Living The Live Supply Chain: Why You Need Data

Hans Thalbauer

In this post, Part 1 of this series, we explore the essentials of deploying a live supply chain. In Part 2 we’ll look at why data scientists will be increasingly key to supply chain success.

Supply chain management is both science and art, and the supply chain operations of leading retailers, consumer products companies, and other manufacturers have been honed to the highest degree.

Unfortunately, the highest degree is no longer sufficient. That’s because established processes are labor-intensive, prone to error, and too slow in providing relevant information to the systems and people who need it. Meanwhile, market dynamics – your customers, your competitors, and the business conditions that affect you – take place in real time.

The solution is to replace your established but now inadequate operations with a live supply chain.

Running on real-time data

A live supply chain runs on real-time data, or at least “right-time” data. It connects employees, partners, customers, assets, and devices. It lets you make predictions and take actions at the speed of the marketplace.

Until very recently, we didn’t have the tools to make this possible. So we made sales forecasts based on sales history – which someone once said is like driving a car forward while looking in the rearview mirror.

But today we do have the tools, and that’s changing the competitive landscape. That is to say, your competitors are actively moving toward live supply chains. And that means you have to respond. Because your competitors aren’t just becoming more efficient. They’re actually reimagining your industry – like when Uber leveraged real-time data to upend ride services.

That real-time data, and where it comes from, will vary depending on your sector. It might come from commerce networks. It might come from social media. It might come from IoT sensors. It will cover everything from how your suppliers are sourcing raw materials at one end of your supply chain to how your products are being used by customers at the other.

The quantity of data is potentially enormous. Just think of the sensors on the average delivery vehicle. You can measure tire pressure and engine performance to predict when maintenance is needed. You can monitor driver behavior to make sure delivery is safe. You can track GPS coordinates to ensure delivery is on time. You can sense the temperature of the storage unit to make sure goods remain saleable. You can track the products themselves to be sure they haven’t been tampered with.

Changing business, changing business models

All this data needs to be fed into your business systems to drive design, planning, logistics, and other operational processes in sync with changing conditions. Some of that data is structured, but much of it is unstructured. It also comes in a vast array of types; that delivery truck probably has more than 100 sensors generating data in nearly as many formats. So you need a real-time system in which you can harmonize and analyze that data.

What does that entail? You have to store it at the lowest level of granularity. You need to parse it so that you’re managing only the data you need while ignoring the data you don’t need. And you must summarize the results at the right level for each job function or stakeholder. Without investing in sophisticated systems and advanced analytics to turn data into actionable information, your supply chain won’t come close to being live.

But the payoffs of that investment include better customer insights, more accurate supply visibility, improved demand forecasts, and real-time decisions that can lead to improved profitability.

They can also lead to competitive advantage through new business models. The example we often cite at SAP is our customer Kaeser Compressor, which transformed itself from a maker of industrial air compressors into a provider of compressed air. In the past, Kaeser sold air compressors that customers had to maintain themselves. Today, the company sells compressed air produced by air compressors that Kaeser maintains for them. Customers get the compressed air they need without the hassle of managing the equipment, while Kaeser achieves higher profit margins.

But Kaeser never could have achieved that transformation without real-time data. For its new business model to be profitable, Kaeser has to ensure that its air compressors operate with the highest uptime possible. That requires smart sensors that provide real-time visibility into operating conditions to allow for preventive maintenance.

In the same way, your supply chain need to capture, analyze, and act on real-timed data. It’s what will make your supply chain live. And what will help your new business models come to life.

Learn more about how running a live supply chain can help you thrive today and innovate for tomorrow at SAP.com.

 

 

 

 

 

 

 

This story originally appeared on EBN

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Hans Thalbauer

About Hans Thalbauer

Hans Thalbauer is globally responsible for solution management and the go-to-market functions for SAP digital supply chain solutions and the SAP Leonardo portfolio of Internet of Things solutions. In this role, he is engaged in creative dialogues with businesses and operations worldwide, addressing customer needs and introducing innovative business processes, including the vision of creating a live business environment for everyone working in operations. Hans has more than 17 years with SAP and is based out of Palo Alto, CA, USA. He has held positions in development, product and solution management, and the go-to-market organization. Hans holds a degree in Business Information Systems from the University Vienna, Austria.

How To Speed Up Progress Towards A Digital Supply Chain

Richard Howells

Earlier this year, I wrote about new research from the non-profit organization the Center for Global Enterprise (CGE) describing an important breakthrough in creating a truly digital supply chain. At the time, I focused on how the right people in the right jobs can speed your progress towards a digital supply chain, one that generates demand and revenue while reducing cost.

Now the Digital Supply Chain Institute (the research arm of CGE) has released very practical advice about how to make progress in this important area. Their message is simple: transform your performance measures and you will transform your supply chain. 

Traditional supply chain metrics

Most companies measure supply chain performance by cost and quality. Cost is measured based on “inventory holding cost” and “inventory turns.” Quality is measured based on “perfect orders” and “demand forecast accuracy.” And there are even more measurements for “cycle times” and “capital assets.” These measures drive companies to lower cost and improve delivery performance with low cost manufacturing and logistics.

While this is all very important work, reducing cost and improving quality measures alone will not flip the supply chain management process to focus on the customer. Nor will these actions ensure that the digital supply chain is a source of revenue growth and cost reduction. In fact, George Bailey, the managing director of the Digital Supply Chain Institute, says, “Running an efficient traditional supply chain will lead to loss of market share and revenue decline; and it is game over if a digital native company enters the market!” In order to remain relevant, Bailey insists businesses quickly embrace a new outlook and set of innovative metrics that better assess a company’s transition to digital.

Essential digital supply chain metrics

Many of the traditional supply chain metrics we use today will be just as important in the future. And we all know that we can get better at managing the systems, people, and processes to improve performance against these metrics. However, some of the traditional measures will be dropped to make room for new, essential digital supply chain metrics. Simply adding more measures will not work. The answer is not to create a bigger scorecard with more metrics.  As Anders Karlborg, the assistant CEO for ZTE, stated in the report, “We don’t want to measure how good we are; we want to measure how good our customers think we are.”

The answer to the question of what metrics will shape our progress towards a true customer-facing supply chain is determined by each company’s digital supply chain strategy. It is important for every company to assess where they are, decide where they want to be, determine a time frame and then communicate the vision, strategy and metrics.

Mike Corbo, chief supply chain officer at Colgate-Palmolive, understands the importance of getting this right when he says, “We have a culture that respects and works towards performance metrics. We take them seriously and so do our people.”

Focus on the right measurements

Per the report, there are two types of new measures that will help shape the digital supply chain. The first is an output measure. Output measures reflect a direct impact on a financial statement. These measures capture the results of the work you do on the company’s financial success. For example, a metric that captures incremental revenue from supply chain actions would fall into this category. The second type of measure is a process measure. These record the progress made against process changes. For example, measuring the degree of automation in a firm is a process measure.

The basic rule is that you must have output measures to help you manage the impact of your actions on the company’s financial progress. Also, you must have process measures to keep track of the changes you are making to transform you company and become a truly digital supply chain. Output measures without process measures are empty and process measures without output measures are blind.

Making it happen

Every company wants to create a digital supply chain because the benefits are large. It will take a clear strategy to drive results. It will also take focused investment in technologies that capture real-time Big Data, artificial intelligence, 3D manufacturing, and others. And it will take accountability to deliver results. What is the best way to create accountability? Clear measures, goals, and rewards. The best approach will be for a company to create the digital supply chain strategy, select the metrics, make the investments, and link pay to progress.

As John Waite, VP Global Supply Chain of Micron, states, “As defined by the customer, our business is all about precision, accuracy, and quality, and our metrics also have to be precise, accurate and of high quality.”

Learn more about the CGE research, the new digital supply chain measures that were developed, and the progress that companies are making right here.

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Richard Howells

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.

Blockchain: Radically Changing The Mining Paradigm

Indranil Som

The mining industry, with its integrated value chains and conservative views, is going through an intense period of change and can no longer ignore the role of technology in its ecosystem—an ecosystem that is growing and becoming more complex day by day.

Use of technology will change the way miners operate and help companies grow by offering newer business models and delivering improved productivity, safety advancements, and cost savings. These technologies could drive economic transformation in the industry in the coming years and help the mining industry become more competitive globally.

Security is one of the biggest concerns that impacts mining in the future. Blockchain technology can help the mining industry benefit financially and avoid falling prey to security breaches.

What is blockchain technology?

Blockchain, or distributed ledger, is a record of encrypted contracts or transactions that can be accessed using digital keys. It is distributed, replicated, and synchronized across people and locations, and it can be verified by anyone—but it can be changed only when there is a consensus among the group participating in the network.

Because records are stored in the form of a block, and each block has reference to the other block, forming a chain, all the distributed blocks must be hacked simultaneously for an attack to be successful, ensuring high-level of security.

How can blockchain help the mining industry?

There are many areas where blockchain can help the mining companies, including:

1. Improved cybersecurity

According to a report published by security firm Trend Micro, 22 mining companies have reported major cyber-attacks since 2010. These attacks aimed to steal intellectual property and other proprietary information, which can be devastating for any company.

A 2016 Symantec Security report revealed that mining is the number-one industry receiving spam email, and one of three spam emails includes a virus. Blockchain, as a distributed digital ledger, reduces the impact of hacking company-wide by limiting it to only the affected block. Blockchain keeps a record of every transaction and safely encrypts that information without third-party intervention, thereby reducing exposure of data to hackers.

2. Increased transparency with smart contracts

Smart contracts implemented on a blockchain improve transparency between buyers and sellers as goods are tracked in real time from their origin, reducing the chance of fraud, ensuring tracability and transparency, and improving logistics visibility and supply chain quality.

Blockchain can end payment gaps by incorporating delivery and payment in digital contracts and integrating it with logistics partners and banks. Once proof of delivery is received from the logistics team, automatic invoicing and payment can be initiated.

3. Better visibility into supply chain

Blockchain offers more visibility into the supply chain, making procurement and delivery simpler, more accurate, and more reliable. The digital ledger integrates data from all vendors and suppliers across the network, giving a complete picture of the supply chain in real time.

Blockchain brings transparency to the extent that no piece of inventory can exist in the same place at any given point. Transaction status is updated in real time, with full traceability back to the point of origin.

Conclusion

Blockchain technology can radically change transactions by cutting costs to support leaner organizations and increased security. It is a game-changer that offers three major features: security, immutability, and accountability. Blockchain is slowly but surely set to radically change the mining paradigm.

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

 

 

 

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Indranil Som

About Indranil Som

Indranil Som is the Digital Leader for Energy and Natural Resources industry at SAP India, engaged in consulting with C-level executives to enable organizations unlock business value through technology driven business transformations. He has had over 16 years of management consulting experience with a combination of strategy and technology engagements, encompassing scoping, planning and execution, with leading international firms.

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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Dan Wellers

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.