McLaren Automotive: Racing Ahead With Real-Time Connected Intelligence

Richard Howells

McLaren Automotive’s entry-level 570S Coupé packs 562 horsepower that rockets the car from 0 to 60 mph in 2.9 seconds. But that’s nothing compared with the speed of the company’s real-time connected intelligence.

Based in Woking, England, McLaren designs and manufactures sports and luxury cars. Most are produced in-house at designated production facilities. And increasingly, the company relies on Internet of Things (IoT) technologies.

I caught up with Craig Charlton, CIO of McLaren Technology Group, in May at SAPPHIRE NOW, where we discussed McLaren’s IoT journey.

One strategy, four units, five transformers

McLaren is pursuing a single IT strategy: “to deliver core solutions, core platforms, and winning platforms.” But it needs to execute that strategy across four business units, each of which requires a different approach to IT:

  1. McLaren Automotive — Manufactures high-performance sports and luxury cars
  2. McLaren Racing — Races to win in Grands Prix and World Championships
  3. McLaren Applied Technologies — Applies advanced technologies and designs across markets as diverse as health and energy to achieve performance breakthroughs
  4. McLaren Commercial — Identifies and enriches partnerships to drive business success

The company is achieving its IT goals through its “Transformational Big Five:”

  1. Business platforms — Advanced business platforms support processes in each of McLaren’s four units.
  2. Cloud and mobility — With 2,800 of the company’s 3,400 employees on mobile devices, cloud is everywhere.
  3. Managed risk — By migrating from legacy systems, McLaren is reducing cybersecurity vulnerabilities and managing risk.
  4. People-centricity — IT is central to how McLaren’s people do business every day.
  5. Partners — McLaren has been co-innovating with SAP for more than 20 years.

Internet of (very fast) Things

But some of the most exciting IT at McLaren revolves around IoT. And as Craig explains, IoT is hardly new at McLaren. “We’ve been using IoT-type technology since 1993,” he says, “when we first put telemetry on our racing cars to analyze race performance.”

Today, at a typical race, the company has 150 to 300 car sensors tracking everything from tire pressure to brake wear to G-force. These sensors generate more than 100 GB of data every race weekend — producing 11.8 billion data points per season and 1080 race permutations in real time, so the race team can ask questions like, “How many times did Fernando Alonso pull 6G in the last race?” — and get the answer in two or three seconds.

“The data has truly transformed how we race,” Craig says. “Solutions like SAP HANA have allowed us to track billions of data points and look at historical data going back 24 years. In fact, we can analyze about 1 trillion data points.”

Fine-tuning race cars, transforming business models

What makes IoT mission-critical to McLaren is the ability to gain new insights to improve performance. By analyzing its Big Data, the company can identify nuggets that help it fine-tune its cars and be faster around the track.

But the company also expects to leverage real-time connected intelligence to improve the performance of its business. “IoT is going to change many organizations from being product-based to being service-based,” Craig predicts. “In the automotive industry, when we talk about autonomous cars, customers may be looking to buy a unit of travel rather than a car.”

For companies in the automotive and many other industries, business change is hardly slowing down. Real-time connected intelligence will help them stay ahead of the curve.

To learn more about McLaren’s IoT journey, watch Craig’s SAPPHIRE NOW presentation or listen to a one-on-one interview with Craig.

To see Craig and 50 other industry experts in person, attend SAP Leonardo Live, July 11 and 12 at the Kap Europa Congress Center in Frankfurt, Germany. The event will bring together a vibrant global community of up to 1,500 IoT, manufacturing, supply chain, R&D, and operations decision makers, influencers, analysts, and media. Learn firsthand from more than 50 SAP customer showcases how to connect IoT and core business processes to achieve digital transformation.

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About Richard Howells

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

Explore The Future Of Retail

Joerg Koesters

Today’s shoppers want personalized service. They expect an omnichannel experience where they can connect directly to retailers across social media, in-store, and through websites. They want to be able to see an Instagram photo of an outfit, click on a link, and have it delivered to their door within days. How can retailers compete in this market? It all comes down to digitalization. Creating better information access and providing on-the-go connectivity to consumers is critical.

Statistics and trends show shoppers are ready

Consumers today are ready to embrace a digital future. And, in many ways, they are already doing so. A survey from PWC.com shows that of 24,000 shoppers surveyed across 29 countries, 56% have shopped at Amazon.com and 47% own or plan to buy a wearable, connected device. More so, 39% of these shoppers are turning to social networks to gain insight and inspiration into what they purchase. Considering how important a connected retail experience is to consumers, retailers must take action to implement solutions.

Yet, many worry about costs. Over the last few years, we’ve physical retailers have seen less foot traffic in their stores as e-commerce grows by double digits. According to Fox Business, 24 large retailers have announced they are closed stores due to the industry’s overbuilt landscape. Simply, there are too many stores in some markets, making it harder to compete for shoppers. With so much uncertainty, investments need to be thoroughly researched. The connection of investment to business value needs to be made explicitly clear.

Digital investments allow retailers to build brand awareness, provide just-in-time services, and offer personalized interaction. It is these services and connection points that help retailers compete across the board. Take a closer look at some of the ways today’s consumers are demanding change and how retailers of all sizes can facilitate it.

Retailers are already poised to embrace digitalization, data analytics, and IoT

The good news is many retailers do not have to overinvest. Many of the technology components necessary to develop this type of connectivity are already in place. In a recent S.M.A.C. Talk Technology podcast, Oliver Grob, solutions manager within the Retail Industry Business Unit with SAP, expressed the same view. “You have cameras, you have interaction sensors, Bluetooth beacons, products which have intelligence techs on their RFID, and so many possibilities [that] what you can do and the level of insight into the retail business is dramatically raised compared to what retailers really know about their business.”

With this groundwork in place, retailers have access to the data they need to create customer-first decisions and services. Utilizing beacon sensors and the Internet of Things (IoT), retailers can gather a better level of insight into where consumers go when they enter a mall, what they buy, and what they desire. Applying advanced analytics to this sensor data can allow retailers to provide a better end result to virtually any customer who walks in the door.

Connecting with consumers through technology

Today’s connected shoppers are making it easier for retailers to provide instant personalized connections before, during, and after a physical shopping experience.  Grob says in the podcast, “Today we have smartphones all over the place that are connected all the time. They [shoppers] have GPS. So you have the possibility to sense what the customer is doing; what he is wanting. I mean, you can even start chatting with him on the spot. So you have the possibility to connect to the customer.”

Imagine a world in which a consumer gets help on the spot. The shopper visits a retailer and finds a pair of shoes to buy. But the shopper has a question. Instead of waiting for a sales associate, the shopper logs into an app, uses a chatbot to ask key questions, and makes a buying decision. What’s more, the shopper who doesn’t want to carry the shoes through the mall can push a few buttons on a smartphone and get the product delivered to their door.

Improving offerings to meet customer demand in advance with data

Data is critical throughout this process. With data, retailers are better enabled to make customer-focused decisions. They no longer need to manage that data either. Solutions are available to fill in that gap in real time. “You need to have the right things for the customer. You need to have the right answers, the right products, the right reaction, and the right time to deliver something. So to tackle this, of course, you need to analyze a lot of data. You need to know what is out there in the community, what’s hip, what Facebook likes, what Instagram likes, and all the social media,” continues Grob.

With this type of data, processed in real time by technology solutions, retailers can answer all of these questions and facilitate a strong sense of satisfaction from their shoppers. Buyers today have dozens of options for making a purchase. The companies that are able to stand out, solve customers’ problems, and – most importantly – connect with customers when they need and want that connection are the retailers that will flourish in a changing retail landscape.

Exploring the connectivity possible in retail is every company’s need

Achieving any of these goals takes connectivity and a dedication to innovation. It also takes partnerships with companies already creating positive results. Minimizing costs, personalizing service, and delivering incredible solutions at competitive prices are a possibility with innovations enabled by technologies such as machine learning, advanced analytics, and IoT.

Explore more of the ways retailers are transforming this industry with SAP.  Take a few minutes to listen to the full podcast from SAP’s Oliver Grob at S.M.A.C. Talk Technology.

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

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About Joerg Koesters

Joerg Koesters is the Head of Retail Marketing and Communication at SAP. He is a Technology Marketing executive with 20 years of experience in Marketing, Sales and Consulting, Joerg has deep knowledge in retail and consumer products having worked both in the industry and in the technology sector.

Machine Learning And Easter Egg Hunts

Elvira Wallis

Easter is the quintessential spring holiday, full of vibrant colors, sweets, and family traditions. And yet, it may also be one of the few holidays with a built-in competition: the infamous Easter egg hunt!

It usually goes something like this: parents hide colored eggs throughout the yard and kids hunt to try and fill up their baskets before their treasures are scooped up by other seekers. It’s the only time of the year when putting all your eggs in one basket is a good thing.

As any master egg hunter knows, this is an exercise in pattern recognition and anomaly detection. You must constantly scan the landscape for anything that looks off or out of place in even the slightest way. Luckily for most egg hunters, the landscape in question is limited and pre-populated with plenty of opportunities for this activity to pay off.

But what if the landscape was exponentially much larger and the eggs were far fewer and further between? You may be just as interested in those Easter eggs, even if your childhood egg hunting strategy no longer works as well.

So it goes with interpreting data that comes from the Internet of Things. While all the sensor data that comes from the Internet of Things can give your business a new level of detail into day-to-day operations, it doesn’t necessarily follow that those hidden Easter eggs (read: insights) will present themselves automatically.

Enter machine learning and its ability to perform tasks by learning from data. For example, imagine for a moment that you are an operations manager for a chocolate company that makes those chocolate bunnies you might have consumed this past Easter holiday.

Creating chocolate bunnies requires lots of perishable products to be stored and available in an optimal condition for the standard chocolate bunny process to be successfully completed. The issue is that once a problem is detected (say, a deviation from the specific viscosity required for molding the chocolate into chocolate bunnies), it may already be too late, with a batch ruined.

However, details surrounding that detection could allow the system to learn from this experience. It could be that the viscosity issue has a higher probability after other smaller anomalies (such as temperature fluctuation) have occurred in succession. Anomaly detection could indicate when a larger failure might occur.

And anomaly detection could be further explored through influencer discovery. Meaning, once the system determines a correlation between smaller temperature anomalies and a subsequent viscosity change, the next step would be to discover what led to this pattern.

This is where a bunch of statistical analysis comes into play. Essentially, because the Internet of Things allows for so many data points to be collected over time, a digital system can correlate different combinations of those data points, which can include details on various environmental variables.

Imagine that a viscosity deviation that might ruin a batch of your favorite chocolate bunnies may be a function of outside temperature, humidity, capacity utilization, pressure, power usage, flow, etc. If each of those indicators is being tracked and measured over time, machine learning can take all that data, identify patterns across it, and provide much more actionable guidance on the influencers discovered.

Enterprise business processes can be extended through connecting the previously unconnected goods or products. This treasure trove of data available through connected goods enables you to quickly react to changing conditions or resolve issues the moment they arise, not only through real-time visibility into product inventory, state, and utilization, but also through having the underlying data directly integrated into existing business systems.

Now, combine that visibility and integration with machine learning capabilities, and you get additional options for optimizing the enterprise. This enables you to maximize the value of your products while also mitigating any future negative influencers that could impact your day-to-day business operations.

This type of business outcome is precisely what connected goods with embedded machine learning enable. Product insights are derived from key indicators that are continually strengthened by machine learning. A digital system with machine learning can help you detect conditional anomalies and discover influencers for abnormal product quality deterioration. Simply put, think of it as the ultimate Easter egg finder for your business.

Want to learn more about how to maximize product value in a connected world through IoT-enabled inventory, storage, utilization, and consumption insights? Visit our connected goods web page.

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Elvira Wallis

About Elvira Wallis

Elvira Wallis is the Senior Vice President of SAP’s IoT Smart Connected Business organization. Elvira is responsible for ideating, defining, delivering and taking-to-market IoT business solutions to increase revenue, adoption and thought leadership.

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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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter