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What Going Digital Really Means For Your Supply Chain

Amr El Meleegy

Like the air we breathe, the term “digital” permeates every facet of our lives, so much that it’s become a fact of life that we take for granted. We use digital technology to communicate information, learn new skills, sell goods, shop, and much more. While most find this new way of life revolutionary, others might argue that there is nothing really new about digital. Why? Because they have been doing digital forever.

For decades, supply chains have incorporated digital technologies like programmable logic controllers, radio-frequency ID, EDI, and electronic documents into their processes and operations. If that’s digital transformation, supply chain operators have long-boarded that train before anyone else thought of coming along for the ride. Over the last 25 years, these technologies have optimized and streamlined the function dramatically – evolving rapidly to accelerate processes, squeeze costs, and offer better quality.

So why are we still talking about digitally transforming the supply chain? During the SAP Radio episode Digital Transformation Across the Extended Supply Chain, from the Coffee Break with Game-Changers Future, Rick Imber, national vice president for the Extended Supply Chain Center of Excellence at SAP, stated “The key is going digital with your business processes and eliminate all those manual steps so you can give the customer what they want. That’s what supply chain digital transformation is all about – the customer.”

Redefining the supply chain one digital innovation at a time

When executives say that their supply chain is going through a digital transformation, they are not referring to the traditional model of supply, demand, and fulfillment. They really mean the extended supply chain – a close integration with other lines of business units that impact and are influenced by the supply chain such as product development, manufacturing, sales, and operations to name a few. Most important, that entire network needs to revolve around delivering the best-possible customer experience.

According to Michael Yagdar, principal and America’s SAP leader at Ernst and Young, the demand for instant service in near perfect quality is bringing additional pressure to the supply chain. “Every single day, companies provide excellent service or ultimate flexibility to the customer. But the implications for the business are significant. Just look at how the supply chain needs to evolve to meet that demand. Customer intimacy is now the source of differentiation,” he stated during the panel discussion with Imber.

Take smart vending machines, for example. With this new beverage delivery system, consumers can personalize their drink, choosing different flavors and ingredients by simply pressing a few buttons on a single machine. While this may sound like a great differentiator, this is only half of the story. By linking the kiosk to a supplier network, enterprises can provide insights to their suppliers into what consumers prefer and how much they pour at a single visit. Not only will suppliers understand which products are selling and need to be replenished, but they can also pinpoint an opportunity to offer a new flavor on store shelves.

Another great digital technology that is evolving the supply chain is 3D printing. For Barilla, this technology is revolutionizing its pasta production and realigning its entire supply chain. The brand can now offer more than just five varieties of pasta to restaurants, retailers, and wholesalers, giving them a choice of ingredients (vegan!), flavors (Mediterranean tomato!), and shapes (soccer balls to celebrate my favorite team’s win!). By putting a 3D printer in its customers’ facilities, Barilla’s supply chain must anticipate and fulfill every possible configuration. The whole notion of demand anticipation and fulfillment and replenishment is completely flipped. Instead, the supply chain needs to think about arriving at the customer site to service this piece of equipment.

Powering the supply chain of the future

In such a dynamic environment, supply chains – as well as the rest of the business – need a new digital core that can provide full, immediate access to accurate, real-time information about their customers, supplier network, and competitors. Having the right information can make a difference when producing and distributing custom products with shorter lead times and smaller runs to meet customer demand while keeping costs under control, minimizing inventory buffers, and driving productivity to peak levels.

With a new digital core any change in supply and demand can be quickly detected and resolved throughout the supply chain. A large order needs to be suddenly shipped overnight? No problem. The digital core can identify any production gaps efficiently, send an alert about the demand-and-supply imbalance, and provide various options to fix it. Now, the supply-chain process happens in real time with increased visibility and decision support

No matter how efficient your processes, the supply chain is only as good as the supplier network. By integrating the digital core into your suppliers’ network, companies can help ensure that they are using the right and best suppliers.

The supply chain of the future: networked, connected, with a brand-new operational model that keep customers coming back for more.

To get a personalized digital core business scenario recommendations report visit https://www.s4hana.com.

For an in-depth look at the digital supply chain and other influences affecting business in the digital age, 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.

This article originally appeared in SAP Business Trends. It was modified for Digitalist Magazine.

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Amr El Meleegy

About Amr El Meleegy

Amr El Meleegy is a senior director of Product Marketing at SAP. He is currently responsible for our next-generation suite of business applications, SAP S/4HANA.

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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Anja Reschke

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.

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Paul Clark

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.

SAP_Disruption_QA_images2400x1600_3

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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Sherry Turkle: We Need to Talk

Stephanie Overby

reclaiming-conversation-sherry-turkle-200x300MIT psychologist Sherry Turkle on why we need to talk to our colleagues

Human beings are communicating more often and with more people than ever before, thanks to the digital devices we are all but tethered to. But the art of conversation is in decline. MIT psychologist Sherry Turkle, who has devoted her career to examining the impact of technology on human interaction, lays out some worrying consequences in her latest book, Reclaiming Conversation: The Power of Talk in a Digital Age. Overreliance on digital communication has not only affected our ability to have effective face-to-face exchanges but has also diminished our capacity for empathy and intimacy. In addition, digital discussions are often less productive and effective than in-person interactions.

We talked to Turkle about the value of human interaction that is unmediated by technology, when to choose talking over texts and e-mail, and how corporate leaders can revive conversation in the digital workplace.

Q: The big trend in business is digital transformation. A major goal is to automate and digitize interactions. What are companies losing in the bargain?

Sherry Turkle: When you want to build trust, when you want to get to know someone new, when you want to seal a deal—these are not moments for transactions, which are fairly blunt and objective instruments for communicating information. These are times for conversations, which are subjective and emotional and enable greater understanding. Good managers need to know when they are dealing with a moment when a transaction is appropriate and when it is a moment for a human exchange. If you try to be transactional when you need a conversation, you are on your way to frustration, disappointing results, and—most often—the need to do it all again.

Q: How has the increase in digital communications affected our ability to talk to each other?

Turkle: We find ways to not have the conversations that count. We would rather keep communication on screens. As one young man told me when I asked what was wrong with conversation: “It takes place in real time, and you can’t control what you’re going to say!” Of course, that is what’s “wrong” with conversation. But, it is also what’s profoundly right with conversation. It is a place where intimacy is born. The link between face-to-face conversation and empathy is strong. There has been a 40% decline in empathy among college students over the past 20 years, with most of that decline happening in the past decade.

Q: Why is face-to-face conversation important in business? Can’t that  effectively be simulated using technology?

Turkle: We are creatures designed for broadband, rich, nuanced exchange through our voices and faces. We are inventing new languages on the screen, and we are doing that with invention, wit, and nuance. But in business (as in friendship and love), we are misunderstanding each other—badly. And we are sending 10 e-mails where a brief call would do.

I am a pragmatist. When you need a video link or a call, use these tools. But what I see is people avoiding presence when it is possible.

Q: How can managers make a business case for talking?

Turkle: Research shows that conversation is good for the bottom line. People are more productive, creative, and engaged with their work when they have time for face. to-face talk. Sociologist Ben Waber had employees wear “sociometric badges” that measured their conversational patterns. When people were given coffee breaks together, performance improved. One CEO I interviewed instituted a breakfast meeting for his team. It gave them all an opportunity to share ideas and talk freely. Group productivity increased, and they needed fewer formal meetings.

One “easy” change is to eliminate devices from in-person meetings. The research is clear: devices distract. They diminish conversations and the relationships among participants. Make meetings shorter if necessary. Offer breaks. Designate one employee to notify attendees if an emergency arises. A meeting is a time to meet.

Q: What else can leaders do to encourage conversation amid the pressure to digitize?

Turkle: Make it clear that in your organization being online is not how you show your loyalty. Instead, show that what is valued is an employee who picks up the phone. Visit your colleagues in person. If you talk, others will talk. Also, design the workplace for conversation by creating device-free spaces that encourage it. Help employees work through their terror of real- time conversations by making it clear that revealing your thought process is valued. Finally, be less transactional. Begin an answer to an e-mail by saying, “I’m thinking.” It’s a powerful message. Complicated problems require thinking and then time to talk.

Q: We conducted this interview electronically to accommodate our schedules. What did I miss out on? How about you?

Turkle: We missed out on the chance to know each other better. What we had was a transaction. I took the time to lay out some of my ideas. But you and I are not closer for it. In business, this would not put us in the best relationship to move forward with a project. Now would be time for conversation!

 

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