Drones: Poised For Takeoff In The Digital Economy

Stefan Guertzgen

Drones have captured the popular imagination, making a splash on social media, in the popular press, and even on hit television shows. But drones can do a lot more than entertain. They are actually a core driver of transformation in the digital economy. Here are a few examples.

Precision farming

Using swarm intelligence, specialized drones home in on weed-infested areas to prevent invasive plants from encroaching on valuable crops. These drones can deliver pesticides only and precisely where they are needed, reducing the environmental impact and increasing crop yields. Drones can also measure soil conditions as well as health status of plants to deliver water, fertilizers, or other components to ensure optimum growth. The result is increased crop yields at lower cost and with reduced use of potentially dangerous pesticides, a concept known as digital farming.

Remote location inspection and maintenance

Pipelines, mining operations, offshore oil rigs, and railroad tracks are often located far from centers of commerce, yet it is imperative that they operate flawlessly. Drones can easily monitor even the most remote stretches and when signal repairs are needed or dangerous conditions are occurring.

Spare parts delivery

When machinery and equipment goes down, time is of the essence. Drones can quickly and efficiently deliver needed spare parts from manufacturers or 3D printers directly to the equipment’s location, saving time, preventing unnecessary downtime, and reducing investments in MRO inventory.

Military observation

Drones can keep track of weapon and troop deployments in military situations without endangering humans. They can also provide a complete view of any skirmish, creating a tactical advantage by eliminating the element of surprise.

Search and rescue

Search-and-rescue missions are expensive and time-consuming. Physical limitations such as fatigue, hunger, personal safety, and the need for light and visibility can delay or slow searches conducted by human rescuers. Drones can search wide areas under challenging conditions and instantly send data back to a central location. Once the search target is identified, rescue teams can set off with the right equipment, knowing exactly where to focus their search. This makes search-and-rescue operations faster, less costly, and more effective. Watch this video for more insight.

Scientific research

Drones can track animal migrations, report on weather patterns, and help discover rare and previously unknown plant and animal species.

Life sciences

Combining nanotechnology and drones enables technology first envisioned by science fiction in the 1960s. Tiny drones can now be injected into the body to perform potentially lifesaving tasks such as micro-surgery, clear blockages, inspect aneurisms, and deliver targeted chemotherapy drugs to cancer sites.

Drones are clearly powerful agents of change as we transform to a digital economy. In addition to the examples highlighted here, drones also play an important role in such industries as insurance risk and damage assessments, wholesale distribution and last-mile deliveries, and delivery and maintenance of essential infrastructure services such as Wi-Fi, Internet, and telephone for remote locations in emerging areas. As drone technology gets more sophisticated, industries of all types will find increasingly innovative ways to use them to increase business efficiency and bolster the digital economy.

For more on how advanced technology will impact our future, see 20 Technology Predictions To Keep Your Eye On In 2017.

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About Stefan Guertzgen

Dr. Stefan Guertzgen is the Global Director of Industry Solution Marketing for Chemicals at SAP. He is responsible for driving Industry Thought Leadership, Positioning & Messaging and strategic Portfolio Decisions for Chemicals.

Beyond Earth Day: Technology's Role In Helping Businesses Do More With Less

Daniel Schmid

Close to a billion people around the world are getting ready to celebrate Earth Day on April 22. The movement started in 1970, when millions of people marched to protest the impact of industrial development on the environment. Despite many achievements since then, and almost 2.7 billion “acts of green” registered by the Earth Day network,[i] the need for action is more acute than ever.

As the famed scientist and nobel prize winner Stephen Hawking noted “Our population and our use of the finite resources of planet Earth are growing exponentially, along with our technical ability to change the environment for good or ill.”

We have reason for concern, but also hope. New technologies could be the urgently needed accelerator to address climate change, transition to clean energy, and reduce negative environmental impacts – if we apply these wisely as a force for good instead of evil.

While all of us have a role to play in this, businesses, like SAP, have a unique one due to their reach and power to make a positive impact. We have the responsibility to stand for a higher purpose that goes beyond economic success. For SAP, it is to “help the world run better and improve people’s lives.” Together with our customers and numerous other organizations, we are working to bring this vision and purpose to life and to address the United Nations 17 Sustainable Development Goals (SDGs).

Let me pick just one example: UN Sustainable Development Goal (SDG) #12, which focuses on initiatives that “ensure sustainable consumption and production patterns.”[ii] Put simply, this means managing the world’s people and natural resources better and mitigating harm to people and the environment. Isn’t this also what enterprise resource planning (ERP) should be about?

Why does this matter?

The demand of already-constrained and finite resources is expected to rise exponentially: If the global population reaches 9.6 billion by 2050, the equivalent of almost three planets will be required to sustain current lifestyles according to the UN.[iii] Business as usual is no option in this scenario. New ways of doing more and better with less are required.

Digital solutions that drive efficiency and resource optimization are already helping to achieve the UN’s call to “increase net welfare gains from economic activities by reducing resource use, degradation, and pollution along the whole lifecycle while increasing quality of life.” Companies, such as Vestas and Kaiserwetter, are leveraging SAP technology to enhance access to renewable and affordable energy. Meanwhile, Vectus, for instance, applies it to conserve precious water in India.

Take food as another example. Each year about one-third of all produced food ends up in the garbage or spoils due to poor transportation and harvesting practices. That’s equivalent to 1.3 billion tons of food at a value of US$1 trillion.[iv] Which business or government cannot afford to address this?

Acting as enabler and exemplar

For many companies like SAP, it starts with leading by example through our own business practices.[v] For example, we have established sustainable, end-to-end lifecycle management of our IT equipment, which encompass sustainable procurement practices, energy efficient operations, and IT reuse and recycling.

However, the scale comes from enabling a base of 378,000 customers through our technology and solutions. Together, they produce 76% of the world’s transaction revenue and 78% of the world’s food.

The potential is huge. Precision farming solutions, such as the one for Stara, can help to maximize crop yields while minimizing the application of fertilizer, pesticides, water, and other costly resources and decreasing their environmental impact. Better forecasting of demand through the use of Big Data and next-generation ERP can help deliver perishable foods to the right markets. Our transportation management solutions can help optimize loads and routes to make food products available at the right time with minimal environmental impact. Business network, cloud procurement solutions,[vi] and the product stewardship network[vii] can help retailers, including Walmart,[viii] and consumers gain insight into food supply chains and make sustainable buying decisions. And the list goes on.

Are we done?

Definitely not. We need more purpose-driven innovation and partnerships that connect the dots and enable a truly circular economy in the future. It is not just about responsible sourcing or about recycling – it’s about thinking it the full product lifecycle from design to end of life.

Dame Ellen MacArthur, who holds the record for circumnavigating the world alone, once said: “If we could build an economy that would use things rather than use them up, we could build a future that really could work in the long term.”[ix] 

This Earth Day, I encourage everyone to step up and be part in shaping this future. As Chief Sustainability Officer at SAP, I will apply all my forces to make SAP an enabler and exemplar for sustainability and for holistic environmental, social and economic value creation. Our CEO Bill McDermott, announced today, that as part of our commitment to address SDG #13 “Climate Action” and become carbon neutral by 2025, SAP is teaming up with partners including Livelihoods Fund, Climate Partner, Plant for the Planet to plant 5 million new trees in the next seven years all over the world.

And there is even more we can do. According to the research SMARTer2030 conducted by Global e-Sustainability Initiative (GeSI) and Accenture Strategy,[x] digitizing business processes and using data to make better decisions about resource usage are essential to reduce carbon emissions. Based on the study results, as well as its own calculations and analysis,[xi] SAP came to the conclusion, that digitization in six major industries could help to save up to 7.6 gigatons emissions. That is 63% of the total of 12.1 gigatons emissions identified by the research that could be cut by 2030. An equivalent to approximately 750 billion trees. Just imagine how many more this could be if applied to all industries.

How will YOU join in? We’ve made it easy.  See how!

 

______________________________________________________________

[i] https://www.earthday.org/take-action/

[ii] http://www.un.org/sustainabledevelopment/sustainable-consumption-production/

[iii] http://www.un.org/sustainabledevelopment/sustainable-consumption-production/

[iv] http://www.un.org/sustainabledevelopment/sustainable-consumption-production/

[v] https://www.sap.com/corporate/en/company/sustainability-csr/sustainable-operations.environment.html#environment

[vi] https://www.ariba.com/about

[vii] https://wiki.scn.sap.com/wiki/display/PLM/Overview+-+SAP+Product+Stewardship+Network

[viii] https://cloudplatform.sap.com/success/walmart.html

[ix] https://www.ted.com/talks/dame_ellen_macarthur_the_surprising_thing_i_learned_sailing_solo_around_the_world/transcript?language=en#t-762180

[x] http://smarter2030.gesi.org

[xi] http://www.digitalistmag.com/resource-optimization/2015/12/17/tech-cut-emissions-save-natural-resources-03860595

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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.

Smart Cities And The New Role Of Chemical Companies In The Digital Economy

Stefan Guertzgen

According to Wikipedia, a ”smart cityis an urban development that integrates information and communication technology (ICT) and Internet of things (IoT) technology in a secure fashion to manage its assets. Multiple industries and stakeholders collaborate on platforms owned and run by local communities. Arup estimates that the global market for smart urban services will be $400 billion per annum by 2020. Examples of smart city technologies and programs have been implemented in Milton Keynes, Amsterdam, Barcelona, Madrid, Stockholm, and in China.

Often overlooked for their benefits, chemical companies can play a major role in the digital economy and the efficiency of smart cities. How could chemicals benefit a smart city?

Utilities and environmental benefits

Chemical companies can contribute to the energy needs of a smart city and improve better environmental practices. For example, many chemical companies operate their own power plants. When these plants create energy surpluses, they could offer the energy to local communities in a smart energy initiative. Since plants are connected to the grid, the infrastructure for this application is already in place. This solution could eliminate the need for additional power plants, minimizing environmental repercussions.

There are also many potential applications for the chemical industry to support breakthrough innovations that reach beyond their usual boundaries. For example, chemical companies that produce hydrogen could be integrated into a fuel cell-driven connected-car concept.

Chemical companies could also be tied into water systems. Many chemical companies produce chemically treated clean water as a service. In addition, using treated water for municipalities and cooling the power generation units of chemical and utility plants would help to streamline wastewater treatment processes and cut overall costs.

Safety protocols

Chemical companies could easily be aligned with emergency services, providing emergency workers and first responders with training and relevant information on chemical usages and hazards. Smart cities would need to be able to track chemicals being transported and implement safety guidelines such as specific truck routes to minimize risk.

Further, smart cities could collaborate with chemical companies on real-time models to predict the impact of the wind direction, air temperature, and other factors in the event of a chemical release.

Smart regions

Chemical companies could have further applications by combining smart cities with nearby rural areas. For example, these areas could use precision agriculture, which creates better yield with less irrigation, less use of chemicals, and reduced labor.

Also, chemical parks could be established as “smart regions” that incorporate transportation and logistics solutions to help areas run more efficiently. Chemical parks could also include smart buildings, facility management, and other solutions that align with the smart city concept.

Many people see chemical companies as a danger or health threat, but these companies also enhance life and boost civic efficiency in many less visible ways. Offering plant tours, sustainability reports, and other local public relations activities could improve the perception of the chemical industry and help the public understand its important role in everyday life.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value: Accelerating Digital Transformation in Chemicals. Explore how to bring Industry 4.0 insights into your business today: Industry 4.0: What’s Next?

Find out how to unlock the value of IoT for your business.

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About Stefan Guertzgen

Dr. Stefan Guertzgen is the Global Director of Industry Solution Marketing for Chemicals at SAP. He is responsible for driving Industry Thought Leadership, Positioning & Messaging and strategic Portfolio Decisions for Chemicals.

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.

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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