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Top 3 Drivers Of Supply Chain Transformation

Richard Howells

Manufacturing supply chains are experiencing levels of change heretofore unprecedented in their history, according to a recent IDC Manufacturing Insights white paper titled “The Extended Supply Chain.”

In the paper, author Simon Ellis posits that the future of the supply chain is “one of an outwardly networked and collaborative organization that fully integrates supply chain with design, manufacturing, and asset management into an ‘extended’ supply chain that is able to respond quickly and accurately.”

In order to transform existing supply chains into extended supply chains, Mr. Ellis explains that organizations must prioritize the following three drivers of change:

1. Customer-centricity: putting consumers at the forefront of your business

Gaining visibility of actual demand and increasing the speed of response will be the key to improving customer-centricity. Supply chains must be not only accurate but timely, whether we are talking about the time it takes to bring new products to market, the time it takes to process and deliver an order, or the time it takes to manage returns.

Today’s customers are more connected, informed, and demanding than ever. They want the ability to order from any device, anywhere, at any time. In other words, they want complete omnichannel capabilities.

2. Individualized products: Realizing the lot size of one

As the paper states, “Most manufacturing supply chains have been designed for the mass-market reseller, moving full pallets on full trucks, and have operated as such throughout much of their history. Yet these businesses are now facing the challenge of smaller cases or even units, LTL or parcel shipments, and high levels of customization — all things that the current supply chain is poorly equipped to manage.”

Enabling customers to personalize orders is a major business driver. Today, consumers can go online and purchase almost any individualized item they desire, from cars and chocolate to sneakers and spaghetti. But this requires companies to reimagine how they design, plan, manufacture, and deliver products.

3. Collaboration: Responding quickly and accurately to customer needs

As supply chains become more global and distributed, collaboration becomes a vital component of the digital extended supply chain. To be able to respond quickly and accurately to customers requires establishing a network of partners, people, and assets.

According to IDC, the successful future supply chain will require “demand-aware” demand networks, “supply-visible” supply networks, and “innovation-connected” product networks. This will inevitably evolve into a network of partners that can play multiple roles in designing, planning, manufacturing, delivering, and servicing products brought to market.

Get a glimpse of the future of supply chains

If you’d like to learn more about the future of supply chains, I invite you to attend a webinar on February 18: “Disruptions in Supply Chain – Are You Ready for 2016?” In the session, Simon Ellis of IDC and Hans Thalbauer, SVP for Extended Supply Chain at SAP, will discuss:

  • Why the current supply chain is poorly equipped to manage high levels of customization
  • Why the future of the supply chain is one of an outwardly networked and collaborative organization that will sit at the center of three lobes — a demand network (“demand-aware”), a supply network (“supply-visible”), and a product network (“innovation-connected”)
  • How cloud-based business-to-business platforms and other technologies are key enablers to reimagining operations and the supply chain

Register now to attend this enlightening session.

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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.

Three Factors Driving Business Agility

Anja Reschke

Why is business agility important in today’s digital era? Without it, you may be outwitted by swift new competitors that move into your industry. You might also risk becoming irrelevant, according to the SAP eBook, The Digital Economy: Reinventing the Business World.

Every sector is at risk of digital disruption, and you need to take action and adjust quickly in order to remain successful in today’s digital economy.

A group of consulting, technology, and business leaders from across the consumer goods spectrum addressed this issue at a recent forum. Their findings are outlined in the whitepaper, Rethinking the Value Chain: New Realities in Collaborative Business by Capgemini Consulting and The Consumer Goods Forum.

Three business agility influencers

The group determined that three key factors are significantly altering the business landscape and persuading companies to change the way they traditionally do business in order to become more agile:

  1. Consumers are changing. Consumer demands are increasing, and their omni-channel path-to-purchase is no longer linear. Their customer experience could involve a mobile app, web research, social media, an in-store visit, and an online purchase – in any order. They are also more influenced by online social networks than by conventional advertising methods, and they expect quick outcomes from responsive companies.
  1. Business is changing. Innovative business partnerships are becoming more important and technology is accelerating competition. There is an increasing threat from agile high-tech companies and start-ups that don’t follow established go-to-market patterns. Digital companies with completely new business models are gaining a competitive advantage as they boldly cross formerly well-established market boundaries.
  1. The world is changing. Global economics and demographics are shifting. Emerging markets are growing rapidly, with a different set of needs that agile companies are more capable of responding to quickly.

The biggest obstacle to business agility

The most challenging hurdle for business agility comes down to one thing: complexity.

Large organizations are so complex – with multiple layers, business units, legacy systems, and departmental silos – that agility seems almost impossible. But the ongoing pressures of the digital economy are forcing even the most complex global companies to become more agile just to stay competitive. What steps are you taking to make your company more agile?

For an in-depth look at how the digital era is affecting business, download the SAP eBook, The Digital Economy: Reinventing the Business World.

To learn more about the multiple factors driving digital transformation, download the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

Learn how digital technology is transforming the healthcare industry in the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare.

Discover Five Things That Will Increase Your Business Agility.

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About Anja Reschke

Anja Reschke is the Senior Director of Strategic Ecosystem Marketing at SAP. She is responsible for the development of joint strategic marketing plans, programs, and activities, with global strategic services and technology partners.

How To Catch Up In The Digital Transformation Race

Paul Clark

It’s been said that every business is now a technology business, and if the competition is already forcing digital transformation in your industry, then it’s already too late for you to catch up.

I don’t buy that.

I don’t think it’s too late for any company to change course and succeed in today’s digital economy. New technology and innovative business models are cropping up everyday and changing the business landscape in multiple sectors, so there’s always something you can do about it. Indeed, a recent McKinsey article helps formulate some ways that incumbents can anticipate and deal with digital disruption.

The journey to business innovation

According to the SAP eBook, The Digital Economy: Reinventing the Business World, there are five main areas that organizations can focus on as they move toward digital transformation:

  1. Improve your customer experience. Innovate your products and services with a relentless customer-centric focus. Use streamlined messaging and a consistent approach through multiple customer touch points. You might also want to consider mobile customer engagement.
  1. Digitize your core business. Automate your processes with faster, simpler systems, and seamless integration between multiple areas of your business and value chain.
  1. Enhance your digital capabilities and create value from data. Focus on boosting your digital capabilities through advanced analytics, agile platforms, and continuous delivery. Consider a business model based on data, with digitally enhanced IoT products, and product-related services based on sensor data.
  1. Connect your workforce. Focus on training, attracting, and retaining employees and contractors with the high-tech skill set needed to support an innovative business model.
  1. Build your business network. Strengthen relationships with existing partners, and expand your digital ecosystem by working with innovative, and perhaps atypical but relevant organizations that could enhance your positioning.

Innovating in the digital era is not just about adopting new technologies. It is also about embracing a culture of innovation, encouraging collaboration, and tapping into digital ecosystems to achieve results well beyond the scope of an individual organization.

I don’t think it’s too late for any business to catch up. But you might want to be quick about it.

For an in-depth look at how the digital era is affecting business, download the SAP eBook, The Digital Economy: Reinventing The Business World.

Discover the multiple factors driving digital transformation in the SAP eBook, Digital Disruption: How Digital Technology is Transforming Our World.

Have you already gone through digital transformation in your business? Find out how to reinvent an entire industry.

Take a closer look at how one industry is transforming with the digital era. Learn more about connected healthcare in the SAP eBook, Connected Care: The Digital Pulse of Global Healthcare.

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About Paul Clark

Paul Clark is the Senior Director of Technology Partner Marketing at SAP. He is responsible for developing and executing partner marketing strategies, activities, and programs in joint go-to-market plans with global technology partners. The goal is to increase opportunities, pipeline, and revenue through demand generation via SAP's global and local partner ecosystems.

How Much Will Digital Cannibalization Eat into Your Business?

Fawn Fitter

Former Cisco CEO John Chambers predicts that 40% of companies will crumble when they fail to complete a successful digital transformation.

These legacy companies may be trying to keep up with insurgent companies that are introducing disruptive technologies, but they’re being held back by the ease of doing business the way they always have – or by how vehemently their customers object to change.

Most organizations today know that they have to embrace innovation. The question is whether they can put a digital business model in place without damaging their existing business so badly that they don’t survive the transition. We gathered a panel of experts to discuss the fine line between disruption and destruction.

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qa_qIn 2011, when Netflix hiked prices and tried to split its streaming and DVD-bymail services, it lost 3.25% of its customer base and 75% of its market capitalization.²︐³ What can we learn from that?

Scott Anthony: That debacle shows that sometimes you can get ahead of your customers. The key is to manage things at the pace of the market, not at your internal speed. You need to know what your customers are looking for and what they’re willing to tolerate. Sometimes companies forget what their customers want and care about, and they try to push things on them before they’re ready.

R. “Ray” Wang: You need to be able to split your traditional business and your growth business so that you can focus on big shifts instead of moving the needle 2%. Netflix was responding to its customers – by deciding not to define its brand too narrowly.

qa_qDoes disruption always involve cannibalizing your own business?

Wang: You can’t design new experiences in existing systems. But you have to make sure you manage the revenue stream on the way down in the old business model while managing the growth of the new one.

Merijn Helle: Traditional brick-and-mortar stores are putting a lot of capital into digital initiatives that aren’t paying enough back yet in the form of online sales, and they’re cannibalizing their profits so they can deliver a single authentic experience. Customers don’t see channels, they see brands; and they want to interact with brands seamlessly in real time, regardless of channel or format.

Lars Bastian: In manufacturing, new technologies aren’t about disrupting your business model as much as they are about expanding it. Think about predictive maintenance, the ability to warn customers when the product they’ve purchased will need service. You’re not going to lose customers by introducing new processes. You have to add these digitized services to remain competitive.

qa_qIs cannibalizing your own business better or worse than losing market share to a more innovative competitor?

Michael Liebhold: You have to create that digital business and mandate it to grow. If you cannibalize the existing business, that’s just the price you have to pay.

Wang: Companies that cannibalize their own businesses are the ones that survive. If you don’t do it, someone else will. What we’re really talking about is “Why do you exist? Why does anyone want to buy from you?”

Anthony: I’m not sure that’s the right question. The fundamental question is what you’re using disruption to do. How do you use it to strengthen what you’re doing today, and what new things does it enable? I think you can get so consumed with all the changes that reconfigure what you’re doing today that you do only that. And if you do only that, your business becomes smaller, less significant, and less interesting.

qa_qSo how should companies think about smart disruption?

Anthony: Leaders have to reconfigure today and imagine tomorrow at the same time. It’s not either/or. Every disruptive threat has an equal, if not greater, opportunity. When disruption strikes, it’s a mistake only to feel the threat to your legacy business. It’s an opportunity to expand into a different marke.

SAP_Disruption_QA_images2400x1600_4Liebhold: It starts at the top. You can’t ask a CEO for an eight-figure budget to upgrade a cloud analytics system if the C-suite doesn’t understand the power of integrating data from across all the legacy systems. So the first task is to educate the senior team so it can approve the budgets.

Scott Underwood: Some of the most interesting questions are internal organizational questions, keeping people from feeling that their livelihoods are in danger or introducing ways to keep them engaged.

Leon Segal: Absolutely. If you want to enter a new market or introduce a new product, there’s a whole chain of stakeholders – including your own employees and the distribution chain. Their experiences are also new. Once you start looking for things that affect their experience, you can’t help doing it. You walk around the office and say, “That doesn’t look right, they don’t look happy. Maybe we should change that around.”

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

To learn more about how to disrupt your business without destroying it, read the in-depth report Digital Disruption: When to Cook the Golden Goose.

Download the PDF (1.2MB)

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Creating A New Employee Experience: Is HR Turning The Corner?

Estelle Lagorce

Businesses and workforces in every industry continue to face major disruption. HR has sometimes struggled to keep up with the accelerating pace of change, yet 2016 could mark a turning point. Although there’s still a long way to go, Deloitte’s new Global Human Capital Trends report shows that HR is now making impressive strides in innovation, reskilling, and adapting to changing workforce and business demands.

So how can HR take the lead in this exciting digital business world? Where are the best opportunities to drive business growth? What capabilities and skills will be needed in the future? In the first of a series of blogs, we focus on one of the key trends driving HR transformation: the growing importance of design thinking in crafting the employee experience.

Focus on the person, not the process

Today’s employees are already inundated with a flood of e-mails, messages, and meetings – so the last thing they want are HR processes that add to the burden. And with the huge growth in mobile devices, they’re also accustomed to interacting with technology in a way that is simple, intuitive, and pleasurable. So it’s not surprising that 79% of executives in this year’s Global Human Capital Trends survey rated design thinking – which puts the employee experience at the center – an “important” or “very important” issue (see figure 1).

Transform HR Figure1 People Analytics

Figure 1: Design thinking: Percentage of respondents rating this trend “important” or “very important”  

In simple terms, design thinking means focusing on the person and the experience, not the process. The key question that HR needs to ask is: “what does a great employee experience look like from end to end?” That means studying people at work and creating “personas” and “profiles” to understand their demographics, environment, and challenges. This implicitly drives a more thoughtful and human approach to business that makes the workplace more attractive to existing and future employees. “Design thinking really is about reevaluating the way HR is being done in the context of the employee experience,” explains Erica Volini, leader of Deloitte Consulting LLP’s HR Transformation Practice.

But does it work? The data from this year’s survey certainly points that way. Companies growing by 10% or more a year are more than twice as likely to report that they are ready to incorporate design thinking, compared to their counterparts who are reporting stagnant levels of growth. Design thinking can also make a huge difference in how companies are perceived, which is crucial in recruiting and retaining the right people. Done well, design thinking promotes a virtuous cycle: generating higher levels of employee satisfaction, greater engagement, and higher productivity for the company.

Learn more

Deloitte’s Global Human Capital Trends 2016 is one of the largest global surveys of its kind, with 7,000 HR and non-HR respondents covering a wide range of industries across 130 countries. “Every single industry is being disrupted; that’s the theme that resonates through the report,” says Erica Volini. “There’s a real opportunity for HR to use this report to change the dialog and make it about what’s happening in the business and ideas to move forward.”

To find out more about HR transformation trends, priorities, and practices:

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Estelle Lagorce

About Estelle Lagorce

Estelle Lagorce is the Director, Global Partner Marketing, at SAP. She leads the global planning, successful implementation and business impact of integrated marketing programs with top global Strategic Partner across priority regions and countries (demand generation, thought leadership).