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Digital Operations: Test-And-Learn Beats Wait-And-See

Dr. Achim Krüger

Digitalization is dramatically shaping supply chain operations in the 21st century.

By embracing the latest Internet of Things (IoT) applications and other cutting-edge technology, supply chain organizations are creating new business models and more efficient ways to work.

Smart logistics processes optimize warehousing operations and delivery, creating enhancements in inventory and transportation. Through smart manufacturing, businesses can accelerate production, increase agility, and make strides toward more easily delivering product customization. Meanwhile, smart engineering enables designers to simulate manufacturing and identify challenges before products are actually built.

Digitalization and a seamlessly digital supply chain clearly have their advantages. The adoption of the latest technology, however, comes with a unique set of challenges. Primarily, leaders seeking to innovate and incite change must strike a delicate balance, walking the knife’s edge between chasing digital initiatives – a metaphorical collection of “shiny objects” – and dismissing every new digital technology as “hype.”

While you certainly don’t want to waste your time implementing initiatives that don’t benefit your enterprise, you can’t afford to hold off on adopting innovative technology too long, or you risk falling too far behind to ever catch up.

Taking a test-and-learn approach at your organization

Contrary to previous technology waves, like enterprise resource planning and mobile communications, sticking to standard business processes won’t lead to the successful application of digital technology.

How should this realization impact your plans for digitalization and your investment in people, processes, and technology moving forward?

SCM World research advises taking a test-and-learn approach rather than clinging to a wait-and-see mindset. Thinking strategically about which technologies to implement and invest in instead of waiting for early adopters to forge the path is key for success in a hypercompetitive business landscape.

To begin instituting test-and-learn at your organization, you should first consider your business holistically through three levels of analysis:

  1. How will digitalization change business processes and customer expectations?
  2. How will digital disruptions and IoT change business models within your industry?
  3. How will digitalization impact the nature of work itself?

Answer these questions to determine where digital investment makes the most sense, then take action – with the intent to constantly refine and improve for the future.

These top companies prosper with test-and-learn

A number of leading companies are already doing just that. From analyzing new data streams and leveraging advanced analytics, to making improvements in 3D printing and advanced robotics, to delivering digital products via the cloud, organizations worldwide are reaping the benefits of taking a test-and-learn approach and experimenting with digitalization.

While heavy hitters such as Amazon and Uber are often-cited digital disruptors, additional examples of companies getting ahead with test-and-learn include:

  • Schneider Electric: Tailored Supply Chain, Schneider’s comprehensive effort to divide its supply chain according to six unique customer segments, uses a series of advanced analytics tools to understand customer behavior. The initiative will help the company enhance data insights and develop a new business process focused on improving demand sensing capabilities. The program, which didn’t require a large investment in new technology, has so far already generated 340 million euros worth of incremental margin contribution.
  • DB Schenker: DB Schenker recently leveraged the concept of the sharing economy and forged a partnership with UShip that connects shippers to trucking companies online – similar to what Airbnb does for travelers looking for a place to stay. So far, this collaboration has not only impacted speed and selection for DB Schenker’s customers, it’s also improved efficiency by making use of previously underutilized assets.
  • Harley-Davidson: Harley-Davidson’s product planning approach decreased from a 21-day fixed plan to a six-hour window. In addition to positively impacting on-hand inventory, the initiative has added more agility and flexibility around scheduling and accommodating orders. All this is largely due to an increasingly digital supply chain, which offers the company greater visibility.

Get smart: Adopt a test-and-learn approach today

These organizations are just a few of the many that are prospering with a test-and-learn approach. From increasing agility and precision to reducing costs and waste, they demonstrate how smart investments in digital technology must strike a balance between inaction and overkill to revolutionize the nature of supply chain.

For more examples of how top companies are using test-and-learn to positively impact business outcomes, and to learn how you can successfully implement the concept at your own organization, download the full SCM World report: Smart Operations and the Internet of Things.

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Dr. Achim Krüger

About Dr. Achim Krüger

Dr. Achim Krüger is Vice President of Operational Excellence (EAM and EH&S) at SAP. After starting his career as an officer with the German Air Force, he held several positions in the areas of maintenance of helicopters and transport aircraft as well as systems engineering, before he worked in higher commands as a logistics general staff officer. Joining SAP in 2002, Dr. Krüger first served as a consultant before establishing the SAP for Defense & Security industry portfolio and later assumed several other duties in Solution Management and Development,

Supply Chain Risk Managers Must Be Fuzzy, Or Fail

Susan Galer

I’ve been eager for the chance to inject the fashionable word “fraught” into one of my blogs for a while, and a recent conversation about supply chain risk presented the ideal opportunity.

During an exclusive roundtable at the SAP Ariba Live 2017 event in Las Vegas entitled “Managing Risk in Your Supplier Engagements,” three experts talked about how companies can prevent the worst from happening in a world fraught with stuff that can go wrong.

Their message was that companies can use advanced technologies like machine learning and predictive analytics to neutralize the impact of natural disasters, global currency fluctuations, and labor strikes, more easily ensure compliance with increasing regulations, and even address evils like forced and slave labor in their supply chain ─ but only if all that tech is backed by a corporate commitment to do good.

Cognitive computing changes the game for risk managers

Investigators and risk managers require both data transparency and context, something Padmini Ranganathan, vice president, products & innovation at SAP Ariba, said is foundational to how the SAP Ariba network of buyers and sellers operates. Dan Adamson, CEO of OutsideIQ, an SAP Ariba partner, discussed his company’s cognitive computing platform, which, together with SAP Ariba, changes the game.

Ranganathan noted that advanced technologies can help companies make sure they have the right data at the right time in the right place, and with the right person able to act. “When your supplier is tripping up somewhere, you need to be there to catch it,” he advised. “Technology is a very powerful tool with the ability to machine learn and pattern match to find out what’s going on.”

“Until now, machines have been great at combing through vast amounts of data but not providing context,” he added. “We bring in the right data and apply the first layer of context to make sure it’s a risk you would care about. How you deal with it is another level of context. We’ll see an evolution because some of your suppliers, depending on your industry, might have a heavy regulatory slant, and you need to treat them differently. Our layers of cognitive computing help filter out the noise and bring the relevant events to bear.”

Outside IQ conducts research far beyond simple watch list monitoring. “We go deeper with our cognitive process, replicating what a researcher would do, looking for patterns and links,” Ranganathan continued. “What might be clean today may have a news report tomorrow. Companies need to know before something becomes an explosive issue. The power SAP Ariba brings in is the whole layer of scoring indicators with relationship insights.”

Purpose-driven supply chain

James Edward Johnson, director of supply risk and analytics at Nielsen, said companies have a shared responsibility in managing supply chains for the greater good. The SAP Ariba network helps Nielsen conduct due diligence at scale faster and more cost-efficiently.

“World development has made some people richer and left a lot of people behind,” Johnson noted. “Because we’re so active in the supply chain, we actually touch millions of lives. How do you make sure that’s a force for good, that when you negotiate deals your push for price isn’t merely favoring companies that will cut corners, abuse their workers, enslave people, or rip up the environment by dumping chemicals into lakes?

“SAP Ariba is a great platform because it’s to a degree, data-neutral. A group like Outside IQ will find and read documents from everywhere in the world. If we can find and solve problems in our supply chain, we can make a difference in the world.”

Forget focus, follow the arc to uncover bad behavior

Responding to an audience member question, Johnson cautioned against zeroing in on risks.

“The moment you start focusing, you’re going to fail to capture risk, which is about seeing the unseen,” he said. “Sometimes your peripheral vision is more effective than your central vision. This is the arc of whatever risk you’re looking at. For example, I can guarantee financial indicators are a good leading indicator. The moment a company starts to fail at meeting their numbers, they’ll start taking risks. The question is where those risks materialize. You have look at other things that might provoke bad behavior.”

Every risk manager should be willing to say, “The answer I just gave you is wrong.”

Make data actionable, but accept fuzziness

These experts agreed that people need to factor risk indicators into contract negotiations while recognizing the level of uncertainty inherent to all kinds of data.

“Everyone in risk management should be willing to say ‘the answer I just gave you is wrong’ – the question is by how much and in what direction,” said Johnson. “Too often people are called on to give specific answers they can hang their hat on. That might teach people to manipulate the data or give people who are politically capable an advantage over people who are technically capable, so you might end up promoting people who are better at talking.”

Machine learning promises to strip out biases like recency and sample selection to give decision makers greater objectivity in understanding actual and potential risks and how to address them. “We should have science-based answers, we should have the data, and we should be able to know how well we know what we say we know,” said Johnson.

For more supply chain risk management strategies, see Managing Third-Party Risk Through Verified Trust.

Follow me: @smgaler

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How The World Is Changing, And How IoT Can Change The World

Richard Howells

In 2016, the world population surpassed 7.3 billion, meaning the number of people on Earth has doubled in the past 45 years.

Furthermore, there’s no end insight to this rapid growth. In fact, it has been calculated that the population is increasing by more than 140 people every minute.

This exploding population creates challenges from the perspectives of sustainability and urbanization:

  • The world’s population is outgrowing the available natural resources. If, as predicted, the global population reaches 9.6 billion by 2050, we would, per United Nations figures, require the equivalent of almost three planets to provide the natural resources needed to sustain current lifestyles.
  • Global population is migrating to urban areas, creating a strain on infrastructure. The United Nations predicts that by 2030, 60% of the world population will live in urban areas. In 2000, this number was only 47%. Nearly 180,000 people are added to the urban population each day.

These two facts alone suggest we must innovate to leverage our natural resources in a more sustainable way, and in many cases, do more with less.

IoT revolutionizes farming

In a recent blog post, SAP and Stara: IoT’s New Constellation of Stars, author Judith Magyar explains how tractors can now leverage sensors to capture real-time data and optimize farm management and operations.

By leveraging data analytic capabilities, farmers can:

  • Gain better insights to make more sound decisions
  • Produce more high-quality crops per acre
  • Support sustainable agricultural practices that respect the environment

This is just one example of how the Internet of Things (IoT) can help balance supply and demand for the world’s natural resources to help maximize production, reduce environmental impact, and remediate problems faster.

Check out this video to learn more about how IoT is revolutionizing the farming industry.

Argentina modernizes its capital city with IoT

In another recent article, 3 Ways Buenos Aires Is Leading Smart City Technology, author Christine Donato explains how the Argentinian capital is leveraging IoT solutions to mitigate some of the challenges of a growing urban area.

This includes:

  • Managing and responding to the 30,000 complaints the city receives each month by leveraging real-time data and social media insight
  • Reducing consumption and keeping the city illuminated and safe by converting 91,000 public street lights to modern LED technology, and using real-time insights to quickly address power outages, broken lights, and vandalism
  • Automating maintenance on 1,400 kilometers of drainage pipes to execute cleaning and maintenance at maximum capacity and predict potential flooding

Check out this video to learn more about how Buenos Aires is illuminating the city in a more sustainable way.

These are just two examples of how organizations are leveraging IoT to change the world. For more on these stories and many others, attend the SAP Leonardo Live – IoT for Business event on July 11 and 12 in Frankfurt, Germany. Visit this website for additional details.

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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.

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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Unleash The Digital Transformation

Kadamb Goswami

The world has changed. We’ve seen massive disruption on multiple fronts – business model disruption, cybercrime, new devices, and an app-centric world. Powerful networks are crucial to success in a mobile-first, cloud-first world that’s putting an ever-increasing increasing amount of data at our fingertips. With the Internet of Things (IoT) we can connect instrumented devices worldwide and use new data to transform business models and products.

Disruption

Disruption comes in many forms. It’s not big or scary, it’s just another way of describing change and evolution. In the ’80s it manifested as call centers. Then, as the digital landscape began to take shape, it was the Internet, cloud computing … now it’s artificial intelligence (AI).

Digital transformation

Digital transformation means different things to different companies, but in the end I believe it will be a simple salvation that will carry us forward. If you Bing (note I worked for Microsoft for 15 years before experiencing digital transformation from the lens of the outside world), digital transformation, it says it’s “the profound and accelerating transformation of business activities, processes, competencies, and models to fully leverage the changes and opportunities of digital technologies and their impact across society in a strategic and prioritized way.” (I’ll simplify that; keep reading.)

A lot of today’s digital transformation ideas are ripped straight from the scripts of sci-fi entertainment, whether you’re talking about the robotic assistants of 2001: A Space Odyssey or artificial intelligence in the Star Trek series. We’re forecasting our future with our imagination. So, let’s move on to why digital transformation is needed in our current world.

Business challenges

The basic challenges facing businesses today are the same as they’ve always been: engaging customers, empowering employees, optimizing operations, and reinventing the value offered to customers. However, what has changed is the unique convergence of three things:

  1. Increasing volumes of data, particularly driven by the digitization of “things” and heightened individual mobility and collaboration
  1. Advancements in data analytics and intelligence to draw actionable insight from the data
  1. Ubiquity of cloud computing, which puts this disruptive power in the hands of organizations of all sizes, increasing the pace of innovation and competition

Digital transformation in plain English

Hernan Marino, senior vice president, marketing, & global chief operating officer at SAP, explains digital transformation by giving specific industry examples to make it simpler.

Automobile manufacturing used to be the work of assembly lines, people working side-by-side literally piecing together, painting, and churning out vehicles. It transitioned to automation, reducing costs and marginalizing human error. That was a business transformation. Now, we are seeing companies like Tesla and BMW incorporate technology into their vehicles that essentially make them computers on wheels. Cameras. Sensors. GPS. Self-driving vehicles. Syncing your smartphone with your car.

The point here is that companies need to make the upfront investments in infrastructure to take advantage of digital transformation, and that upfront investment will pay dividends in the long run as technological innovations abound. It is our job to collaboratively work with our customers to understand what infrastructure changes need to be made to achieve and take advantage of digital transformation.

Harman gives electric companies as another example. Remember a few years ago, when you used to go outside your house and see the little power meter spinning as it recorded the kilowatts you use? Every month, the meter reader would show up in your yard, record your usage, and report back to the electric company.

Most electric companies then made a business transformation and installed smart meters – eliminating the cost of the meter reader and integrating most homes into a smart grid that gave customers access to their real-time information. Now, as renewable energy evolves and integrates more fully into our lives, these same electric companies that switched over to smart meters are going to make additional investments to be able to analyze the data and make more informed decisions that will benefit both the company and its customers.

That is digital transformation. Obviously, banks, healthcare, entertainment, trucking, and e-commerce all have different needs than auto manufacturers and electric companies. It is up to us – marketers and account managers promoting digital transformation – to identify those needs and help our clients make the digital transformation as seamlessly as possible.

Digital transformation is more than just a fancy buzzword, it is our present and our future. It is re-envisioning existing business models and embracing a different way of bringing together people, data, and processes to create more for their customers through systems of intelligence.

Learn more about what it means to be a digital business.

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Goswami Kadamb

About Goswami Kadamb

Kadamb is a Senior Program Manager at SAP where he is responsible for developing and executing strategic sales program with Concur SaaS portfolio. Prior to that he led several initiatives with Microsoft's Cloud & Enterprise business to enable Solution Sales & IaaS offerings.