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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.

Drones: Poised For Takeoff In The Digital Economy

Stefan Guertzgen

Drones have captured the popular imagination, making a splash on social media, in the popular press, and even on hit television shows. But drones can do a lot more than entertain. They are actually a core driver of transformation in the digital economy. Here are a few examples.

Precision farming

Using swarm intelligence, specialized drones home in on weed-infested areas to prevent invasive plants from encroaching on valuable crops. These drones can deliver pesticides only and precisely where they are needed, reducing the environmental impact and increasing crop yields. Drones can also measure soil conditions as well as health status of plants to deliver water, fertilizers, or other components to ensure optimum growth. The result is increased crop yields at lower cost and with reduced use of potentially dangerous pesticides, a concept known as digital farming.

Remote location inspection and maintenance

Pipelines, mining operations, offshore oil rigs, and railroad tracks are often located far from centers of commerce, yet it is imperative that they operate flawlessly. Drones can easily monitor even the most remote stretches and when signal repairs are needed or dangerous conditions are occurring.

Spare parts delivery

When machinery and equipment goes down, time is of the essence. Drones can quickly and efficiently deliver needed spare parts from manufacturers or 3D printers directly to the equipment’s location, saving time, preventing unnecessary downtime, and reducing investments in MRO inventory.

Military observation

Drones can keep track of weapon and troop deployments in military situations without endangering humans. They can also provide a complete view of any skirmish, creating a tactical advantage by eliminating the element of surprise.

Search and rescue

Search-and-rescue missions are expensive and time-consuming. Physical limitations such as fatigue, hunger, personal safety, and the need for light and visibility can delay or slow searches conducted by human rescuers. Drones can search wide areas under challenging conditions and instantly send data back to a central location. Once the search target is identified, rescue teams can set off with the right equipment, knowing exactly where to focus their search. This makes search-and-rescue operations faster, less costly, and more effective. Watch this video for more insight.

Scientific research

Drones can track animal migrations, report on weather patterns, and help discover rare and previously unknown plant and animal species.

Life sciences

Combining nanotechnology and drones enables technology first envisioned by science fiction in the 1960s. Tiny drones can now be injected into the body to perform potentially lifesaving tasks such as micro-surgery, clear blockages, inspect aneurisms, and deliver targeted chemotherapy drugs to cancer sites.

Drones are clearly powerful agents of change as we transform to a digital economy. In addition to the examples highlighted here, drones also play an important role in such industries as insurance risk and damage assessments, wholesale distribution and last-mile deliveries, and delivery and maintenance of essential infrastructure services such as Wi-Fi, Internet, and telephone for remote locations in emerging areas. As drone technology gets more sophisticated, industries of all types will find increasingly innovative ways to use them to increase business efficiency and bolster the digital economy.

For more on how advanced technology will impact our future, see 20 Technology Predictions To Keep Your Eye On In 2017.

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About Stefan Guertzgen

Dr. Stefan Guertzgen is the Global Director of Industry Solution Marketing for Chemicals at SAP. He is responsible for driving Industry Thought Leadership, Positioning & Messaging and strategic Portfolio Decisions for Chemicals.

Smart Government Strategies To Drive Measurable Success

Dr. Hichem Maya

In an era of rapid social and economic change, governments need to overcome several challenges and tap into various opportunities to sustain and improve their services. So how do governments achieve this complex task? The answer is smart government.

Smart government, by definition, can be defined as the creation of public value by synergizing technology, information, and communication to mobilize agile governance. By harnessing integrated communications technology for digital transformation, governments can become fast, measurable, affordable, and sustainable in the way they interact with their internal and external customers.

So, what does a smart vision really look like? In my view, the strategy needs to encompass multiple elements, from leveraging technology to the use of innovative business models and policies. While governments around the world are beginning to engage citizens with their smart initiatives, it’s important for us to really talk about what defines a well-rounded smart government initiative that is tipped for total success. By investing in breakthrough innovations, governments of all levels can accelerate performance to capitalize on untapped opportunities, improve services delivery, and provide a positive impact on citizens’ lives.

Happy, urban, and sustainable

Based on Dubai 2021’s vision, there are six key pillars that form the foundation of an effective smart government strategy:

  • People
  • Society
  • Experience
  • Place
  • Economy
  • Government

So why are we starting with people? We’re in what’s often termed the age of the citizen, and the whole premise of smart government hinges on the people it serves. Enhancing the customer experience to ensure citizen happiness and satisfaction while improving lives through enhanced convenience is the core emphasis of smart government. Within this, the citizen-centric smart foundation is all about creating a framework and infrastructure to foster educated, aware, cultured, and healthy individuals who are productive in their lives and innovative in their field.

Society is an extension of the individual and therefore forms the next critical pillar of the smart foundation. A vibrant, sustainable, and multicultural society needs to remain at the heart of every governance model.

Growing urbanization has led to its own set of needs, challenges, and expectations. Best-run public sector organizations address growing urbanization, demands for accountability, rising citizen service requirements, and safety expectations by focusing on key imperatives. That defines the experience pillar. An additional objective is to provide a rich cultural experience in a safe and secure environment.

What’s the point of any strategy if it’s not sustainable? An ever-growing population and shifting demographics are creating relentless demands for jobs, business, talent, investments, infrastructure, trade, and commerce.

The greatest challenge of any economy today is balancing growth with sustainability. The ideal plan is to focus on creating smart, integrated, and connected cities where:

  • Resources are used sustainably
  • Environmental elements are clean, healthy, and sustainable
  • Safe and resiliently built environments are nurtured

Government and economy do the tango

Globalization and the impact of trade and competition have meant that governments can now tap into the opportunity to create financially sustainable and innovative knowledge economies. To be attractive as a global economy, a city needs sustainable economic growth and to be a business- friendly city and a preferred investment destination.

The emphasis must be achieving excellence in governance by being proactive. Real-time reporting and data analytics can provide governments with instant insights to make informed decisions at the right time. Compliance and risk management, as well as fraud detection and prevention, all lead to excellence in governance.

Finally, of course, a pioneering economy and government needs to be sustainable and innovative in the management of its resources while being transparent and reliable in its dealings. The various elements within a smart framework must include access to capital, labor, skills, and training, state-of-the-art technology and government services, along with a robust business environment enjoying suitable policy support.

By engaging, improving, and managing interactions with their stakeholders, smart governments can create lasting public value. That’s where the true value of being smart is.

For an example of one smart government in action, see How the Port of Hamburg Doubled Capacity with Digitization.

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Dr. Hichem Maya

About Dr. Hichem Maya

Dr. Hichem Maya leads the industry digital transformation and value engineering team in the Middle East and North Africa at SAP. The organization helps businesses from a variety of industries to identify the proper value generated through digital technologies adoption.

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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