As mature and developing economies are looking to increase their competitiveness in the global supply chain through significant investments in infrastructure, Australia is currently examining how its “investment in the freight network can boost the nation’s prosperity and meet community expectations for safety, security, and environmental amenity.”
Working with leading businesses and public services organizations across the globe that either manage or oversee transportation and supply chain operations, SAP has been at the forefront of technology-driven change that drives better business outcomes.
Here are some examples:
- Smart traffic management: To better manage enormous traffic volume (10,000 taxicabs, 7,000 buses, and 1 million private cars), the city of Nanjing, China, has implemented a smart traffic system that ingests and enriches continuous data streams from transportation systems across the city to predict status, influence traveler behaviour, and provide recommendations for planning, resulting in improved patronage and on-time performance for public transportation, average speed during peak periods, and average commuting times.
- Smart port communities: To cope with increasing traffic volumes (up to 40,000 truck arrivals daily) and no possibility of expansion, Hamburg Port Authority leverages a logistics platform that consolidates data from various sources (e.g., vehicles) to communicate with the port’s various stakeholders, resulting in shortened driving times (up to 5,000 hours saved per day) and better planning for port stakeholders.
- Predictive maintenance: Operating a fleet of nearly 30,000 moving assets that move over 2 million passengers each day, Italy’s railway operator Trenitalia has established a dynamic maintenance model that analyzes sensor data and monitors equipment behavior remotely to decrease maintenance and service costs (eight percent to 10% reduction expected), while boosting availability and reliability of service for passengers.
- Connected safety: To prevent road accidents, such as the one that killed 14 bus riders in Japan in January 2016, SAP and NTT have built a solution – currently being tested by Keifuku Bus Company – that estimates drivers’ fatigue level by analyzing their vital signs (e.g., heartbeat, nervous system responses) fed through a sensor-equipped vest and combines that data with vehicle-related data. Predictive capabilities can thus help transportation companies identify potential danger before accidents occur.
What do these case studies tell us about the keys to value creation, both at a microeconomic and at a macroeconomic level?
- Data is the new oil: Every government organization or business (e.g., logistics service providers, manufacturers, retailers), every person (e.g., workers, consumers, citizens) and soon every “thing” (e.g., vehicles, containers, linear assets) will be connected. With Big Data technologies becoming more and more affordable, organizations are now able to leverage timely, meaningful, and actionable insights to make best-informed decisions and ultimately improve outcomes – be it in terms of customer service, cycle times, or productivity and efficiency.
- Networked collaboration amplifies value creation: As shown by the smart traffic management and smart port communities concepts above, the key to maximizing efficiency from an end-to-end perspective is to intelligently connect people, things, and businesses across the value chain – which is enabled by cloud-based networks and applications.
- Technology strategies need to be constantly revisited: The sophistication and affordability of digital technology are soaring, enabling businesses and public services organizations to more easily experiment with potential use cases and assess technological feasibility, business viability, and human desirability. At the same time, the pace of mass adoption and the transformative impact of each technology are becoming harder to predict. Hence businesses, governments, and policymakers need to adopt an agile stance on technology if they are to extract the most value from it.
- Countries can derive a competitive advantage in the same way companies do: Becoming a data-driven country is key to competing at an international level, just as data-driven companies are keeping an edge over their competitors by making informed, timely, forward-looking decisions. Similarly, a country can learn from the way companies approach innovation through the concept of “bimodal IT.” At a country level, this can translate into quick wins through opportunities that relate to clear-scoped, well-defined problem statements on the one hand, and lay the foundation for holistic value creation by addressing the interconnectivity challenge across the value chain on the other hand.
In summary, two key learnings can be applied at a country level: First, there is a need for an approach that is both holistic and differentiated (“two-speed” concept), allowing the capture of quick wins while laying the foundation for an integrated, digitized national supply chain. Second, infrastructure of the future does not have to be bigger but smarter – in other words, the focus should be placed on data-intensive rather than capital-intensive assets.
If you would like to assess your own organization’s digital maturity, take the free 10-minute Digital Transportation & Logistics Readiness Assessment.