Can White-Collar Apprenticeships Close The STEM Skills Gap?

Adam Winfield

The higher education-career template is still the undisputed way to go for many living in developed countries.

In Canada, where I live, more than 2 million people fill the country’s universities and colleges. Fifty-three percent of Canadians have post-secondary degrees, the highest of any OECD country.

While we’re lucky to live in such a highly educated society, there’s growing anxiety over whether the conventional rites of passage are compatible with the new world technologists are creating.

Some see a scenario in which hordes of young people lament expensive, near-useless university degrees while companies scour for the rare science, technology, engineering, and mathematics (STEM) skills they need.

Already 1.3 million Canadians are unemployed while 400,000 Canadian jobs go unfilled. Many of the vacancies are in skilled technical professions and trades, which is perhaps why so many jobless or underemployed young people regret not going to trade school (63% of Canadian unemployed university graduates feel this way, according to a 2016 study).

Shaking up higher education

Meanwhile, the Internet is shaking the very foundation of the education system. The unlimited participation and interaction that takes place in MOOCs (massive open online courses) and other forms of online learning can make traditional university education look archaic.

Even without joining a MOOC, disciplined learners can use the Internet to fast-track their way to a degree-educated level. Some see this as a way to eschew conventional higher education in favor of more affordable, more efficient, and more fluid ways of learning. Really, the only thing they won’t have on their resume is “BSc.”

STEM companies have a huge role to play in encouraging and helping young people choose this route. Not only must they change what they value when hiring (real skills beat degree certificates), they must also become actively involved in the education process.

To produce more STEM-educated workers and close the skills gap, companies can even use the combined power of MOOCs, Internet resources, and digital HR tools to create their own educational institutions. They can take responsibility for preparing high school graduates for STEM work just as, if not more, effectively than universities or colleges.

The idea of companies training workers straight out of high school is nothing new. Blue-collar trades call it apprenticeships. White-collar apprenticeships never took off because policy drives over recent decades saw young people pushed into going to university or college. According to Wired, however, coding is the new blue-collar job. Does this mean STEM apprenticeships could become the new normal?

Making white-collar apprenticeships work

Apprenticeships typically come with pay, so it’s not within a STEM employer’s best interests to hand them out to high school leavers in the hope that they’ll begin returning value right away. There is an outlandish alternative: What if large STEM companies set up their own universities, offering degree-level education at a more reasonable cost? It’s something that would need to be backed up by strong government regulations, but with today’s technology and job market it’s not unthinkable.

Even if it’s not an employee-paid model, STEM companies can still benefit from making white-collar apprenticeships the way to go for high school graduates. It opens the door to larger pools of talent, allows control over the skills being taught, and gives companies a head start on securing the top talent.

It sounds obvious on paper, so why aren’t STEM companies already doing it? First, there’s the cost and amount of work involved in setting up an educational institution within a company. The complex regulations that apply to higher education are enough to put most companies off the idea.

Apprenticeships have historically been associated with unions, giving employers another reason to shy away from them. Companies are also wary of the possibility that apprentices will up and leave for better salaries or startups once they have the skills they need.

Despite these concerns, if university costs keep rising – causing fewer people to do STEM degrees and continuing growth in the skills gap – STEM employers could find themselves ruing the decision not to step up and create degree-level apprenticeship programs.

Signs of change in STEM education

Just as young people were sold the university dream throughout the 1990s and 2000s, there are signs the same could be about to happen for white-collar apprenticeships. Before his term ended, President Obama put aside $100 million in grants to develop apprenticeships, and with the rise of STEM jobs, the stigma associated with choosing apprenticeships over university is fading.

Already, partnerships between high schools, post-secondary institutions, and tech companies, such as Templeton STEM in Vancouver, are nurturing interest in STEM among teenagers – an indication that the likes of SAP are willing to invest and be directly involved in education for their own future gains.

Some companies have realized that traditional higher education can be a poor indicator of skills, and that there can be more efficient ways of nurturing young talent. IBM HR vice president Sam Ladah says the focus should be on “new-collar jobs” – judging candidates on skills rather than educational background. He believes people who don’t have four-year degrees can prove their technical knowledge through other certifications and coding bootcamps.

If the trend continues, it could one day be white-collar apprentices who are sought after while the university-educated are scoffed at. The byproduct of higher quality, hyper-relevant apprenticeships would be businesses treating them equally, if not preferably, to more generic degrees.

A move away from STEM university degrees and towards white-collar apprenticeships will not happen by the will of young people alone. It will take a joint effort from governments, students, and perhaps most importantly, the STEM companies that need it to happen.

For more on how job training needs to change, see Taking Learning Back to School.

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About Adam Winfield

Adam Winfield writes about technology, how it's affecting industries, how it's affecting businesses, and how it's affecting people.

Why Corporate Culture Can Make Or Break Your Business

Simon Davies

Many business owners focus their efforts on numbers. Margins, profits, savings, overheads. While these things are important, they may be far less important than we are led to believe. Leaders can get so caught up in percentages that they forget about the people at the heart of their business.

This is where corporate culture comes in. Growing and nurturing a positive culture can give you a huge advantage over your competitors, both by avoiding negatives and creating positives. Workplace specialist Landmark, which has seen many businesses rise and fall, has gone as far as describing corporate culture as the “the key to securing your company’s future.”

Stress is bad for business

It’s understandable for a CEO to prize productivity above all else. More work, it would seem, means more profits. But sometimes pushing workers hard can be detrimental to the bottom line.

According to the Harvard Business Review, this kind of “cut-throat environment” where employees are pushed to their limits actually harms productivity. You might think you’re simply getting the most out of your employees by enforcing strict rules or setting high targets, but really what you’re doing is creating stress. And stress is never a good thing.

In 2014, the American Psychological Association estimated that employee stress costs the U.S. economy $500 billion per year. This figure was calculated based on the costs of lost earnings and the sick pay of employees taking time off for stress and related illnesses. A paper from the American Institute of Stress estimated that a staggering 80% of doctor visits are due to stress or conditions derived from stress.

It goes without saying that any of these conditions affecting even one of your employees will be bad for your business. Because of this, it is crucial to create a positive, uplifting workplace culture based on wellbeing and healthiness, not on squeezing the most out of people to crunch numbers.

There are a few proven ways to do this. Many U.S. companies have embraced the concept of the “mental health day.” Unlike a conventional sick day, mental health days allow employees to take time off work when they sense their stress levels may be about to accelerate. Encouraging employees to take mental health days could be a great way to minimize stress in your workplace.

Good company culture can improve productivity

As well as the productivity boost that comes with alleviating stress, positive workplace culture can improve productivity in other ways. The key to this is having clear, well-established company values.

If you don’t have company values that are regularly communicated to staff, it’s worth working on this immediately. Think about why you do what you are doing. Why does your business exist? If the answer is simply to make money, employees will pick up on this and take the same attitude, or worse, they will become disengaged. A Gallup poll found that disengaged workers make more mistakes and are less productive.

To increase engagement, you need company values your workers can believe in as much as you do and a company narrative they will be proud to be part of. At glasses giant Warby Parker, the core values are straightforward: “Learn, Grow, Repeat.” The company implements this on a small scale by offering training programs and having a well-stocked employee library, and on a larger scale by learning from company business moves.

Google is another great example of this. At the heart of its company values are an experimentation and playfulness that is clear from the moment you step into its offices. The slides, swimming pools, and ping-pong tables are replicated in the company’s business practices. Alphabet CEO Larry Page has said: “If you’re not doing some things that are crazy, then you’re doing the wrong things.” As long as Google sees itself as a bold, creative industry leader, employees will be proud to work there. But if the company began to operate like a faceless, monolithic corporation, productivity would undoubtedly stall.

When employees are not stressed, and when they believe in what they are doing, they are less likely to quit their jobs. That’s why good company culture has been linked to increased employee retention. Since hiring and training new employees is so costly and time-consuming, anything that keeps workers at the company is a good thing.

Your company needs an identity and a purpose, just like Google, to make sure employees believe in what they are doing. This, not sets of rules or even financial incentives, will bring out the best in them.

Providing the flexibility today’s employees demand requires flexibile thinking. Learn How to Design a Flexible, Connected Workspace.

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About Simon Davies

Simon Davies is a London-based freelance writer with an interest in startup culture, issues, and solutions. He works explores new markets and disruptive technologies and communicates those recent developments to a wide, public audience. Simon is also a contributor at socialbarrel.com, socialnomics.net, and tech.co. Follow Simon @simontheodavies on Twitter.

#boldlydigital: A Cult of Creation

Sam Yen

If you ask a roomful of first graders who among them is creative, they will all raise their hands and a gleam will come into their eyes. But if you ask executives in a conference room the same question, a lot of them will start gazing at their shoes.

It’s not that we lose the capacity to be creative as we get older; rather, somewhere along the way, the passion and excitement that drove our creative impulses as children fade away.

I blame that loss of passion on our educational systems and our workplaces, where we are taught that value lies in solving problems, not in being creative. That mindset needs to change if organizations want to be as innovative as possible.

In its typical art or science context, creativity is difficult to define and is usually thought of as an inherent trait—either you have it or you don’t. But in the business realm, creativity is neither elusive nor exclusive: it’s both possible to define and to put into practice. Creativity in business means going beyond mere problem-solving to what I call problem finding, a skill that anyone can acquire.

Don’t get me wrong. Problem-solving is crucial to innovation. The best idea in the world will remain just that—an idea—unless an organization can successfully turn it into a product or service, bring it to market, and commercialize it. But many organizations make the mistake of thinking that problem-solving alone is enough to succeed. They believe that innovation means researching their target customers and markets and developing products and services to fit specific needs. But solving problems that customers already know they have usually results in incremental innovations. To achieve innovation breakthroughs, you need to combine execution with creativity.

Enterprise-Scale Creativity

Leading into the unknown is the point where most executives give up. They outsource creativity to agencies to come up with radical new product ideas, or they hire a bunch of designers to come up with ideas internally. Both of those routes can work, but they don’t scale well. Few businesses can afford more than one-off relationships with agencies, and fewer still can hire enough designers to hit the 1:10 ratio of designers to employees that consumer-focused companies like Facebook or Google have. For most companies, that ratio is more like 1:1,000 or 1:10,000.

Yet finding a way to institutionalize creativity, to scale it across the organization—especially to employees and managers without art or design degrees—has become a crucial part of company value. A portfolio of 16 publicly traded companies that the Design Management Institute considers to be expert in creativity and design outperformed the S&P 500 by over 200% each year from 2013 to 2015.

To achieve breakthrough innovations, organizations must find problems that are relevant to customers but that no one else is working on.

Scaling creativity requires a structured process that reignites the passion that we all had as children—that makes it fun and easy, just as it was then. The most important element of the process is to start without a specific hypothesis. At the design school at Stanford University, where I taught in 2014–2015, we liked to illustrate this with a quote from the 19th-century German philosopher Arthur Schopenhauer: “Talent hits a target no one else can hit. Genius hits a target no one else can see.” To achieve breakthrough innovations, organizations must find problems that are relevant to customers but that no one else is working on.

Craft a Problem-Finding Culture

The techniques for problem finding are all based on the principles of design thinking that originated in the 1970s. Design thinking is a broad term for using collaboration and iteration techniques to identify and solve problems and to scale the use of such techniques across the organization. There are many different design-thinking methodologies. At SAP, however, we follow a few basic guidelines:

  • Take a human-centric perspective. Problem-solving looks at market feasibility and technical feasibility and works toward a solution from there. Problem finding introduces a third element: the desirability and usability of a product or service from the customer’s perspective. Start by empathizing with the customer’s needs and desires and work backward to discover the problem that needs solving.
  • Bring together people from different backgrounds. In problem-solving, it’s usually most effective to assign tasks to specific groups like marketing or engineering. In problem finding, it’s best to have a team of people from different disciplines who can see the potential opportunities through different lenses. By brainstorming and iterating as a group, the team can bring those different perspectives together into a solution.
  • Define the experience first. Since problem finding is a user-centered process, organizations should never move into product or service design until they have defined the experience from the user’s perspective. The user perspective should dictate product or service features and functions.
  • Let designers lead. Problem finding should be part of your product and service design process. While not everyone on the problem-finding team needs to be a design expert, you need an expert to make sure that the team hits specific goals in the process. For example, the team needs to define the persona of the customer it is trying to reach. It’s also important to map out how customers will interact with the product or service you ultimately define, which is a skill that requires years of design experience.
  • Stop shipment of bad design experiences. Give the organization permission to make decisions based on the results of the design process. Having the ability to halt development of a product or service that would sacrifice the customer experience is critical to getting the organization to become serious about the importance of design.
  • Create the right space. Having a flexible design space creates visible, physical testimony that design matters to the organization, and it reinforces the types of behavior, such as open collaboration, that are important to the design process. But don’t build a new space before building the design culture. Without training, people won’t know how to work in the new environment and the whole process will fail.
  • View executive sponsorship as necessary but not sufficient. Developing a creative culture requires executive sponsorship, but that’s not enough. There must be a level of buy-in that can survive the departure of key leaders and the normal ebb and flow of organizational dynamics and politics. Middle managers must believe culture change is necessary and be willing to take responsibility for creating the processes to support it. They must also be empowered to support the unconventional decisions that arise from the problem-finding process, to enforce the right values, and to shelter their teams from attacks by conventional thinkers.

Developing a creative culture takes time—usually 3 to 5 years but up to 10 years at very large organizations. To begin to make a difference, business leaders must ensure that there is value associated with creativity. The design teams must show results early and often. They must demonstrate that doing things a different way leads to unexpected results that were never possible in a business-as-usual culture.

Practicing creativity across the organization inevitably leads to success because it takes the design process out of its traditionally narrow confines and ensures that customer needs always come first. Instilling creative confidence among those who never went to art or design school also has a positive impact on company culture. Work becomes more fun for everyone, restoring that gleam in the eye that many thought was lost forever. D!

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Sam Yen

About Sam Yen

Sam Yen is the Chief Design Officer for SAP and the Managing Director of SAP Labs Silicon Valley. He is focused on driving a renewed commitment to design and user experience at SAP. Under his leadership, SAP further strengthens its mission of listening to customers´ needs leading to tangible results, including SAP Fiori, SAP Screen Personas and SAP´s UX design services.

The Blockchain Solution

By Gil Perez, Tom Raftery, Hans Thalbauer, Dan Wellers, and Fawn Fitter

In 2013, several UK supermarket chains discovered that products they were selling as beef were actually made at least partly—and in some cases, entirely—from horsemeat. The resulting uproar led to a series of product recalls, prompted stricter food testing, and spurred the European food industry to take a closer look at how unlabeled or mislabeled ingredients were finding their way into the food chain.

By 2020, a scandal like this will be eminently preventable.

The separation between bovine and equine will become immutable with Internet of Things (IoT) sensors, which will track the provenance and identity of every animal from stall to store, adding the data to a blockchain that anyone can check but no one can alter.

Food processing companies will be able to use that blockchain to confirm and label the contents of their products accordingly—down to the specific farms and animals represented in every individual package. That level of detail may be too much information for shoppers, but they will at least be able to trust that their meatballs come from the appropriate species.

The Spine of Digitalization

Keeping food safer and more traceable is just the beginning, however. Improvements in the supply chain, which have been incremental for decades despite billions of dollars of technology investments, are about to go exponential. Emerging technologies are converging to transform the supply chain from tactical to strategic, from an easily replicable commodity to a new source of competitive differentiation.

You may already be thinking about how to take advantage of blockchain technology, which makes data and transactions immutable, transparent, and verifiable (see “What Is Blockchain and How Does It Work?”). That will be a powerful tool to boost supply chain speed and efficiency—always a worthy goal, but hardly a disruptive one.

However, if you think of blockchain as the spine of digitalization and technologies such as AI, the IoT, 3D printing, autonomous vehicles, and drones as the limbs, you have a powerful supply chain body that can leapfrog ahead of its competition.

What Is Blockchain and How Does It Work?

Here’s why blockchain technology is critical to transforming the supply chain.

Blockchain is essentially a sequential, distributed ledger of transactions that is constantly updated on a global network of computers. The ownership and history of a transaction is embedded in the blockchain at the transaction’s earliest stages and verified at every subsequent stage.

A blockchain network uses vast amounts of computing power to encrypt the ledger as it’s being written. This makes it possible for every computer in the network to verify the transactions safely and transparently. The more organizations that participate in the ledger, the more complex and secure the encryption becomes, making it increasingly tamperproof.

Why does blockchain matter for the supply chain?

  • It enables the safe exchange of value without a central verifying partner, which makes transactions faster and less expensive.
  • It dramatically simplifies recordkeeping by establishing a single, authoritative view of the truth across all parties.
  • It builds a secure, immutable history and chain of custody as different parties handle the items being shipped, and it updates the relevant documentation.
  • By doing these things, blockchain allows companies to create smart contracts based on programmable business logic, which can execute themselves autonomously and thereby save time and money by reducing friction and intermediaries.

Hints of the Future

In the mid-1990s, when the World Wide Web was in its infancy, we had no idea that the internet would become so large and pervasive, nor that we’d find a way to carry it all in our pockets on small slabs of glass.

But we could tell that it had vast potential.

Today, with the combination of emerging technologies that promise to turbocharge digital transformation, we’re just beginning to see how we might turn the supply chain into a source of competitive advantage (see “What’s the Magic Combination?”).

What’s the Magic Combination?

Those who focus on blockchain in isolation will miss out on a much bigger supply chain opportunity.

Many experts believe emerging technologies will work with blockchain to digitalize the supply chain and create new business models:

  • Blockchain will provide the foundation of automated trust for all parties in the supply chain.
  • The IoT will link objects—from tiny devices to large machines—and generate data about status, locations, and transactions that will be recorded on the blockchain.
  • 3D printing will extend the supply chain to the customer’s doorstep with hyperlocal manufacturing of parts and products with IoT sensors built into the items and/or their packaging. Every manufactured object will be smart, connected, and able to communicate so that it can be tracked and traced as needed.
  • Big Data management tools will process all the information streaming in around the clock from IoT sensors.
  • AI and machine learning will analyze this enormous amount of data to reveal patterns and enable true predictability in every area of the supply chain.

Combining these technologies with powerful analytics tools to predict trends will make lack of visibility into the supply chain a thing of the past. Organizations will be able to examine a single machine across its entire lifecycle and identify areas where they can improve performance and increase return on investment. They’ll be able to follow and monitor every component of a product, from design through delivery and service. They’ll be able to trigger and track automated actions between and among partners and customers to provide customized transactions in real time based on real data.

After decades of talk about markets of one, companies will finally have the power to create them—at scale and profitably.

Amazon, for example, is becoming as much a logistics company as a retailer. Its ordering and delivery systems are so streamlined that its customers can launch and complete a same-day transaction with a push of a single IP-enabled button or a word to its ever-attentive AI device, Alexa. And this level of experimentation and innovation is bubbling up across industries.

Consider manufacturing, where the IoT is transforming automation inside already highly automated factories. Machine-to-machine communication is enabling robots to set up, provision, and unload equipment quickly and accurately with minimal human intervention. Meanwhile, sensors across the factory floor are already capable of gathering such information as how often each machine needs maintenance or how much raw material to order given current production trends.

Once they harvest enough data, businesses will be able to feed it through machine learning algorithms to identify trends that forecast future outcomes. At that point, the supply chain will start to become both automated and predictive. We’ll begin to see business models that include proactively scheduling maintenance, replacing parts just before they’re likely to break, and automatically ordering materials and initiating customer shipments.

Italian train operator Trenitalia, for example, has put IoT sensors on its locomotives and passenger cars and is using analytics and in-memory computing to gauge the health of its trains in real time, according to an article in Computer Weekly. “It is now possible to affordably collect huge amounts of data from hundreds of sensors in a single train, analyse that data in real time and detect problems before they actually happen,” Trenitalia’s CIO Danilo Gismondi told Computer Weekly.

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials.

The project, which is scheduled to be completed in 2018, will change Trenitalia’s business model, allowing it to schedule more trips and make each one more profitable. The railway company will be able to better plan parts inventories and determine which lines are consistently performing poorly and need upgrades. The new system will save €100 million a year, according to ARC Advisory Group.

New business models continue to evolve as 3D printers become more sophisticated and affordable, making it possible to move the end of the supply chain closer to the customer. Companies can design parts and products in materials ranging from carbon fiber to chocolate and then print those items in their warehouse, at a conveniently located third-party vendor, or even on the client’s premises.

In addition to minimizing their shipping expenses and reducing fulfillment time, companies will be able to offer more personalized or customized items affordably in small quantities. For example, clothing retailer Ministry of Supply recently installed a 3D printer at its Boston store that enables it to make an article of clothing to a customer’s specifications in under 90 minutes, according to an article in Forbes.

This kind of highly distributed manufacturing has potential across many industries. It could even create a market for secure manufacturing for highly regulated sectors, allowing a manufacturer to transmit encrypted templates to printers in tightly protected locations, for example.

Meanwhile, organizations are investigating ways of using blockchain technology to authenticate, track and trace, automate, and otherwise manage transactions and interactions, both internally and within their vendor and customer networks. The ability to collect data, record it on the blockchain for immediate verification, and make that trustworthy data available for any application delivers indisputable value in any business context. The supply chain will be no exception.

Blockchain Is the Change Driver

The supply chain is configured as we know it today because it’s impossible to create a contract that accounts for every possible contingency. Consider cross-border financial transfers, which are so complex and must meet so many regulations that they require a tremendous number of intermediaries to plug the gaps: lawyers, accountants, customer service reps, warehouse operators, bankers, and more. By reducing that complexity, blockchain technology makes intermediaries less necessary—a transformation that is revolutionary even when measured only in cost savings.

“If you’re selling 100 items a minute, 24 hours a day, reducing the cost of the supply chain by just $1 per item saves you more than $52.5 million a year,” notes Dirk Lonser, SAP go-to-market leader at DXC Technology, an IT services company. “By replacing manual processes and multiple peer-to-peer connections through fax or e-mail with a single medium where everyone can exchange verified information instantaneously, blockchain will boost profit margins exponentially without raising prices or even increasing individual productivity.”

But the potential for blockchain extends far beyond cost cutting and streamlining, says Irfan Khan, CEO of supply chain management consulting and systems integration firm Bristlecone, a Mahindra Group company. It will give companies ways to differentiate.

“Blockchain will let enterprises more accurately trace faulty parts or products from end users back to factories for recalls,” Khan says. “It will streamline supplier onboarding, contracting, and management by creating an integrated platform that the company’s entire network can access in real time. It will give vendors secure, transparent visibility into inventory 24×7. And at a time when counterfeiting is a real concern in multiple industries, it will make it easy for both retailers and customers to check product authenticity.”

Blockchain allows all the critical steps of the supply chain to go electronic and become irrefutably verifiable by all the critical parties within minutes: the seller and buyer, banks, logistics carriers, and import and export officials. Although the key parts of the process remain the same as in today’s analog supply chain, performing them electronically with blockchain technology shortens each stage from hours or days to seconds while eliminating reams of wasteful paperwork. With goods moving that quickly, companies have ample room for designing new business models around manufacturing, service, and delivery.

Challenges on the Path to Adoption

For all this to work, however, the data on the blockchain must be correct from the beginning. The pills, produce, or parts on the delivery truck need to be the same as the items listed on the manifest at the loading dock. Every use case assumes that the data is accurate—and that will only happen when everything that’s manufactured is smart, connected, and able to self-verify automatically with the help of machine learning tuned to detect errors and potential fraud.

Companies are already seeing the possibilities of applying this bundle of emerging technologies to the supply chain. IDC projects that by 2021, at least 25% of Forbes Global 2000 (G2000) companies will use blockchain services as a foundation for digital trust at scale; 30% of top global manufacturers and retailers will do so by 2020. IDC also predicts that by 2020, up to 10% of pilot and production blockchain-distributed ledgers will incorporate data from IoT sensors.

Despite IDC’s optimism, though, the biggest barrier to adoption is the early stage level of enterprise use cases, particularly around blockchain. Currently, the sole significant enterprise blockchain production system is the virtual currency Bitcoin, which has unfortunately been tainted by its associations with speculation, dubious financial transactions, and the so-called dark web.

The technology is still in a sufficiently early stage that there’s significant uncertainty about its ability to handle the massive amounts of data a global enterprise supply chain generates daily. Never mind that it’s completely unregulated, with no global standard. There’s also a critical global shortage of experts who can explain emerging technologies like blockchain, the IoT, and machine learning to nontechnology industries and educate organizations in how the technologies can improve their supply chain processes. Finally, there is concern about how blockchain’s complex algorithms gobble computing power—and electricity (see “Blockchain Blackouts”).

Blockchain Blackouts

Blockchain is a power glutton. Can technology mediate the issue?

A major concern today is the enormous carbon footprint of the networks creating and solving the algorithmic problems that keep blockchains secure. Although virtual currency enthusiasts claim the problem is overstated, Michael Reed, head of blockchain technology for Intel, has been widely quoted as saying that the energy demands of blockchains are a significant drain on the world’s electricity resources.

Indeed, Wired magazine has estimated that by July 2019, the Bitcoin network alone will require more energy than the entire United States currently uses and that by February 2020 it will use as much electricity as the entire world does today.

Still, computing power is becoming more energy efficient by the day and sticking with paperwork will become too slow, so experts—Intel’s Reed among them—consider this a solvable problem.

“We don’t know yet what the market will adopt. In a decade, it might be status quo or best practice, or it could be the next Betamax, a great technology for which there was no demand,” Lonser says. “Even highly regulated industries that need greater transparency in the entire supply chain are moving fairly slowly.”

Blockchain will require acceptance by a critical mass of companies, governments, and other organizations before it displaces paper documentation. It’s a chicken-and-egg issue: multiple companies need to adopt these technologies at the same time so they can build a blockchain to exchange information, yet getting multiple companies to do anything simultaneously is a challenge. Some early initiatives are already underway, though:

  • A London-based startup called Everledger is using blockchain and IoT technology to track the provenance, ownership, and lifecycles of valuable assets. The company began by tracking diamonds from mine to jewelry using roughly 200 different characteristics, with a goal of stopping both the demand for and the supply of “conflict diamonds”—diamonds mined in war zones and sold to finance insurgencies. It has since expanded to cover wine, artwork, and other high-value items to prevent fraud and verify authenticity.
  • In September 2017, SAP announced the creation of its SAP Leonardo Blockchain Co-Innovation program, a group of 27 enterprise customers interested in co-innovating around blockchain and creating business buy-in. The diverse group of participants includes management and technology services companies Capgemini and Deloitte, cosmetics company Natura Cosméticos S.A., and Moog Inc., a manufacturer of precision motion control systems.
  • Two of Europe’s largest shipping ports—Rotterdam and Antwerp—are working on blockchain projects to streamline interaction with port customers. The Antwerp terminal authority says eliminating paperwork could cut the costs of container transport by as much as 50%.
  • The Chinese online shopping behemoth Alibaba is experimenting with blockchain to verify the authenticity of food products and catch counterfeits before they endanger people’s health and lives.
  • Technology and transportation executives have teamed up to create the Blockchain in Transport Alliance (BiTA), a forum for developing blockchain standards and education for the freight industry.

It’s likely that the first blockchain-based enterprise supply chain use case will emerge in the next year among companies that see it as an opportunity to bolster their legal compliance and improve business processes. Once that happens, expect others to follow.

Customers Will Expect Change

It’s only a matter of time before the supply chain becomes a competitive driver. The question for today’s enterprises is how to prepare for the shift. Customers are going to expect constant, granular visibility into their transactions and faster, more customized service every step of the way. Organizations will need to be ready to meet those expectations.

If organizations have manual business processes that could never be automated before, now is the time to see if it’s possible. Organizations that have made initial investments in emerging technologies are looking at how their pilot projects are paying off and where they might extend to the supply chain. They are starting to think creatively about how to combine technologies to offer a product, service, or business model not possible before.

A manufacturer will load a self-driving truck with a 3D printer capable of creating a customer’s ordered item en route to delivering it. A vendor will capture the market for a socially responsible product by allowing its customers to track the product’s production and verify that none of its subcontractors use slave labor. And a supermarket chain will win over customers by persuading them that their choice of supermarket is also a choice between being certain of what’s in their food and simply hoping that what’s on the label matches what’s inside.

At that point, a smart supply chain won’t just be a competitive edge. It will become a competitive necessity. D!


About the Authors

Gil Perez is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Tom Raftery is Global Vice President, Futurist, and Internet of Things Evangelist, at SAP.

Hans Thalbauer is Senior Vice President, Internet of Things and Digital Supply Chain, at SAP.

Dan Wellers is Global Lead, Digital Futures, at SAP.

Fawn Fitter is a freelance writer specializing in business and technology.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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Four Retail Technology Trends To Take Off In 2018

Shaily Kumar

Over the past few years, technology has seen a significant shift from cyclical, invention-led spending on point solutions to investments targeting customer-driven, end-to-end value. The next wave of disruption and productivity improvements is here, which means a huge opportunity for digital-focused enterprises – if you are following the right roadmap.

Technology trends have significant potential over the next few years. Establishing a digital platform will not only set the stage for business innovation to provide competitive advantage, but it will also create new business models that will change the way we do business. Technology trends in 2018 will lay the foundation for the maturity of innovative technologies like artificial intelligence and machine learning and will prepare both businesses and shoppers to be ready for their consumption.

Like any other industry, retail is being disrupted. It is no longer enough to simply stock racks with alluring products and wait for customers to rush through the door. Technological innovation is changing the way we shop. Customers can find the lowest price for any product with just a few screen touches. They can read online reviews, have products sent to their home, try them, and return anything they don’t want – all for little or nothing out of pocket. If there are problems, they can use social networks to call out brands that come up short.

Retailers are making their products accessible from websites and mobile applications, with many running effective Internet business operations rather than brick-and-mortar stores. They convey merchandise to the customer’s front entry and are set up with web-based networking media if things turn out badly.

Smart retailers are striving to fulfill changing customer needs and working to guarantee top customer service regardless of how their customer interacts with them.

2017 saw the development of some progressive technology in retail, and 2018 will be another energizing year for the retail industry. Today’s informed customers expect a more engaging shopping experience, with a consistent mix of both online and in-store recommendations. The retail experience is poised to prosper throughout next couple of years – for retailers that are prepared to embrace technology.

Here are four areas of retail technology I predict will take off in 2018:

In-store GPS-driven shopping trolleys

Supermarkets like Tesco and Sainsbury’s now enable their customers to scan and pay for products using a mobile app instead of waiting in a checkout line. The next phase of this involves intelligent shopping trolleys, or grocery store GPS: Customers use a touch screen to load shopping lists, and the system helps them find the items in the store. Customers can then check off and pay for items as they go, directly on-screen. These shopping trolleys will make their way into stores around the last quarter of 2018.

Electronic rack edge names

Electronic rack edge names are not yet broadly utilized, but this could change in 2018 as more retailers adopt this technology. Currently, retail workers must physically select and update printed labels to reflect changes in price, promotions, etc. This technology makes the process more efficient by handling such changes electronically.

Reference point technology

Despite the fact that it’s been around since 2013, reference point technology hasn’t yet been utilized to its fullest potential. In the last few years, however, it’s started to pick up in industries like retail. It’s now being used by a few retailers for area-based promotions.

Some interesting uses I’ve observed: Retailers can send messages to customers when they’re nearby a store location, and in-store mannequins can offer information about the clothing and accessories they’re wearing. I anticipate that this innovation will take off throughout 2018 and into 2019.

Machine intelligence

The technological innovations describe above will also provide retailers with new data streams. These data sources, when merged with existing customer data, online, and ERP data, will lead to new opportunities. Recently Walmart announced it would begin utilizing rack examining robots to help review its stores. The machines will check stock, prices, and even help settle lost inventory. It will also help retailers learn more about changing customer behavior in real time, which will boost engagement.

Clearly, technology and digital transformation in retail have changed the way we live and shop. 2018 will see emerging technologies like machine learning and artificial intelligence using structured and unstructured data to deliver innovation. As technology develops, it will continue to transform and enhance the retail experience.

For more insight on e-commerce, see Cognitive Commerce In The Digital World: Enhancing The Customer Journey.

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Shaily Kumar

About Shaily Kumar

Shailendra has been on a quest to help organisations make money out of data and has generated an incremental value of over one billion dollars through analytics and cognitive processes. With a global experience of more than two decades, Shailendra has worked with a myriad of Corporations, Consulting Services and Software Companies in various industries like Retail, Telecommunications, Financial Services and Travel - to help them realise incremental value hidden in zettabytes of data. He has published multiple articles in international journals about Analytics and Cognitive Solutions; and recently published “Making Money out of Data” which showcases five business stories from various industries on how successful companies make millions of dollars in incremental value using analytics. Prior to joining SAP, Shailendra was Partner / Analytics & Cognitive Leader, Asia at IBM where he drove the cognitive business across Asia. Before joining IBM, he was the Managing Director and Analytics Lead at Accenture delivering value to its clients across Australia and New Zealand. Coming from the industry, Shailendra held key Executive positions driving analytics at Woolworths and Coles in the past.