How To Win With The Right People In Your Digital Supply Chain

Richard Howells

A digital supply chain (DSC) focused on customers can have a tremendous impact on an organization’s financial performance, helping to cut costs and boost revenue, according to a report last year from The Center for Global Enterprise (CGE). Improved DSCs can reduce total procured costs by 20 percent and increase revenue by 10 percent.

A true DSC is “a customer-centric platform model that captures and maximizes utilization of real-time data coming from a variety of sources,” the CGE report stated. “It enables demand stimulation, matching, sensing and management to optimize performance and minimize risk.”

Some of the most critical and difficult factors in the DSC transformation include technology, demand management and risk, according to the CGE report. But the single most critical and difficult factor for most companies is their people.

Transformation is not a shrink-wrapped solution

There are several fundamental skills missing from the current workforce. In fact, 78 percent of companies surveyed by CGE reported they were short on the right kind of people needed to execute the DSC in their company.

And there is no DSC package to buy that will make it happen. That’s why it’s critical to get the right people, with the right skills, organized and focused on enabling an effective and capable DSC, the most important core process for the majority of companies today.

“We need different skill sets — more data scientists and IT professionals conversant with Big Data, analytics, and tools to interface with data available from the web,” said Keith Miears, VP of global supply chain at Dell, and one of the 24 senior executives involved with the DSC initiative. “And we need people who understand the opportunities and risks our business faces and can figure out what data we need.”

What can companies do?

Back-end business tasks remain essential, such as minimizing inventory, utilizing low-cost/high-quality suppliers, optimizing shipping and logistics, and getting the right product to the right place at the right time. But advances in technology and social buying patterns make a back-end focus insufficient.

Most companies the lack front side-facing skills necessary to reduce costs even further and to actually grow revenue as a result of the DSC. As new people are hired, organizations must increase the efficiency and function of their back-end activities with less help from HR.

We need to develop a roadmap for recruiting people with the right skills at the right time. And staffing the DSC must include new categories of hire, such as:

  • Data scientists and data stewards who know how to collect, maintain and analyze high-quality Big Data in a business context
  • Maintenance technicians who serve as the new face of customer service as we move to service subscription and usage-based relationships where uptime is critical
  • People who have deep expertise in technologies like blockchain, 3D printing and driverless vehicles/drones

Focus to achieve better people management

There are two requirements for managing people well. Clarity of intent means being clear about what you want from the DSC, why it is important, and when it has to happen. And accountability requires each person on the DSC team to know precisely what they are accountable for and how their results will be measured.

The DSC requires a new scorecard that communicates what is wanted, who is accountable, and how rewards and punishments will be administered. It should make clear exactly how the DSC will drive revenue growth, how much growth, who is accountable, and how progress will be tracked and incentivized.

The scorecard requires careful thought so it keeps people’s eyes on the back end while optimizing the front side. (This may sound like common sense, but it’s rarely ever done this way.) And better metrics are required in order to encourage the collaboration with a purpose mentioned previously.

A new route to the top

The DSC leader is frequently a corporate center job with direct-line authority over business group supply chain executives. The DSC head in one company has also taken on the ownership of the USA P&L, according to CGE, and in another case, the DSC transformation is managed by an individual with a strong marketing background.

It is becoming clear that being the senior executive running the DSC is great training for the CEO position. In fact, incumbency in DSC leadership is a new route to the top.

DSCs could be the most important transformation for companies over the next five years. Company leaders who recognize the importance of the people involved in this transformation will open doors for opportunity and growth.

For more on this topic, see Supply Chain Leaders Boost Value With Digital Transformation.

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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 Fonterra Earns The Trust Of Dairy Consumers Around The Globe

John Ward

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

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

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

Looking for process perfection

Two billion is a big number.

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

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

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

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

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

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

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

Churning up quality

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

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

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

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

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

Please follow me on Twitter @JohnGWard3.

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About John Ward

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

Blockchain: Hit Or Miss For Supply Chain?

Richard Howells

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

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

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

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

Where can blockchain benefit supply chain processes?

During our discussions, a few areas of opportunity emerged.

Logistics processes

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

Track and trace and genealogy processes

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

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

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

Asset lifecycle management

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

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

Blockchain is a key part of a digital supply chain

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

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

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

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About Richard Howells

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

Diving Deep Into Digital Experiences

Kai Goerlich

 

Google Cardboard VR goggles cost US$8
By 2019, immersive solutions
will be adopted in 20% of enterprise businesses
By 2025, the market for immersive hardware and software technology could be $182 billion
In 2017, Lowe’s launched
Holoroom How To VR DIY clinics

Link to Sources


From Dipping a Toe to Fully Immersed

The first wave of virtual reality (VR) and augmented reality (AR) is here,

using smartphones, glasses, and goggles to place us in the middle of 360-degree digital environments or overlay digital artifacts on the physical world. Prototypes, pilot projects, and first movers have already emerged:

  • Guiding warehouse pickers, cargo loaders, and truck drivers with AR
  • Overlaying constantly updated blueprints, measurements, and other construction data on building sites in real time with AR
  • Building 3D machine prototypes in VR for virtual testing and maintenance planning
  • Exhibiting new appliances and fixtures in a VR mockup of the customer’s home
  • Teaching medicine with AR tools that overlay diagnostics and instructions on patients’ bodies

A Vast Sea of Possibilities

Immersive technologies leapt forward in spring 2017 with the introduction of three new products:

  • Nvidia’s Project Holodeck, which generates shared photorealistic VR environments
  • A cloud-based platform for industrial AR from Lenovo New Vision AR and Wikitude
  • A workspace and headset from Meta that lets users use their hands to interact with AR artifacts

The Truly Digital Workplace

New immersive experiences won’t simply be new tools for existing tasks. They promise to create entirely new ways of working.

VR avatars that look and sound like their owners will soon be able to meet in realistic virtual meeting spaces without requiring users to leave their desks or even their homes. With enough computing power and a smart-enough AI, we could soon let VR avatars act as our proxies while we’re doing other things—and (theoretically) do it well enough that no one can tell the difference.

We’ll need a way to signal when an avatar is being human driven in real time, when it’s on autopilot, and when it’s owned by a bot.


What Is Immersion?

A completely immersive experience that’s indistinguishable from real life is impossible given the current constraints on power, throughput, and battery life.

To make current digital experiences more convincing, we’ll need interactive sensors in objects and materials, more powerful infrastructure to create realistic images, and smarter interfaces to interpret and interact with data.

When everything around us is intelligent and interactive, every environment could have an AR overlay or VR presence, with use cases ranging from gaming to firefighting.

We could see a backlash touting the superiority of the unmediated physical world—but multisensory immersive experiences that we can navigate in 360-degree space will change what we consider “real.”


Download the executive brief Diving Deep Into Digital Experiences.


Read the full article Swimming in the Immersive Digital Experience.

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Kai Goerlich

About Kai Goerlich

Kai Goerlich is the Chief Futurist at SAP Innovation Center network His specialties include Competitive Intelligence, Market Intelligence, Corporate Foresight, Trends, Futuring and ideation. Share your thoughts with Kai on Twitter @KaiGoe.heif Futu

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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.