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How High Will Your Supply Chain Jump To Build Customer Centric Business Processes?

Richard Howells

The 21st century consumer is always on, always connected, and doesn’t make a move without consulting the Internet. The millennial generation is emerging as a major demand driver, with access to huge amounts of information about products and trends on “what’s hot and what’s not,” via social media.

Take my teenage son (please!!!) for example, a basketball player in his high school. Every season, he wants the latest and greatest sneakers that will make him run, jump, and rebound better and faster. So what does he do? He turns on his tablet to go online to check out what’s available. And here he can not only see and buy what the NBA stars are wearing, but he can also customize the shoes to match his school colors and have his name and team number stitched into each sneaker. Through the advent of omni-channel sales, he can (once he gets my credit card of course) order from anywhere, on any device he has access too. Long gone are the days of the only option being the white high top!

And what happens when my son posts a pic of his new kicks on his social networks? Inevitably many of his friends are going to jump on their devices and order a pair for themselves. Is your business prepared to deliver to meet demand when your product is deemed “hot” and goes viral among the millennials?

Point of sales at the store is not the ONLY source of data to drive the replenishment process. It is no longer good enough just to be “demand driven.” We need to be “market driven.” We not only need the information from orders and sales forecasts, but also from weather forecasts, traffic reports, market share reports, and customer sentiment. We need to know what is being tweeted about our products, what and where products are hot, and what is being said, both good and (sometimes more importantly) bad via social media. This involves all the sources of data that describe the market and where the market is going at the most granular level.

Why is this important? Because the customer, or consumer, is becoming more demanding. If I order something online, I expect the delivery on the same day, or at least the next day. That introduces the need to think about demand differently. It is not possible to compete with aggregated demand for a product family in a region. To respond with speed, we need the information at the detailed level, so that it can be aggregated and analyzed to service a channel, market sector, customer, and specific order.

It sounds so simple, but to deliver those custom basketball sneakers to my son before he gets impatient, how high does the supply chain have to jump to enable him to make that three pointer?

Here are a few ways that we have to re-imagine this business process to be centered around the customer.

  • Design a customizable sneaker, with all possible allowed combinations of colors.
  • This design is handed over to both the sales and manufacturing organizations, to enable customers to design their own sneaker, and to the manufacturing site to produce it.
  • At the moment an order is placed, through any sales channel (in store, online etc.), the specific demand is instantly visible. The customer can specify unique text or numbers to be stacked onto the sneaker. They can also determine the shipping rules and instructions.
  • The specific order is planned and scheduled at an appropriate manufacturing facility.
  • The production line is set up to create all combinations of the sneaker for a “lot size of one.
  • At the final manufacturing step the unique text is stitched onto each sneaker.
  • The logistics processes are configured to uniquely pack and shipped to the desired pick up or delivery location based on the shipping rules determined by the customer.
  • Processes need to be in place to capture real demand signals coming from social media as demand for these custom sneakers take off in certain markets, regions, or even cities.

This is just a simple example of some of the business processes that have to be adjusted, and how leveraging a digitized extended supply chain can deliver a personalized solution by putting the customer in the center of the process.

The benefits of this scenario are significant:

  • Improved customer service and engagement
  • Stronger competitive differentiation
  • Compelling and holistic brand experience
  • Improved revenue

For more on supply chain optimization, download the free e-book How to Attack Supply Chain Fraud, Waste, and Abuse: The Quick Guide.

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About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.

Three Factors Driving Business Agility

Anja Reschke

Why is business agility important in today’s digital era? Without it, you may be outwitted by swift new competitors that move into your industry. You might also risk becoming irrelevant, according to the SAP eBook, The Digital Economy: Reinventing the Business World.

Every sector is at risk of digital disruption, and you need to take action and adjust quickly in order to remain successful in today’s digital economy.

A group of consulting, technology, and business leaders from across the consumer goods spectrum addressed this issue at a recent forum. Their findings are outlined in the whitepaper, Rethinking the Value Chain: New Realities in Collaborative Business by Capgemini Consulting and The Consumer Goods Forum.

Three business agility influencers

The group determined that three key factors are significantly altering the business landscape and persuading companies to change the way they traditionally do business in order to become more agile:

  1. Consumers are changing. Consumer demands are increasing, and their omni-channel path-to-purchase is no longer linear. Their customer experience could involve a mobile app, web research, social media, an in-store visit, and an online purchase – in any order. They are also more influenced by online social networks than by conventional advertising methods, and they expect quick outcomes from responsive companies.
  1. Business is changing. Innovative business partnerships are becoming more important and technology is accelerating competition. There is an increasing threat from agile high-tech companies and start-ups that don’t follow established go-to-market patterns. Digital companies with completely new business models are gaining a competitive advantage as they boldly cross formerly well-established market boundaries.
  1. The world is changing. Global economics and demographics are shifting. Emerging markets are growing rapidly, with a different set of needs that agile companies are more capable of responding to quickly.

The biggest obstacle to business agility

The most challenging hurdle for business agility comes down to one thing: complexity.

Large organizations are so complex – with multiple layers, business units, legacy systems, and departmental silos – that agility seems almost impossible. But the ongoing pressures of the digital economy are forcing even the most complex global companies to become more agile just to stay competitive. What steps are you taking to make your company more agile?

For an in-depth look at how the digital era is affecting business, download the SAP eBook, The Digital Economy: Reinventing the Business World.

To learn more about the multiple factors driving digital transformation, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

Learn how digital technology is transforming the healthcare industry in the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare.

Discover Five Things That Will Increase Your Business Agility.

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About Anja Reschke

Anja Reschke is the Senior Director of Strategic Ecosystem Marketing at SAP. She is responsible for the development of joint strategic marketing plans, programs, and activities, with global strategic services and technology partners.

How To Catch Up In The Digital Transformation Race

Paul Clark

It’s been said that every business is now a technology business, and if the competition is already forcing digital transformation in your industry, then it’s already too late for you to catch up.

I don’t buy that.

I don’t think it’s too late for any company to change course and succeed in today’s digital economy. New technology and innovative business models are cropping up everyday and changing the business landscape in multiple sectors, so there’s always something you can do about it. Indeed, a recent McKinsey article helps formulate some ways that incumbents can anticipate and deal with digital disruption.

The journey to business innovation

According to the SAP eBook, The Digital Economy: Reinventing the Business World, there are five main areas that organizations can focus on as they move toward digital transformation:

  1. Improve your customer experience. Innovate your products and services with a relentless customer-centric focus. Use streamlined messaging and a consistent approach through multiple customer touch points. You might also want to consider mobile customer engagement.
  1. Digitize your core business. Automate your processes with faster, simpler systems, and seamless integration between multiple areas of your business and value chain.
  1. Enhance your digital capabilities and create value from data. Focus on boosting your digital capabilities through advanced analytics, agile platforms, and continuous delivery. Consider a business model based on data, with digitally enhanced IoT products, and product-related services based on sensor data.
  1. Connect your workforce. Focus on training, attracting, and retaining employees and contractors with the high-tech skill set needed to support an innovative business model.
  1. Build your business network. Strengthen relationships with existing partners, and expand your digital ecosystem by working with innovative, and perhaps atypical but relevant organizations that could enhance your positioning.

Innovating in the digital era is not just about adopting new technologies. It is also about embracing a culture of innovation, encouraging collaboration, and tapping into digital ecosystems to achieve results well beyond the scope of an individual organization.

I don’t think it’s too late for any business to catch up. But you might want to be quick about it.

For an in-depth look at how the digital era is affecting business, download the SAP eBook, The Digital Economy: Reinventing The Business World.

Discover the multiple factors driving digital transformation in the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

Have you already gone through digital transformation in your business? Find out how to reinvent an entire industry.

Take a closer look at how one industry is transforming with the digital era. Learn more about connected healthcare in the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare.

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About Paul Clark

Paul Clark is the Senior Director of Technology Partner Marketing at SAP. He is responsible for developing and executing partner marketing strategies, activities, and programs in joint go-to-market plans with global technology partners. The goal is to increase opportunities, pipeline, and revenue through demand generation via SAP's global and local partner ecosystems.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

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

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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3 Ways To Convince Your Workforce To Stop Fearing Digital Transformation

Paul Kurchina

Change of any kind – especially when it’s foisted on you without your commitment – can be dreadful. It may even resemble the return home from a disappointing doctor’s appointment. After shocking the doctor with high numbers across the board, your spouse replaces all of your most-loved foods (the leftover pizza from last night!) and beverages (the after-work beer and soda!) with kale, quinoa, and juice that looks like algae purged by a blender. Immediately, you resist: “How dare my loved one change my diet without my consent! I have no control! Why eat if I can’t be happy with what’s on my plate?”

That’s exactly how most employees view digital transformation initiatives. During the Americas’ SAP User Group (ASUG) webcast “The Only Thing to Fear Is Fear Itself: Embracing Change and Seizing the Opportunity of the Digital Transformation,” Keith R. Sturgill, CIO of Eastman Chemical Company and ASUG Board Chair, said, “in times of transformative change, great opportunities are invaluable. But, it also comes at a great cost because it’s not easy.” Sometimes the process is so daunting that we stop it, ignore it, and resume using our ingrained habits.

While technology-enabled, the real change behind digital transformation is all about people: how they work, collaborate, and make decisions. And changing people is always harder than implementing new technology. But, it’s not impossible once everyone – including leadership, employees, and partners – accepts these three realities of our digital world.

Reality check #1: Digital disruption is not just evolving. It’s already here!

Hearing from customers directly, reacting to what they want, and correcting what they don’t like at hard-to-imagine speeds is raising the bar high for every business. “Connecting people worldwide isn’t just allowing them to self-organize ideas and share opinions; it’s creating a new environment [in which] new business models can emerge. Just ask any growing business,” says Sturgill.

Just think:

  • Amazon is changing the face of retail without a single brick-and-mortar store
  • Airbnb is surpassing traditional hotels and motels without building a physical resort
  • Uber is upending the whole notion of taxi service without a single cab

However, it’s not as easy as setting up a website and creating a network of people, assets, and capital to support it. According to Sturgill, “it’s impossible to know the impact of what’s going to occur [in the future.] We can’t even begin to imagine how this is going to change the world. But without a doubt, it will be huge.”

Reality check #2: Decision making will never – and cannot – be the same

In the past, computers were set up with rules to inject automation and efficiency into business processes. Yet, they failed to support more difficult, complex problem solving such as predictions and forecasting that went beyond the scope of a predefined set of algorithms.

Our digital era is bringing about a new approach to decision making. Not just improving or accelerating decisions, but ultimately changing how they are made. Without the confines of codified decision flows, machine learning will soon consume and process an incredible amount of data to “understand” patterns and correlations. And as more data enters the systems, decisions on complex issues will likely become more improved and accurate.

“Machine learning algorithms will augment human insights, not replace them. Let people do what they do best – create, design, establish relationships and capabilities, and knit together insights to innovate with better judgment and unimaginable ideas,” advises Sturgill. “Think of your business as a decision machine.”

Reality check #3: The user experience (not technology) matters most

Like I said earlier in this blog, digital transformation is not about the technology you implement; it’s about your people. This is why the user experience will always eclipse corporate standards. From your customer to your workforce, consumer-grade technology is increasingly expected to become the norm – and it’s even happening to business-to-business (B2B) companies quicker than anyone realizes.

Most digital transformation strategies place a bright spotlight on the customer experience. By understanding what customers value and their unique preferences, B2B companies are using technology as a differentiator that gives customers a reason to engage and purchase from the business.

However, digital transformation does not end with the customer experience. “It is about people in your organization – talented, empowered, and passionate people. Employees should expect the work environment to be at least as good as their home computing environment. It should be as easy to order a new laptop at work as it is at home,” remarks Sturgill. “You need to commit to improving the work experience of your employees.”

Get your workforce engaged and passionate about digital transformation. Watch the webcast replay The Only Thing to Fear Is Fear Itself: Embracing Change and Seizing the Opportunity of the Digital Transformationin a series hosted by ASUG.

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