Tag: coronavirus

Digital Supply Chain, Industry 4.0, Discrete Industries, and the Covid-19 Coronavirus – a chat with Stefan Krauss

We are in a very strange times! On this fourth Digital Supply Chain podcast on the theme of Industry 4.0, I had a chat with Stefan Krauss. Stefan is aSenior Vice President and he heads up discrete industries at SAP, so I was keen to have a conversation with him about the impact of Industry 4.0 on discrete manufacturing.

Of course, given the time we are in right now, we couldn’t avoid discussing the current Covid-19 coronavirus pandemic, but we also discussed Industry 4.0, and its effects on industries like Automotive, Industrial Machines and Components, and the Shared Services economy.

Listen to the podcast using the player above, and/or see the full transcript below:

 

Stefan Krauss [00:00:02] This whole crisis also shows that there will be a significant impact on the whole supply chain in the world. And I think this will go way and beyond this crisis that I think companies have to deal with this new world and we need to really rethink the supply chain processes.

 

Tom Raftery [00:00:24] Good morning, good afternoon or good evening, wherever you are in the world. This is the digital supply chain podcast. And I’m your host, Tom Raftery.

 

Tom Raftery [00:00:35] Hi, everyone. Welcome to the Digital Supply Chain podcast. This is one of the series themed around Industry 4.0. And my guest on the show today is Stefan. Stefan, would you like to introduce yourself?

 

Stefan Krauss [00:00:49] Yeah. Tom, thank you. And hello, everybody. My name is Stefan Krauss. I’m heading up discrete industries at SAP and I’m very happy to talk with you guys about, you know, how we perceive Industry 4.0. OK. You people. Yeah. Go on. Yeah, but maybe before we start, I think as you know, we are I think all in the middle of a, you know, serious crisis. Let. Allow me to really, you know, wish everybody listening to this broadcast, you know? All the best. Let’s all stay healthy. Let’s make sure, you know, we take care about ourselves and our families. On the other side, I think this whole crisis also shows that there will be a significant impact on the whole supply chain in the world. And I think this will go way beyond this crisis that I think companies have to deal with this new world and that we need to really rethink the supply chain processes.

 

Tom Raftery [00:01:48] Yeah, that that’s. It’s a good place to start, actually. Stefan, thank you for me for bringing that up. We are in the middle, as you said, of the Coronavirus pandemic at the moment. This is March 18th we’re recording this. I’ll be publishing this early next week. So, some things could even change between now and then. But from everything we’ve been reading, it’s looking like this is going to last a while and, you know, I wouldn’t like to be an airline pilot right now, as I said to you before I turned on the recorder, or I wouldn’t it to be a waiter in a restaurant right now or a chef or a restaurant owner. That’s huge implications all around. You said there in your opening that supply chains are going to be massively impacted by this as well. How can we help there?

 

Stefan Krauss [00:02:41] Yeah, I think and again, due to this this pandemic, I think we already see that some manufacturing facilities have closed. I think they have already a shortage on parts to really, you know, keep production alive on the other side. It’s also about, you know, do you want to have all your employees coming, coming to the factory? So maybe we as a software company have it a little bit more easy as we can really work remote from home. But I think in all those places where really people are coming together, it’s it’s a tough time. And as I said, I think we all really see some impact on the whole supply chain that there is a shortage. So, I think overall, if I look then into the future and and they this term, Industry 4.0 is heavily used around the world. And there are also other names like Smart Manufacturing or Manufacturing 2025. I think the fundamental thing is really in my opinion, about how can companies best serve the individual customer demands their customers have. I think this is for me the trigger, which causes really the that’s a challenge both on supply chain and manufacturing processes to be very flexible, agile, and elastic to really react on changing customer demand. And of course, this is in this crisis even more obvious. How can we react? And really, you know, produce the right things as long as we can really now produce and fulfilling here the customer demand.

 

Tom Raftery [00:04:20] OK. Very good. You mentioned discrete industries, can you for people who are not familiar with the term, tell us a little bit about discrete industries. What are they? Who are the customers you’re dealing with, and what kind of concerns do they have?

 

Stefan Krauss [00:04:35] Yeah, that’s a that’s a very good question. And I think we are famous for using those kinds of abbreviations. So discrete Industries are industries like automotive, industrial machine and components, High-Tech, Aerospace, and Defence. And when I look particular to industrial machinery and components and high tech industries, what I find very interesting is those industries or those companies, you know, being part of those industries have a two kind of roles in Industry 4.0, because on the one side, I think they want to optimise, of course, their own manufacturing process, their own supply chain. But on the other side, I think with their products, they are selling to their customers. And this is, of course, very often a B2B business. I think they are also helping their customers to then establish industry 4.0 scenarios, to connect machines products, to embed more and more software into the machines. So, I think this is a very interesting or two very interesting industries to look at right now, where we see tremendous change in the, you know, the business processes, the business models and how they operate.

 

Tom Raftery [00:05:49] OK. And in what kinds of ways are industry 4.0 helping these companies?

 

Stefan Krauss [00:05:59] I think, as I said before, it is really about end to end pro or end to end processes, we want to look at starting with really the customer demand, the customer order, which you then want to drive in a very again flexible way through your whole manufacturing supply chain processes. And I think we see more and more companies who want to shorten, let’s say, the freezing time where you say customer cannot change order anymore because now it’s really going into the production process. And you want to be maximal flexible to say, I can still take last changes. And, you know, executed through the whole, you know, production process. And this is something where I think Industry 4.0 will help cost our customers to really change those business processes and create the transparency and the flexibility to react. And this goes also, in my opinion, very much from top to down. So very often we say from top floor to shop floor. So, you want to really create full transparency through your entire production processes and facilities around the world, down to an individual factory and then even down to the individual machines to really have that kind of information and transparency, you need to really steer the whole processes.

 

Tom Raftery [00:07:28] So this transparency is this is something that companies are thinking about exposing to their customers?

 

Stefan Krauss [00:07:37] Yeah, of course. I think because an additional trend which we see is that more and more, you know, business models are saying we are not necessarily selling the product to the customer anymore, but we see more and more this operating model the outcome based business processes, which means a manufacturer of a machine, may not sell the machine, but they will install and operate it for their customers. And then, of course, you can take data out of machines IoT data basically out of sensors and end to end to optimise of course, on the one hand side, the performance and the output of the machine, but I think it is also very much of course used for predictive maintenance processes, for example, when billing. Right. And it’s about the uptime. It is about the uptime and productivity of machines. So, you can avoid, you know, long lasting repair time and so on. And then, of course, the billing, which is basically the interesting challenge later on to say, hey, I pay by the hour, I pay by the output, I pay by, you know, the number of products which has been produced with the machine and so on. So, yeah, it’s very interesting how those business models are evolving and changing the entire landscape here.

 

Tom Raftery [00:08:59] Yeah, and can we speak to some good use cases? Cause, you know, we have lots of customers and that there must be some really fascinating stories you can talk to about some users of industry 4.0 technologies.

 

Stefan Krauss [00:09:14] Yeah, absolutely Tom and I think one nice example, it’s a German company called Gephardt Fördertechnik. They are a leading company in internal logistics and they have really created an IoT platform which allows not only again in their own manufacturing facilities, but also when they of course sell their products to their customers to create this transparency and have those, you know, machines and products really connected and have a dashboard visualisation to really observe all, you know, the the the activities going on in the machine. And as I said before, really run predictive maintenance processes and so on. So I think this is a nice example where Gephardt Fördertechnik is using SAP products like SAP Asset Intelligence Network, which allows you to really connect all those assets at the customer site in a network. And here you can track both structural and unstructured data to share it with the I call it the right ecosystem. So, with whomever you decide you want to share those information that can be employees on the customer side, it can be people from Gephardt Fördertechnik who, you know, offers services, could be a third party service providers. So, I think this is, of course, fully managed to say who has access to those information to really, you know, have full transparency about the machines.

 

Tom Raftery [00:10:50] Ok great for our customers. And again, you’re interacting with a good number of them. What are the… I don’t want to say forcing factors, but what are the things that are moving them into this space most? And what are the kind of challenges that are coming across once they start going down, you know, the route of rolling out one of these projects?

 

Stefan Krauss [00:11:16] Ha! This is another very interesting topic. And I just recently had a meeting with our senior management of industrial machinery company. And they are super successful, let’s say, in their current business. So, they are growing every year. Nice business. Still, of course, top management is saying we cannot just lean back and say, hey, this will be the future. So, for them, it’s really about rethinking. Also, you know, what will be our product offerings here in the future? It’s going even beyond saying, you know. Today they very much sell individual products into we sell solutions. We sell something which the combination of products and services, embedded software. We operate it. So, this this this business model. And I think are a major challenge those cost companies face is I think they might be all very experienced in innovation when it comes to, you know, develop and innovate the next product. Most companies are not necessarily, you know, used to say, I also need this business model innovation. How are we changing the company? And there’s a lot of resistance, of course, on middle management, on let’s say employee level, because for them, they still say, hey, why do we have to change? We are so successful today. This is something, I think where I think top management, and this is also a lot of discussions I think where SAP comes into the game. But also, you know, the strategy consulting companies to really help customers on what I think a lot of people call digital transformation. And how can we really define and and let’s say, articulate those changes through all the entire company. And it really starts with the employee level and then it starts with the skills we need here in the future. So, I think we also see that companies, of course, hiring more and more, for example, I.T. experts, even if they are a machinery company or an automotive company. So, they need a shift in skills.

 

Tom Raftery [00:13:23] I saw the CEO of Volkswagen, whose name has just gone out of my head. Say yes. Herbert Deiss. He said just the other day. Well, that is a couple of weeks ago now. He said that Volkswagen is going to have to become a software company. I mean, that’s a huge change and I mean, he’s been forced into that position by the likes of Tesla and the complete upheaval of the automotive industry. But it just to exactly your point to hear Herbert Deiss say that Volkswagen needs to become a software company. That’s amazing.

 

Stefan Krauss [00:13:57] Yeah. I think he is right. And there are other companies also when we look to some of these Start-Up companies building now the e-cars. I have talked to one. I think they are located in Asia and they say. Our goal is not to produce a car. Our goal is to produce the next screen, the fourth screens, so you have the iPhone and you have maybe the desktop at that stuff. But the car will also act as an environment where people can either work or, you know, of course, enjoy movies and whatever. And then, of course, it’s somehow driving. And I think this is a totally shift in mindset. And yes, of course, Tesla is it’s nicely leading this nowadays. It’s also very interesting when you compare so normally, I think I don’t know how long you drive your car, but, you know, we buy a car and we drive a car for three, four, five, six years. And in the past, you know, you had the car like you bought it. Maybe little accessory here and there. But the features, I think was built in how you ordered the car. Now, in this this software world, you can activate certain components later on. Maybe you have some money left and then you want to invest here into this and that. And I just what you know, funny enough, somebody was was selling or let’s say another one was buying and such and such an E-car and all of a sudden, certain software pieces were deactivated. That’s right. That’s a discussion about use rights. Then later on. So, you get a physical car. But let’s see what really software options are activated or gets deactivated. Yeah.

 

Tom Raftery [00:15:39] I was on the game changers radio show yesterday talking about the future of automotive. And I said we’re seeing I called it the iPhonification of the automotive industry. And I referenced exactly your point about how Tesla are now converting also into a software as a service company, where, to your point, they’re able to turn on or turn off the utility of parts of the car. And it’s where they turn it the car into a platform for software sales. And obviously, it makes it easier for Tesla if they have a single SKU of model and they say they differentiate by the features that are turned on or off in software. So that that makes the manufacturing far easier for them and it gives them a completely different sales model that they sell you a a car, and based on how much you pay, you get X features turned on and or not, and then you can have them turned on later. And of course, I suspect it will be a matter of time before like the iPhone, they open up an app store to developers to develop apps to sell on the car. And this this will completely change how automotive the automotive industry works. And it’s only possible through the likes of the the technologies that we’re talking about.

 

Stefan Krauss [00:17:08] Yeah, I think you’re absolutely right. And I think this has a lot of pros, but it may have also some cons. And we have discussed this also with other, you know, customers of us, because I think we also need to consider maybe whether you are in the volume business, like of course you, you have one SKU and then of course, you sell it in a high volume. The question for, you know, industrial machinery companies where of course, we don’t actually have that kind of volume in all the different segments, is it still, because the business fundamentals are still valid right? It is really about, you know, top line and bottom line at the end of the day. And to just say now I have maybe a machine where I have built all the options in, and the options cost money, of course. And then the customer may activate it or may activate it later or even not, it’s not necessarily a good business case if you’re not really in a volume business. So, I think that is not the one answer to everything right now. And this is why, again, I think customers or companies really have to throw a think through on, you know, what of those new business trends and models will really stay relevant, relevant in the meaning of creates, you know, business value and business outcome for them later on. And we see already first all the automotive companies who started, for example, with mobility services, and they stopped it already by saying, oh, looks doesn’t look like a good business case for us. So, this very interesting times where I think it’s very much about also, you know, testing, trying failure, you know, adopting and then and it’s not the continuous improvement business. Many companies have been in for so many years.

 

Tom Raftery [00:18:59] Yeah, it’s it’s challenging. And something just occurred to me the other day as well. The whole idea of the shared services industry is going to be, I suspect, massively hurt by Coronavirus, I mean, are you going to want to get into a car that you don’t know who’s been in it before you?

 

Stefan Krauss [00:19:18] You’re right. Just thinking about it as you said it. Yeah, because I was just reading this morning in the newspaper that, you know, people are asked to, of course, use more and more their cars and not maybe, you know, public trains and buses and so on. And then, of course. Yeah. That’s also very true what you said on those kind of, you know, mobility services. Yeah.

 

Tom Raftery [00:19:39] Yeah. Yeah. That I suspect they’ll take a huge hit. Stefan, we’re coming to the end of the podcast we are at about 19 minutes now, I just said I’d ask you; is there anything that I have not asked you that you think I should have?

 

Stefan Krauss [00:19:57] I think we could talk about this this very interesting topic for hours and hours. I know. I know. Happy we if you want, we can also follow up. But no, no, I think for today, I think we covered the main points. And maybe to summarise it from my point of view. What we see this is not about technology. It’s about really business value. I think companies want and need to achieve. And this is where I think we see leading companies already, you know, heavily in and where, of course, laggards may need to follow. And it’s all about not only the processes, I think it’s also how to use all this data which are available nowadays coming from IoT sensors and so on and so on from the Internet and make good business usage and value out of that. I think this is my, you know, maybe suggestions or, you know, kind of credo companies should look at. And this is also, of course, where we as SAP want to help many companies on this digital transformation, both on a business process talk, but also then, of course, with our solution and service offerings we bring here to the table.

 

Tom Raftery [00:21:13] Super, Stefan, if anyone wants to find out more about Stefan or about discrete industries or about any of the other things. Where should I direct them to go and any links you give me, I can embed them in the in the in the description of the show notes. So, fire away. Where should you, where would you like me to send people?

 

Stefan Krauss [00:21:36] Yeah, I think of course, happy to share with you. I think you all can find me on LinkedIn, of course, Stefan Krauss and Krauss with double S. So, I think it’s a very common name. But also, I think please join SAP’s, you know, SAP.com and then you can find via the link to industries. A lot of those kind of, you know, trends and of course, of solution offerings we have. You can find nice whitepapers which we have written for all of our industry to translate basically those trends which we see in industries into, you know, how SAP can support here. So, I think that what would be my two main sources I would like to point you to.

 

Tom Raftery [00:22:18] Perfect. Perfect. Stefan, that’s been great. Thanks a million for coming on the show today.

 

Stefan Krauss [00:22:22] Thank you very much Tom. See you soon again. And have a great day. And please all stay healthy. That’s is most important.

 

Tom Raftery [00:22:30] Indeed. Indeed.

 

Tom Raftery [00:22:33] OK. We’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SAP.com/DigitalSupplyChain or simply drop me an email to Tom.Raftery at SAP.com. If you’d like to show, please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.

 

And if you want to know more about any of SAP’s Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain and if you liked this show, please don’t forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.

 

 

 

Digital Supply Chain, Industry 4.0, and the Covid-19 Coronavirus – a chat with Martin Barkman

We are in a very strange times! On this third Digital Supply Chain podcast on the theme of Industry 4.0, I had chat with Martin Barkman. Martin is an SVP and the Global Head of Solution Management for Digital Supply Chain at SAP, so I was keen to have a conversation with him about that, but the conversation went a bit off track!

With all that is going on in the world right now it is difficult to avoid talking about the current Covid-19 coronavirus pandemic which has turned all of our lives upside down. So, despite not intending to, our conversation quickly veered into a discussion of the implications of the coronavirus contagion, and its effects on supply chains, manufacturing, and ourselves.

This is an extremely topical podcast, which ends on a positive note. I hope you find it useful.

Listen to the podcast using the player above, and/or see the full transcript below:

Martin Barkman [00:00:00]   The first thing that I think in in times like this organizations have to understand this is what is my what is my supply? Where do I have products? Can I get the product? Am I relying upon regions that are even more hard hit by the particular crisis and whether it’s this viral situation or just in general I think companies are rethinking making sure that they have alternative sources.
Tom Raftery [00:00:29] Good morning. Good afternoon or good evening. Wherever you are in the world, this is the Digital Supply Chain podcast and I am your host Tom Raftery.

 

Tom Raftery [00:00:39] Welcome to the Digital Supply Chain podcast. We are in the series themed around Industry 4.0 and my special guest on the show today is Martin. Martin, would you like to introduce yourself?

 

Martin Barkman [00:00:52] Absolutely, Tom. And thank you for having me. I am Martin Barkman and I head up solution management for SAPs digital supply chain area based in the United States and super excited to be here talking to you today.

 

Tom Raftery [00:01:08] Thank you. Thank you, Martin. so, digital supply chain and industry 4.0. How are they connected?

 

Martin Barkman [00:01:16] It’s a great it’s a great question. I mean, there’s a lot going on with supply chain today. Obviously, the topic at the moment is everything the world is doing to mitigate the effect of this virus. But even before the virus, supply chains were becoming more prominent and more central to the conversations in company boardrooms and frankly, even amongst consumers. Geopolitically, we saw things like trade tariffs, and regulations coupled with uncertainties around the exit of Britain from the United, from the European zone. All of these put pressure on companies supply chains. And then at the same time, you also have consumers that are pickier and have more desires than ever before.

 

Martin Barkman [00:02:15] Whether it’s the personalization of products or even the speed…

 

Tom Raftery [00:02:21] They’ve been spoiled, consumers have been spoiled by the likes of Amazon who are now giving them deliveries same day and even, you know, sub-hour times and things like that. so, that’s gotta put huge pressure on supply chains as well.

 

Martin Barkman [00:02:32] Yeah, it’s interesting. So, you have governments, you have individual consumer. And then there’s this underlying thread around topics of sustainability. You know, consumers are starting to figure out that having the delivery truck come to their house many, many times every day maybe isn’t the most sustainable option. So, we’re seeing a convergence of a lot of these global trends, consumer trends, and it’s converging around the supply chain. And so, how do you set up a supply chain that can really accomplish all of this in a fundamentally different way? You asked about Industry 4.0, and it’s an interesting term. It actually originated in in Europe many, many years ago. And it was primarily focused around the automation of the factory or the plants. Now we’re seeing the concepts actually extend to the entire supply chain, to the assets that are deployed throughout the supply chain, all the way to the way distribution and logistics is handled. And it’s all about using technology and data to fundamentally change and take a step change in productivity. Other times it’s called industrial Internet of Things, so, I just wanted to throw that out there, that that’s also a term that’s often used.

 

Tom Raftery [00:03:52] Sure, sure. And I mean, we’re not going to harp on the whole Coronavirus thing because, you know, there’s lots of other people talking about that. And, you know, people better, better informed than us. But things like that are going to be putting huge pressure now, you gonna think on supply chains. I mean, particularly there’s going to be a huge increase in the requirement for logistics as more people, you know, stay at home and have a requirement to have things delivered to their home. so, that that’s going to that’s going to change the logistics industry. It’s going to grow the logistics industry, and it’s going to completely you got to think change how a lot of supply chains are organised.

 

Martin Barkman [00:04:31] Yeah. No, no, no doubt. And it is it is absolutely the topic of the day and what companies are focusing on. I mean, you know, the first thing that I think in in times like this organizations have to understand is what is my what is my supply? Where do I have product? Can I get the product? Am I relying upon regions that are even more hard hit by the particular crisis and whether it’s this virus situation or just in general, I think companies are rethinking, making sure that they have alternative sources identified. They understand the implications of those sources.  They have the ability to switch and shift order volumes from one, one to the other. You know, so. That that I think is kind of step one in a time like this, of course, with that comes also an understanding of where you have inventory in the supply chain and how can you use that inventory to ultimately create new finished goods and move those finished goods to the point where they are most, most desperately needed. I think at the same time, demand is is really, really changing. We’re seeing spikes in demand for products that are absolute critical.

 

Tom Raftery [00:06:01] Toilet Rolls?

 

Martin Barkman [00:06:01] Whether it’s. But it’s not just I mean, it’s paper products in general. Right. Diapers and such. Certainly, in personal hygiene products. I mean, right now, Amazon is prioritising the delivery of those to consumers at the expense of maybe some products that are not deemed to be quite as urgent. I think for companies, what’s critical is understanding, you know, just by how much and where and to what degree demand has changed, because ultimately that picture has to be you have to form the unified picture of demand and supply and ultimately how you how you solve for that. so, you want to get your arms around. So, I yeah. This is a you get your arms around that. That demand certainly part of the supply picture is also the capacity. And you mentioned people are now working from home, certainly in some professions that’s a possibility. In professions like running a manufacturing operation, that’s not always the case. The customers we have that I’ve talked to are trying to keep these critical plants up and running plants that are involved in producing products that are more needed now than ever before. But the method in which you do that right, the way you run your shifts, the way you inform and encourage people to work when they are on the shop floor is different. Right. We can’t stand shoulder to shoulder anymore. We have to maintain the social distancing even in the workplace. so, I think its capacity, its inventory, its supplier and supply and its demand and forming that picture and understanding also what is it saying I need to do today? But what are the what ifs and the scenarios? We live in an extremely dynamic environment. so, this week is fundamentally different than last week. so, whatever I thought was my plan last week, it’s very likely that that plan now needs to change. so, I need an environment and an ability to rerun those scenarios very, very effectively. Once I choose a scenario and I say, OK, this is the one I’m going to operate, that, how do I put it into action all the way down to planning the transportation and understanding how to get it ultimately to the end consumer?

 

Tom Raftery [00:08:29] And demands have got to be swinging wildly as well at the moment. I mean, we talk about people working from home. That’s going to mean a huge drop in demand for, you know, petrol, diesel those kinds of fuels to get people to and from work. And on the other hand, there’s going to be a huge uptick you got to think and demand for things like webcams so, people can more effectively work from home.

 

Martin Barkman [00:09:00] Yeah. so, it’s interesting right now, I think we’re all trying to come to grips with what is the the new…the drop in, you know, what is the the drastic change in demand, and as I mentioned earlier, how do companies get their arms around that? But soon we will have to start to plan for the recovery. Is the recovery going to be like the letter V, where it’s a sharp drop and then a sharp rise, is it going to be like the letter U where it’s a drop and then it’s a period of really, really low band in general, but then an uptick. Or frankly, it’s almost gonna be like the letter L you know, the classic where we’re gonna be at a low point of demand for quite some time and then maybe we see a gradual, slow recovery. And the answer is, of course, we don’t know, and it may actually differ for different products. I also think we have to think about the possibility that when we emerge from this, yes, things will be fine, but they will be different. Right. so, if you think back to the 9/11 crisis, we started to fly again, but airport security was fundamentally changed. Will our way of working be fundamentally different when we emerge from this crisis? so, we have to understand how we will emerge and what the scenarios are so, that we can plan accordingly. But then let’s not assume that everything returns to the way it was. It may not be for certain parts of the economy or for certain industries or for certain types of products.

 

Tom Raftery [00:10:57] And how do companies plan for that?

 

Martin Barkman [00:11:02] Yeah, I think…

 

Tom Raftery [00:11:07] The 64-million-dollar question?

 

Martin Barkman [00:11:08] Yeah, look, I mean, you hear it said every day. Right. These are unprecedented times. Companies that have a good handling of their data, of their information and they’re able to bring it into one environment where they can run these scenarios. Not to pretending that they know exactly what’s going to happen, but they can say, you know what, if this happens, what if we have a quick recovery? What if we have a prolonged recovery? What if they make some more of our products coming out of the recovery maybe is a little bit different? What if a part of the world relapses later this year and the epidemic comes back in a limited form? so, I think companies that have that kind of digital environment are going to be able to plan these different scenarios. They may not know, but they can certainly weigh the different options. But I also think it’s interesting. Right? so, Industry 4.0 if we over time, are able to automate and run more critical parts of the supply chain in an autonomous or perhaps in a remotely controlled way. And this is already happening. I mean, I’ve been to see many production operations. You know, the people there are operating them behind a glass wall or in the case of milling and mining, significant parts of the operation might be controlled in a control centre that’s located hundreds of miles away and then using cameras and digital infrastructure they’re able to control the equipment. The interesting thing about that is when the next pandemic, and I hate to even say it comes, supply chains might be able to operate more autonomously, because people are not necessarily working and standing right next to each other. It’s not that we have eliminated the need for people completely, but we’ve eliminated the need for people to stand closely together performing the tasks and potentially risking their safety as a result.

 

Tom Raftery [00:13:38] so, Martin, I think one of the most important things at this kind of time is transparency in supply chains. Can you talk a little bit about that for us?

 

Martin Barkman [00:13:48] Absolutely. And it’s really interesting because supply chains almost by nature, right? You think everything happens in sequence from one step to the other it’s very linear oriented, and in many cases, it is, right? You start with a but raw material and you convert it into something that you ultimately distribute and sell. However, that’s a very simplified view. And what has been happening already is supply chains are becoming more networks. Right? so, you source raw materials more through a network, in many cases. Your manufacturing setup is a network. You have your own manufacturing sites and you have the ability to go out and work with contractors in a network type of capacity. Transportation. Same thing. You source transportation through a network and you work with a network of providers. And as a result, the supply chains are actually becoming less linear and sequential and more networked. Now, more than ever, visibility of what’s happening in your supply chain is very important. And because it’s more networked, you need the visibility through your network. so, you need to understand. Not just what’s happening within the four walls of your supply chain, but within your supply chain network. so, this is a topic that was already becoming important. I think now more than ever, it’s of upmost importance. Companies are setting up, you know, war rooms and crisis management centres to understand how to maximize their ability to serve their customers. And of course, information and visibility are very, very key to that. Now, beyond this pandemic, there are other cases where having visibility is very important. What if there’s a product recall? How do I ensure that I can trace the source of the recall or the cause of the recall through my supply chain and remove the product that is subject to the recall without overdoing it, without removing a product that does not have to be subject to the recall. so, there there’s just a lot of ways in which this connecting everything and then having that be rendered simultaneously more closer, if not real time. It’s becoming very, very important.

 

Tom Raftery [00:16:23] And for organizations who are in the throes of this right now, I mean, what would you advise them to do if they haven’t got the kind of transparency that they need or if they are starting on that project or if they’re even if they’re in that in that project and they’re looking to increase their  visibility into their supply chain where we’re should. What should they do? What kind of steps should they take?

 

Martin Barkman [00:16:51] Yeah, it’s hard to think of a one size fits all, but. There’s a good chance that there are some pockets of places in their supply chain where the information resides digitally. Sometimes that could be very large pockets, large repositories. I would say an initial key step is assess what is the digital environment you have? What are the existing tools you have in place and look for ways to activate elements of those tools that maybe you haven’t otherwise activated. So, for example, we have customers that are running the SAP integrated business planning application to do the scenario analysis that I talked about earlier. It has inherent capabilities for things like visibility. We call it the control tower. Ensure that you’re leveraging those capabilities to the fullest, which in some cases, if you aren’t, isn’t a big undertaking to go do.

 

Tom Raftery [00:17:53] Okay.

 

Martin Barkman [00:17:55] And certainly that’s something that that companies can consider.

 

Tom Raftery [00:18:00] All these things are kind of on a curve so, they can move kind of further to the right on the curve to increase their visibility, you’re saying?

 

Martin Barkman [00:18:07] Yeah. I mean, it’s a matter of time too, right? And, you know, are there quick wins that can be attained right now? At some point, companies may look to say, you know, how do we how do we take a step change in our in our digital environment, in our infrastructure, so, that we can do this on an ongoing basis, not just when a pandemic comes across, but frankly, sometimes you see a spike in demand that you hadn’t forecasted. You would like nothing more than to meet that demand. But you don’t know if you can or what it would take to meet that demand. so, you need to be able to run these plans and rerun the plans more often. You know, that’s the kind of capability that I think companies at some point are going to start to say, you know what, it makes sense to pursue that.

 

Tom Raftery [00:18:53] Excellent. Martin, we’re coming towards the end of the podcast now. We’re at about 18 minutes, 19 minutes into the into the podcast. Before we end up before we finish up, is there is there any question that I have not asked you that you think I should have?

 

Martin Barkman [00:19:14] I perhaps one thing we should conclude with is, you know what what is, pandemics aside, if we allow ourselves the luxury and the pleasure of removing that that new lens just for a second, maybe what is on the other side? And what do we think is is of utmost importance to companies? And I’d just like to talk about that, because I think we have to allow ourselves the ability to think in those terms, right? For the future and to us and what we see from our customers is supply chain is moving increasingly, from a pure back office function to something that’s at the at the boardroom level, very much part of the discussion. And the reason is we are moving into an era where it’s all about the experience economy, meaning what is it that customers want to experience when they do business with you? What is it that your employees want to experience when they go to work? What is it that your shareholders are looking for you to accomplish right in your community? Same thing with the environment. And we think that’s very exciting for those of us that are passionate about supply chain, because how can you accomplish something on all those axes and on all those vectors without a really, really comprehensive approach to supply chain management, right? What is the point of selling a product that’s marketed well, if in the end the product doesn’t meet customer needs from a quality and functionality standpoint? What is the point of having the most perfectly manufactured product with all the bells and whistles if in the end it’s delivered late to customers? so, the supply chain is what brings that ultimate experience very much together. And we see companies making investments in supply chains in ways that traditionally wouldn’t have been wouldn’t have been thought of. And it’s so, that the supply chain can help the company be successful in the experience economy. And we think that’s exciting and we think that’s very much on top of minds of companies right now, maybe a little bit further back of their mind, given the urgency, but nevertheless, something that absolutely has to be continued to be addressed.

 

Tom Raftery [00:21:57] Excellent, excellent, excellent. Martin, if people want to know more about Martin or about supply chains or about business planning or any of the above, where would you have me direct them? I’ll put some links in the show, notes in the description, this podcast so, you just tell me what to put in there.

 

Martin Barkman [00:22:17] Sure. Let’s assume they want to know about supply chain more so, than they know about me. Certainly, I’m on LinkedIn. But for for supply chain and what we’re doing at SAP, I would invite everyone actually to go to SAP.com, and in there we have sections for supply chain management. We have a lot of interesting content of what we’re seeing are the big trends and what companies are doing. And we have a lot of testimonials from companies with whom we work. And I think that’s an exciting place for people to start to learn more.

 

Tom Raftery [00:22:55] Super, super. Martin, thanks again for joining us on the show today.

Martin Barkman [00:23:01] Thank you so, much. It’s a pleasure.

 

Tom Raftery [00:23:04] OK. We’ve come to the end of the show. Thanks, everyone, for listening. If you’d like to know more about digital supply chains, head on over to SAP.com/digitalsupplychain or simply drop me an email to Tom.Raftery at sap.com. If you like to show, please don’t forget to subscribe to it in your podcast application to get new episodes right away as soon as they’re published. And also, please don’t forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.