The Internet Of Things In Life Sciences

Mandar Paralkar

As healthcare IT increasingly leverages mobility and cloud technology to connect with medical devices and fitness apparel and to monitor patient conditions, traditional life science manufacturers are under pressure to deliver innovation that improves patient outcomes.

Automation is not new to the life sciences industry; life sciences companies have been connecting to shop-floor automation devices and sensors via local area networks for some time. Remote data capture has been active in clinical trials and in field service instances over telemetry, and biologics has been managing cold chain products for long period. However, the industry’s shift from selling products that connect with end users to selling services is creating a catalyst for change and a renewed interest in the Internet of Things in the pharma and medical device industry. This is reinforced by recent acquisitions of on-premise manufacturing execution systems (MES) vendors by big automation players in the market.

Connected products

Life sciences companies today are challenged by the inability to monitor temperature efficiently during transit. The goal is to record any temperature variances and note failures at any stage of the distribution chain, from wholesalers, third-party logistics (3PL), and retail pharmacies or hospital clinics, where products are dispensed to patients. Inside the manufacturing shop floor and warehouse, refrigeration is a critical parameter that needs to be monitored constantly, as it can critically impact product quality. Sensor providers can help achieve this from a hardware and data capture perspective, whereas an IoT platform with adapters/connectors to edge level providers has a big role to play from a communication, workflow, alerting and analytics, and mobility perspective.

Connected assets

Effective process validation is essential to ensuring drug quality. Process validation is the collection and evaluation of manufacturing data, from the process design stage through commercial production, which establishes scientific evidence that the process is capable of consistently delivering quality product. Process validation involves a series of machine-learning activities, along with manufacturing and quality processes, over the life cycle of a product.

Life sciences companies require that processes remain in constant control, so they must consistently check for intra- and inter-batch variances while maintaining product quality and quantity. Full functionality of all critical manufacturing attributes and quality parameters must be assessed for their role in processes, along with any impact on products. Customer returns and drug product recalls have severe cost implications. IoT tools with graphical user interfaces that connect to the laboratory information management system instrumentation layers such as chromatography machines will help manufacturers discover new insights in Big Data and leverage predictive analytic to improve business processes.

Connected people

Manufacturers need strong collaboration with partners like hospitals and other healthcare providers that monitor and record patient data from medical devices and products used in the field, as this information enables them to address any problems or issues that could affect patient heath. Business challenges include collecting equipment usage data from patients, identifying equipment requiring maintenance or calibration, updating technology based on patient performance data, and devising the right value-added services.

Connecting manufacturers with medical equipment in the field will enable providers to easily recognize patients and ensure that the correct treatment is being administered. This in turn can help improve outcomes and reduce readmissions by engaging both patients and caregivers, customizing protocols based on progress, and identifying potential areas of improvement.

The digital economy offers the life sciences industry new opportunities to boost market share by reimagining business processes and pushing value-added services beyond manufacturing and service and into the extended supply chain.

Learn how to bring new technologies and services together to power digital transformation by downloading “The IoT Imperative for Consumer Industries.”  

Explore how to bring Industry 4.0 insights into your business today by reading “Industry 4.0: What’s Next?


About Mandar Paralkar

Mandar Paralkar is the director of Global Life Sciences Industry Solution Management at SAP, where he has a leading role in creating the industry solution strategy and global business plans. He works with customers to define industry requirements to corporate development and shares global life sciences trends and solution innovations internally and externally. Further, he supports customer engagements with his deep industry expertise that includes a sound compliance and validation background.

How Is IoT Driving Growth In Equipment-as-a-Service Options?

Dietmar Bohn

The Internet of Things (IoT) is poised to deliver significant growth to many industries over the next few years. Within three years, it’s expected that companies selling IoT solutions will see revenues of over $450 billion. By 2025, it’s expected that there will be 75.4 billion connected devices worldwide. This provides a strong market for growth in many industries. The manufacturing industry is no different, with opportunities to improve uptime for customers and reduce high-dollar repairs.

At the same time, digitalization and disruption are providing the opportunity for companies with revolutionary new business models to enter the market. One new business model that shows great promise is integrating IoT technology and equipment with aspects of software-as-a-service models. But how will this model work in real life, what impact will it have on the companies that use it, and what benefits will it offer across a wide range of industries? Here’s a quick look.

How is the IoT driving growth in equipment-as-a-service options?

With the advent of cloud computing, software-as-a-service became popular. Essentially, it provided users with software access for a subscription fee, with the software-providing company handling maintenance, upgrades, and security issues. This concept has grown into a wide range of IT and other areas. As an example, from another industry, Netflix provides video services as a service through a monthly subscription fee.

Now the as-a-service model is being applied to a wide range of other industries. Equipment for many industries has often used the service contract or lease model. However, these models have had their own problems. Clients often don’t catch early warning signs that the equipment is having issues. The maintenance schedule may not be appropriate to the client’s site conditions. The equipment may be more than the end user needs. For whatever reason, service contracts can be expensive on both sides.

Equipment-as-a-service that implements IoT technology benefits both sides. Let’s take a look at how it might work in a business. ABC Manufacturing is an electronics manufacturing firm that uses automated MIG welders (metal inert gas welders) to produce part of its electronics components. It has service contracts for these welders, but it is not happy with the downtime and unexpected machine failures, which cost the company money. They’re also not quite sure that the equipment is right for their needs, with the limited-axis welders making somewhat sloppy welds when they reach particular angles.

XYZ  Equipment provides the welding machines but is not happy with the number of failures that could be prevented. These failures cost a lot of time and parts to fix. The unpredictable nature of the failures means sometimes they’re paying repair technicians to sit around while paying overtime when a machine breaks down at odd hours. At the same time, they’re also losing profitability from refunds to ABC Manufacturing for downtime on their lines. They know the customer isn’t quite sure about the machinery, but they’re not quite sure what they want to be changed.

After attending an equipment conference, XYZ’s CTO comes back to the office very excited about new IoT technology and business models. He convinces XYZ’s CEO to try an experiment with ABC’s service contract. XYZ’s CTO sets up an appointment with ABC’s production director and CEO to discuss options.

At the meeting, they talk about the issues with the welders. ABC doesn’t want to invest in any significant money in machinery it isn’t sure will work for their issues, so XYZ offers to set them up with a few 7-axis welders on an equipment-as-a-service option. ABC will pay a monthly fee for the use of the machinery, based on the outcome of the machinery. If they’re not happy with the equipment, ABC can end the subscription at the end of that subscription period without any penalty. XYZ will install sensors that use IoT technology to allow them to remotely monitor the equipment. This allows XYZ to determine when preventative maintenance is needed. The advanced notice lets XYZ schedule maintenance when it makes sense for both companies. XYZ makes fewer repairs and saves money. ABC avoids risk on the equipment. Everyone is happy.

Equipment-as-a-service provides great options for both equipment manufacturers and businesses. By integrating IoT technology with equipment contracts, many companies are gaining better uptime without the heavy investment. Equipment companies are also profiting from the lower failure rate as equipment is being serviced before problems get out of control. IoT technology is expected to add between $10 and $15 trillion to the worldwide GDP by 2030. Where does your company fall with these new possibilities?

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value: Accelerating Digital Transformation in Industrial Machinery and Components. Explore how to bring Industry 4.0 insights into your business today: Industry 4.0: What’s Next?


Dietmar Bohn

About Dietmar Bohn

Dietmar Bohn is the Vice President of Industry Cloud at SAP. He brings more than 15 years of CRM experience from both outside and inside SAP and more than 25 years of industry experience. Bohn has held different executive roles spanning CRM strategy projects, CRM implementation projects, CRM development and CRM product management. He holds degrees in Electrical Engineering and in Telecommunications.

Mitigating The Brain Drain Of The Chemical Industry

John Harrison

Burdened by an aging workforce, the chemical industry is facing a serious brain drain – and this is creating a host of problems related to HR and compliance.

Manufacturing Automation reports that more than 20% of the chemical industry’s workforce will approach retirement in the next three to five years. If this aging-workforce problem is not resolved within this timeframe, chemical companies’ profitability will suffer significantly.

Per the American Chemical Council, this could mean more unplanned disruptions, more hiring and training costs, and more efforts to maintain safety. Increasing the need for expanding the workforce is shale gas utilization, which is changing the U.S. from a high-cost producer to one of the lowest-cost global producers. ACC president and CEO Cal Dooley says, “it’s vital that we be able to attract and retain a talented workforce that helps us to continue to drive economic expansion, innovation, and global competitiveness.”

To compensate, chemical companies are using more contractors and service providers to supplement the diminishing workforce, which increases compliance risks. Chemical companies that adopt digital solutions are well positioned to mitigate these risks, especially in the areas of product development, processes, and business modeling.

Digital transformation

Clearly, digital technology has vast implications for the chemical industry because it can help simplify complex processes. Today, core business elements are connecting to each other like never before. Platforms link products, equipment, and employees. Suppliers and customers connect to chemical firms. These connected systems offer new opportunities for collaboration. Processes improve at a faster rate. Productivity grows across the company.

A new frontier

Computing advances offer solutions not possible only a few years ago. Predictive maintenance schedules and quality control are now a reality. Supply-chain efficiency and market-driven pricing are easier to put in place. New profit centers are emerging.

In addition, cloud computing offers vast storage capacity at affordable rates. These structures broaden information sharing and simplify analysis and reporting.

The Internet of Things (IoT) is another factor to consider. The IoT connects products, equipment, and other devices together with sensors, software, and wireless technology. These devices detect, store, and report data on a massive scale. In essence, your “things” are now smart and connected.

Chemical work, redefined

These improvements allow meaningful changes to the way chemical firms work. In addition, digital solutions play a major role in solving the aging-workforce issue by reducing the workload and ensuring companies comply with regulations. For forward-looking companies, technology changes the nature of work in ways including:

Floor operations: Smart, connected machines improve accuracy and safety on the shop floor. Operations are more precise with the use of machines connected to database systems. Predictive systems control or support operational instructions. Self-learning systems interact with machinery and business processes.

Digital back offices: Many support functions are evolving or now digitized. Procurement and invoicing are no longer siloed activities. This new digital space integrates inventory management, accounting (e.g., invoice reconciliation), and human resources. Analytics tools take digitized data from processes in real time. Insights and reporting are immediately available. Employees are presented with more information and can make decisions faster. Technologies like machine learning become commercially viable options to augment people’s ability through data.

Accuracy, security, and compliance

To understand how digital growth relates to compliance, let’s look at one example where contractors and compliance meet. Chemical labeling systems often cause major headaches. Labeling systems vary in many ways. Differences in process and format can change by department and region.

These variables challenge consistency and control standards across a company, but enterprise-wide systems offer a solution. Such systems ensure consistency, compliance, and security. As guidelines change, there’s an urgent need to change and manage label data fast. With smart technology, firms can share data and changes with remote contractors and suppliers.

These systems allow all locations to manage changes and reduce downtime. Business processes scaled across the globe ensure consistency across the enterprise.

Version-control systems and documentation are important regulatory issues. Firms need systems to chart approvals, workflow, and revision history. These modern systems connect data from all sources.

Firms today share data with contractors worldwide. This integration of corporate and partner data requires accurate label printing. Central printing oversight offers global supply chain consistency. Manual and redundant label data entry disappears.

Labeling systems now can share business rules with contractors and suppliers. With leaner workforces, these systems reduce delays caused by global variances.

Differences in regulations are a challenge to compliance. Different image requirements, formats, and language complicate the issue. As a solution, single-source systems incorporate these variables centrally. Different format and printer standards are tracked at the firm level. Labor is free to work in other areas.

Shared data is another advantage. Automation allows data to be linked from different systems. Now safety and quality control info is tied to performance. Inventory and supply chain data links to orders and sales.

Contract employees can sign off on regulatory mandates in remote locations and affirm procedures. Smart devices prevent tampering and alert contractors of safety issues in real time.

Fleet of foot

Digital advances in fleet and stock management also improve compliance, even with fewer employees on the payroll. Systems and sensors can better match demand with supply. External market intelligence can be factored into the forecasting process.

Transportation systems become more agile. The ability to respond to customer needs increases and new markets emerge globally.

Fewer personnel costs

One other consideration is the use of basic mobile and social media tech. Leveraging these tools lets contractors and staff communicate directly. An engaged workforce can collaborate in new ways. Integrated platforms offer the right information at the right time. The right people see it. The right decisions are made.

Cloud-based content management systems streamline training. Enterprise compliance tools reduce risk and boost performance. Cloud-based talent management systems track rising stars. Hiring and training costs drop for new hires and contractors.

Improved safety

With an aging workforce and new employees coming onboard, accidents and other workplace incidents are expected to increase. The U.S. government estimates that by 2024, older workers will account for 25% of the labor market. The recent economic recession combined with longer life expectancy and changes to retirement and pension plans have increased the average retirement age to 67.

Aging – and the physical changes associated with it – “could potentially make a workplace injury into a much more serious injury or a potentially fatal injury,” says Ken Scott, an epidemiologist with the Denver Public Health Department.

Including workers in the digital corporation via wearable sensors is now a reality. Knowing when there has been an incident (e.g., a fall or an exposure to an environmental hazard) instantly allows for a faster response. With the additional data being gathered, predictive algorithms and machine learning can identify safety concerns and help a company be proactive in reducing safety risks and severity. Since older workers take longer to recover from an injury, speeding the response and reducing severity benefit both the worker and the company through reduced lost work time and related costs.

What it means

In short, the connected chemical company lets employees everywhere connect. This strengthens compliance through shared datasets and consistent processes.

Learn how to innovate at scale by incorporating individual innovations back to the core business to drive tangible business value by reading Accelerating Digital Transformation in Chemicals. Explore how to bring Industry 4.0 insights into your business today by reading Industry 4.0: What’s Next?


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.



The Differences Between Machine Learning And Predictive Analytics

Shaily Kumar

Many people are confused about the specifics of machine learning and predictive analytics. Although they are both centered on efficient data processing, there are many differences.

Machine learning

Machine learning is a method of computational learning underlying most artificial intelligence (AI) applications. In ML, systems or algorithms improve themselves through data experience without relying on explicit programming. ML algorithms are wide-ranging tools capable of carrying out predictions while simultaneously learning from over trillions of observations.

Machine learning is considered a modern-day extension of predictive analytics. Efficient pattern recognition and self-learning are the backbones of ML models, which automatically evolve based on changing patterns in order to enable appropriate actions.

Many companies today depend on machine learning algorithms to better understand their clients and potential revenue opportunities. Hundreds of existing and newly developed machine learning algorithms are applied to derive high-end predictions that guide real-time decisions with less reliance on human intervention.

Business application of machine learning: employee satisfaction

One common, uncomplicated, yet successful business application of machine learning is measuring real-time employee satisfaction.

Machine learning applications can be highly complex, but one that’s both simple and very useful for business is a machine learning algorithm that compares employee satisfaction ratings to salaries. Instead of plotting a predictive satisfaction curve against salary figures for various employees, as predictive analytics would suggest, the algorithm assimilates huge amounts of random training data upon entry, and the prediction results are affected by any added training data to produce real-time accuracy and more helpful predictions.

This machine learning algorithm employs self-learning and automated recalibration in response to pattern changes in the training data, making machine learning more reliable for real-time predictions than other AI concepts. Repeatedly increasing or updating the bulk of training data guarantees better predictions.

Machine learning can also be implemented in image classification and facial recognition with deep learning and neural network techniques.

Predictive analytics

Predictive analytics can be defined as the procedure of condensing huge volumes of data into information that humans can understand and use. Basic descriptive analytic techniques include averages and counts. Descriptive analytics based on obtaining information from past events has evolved into predictive analytics, which attempts to predict the future based on historical data.

This concept applies complex techniques of classical statistics, like regression and decision trees, to provide credible answers to queries such as: ‘’How exactly will my sales be influenced by a 10% increase in advertising expenditure?’’ This leads to simulations and “what-if” analyses for users to learn more.

All predictive analytics applications involve three fundamental components:

  • Data: The effectiveness of every predictive model strongly depends on the quality of the historical data it processes.
  • Statistical modeling: Includes the various statistical techniques ranging from basic to complex functions used for the derivation of meaning, insight, and inference. Regression is the most commonly used statistical technique.
  • Assumptions: The conclusions drawn from collected and analyzed data usually assume the future will follow a pattern related to the past.

Data analysis is crucial for any business en route to success, and predictive analytics can be applied in numerous ways to enhance business productivity. These include things like marketing campaign optimization, risk assessment, market analysis, and fraud detection.

Business application of predictive analytics: marketing campaign optimization

In the past, valuable marketing campaign resources were wasted by businesses using instincts alone to try to capture market niches. Today, many predictive analytic strategies help businesses identify, engage, and secure suitable markets for their services and products, driving greater efficiency into marketing campaigns.

A clear application is using visitors’ search history and usage patterns on e-commerce websites to make product recommendations. Sites like Amazon increase their chance of sales by recommending products based on specific consumer interests. Predictive analytics now plays a vital role in the marketing operations of real estate, insurance, retail, and almost every other sector.

How machine learning and predictive analytics are related

While businesses must understand the differences between machine learning and predictive analytics, it’s just as important to know how they are related. Basically, machine learning is a predictive analytics branch. Despite having similar aims and processes, there are two main differences between them:

  • Machine learning works out predictions and recalibrates models in real-time automatically after design. Meanwhile, predictive analytics works strictly on “cause” data and must be refreshed with “change” data.
  • Unlike machine learning, predictive analytics still relies on human experts to work out and test the associations between cause and outcome.

Explore machine learning applications and AI software with SAP Leonardo.


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.