Tested For You: How Are European Retailers Performing In Online Customer Service?

Martin Stocker and Erica Vialardi

The sunny and warm weather has finally arrived. What could be more fun than having some cocktails and nice foods on your terrace together with friends? My colleague Erica and I decided to meet on a Saturday afternoon for a summer barbecue with our families. I would take care of the preparation of the barbecue itself, while Erica would look into the cocktails.

Since we both like good and innovative online shopping experiences, we decided to make it a little bit more challenging and ended up testing the online customer services of the top 10 European online retailers to get everything ready for the party. We were both confident that, in the golden age of online retailing, the whole setup would go smoothly. In reality, we went through quite surprising experiences.

What makes customer service future-proof

Finally, we met for the barbecue and had a very nice time with good food and fresh cocktails. In the kitchen, Erica took me aside and told me, “It was fun to do the cocktails stuff, but not all parts of it. I thought it would be way easier!” I shared the same impressions with her.

To test which of the top 10 European retailers would score best in terms of online customer service performance, we selected the two main criteria that, today, prove a retailer’s ability to walk down a future-oriented path in customer service:

1) the customer engagement effectiveness of their customer service

2) the availability of self-service channels

Each criterion got an assessment on a 1 to 10 scale, where 1 means “not available” and 10 means “extremely effective and innovative”. Are retail brands walking the walk, or just talking the talk of providing great online customer service?

Forward-thinking retailers don’t wait for a complaint

The first criterion we assessed was the level of customer engagement that retailers could provide on the customer service side. Leading retailers are aware that customer service is increasingly becoming an actual engagement channel and no longer a mere post-sale troubleshooting tool.

The differentiator here lies in the ability to provide customers with enough valuable product information so that they can have all their questions answered before they make the purchase decision, and in addition, are encouraged to increase the value in their shopping carts. The elements we analysed to assess customer engagement performance in service included: detail of product description; product advice and suggestions of use through service channels; cross-and up-selling; personalization tools; and re-marketing through service channels.

Testing brought its share of fun and sharing our experiences ended up in conversations like this one:

Martin: “I hoped that some online shops would support a much more intelligent and convenient way on how to find the items on my list. Take the new gas bottle for my barbecue: unfortunately, when I browsed the first online shop, the size of the bottle was not the perfect fit for my grill.”

Erica: “Do you mean that not only didn’t the store recommend products related to a specific grill, even a basic thing like a gas bottle, but they couldn’t even provide more product information through their service channels?”

Martin: “Exactly! I wished I could, for example, have immediately chatted with a store consultant when visiting the page of the gas bottle to get some product advice. Some of the online shops did indeed have a Service button, but when I clicked on it, I got the usual contact information via phone, email to address technical or delivery issues only. What held me back from purchasing was not getting a helpful answer fast enough about the product I wanted to purchase.”

Erica: “Frustrating! Now I understand why you had to drive to the next DYI store to talk to a salesperson.”

A multifaceted gem called self-service

The second criterion was about measuring the retailers’ performance in offering self-service channels, which enable customers to solve their service requests on their own and find answers with ease, without having to contact a service operator. The higher the number of self-service channels, the higher the score of the retailer. We analysed the presence of the following self-service methods at each retailer’s website: FAQs; buying guides; personalization tools; customer communities and ratings; and chatbots.

Here again, the two of us had interesting conversations, for better or for worse:

Erica: “I wanted to make everything ready to be the ‘hostess with the mostest’ that day, so I went on an online quest for cocktail items on two different home goods online retailers. When looking for barware, I heavily relied on self-service tools to guide me in my purchase. Through communities, peer reviews and Q&As, I could easily determine that a key differentiator in a cocktail shaker was the lid and felt confident in my purchase.”

Martin: “Now that’s what I call great service! Better than my experience with the gas bottle for sure. At least you found all the info on your own, directly on the website.”

Erica: “Wait—unfortunately, the fun didn’t last long. When it came to the actual cocktail preparation, I would have expected at least something as simple as a link to a cocktail recipe book on the glassware section of the store, but it wasn’t available anywhere. This made it very hard for me to choose the right glasses and… guess what?”

Martin: “… you clicked away and ended up on Google.”

European retailers could serve themselves better

There is still a long way to go, but with our research, we could highlight some strengths and growth opportunities. Here is the final ranking:

The strongest performers overall were by far the UK apparel and home goods retailers. They showed very advanced service functionality, such as a striking 20-question personalization tool to select the best outfit, and in another case, sophisticated, searchable communities together with product comparison tools.

The two biggest German fashion vendors provided good service performances, the only ones with a live chat available on their homepages that also included a separate, product advice chat. A good experience, which combined the advantages of an online and an offline shop. No long waiting times, direct responses, and very uncomplicated recommendations.

The third and last cluster were the grocery retailers from France, who offered the weakest performance in terms of customer engagement and self-service capabilities and instead seemed to concentrate most of their service efforts on the delivery/pickup side, which may reflect the intrinsic nature of the fresh food industry, where convenient delivery is a priority.

The first takeaway of our research has been that good service is key to hold consumers from clicking away. Eighty-six percent of all consumers are indeed likely to pay for good service or pay more for their items on the shopping list. Another finding was that customer service should start transforming from solving “administrative” complaints to managing revenue-generating customer engagement activities.

In addition, it still seems to be hard for retailers in specific branches to move away from their product-based core businesses toward a more service-oriented offering, based on the usage/experience for the consumer. Here again, service will play an ever more discriminating role in customer retention in the future.

Conversational commerce is today

Probably inspired by the lavish dinner and cocktails, a thought struck us: Isn’t it a paradox that with today’s availability of sophisticated online, one-to-one conversational channels that brands could only dream of five years ago, those same conversational channels are still often used as mere “complaint centres”? Turn the complaints into opportunities, and you will transform those tools into powerful customer engagement gates, in times where boundaries between service, marketing and commerce are blurring.

For example, with intelligent chatbots, both authors are convinced, shopping will be much easier, faster, and more convenient. Even supermarkets could offer their customers a menu with the ingredients they are looking for and put these on their pick list. It is worth noting that of all 10 retailers we tested, not one used chatbots on their online stores yet.

One conversational commerce tool that is already existing and working is Chatbot Charly, developed at SAP Hybris Labs. It would be a win for both sides: retailers could serve their customer needs, increase the satisfaction and the revenue of their shoppers, and consumers could spend more time on the most important things in life: having a great time with their families and friends.

For a in-depth analysis of the evolution of customer service, shifting from strictly a post-sale approach to an entire end-to-end process, read the report “Supporting the Buying Journey with Customer Service” from Forrester.

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Martin Stocker

About Martin Stocker

Martin Stocker is Director of Global Programs Marketing at SAP Hybris.

Erica Vialardi

About Erica Vialardi

Erica Vialardi is the EMEA Audience Engagement Marketing Manager at SAP Hybris.

Why Retail’s “Battle-Worn” Offer Fantastic Value For Personalization

Derek Klobucher

The secret to delivering the best in personalized service is for retailers to achieve a single, unified view of each individual shopper. The ultimate goal is a bespoke customer experience that they will enjoy online, in-store and everywhere else.

“Retailers looking to maintain or grow market share must predict where and how their customers will be buying, and seamlessly deliver online and in-store experiences for them,” Forbes stated. “However, these experiences can’t be mass produced — today’s buyers want personalized interaction.”

The trick, however, is that personalization is about more than just crunching the data you can quantify, according to a panel of retail experts at NRF 2018. It’s also about harnessing the human element by gathering experiences from retail associates who have been in the trenches for years.

The personalization balancing act

“When we talk about personalization, what we’re really talking about usually is content,” John Allen, chief technology officer of U.K.-based fast-fashion retailer Missguided told the panel. “And the thing with content is that it needs to be created, curated and managed.”

That includes ensuring that a retailer’s personalization efforts can cope with changes in customer behavior, such as shifting shopping platforms from desktops to mobile devices, according to Allen, who warned retailers not to go overboard. For example, don’t make your homepage so highly personalized that it dramatically slows performance — which can turn off shoppers.

“You’ve got to find that balance between the right kind of experience with content and the right experience in mobile,” Allen said. “[And] personalization doesn’t take into account that I’m a loyal customer, but last time I bought from you I had a really poor experience.”

Only about 11 percent of retailers both collect a lot of customer data and use it for personalized targeting, according to research from L2. “If you collect it, you might as well use it — and if you don’t use it, you’re kind of having this weird relationship with consumers,” L2’s Evan Neufeld said.

Collecting — and using — data wisely

“Personalization done wrong is potentially disastrous,” Evan Neufeld, Intelligence VP at New York-based business intelligence firm L2 Inc., told the panel. “So we need to be really, really careful about how we actually embrace digital personalization.”

Clever use of data is key here, but only about 11 percent of brands were collecting a lot of information and doing a lot of targeting, according to L2 research that Neufeld shared. Most retailers surveyed (52 percent) were neither collecting data nor personalizing, while the rest were either trying to personalize without data or just collecting data for in-store use.

“We want to see people moving to that quadrant where, if you’re capturing data, you’re deploying data — and that’s the biggest gap we saw,” Neufeld said. “It’s less about what you collect; it’s that if you collect it, you might as well use it — and if you don’t use it, you’re kind of having this weird relationship with consumers.”

The dream of a unified view

“There’s nothing worse than a bad ad, and there’s nothing worse than a mistargeted ad,” Neufeld said, holding up Amazon as an example of a brand that uses purchase history and an astute algorithm to make very sound product recommendations. “That’s the dream, but the reality is that we’re nowhere near this level of personalization across the Internet.”

Nor are we there in-store. Integrating different datasets is a challenge that all retailers face, according to Neufeld, but the hope is to one day achieve that unified view of the customer.

“All consumer research says that if I go into a Walmart, or I go into a Warby Parker, I want them to instantly know who I am online,” Neufeld said. “It really becomes about integrating systems so you have this whole continuous view of the customer.”

“Personalization … is also about gathering the experiences of the battle-worn — those who have been there for a while — lived in it, breathed it, talked to customers in-store for the past however many years you’ve been in business,” SAP’s John McCoy said.

“Experiences of the battle-worn”

“When we think of content, we think of creative, we think of branding, products and offers,” Missguided’s Allen said. “I think the future of personalization is not just about content; it’s about personalization of the experiential content, rather than just created content.”

Retailers often miss that point because they tend to favor quantitative data over qualitative, conversational data, the panel’s moderator, SAP Industry Value Lead for Digital Transformation John McCoy, told me in a video. It’s crucial that retailers incorporate the knowledge and experience of sales associates.

“Personalization … is also about gathering the experiences of the battle-worn — those who have been there for a while — lived in it, breathed it, talked to customers in-store for the past however many years you’ve been in business,” McCoy said. “And then leveraging that data to ensure that your personalization has that human element.”

This story originally appeared on SAP’s Business Trends. Follow Derek on Twitter@DKlobucher

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Derek Klobucher

About Derek Klobucher

Derek Klobucher is a Brand Journalist, Content Marketer and Master Digital Storyteller at SAP. His responsibilities include conceiving, developing and conducting global, company-wide employee brand journalism training; managing content, promotion and strategy for social networks and online media; and mentoring SAP employees, contractors and interns to optimize blogging and social media efforts.

Embracing Digital Transformation: The Future Of Banking

Falk Rieker

The face of the banking industry has changed in the last few years.

Financial technology companies (fintechs) have begun disrupting the market with cryptocurrency, bitcoin, blockchain, and more. In the United Kingdom, a new breed of banks called “challenger banks” have emerged, focusing on delivering digital-only services and exceptional customer interactions. In the United Kingdom alone, there are currently more than 20 challenger banks.

Forward-thinking banks have responded to these market disruptions by expanding their in-house capabilities. Others have partnered with fintechs to develop new digital offerings. And some simply acquired their competitors.

Banking goes digital

Digital transformation looks different in every industry and every company. In general terms, it is the integration of digital technology into all areas of a business. That integration leads to fundamental changes in how the business operates and delivers value to its customers.

Banks running on a digital core can see reduced costs and streamlined processes. This end-to-end integration also helps provide a more seamless, engaging customer experience. And it makes room for further business transformation with new digital technologies like blockchain and artificial intelligence.

Going digital has also affected the banking workforce, with automation sometimes resulting in layoffs and staff reductions. But there is a growing demand for data scientists with banking experience—a skill set not easy to find in today’s market. It is time for the industry to develop a new workforce model to educate existing staff and recruit new talent.

Big Data and its impact on the customer journey

The banking industry is among the most data-driven of industries. Regulatory and insurance requirements mean banks must store many years of transaction data. The challenge is knowing how to translate that information into meaningful insights.

Big Data provides significant opportunities for banks to outshine their competition. Moving data onto a cloud platform provides a 360-degree view of every customer. This deep insight shows banks where they can provide a higher level of service and create more value. Big Data also allows the use of disruptive technologies like artificial intelligence, blockchain, and IoT to map the customer journey and gain a competitive edge.

Leveraging technology to reinvent the banking business model

New advanced technologies allow banks to strengthen customer engagement with personalized, innovative offerings. The industry already leverages IoT with mobile apps, swipe cards, ATMs, card readers, and sensors. It also provides a new opportunity for real-time asset financing.

Some banks are already using blockchain technology to transform their business processes, as it offers secure, convenient alternatives to traditional bank processes. Lately, blockchain has been in the spotlight because of its ability to reduce fraud in the financial world. Blockchain is already used in the financial instruments areas of banking, including payments (cross-border, peer-to-peer, corporate and interbank); private equity asset transfers; tracking derivative commodities; the management of trading, spending, mortgage and loan records, microfinance applications, and customer service records.

Looking at cross-border payments, for example, blockchain can be used to reduce processing time to minutes from standard times of three to six days. This elevates the customer experience to a new level with lower cost real-time transactions. Stack processes improved by blockchain include clearing networks; international transfers; clearing and settlement; auditing, reconciliation, and reporting; and asset ownership.

Other technologies, such as machine learning, can help automate manual processes, of benefit to trading, fraud management, and customer segmentation activities.

Banking on the cloud

Banks are racing to take advantage of market opportunities available through digital transformation. At the same time, they must manage the risks created by the new digital economy. There is a critical need for affordable computing platforms that provide greater agility.

There is no doubt new digital technologies are changing the banking industry. Banks that embrace innovation and adopt new technologies have unprecedented opportunities to change and improve how they provide financial services including offering the ability to:

  1. Collaborate with financial technology partners to develop digital products.
  2. Provide customers with seamless real-time, multichannel digital interactions.
  3. Simplify and optimize business processes through standardization, optimization, and adoption of cloud solutions.
  4. Build an open and agile platform that makes it easy to meet regulatory requirements.
  5. Innovate with disruptive technologies like artificial intelligence (AI), IoT, and blockchain.

Restructuring the business model and processes is critical to any bank’s successful digitalization. Leveraging innovative capabilities in a cloud deployment can not only speed up digital transformation initiatives but also deliver business-wide process improvements as well.

For more insight on digital leaders, check out the SAP Center for Business Insight report, conducted in collaboration with Oxford Economics, “SAP Digital Transformation Executive Study: 4 Ways Leaders Set Themselves Apart.”

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Falk Rieker

About Falk Rieker

Falk Rieker, Global Vice President and Global Head of the Banking Business Unit at SAP, is a senior level financial services professional and SAP veteran with over 20 years’ experience. He is responsible for leading the SAP banking solution strategy and connecting bankers with the technology they need to succeed in today´s workplace. As a thought leader in the banking space, Falk frequently speaks at international banking conferences and has been published and quoted in leading industry publications like Forbes, American Banker, IDG and Wall Street and Technology. Follow Falk on Twitter (@FalkRieker), LinkedIn, Youtube, and Instagram.

The Blockchain Solution

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

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

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

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

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

The Spine of Digitalization

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

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

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

What Is Blockchain and How Does It Work?

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

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

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

Why does blockchain matter for the supply chain?

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

Hints of the Future

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

But we could tell that it had vast potential.

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

What’s the Magic Combination?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Blockchain Is the Change Driver

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

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

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

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

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

Challenges on the Path to Adoption

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

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

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

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

Blockchain Blackouts

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

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

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

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

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

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

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

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

Customers Will Expect Change

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

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

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

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


About the Authors

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

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

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

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

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

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

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Four Retail Technology Trends To Take Off In 2018

Shaily Kumar

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

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

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

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

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

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

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

In-store GPS-driven shopping trolleys

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

Electronic rack edge names

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

Reference point technology

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

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

Machine intelligence

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

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

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

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Shaily Kumar

About Shaily Kumar

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