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Top Six Ways To Modernize The Supply Chain

Marcell Vollmer

When was the last time you encountered a supply chain professional or colleague who didn’t have a smartphone or social media account?

Like the rest of the world, procurement has gone digital. According to a survey conducted by Oxford Economics, the function is undergoing a radical modernization, leveraging technology to improve processes and transform the way work gets done.

Today’s supply chain professionals are part of an “always-on” culture. And they need to be empowered with technology and insights that enable them keep pace. To discover, connect, and collaborate with their trading partners and peers across the street and around the globe. To work anywhere, anytime from any device. To create new value that spans the enterprise.

How can you enable this within your organization?

1.  Rethink the process

Supply chain management isn’t a set of discreet tasks performed in silos, but a connected one carried out across many functions and geographies. And the key to executing it well is in linking multiple parties and systems using a common platform that supports the entire source-to-settle process and provides a gateway for collaboration both within and beyond the enterprise on a global scale. Networks are a great way to do this.

2. Get connected

Every day, billions of consumers around the world use social networks to manage their personal connections. To shop, share and consume. Why? Because they make things easy. The same is true of business networks, which provide an equally easy and consumer-like way for companies to manage their trading relationships and commerce activities.

With a few clicks, you can shop for the goods and services you need to run your business, order and have them shipped. When it comes to payments, you can kill the paper checks and transfer the funds electronically. Or you can review your receivables and decide whether you want to offer a discount in return for early payment.

You can view and manage your spend across all major categories and find opportunities for savings. You can manage your entire workforce –temporary and full-time employees alike –and empower them to do their jobs anywhere, anytime from any device. And you can engage your customers across multiple channels and create personalized experiences along every step of their journey that delight and keep them loyal.

So get connected.

3. Don’t just automate, innovate

Digitization is the first step most companies take to improve the efficiency and effectiveness of their supply chain operations. And while it’s a good start, automating processes such as procurement, orders, invoicing, and payment doesn’t in and of itself create value. Where the real value of digitization lies is in enabling new processes that drive more collaborative, intelligent, and transparent ways of operating. Processes like dynamic discounting that allow buyers to secure discounts that can be reinvested in research and development or sellers to lock in funding to expand their business. Or contingent workforce management through which companies can identify and manage highly specialized resources needed to develop that next-generation product and open new revenue streams.

Such processes can change the game. And networks make them possible by providing a common platform from which all parties can in connect and collaborate – regardless of the back-end systems they may be using.

4. Work smarter

Like their social counterparts, business networks house incredible amounts of insights and data that can be used to learn in context and act in smarter ways. You can, for instance, access performance ratings on potential trading partners along with recommendations from the community to determine who to do business with or detect risk in your supply chain. You can combine in-the-moment purchasing data with historic trends to predict stock outs before they happen and direct replenishment. Or gain real-time insights into invoice approval status to more efficiently manage your cash. Engage in these communities and unleash the power of this information to optimize your supply chain decisions and accelerate innovation and growth.

5. Run Simple

Complexity is the enemy of business. Every year, it costs the 200 biggest companies in the world an estimated $237 billion. That’s ten percent of profits buried under a mountain of waste, inefficiency, and missed opportunity. Digitization can remove this complexity by enabling new, more efficient processes that allow you – and your supply chain – to run more simply than ever.

6. Get moving

In today’s economy, digitization is the on-ramp to innovation and success. With the right strategy and solutions to support it, you can transform your supply chain and create entirely new levels of value for your organization.

So get on the highway and go fast. Or your competition may pass you.

To learn more about how to modernize your supply chain through digitization, download “Collaborating with Direct Materials Suppliers Across Your Global Extended Supply Chain.”

This article first appeared on Supply Chain Digital.

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Marcell Vollmer

About Marcell Vollmer

Marcell Vollmer is the Chief Digital Officer for SAP Ariba (SAP). He is responsible for helping customers digitalize their supply chain. Prior to this role, Marcell was the Chief Operating Officer for SAP Ariba, enabling the company to setup a startup within the larger SAP business. He was also the Chief Procurement Officer at SAP SE, where he transformed the global procurement organization towards a strategic, end-to-end driven organization, which runs SAP Ariba and SAP Fieldglass solutions, as well as Concur technologies in the cloud. Marcell has more than 20 years of experience in working in international companies, starting with DHL where he delivered multiple supply chain optimization projects.

Is Your Supply Chain Prepared For The Digital Future?

Kristin Ulrich

Ninety percent of CEOs believe the digital economy will have a major impact on their industry, but only 25% have a digitalization plan in place, according to SAP research.

Most global supply chains are unequipped to cope with the world we’re entering. For that reason, supply chain managers need to shift their attention from cutting costs to enabling new processes and increasing connectivity and agility. Speed is also crucial, as product cycles are becoming shorter and more fluid. Additionally, as customers demand faster product and service development and delivery, organizations must transform their existing business processes to reduce response times.

A key part of this transition includes the transformation of traditional supply chains into demand-sensitive business networks. Standardized supply chain and logistics approaches pose threats for companies. Enterprises can use the latest digital technologies to overcome these threats a couple of different ways:

  1. Gaining a better understanding of what the customer wants while enhancing customer relationships
  1. Transforming supply chain processes and responding to the rising tide of global uncertainties and business complexities

The big move toward digitalization is coming sooner than many companies expect, according to Digital Supply Chain Management – 2020 Vision. This white paper presents an overview of supply chain digitalization best practices, courtesy of several leading enterprises. The document also provides a view of today’s challenges and trends versus the vision of a digital supply chain in 2020.

We have developed a digital maturity assessment tool based on our findings. By filling out this brief questionnaire designed for IT, operations, and supply chain managers, you’ll be able to evaluate your company’s level of digital maturity in the following categories:

  • Design
  • Plan
  • Respond
  • Produce
  • Make
  • Deliver
  • Operate

Following the completion of the questionnaire, you will receive a customized summary of your individual results, free of charge. We’ll also send you a global analysis of industry and peer-group maturities at the end of the year.

Early adopters of digital transformation have increased revenue by nine percent, market valuation by 12%, and profitability by 26%, according to SAP research.

Take your first step toward digitalizing your supply chain today by completing your very own digital maturity assessment.

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Kristin Ulrich

About Kristin Ulrich

Kristin Ulrich is a business consultant for Supply Chain Management of Business Transformation Services at SAP. As part of her responsibilities, Kristin developed a digital maturity model, the underlying concept behind the SAP Digital Supply Chain Maturity Assessment. Prior to her role at SAP, Kristin has worked in different industries in operations management, procurement, and supply chain management while gaining a broad understanding of trends and challenges of the digitalization of business processes. For further inquiries, please contact her at kristin.ulrich@sap.com.

Leading In Digital Manufacturing: Overcoming Challenges In A Time Of Automotive Disruption

William Newman

Today’s manufacturing leader is confounded by a modern-day “who moved my cheese” dilemma. As automakers increasingly move from traditional personal vehicle sales – what you and I buy today and drive and keep in our garage overnight – to a more robust set of rideshare vehicles and autonomous “living spaces” that are constantly in use in a large population fleet – complexities arise around not only what to make but also how and when to make. In fact, data suggests that those personal vehicle sales will account for only two percent growth from now until 2030 (McKinsey, 2016). Where will the new revenue come from? All the digital services that you and I will consume while we rideshare and transit in our mobile living spaces – to the tune of $1.5 trillion in consumer services.

This leaves manufacturing leaders with a dilemma. As traditional business models of personal vehicle sales (i.e, OEMs sell a vehicle to you, and you own and operate it) and their associated value chains continue to be a significant but stagnant growth market, emerging business models and those new digital services and value chains will account for the lion’s share of 50x industry growth in digital services and transportation – and ultimately the future of Automotive 4.0 companies. While we are in this transition, manufacturing leaders will need to maintain their profitability in current business operations while ramping up and capturing those new digital markets. Specifically, manufacturing leaders that thrive and survive will need to be quick and agile at determining what to make, how to make it, and when to make it. But how does a manufacturing leader transform its operations?

modes of automotive manufacturing

We need to go back over 100 years to understand this long structural change in automotive manufacturing. In the early years of the industry, expert craftsmen built vehicles by hand and created modern luxury machines. This represented Mode 0 manufacturing, with a lack of automation. With automation in the 1960s and 1970s came Mode 1 manufacturing, whereby machines and tools were automated to perform tasks based on operator programs. Today, new concepts in machine learning, artificial intelligence (AI), and predictive processes present manufacturing leaders with new complexities – and opportunities – to move from Mode 1 manufacturing to Mode 2 operating models and processes. This represents a natural progression from original manual operations and work tasks to taking advantage of advances in technology, integration, and Big Data.

This enables manufacturers to consider a brand new operating model of what to build, how to build, and when to build that were never before possible. As automotive manufacturers move to Mode 2 operations and address vehicle-market opportunities that the new automotive market offers, manufacturing leaders also must consider the current revenue market during the shift. The ability to operate in a “bimodal” manufacturing environment allows carmakers and suppliers to build vastly different components and assemblies within a confined, integrated, and flexible environment.

Mode 2 manufacturers can create standard-capability vehicles alongside those completely outfitted for ridesharing and digital services. Additive manufacturing allows 3-D printed tooling to build plastic parts as and where needed, reducing vendor-managed inventories, production constraints, and bottlenecks.

difference between mode 1 and mode 2

As the need to maintain current production volumes remains while traditional automotive vehicles give way to more advanced transportation, connected vehicle automakers and suppliers are creating bimodal manufacturing capabilities. Both Mode 1 and Mode 2 manufacturing capabilities coexist, driving manufacturing executives to manage assets, processes, and talent flexibly with greater plant integration.

Today, leading Mode 2 automotive manufacturers are taking advantage of flexible, intelligent operating models to drive profit and increase competitiveness while taking advantage of new market opportunities in the rideshare, electrification, and connected vehicle segments. But why change? Perhaps Harvard Business School’s Clayton Christensen – who introduced the theory of disruptive innovation 20 years ago – says it best: “The incumbent leaders never see it coming. They focus on their best customers and try to provide what they need [today]” versus what the market needs to deliver tomorrow.

For manufacturing leaders, it will indeed be a wild ride until 2030 and beyond.

Learn more about the changing nature of vehicle ownership in Enter The Digital Consumer, Driver, Services Buyer.

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William Newman

About William Newman

William Newman is a Strategic Industry Advisor, providing industry perspective, strategic solution advice, and thought leadership to support SAP automotive and discrete industry customers and their co-innovation programs. He helps build and maintain SAP's leadership position in the automotive industry and associated industry segments. He manages SAP’s annual digital aftermarket survey program and serves as the ASUG Point of Contact for the NA Automotive SIG. He is the author of two SAP Press books and a LinkedIn Editor’s Choice contributor.

Teaching Machines Right from Wrong

Dan Wellers

 

By 2018, smart machines will supervise over 3 million workers worldwide.
21% of consumers in an FTC study had confirmed errors on their credit reports.
2014: the first annual Fairness, Accountability, and Transparency in Machine Learning conference.
A private university encouraged 20-25 students to drop out based on AI predictions of
poor grades.

Real-world examples of misused AI algorithms abound. These are just a few:

  • Women who weren’t pregnant — or weren’t ready to reveal it — received special offers of baby products and “congratulatory” messages.
  • People with minority ethnic names received a disproportionate number of ads implying they had criminal records.
  • Guests at a party learned a ride-hailing company kept track of customers who stayed out all night and went home in the wee hours.

Ethical-Edge Cases

Credit scoring algorithms designed to evaluate lending risk are now commonly used to gauge reliability and trustworthiness, determining whether someone should get a job or apartment.

Insurance underwriting algorithms determine the extent, price, and type of coverage someone can get, with little room for disagreement.

Healthcare algorithms could be used to penalize the currently healthy for their probability of future illness.

Algorithms often use zip codes as proxy for (illegal) racial profiling in major decisions, such as employment and law enforcement.

Self-driving cars will have to learn how to react in an accident situation when every possible outcome is bad.


What Should We Do About It?

All machine learning contains assumptions and biases of the humans who create it — unconscious or otherwise. To ensure fairness, business leaders must insist that AI be built on a strong ethical foundation.

We can:

  • Monitor algorithms for neutrality and positive outcomes.
  • Support academic research into making AI-driven decisions more fair, accountable, and transparent.
  • Create human-driven overrides, grievance procedures, and anti-bias laws.
  • Include ethics education in all employee training and development.

Above all, we must consider this a human issue, not a technological one. AI is only as unbiased a tool as we make it. It’s our responsibility to keep it on the ethical straight and narrow.


Download the executive brief Teaching Machines Right from Wrong.


Read the full article AI and Ethics: We Will Live What Machines Learn

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Dan Wellers

About Dan Wellers

Dan Wellers is the Global Lead of Digital Futures at SAP, which explores how organizations can anticipate the future impact of exponential technologies. Dan has extensive experience in technology marketing and business strategy, plus management, consulting, and sales.

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Why Millennials Quit: Understanding A New Workforce

Shelly Kramer

Millennials are like mobile devices: they’re everywhere. You can’t visit a coffee shop without encountering both in large numbers. But after all, who doesn’t like a little caffeine with their connectivity? The point is that you should be paying attention to millennials now more than ever because they have surpassed Boomers and Gen-Xers as the largest generation.

Unfortunately for the workforce, they’re also the generation most likely to quit. Let’s examine a new report that sheds some light on exactly why that is—and what you can do to keep millennial employees working for you longer.

New workforce, new values

Deloitte found that two out of three millennials are expected to leave their current jobs by 2020. The survey also found that a staggering one in four would probably move on in the next year alone.

If you’re a business owner, consider putting four of your millennial employees in a room. Take a look around—one of them will be gone next year. Besides their skills and contributions, you’ve also lost time and resources spent by onboarding and training those employees—a very costly process. According to a new report from XYZ University, turnover costs U.S. companies a whopping $30.5 billion annually.

Let’s take a step back and look at this new workforce with new priorities and values.

Everything about millennials is different, from how to market to them as consumers to how you treat them as employees. The catalyst for this shift is the difference in what they value most. Millennials grew up with technology at their fingertips and are the most highly educated generation to date. Many have delayed marriage and/or parenthood in favor of pursuing their careers, which aren’t always about having a great paycheck (although that helps). Instead, it may be more that the core values of your business (like sustainability, for example) or its mission are the reasons that millennials stick around at the same job or look for opportunities elsewhere. Consider this: How invested are they in their work? Are they bored? What does their work/life balance look like? Do they have advancement opportunities?

Ping-pong tables and bringing your dog to work might be trendy, but they aren’t the solution to retaining a millennial workforce. So why exactly are they quitting? Let’s take a look at the data.

Millennials’ common reasons for quitting

In order to gain more insight into the problem of millennial turnover, XYZ University surveyed more than 500 respondents between the ages of 21 and 34 years old. There was a good mix of men and women, college grads versus high school grads, and entry-level employees versus managers. We’re all dying to know: Why did they quit? Here are the most popular reasons, some in their own words:

  • Millennials are risk-takers. XYZ University attributes this affection for risk taking with the fact that millennials essentially came of age during the recession. Surveyed millennials reported this experience made them wary of spending decades working at one company only to be potentially laid off.
  • They are focused on education. More than one-third of millennials hold college degrees. Those seeking advanced degrees can find themselves struggling to finish school while holding down a job, necessitating odd hours or more than one part-time gig. As a whole, this generation is entering the job market later, with higher degrees and higher debt.
  • They don’t want just any job—they want one that fits. In an age where both startups and seasoned companies are enjoying success, there is no shortage of job opportunities. As such, they’re often looking for one that suits their identity and their goals, not just the one that comes up first in an online search. Interestingly, job fit is often prioritized over job pay for millennials. Don’t forget, if they have to start their own company, they will—the average age for millennial entrepreneurs is 27.
  • They want skills that make them competitive. Many millennials enjoy the challenge that accompanies competition, so wearing many hats at a position is actually a good thing. One millennial journalist who used to work at Forbes reported that millennials want to learn by “being in the trenches, and doing it alongside the people who do it best.”
  • They want to do something that matters. Millennials have grown up with change, both good and bad, so they’re unafraid of making changes in their own lives to pursue careers that align with their desire to make a difference.
  • They prefer flexibility. Technology today means it’s possible to work from essentially anywhere that has an Internet connection, so many millennials expect at least some level of flexibility when it comes to their employer. Working remotely all of the time isn’t feasible for every situation, of course, but millennials expect companies to be flexible enough to allow them to occasionally dictate their own schedules. If they have no say in their workday, that’s a red flag.
  • They’ve got skills—and they want to use them. In the words of a 24-year-old designer, millennials “don’t need to print copies all day.” Many have paid (or are in the midst of paying) for their own education, and they’re ready and willing to put it to work. Most would prefer you leave the smaller tasks to the interns.
  • They got a better offer. Thirty-five percent of respondents to XYZ’s survey said they quit a previous job because they received a better opportunity. That makes sense, especially as recruiting is made simpler by technology. (Hello, LinkedIn.)
  • They seek mentors. Millennials are used to being supervised, as many were raised by what have been dubbed as “helicopter parents.” Receiving support from those in charge is the norm, not the anomaly, for this generation, and they expect that in the workplace, too.

Note that it’s not just XYZ University making this final point about the importance of mentoring. Consider Figures 1 and 2 from Deloitte, proving that millennials with worthwhile mentors report high satisfaction rates in other areas, such as personal development. As you can see, this can trickle down into employee satisfaction and ultimately result in higher retention numbers.

Millennials and Mentors
Figure 1. Source: Deloitte


Figure 2. Source: Deloitte

Failure to . . .

No, not communicate—I would say “engage.” On second thought, communication plays a role in that, too. (Who would have thought “Cool Hand Luke” would be applicable to this conversation?)

Data from a recent Gallup poll reiterates that millennials are “job-hoppers,” also pointing out that most of them—71 percent, to be exact—are either not engaged in or are actively disengaged from the workplace. That’s a striking number, but businesses aren’t without hope. That same Gallup poll found that millennials who reported they are engaged at work were 26 percent less likely than their disengaged counterparts to consider switching jobs, even with a raise of up to 20 percent. That’s huge. Furthermore, if the market improves in the next year, those engaged millennial employees are 64 percent less likely to job-hop than those who report feeling actively disengaged.

What’s next?

I’ve covered a lot in this discussion, but here’s what I hope you will take away: Millennials comprise a majority of the workforce, but they’re changing how you should look at hiring, recruiting, and retention as a whole. What matters to millennials matters to your other generations of employees, too. Mentoring, compensation, flexibility, and engagement have always been important, but thanks to the vocal millennial generation, we’re just now learning exactly how much.

What has been your experience with millennials and turnover? Are you a millennial who has recently left a job or are currently looking for a new position? If so, what are you missing from your current employer, and what are you looking for in a prospective one? Alternatively, if you’re reading this from a company perspective, how do you think your organization stacks up in the hearts and minds of your millennial employees? Do you have plans to do anything differently? I’d love to hear your thoughts.

For more insight on millennials and the workforce, see Multigenerational Workforce? Collaboration Tech Is The Key To Success.

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