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The Role Of Technology In Retail Food Sustainability

Joerg Koesters

You know your business. You’re an expert in what to expect from your customers, marketing campaigns, supply chain logistics, and IT developments within your field. But there are a lot of new concepts and technologies out there that impact the retail market and food sustainability. Let’s take a quick look at how technology is shaping each of these areas.

Social media and the generation gap

Social media is a hot buzzword right now, but many people in business leadership fail to appreciate the role social media plays in building their brand and their business. We have social media marketing, but it can also be a tool for gathering intelligence on potential issues that arise due to a recall or disease outbreak. However, the data gathered still needs to be handled logically. Gone are the days when a business would hire a couple college kids to respond to queries on social media. Instead, having your social media profiles connected to analytics helps you more quickly determine when you’re dealing with business as usual versus a serious PR nightmare.

But beyond social media, the focus consumers have on food is changing as the generations pass the torch to the next generation. Though we’re often focused on Generation X consumers, due to their position at the top of their earning potential, Generation Z consumers have a radically different view of food retail. In Switzerland, the dairy industry that has remained unchanged for centuries is now facing digitalization, transparency and traceability, potentially to the point of which region, farm, or even cow from which the consumer’s milk comes.

Digital transformation

Another hot trend is digital transformation or digitization of businesses. From farmers in developing countries who use mobile devices to verify the weather conditions for the next few days to utilities that are able to better expand and invest in their infrastructure to power farms, digitization has the opportunity to revolutionize our world.

Imagine a supply chain that starts with a connected farmer in a developing country. Digitization allows for mobile device connectivity, so the farmer can determine what needs to be done about a pest in the field. Sensors allow a grain elevator to estimate what the season’s yield will be, allowing for better distribution of bulk food ingredients around the globe. A manufacturer can use analytics to determine points of peak demand, giving them flexibility with just-in-time supply chain management. A store can use connectivity to determine exactly where produce or meats have come from during a recall. Consumers know they’re getting the best food for their families.

Personalization and 3D printing

Another driving trend in food is personalization. Whether it’s food that meets a hot new diet or doesn’t have allergens that cause health problems for much of the developed world, today’s consumer wants their food their way. As the Internet is bringing people together from across the globe, families with children who face the challenges of ADHD, for example, spoke out and demanded equal food quality to that being developed in Europe. Many children with ADHD have problems with hyperactivity caused by artificial food dyes. In Europe, these dyes have fallen under strict regulation, requiring foods that contain the dyes to be labeled similar to how alcohol and tobacco is in the U.S. Upon learning this, U.S. families demanded through a Change.org petition that a particular candy manufacturer stop using artificial food dyes in its candy.

Another trend in personalization is the advent of the 3D printer. No longer a simple gimmick to experiment with, the 3D printer has become an essential shop-floor tool in large and small businesses worldwide. Why? Because it makes it much more feasible for the average customer to afford the exact specifications they want in their food. Imagine a supermarket where a customer can simply walk up to a kiosk, request a pound of gluten-free, garlic-parmesan flavored pasta that is fortified with vitamins and is available in a number of child-friendly shapes. Instead of having an entire row of pastas, the kiosk only takes up a few square feet while still delivering a wide range of options, from economical to gourmet.

Sustainability

You’ve probably heard plenty about sustainability over the past few years. As a hot new buzzword, it’s regularly thrown into conversations whether it’s really understood or not. You know that climate change is turning into a problem for your suppliers as the weather becomes increasingly unpredictable, making it difficult to forecast potential crop yields in the long term, but what about in the short term? With your customers’ access to and interest in sustainability initiatives, your company needs to provide the information they need on what you’re doing to keep our world running. But can sustainability be good for your business? The answer is a resounding yes!

Many retailers may be unaware of the United Nations’ Sustainable Development Goals. This initiative among member nations is focused on ending hunger, improving nutrition, improving food security, and promoting sustainable agriculture across the world. Currently, half a billion small farms provide 80% of the food for developing nations. Rural development will help increase the output of small farms to meet some of the world’s rising demand. It’s estimated that today, 795 million people are undernourished, and projections show that our world’s population will grow by another two billion by 2050. How will we feed everyone? Sustainability feeds not only today’s generation, but it ensures that the capability remains to feed tomorrow’s generations as well.

Adapting to the latest trends

Though many companies are currently holding their own, how much longer will that option be viable? Food delivery, better convenience store foods, and healthy fast-food chains are all gaining ground in the market. To remain competitive, you need to understand that these seemingly esoteric, theoretical concepts can and will make a tangible impact on how food is grown, transported, personalized, and delivered in the future.

For example, let’s look at online grocery shopping. This trend has been growing wildly in the past few years, with the percentage of U.S. households that have purchased groceries online increasing from 11% in 2013 to 21% in 2015. These households are also shopping differently online compared to in-store shopping, and busy households are increasingly shopping for specific products or setting up subscription-based shopping. How does a traditional grocery store keep customers coming to a brick-and-mortar store when faced with these competitors?

I know you’re busy running your business on a day to day basis, but you can see the additional levels of complexity in these topics that you need to understand to drive future revenue. To remain competitive, you need to improve your customers’ brand loyalty and grow your companys’ market share. By getting a better grip on these topics’ complexity, you’ll be able to address those concerns with a deeper understanding of the latest trends.

At SAP, we believe in helping our clients get the tools they need to stay ahead of the latest trends in their industries. Our upcoming SAP Future of Food Forum is an online series of virtual live discussions, with the first session on October 18. Among the topics we’ll cover during these discussions is the role being played by technology in terms of food sustainability.

To learn more about food sustainability and topics around the future of food, please join our virtual forum.

 

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About Joerg Koesters

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

The Internet Of Things: An Environmentalist’s Heaven Or Hell?

John Graham

Back in early December, The Guardian ran an article asking whether the Internet of Things will save or sacrifice the environment. As you’d expect, the answer is far from clear. Some environmentalists worry about the effects of producing, installing, and powering those billions of extra devices; others urge the use of IoT sensor networks to help us monitor and curb resource consumption and emissions.

On the surface, the thought of creating huge wireless sensor networks for the benefit of the environment seems paradoxical. However, there is a much bigger picture lurking underneath. The Global e-Sustainability Initiative’s (GeSI) recent #SMARTer2030 report suggests that IoT-related technologies could save “almost 10 times the carbon dioxide emissions that it generates by 2030 through reduced travel, smart buildings, and greater efficiencies in manufacturing and agriculture.”

Even if we achieve a situation in which physical IoT devices have a net positive effect on humanity’s carbon footprint, there is still the massive data transmission and storage growth to consider. Speaking as an executive of a company providing the cloud-based data platform for IoT networks, I can say that it’s in our best interests to keep energy consumption as low as possible, because it costs less. That’s why data centers are built with energy efficiency top of mind.

Ultimately, whether or not the IoT turns out to be an environmentalist’s dream will depend on how we apply its concepts. If it’s primarily used to stream endless high-quality video feeds 24 hours a day or for power-hungry gimmicks and trivialities, the footprint will be far worse than if it’s used directly to get resource and energy management under control. It seems unlikely that the private sector and consumers alone will summon the collective motivation to veer in the direction of the latter, so policy will need to keep up and be sound and assertive.

The attitude of disposability in Western society today is another issue altogether. Perfectly functional year-old smartphones and computers are piling up in landfills across the globe as consumers struggle to resist the lure of the latest model. Can the IoT buck this trend by being founded on sensor networks built to last? With the world trending away from centralized hardware and toward cloud-based software, it could be that upgrades to the virtual aspects of IoT will be enough to satisfy our lust for innovation, while the sensors hum away out of sight and out of mind.

Time will tell.

Register here to listen to an SAP Live webcast in which IBM’s IoT guru Michael Martin discusses the possibilities and challenges of our connected future.

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John Graham

About John Graham

John Graham is president of SAP Canada. Driving growth across SAP’s industry-leading cloud, mobile, and database solutions, he is helping more than 9,500 Canadian customers in 25 industries become best-run businesses.

Climate Change: Look North and South – The Evidence Is Real

Nancy Langmeyer

Explorer Sir Robert Swan – the first and only man to walk on both the North and South Poles unsupported – believes that “the greatest threat to our planet is the belief that someone else will save it.”

As a self-proclaimed survivor, Sir Swan, like many others around the globe, believes that climate change and global warming are very serious issues.

The United Nations (UN) adopted 17 Sustainable Development Goals (SDGs) in 2015, and Goal 13 asks the world to “take urgent action to combat climate change and its impacts.” According to the UN, “Climate change is now affecting every country on every continent. It is disrupting national economies and affecting lives, costing people, communities, and countries dearly today and even more tomorrow.”

The National Aeronautics and Space Administration (NASA) says the rate of temperature increase around the globe has nearly doubled in the last 50 years due to greenhouse gases released as people burn fossil fuels. But even though 2016 was the hottest year in recent history, sadly there are still people in the world who say global warming is of no concern and that it is actually a “hoax!”

Well, like Sir Swan, let’s look to the North and Sole Poles and see what we can learn about the reality of this situation.

The Poles have a story to tell us…

Sir Swan believes the North and South Poles hold vital clues to the issue of global warming and that they are an indication of what is going on around the world in respect to climate change.

In his TED talk, Swan showed pictures of melting ice in the North and South Poles, describing it as a dangerous situation. He says, “We need to listen to what these places tell us, and if we don’t, we’ll end up with our own survival situation here on planet Earth.”

So, let’s start in the North and find out what we can learn there.

At 90⁰ north latitude, the North Pole is 450 miles north of Greenland, in the middle of the Arctic Ocean. There is no actual landmass at the North Pole – only massive amounts of ice that expand in winters and shrink down to half the size in summers.

The climate change story here is that the North Pole has been experiencing unusually high temperatures, reaching 32⁰ Fahrenheit in December 2016, which was 50⁰ warmer than typical! This trend has lead to an alarming shrinkage of the Arctic Sea ice masses that equates to approximately 1.07 million km² of ice loss every decade.

Why is this a problem? Well, according to the National Science Foundation, sea ice variability – the amount of water the ice puts into or pulls out of the ocean and the atmosphere – plays a significant role in climate change. NASA says that, “The sea ice cover of the Arctic Ocean and surrounding seas helps regulate the planet’s temperature, influences the circulation of the atmosphere and ocean, and impacts Arctic communities and ecosystems.”

Even the coldest place on Earth is getting warmer!

Now, in the completely opposite direction, what can we learn from the South Pole and Antarctica? At 90⁰ south latitude, Antarctica, which includes approximately 90% of the ice on the planet, is a little over 300 feet above sea level with an ice sheet on it that is about 9,000 feet thick.

Much colder than the North Pole, the temperature here has dropped to a chilling low of -135.8⁰ Fahrenheit in 2013. However, this pole, too, is experiencing warmer weather, with its highest temperature reaching 63.5⁰ in March 2015.

NASA indicates that Antarctica has been losing about 134 gigatonnes of ice per year since 2002. And just recently, a new concern emerged – a rift in the continent that could send a significant part of the polar cap off into the ocean and create one of the largest icebergs ever recorded. This could, in the long run, raise global sea levels by four inches.

So what’s a little rise in sea level?

While a couple inches here or there doesn’t seem like much, NASA says rising sea levels can erode coasts and cause more coastal flooding, and in fact, some island nations could actually disappear.

And that’s just the sea level. There are other ramifications as the climate changes, such as an increase in infectious diseases with the expansion of tropical temperature zones, more intense rain storms and hurricanes, and many other life-threatening issues.

Let’s be the “someone else”

These insights are just the tip of the iceberg (so to speak) in the story of global warming, but it is evident the Poles are telling us that climate change is real. It’s also evident that it’s time for us as the inhabitants of this world to become the “someone else” Sir Swan talks about. And the good news is that it’s not too late for us to save this planet.

We don’t have to go to the North or South Pole to make an impact. We can simply follow Swan’s advice: “A survivor sees a problem and doesn’t go, ‘Whatever.’ A survivor sees a problem and deals with that problem before it becomes a threat.”

Whether it’s at work with a company like SAP that supports the UN SDGs with its vision and purpose, or individually – we all have to help climate change before there are irreversible threats to our place. Let’s be the someone else, starting today.

A quick note: My last blog focused on how women in the arts and sports are helping to break gender inequality barriers. Well, I am happy to report that this same movement is happening in science too! In 2016, an initial 76 women in science embarked on a leadership journey to increase the awareness of climate science. The inaugural session of the year-long Homeward Bound program, which focused on empowering women in science, culminated in December 2016 with the largest female expedition in Antarctica. Here these brilliant, dedicated female scientists and engineers saw the effects of climate change first-hand and brainstormed how they, through “collaborative leadership, diverse thinking, and creative approaches,” could make an impact. 

SAP’s vision is to help the world run better and improve people’s lives. This is our enduring cause; our higher purpose. Learn more about how we work to achieve our vision and purpose.

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Nancy Langmeyer

About Nancy Langmeyer

Nancy Langmeyer is a freelance writer and marketing consultant. She works with some of the largest technology companies in the world and is a frequent blogger. You'll see some under her name...and then there are others that you won't see. These are ones where Nancy interviews marketing executives and leaders and turns their insights into thought leadership pieces..

How Emotionally Aware Computing Can Bring Happiness to Your Organization

Christopher Koch


Do you feel me?

Just as once-novel voice recognition technology is now a ubiquitous part of human–machine relationships, so too could mood recognition technology (aka “affective computing”) soon pervade digital interactions.

Through the application of machine learning, Big Data inputs, image recognition, sensors, and in some cases robotics, artificially intelligent systems hunt for affective clues: widened eyes, quickened speech, and crossed arms, as well as heart rate or skin changes.




Emotions are big business

The global affective computing market is estimated to grow from just over US$9.3 billion a year in 2015 to more than $42.5 billion by 2020.

Source: “Affective Computing Market 2015 – Technology, Software, Hardware, Vertical, & Regional Forecasts to 2020 for the $42 Billion Industry” (Research and Markets, 2015)

Customer experience is the sweet spot

Forrester found that emotion was the number-one factor in determining customer loyalty in 17 out of the 18 industries it surveyed – far more important than the ease or effectiveness of customers’ interactions with a company.


Source: “You Can’t Afford to Overlook Your Customers’ Emotional Experience” (Forrester, 2015)


Humana gets an emotional clue

Source: “Artificial Intelligence Helps Humana Avoid Call Center Meltdowns” (The Wall Street Journal, October 27, 2016)

Insurer Humana uses artificial intelligence software that can detect conversational cues to guide call-center workers through difficult customer calls. The system recognizes that a steady rise in the pitch of a customer’s voice or instances of agent and customer talking over one another are causes for concern.

The system has led to hard results: Humana says it has seen an 28% improvement in customer satisfaction, a 63% improvement in agent engagement, and a 6% improvement in first-contact resolution.


Spread happiness across the organization

Source: “Happiness and Productivity” (University of Warwick, February 10, 2014)

Employers could monitor employee moods to make organizational adjustments that increase productivity, effectiveness, and satisfaction. Happy employees are around 12% more productive.




Walking on emotional eggshells

Whether customers and employees will be comfortable having their emotions logged and broadcast by companies is an open question. Customers may find some uses of affective computing creepy or, worse, predatory. Be sure to get their permission.


Other limiting factors

The availability of the data required to infer a person’s emotional state is still limited. Further, it can be difficult to capture all the physical cues that may be relevant to an interaction, such as facial expression, tone of voice, or posture.



Get a head start


Discover the data

Companies should determine what inferences about mental states they want the system to make and how accurately those inferences can be made using the inputs available.


Work with IT

Involve IT and engineering groups to figure out the challenges of integrating with existing systems for collecting, assimilating, and analyzing large volumes of emotional data.


Consider the complexity

Some emotions may be more difficult to discern or respond to. Context is also key. An emotionally aware machine would need to respond differently to frustration in a user in an educational setting than to frustration in a user in a vehicle.

 


 

download arrowTo learn more about how affective computing can help your organization, read the feature story Empathy: The Killer App for Artificial Intelligence.


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About Christopher Koch

Christopher Koch is the Editorial Director of the SAP Center for Business Insight. He is an experienced publishing professional, researcher, editor, and writer in business, technology, and B2B marketing. Share your thoughts with Chris on Twitter @Ckochster.

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In An Agile Environment, Revenue Models Are Flexible Too

Todd Wasserman

In 2012, Dollar Shave Club burst on the scene with a cheeky viral video that won praise for its creativity and marketing acumen. Less heralded at the time was the startup’s pricing model, which swapped traditional retail for subscriptions.

For as low as $1 a month (for five two-bladed cartridges), consumers got a package in the mail that saved them a trip to the pharmacy or grocery store. Dollar Shave Club received the ultimate vindication for the idea in 2016 when Unilever purchased the company for $1 billion.

As that example shows, new technology creates the possibility for new pricing models that can disrupt existing industries. The same phenomenon has occurred in software, in which the cloud and Web-based interfaces have ushered in Software as a Service (SaaS), which charges users on a monthly basis, like a utility, instead of the typical purchase-and-later-upgrade model.

Pricing, in other words, is a variable that can be used to disrupt industries. Other options include usage-based pricing and freemium.

Products as services, services as products

There are basically two ways that businesses can use pricing to disrupt the status quo: Turn products into services and turn services into products. Dollar Shave Club and SaaS are two examples of turning products into services.

Others include Amazon’s Dash, a bare-bones Internet of Things device that lets consumers reorder items ranging from Campbell’s Soup to Play-Doh. Another example is Rent the Runway, which rents high-end fashion items for a weekend rather than selling the items. Trunk Club offers a twist on this by sending items picked out by a stylist to users every month. Users pay for what they want and send back the rest.

The other option is productizing a service. Restaurant franchising is based on this model. While the restaurant offers food service to consumers, for entrepreneurs the franchise offers guidance and brand equity that can be condensed into a product format. For instance, a global HR firm called Littler has productized its offerings with Littler CaseSmart-Charges, which is designed for in-house attorneys and features software, project management tools, and access to flextime attorneys.

As that example shows, technology offers opportunities to try new revenue models. Another example is APIs, which have become a large source of revenue for companies. The monetization of APIs is often viewed as a side business that encompasses a wholly different pricing model that’s often engineered to create huge user bases with volume discounts.

Not a new idea

Though technology has opened up new vistas for businesses seeking alternate pricing models, Rajkumar Venkatesan, a marketing professor at University of Virginia’s Darden School of Business, points out that this isn’t necessarily a new idea. For instance, King Gillette made his fortune in the early part of the 20th Century by realizing that a cheap shaving device would pave the way for a recurring revenue stream via replacement razor blades.

“The new variation was the Keurig,” said Venkatesan, referring to the coffee machine that relies on replaceable cartridges. “It has started becoming more prevalent in the last 10 years, but the fundamental model has been there.” For businesses, this can be an attractive model not only for the recurring revenue but also for the ability to cross-sell new goods to existing customers, Venkatesan said.

Another benefit to a subscription model is that it can also supply first-party data that companies can use to better understand and market to their customers. Some believe that Dollar Shave Club’s close relationship with its young male user base was one reason for Unilever’s purchase, for instance. In such a cut-throat market, such relationships can fetch a high price.

To learn more about how you can monetize disruption, watch this video overview of the new SAP Hybris Revenue Cloud.

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