease. More and more sales managers are jumping at the chance to revamp their roles. They’re anxious to align the business with customers so they can woo prospects, hold onto business, and broaden what they deliver to existing customers.

That’s where a perceived drag comes into play. Can marketing deliver on their part? The line of demarcation between sales and marketing is blurry at best. How do we manage the expectations that marketing messages set with in-person experiences with sales people? If there’s no consistency in what a company says and how it positions itself, it’s only natural that a prospect can misinterpret what they expect. They’ll feel more than a little let down with the brand experience before they ever become a customer.

If brands want to understand what matters to customers, the first thing to know is that consistency stands front and center. Before companies can deliver on enviable customer experience, they first have to understand that an “experience” isn’t an isolated interaction, but rather reliable, consistent experiences across all interactions.

How can you use technology to deliver remarkable experiences in a world of evolving customer expectations? Read the free eGuide Managing Customer Relationships in the New Age of Experiences to learn how.

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About Carla Johnson

Carla Johnson helps marketers unlock, nurture, and strengthen their storytelling muscle so they can create delightful experiences. Through her consultancy, Type A Communications, she works as a trusted adviser at the highest level of blue-chip brands to establish open conversations, instill creative confidence, and inspire an environment of receptivity that develops highly priced teams and stellar business value. Carla has worked with companies such as American Express, Dell, Emerson, Motorola Solutions, VMWare, Western Union, and the U.S. Army Corps of Engineers on how to tap into a wellspring of ideas and unveil new ways to bring their brand stories to life in fun and captivating ways. Recognized as one of the top 20 influencers in content marketing, Carla serves as vice president of thought leadership for the Business Marketing Association, a division of the Association of National Advertisers, and is an instructor for the Content Marketing Institute and the Online Marketing Institute. A frequent speaker, Carla also writes about the future of B2B marketing, leading through innovation, and the power of storytelling for the Content Marketing Institute, Chief Content Officer magazine, CMSWire and other business and industry publications. Carla lives in Denver with her devilishly handsome husband Ron, their three children, Melinda, Abby, and Nick, two parakeets, and seven fish.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

Michael Laprocido

About Michael Laprocido

Mike Laprocido serves as a Strategic Industry Advisor for SAP. He is responsible for developing thought leadership and driving SAP solution adoption in the chemical and oil and gas industries. With over three decades in various executive roles at BP Oil, BP Chemicals, Kuraray America, Panda Energy and IBM prior to joining SAP, Mike has gained a broad and deep industry knowledge base that he leverages to help his clients to innovate and transform their business through the application of digital technology.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

About Joerg Koesters

Joerg Koesters is the Head of Retail Marketing and Communication at SAP. He is a Technology Marketing executive with 20 years of experience in Marketing, Sales and Consulting, Joerg has deep knowledge in retail and consumer products having worked both in the industry and in the technology sector.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

Rob Meikle

About Rob Meikle

Rob Meikle is the Chief Information Officer (CIO) for the City of Toronto, Canada's largest city, sixth largest government and home to a diverse population of about 2.7 million people.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

About Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is founder and president of the agile digital transformation analyst firm Intellyx. He is ranked #5 on Onalytica’s list of top digital transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists. Mr. Bloomberg is the author or coauthor of four books, including The Agile Architecture Revolution (Wiley, 2013). His next book, Agile Digital Transformation, is due within the next year.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

Lane Leskela

About Lane Leskela

Lane Leskela, global business development director, Finance and Risk, for SAP, is an accomplished enterprise software leader with years of experience in customer advisory, marketing, market research, and business development. He is an expert in risk and compliance management software functions, solution road maps, implementation strategy, and channel partner management.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

About Jennifer Scholze

Jennifer Scholze is the Global Lead for Industry Marketing for the Mill Products and Mining Industries at SAP. She has over 20 years of technology marketing, communications and venture capital experience and lives in the Boston area with her husband and two children.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

About Matt Wilkinson

Matt Wilkinson is the General Manager, Consumer Industries for SAP ANZ. Having operational roles in consumer industries organisations combined with 20+ years of professional services in both delivery and sales roles with cloud and on premise solutions, provide him with a unique insight to help organisations achieve effective digital transformation.

The Top Reasons Why The Maker Movement Will Be The Next Renaissance

Kai Goerlich

Trying to give customers exactly what they want can be a big mistake. Manufacturers spend billions of dollars on market research and product development to deliver a diverse mix of goods with a variety of options on a mass scale.  But, in the end, they are still often guessing at what an individual customer really wants. It’s an expensive, sometimes futile endeavor that can backfire badly.

Dell Computers—once the corporate poster child for mass customization—had to pull the plug on its make-to-order model, saying it had become “too complex and costly”.  German luxury carmaker Maybach offered an extensive array of models and long list of options. But Daimler lost $439,000 on each car sold and ultimately discontinued the entire line. And more choice isn’t always what customers want. When Procter & Gamble trimmed many of its product lines, including reducing the varieties of Head & Shoulders from 26 to 15, in an attempt to cut costs related to product complexity, its market share increased.

What had gotten lost in these cases was the feeling for what customers really wanted. But what would happen if customers could design and produce their own products?

Avi Reichental, CEO of 3D Systems, says in his TED talk: “My grandfather was a cobbler. Back in the day, he made custom-made shoes. I never got to meet him… But I did inherit his love for making, except that it doesn’t exist that much anymore. You see, while the Industrial Revolution did a great deal to improve humanity, it eradicated the very skill that my grandfather loved, and it atrophied craftsmanship as we know it… But that’s all about to change.”

Makers shake up manufacturing

maker_movement_imageOver the last decade, the quickly growing maker movement has enabled individuals and start-ups to bypass traditional industry to invent and produce bespoke goods on-demand. Make-it-yourself technologies such as 3D printing have been advancing exponentially. And thanks to hackerspaces that democratize access to high-end production tools, and new crowdfunding and online retail options, individuals can take product ideas from concept to funding to production to market on their own.

And that movement is poised to go mainstream. Consider:

  • The inaugural San Francisco MakerFaire in 2006 attracted 65,000 DIY enthusiasts. Last year, 130,000 attended along with another 85,000 in New York.
  • Today, there are 1,100 hackerspaces around the world giving people access to the tools of productions from computer numeric controlled machines to 3D scanners and giving birth to such maker start-ups as payment processor Square.
  • Peer-to-peer ecommerce site Etsy’s revenue has nearly quadrupled in as many years from $525 million in 2011 to $1.9 billion in 2014.
  • Crowdfunding has advanced from begging family and friends for seed money to the lending campaigns that generated $11.08 billion in 2014. The World Bank predicts the market will grow to $93 billion by 2025.
  • The 3D printing market will quadruple to $12 Billion by 2025. In just three years, at least seven of the world’s top 10 retailers will be using such additive manufacturing technology to generate custom stock orders with entirely new business models concurrently being built on the technology, according to Gartner.

We’re on the cusp of a major breakthrough in manufacturing innovation. As the Computing Community Consortium pointed out last year when announcing its maker conference: “Today’s emerging ‘Manufacturing Renaissance’ is radically different” from those before, and “is more akin to the introduction of major transformative technologies such as the printing press, the programmable loom, and the computer itself.”

A confluence of technological and sociological shifts are converging that will turn the advances of the industrial revolution on its head. At the center of this shift are individuals. Today most products are designed for manufacturers – to make production easier. In the near future, products will be designed for—and by—individuals. This will not only shake up the manufacturing sector but will transform the way we live, work, and create.

A renaissance of creativity, craftsmanship, and community

That transformation has begun to take place in pockets of existing businesses already. Coca-Cola introduced the Freestyle fountain, giving soda buyers the ability to create their own singular concoction from more than 100 different flavors. NikeID enables individuals to put their personal stamp on sneakers, either online or in retail customization studios.Mars has an entire business unit dedicated to customized candies and products called Mars Direct. Hershey partnered with 3D Systems to create the CoCoJet 3D Printer, capable of printing custom designs in dark, milk or white chocolate.

But, soon, such customization will be the norm as individualization becomes a matter of changing a line of code rather than retooling an assembly floor. You’ll be able to 3D print a hamburger, a hearing aide—or a house (to be assembled with the help of some handy drones) to your individual specifications. And individuals will be able not only to personalize products. They will be able to dream up, design, and produce them.

Today, innovation is tucked away in the R&D departments of corporations. Funding is provided by corporate finance mechanisms. Production takes place a world away in a factory. Twenty years from now, it will take place in your neighborhood. Products that used to require economies of scale from a centralized factory will be produced locally. As 3D printing continues to accelerate and come down in price, more goods will be produced at or near their point of use.

Creative subcultures will flourish as individuals collaborate on ideas, funding, and production. Some may flock to cities and towns where these subcultures will thrive. Others may take advantage of increasing connectivity to work together virtually. Either way, the result will be a resurgence in creativity, craftsmanship, and community.

Let the customer customize

For companies to remain relevant in this make-for-me future, they will have to rethink their business models.

Of course, some commodities will always be commodities. You don’t need to put your own spin on nuts and bolts. Goods that require massive scale, speed, and efficiency will be mass-produced, and manufacturers will continue to squeeze every ounce of cost and efficiency out of those supply chains.

Everything else, however, will be able to be customized to the individual. Today, complexity is the enemy. It’s difficult and costly. Thanks to 3D printing, product complexity will become free—and therefore advantageous. And mass customization could overtake mass production.

Today, roughly 80 percent of shipments are finished products and 20 percent are raw goods. In the future, the inverse will be true.  Instead of making products, corporations will come up with basic frameworks giving people the power to put it together as they wish.

As production is decentralized, and goods are individualized, the value proposition for companies will radically change.  It will not be that you produce something that delivers value, but that you have the knowledge of how to produce it—and in myriad ways.

As a result, IP and design will be the most important corporate assets of the future. Instead of designing, manufacturing, and delivering products, companies will design and deliver IP. Companies that own and leverage the rights to products and services—rather than those that manufacture, sell, or distribute them — will flourish.

Remodel Customer Relationships

Such a radical shift will bring challenges:

  • Manufacturers will have to figure out how the quality controls in their large, centralized factories can translate into a distributed and individualized production environment. Physical quality control will shift to digital quality control as the number of partners involved in the process balloons.
  • With a supply chain that is more distributed, is local, and works in real time, companies will need to approach customer service and standards for safety, quality, traceability, and social responsibility in new ways.

Manufacturers cannot simply wait while these issues are sorted out by someone else. The changes required to compete in this near future will take time, investment, and commitment.

Companies that want to remain relevant will have to be willing to cannibalize their existing business models and reorganize around the individual. They will have to figure out how to let their customers customize.

Download the Executive Brief: Makers Shake Up Manufacturing

maker-thumbnail

 

To learn more about how exponential technology will affect business and life, see SAP Digital Futures.

Comments

Marina Simonians

About Marina Simonians

Marina Simonians is the Head of Global ISV GTM Strategy at SAP responsible for building new global ISV software driven initiatives for Big Data, AI/ML, Advanced analytics and IoT. With a passion for ecosystems she believes partnerships are most critical success factor in today’s software-driven market.

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

Michael Laprocido

About Michael Laprocido

Mike Laprocido serves as a Strategic Industry Advisor for SAP. He is responsible for developing thought leadership and driving SAP solution adoption in the chemical and oil and gas industries. With over three decades in various executive roles at BP Oil, BP Chemicals, Kuraray America, Panda Energy and IBM prior to joining SAP, Mike has gained a broad and deep industry knowledge base that he leverages to help his clients to innovate and transform their business through the application of digital technology.

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

About Joerg Koesters

Joerg Koesters is the Head of Retail Marketing and Communication at SAP. He is a Technology Marketing executive with 20 years of experience in Marketing, Sales and Consulting, Joerg has deep knowledge in retail and consumer products having worked both in the industry and in the technology sector.

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

Rob Meikle

About Rob Meikle

Rob Meikle is the Chief Information Officer (CIO) for the City of Toronto, Canada's largest city, sixth largest government and home to a diverse population of about 2.7 million people.

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

About Jason Bloomberg

Jason Bloomberg is a leading IT industry analyst, Forbes contributor, keynote speaker, and globally recognized expert on multiple disruptive trends in enterprise technology and digital transformation. He is founder and president of the agile digital transformation analyst firm Intellyx. He is ranked #5 on Onalytica’s list of top digital transformation influencers for 2018 and #15 on Jax’s list of top DevOps influencers for 2017, the only person to appear on both lists. Mr. Bloomberg is the author or coauthor of four books, including The Agile Architecture Revolution (Wiley, 2013). His next book, Agile Digital Transformation, is due within the next year.

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

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Lane Leskela

About Lane Leskela

Lane Leskela, global business development director, Finance and Risk, for SAP, is an accomplished enterprise software leader with years of experience in customer advisory, marketing, market research, and business development. He is an expert in risk and compliance management software functions, solution road maps, implementation strategy, and channel partner management.

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Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

About Jennifer Scholze

Jennifer Scholze is the Global Lead for Industry Marketing for the Mill Products and Mining Industries at SAP. She has over 20 years of technology marketing, communications and venture capital experience and lives in the Boston area with her husband and two children.

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Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

About Matt Wilkinson

Matt Wilkinson is the General Manager, Consumer Industries for SAP ANZ. Having operational roles in consumer industries organisations combined with 20+ years of professional services in both delivery and sales roles with cloud and on premise solutions, provide him with a unique insight to help organisations achieve effective digital transformation.

Tags:

#CustExp

Cheap Gas, Electric Cars, And Customer Experience

gregory yankelovich

Even if you sell a commodity, customer experience often outweighs price considerations. Just because the term customer experience management (CEM) is  relatively new to corporate vocabulary, the power of “experience” is not lost on marketing professionals. The world of marketing is drastically changing, moving away from the hype of novelty and awareness-building through branding and advertising and toward  the creation of loyalty through great customer experiences.

As oil prices impact every element of the world Cheap gaseconomy, and markets expect the depressed levels to last for at least a decade, the future of alternative energy technologies being questioned. Sales of electric and hybrid cars  are dipping, seemingly in concert with oil prices, and auto industry analysts are trying to assess whether or not cheap gas will kill the demand for such vehicles.

It is important to remember that even at the near-record high of gas prices, customer retention of hybrid vehicles was only 35%. Specifically, Prius owners’ loyalty in 2012 was only 25%.

“Only 30.9% of hybrid drivers traded in for another gas-electric model in the third quarter of 2011, when gas prices were stable. But as prices at the pump surged in the final three months of that year, so did hybrid car repurchases, leading to a 40.1% loyalty rate.”

It is easy to see correlations between gas prices and sales of electric vehicles, but perhaps it is a mistake to take these as the causation.

It is true that sales of electric cars from Nissan (Leaf) are 20% down this year and gas-electric hybrid Chevy Volt’s are down 50%. However, the demand for Tesla Model S is stronger than ever, and sales are up 35% during the first quarter of 2015.

Mining online reviews posted by customers who have purchased these cars reveal a much stronger correlation between customer experience and retention/loyalty than the correlation between sales of electric cars and price of gas. As the novelty of electric/hybrid cars and the social cache of environmentalism fade, the underwhelming customer experience these vehicles delivered to their owners compels customers to return to familiar fossil-fuel vehicles. That will continue until the electric cars sold provide better customer experience than conventional ones at the same or better price. The energy that drives these cars may be alternative, but it is not a substitute for the delivery of superior customer experience.

For more effective customer experience strategies, see Customer Experience: How to Balance Culture and Operations.

Comments

Marina Simonians

About Marina Simonians

Marina Simonians is the Head of Global ISV GTM Strategy at SAP responsible for building new global ISV software driven initiatives for Big Data, AI/ML, Advanced analytics and IoT. With a passion for ecosystems she believes partnerships are most critical success factor in today’s software-driven market.

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The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

Download this short executive document. 

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter