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How Supply Chain Leaders Manage Resource Scarcity

Richard Howells

For 150 years, Nestlé has brought countless beloved brands into the lives of its consumers.

Gerber, for instance, is the go-to solid food for parents with infants. Pet lovers depend upon Purina and Friskies to feed their furry, four-legged friends. And when chocolate fiends get a craving, they often reach for a delicious Butterfinger, KitKat, or Crunch bar.

With $92 billion in annual revenue, Nestlé was recently ranked as the world’s top food and beverage company, according to the 2016 FORBES Global 2000.

And while the organization’s viability is unquestionably stable, there is one serious issue that does concern the folks at Nestlé: resource scarcity.

By helping farmers, Nestlé helps itself

Like all supply chain companies, Nestlé is heavily dependent upon its natural resources to drive its business forward. The organization is particularly reliant on certain raw materials, including cocoa and sugar, which are essential to many of the items it produces.

To combat resource scarcity, Nestlé launched the Creating Shared Value program in 2009. The initiative involves providing “technical assistance to farmers in Africa and other developing markets to help them boost crop yields,” per a recent SCM World report.

The program features a combination of best-practice sharing, investment support, and nongovernmental organization collaboration to ensure the raw materials that Nestlé needs most are developed in a more sustainable manner.

With an ample amount of resources, operations at Nestlé’s production plants can remain uninterrupted, and consumers can continue to enjoy the company’s many indispensable products.

There’s more than one way to overcome resource scarcity

Nestlé is merely one supply chain organization that has developed a creative approach to addressing its resource scarcity concerns.

In a new report, SCM World outlines an array of leading supply chain companies, in a range of different industries, that have deployed unique and useful strategies to deal with the challenges around resource scarcity:

  • Cisco Systems: Reducing material waste is a primary component of Cisco Systems’ sustainability initiative. Over the past nine years, the IT conglomerate has generated more than $1 billion in value through the return, recycling, and reuse of older products.
  • Schneider Electric: Schneider has a Waste as Worth initiative in place that focuses on recycling obsolete stock and reusing metals and thermoplastics previously in circulation. The company also monitors and controls energy usage in real time at its 300 global sites to ensure power is used efficiently. These measures have resulted in a 25% reduction in water consumption, a fourfold reduction in greenhouse gas emissions, a 13% reduction in energy intensity, and an 83% to 91% increase in waste recovery.
  • Unilever: Consumer goods company Unilever has instituted a zero-waste-to-landfill target at its 240 manufacturing plants around the globe. To date, the organization has lowered water usage by 20% across 90 of its sites, partly through the deployment of 35,000 Internet of Things-enabled sensors and the use of Big Data analytics. It’s also managed to raise its annual consumption of renewable energy, such as biomass, wind, and solar power, to 28%. By 2020, Unilever expects to reduce its reliance on coal, which currently accounts for 7% of the company’s energy needs, to zero, cutting greenhouse gas emissions by 43%. These actions will result in more than $200 million in cost savings for the enterprise.
  • IKEA: The world’s largest furniture retailer has developed a resource independence strategy that also takes into account ethical sourcing. Its ambitious goal includes a 100% target for raw material sustainability – for items such as wood, metals, and plastics. As a founding member of the Better Cotton Initiative – a program dedicated to promoting the sustainable cultivation of cotton – IKEA became the first major retailer to exclusively use sustainable cotton in its products. The cotton requires up to 50% less water and fertilizer and up to 30% less fertilizer to grow.
  • BMW: Supply chain experts at luxury vehicle manufacturer BMW use social media to address resource scarcity. The company developed a keyword-based, self-learning tool that monitors data from chat rooms, blogs, Twitter, and other sources. The tool flags potential supply chain risks, including floods, earthquakes, and other events that may impact resource availability, enabling staff to respond appropriately.

A road map for resource scarcity success

There’s no one tried-and-true way to conquer your resource scarcity concerns. Supply chain leaders are addressing their issues in a number of different ways.

There are, however, certain characteristics that many of these organizations share, from building a clear picture of their future resource requirements to setting clear sustainability goals.

Read the entire SCM World report, Resource Scarcity: Supply Chain Strategies for Sustainable Business, for more insight on how today’s top supply chain companies are reducing, or altogether preventing, natural resource shortages.

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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.

How Technology Provides Smart, Secure Parking For Truck Drivers

Gil Perez

If you’ve planned a trip recently, you’ve likely spent time researching and booking hotels, perhaps using one of a growing number of travel websites. Many people wouldn’t dream of setting off without a clear idea of where they’re going to sleep that night.

This, however, is a daily reality for truck drivers.

Facing a parking crisis

In Germany alone, there is a deficit of 14,000 official truck parking spaces. With no way of knowing where they can find available spaces in advance, truckers approach an average of four different parking areas before they find a free parking slot.

Robust statutory requirements for drivers to take timed rest periods only add to the pressure. Violation of the strict rest period rules can result in serious legal consequences for both drivers and their employers. And with an immovable deadline for getting off the road, drivers who can’t find an official space often have no choice but to find a less-appropriate alternative.

Parking by the side of the road can obstruct traffic and creates a driving hazard, endangering both the truck driver and the public. And parking in dimly lit industrial areas can put the driver and the cargo at risk from criminal activity. Trucks parked in unofficial parking spaces risk cargo theft, often perpetrated by organized criminal gangs.

Giving drivers the information they need

Now, Boschhas the potential to transform the way logistics and forwarding companies manage parking arrangements for their trucks. Leveraging cloud-based technology within a connected parking solution, Bosch Secure Truck Parking allows drivers to find and reserve available parking spaces in advance using an online booking portal.

Enabled by the Internet of Things, Bosch can link the booking portal to access control systems at truck parking sites across Germany. Based on number-plate recognition, access is granted only for trucks that have a reservation. Payment is then made online by the company that owns the truck.

Saving costs and improving efficiency

For forwarding and logistics companies, the solution offers considerable savings in both costs and efficiency. Last year, €1.5 billion was lost in Germany as a result of cargo theft. However, it isn’t only the value of the cargo lost that creates problems for the companies involved.

Theft can also cause significant delays in the delivery of products to their destination, either as a result of necessary repairs to the truck or sourcing new cargo. And in the age of just-in-time delivery contracts, a delay can result in substantial financial penalties for the logistics provider.

Taking the stress out of parking

Bosch Secure Truck Parking represents a massive change that could greatly improve quality of life for truck drivers. With a single stroke, it removes the stress of not knowing where or when they will find a parking space. It also enables drivers to set off on their journey comfortable in the knowledge that they and their cargo will be spending the night in a safe, secure environment.

Bosch’s vision is to enable every driver to have a pre-booked parking space waiting before they set off. For an industry in which every stage of the logistics process is worked out with the greatest precision to optimize efficiency, it is only surprising that this is the first solution to address this issue.

Helping to preserve our green spaces

In future, the secure truck parking solution also has the potential to help ease Germany’s truck parking space shortage. As well as enabling the state to manage its official parking sites more efficiently, the technology could also encourage a wide range of organizations to offer parking spaces to truck drivers.

Bosch’s online booking portal lets companies restrict bookings to specific periods, such as evenings or weekends only, when they don’t need the space for their own operations. All payments are made online so companies can benefit from an additional revenue stream without requiring additional staff to manage activity and handle cash transactions. And with automatic number-plate recognition technology controlling access barriers, companies can offer the service securely, confident that only trucks that have pre-booked can access their premises.

By increasing usage by trucks of existing parking sites, the solution can minimize the need to build new parking areas. This will not only provide significant cost savings for the state, it will also help preserve our precious green spaces for future generations.

To learn more about Bosch Secure Truck Parking, read the announcement or connect with us on @SAPLeonardo for the latest IoT news.

Connect with industry experts, partners, influencers, and business leaders at SAP Leonardo Live, our premier Internet of Things (IoT) conference for breakthrough innovation and technology. Register here and join us from July 11–12, 2017 in Frankfurt, Germany to experience how your company can run a digitized business.

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Gil Perez

About Gil Perez

Gil Perez is senior vice president of Digital Assets and The Internet of Things (IoT) and general manager of Connected Vehicles and IoT Security at SAP.

How To Ensure That Profitability And Sustainability Are At The Heart Of Your Firm

Derek Klobucher

The choice between profitability and sustainability is no longer a stark one, as promising companies start showing real gains — such as Tesla Inc. overtaking GM and Ford as the most valuable U.S. automaker by market capitalization. The Palo Alto-based electric automaker and energy storage company reached this milestone due in part to strong Q1 performance as its Detroit counterparts stumbled.

“While GM and Ford may have strong profits and healthy balance sheets, Tesla offers something Wall Street loves much more: the potential for dramatic growth,” The New York Times stated last week. “Tesla is going to change the world, and is primed to cash in on the two transformative trends in the industry: the shift to electric vehicles as part of a broader societal move to cleaner energy, and the advent of automated driving.”

Yes, Tesla has been green from the get-go. But it’s also possible for organizations that haven’t been eco-warriors from the start to blend profitability with sustainability — the noble endeavor to business while preserving natural resources and environmental harmony. And that’s a good way to please all kinds of stakeholders.

Choose your stakeholders wisely

A critical move for older companies — big and small — will be to deal with climate change-related issues in their boardrooms as opposed to sustainability departments, according to the MIT Sloan Management Review. Boards of directors would need to better understand how climate risks impact the bottom line, include climate risks among their organizations’ material risks, and determine their most significant audience.

“Boards that regard short-term shareholders as the only significant audience … would be unlikely to consider climate change as a material risk for reporting purposes,” MIT SMR stated last month. “Alternatively, boards that regard long-term shareholders and future generations of employees as a significant audience would likely consider climate change a material risk.”

Rather than reinvent the wheel, MIT SMR recommends that organizations ease into their sustainability transitions by:

  • Learning from existing work done by NGOs, accountants, academics, and others
  • Placing greater emphasis on the materiality determination process
  • Exploring circumstances and scenarios that could affect their business — and developing plans for them

Show me the numbers

Board members discussing sustainability with like-minded shareholders is one thing. It’s quite another for CFOs to quantify environmental values, such as habitat preservation or factory safety.

“Just utter the word ‘sustainability,’ and a finance chief’s eyes are likely to glaze over,” CFO.com stated last month. “The gains and losses of the next quarter are likely to be more compelling than the question of whether a company’s plants will have access to cheap energy over the next 20 years.”

But long-term investors, such as those mentioned by MIT SMR, are starting to change that. Finance executives will increasingly need granular data about how climate change will influence their organizations’ future balance sheets — because long-term investors such as endowments and pension funds are demanding that information, according to CFO.com.

The mother of invention

Moving to profitable sustainability isn’t always a luxury that organizations choose. Sometimes the environment forces it — resulting in innovation.

“In markets where the pressures of resource depletion are felt most keenly, corporate sustainability efforts have become a wellspring of innovation,” Harvard Business Review stated in 2013. The most successful companies studied followed one or more of three main approaches:

  • Long view: Relatively expensive upfront investment in sustainable operation methods that eventually — and dramatically — lowered costs and increased yields
  • Bootstrap: Small changes in processes that led to significant cost savings, which funded advanced technologies that increased production efficiency
  • Spreading out: Dispersing sustainability efforts to customer and supplier operations, which helped organizations develop new business models that competitors often couldn’t imitate

“Trade-offs between economic development and environmentalism aren’t necessary,” HBR stated. “Rather, the pursuit of sustainability can be a powerful path to reinvention for all businesses facing limits on their resources and their customers’ buying power.”

Moving toward sustainability

That “powerful path to reinvention” can also be consumer-driven, as GM and Ford have learned. And it’s not too late for legacy companies to get moving.

“The Detroit automakers are hardly sitting still in their efforts to improve current results and future prospects,” The New York Times stated. “Both [GM and Ford] have bought technology companies to bolster their in-house engineering expertise.”

As Tesla prepares to launch its its new, mass-market all-electric car this summer, the company is synonymous with green high-tech and success. Though almost unthinkable now, GM and Ford could be implementing changes that would one day make them synonymous with sustainability and profitability too.

Follow Derek on Twitter: @DKlobucher

This article originally appeared on SAP Community Network, and is republished by permission.

Follow SAP Finance online: @SAPFinance (Twitter)  | LinkedIn | FacebookYouTube

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Derek Klobucher

About Derek Klobucher

Derek Klobucher is a Financial Services Writer and Editor for Sybase, an SAP Company. He has covered the exchanges in Chicago, European regulation in Dublin and banking legislation in Washington, D.C. He is a graduate of the University of Michigan in Ann Arbor and Northwestern University in Evanston.

The Future of Cybersecurity: Trust as Competitive Advantage

Justin Somaini and Dan Wellers

 

The cost of data breaches will reach US$2.1 trillion globally by 2019—nearly four times the cost in 2015.

Cyberattacks could cost up to $90 trillion in net global economic benefits by 2030 if cybersecurity doesn’t keep pace with growing threat levels.

Cyber insurance premiums could increase tenfold to $20 billion annually by 2025.

Cyberattacks are one of the top 10 global risks of highest concern for the next decade.


Companies are collaborating with a wider network of partners, embracing distributed systems, and meeting new demands for 24/7 operations.

But the bad guys are sharing intelligence, harnessing emerging technologies, and working round the clock as well—and companies are giving them plenty of weaknesses to exploit.

  • 33% of companies today are prepared to prevent a worst-case attack.
  • 25% treat cyber risk as a significant corporate risk.
  • 80% fail to assess their customers and suppliers for cyber risk.

The ROI of Zero Trust

Perimeter security will not be enough. As interconnectivity increases so will the adoption of zero-trust networks, which place controls around data assets and increases visibility into how they are used across the digital ecosystem.


A Layered Approach

Companies that embrace trust as a competitive advantage will build robust security on three core tenets:

  • Prevention: Evolving defensive strategies from security policies and educational approaches to access controls
  • Detection: Deploying effective systems for the timely detection and notification of intrusions
  • Reaction: Implementing incident response plans similar to those for other disaster recovery scenarios

They’ll build security into their digital ecosystems at three levels:

  1. Secure products. Security in all applications to protect data and transactions
  2. Secure operations. Hardened systems, patch management, security monitoring, end-to-end incident handling, and a comprehensive cloud-operations security framework
  3. Secure companies. A security-aware workforce, end-to-end physical security, and a thorough business continuity framework

Against Digital Armageddon

Experts warn that the worst-case scenario is a state of perpetual cybercrime and cyber warfare, vulnerable critical infrastructure, and trillions of dollars in losses. A collaborative approach will be critical to combatting this persistent global threat with implications not just for corporate and personal data but also strategy, supply chains, products, and physical operations.


Download the executive brief The Future of Cybersecurity: Trust as Competitive Advantage.


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How Digital Transformation Is Rewriting Business Models

Ginger Shimp

Everybody knows someone who has a stack of 3½-inch floppies in a desk drawer “just in case we may need them someday.” While that might be amusing, the truth is that relatively few people are confident that they’re making satisfactory progress on their digital journey. The boundaries between the digital and physical worlds continue to blur — with profound implications for the way we do business. Virtually every industry and every enterprise feels the effects of this ongoing digital transformation, whether from its own initiative or due to pressure from competitors.

What is digital transformation? It’s the wholesale reimagining and reinvention of how businesses operate, enabled by today’s advanced technology. Businesses have always changed with the times, but the confluence of technologies such as mobile, cloud, social, and Big Data analytics has accelerated the pace at which today’s businesses are evolving — and the degree to which they transform the way they innovate, operate, and serve customers.

The process of digital transformation began decades ago. Think back to how word processing fundamentally changed the way we write, or how email transformed the way we communicate. However, the scale of transformation currently underway is drastically more significant, with dramatically higher stakes. For some businesses, digital transformation is a disruptive force that leaves them playing catch-up. For others, it opens to door to unparalleled opportunities.

Upending traditional business models

To understand how the businesses that embrace digital transformation can ultimately benefit, it helps to look at the changes in business models currently in process.

Some of the more prominent examples include:

  • A focus on outcome-based models — Open the door to business value to customers as determined by the outcome or impact on the customer’s business.
  • Expansion into new industries and markets — Extend the business’ reach virtually anywhere — beyond strictly defined customer demographics, physical locations, and traditional market segments.
  • Pervasive digitization of products and services — Accelerate the way products and services are conceived, designed, and delivered with no barriers between customers and the businesses that serve them.
  • Ecosystem competition — Create a more compelling value proposition in new markets through connections with other companies to enhance the value available to the customer.
  • Access a shared economy — Realize more value from underutilized sources by extending access to other business entities and customers — with the ability to access the resources of others.
  • Realize value from digital platforms — Monetize the inherent, previously untapped value of customer relationships to improve customer experiences, collaborate more effectively with partners, and drive ongoing innovation in products and services,

In other words, the time-tested assumptions about how to identify customers, develop and market products and services, and manage organizations may no longer apply. Every aspect of business operations — from forecasting demand to sourcing materials to recruiting and training staff to balancing the books — is subject to this wave of reinvention.

The question is not if, but when

These new models aren’t predictions of what could happen. They’re already realities for innovative, fast-moving companies across the globe. In this environment, playing the role of late adopter can put a business at a serious disadvantage. Ready or not, digital transformation is coming — and it’s coming fast.

Is your company ready for this sea of change in business models? At SAP, we’ve helped thousands of organizations embrace digital transformation — and turn the threat of disruption into new opportunities for innovation and growth. We’d relish the opportunity to do the same for you. Our Digital Readiness Assessment can help you see where you are in the journey and map out the next steps you’ll need to take.

Up next I’ll discuss the impact of digital transformation on processes and work. Until then, you can read more on how digital transformation is impacting your industry.

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About Ginger Shimp

With more than 20 years’ experience in marketing, Ginger Shimp has been with SAP since 2004. She has won numerous awards and honors at SAP, including being designated “Top Talent” for two consecutive years. Not only is she a Professional Certified Marketer with the American Marketing Association, but she's also earned her Connoisseur's Certificate in California Reds from the Chicago Wine School. She holds a bachelor's degree in journalism from the University of San Francisco, and an MBA in marketing and managerial economics from the Kellogg Graduate School of Management at Northwestern University. Personally, Ginger is the proud mother of a precocious son and happy wife of one of YouTube's 10 EDU Gurus, Ed Shimp.