How To Speed Up Progress Towards A Digital Supply Chain

Richard Howells

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

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

Traditional supply chain metrics

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

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

Essential digital supply chain metrics

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

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

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

Focus on the right measurements

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

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

Making it happen

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

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

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

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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.

Connected Fleets Save Money

Barbara Flügge

Something unexpected began happening in journalist Mike Esposito’s inbox. Extra emails were demanding his attention, but they weren’t written by people.  His newly leased car was reminding him about its upkeep.

Esposito, who writes for Auto DeaIer Today, noted that among other matters, his vehicle “tells me when I’m low on fuel, when the tire pressure drops and what the outside temperature is.”

Like cars in many government fleets, Esposito’s car is “smart” due to Internet connectivity. It contains telematics–devices including a global positioning system (GPS)–that are part of the car’s operating system. Telematics are also part of the Internet of Things (IoT).

Connected fleet ecosystem

These days, IoT objects containing sensors often connect vehicles to the Internet and, in the case of fleets, to each other.

Esposito’s car can send him notes, because telematics let one machine (the car) share information with another machine (his computer).

Machine-to-machine communication is one part of an ecosystem with the Internet at its centre. The sensors in vehicles with telematics also can connect to parts of their environment–including roadway warning systems–which also contain IoT sensors.

Connected cars produce much data, including information about how carefully people drive them. A privately owned connected car might send this data to an insurance company, which would use it to adjust driver rates.

In contrast, data from public sector fleets would travel to the digital systems of the municipalities, central governments or authorities (such as ports) they serve. This information would include availability for use and maintenance issues in addition to driver care.

Many kinds of vehicles may be included in public sector fleets, including boats, grounds maintenance equipment, motorbikes, trucks, UAVs (drones), and warehouse forklifts.

Connecting fleets to correct problems

Retrofitting vehicles for connectivity or buying new vehicles with factory-installed telematics is expensive. But fleet connectivity provides payback in a number of ways. To understand why organisations would develop these fleets, it helps to consider some actual examples.

Traffic congestion in a mountain resort. Mountain sports, glamorous celebrity lifestyles, and fresh air are among the attractions of Aspen, Colorado. But the city is so popular that it is choking on auto traffic from commuters, residents, and tourists.

Government Fleet magazine reports that Aspen is considering a plan to create a quiet, low-pollution transit system. It would be a connected fleet of mopeds, on-demand shuttles, buses and self-driving mini-vans. The plan also includes improving traffic flow on downtown streets and providing lockers for commuters.

School bus delays. The Chesapeake, Virginia, public school district received many complaints about bus inefficiency in the 2015-2016 school year. Local TV station WAVY reports that the district is responding by equipping each school bus with a GPS and automatic vehicle location system.

Smartport. Truck drivers traveling to the Port of Hamburg in northern Germany no longer have to access many message boards throughout the container port to get updated on traffic and bridge conditions as well as parking availability.

According to tech publisher ZDNet, the port now connects truckers to get current information through a mobile app made possible by a digital platform.

The platform, which is equipped with IoT-solution software, gathers and analyzes huge volumes of data. The IoT software connects to the port’s traffic management system as well as the telematics of trucks visiting the port. This provides a real-time picture of traffic flow.

IoT traffic tracking solutions

IoT software solutions for connected fleets provide government organizations with insights into fleet management, logistics and delivery, insurance telematics (such as monitoring driver-related events), and vehicle diagnostics.

Fleet management solutions include tracking vehicles in real time, monitoring the health of vehicles, and analysing fuel consumption.

Diagnostics involve analysing trouble codes, providing alerts based on vehicle events, and predicting driving performance. One of the logistics matters that solutions analyze concerns arrival times and routing.

IoT solutions help the public sector increase productivity without increasing facilities. ZDNet notes that container turnover at the Port of Hamburg was nine million units in 2014 and likely will double by 2024.

Speaking to the magazine, Hamburg Port Authority representative Sascha Westermann said, “It’s not possible to build more roads. It takes a long time and there’s no space.”

Westermann, who leads IT traffic management for the authority, told ZDNet, “We need smart solutions. IT solutions.”

Year of the connected fleet?

Automobile technology reporter Mike Esposito says he thinks 2017 finally marks the “official arrival” of connected cars. It’s estimated, he says, that 60% to 80% of the cars in which manufacturers have installed telematics will sell this year.

Esposito predicts that “smaller, less expensive cars” will comprise 75% of connected car sales by 2022.

As prices decrease, it’s likely that more public-sector fleets will become connected. The year of the connected fleet is coming soon.

To learn more about SAP Leonardo and our digital innovations, download the “IoT Imperative white paper for the public sector.”

This article originally appeared on Cities Today.

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Barbara Flügge

About Barbara Flügge

Barbara Flügge leads smart cities and regions efforts at SAP. As a thought leader, she advises executives, forward thinkers, and innovation leaders in this area. She dedicates her activities to entire ecosystems beocming cities, ports, and mega events in digital and sustainable transformation. Barbara is a strong believer of innovation and digitization as a public good for everyone. She works on global scale and has in depth knowledge in public sector, automotive, manufacturing, telecommunications, and many other industries. Barbara is a recognized speaker, editor,and author.

Transportation And Logistics Services: Is It Moving Radically Enough?

Juergen Roehricht

Exponential technologies like 3D printing, artificial intelligence, digital assistants, networks, blockchain, and many others are transforming the world we live in faster than we ever imagined. Recently, I joined a panel discussion about digital innovations and their impact on the transportation and logistics services industry. In fact, the discussion inspired me to start this new series of blogs, not just to share my thoughts but to challenge us as (digital) leaders by asking: Are we thinking radically enough? How do exponential technologies and the digital transformation impact our industry? Are we really making the most of digital innovations?

3D printing: It’s now or never

One of the questions the panel discussed was how 3D printing affects business. Interestingly enough, this turned out to be quite controversial.

Many companies are not taking 3D printing seriously. Some don’t see any need to engage with it, and others think it does not offer use cases for their business. Other companies clearly understand the benefits, such as being able to print spare parts for rolling stock. This becomes particularly relevant for older assets for which it is hard to obtain spare parts. Printing the parts they need, right where they need them, means companies can avoid supply-chain and logistics complexity, speed delivery, and potentially lower the costs of manufacturing and shipping.

Though I agree with this argument, I felt that the discussion lacked another angle to move it on to common ground. I asked whether it would be an option for companies to incorporate 3D printing into their core business or even to create a new business by offering 3D printing themselves or via a partner. That would give them an extended production workbench for customers and differentiate them from the competition in multi-modal transport. Companies could think about that model, regardless of any existing leading companies, competitors, or new kids arriving on the block.

The reason for this question is, for each new technology, I first ask myself whether it is likely to affect one or all three of the fundamental pillars of a business: the business model, the business processes, and the way we work. And in the case of 3D printing, I can confidently say that I see that all three pillars are affected.

To summarize the discussion around 3D printing, while I fully understand both perspectives, I have a different standpoint. For years, many transportation and logistics services companies have been providing value-added services like warehousing for their clients and charging premiums on top of the pure transportation service, which is a commoditizing market with declining margins, despite a growing transport volume. Why not extend this now to become an even bigger contributor to manufacturers’ value chains by starting a 3D printing division, closely connected with logistics and, potentially, with warehousing services as well?

A related option is to use outsourcing and leveraging partners, i.e., to work with companies specializing in 3D printing through a dedicated network.

There are already some transportation and logistics companies that are actively using 3D printing, like UPS. Why should printing a sneaker for a consumer differ from printing spare parts for a business customer?

Big Data, predictive analytics, and the Internet of Things: Untapped opportunities

Another interesting topic is how Big Data and predictive analytics are being used and how both will develop. Limiting the conversation to Big Data and predictive analytics is too narrow, unless you combine them with sensors and Internet of Things scenarios. Consider the example of a sensor attached to a container that uses signals, geofencing, and transmission into an analytics-based UI to track containers anywhere at any time. Imagine how much value this could bring to transportation and logistics services providers and to the shipping and receiving companies.

By knowing where a given container is at any time, companies can take action to prevent problems such as not meeting the contracted expected time of arrival (ETA); security problems such as intrusions or high-risk routes; or incorrect handling of the containers (such as temperature irregularities or physical shocks). In addition, these technologies can enable companies to save on operational costs by optimizing logistics to better handle empty transport resources. Sensors that can track, analyze, and predict relevant data could be a solution in all these scenarios.

Not everyone is convinced that these technologies are the way forward. You may hear comments like: “Our customers would not pay for this, and we are operating with very low margins.” Others might complain about the high costs associated with such an approach. While these concerns are understandable, I think they are short-sighted when considering the future impact on business and services. Sensors are now much cheaper, and adding them to a cloud solution that receives, streams, and interprets the data before displaying it on a user interface, and even adding machine learning and prediction algorithms, can be done very fast.

You cannot argue only from a cost perspective. Especially when it comes to ETA as a key metric for transportation companies and the risks of not meeting the contractual agreement. Would you prefer paying unreasonably high compensatory costs instead of installing a system that would help you avoid costly delays?

By decreasing the risk of insurance events, companies can negotiate better rates. Especially when combined with blockchain, technology can put all key data (contracts, IoT and geo-signals, payments, etc.) into a secure, transparent, auditable, and risk- and fraud-minimizing blockchain. And, with the right proposition, why should a customer not be willing to pay a few cents more for better service? Why not leverage this to set yourself apart from your competitors?

Last but not least…

In a world driven by exponential digital technology advances, the average life span of a Fortune 500 company has shrunk from 75 to 15 years over the past 50 years. There are more digital-native and digital technology companies in the Standard & Poor Top 12 ranking than ever before. Startups are popping up everywhere, driving change, and chasing and partially taking over markets that were owned by established companies for years. And companies are realizing that their existing organization might not be capable of changing fast enough, so they are creating digital venture funds and startup programs to drive those new business models and processes, sometimes with ideas that even disrupt themselves. In this world we always need to ask ourselves: Are we thinking radically enough?

The costs of managing, powering, and moving products and services are about to change dramatically. Tick Tock: Start Preparing for Resource Disruption.

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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.

Human Skills for the Digital Future

Dan Wellers and Kai Goerlich

Technology Evolves.
So Must We.


Technology replacing human effort is as old as the first stone axe, and so is the disruption it creates.
Thanks to deep learning and other advances in AI, machine learning is catching up to the human mind faster than expected.
How do we maintain our value in a world in which AI can perform many high-value tasks?


Uniquely Human Abilities

AI is excellent at automating routine knowledge work and generating new insights from existing data — but humans know what they don’t know.

We’re driven to explore, try new and risky things, and make a difference.
 
 
 
We deduce the existence of information we don’t yet know about.
 
 
 
We imagine radical new business models, products, and opportunities.
 
 
 
We have creativity, imagination, humor, ethics, persistence, and critical thinking.


There’s Nothing Soft About “Soft Skills”

To stay ahead of AI in an increasingly automated world, we need to start cultivating our most human abilities on a societal level. There’s nothing soft about these skills, and we can’t afford to leave them to chance.

We must revamp how and what we teach to nurture the critical skills of passion, curiosity, imagination, creativity, critical thinking, and persistence. In the era of AI, no one will be able to thrive without these abilities, and most people will need help acquiring and improving them.

Anything artificial intelligence does has to fit into a human-centered value system that takes our unique abilities into account. While we help AI get more powerful, we need to get better at being human.


Download the executive brief Human Skills for the Digital Future.


Read the full article The Human Factor in an AI Future.


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About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

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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How Manufacturers Can Kick-Start The Internet Of Things In 2018

Tanja Rueckert

Part 1 of the “Manufacturing Value from IoT” series

IoT is one of the most dynamic and exciting markets I am involved with at SAP. The possibilities are endless, and that is perhaps where the challenges start. I’ll be sharing a series of blogs based on research into knowledge and use of IoT in manufacturing.

Most manufacturing leaders think that the IoT is the next big thing, alongside analytics, machine learning, and artificial intelligence. They see these technologies dramatically impacting their businesses and business in general over the next five years. Researchers see big things ahead as well; they forecast that IoT products and investments will total hundreds of billions – or even trillions – of dollars in coming decades.

They’re all wrong.

The IoT is THE Big Thing right now – if you know where to look.

Nearly a third (31%) of production processes and equipment and non-production processes and equipment (30%) already incorporate smart device/embedded intelligence. Similar percentages of manufacturers have a company strategy implemented or in place to apply IoT technologies to their processes (34%) or to embed IoT technologies into products (32%).

opportunities to leverage IoTSource:Catch Up with IoT Leaders,” SAP, 2017.

The best process opportunities to leverage the IoT include document management (e.g. real-time updates of process information); shipping and warehousing (e.g. tracking incoming and outgoing goods); and assembly and packaging (e.g. production monitoring). More could be done, but figuring out where and how to implement the IoT is an obstacle for many leaders. Some 44 percent of companies have trouble identifying IoT opportunities and benefits for either internal processes or IoT-enabled products.

Why so much difficulty in figuring out where to use the IoT in processes?

  • No two industries use the IoT in the same way. An energy company might leverage asset-management data to reduce costs; an e-commerce manufacturer might focus on metrics for customer fulfillment; a fabricator’s use of IoT technologies may be driven by a need to meet exacting product variances.
  • Even in the same industry, individual firms will apply and profit from the IoT in unique ways. In some plants and processes, management is intent on getting the most out of fully depreciated equipment. Unfortunately, older equipment usually lacks state-of-the-art controls and sensors. The IoT may be in place somewhere within those facilities, but it’s unlikely to touch legacy processes until new machinery arrive. 

Where could your company leverage the IoT today? Think strategically, operationally, and financially to prioritize opportunities:

  • Can senior leadership and plant management use real-time process data to improve daily decision-making and operations planning? Do they have the skills and tools (e.g., business analytics) to leverage IoT data?
  • Which troublesome processes in the plant or front office erode profits? With real-time data pushed out by the IoT, which could be improved?
  • Of the processes that could be improved, which include equipment that can – in the near-term – accommodate embedded intelligence, and then communicate with plant and enterprise networks?

Answer those questions, and you’ve got an instant list of how and where to profit from the IoT – today.

Stay tuned for more information on how IoT is developing and to learn what it takes to be a manufacturing IoT innovator. In the meantime, download the report “Catch Up with IoT Leaders.”

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Tanja Rueckert

About Tanja Rueckert

Tanja Rueckert is President of the Internet of Things and Digital Supply Chain Business Unit at SAP.