Lenovo’s “Disciplined” Supply Chain Drives Global Leadership

John Ward

“Lenovo’s been the number one PC company for over three years now,” says Gerry Smith, an executive vice president at Lenovo and president of its Data Center Group, in a recent video.

In fact, Lenovo’s 2015 PC sales represented about 20% of total market share according to Gartner.

That’s a pretty remarkable accomplishment for a company that The Wall Street Journal, described, “as recently as 2005… was a little-known computer maker that sold only in China.”

But a lot has changed in the past 10 years or so – especially in Lenovo’s now worldwide supply chain.

These days, Lenovo has operations in 60 countries, customers around the planet, and it relies on a revamped supply chain driven by such thoroughly modern imperatives as sustainability, product security, real-time planning, and customer-centricity.

Major acquisitions deliver global growth

Lenovo’s dramatic growth has made headlines. In 2005, the company bought IBM’s personal computer business. Then, in 2014 came the acquisitions of both IBM’s Intel-based server business and Motorola Mobility.

And as a result of such bold moves, Lenovo has had to adapt to an increasingly global marketplace and a growing list of international standards and regulations.

As part of an integrated response to its full-scale globalization, Lenovo has established comprehensive sustainability programs across its broad supply chain. These initiatives address operations from internal manufacturing to packaging and logistics. Still other programs help Lenovo evaluate external suppliers on criteria such as employee working conditions, environmental footprint, and the use of environmentally preferred materials. In total, Lenovo reports that it uses more than 25 key indicators to measure vendor transparency, commitment, and performance.

“Working with trusted suppliers – as well as owning and running our own factories – promotes end-to-end security in Lenovo’s supply chain,” says Smith. “These controls help us ensure that products are built with components from known suppliers, guard against hijacking, and protect against compromised firmware updates once our products are deployed.”

Process efficiency is part of the plan

Lenovo’s global supply chain strategy also employs solutions designed to optimize process efficiency. For example, Lenovo implemented an advanced planning and optimization component on an in-memory computing platform to help plan and execute supply chain processes for the newly acquired server business. Additionally, the company partnered  co-developed new applications that support supplier collaboration and help to perform cost forecasting calculations in near real-time.

“We’ve dramatically improved our supply chain performance,” says Smith, “reducing our planning time from 10 hours to 10 minutes.”

As Smith sees it, Lenovo has all the tools in place “to make our supply chain, not only the best PC and server supply chain in the world, but one of the best supply chains across all industries.”

Others obviously agree with Smith’s assessment.

Gartner named Lenovo among its top 25 supply chain companies for 2016. In particular, Gartner cites the high-tech company for the “disciplined approach” it took to integrate its supply chain in the wake of recent acquisitions.

Gartner also notes that Lenovo’s supply chain team ran specific programs to enhance customer experience and operational excellence – like the creation of a customer social/digital platform for key global accounts that presents content tailored to each customer’s preference in terms of order status, new product information, and technical support information. Further, Gartner highlights the fact that Lenovo assigns a supply chain staff member as an executive sponsor for each major account.

A lot has changed since Lenovo was a little-known computer maker that sold only in China.

Please follow me on Twitter at @JohnGWard3.

  • Hear more from Lenovo’s Gerry Smith in this SAP video.
  • Read more about how Lenovo is optimizing supply chain efficiency in this SAP Business Transformation Study.

This story originally appeared on Business Trends on the SAP Community.

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How Fonterra Earns The Trust Of Dairy Consumers Around The Globe

John Ward

These days, great taste isn’t the only thing that consumers want in the foods they buy. Increasingly, issues like food safety and product traceability matter a lot, too.

Such concerns aren’t lost on the folks at Fonterra Co-operative Group Limited – a global dairy company owned by around 10,500 New Zealand farmers.

“Fonterra’s vision is to make a difference in the lives of 2 billion people worldwide by 2020,” says Andrew Longwill, the information services manager for Fonterra’s Australia operations. “To earn consumer trust, you need the ability to track and trace all the ingredients that go into your milk, cheese, butter, and other dairy foods.”

Looking for process perfection

Two billion is a big number.

But Fonterra already has customers in more than 140 countries around the globe. In fact, this New Zealand co-operative is responsible for approximately 30% of the world’s dairy exports.

Fonterra helps ensure both the taste and safety of its products by using only the highest quality ingredients – like fresh milk from grass-fed cows – and by maintaining a global view of traceability data across its extensive supply chain. This rigorous oversight extends to the company’s milk processing facilities as well.

When milk arrives at the various Fonterra sites, it is transformed into dairy foods under individual process orders.

“There are a lot transactions needed to complete just one process order,” says Longwill. “And to ensure product quality and safety, there are confirmations to perform and data to collect all along the way.”

Recently, Fonterra implemented a custom app designed to streamline some factory operations that once relied heavily on paper production information (PI) sheets.

“The PI sheets we used were old and clunky,” says Simon Crowley, chief enterprise architect at Fonterra. “We’re looking to digitize the plants and offer our people a more consumer-like set of process interfaces.”

The project started with a design thinking workshop that gathered the input and ideas of the factory workers. Then the team provided operators and production supervisors with a mobile interface featuring a simplified user experience covering more than 200 individual process order management tasks.

Churning up quality

Fonterra has implemented the new quality app at its Cobden processing plant in Victoria, Australia.

Cobden is home to the award-winning Western Star Butter brand. This facility processes more than 295 million liters of fresh milk a year. Fonterra workers here churn out dairy foods with instant visibility into process order progress and a simplified method for capturing critical production and quality data.

As Rob Howell, general manager of manufacturing operations for Fonterra Australia, observes, “We want our operators and production supervisors to spend their time on what they do best – concentrating on the machinery, the output, and the quality of our dairy foods.”

Fonterra now intends to roll out the custom app to an additional six facilities in Australia by the end of the year. Eliminating the manual data input associated with the paper PI sheets will be an especially welcome change for all the Fonterra employees working the processing plant floors.

Traditional change management won’t work in the era of digital transformation. Learn about The New DNA of Change.

Please follow me on Twitter @JohnGWard3.

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About John Ward

John Ward is an Integrated Marketing Expert at SAP. He has over 30 years of professional writing experience that includes marketing material, sales support, technical documentation, video scripting, and magazine articles.

Blockchain: Hit Or Miss For Supply Chain?

Richard Howells

Earlier this month I participated in an interesting show on the topic of “Blockchain Technology: A Hit or A Miss for Supply Chain Networks?” with Irfan Khan, CEO and president of Bristlecone.

The discussion was based on blockchain’s ability to drive end-to-end value, eliminate inefficiencies, and improve customer experience. Blockchain – a decentralized, distributed ledger payment system using cryptocurrency – is powering digital transformation for companies around the world.

“It’s difficult to make predictions, especially about the future.”

I set the stage by using this quote that has been attributed to several people, from Nostradamus to Mark Twain (who is attributed almost every quote known to man). It works perfectly for blockchain, which, according to Gartner’s latest Hype Cycle for Supply Chain Execution (July 2017), was rated “transformational” but with a market penetration of “less than 1 percent.” The key is to predict and identify use cases to improve transparency, traceability, and performance and that can benefit from secured transactions.

Where can blockchain benefit supply chain processes?

During our discussions, a few areas of opportunity emerged.

Logistics processes

It has been estimated that 90 percent of global trade is carried out by ocean shipping industry, and the cost of trade-related documents and administration is estimated to represent up to 20 percent of the actual transportation cost. And this process relies on a web of disparate systems across freight forwarders, customer’s brokers, port authorities, ocean carriers, and trucking companies. Imagine if we could digitize the process to collaborate across companies and authorities, reduce the paperwork, streamline cross boarder movements, and reduce fraud and errors. Blockchain has the potential to help enable us to manage and track a “digital twin” of shipping containers across the world.

Track and trace and genealogy processes

In many industries, we are continually pushing for improved traceability by both regulatory bodies, and consumers. For example, in the food and beverage industries, we are seeing an increased demand for local and organic products with a clear proof of origin and sustainability.

Let’s look at the simple coffee bean as an example. This starts literally, at the source, in remote farms in Africa where 70-80 percent of the world’s coffee beans are grown. Imagine if we could have mobile machines that could capture the grade, color, size, and quality the coffee carries at source, and by leveraging AI and machine learning, determine a fair-trade price for the specific lot. This could be transmitted to the buyers who could agree a purchase with the farmer and perform an electronic transfer of funds immediately. Imagine also that the quality information and price paid is tracked throughout the harvesting, logistics, roasting and consumption of those beans all over the world. A consumer could have an app that would tell them where the coffee came from, the journey from farm to cup, and even if the farmer was compensated fairly.

This example is not too far-fetched. Check out what a company called Bext360 is doing as a proof of concept today.

Asset lifecycle management

Many industries have capital-intensive, business-critical assets (think airplanes, mining equipment, trucks, tractors) that are expected to be in use for 10 or even 30 years. Over its lifespan, each asset will go through numerous upgrades, repairs, and refurbishments and may also go through numerous owners. This ensures that all the parts used to perform these activities are of high quality, from reliable, legitimate sources and are critical for end user or passenger safety and security. We can now put IoT-enabled sensors on every part within an asset and track (Big) Data at a level never imagined a few short years ago. Ensuring the traceability and security of this data is critical to ensure the history and provenance of parts, the or the maintenance and repair history of a capital-intensive piece of equipment.

Blockchain, along with other technologies such as IoT, predictive analytics, and machine learning has the potential to manage assets from the design of the product, through manufacturing and throughout its active life and keep a secure, digital twin that can be tracked and analyzed for a complete history of that asset.

Blockchain is a key part of a digital supply chain

Blockchain, although relatively early in its existence, has the potential to help digitize our supply chains. However, as we discussed, it is not a solution by itself. We see several technologies coming together to enable the digital supply chain. The Internet of Things enables smarter and connected products and assets that are generating amazing amounts of data from all areas of the supply chain. This “Big Data” is the catalyst for predictive analytics, and machine learning adds intelligence to this data and drives automation and artificial intelligence through physical devices. Blockchain’s role is to automate transactions, ensure traceability, and address cybersecurity.

For more on blockchain, see Blockchain: Much Ado About Nothing? How Very Wrong!

Article published by Richard Howells. It originally appeared on Huffington Post and has been republished with permission.

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About Richard Howells

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

The Future Will Be Co-Created

Dan Wellers and Timo Elliott

 

Just 3% of companies have completed enterprise digital transformation projects.
92% of those companies have significantly improved or transformed customer engagement.
81% of business executives say platforms will reshape industries into interconnected ecosystems.
More than half of large enterprises (80% of the Global 500) will join industry platforms by 2018.

Link to Sources


Redefining Customer Experience

Many business leaders think of the customer journey or experience as the interaction an individual or business has with their firm.

But the business value of the future will exist in the much broader, end-to-end experiences of a customer—the experience of travel, for example, or healthcare management or mobility. Individual companies alone, even with their existing supplier networks, lack the capacity to transform these comprehensive experiences.


A Network Effect

Rather than go it alone, companies will develop deep collaborative relationships across industries—even with their customers—to create powerful ecosystems that multiply the breadth and depth of the products, services, and experiences they can deliver. Digital native companies like Baidu and Uber have embraced ecosystem thinking from their early days. But forward-looking legacy companies are beginning to take the approach.

Solutions could include:

  • Packaging provider Weig has integrated partners into production with customers co-inventing custom materials.
  • China’s Ping An insurance company is aggressively expanding beyond its sector with a digital platform to help customers manage their healthcare experience.
  • British roadside assistance provider RAC is delivering a predictive breakdown service for drivers by acquiring and partnering with high-tech companies.

What Color Is Your Ecosystem?

Abandoning long-held notions of business value creation in favor of an ecosystem approach requires new tactics and strategies. Companies can:

1.  Dispassionately map the end-to-end customer experience, including those pieces outside company control.

2.  Employ future planning tactics, such as scenario planning, to examine how that experience might evolve.

3.  Identify organizations in that experience ecosystem with whom you might co-innovate.

4.  Embrace technologies that foster secure collaboration and joint innovation around delivery of experiences, such as cloud computing, APIs, and micro-services.

5.  Hire, train for, and reward creativity, innovation, and customer-centricity.


Evolve or Be Commoditized

Some companies will remain in their traditional industry boxes, churning out products and services in isolation. But they will be commodity players reaping commensurate returns. Companies that want to remain competitive will seek out their new ecosystem or get left out in the cold.


Download the executive brief The Future Will be Co-Created.


Read the full article The Future Belongs to Industry-Busting Ecosystems.

Turn insight into action, make better decisions, and transform your business.  Learn how.

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About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

About Timo Elliott

Timo Elliott is an Innovation Evangelist for SAP and a passionate advocate of innovation, digital business, analytics, and artificial intelligence. He was the eighth employee of BusinessObjects and for the last 25 years he has worked closely with SAP customers around the world on new technology directions and their impact on real-world organizations. His articles have appeared in articles such as Harvard Business Review, Forbes, ZDNet, The Guardian, and Digitalist Magazine. He has worked in the UK, Hong Kong, New Zealand, and Silicon Valley, and currently lives in Paris, France. He has a degree in Econometrics and a patent in mobile analytics. 

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Blockchain: Much Ado About Nothing? How Very Wrong!

Juergen Roehricht

Let me start with a quote from McKinsey, that in my view hits the nail right on the head:

“No matter what the context, there’s a strong possibility that blockchain will affect your business. The very big question is when.”

Now, in the industries that I cover in my role as general manager and innovation lead for travel and transportation/cargo, engineering, construction and operations, professional services, and media, I engage with many different digital leaders on a regular basis. We are having visionary conversations about the impact of digital technologies and digital transformation on business models and business processes and the way companies address them. Many topics are at different stages of the hype cycle, but the one that definitely stands out is blockchain as a new enabling technology in the enterprise space.

Just a few weeks ago, a customer said to me: “My board is all about blockchain, but I don’t get what the excitement is about – isn’t this just about Bitcoin and a cryptocurrency?”

I can totally understand his confusion. I’ve been talking to many blockchain experts who know that it will have a big impact on many industries and the related business communities. But even they are uncertain about the where, how, and when, and about the strategy on how to deal with it. The reason is that we often look at it from a technology point of view. This is a common mistake, as the starting point should be the business problem and the business issue or process that you want to solve or create.

In my many interactions with Torsten Zube, vice president and blockchain lead at the SAP Innovation Center Network (ICN) in Potsdam, Germany, he has made it very clear that it’s mandatory to “start by identifying the real business problem and then … figure out how blockchain can add value.” This is the right approach.

What we really need to do is provide guidance for our customers to enable them to bring this into the context of their business in order to understand and define valuable use cases for blockchain. We need to use design thinking or other creative strategies to identify the relevant fields for a particular company. We must work with our customers and review their processes and business models to determine which key blockchain aspects, such as provenance and trust, are crucial elements in their industry. This way, we can identify use cases in which blockchain will benefit their business and make their company more successful.

My highly regarded colleague Ulrich Scholl, who is responsible for externalizing the latest industry innovations, especially blockchain, in our SAP Industries organization, recently said: “These kinds of use cases are often not evident, as blockchain capabilities sometimes provide minor but crucial elements when used in combination with other enabling technologies such as IoT and machine learning.” In one recent and very interesting customer case from the autonomous province of South Tyrol, Italy, blockchain was one of various cloud platform services required to make this scenario happen.

How to identify “blockchainable” processes and business topics (value drivers)

To understand the true value and impact of blockchain, we need to keep in mind that a verified transaction can involve any kind of digital asset such as cryptocurrency, contracts, and records (for instance, assets can be tangible equipment or digital media). While blockchain can be used for many different scenarios, some don’t need blockchain technology because they could be handled by a simple ledger, managed and owned by the company, or have such a large volume of data that a distributed ledger cannot support it. Blockchain would not the right solution for these scenarios.

Here are some common factors that can help identify potential blockchain use cases:

  • Multiparty collaboration: Are many different parties, and not just one, involved in the process or scenario, but one party dominates everything? For example, a company with many parties in the ecosystem that are all connected to it but not in a network or more decentralized structure.
  • Process optimization: Will blockchain massively improve a process that today is performed manually, involves multiple parties, needs to be digitized, and is very cumbersome to manage or be part of?
  • Transparency and auditability: Is it important to offer each party transparency (e.g., on the origin, delivery, geolocation, and hand-overs) and auditable steps? (e.g., How can I be sure that the wine in my bottle really is from Bordeaux?)
  • Risk and fraud minimization: Does it help (or is there a need) to minimize risk and fraud for each party, or at least for most of them in the chain? (e.g., A company might want to know if its goods have suffered any shocks in transit or whether the predefined route was not followed.)

Connecting blockchain with the Internet of Things

This is where blockchain’s value can be increased and automated. Just think about a blockchain that is not just maintained or simply added by a human, but automatically acquires different signals from sensors, such as geolocation, temperature, shock, usage hours, alerts, etc. One that knows when a payment or any kind of money transfer has been made, a delivery has been received or arrived at its destination, or a digital asset has been downloaded from the Internet. The relevant automated actions or signals are then recorded in the distributed ledger/blockchain.

Of course, given the massive amount of data that is created by those sensors, automated signals, and data streams, it is imperative that only the very few pieces of data coming from a signal that are relevant for a specific business process or transaction be stored in a blockchain. By recording non-relevant data in a blockchain, we would soon hit data size and performance issues.

Ideas to ignite thinking in specific industries

  • The digital, “blockchained” physical asset (asset lifecycle management): No matter whether you build, use, or maintain an asset, such as a machine, a piece of equipment, a turbine, or a whole aircraft, a blockchain transaction (genesis block) can be created when the asset is created. The blockchain will contain all the contracts and information for the asset as a whole and its parts. In this scenario, an entry is made in the blockchain every time an asset is: sold; maintained by the producer or owner’s maintenance team; audited by a third-party auditor; has malfunctioning parts; sends or receives information from sensors; meets specific thresholds; has spare parts built in; requires a change to the purpose or the capability of the assets due to age or usage duration; receives (or doesn’t receive) payments; etc.
  • The delivery chain, bill of lading: In today’s world, shipping freight from A to B involves lots of manual steps. For example, a carrier receives a booking from a shipper or forwarder, confirms it, and, before the document cut-off time, receives the shipping instructions describing the content and how the master bill of lading should be created. The carrier creates the original bill of lading and hands it over to the ordering party (the current owner of the cargo). Today, that original paper-based bill of lading is required for the freight (the container) to be picked up at the destination (the port of discharge). Imagine if we could do this as a blockchain transaction and by forwarding a PDF by email. There would be one transaction at the beginning, when the shipping carrier creates the bill of lading. Then there would be look-ups, e.g., by the import and release processing clerk of the shipper at the port of discharge and the new owner of the cargo at the destination. Then another transaction could document that the container had been handed over.

The future

I personally believe in the massive transformative power of blockchain, even though we are just at the very beginning. This transformation will be achieved by looking at larger networks with many participants that all have a nearly equal part in a process. Today, many blockchain ideas still have a more centralistic approach, in which one company has a more prominent role than the (many) others and often is “managing” this blockchain/distributed ledger-supported process/approach.

But think about the delivery scenario today, where goods are shipped from one door or company to another door or company, across many parties in the delivery chain: from the shipper/producer via the third-party logistics service provider and/or freight forwarder; to the companies doing the actual transport, like vessels, trucks, aircraft, trains, cars, ferries, and so on; to the final destination/receiver. And all of this happens across many countries, many borders, many handovers, customs, etc., and involves a lot of paperwork, across all constituents.

“Blockchaining” this will be truly transformational. But it will need all constituents in the process or network to participate, even if they have different interests, and to agree on basic principles and an approach.

As Torsten Zube put it, I am not a “blockchain extremist” nor a denier that believes this is just a hype, but a realist open to embracing a new technology in order to change our processes for our collective benefit.

Turn insight into action, make better decisions, and transform your business. Learn how.

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Juergen Roehricht

About Juergen Roehricht

Juergen Roehricht is General Manager of Services Industries and Innovation Lead of the Middle and Eastern Europe region for SAP. The industries he covers include travel and transportation; professional services; media; and engineering, construction and operations. Besides managing the business in those segments, Juergen is focused on supporting innovation and digital transformation strategies of SAP customers. With more than 20 years of experience in IT, he stays up to date on the leading edge of innovation, pioneering and bringing new technologies to market and providing thought leadership. He has published several articles and books, including Collaborative Business and The Multi-Channel Company.