Tag: supply chain

Digital Supply Chain and surviving coronavirus-driven supply chain disruptions – a chat with MSCG

Supply chains have never been hit with so many disruptions at once. A perfect storm of trade wars, an oil price crash, and then the coronavirus have seen global supply chains shocked like never before.

In the midst of this, via a chat on LinkedIn I discovered that MSCG held a webinar for partners and customers on this very topic, so I invited the two webinar hosts, Dr Dan Bhide and Odell Smith to come on the podcast and talk about the comments, concerns, and learnings folks came away from the webinar with.

I think it was a great chat, but don’t take my word for it (I may be a bit biased ūüėČ ), have a listen using the player above and/or check out the transcript below, and let me know what you think.

 

Odell Smith [00:00:00] We’ve been in great times, you know, over the last over the last several years, and and the the the thought about risk management and about evaluating risk and then putting in good mitigation plans hasn’t hasn’t really been in place.

 

Tom Raftery [00:00:19] Good morning, good afternoon or good evening. Where ever you are in the world. This is the digital supply chain podcast and I am your host, Tom Raftery.

 

Tom Raftery [00:00:31] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have two guests, Dan and Odell. Dan and Odell, would you like to introduce yourselves?

 

Dr Dan Bhide [00:00:45] Yes, happy to Tom. Thanks for having us on your podcast today. Really look forward to this conversation. My name is Dan Bhide. I’m a co-founder and partner at My Supply Chain Group. We are Enterprise consulting firm, helping our clients with supply chain stategy, process reengineering and solution implementation in multiple industry verticals.

 

Tom Raftery [00:01:07] Super, and Odell…

 

Odell Smith [00:01:09] Hey. Glad to be here. My name is Odell Smith. I have been with My Supply Chain Group for since it started over 11 years ago. I have been working in the supply chain space for over 30 years and specifically and in I.T. for the last 26 or so and build ITs, architect I.T. solutions for the supply chain.

 

Tom Raftery [00:01:38] Nice, nice, nice. Now, you guys held a webinar a week or so ago addressing specifically supply chain disruption, because¬† we’re in a kind of a crazy mixed up world right now, this is April 2020, the 14th of April 2020. You know, everything in the world seems to have gone to pot. And you had about a hundred or so people on the webinar. And I was interested to maybe bring some of the learnings from that to the audience of his podcast. So, do you want to talk about the background to the webinar first and then we can get into some of the things that come out of it?

 

Dr Dan Bhide [00:02:20] Indeed, we had a lot of other clients calling us, asking, hey, you know, can you help us with these issues vs those issues? And we certainly engage in those activities. What turns out from our experience is this unlike many other disruptions that we have seen in the recent past, whether it was an earthquake or a tsunami, or a fire at a major airport, this one is unique in the sense that quite a few things have certainly assembly together themselves in one place at one time. You know, whether it’s the corona pandemic, whether it’s also the mix of the US-Sino trade war that’s actually been happening for the last couple of years whether it is this certain glut of oil and the rapid decline in oil prices because of that, the fear of recession. All those things are suddenly piled up on us. And a lot of companies that thought they had their business continuity plans put together are now finding that, you know, those weren’t after all that resilient. So that was the reason behind us saying lets take a big picture approach to helping our clients and prospects understand what happened, why it’s happening and what we can do about it. As we go on this conversation we can explain the fact that, you know, beyond going from just issues, impact and mitigation strategies, very able to help clients understand how to actually translate a mitigation strategy into the specific action plans and the specific tasks.

 

Tom Raftery [00:03:44] Okay. Odell, you want to jump in and add anything to that or…

 

Odell Smith [00:03:48] A lot of a lot of this kind of comes down to to information and in the sharing of information. And so one of the one of the only ways that any business is going to be able to get through this is is with collaboration. And so so there’s being able to have information to process and manage internally as well as being able to share with your your vendors and your customers.

 

Tom Raftery [00:04:20] Can I interrupt you Odell for a second just, rather than getting into that just yet, can we take a step back? And we’ve identified the kind of main factors, the drop in oil price, the trade wars and the sudden global pandemic that has shut almost everything down. Those are the big picture factors. But how is that affecting supply chains? How is that affecting organizations you work with? What is it? What are the problems that you guys are seeing out there for companies?

 

Odell Smith [00:04:55] OK. So an example is there’s there’s quite a bit of disruption in in not only in in some of the vendors and suppliers, especially with the the great focus that’s been happening over the last 10 to 20 years of outsourcing, a lot of stuff overseas. And and so there’s obviously enormous impact there with suppliers not being able to provide raw material and/or finished goods to to the supply chains. But in addition to that, there’s there’s logistics impacts as well. So take, for instance, one of our clients has asked us to help them build some what/if simulation capability around port closures. So as these as these products, in addition to the suppliers not being able to provide things, the government mandated closure of of logistics facilities and ports has been a significant problem and a concern with several companies in addition to health and safety measures for the people that work in those areas. So there’s just a couple of examples of of things where things that you wouldn’t normally expect. I mean, sometimes you have union strikes and these type of things, but they’re they’re known more ahead of time. Right. Sure. And there’s a way to be able to try to mitigate some of that. But this is this is urgent, immediate and unexpected in many cases.

 

Tom Raftery [00:06:36] Totally, totally unprecedented to use a word that’s been used an awful lot these days.

 

Odell Smith [00:06:43] Exactly.

 

Dr Dan Bhide [00:06:44] You know, if you think about it Tom, even in the last few big disruption that some of us have read about or been through we were, none of us were around for the 1929 Great Depression, many of us may not remember the 1973 oil shock, but none of them had this confluence of all the events and the disruption of demand, disruption of supply, the disruption of networks. And all that compounded by the fact that most of us are forced to stay home because of social distancing. Many people are losing jobs, and all this confluence of multiple impacts is fairly unprecedented.

 

Tom Raftery [00:07:18] It is. And we here in Spain, they’re now starting to allow some sectors go back to work again in a very limited capacity. But it looks like we’re coming out, you know, slowly, the other end of it. The curve is being flattened, but it’s still… There’s not going to be a vaccine widely available until mid to late 2021. So social distancing and those kind of measures you know, to Odell’s point in the workplace for health and safety. That’s going to be an ongoing factor and possibly access to supplies and things like that we can deal with these kind of things short term but is this something that we can manage for 18 months?

 

Dr Dan Bhide [00:08:11] I guess it’s more do we have a choice about how to manage it. You know one of the CEOs of a big retailer said, “Hey, you know what? There is no playbook. We are doing this on the fly.” And speaking to another client recently, he said because of social distancing requirements we really can’t even have the whole production staff on the floor, for example. And if earlier we were running the line with, say, 20 people on the line, now we have to make do with ten or twelve of them because of social distancing. And that means we are running our lines at says 60-70% of the capacity than I would usual. Now, this is where the ability to look at all kinds of what/if analysis now that I’m running at 70% for example can I open up the third shift? Can I open up Saturdays? And if I do that, do I have an ability to catch up on my demand? That kind of ability to on the fly do these kinds of different analysis and then figure alternative now that you know you have a different harder constraint of not getting everybody on the production floor becomes an issue. And how quickly are you able to do that kind of analysis to have right kind of decisions made becomes a significant challen. If you digitise your supply chains, then that kind of what/if capability becomes a little easier to achieve then if things are still disconnected and maybe worst, even on paper.

 

Tom Raftery [00:09:32] In the webinar that you guys ran what were the primary concerns that people had when they joined the webinar? What were the questions they were asking and what kind of answers did you have for them?

 

Odell Smith [00:09:44] I guess some of the main concerns were around again, back to the data thing trying to be able to understand the impact of a particular situation. In many cases there are there are several different impacts even inside of some of the same companies. Right. You can have massively increased demand in one business unit and devastatingly loss demand in another business unit even inside of the same corporation. So being able to quickly be able to get information on where we think that’s going to go and what the impact of that is going to be is important and being able to simulate what, how am I going to solve whichever side of that that I’m on? One of the things about this flattening the curve thing, Tom, is I get it. It’s important for for the medical response to this. But what that does, in effect is an indeterminately amount extend this issue and extend the supply chain impact for what you’re talking about, a very long duration. Right. That’s a whole purpose of that model of flattening that curve. And and so trying to to be able to put some data, the people that we were talking to were very concerned about how how to model that. Right. So that they could so that they could plan effectively and then try to, you know, come up with different scenarios where they might be able to make it through. There’s a lot of capability to do things to to try to substitute products where available and to be able to maybe, maybe delay demand spikes or, you know, change promotions and and pricing things that were going to affect demand and that type of thing to be able to shift some of those things around. Those are those are very doable. Those wind up affecting then the supply and how it’s supply is going to be able to make that. So there’s a balance that you can do with that. But being able to simulate that and see that have the visibility of those is some of the biggest concern, because a lot of people have not put in some of some of the new capabilities to be able to visualise that stuff. And that’s that’s an important piece of this concern anyway. Not being able to see.

 

Tom Raftery [00:12:30] So Odell, if I remember correctly, I think you said you’ve been in supply chain for 26 years. Yes. If this had happened 25 years ago as opposed to today you know, what are the differences in the supply chain solutions that are available today versus ones that were available 20 odd years ago? What can companies do now that they couldn’t do then? I mean, we were chatting away here on a podcast recording platform that allows us to see each other’s faces. We’re working from home using Zoom and similar technologies, things that could not have happened 25 years ago. How does the supply chain world compare?

 

Odell Smith [00:13:14] It’s even it’s it’s hard to even imagine back then the the being able to have a) this happening, but but the capability of being able to to function as well as we’re able to. I mean, there is still an amazing amount of business that’s being accomplished because of technology, just like what you’re what you’re describing here. So as an engineer, before you know, it got into the I.T. side of the supply chain working in manufacturing there, there were there were these same type of of of problems. But it seems like there has been this kind of just in time mentality that’s that has really shortened the supply chain, has reduced a lot of cost and has and has taken a lot of the flexibility out of the supply chain over the last several years. And and that that flexibility then is has done a great thing for reducing prices and increasing margins. And it’s a it’s a great thing for the business. But it also I think this is a bit philosophical, but it’s kind of, we’ve been in great times, you know, over the last over the last several years. And and that the the thought about risk management and about evaluating risk and then putting in good mitigation plans hasn’t hasn’t really been in place. Back to your technology question. So there’s going to be a focus on that going forward that hasn’t been there in years. And this whole just in case logic that we discussed in our webinar is going to be much more tied to the just-in-time thing and there’s going to be a balance there. The new technologies that we’ve that we’ve seen come available, especially in the digital revolution, where we’re able to quickly put data in to a system and be able to get valuable results out of it from partners is probably one of the biggest, biggest benefits. So our being able to see the entire supply chain and then be able to collaborate with the cloud technologies with with partners on on from supplier side as well as in the in our manufacturing and processing as well as through to the end customer. And being able to collaborate is the biggest advantage that I’ve seen here in the technology. And that’s that’s a large piece of that is going from on-premise to the cloud. Right. And those those are the biggest the the biggest advantages. And then the tool sets inside of those that that allow more flexibility and visibility in the analytics that are real-time, where we used to have to wait days, you know, to be able to get data in a place where we could do analytics on it. Those are the main pieces for me.

 

Tom Raftery [00:16:32] All right. Dan, have you anything to add there?

 

Dr Dan Bhide [00:16:34] Sure. You know, just as the technology has evolved, you know, most of us hadn’t. Maybe the word digital supply chain wasn’t coined 25 years ago. Now it’s a reality for us. You know, and some of us had been leaders, some companies had been forced to follow that, you know. The expectations of consumers have changed as well over the last 25 years, you know, when you thought of getting a product within a week was good enough. Now, here are the Amazons of the world offering the products overnight or even sometimes the same day. So some brick and morter have been forced to go there as well. What that has done is we all talk about the 3 V’s of supply chain, the velocity of supply chain has been forced to increase big time. The visibility also is required to go literally not just within your own silos or breaking the silos, now we’re talking about visibility across the whole network you know from supplier’s supplier to customers, customers. And then there’s also expectation of variability how do I reduce my variability in my supply plan so that I can assure for Tom delivery of his product that he ordered tomorrow morning or even today evening. So expectation of reduced variability, expectation of increasing velocity and expectation of increased visibility has been forced upon the client companies as well.

 

Tom Raftery [00:17:51] And we’re at to almost 18 minutes mark now and I like to keep this podcast to about 20 minutes. For people who are listening who were unable to attend your webinar. What advice would you give them going forward where we’re headed into a world of possibly 18 months of social distancing. You know, maybe there’s a vaccine comes out sooner and maybe it’s, you know, nine or twelve months or whatever it is. But we’re heading into a world of a lot of unknowns, you know, and we’ve had this triple whammy hit us now, what advice would you give to people who are running supply chains now moving forward?

 

Dr Dan Bhide [00:18:33] You know, one of the things a caution is that this priming the pump, once things start getting normalised to a new normal, I mean, is going to be excruciatingly complex and time consuming. So that is something that they’re already dealing with. But this priming the pump, meaning getting back to a new normal, is going to take weeks, possibly months to happen. And that means that we have to now look beyond the short-term mid-term plans to look at the Long-Term Plans, having the business continuity plans in place and also literally doing a monthly new scenario’s of what/if, and to mitigate the risk and most importantly focus on the fact that what you do now is going to redefine your competitive ecosystem as well, because some companies will be able to handle this well, some won’t. And that’s going to create a new normal and a new competitive landscape. So see this as much as an opportunity, as a disruption or threat.

 

Tom Raftery [00:19:32] Ok Odell…

 

Odell Smith [00:19:32] So there’s there’s a lot of companies where executives are down on the shop floor packing warehouse boxes right now, trying to to to be able to just get through this. Right. And and that is absolutely required. You just have to do what you have to do to be able to make to make this work. All hands on deck. But at the same time, there has to be some level of strategy where you do like Dan was saying, where you you look for ways that you can take advantage of this and that you can get out of execution and start trying to do some of that forward planning and being able to being able to focus on the entire chain inside of your corporation with a value chain, but the entire supply chain and work on collaboration, with your suppliers and with your customers, to see what they are seeing right as what their demand is and to be able to figure out how you can best supply that, you have to you have to spend some time on that, even in the middle of, you know, working 14 hours a day packing boxes to try to get things out. And so the it’s not necessarily a time to to go and do a full system implementation, but there are there are ways that technology can help in this digitisation, the digitisation that we’ve just talked about. That was a little bit tough to get out! There are there are ways that that you can use information to help expedite that collaboration. And I couldn’t I couldn’t emphasize the collaboration with customers and vendors enough in that scenario.

 

Tom Raftery [00:21:25] OK. Last question, guys. Is there anything that we haven’t talked about that you think we should have talked about? Anything that you’d like to bring up that we haven’t hit on just yet?

 

Dr Dan Bhide [00:21:36] One quick comment from me and as I was referring to earlier, it’s one thing to comprehend the big picture and talk about mitigation strategies. I would align that to maybe a 80 to a 20 thousand feet level thinking, but it’s a whole another world translating those mitigation strategies into really what enables us to translate that mitigation strategy into action plans. So this is where the expertise matters. How do you translate the so-called one-liner mitigation strategy into 20-30 action items or tasks, whether they’re on the system side, on the people side, on the process side, on the policies and practices side, how do you come up with the new KPIs for resilience as against traditional KPIs for efficiency and just-in-time because those are the challenges that one needs to really think through.

 

Tom Raftery [00:22:31] Odell…

 

Odell Smith [00:22:31] I think being able to look back at this and be able to think of what worked and what didn’t work is going to what is going to wind up being of value as well. It’s it’s almost impossible to do that while you’re in the trenches. But take take notes about about what’s going on and and what worked and what didn’t work and then where you might want to, where you might want to have things perform differently in the future. Most of our planning solutions are are based on data that happened in the past. These anomalistic times that we’re in are going to cause many, many outliers. But there is also going to be a new normal that’s going to come out of that. There’s going to have to be a focus and an analysis on that data to have good plans going forward in the future. And that’s probably a complete separate podcast discussion around innovations and that type of thing. And, you know, being able to use advanced machine learning and AI to be able to support some of those quick decisions. But that anyway, that’s that’s that’s something that’s necessary to do for sure.

 

Tom Raftery [00:23:52] Gentlemen, thank you very much. If people want to know more about yourselves, Dan and Ordell or MASC Gee, where would you have me point them?

 

Dr Dan Bhide [00:24:01] They can go to my supply chain group dot com and they can call us as well. But my supply chain group dot com, one word is the place they can reach out to us.

 

Tom Raftery [00:24:13] In that case, gentlemen, thank you very much for your time and your expertise today. It’s been it’s been a pleasure talking to you.

 

Dr Dan Bhide [00:24:20] Thanks for having us Tom. It’s my pleasure.

 

Odell Smith [00:24:22] Yes. Really enjoyed it. Thanks for the time.

 

Tom Raftery [00:24:30] 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 SFP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot 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 a show.

 

Tom Raftery [00:24:57] Thanks. Catch you all next time.

 

[00:28:56] Super. Super. That’s great. Claudio’s that’s been fantastic. Thanks a million for coming on the show today.

 

[00:29:10] 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 SFP dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot 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 show.

 

[00:29:38] 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.

And remember, stay healthy, stay safe, stay sane!

 

 

 

Digital Supply Chain, Climate 21, and Climate Change – a chat with Toby Croucher

It is April 2020 and we are currently in the middle of the Covid-19 Coronavirus pandemic, however we will develop a vaccine¬† for this virus, and so this crisis will finally pass. Unfortunately there is no similar “easy cure” for climate change.

With that in mind, a huge amount of an organisation’s carbon footprint comes from its supply chain, so when I heard about SAP’s new Climate 21 initiative, I was keen to get one of the core team, Toby Croucher to come on the podcast to talk about it.

Toby agreed and we had a great chat talking about how the Climate 21 initiative will help companies calculate, manage, and reduce the carbon footprint of their supply chain. Enjoy.

Click on the player above to hear our conversation and/or check out the transcript below:

Tom Raftery [00:00:00] Whereas if I’m looking down through my supply chain of different suppliers, it’s very difficult for me to tell who is using renewable energy or not, you know, which cloud provider do I choose? Because do I know their energy sources? Which logistics company do I use? Do I know which of them are using electric vehicles or which of them are using diesel? You know, that’s not exposed today.

 

Tom Raftery [00:00:27] 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 [00:00:38] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery with SAP and my special guest on the show today is Toby. Toby, would you like to introduce yourself?

 

Toby Croucher [00:00:47] Hi, Tom. Yeah thanks. My name’s Toby Croucher. I’m the energy and natural resource industry lead for the EMEA North region. There’s a Nordics and France UK, and Benelux. Good to talk with you Tom.

 

Tom Raftery [00:01:06] Thanks. Thanks. So when I want to get you on the show, Toby, because, you know, we’re gonna talk about a thing called an initiative of as SAP’s called Climate 21. And the reason I wanted to talk about that is because supply chains are a massive part of a company’s carbon footprint. And the Climate 21 initiative is is an initiative that SAP is, you know, getting into to try and address that. So and you’re you’re part of the core Climate 21 team. So I decided to have you on the show so we could talk a little bit about it. And, you know, some of the reasons behind it, what it hopes to address, where the future is going, that kind of thing. So could you, you know, maybe start off give me a little bit of a background of Climate 21. What is it and why is it.

 

Toby Croucher [00:01:58] Yeah, well, I mean, climate’s not been. It’s not it’s not a new issue. It’s not a new challenge, as it were, it’s been you know, it’s been in the in the public domain to varying degrees, you know, for decades, really. Certainly since the early 2000s. But but last year, last year in particular, there’s an entirely new level of exposure in society as to what’s happening with the climate. What was happening with our response and the gap between our ambition you know, globally, our ambition to stabilize our climate between one, half, two degrees from the from the Paris accord, the U.N. agreements that, you know, 73 countries now have signed up to be net zero. And a level of action going on, actually. And, you know, from an SAP perspective, you know, when you look at CO2, of all of the issues relating to sustainability, it’s the only one as a has a globally consistent currency. It means the same thing. And a ton of a ton of CO2 means the same thing wherever you are in the world.

 

Tom Raftery [00:03:11] There’s no there’s no difference between a French ton of CO2 and an American icon of CO2.

 

Toby Croucher [00:03:17] As as the head of the international agency said it, CO2 doesn’t need a passport. And you know, it can be converted. Different greenhouse gases can be converted into the equivalent CO2 now. So it really lends itself actually to a transactional system. And it’s spread. CO2 is spread in terms of it’s it’s it’s the output of CO2 across industries, through supply chains, all the way to customers, all the way from the lip of the primary energy industries. So it’s got it’s got a certain kind of attributes CO2 that really lend itself to SAp’s heritage. It’s it’s it relates to material flows. And, you know, to a large extent, all the issues around managing our approach to climate change have been you know, how do we get the accounting right globally? How do we get the accounting right all the way from the global system of accounting for CO2 down to the national decarbonisation targets, which which, you know, most of the countries we live in have; then down to an industry level. And that, you know, can be inside trading schemes like the EU have. And then inside to a company level. And then when you’re in a company, actually, you go start to look across all your activities globally. And that constitutes your footprint, whether that’s direct, scope one or indirect scope two or scope three, which is there all the way through your supply chain. And the moment the world doesn’t have an effective, reliable, consistent way of doing it, it fits over well with that SAP’s heritage and SAP’s capabilities. The program started off as week I think we set September, October last year, we started moving into action in this with, you know, with our Board level sponsorship.

 

Tom Raftery [00:05:17] OK. So before I turned the recorder on, we had a little bit of a discussion about this, and one of the topics that we said we would chat about was the idea of a carbon budget. Now, the idea of a carbon budget is something that a lot of people may be unfamiliar with. So I think the way I frame it to people and, you know, feel free to jump in. But the way I frame it to people is that we have, as you rightly pointed out from the Paris Climate Accord in 2015, we have internationally signed up to trying to limit the global warming to one and a half degrees C, between 1.5 degrees C and maximum 2 degrees C, ideally one and a half and at worst 2 degrees C is what, one hundred and ninety five countries signed off on. We know where we are today. We’re already at one. So that leaves us between a half and one degree C to go. And we know to get from where we are today to one and a half to two degrees C. We have to pump X gigatons of CO2 into the climate to reach our target of 1.5 to 2 degrees C and that X is known, it is just physics. It is about a thousand gigatons. And the issue around the carbon budget is that the fossil fuel companies have proven reserves of about 3000 gigatons. So it becomes kind of challenging, I think, for organizations. So but we do we have that budget. We know where we want to get to or where we want to stop at. And¬† I mean, for companies, for organizations to figure it out where they are themselves, they need some kind of accounting right?.

 

Toby Croucher [00:07:03] Yeah, and I think, you know, you’re absolutely you’re absolutely right. You know, I mean, I I’ve I’ve explained that, you know, when I explain to my children, I explain it in the same way you think about calories, you know. I mean, it’s there are ways in which there are ways in which the world can absorb carbon sinks, absorb, you know, oceans and forests that suck up. And there are their outputs. There are ways in which it’s produced. And we’ve got to get a gigaton is a lot. But actually, you know, current rates of our current rates of consumption or carbon emissions, we’re gonna get I think it’s between eight and ten years we’ve used up all our budget. OK, if you’re dieting and someone’s that you couldn’t go over 2500 calories a day, you know. You know, you’ve got there by lunchtime. You know, and it’s it’s not that many years left now as you start to as you start to cascade that down, because that’s very, very hard for an organisation. Is is you you cascade that down until what are you what are you what are your targets and where are you going to go? Now, the interesting thing is, you know, and you hear this now increasingly from, you know, from the large international companies, you know, both in the energy intensive, industries and the consumer end and all the way through the supply chains. You can’t do this alone. You know, you can’t as a company continue to and that’s where the analogy breaks down. You can’t continue to squeeze your own emissions. You’ve got to get visibility through them, through and through your transactions. So, you know, we had a discussion with a company only this morning that produces industrial materials. And they said, well, you know, we really want to supply these these pumps. So the electricity they use is less and less and less actually are ah, you know, our customers are able to run these in a low carbon way. But actually, we get inputs to build them. We want to know how much carbon is in there. And and essentially this you know, this budgetry challenge, this carbon budget challenge is going to have is going to have to two parts to it. One part is is leaving fossil fuels in the ground. And those assets investors are calling those assets stranded assets. And the valuation of those companies that used to have a reserve to production ratio, which is “I’ve got loads in the bank, we can burn later”. That’s not going to apply anymore. That’s half of it. So half of it is is decarbonizing primary energy supply, which is you know there is options for that around hydrogen and bio and green electrons. The other half actually is products and services and squeezing those and in the same way, you know, if you if you want to lose weight, you need a good pair of scales. That’s second half for that second half that, you know, that, you know, decarbonise and squeezing all of the grams and kilos and tons and kilotons, not the gigatons a billion tonnes, but making all those small decisions, you know, you know, now just, you know, not having milk in your coffee, type decisions to make those types of decisions actually is going to take a very, very different approach to your future and your transactional systems.

 

Tom Raftery [00:10:28] And I think it’s it’s important as well, because in in, you know, take your example in the idea of a diet. It’s very easy going through the the aisles of the grocery store to pick up the items and look at the label on them to see how many you know, how much carbohydrate is in them or how much protein or fat is in them, you know, per 100 grams or whatever it is. Whereas if I’m looking down through my supply chain at different suppliers, it’s very difficult for me to tell who is using renewable energy or not. You know, which cloud provider do I choose? Because do I know their energy sources? Which which logistics company do I use? Do I know which of them are using electric vehicles or which of them are using diesel? You know, that’s not exposed today.

 

Toby Croucher [00:11:18] No, it’s not. And you know that there’s a big element of trust. You know, public trust in relation to, you know, I mean, you saw with Volkswagen’s challenges around their , you know, that their emissions monitoring dieselgate. Exactly. Dieselgate. And I think, you know, what we’re starting to build when we start to look at Climate 21 is an ability to, you know, to have that visibility and to be able to manage that and have that ledger that passes through as those as those products and services move down through the industrial, ultimately to us as consumers I mean, the notion has been, you know, the notion has been, you know, presented that individuals should have a carbon budget, you know, depending on the population growth projections it’s somewhere between, you know, two tons and four tons or six tons. But it’s it’s a budget now at the moment you know, very few of us would know whether we were underweight or overweight in terms of are we doing the right thing. Now, you know, you know, you’ve got photovoltaics on your roof. You know, it’s a it’s a big decision to make in a way to dieting. You don’t eat cake. You don’t eat cake if you’re dieting. But the smaller decisions, the small decisions around how to source which which supplier will source materials, can you change? What’s the substitution options you’ve got? These traditionally these lifecycle assessments are these lifecycle assessments have been done on a on a singular basis for a single product or a single service. And the you know, the the oil and gas industry did it with biofuels. Right? Well, sort of biofuels, but it becomes. But to do it once is a manual exercise to do it systematically, continually across all your business process. I mean, that’s you know, that’s an entirely different undertaking. But actually, that’s the only way you’re going to get the assurance through your supply chain. You’re gonna get the visibility through your supply chain. You’re going to get an ability to have those numbers, not just assured, as they are currently in that scope three area. But verified, reported both to investors to say, I’m decarbonising my business and ultimately to your your customers, whether it b2b or b2c. And that level of trust is going to have to come with a completely transactional level. I mean, currently, you know, many of our customers, if not most report CO2 emissions reporting is very important. And that will remain important for lots of reasons. But it’s the longer term is the management of them that’s going to become so, so important. And the ability to tell a story about how you’re effectively managing and effectively decarbonizing not just your business strategy book, but your supply chains as well.

 

Tom Raftery [00:14:02] OK. So we’re going to help with the calculation and transparency of emissions. Where else is this going?

 

Toby Croucher [00:14:14] Well, I mean, if you if you look at it, if you if you look at the discussions we’re having with with many of our customers, if you look at the way you CO2 is not it’s not singular issue. It’s related to, you know, land-use change, for example. It’s related to, you know, there are in some parts of the world. It is a very really a good example. You take you know, you’re low carbon energy is is actually a secondary importance to air quality and NOxand SOx and those issues. And the intent here is not to have a singular transactional system around CO2. I mean CO2 as I said at the beginning, it got certain qualities. And it’s a it’s a it’s a global it’s it’s a global priority, of course, for reasons we know well. But if we start to look at our strategy, it’s very much towards saying, let’s look at let’s look at the traditional non-financial flows, things that fit under the broad banner of sustainability. Let’s look at the non-financial flows and see how we start to build those in into our our ERP proposition. So Climate 21 is it is it is a kind of leading program that’s gonna be followed with, you know, us evaluating how it’s up, to what extent can we build this transactional future that historically has been, you know, hasn’t been included in with an organisation decision making has been reported on up in the manage and optimise. How do we start to build that in strategically? And that’s it. I mean, that’s it’s incredibly. It is. It is something, actually. You know, the world. And I said this to you, Tom, before we started the call. This idea of, you know, ecosystem services and the services that nature provides, if you like. I mean, that’s, you know, since the beginning of time, the the ultimate supply chain has been that nature itself, which we benefitted from a tremendous reliability. You know, it’s it’s it’s free at point of consumption. I mean, it’s got all the qualities about it now. You know, if you start to build that into then and you’re in your industrial systems, it’s a huge leap. It’s a huge leap.

 

Tom Raftery [00:16:29] Very true. We are, today is the first of April we’re recording in the middle of a global pandemic. The Covid-19 Coronavirus pandemic. Are you seeing any parallels between what we’re seeing in the pandemic and the whole climate issue?

 

Toby Croucher [00:16:48] There’s an incredible amount being written actually at the moment about the link between current employment, I think, because, you know, for very obvious and actually rightfully so, you know that the Coronavirus situation has knocked climate change off the off the pedestal of global concerns. And that’s absolutely correct. I think what’s really interesting what is really interesting with Corona. And this is really this is really, I think, important for the climate debate is we’re seeing most of the reporting that we’re receiving as members of society is based around what the modelling is telling us, the data in terms of how we’re doing, you know, in terms of flattening the curve and the forecast and, you know, the idea of the idea of being, you know, relying on on data to see where you are, you know, modelling to see what could happen and then and then forecasting your interventions to see where that’s going to get you to against, certain outcomes you don’t want. That’s… And we’ve been very science led. I must say, I think that the way we’re responding as companies, we’re being led by the science. We certainly see that in the UK. It’s been you know, it’s that the science is leading our response. Now I think that’s very promising for the climate agenda, particularly in this next decade that is being called that the decade of delivery. If we don’t if we don’t crack, if we don’t crack some of these challenges in the next 10 years. And we’ve had 20 years to think about it. And we don’t get it in the next 10 years. We’re in a very, very difficult position. So so I think there’s something there’s something positive around corona. And we may see it. We may see a return to science and science based decision making being led by data, which, again, we have a role in. I think that’s very, very positive. I think the risk for me is the oil prices has dropped. It’s it’s it’s low. And actually one way to one way to stimulate, you know, the post-corona recovery could bake-in could lock in some sort of high carbon outcomes that will lose time. And we don’t have you know, we don’t have that time to lose. You know, I think the drop in in consumption during the Coronavirus. We’ll eat that up in a few months. That won’t really matter. It’s about trying to stimulate economies. And there’s such an oversupply of fossil fuels at the moment that if that squeezes, you know, other investments that could be made, that that would be challenging. The final thing I would say with corona is, is, you know, with running all the risk management, we can we’re doing as much as we can. As societies in the hope there’s going to be a remedy, a vaccine, something, something at some point in future, we know we’ll come in and take this particular problem away as long as we can reduce, reduce what’s happening in the interim. That silver bullet will not present herself with with climate change this decade. There isn’t you know, there isn’t a singular answer like that. And that’s, I think, why it’s been such an such a difficult challenge over the past couple decades, because there’s so many dimensions to it. You know, fiscal, technology, societal, I mean, it’s a hundred years worth of energy infrastructure has been built around the world, around, you know. And it’s a tremendously efficient oil and gas and coal as well are very energy dense think they’re great fuels. If it wasn’t for that pesky CO2. So I think right. I think it’s there’s some things we can learn from corona, I feel cautiously positive.

 

Tom Raftery [00:20:30] When one of the things that, hey, I try and get people to visualise is, you know, what is a ton? You know, you can think of like a Mini Cooper as being roughly a ton and a gigaton is one billion tons. So try and picture a billion Mini Coopers and then try and picture a way of hoovering 10 billion Mini Coopers out of the atmosphere, every year, and storing them somewhere. And that’s the kind of level of challenge we’re at, and 10 billion is probably not enough to be hoovering out of the atmosphere every year. We obviously need to stop putting it in, putting them into the atmosphere in the first place. But we’ll have to try and suck them out as well. And that’s an even bigger challenge, I think.

 

Toby Croucher [00:21:22] Yeah, I think we land use land use will play a role, you know, to kind of recarbonise reforestation. Yeah, that that will play a role. You know, it’s a policy decision as to whether that’s linked as an offset or not. You know, I think you have to be careful with with offsets, you know. But but and sequestrations, carbon capture and storage actually finding it and, you know, putting in an aquifer, putting in a geological formation. But there you need a you know, you you kind of need a big single point geography. The geography doesn’t work. So it’s you know, that’s that’s that’s challenging as well. And that’s where you start to look at you know, you start to look at solving this this challenge and you have to set as a lot of energy efficiency needed, a lot of land use changes. You’re going to have to rely on, you know, the three you know, the three kind of energy supply vectors around bio and hydrogen where appropriate. And then, you know, green electrons from renewables, you’re going to have to try and sequester. And then you’re going to have to have, you know, buildings and different industrial solutions. So buildings, heating, cooling buildings. Mobility is going to have to be addressed. And you start to see actually and the whole thing, that whole picture of activity is gonna have to it will generate a whole new set of business models of course. There’ll be a whole supply chain associated around it, but it’s going to in a whole system transaction to make sure that it all adds up. And there is a global accounting system which which links them on the micro to the macro. And I think it’s going to be it’s going to be very. Yeah, it’s gonna be very interesting to see how this how this plays.

 

Tom Raftery [00:23:12] Toby we’re coming to the end of the podcast. We’ve gone 22, 23 minutes at this point. Is there as a last question, is there any question I have not asked you that you wish I had?

 

Toby Croucher [00:23:27] No, I think, you know, I think it is a typical job interview, kind of question, where would you know where? Would you like to be in 10 years time or where would you like to where would you like to have got this agenda to in in in 10 years time? And that’s probably the question. Are you going to ask that question?

 

Tom Raftery [00:23:51] You asked it. Go ahead and answer it now!

 

Toby Croucher [00:23:57] Well, I think will be what I think will be great, actually. And I see I see that there’s very much there’s an element of the role with this in SAP is the market and markets and, you know, and customers and investors and employees over the next decade. Very much so if we’re to stand a chance of hitting our 2050 targets and seeing ourselves in a good place for, you know, future generations. The companies do well in this are going to have to be you know, it’s going to have to be clear they’re winning and they’re doing well and they are performing well. And I think that’s that’s where you start to see flows of talent, flows of capital, you know, access to markets, new markets, going to the companies that get this, you know, that really get this that really get the fact that they’ve got a build-in, you know, a new system of transaction. They’ve got to take these issues from being historically reported once a year, you know, in a report which often doesn’t really get read by very many people and pushed out the door, you know, with risks, all those associated risks of, you know, it being marketing, they’ve got to build it in actually all the routine way of running a business. And I think when that happens and when society responds and consumers respond, those companies will win. And that they’ll not just win in traditional ways, that they’ll win in terms of their market share. And I I think we’ve started to see that, you know, the early seeds of that we have done before, you know, but then we get hit with a financial crisis or other crisis. But I think if we’re looking for where I want to get to in 10 years time and the role SAP could play, I think it’s very much in shifting that, you know, shifting that gap between the companies that are really, you know, doing this and those that aren’t and that gap, you know, there’ll be a high penalty to pay for the companies that don’t manage to get across that gap and start building this way of working and become, you know, essentially sustainable businesses.

 

Tom Raftery [00:26:14] Yeah. Cool, cool, cool, Toby. If people want to know more about Toby or about SAP Climate 21 initiative or about, you know, any anything else you think they might want to know about or where we’re should/ where would I direct them to go?

 

Toby Croucher [00:26:36] Within SAP we have a Jam site. There’s an internal Jam site for our Internal employees. We have an external point of view. I mean, I know as I said, you know, I think just before we started the conversation Tom we’re in, build and develop, you know, where we were kind of, you know, a pretty early stages but we’re moving very, very fast. But either, you know, comes to me there’s a there’s a core team working this, you know, right now. I mean, you know, organizationally it will grow and expand over time as we start to build up, you know, our go to market and our, you know, engage with customers more widely. So use the jam internally. Or come through the Climate 21 core team. I’m happy to fill any any questions around our approach.

 

Tom Raftery [00:27:27] Super, super, Toby. That’s been fantastic. Thanks a million for joining me on the show today.

 

Toby Croucher [00:27:32] My pleasure. Thanks a lot.

 

Tom Raftery [00:27:37] 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 dot com slash digital supply chain or simply drop me an email to Tom Dot Raftery at SAP dot 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.

And remember, stay healthy, stay safe, stay sane!

 

Digital Supply Chains and the impact of the #Covid-19 #Coronavirus – a chat with Richard Howells (@HowellsRichard)

It is early April 2020 and the world is in the middle of the Covid-19 coronavirus pandemic.

The contagion has hugely impacted supply chains, and in some cases supply chains have hugely impacted the contagion, stepping up to allow automobile manufacturers pivot to building ventilators, airplane manufacturers switch to 3D printing protective visors, and drinks makers start making hand sanitisers.¬† And that doesn’t even start to get into the challenges facing grocery stores maintaining stock levels.

In the midst of this Richard Howells wrote an excellent piece in Forbes titled Business As Unusual: Resiliency In Times Of Supply Chain Disruption examining how supply chains are coping with the outbreak so I thought I’d invite him on the show to discuss this and we had a fascinating conversation on the topic.

Click on the player above to hear our conversation and/or check out the transcript below:

 

Richard Howells [00:00:00] So there’s lots of areas where we’re seeing companies addressing short term challenges, but also looking at ways to rebalance their supply chains, moving forward and having risk mitigation strategies. I think supply chains will, if they don’t already in every business, will have a seat at the table of every business moving forward because they’re both an opportunity and a risk.

 

Tom Raftery [00:00:27] 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 [00:00:38] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery and with me on the show today, I have Richard Howells. Richard, would you like to introduce yourself?

 

Richard Howells [00:00:47] Hi, Tom. So I work for SAP in the area of digital supply chain and I spend a lot of time writing about business challenges, trends and opportunities for supply chain executives.

 

Tom Raftery [00:01:00] Yeah, you write a lot of stuff on Forbes as some great some great articles. And you wrote one because, you know, we are; this is, what, the second of April 2020, we are in the middle of a global pandemic. The Covid-19 Coronavirus virus pandemic. Today is the day that we are going to reach 1 million people infected and 50000 dead. And, you know, it’s presenting a lot of challenges. And you wrote a blog post about this on Forbes called Business as Unusual Resiliency in times of Supply Chain Disruption. And you made some, you know, great points in that and talked up some interesting stories. So I thought it’d be cool to have you come on the podcast, because, you know, this is a supply chain issue big time globally. And you address a lot of those challenges there in that article. So would you like to talk a little bit about that?

 

Richard Howells [00:01:53] Sure. So, I mean, I start I started the article off about talking about some of the challenges from a supply chain perspective that this pandemic has caused. I mean, it’s hard to believe that when we were celebrating New Year’s Eve for three months ago that this didn’t was a figment of wasn’t even a figment of anyone’s imagination. We couldn’t believe that we’d be been this case three months later. And what’s happened is that I mean, we’re seeing supply chain at the centre of everything at the moment. It’s both the challenges in some cases and the opportunities in others. I mean, when we started off with the issues in China, it considered it created a huge supply issue because China is the manufacturing factory of the world. So when you’ve got uncertain supply of critical materials, it has a knock on effect throughout the whole world. And then as the pandemic spread, so did the demand volatility as people started panic buying. I mean, we’re seeing huge demand for medical equipment, medical devices and of of of key products from a from a consumer goods standpoint. And the demand for luxury items and discretionary items is nonexistent. Now, it’s amazing to me that we are reliant as a globe now on 20 or 30 items that everyone’s looking for in the stores and… toilet paper of all things, who thought there would be a rush on toilet paper.

 

Tom Raftery [00:03:23] I think that was a I think there was a social media thing more than anything else, because I went to I we had our lockdown announced on the 14th and I went to their local supermarket and there was plenty of toilet paper. What was missing was all the meat. The meat counter was stripped bare. Now that was fixed in a matter of a couple of days. It was a supply chain issue again. You know, they didn’t anticipate that big demand, but they and they got it fixed in a couple of days. So there aren’t any shortages here. There are sometimes if you go to the shops, there might be a short term shortage of an individual brand, but not of that, not of the class of goods.

 

Richard Howells [00:03:57] And I’m based in the US. And we’ve still got I mean, you’re you’re a few weeks ahead as far as the pandemic is in in Spain. And we we still have shortages. And those shortages are now because of capacity constraints. There are shortages because we don’t have enough manufacturing capacity to increase the production of toilet paper, for example, which was running at full production anyway. And we’re having logistics challenges of getting goods from point A to point B. What if they’ve got to come from foreign foreign ports or foreign countries? There’s no transport that the flights are down by 80 plus percent. Some of the ports are closed or there’s less or less capacity going through it. And then we’ve got the challenge of drivers and the risk that those drivers are taking without the proper security and humanitarian coverage. And that’s the final challenge I think we see from this at the moment, is that humanitarian risk, the balance of of labour shortages, but also of ensuring the health and safety of employees who are doing the vital jobs, who are doing the “required jobs”. How we’ve changed manufacturing processes, for example, where there can be less people on the plant floor. So to make sure that we’ve got the social distancing during working environment, working processes and working environments as well.

 

Tom Raftery [00:05:22] That’s going to be a huge challenge for manufacturers. I mean, they they’ve set up their manufacturing lines in a particular way. And to your point now, they have to do social distancing between the employees and the floor and just for health and safety.

 

Richard Howells [00:05:33] Yes, it’s it’s it’s things that you wouldn’t think about in normal circumstances, I’m sure it’s never been thought through as a as a plan of how to do this. And people are having to come up with solutions literally on the fly.

 

Tom Raftery [00:05:47] I went grocery shopping yesterday just for the second time since lockdown because the grocery shops are tending to push us towards online deliveries and in the grocery stores now, they have markings on the floor to say where you should stand when you’re in a queue for the checkout counter you know, and there is, you know, two meters between each mark so that you’re two meters behind the person in front of you. You know, again, for social distancing and they have to have a glass Perspex barrier between you and the person at the checkout counter, which was never there before. And again, it’s just to protect the employees from potential infection from shoppers. Yes, and vice versa, I suppose.

 

Richard Howells [00:06:27] Is that just they’ve just started introducing in some of the stores here one way systems around the supermarkets as well, which I haven’t seen up until now in the US.

 

Tom Raftery [00:06:36] Wow, wow, wow

 

Richard Howells [00:06:38] And we’re seeing lots of repurposing as well of manufacturing. I sent you a link this morning to the Airbus plants here in Spain. I mean, Airbus have several factories here in Spain and they have over 20 3D printers because they I mean, they were they were the first commercial airline company to use 3D printed parts and commercial flights back in, I think was 2015. So they’ve been playing a lot and working a lot after playing working a lot with 3D printers. And now they’ve turned that around into using those 3D printers to make the Perspex masks that the health workers, the health care workers are using to keep themselves safe when they’re dealing with people who are very sick. Actually, there’s a there’s a consortium that I’ve seen online of 3D printing companies who are sharing the designs of these 3D masks for that very purpose that they’re crowdsourcing and sharing the information. And we’re also seeing other companies doing some similar things. I mean, I read about Medtronic’s are opening up, or making that does the designs of their ventilators so that they’re simple ventilators, their basic line of ventilators open to other people so that they can manufacture those ventilators. And they’re also partnering with with Tesla to to to increase their production. You’re you’re seeing automotive companies becoming outsourced, manufacturers for medical device companies to increase the production, because there’s a lot of very small ventilator manufactures that just can’t scale.

 

Tom Raftery [00:08:15] If I had said that to you in December thirty first, that the car companies would be making ventilators in April of this year, you’d said, Tom, you’re smoking crack.

 

Richard Howells [00:08:24] That’s exactly what happened. Yes. And they’re becoming the contract manufacturers rather than working with lots of contract manufacturers for their parts.

 

Tom Raftery [00:08:31] So how do they how are these automotive, for example, companies sourcing the parts to manufacture these ventilators? How would that work?

 

Richard Howells [00:08:40] Well, that means that that means having improved visibility across the supply chain. I mean, first of all, I mean, SAP is doing a lot of work in providing offers to our customers to access some of our, some of our systems in these times of need and mapping, mapping the visibility of where the suppliers are that have the inventory with your demand and in-building and having visibility across the network of that is a huge, huge first step. I mean, I would imagine that there’s as I said, there’s a lot of partnerships going on. The also the the the the medical device manufacturers will be sharing their partner information and their supply information and supply sources to satisfy that demand for additional materials that these companies may never buy. I mean, we’re seeing other examples. We’re seeing perfume manufacturers and liquor producers making hand sanitizers. I mean, at the moment, the medical device, medical companies need three or four sections of things. They need we need they need the public to have and they need hand sanitizers to reduce the spread of the virus. They need the masks, the testing equipment and the robes for testing people and treating people. And ultimately, in the worst case situations, they need ventilators and an unparalleled amount of ventilators to actually treat the most critically ill. And companies are coming together to help support that. As I said, I mentioned the hand sanitizer example. We see the ventilator example with car manufacturers. We’re seeing other companies. Another one of our customers, actually Decathlon are are repurposing this, their the devices for their breathing, snorkelling devices and adapting them to be ventilators, working with with partners to adapt them to be ventilators. So we’re we really are thinking out of the box and and building partnerships that you wouldn’t have seen. And it’s it’s actually good to see companies coming together to solve solve some of these problems.

 

Tom Raftery [00:10:45] I came across a thread of tweets a couple of days ago and again this morning because someone else tweeted, not me, where it was. I think a psychologist talking about how in times like this, people are afraid that there’s going to be a breakdown of social order. Whereas in fact, in times of crisis like this, it seems to bring out, in fact, the best of us, the likes of the people in New York in 9/11, all coming together to help each other out. And, you know, we’re seeing it again in this situation where rather than, you know, everything falling apart, in fact, we’re getting to your point, unprecedented partnerships between businesses that would never work together before, to try and all come together to produce the goods that are in short supply.

 

Richard Howells [00:11:31] Yes. I mean, you see it at a personal level with with neighbours helping other neighbours. And we’re seeing it at a business level as well at a larger scale. And it’s it’s good to see. But the wrong circumstance. Wish we didn’t have to see it, but it’s good to see when it does happen.

 

Tom Raftery [00:11:47] Richard, what are some of the strategies that companies are coming up with to address this situation?

 

Richard Howells [00:11:53] Well, what we’re seeing across all areas of the supply chain, different, different needs and different strategies. If we start at the basic level over the last 10 to 15 years, we’ve stripped a lot of cost out of the supply chain. We went to a global supply chain to reduce the cost of raw materials. For example, we’ve outsourced a lot of our manufacturing to have cheaper labour. And this has done a great job in cost reduction. But it’s also increased the risk involved, which… Exactly, it’s coming home at the moment as a huge cost implication and a customer service implication. And in the short term, I think we’ve got to work out where the from a supply standpoint, where the inventory is, how can I access that inventory? Which which partners do I have that already have it? Which other companies have available inventory that I can source? How do I get the goods to the right place, to the hotspots when we’re talking about medical supplies to the to the areas with the most shortages? When we talk about supermarkets, we’re seeing so so alternate sourcing strategies are one of the areas in the short term that I see a lot of supply chains looking to to solve. Also, where to position inventory in a in a global supply chain. I can’t be totally reliant on having all my finished goods being shipped and it takes a week for me to get the finished goods. I need a source of inventory of finished goods locally. We are seeing a lot of companies start thinking or will be thinking a lot about the balancing of offshoring versus near shoring versus on shoring, even though it may cost more to manufacture locally, but you need that to reduce that risk. The whole area of employee safety, of ensuring you have the environmental, health and safety processes in place to ensure the safety of your people working on the plant floor. The people working in the distribution area and and and your customers safety of making sure that the products are of good quality and having visibility of demand, I think is critical. I mean, this may be a case. It’s taken a long time to for the retailers to share the point of sales information with manufacturers. Now is the time to share that information. We need to know where we have shortages. We need to know what is going off the shelves, although it’s pretty obvious what’s going off the shelf as a consumer. But maybe the manufacturing companies could have had advanced information of that to get more goods of the right sort to to the to the retailers that needed it the most. So there’s lots of lots of areas where we’re seeing companies addressing short term challenges, but also looking at ways to rebalance their supply chains, moving forward and having missed risk mitigation strategies. I think supply chains will if they don’t, already in every business will have a seat at the table of every business moving forward because they’re both an opportunity and a risk.

 

Tom Raftery [00:15:03] Yeah, absolutely. And so that that brings up a good point. Where do we go? Post pandemic? You know, in whether it’s six or 12 or 18 months time, what is the supply chain world going to look like?

 

Richard Howells [00:15:18] Well, I mentioned I think we’ll have still have global supply chains, but maybe with local execution we will be balancing our inventory so that we keep a certain percentage of inventory locally. We will be balancing our manufacturing, outsourcing vs. and offshoring to to maybe doing some of the manufacturing ourselves and at least having it local, local manufacturing capabilities and capacities. I think that we will not be reliant on single sourcing strategies. We won’t put all our eggs in one basket. We will we will have multiple suppliers to provide the same critical the critical components that we need and balance that. Maybe we work with one but 20 percent and 80 percent with the other at the moment, but have the ability to switch so that you can go to local sourcing as and when required. And it’s going to cost a little bit more, but it will reduce risk. And I think sustainability actually will be a huge thing moving forward. I mean, it should be a huge thing anyway. But we’re seeing the in the environmental impact of this pandemic is actually a positive impact on the globe. We’re seeing less pollution in certain areas and we’re seeing cleaner waterways due to lack less less distribution and fumes being put into the atmosphere. And I think that as companies start to think about how they are global but execute locally, that will reduce the carbon footprint of our supply chains automatically. But we also want to ensure that we we are still sourcing ethically, that we are having good labour manufacturing environments to work in for working conditions and we are designing sustainable products and recyclable products for the good of the planet anyway.

 

Tom Raftery [00:17:22] I actually have a very practical example of that. I have a personal air quality meter. It’s made by a company called Plume. Plume Labs. It’s called a Flow air quality meter. It’s it’s a device you wear on your belt loop or somewhere like that. And it measures five different air quality indices. There are things like VOCs which are, you know, volatile organic compounds, NOx, pm 1, pm 2.5, and pm 10, that’s particulate matter at different sizes. And it has an app which comes with the phone, which syncs with the phone. So it matches up the air quality, which it measures once every minute along those five measurements. It synchs that with the G.P.S. coordinates and then uses mapping data to give you a map of the air quality for everywhere you’ve been for 24 hours a day, seven days a week, 365 days of the year, etc.. So, I only get out of the house now to walk the dogs because we’re on lockdown and walking the dogs is literally the only… Well that and grocery shopping, you know. But what of the groceries are, you know, online deliveries? So just walking the dogs. I used to walk the dogs anyway before the lockdown. So I have before and after data for the air quality where I live and for the walk that I take every day. So I’ve perfect A.B data and these the the difference in air quality between, you know, before the lockdown and since the lockdown is just amazing. And even even before the lockdown, you know, I used to in presentations talk about this, talk about, you know, you get air quality in one area, which is terrible and in another area, which is better. But it’s not just it’s not just it’s not just a question of where. It’s also a question of when. And what I mean by that is… Rush hours? Yeah, exactly. The the I used to take the dogs out for a walk in the morning and the evening and in the morning it was, you know, just before 9:00 a.m. and I’d be walking past a local school. And of course, all the SUVs would be outside the school as the parents were delivering their kids. I’d walk past the same school at eight o’clock in the evening and there wouldn’t be a car from miles. And the air quality difference between those two times a day for the exact same place was incredible. But now that there have been almost no cars driving by there in three and a half weeks, it’s it’s flat. You know, there’s almost nothing there at all. It’s just like almost it’s not it’s not exactly zero across all five measurements, but it’s close enough.

 

Richard Howells [00:20:15] And it’s interesting, using personal devices like that would be a great way of getting the information across the globe or the country. You know, about how that has improved because that information is is stored centrally in the cloud some whereand that information can really add value. And that’s another example about that. We’ve been seeing this in the news about we we can see where the hot spots are and where that they’re reducing a little by people who were using electronic temperature. That’s right. The company has visibility across the North America at the moment of the temperatures are coming down in certain areas, which implies that people are getting a little healthier in those areas or the pandemic isn’t as is reducing in some of those areas or increasing as the case may be. Saw that. That’s fascinating. A type of information from Smart Assets is very valuable in today’s climate and it’s very valuable from a business perspective moving forward as well.

 

Tom Raftery [00:21:17] It is. And the company who make that air quality meter know that, they’ve been mapping air quality across cities globally since they started. It was a, you know, one of the one of the business drivers of creating the air quality meters. Richard, we’re at about 20 minutes. We’re just over 20 minutes. So we’re coming towards the end of the podcast. I like to keep it about the 20 to 25 minute mark. Is there is there anything else that we haven’t touched on that you think that we should have?

 

Richard Howells [00:21:44] I think we’ve covered most of the topics or all the topics, I think. I’d just like to. I hope that everyone stays safe and adheres with the different mandates and guidances from the different governments around the world, and hopefully the next time we we do a podcast Tom, we’ll be talking about in happier times and about happier subjects.

 

Tom Raftery [00:22:05] I hope so. OK, everyone, thanks a million for your interest. Richard, thanks for coming on the show. And to everyone who’s listening. Stay happy. Stay healthy. Stay safe. Stay sane. Because, I mean, you know, we’re on lockdown right now. It’s very easy to kind of go a bit out of your head, do stay sane.

 

Richard Howells [00:22:24] I’m not sure if I can do that.

 

[00:22:30] 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 Dot Raftery at SAP dot 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.

And remember, stay healthy, stay safe, stay sane!

Digital Supply Chain – @SAP offers access to software to help combat the #Covid-19 #Coronavirus crisis

It is April 3rd 2020 and the world is in the middle of a deadly pandemic which by the end of yesterday had infected over one million people, and killed over 50,000 with both numbers rising at exponential rates.

Businesses and entire industries have been massively negatively impacted (tourism, restaurants, sports, etc.) while demand for things like webcams has soared as people shift to working/studying online.

This crisis has really highlighted importance of supply chains as automobile manufacturers have pivoted to building ventilators, airplane manufacturers switch to 3D printing protective visors, and drinks makers start making hand sanitisers.¬† And that doesn’t even start to get into the challenges facing grocery stores maintaining stock levels.

Given all this chaos SAP, whose software runs many of the world’s most complex supply chains, has looked at this issue to see how best we can help. We have decided to make some of our most useful cloud-delivered supply chain software free for our customers. I invited SAP SVP Martin Barkman (who was on the show just last week) to come back on to explain this new and timely free offering from SAP.

Click on the player above to hear our conversation and/or check out the transcript below:

Martin Barkman [00:00:00] I think if there’s one thing we’ve seen it, it’s that the world now needs operational and resilient supply chains more than ever before. Why? We need to bring certain goods and services to end consumers. And there’s a sense of urgency. We all live it. We all feel it.

 

Tom Raftery [00:00:37] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery and I’m with you today on a special edition of the Digital Supply Chain podcast where we’re going to talk about Covid-19 and what SAP are doing to help our customers. So, with me in the show, I have Martin Barkman, who came on the show last week and very generously given more time to explain to us what the current situation is, and how we’re going to help our customers. So, Martin, do you want to take it away?

 

Martin Barkman [00:01:05] Absolutely. Thanks, Tom, and thanks for bringing us together again. I think if there’s one thing we’ve seen it, it’s that the world now needs operational and resilient supply chains more than ever before. Why? We need to bring certain goods and services to end consumers. And there’s a sense of urgency. We all live it. We all feel it. But supply chains are threatened. There is now more complexity, uncertainty, volatility that supply chain leaders have to cope with. Right. And we see this across the whole supply chain spectrum. You may be short on certain raw materials, right? So can you switch in your bill of material for another ingredient or component? You have to understand your capacity, which could be changing because of labour challenges. How do you adjust your capacity to meet demand that is now coming at you with more uncertainty and changing quite a bit? We also see a lot of companies rethinking what products should they produce? Should they reduce the number of SKUs and really crank up the throughput to make sure they deliver the volume of product that the consumers need. And of course, in some cases, companies are retooling their manufacturing lines completely and making things like hand sanitizer, gowns, facemasks. Distribution is a challenge. Now, all of a sudden there are limitations and restrictions. So even if you make the product, you have to think through how do I get it to the end customer? And then, of course, this all assumes that the assets you have in your supply chain are operational. And as we know, maintenance is importance in this pandemic era. How do you do maintenance? So, my goodness, there is just so much that we now have to go tackle and help supply chain leaders sort out.

 

Tom Raftery [00:02:57] So what do we do to help?

 

Martin Barkman [00:02:59] Yeah, it’s if we are we are here to help. As as you know, we have a broad and deep and functionally rich portfolio of supply chain solutions at SAP. And we’ve thought about really what are what are now going to be the most important capabilities that our software has that can not only help customers work through these challenges that I mentioned earlier today, but also how do we build? As we do that, how do we also build a foundation that’s going to help a company manage through this? We don’t know what the recovery will be. I’ve heard V-shaped, U-shaped, L-shaped, who knows? But there is going to be an evolution, right? Something’s going to happen over time. So how do we really look at the capabilities that are going to help companies digitally manage their supply chain? Well, with with more and more remote people making decisions more quickly, harnessing the information that’s coming at them. And then, of course, we have to even think beyond this crisis, because let’s not forget that supply chains were already undergoing a digital transformation. Things like better visibility, things like pivoting the supply chain to be more customer centric, things like looking at productivity through advancements in the industrial Internet of Things or Industry 4.0 or even thinking about sustainability. Right. The topic of sustainability is still true and important to many of the companies that are operating supply chains. Hopefully most of the companies, if not all. And now we have an opportunity as we go through this, to also think wisely about how we’re preparing for a future where resources are scarce and consumption can’t be unbounded. So that’s what we’re looking at overall in the very, very near term we have thought about our capabilities and there’s one capability that we think can help companies literally right now, and that is how they do planning. For many companies, planning is sequential, people-centric, I want to say in part spreadsheet-governed process. Think sales and operations planning. It plays out typically over the course of a month. Well, guess what? Now we are not living in months. We are living whatever was taking months, maybe was trending towards days. Today it’s happening every hour. Right. So companies are constantly having to update their plans. So we’ve partnered with our, we are offering, we have 90 certified integrated business planning software partners at SAP and we are offering them for the next 90 days the ability to run planning as a service for companies that are struggling to do planning with their spreadsheets. So what does that mean? We are allowing our ecosystem to use our software to deliver a capability to customers, basically to offload that firefighting exercise and bring resources to help customers get through through that type of that type of process. So we’re really excited about this because we think it can have an immediate impact and immediate difference. And we’re very blessed to have such a such a passionate and knowledgeable ecosystem of partners that already know the SAP software solution for this. And now they can bring that capability for the next 90 days and help companies navigate through this crisis.

 

Tom Raftery [00:06:48] And you said its cloud delivered so there’s no hardware installation or anything like that.

 

Martin Barkman [00:06:53] Exactly. So we will host it. Its cloud, delivered. We will stand up the system that our our channel partner would, would, would use. They can move the data in remotely using file uploads and then start to run these planning scenarios. To look at things like, well, what are the bottlenecks in the supply chain? How do I plan around those? What is the demand that’s coming in? What what’s produced material do I have? Where do I need to get it? How do I analyse different scenarios, for example? Do I want to put service level targets do I want to aspire to it to achieve? How did those change perhaps based on where the crisis is, is most urgent. And they can run these different scenarios and evaluate, evaluate what to do, and our hope is that we can help supply chains get the products to where it’s most needed. It was really interesting, of course, I can’t help, but I have to watch the news. And earlier this week, the president had CEOs on the White House lawn talking about what they’re doing to help with this crisis. And one of the CEOs for a large defence company, said this is war. And in war strategy is great, but logistics wins the war. So, think supply chain, if we can have supply chains, do more, do better, do it faster. It’s going to have a huge impact for all of us as individuals, let alone as businesses.

 

Tom Raftery [00:08:31] Sure. This is a free offering, as you said. If if I am an organisation who wants to take advantage of this, what do I do?

 

Martin Barkman [00:08:40] Yep, so certainly contact your your SAP account executives. We have processes where we can get that level of interest and funnelled and channelled through our partner ecosystem, furthermore, you can also contact your your your supply chain partner if they are a certified partner on our SAP integrated business planning solution than they’ll be made aware of this offer and can consider it to see if it’s something that they support and that they can deliver for the customer expressing the interest.

 

Tom Raftery [00:09:20] Superb, superb, Martin that has been fantastic. I’m sure there’ll be huge interest in this offering. Where is this mentioned online as well? That I can put a link in the show notes?

 

Martin Barkman [00:09:30] It is. You can go to http://www.sap.com and look through the section of our offers that we have across the company. And there is a mention of this particular offer right there on the Web site.

 

Tom Raftery [00:09:46] Fantastic. Martin, that’s been great. Thanks a million for coming on and telling our listeners all about this.

 

Martin Barkman [00:09:51] Thank you, Tom. And let’s go make a difference.

 

Tom Raftery [00:09:55] Let’s do it. Everybody stay safe. Stay home, stay healthy, stay sane. Thanks.

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.

And remember, stay healthy, stay safe, stay sane!

Digital Supply Chain – Women in Supply Chain a chat with @circular_nomad and @supplychnqueen

As well as running the Digital Supply Chain podcast, and the Industry 4.0 themed series of podcasts, I decided to also spin up a new series – themed around the topic of Women in Supply Chain. This series will strive to highlight the stories of women leaders in Supply Chain to attempt to address the current imbalance in their representation on panels, podcasts, etc.

Kicking off this series, I invited Sheri Hinesh (@supplychnqueen on Twitter), and Deborah Dull (@circular_nomad on Twitter) to join me for the inaugural podcast, as they have their own very successful Supply Chain podcast Supply Chain Revolution.

We had an awesome conversation covering topics as diverse as the impact of digital goods, the transition of our energy systems to clean energy, sustainable supply chains and the circular economy.

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

Sheri Hinesh [00:00:00] And when you think about sustainability through the lens of supply chain and even digital, 50 to 80 percent of the revenue spend happens in supply chain. And so, do, up to 85 percent of the environmental impacts, social impacts of supply chain. so, who better then than us as supply chain practitioners who have that end-to-end interconnected view of the world of business, of the communities where we operate to really do something epic?

Tom Raftery [00:00:32] 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 [00:00:41] Hi, everyone, welcome to the Digital Supply Chain podcast. My name is Tom Raftery. This is the first of a new series that we’re going to run on Women in supply chain. And with me, I have two of the highest profile women in supply chain today, Deborah and Sherri. Deborah and Sherri, would you like to introduce yourselves?

Deborah Dull [00:00:59] Hello, I’m Deborah Dull. Thanks, Tom, for having us on. The most important supply chain related introduction about me is that I have a deep love for inventory.

Tom Raftery [00:01:12] Fascinating, fascinating, and that laugh there is from Sherri, Sherri, would you like to introduce yourself?

Sheri Hinesh [00:01:17] Hello, world digital supply chain, folks. My name is Sherri Hinish, and my vision is to change the world through sustainable supply chain, evangelizing the SDGs and making the world a better place. The world that we share. I’m also affectionately called the Supply Chain Queen. And I have a podcast with Deborah called The Supply Chain Revolution, where we share provocative points of view that challenge paradigms for progress, say it three times.

Tom Raftery [00:01:50] so, Sherri for anyone who is unfamiliar because this is a digital supply chain podcast, not a sustainability podcast, so, people might not be aware. What are the SDGs?

Sheri Hinesh [00:02:04] Sure, so, the SDGs are a framework where we can achieve as the human race can achieve economic and social and environmental prosperity in the world that we share. And with everything happening right now with Covid-19. This is really important for us to understand that we’re all connected. And the SDGs are 17 interconnected goals that would help us to achieve a better world by 2030. so, this is really about the decade of action. How can we encourage a world that has no hunger, where we have economic growth and prosperities in the community where we operate, that supply chain touches? Responsible consumption, responsible production, where we protect life below water and life on land. And it’s really a beautiful vision. I’ve devoted my life to really sharing this picture and framework of a better world, that’s super tangible that people can connect to and that we can really mobilize each other in a meaningful way in the world we share. We have to get there. We have to get in the canoe. Deborah and I always talk about this like get in the canoe. We can do it and we need inspiration right now more than ever Tom.

Tom Raftery [00:03:30] No, I get that completely, I’m a former sustainability analyst for seven years or so, before I joined SAP, so, you know, you’re completely speaking my lingo here. But tell me, I mean, maybe, maybe. Deborah, jump in here. What does sustainability have to do with supply chain?

Deborah Dull [00:03:46] Great question. so, one of the topics that I love most, which is related to but different than sustainability, is the idea of a circular economy. And I’ll explain what that is briefly. But the answer to your question is that the way the world operates is through supply chains. so, every supply chain manager impacts the planet and impacts sustainability. And when you talk about financial sustainability, environmental sustainability, social sustainability, the choices we all make in our day to day impact that where we buy, how we buy, how we manage our suppliers, do we make bridges or do we hold people negatively accountable, for example? All comes back to the human connection that Sherri talked about, certainly. And when we talk about the concept of a circular economy, I think supply chains are uniquely positioned to really catapult the businesses and organizations that we support. And what I mean by that is if we look at the way the world works today, we take an item from the planet. We make something very efficiently, we use it. And then typically that item gets thrown away. And there’s a new economic model that says, hold on a second. All those items we’re throwing away, there’s actually more money to be had. We could squeeze more out of those materials and everybody makes more money. And so, if we think about the way to circulate and loop all of these materials and resources, even like heat or organics or plastics or metals, it’ll come down to supply chains, ability to find, circulate, move it, track it, bring it back. Is it socially responsible? Is it safe for human consumption? And I can’t think of a discipline more impacted than supply chain. And the flip side, who can impact more than supply chain can? We certainly have to work across material scientists and economists and those who design these systems. But if we look at the US workforce alone, 37 percent of jobs are supply chain related. And so, we have this massive cohort. And given that we’re such a new field, I think we haven’t really been considered like that at a global scale. And these days, though, it’s hard to read the news or turn on the radio without hearing the word supply chain every five minutes, which if I take my rose coloured glasses on here, I see it’s just a tremendous step forward for our field.

Sheri Hinesh [00:06:14] And Deborah, you make a great point. That supply chain is truly the conduit. And when you think about sustainability through the lens of supply chain and even digital, 50 to 80 percent of the revenue spend happens in supply chain. And so, do up to 85 percent of the environmental impacts, social impacts of supply chain. so, who better then than us as supply chain practitioners who have that end-to-end interconnected view of the world of business, of the communities where we operate to really do something epic? In the next wave in the supply chain revolution. This is this is our purpose right now, so, we’re super excited.

Deborah Dull [00:06:58] If think about Tom, if we think about the impacts of digital digital supply chain. so, actually, fun fact. I wrote my master’s thesis on the digital supply chain. But at the time this was *mumbles* years ago, it was actually about digital goods. so, I talked to Amazon, the Kindle team, I talked to the Netflix team. I talked to Sony. And so, when they were moving digital goods around the world. And the reason why this is so, important is the cloud is a real physical place that’s supported by real physical supply chains. And so, as we who are in software make decisions about product or as we as consumers make decisions about how many copies of our vacation photos we keep. That has a physical impact in the cloud. And if we make choices, that requires twice as much storage space. That’s twice as many servers, twice as many spare parts, twice as many supply chains, twice as many power requirements, twice as many mechanics engineers to repair. And they’re going to be driving there. so, you duplicate the whole thing. The other interesting factor is how much energy A.I. takes in chugging through their algorithms. It’s something like 30 percent of the world’s power right now is being taken just to help AI think. And these are elements that I don’t think are highlighted enough but relate very much to digital supply chain. Regardless of the way you define digital supply chain, whether they’re digital goods or the digital backbone that supports the physical supply chain.

Sheri Hinesh [00:08:36] You know what’s crazy, so, right now, a lot of people are talking about this pivot to virtual and how we connect digitally and how the CO2 impacts. And I know, Tom, this is right up your alley because you post a lot about climate change. And I saw a quick and dirty study from IBM, and I think it was Jeremy Waite that positioned that the pivot to Virtual actually has the same impact as people driving every day. so, when we start to think about digital supply chain in the world, we share digital waste. And are we really being as lean and effective in this new way of working? Where’s the opportunity? so, I would I would love to hear your point of view, Tom, around that. What are you hearing and seeing?

Tom Raftery [00:09:23] so, I missed that post and I would have assumed that working virtually working from home, for example, like all of us are now thanks to Covid-19, would have had a lower environmental impact. But you’re saying that Jeremy’s post said that, no, it’s similar because the technologies we’re using require large amounts of technology which are carbon intensive?

Sheri Hinesh [00:09:51] Yet our energy grids are still dirty and highly reliant on fossil fuels. so, depending on where you are in the country with your energy mix, you still have this very comparable impact. so, I thought it was a really, you know, in terms of education, I think this is really the pulse here. And the opportunity is we need to accelerate the transition to renewables. And if we can do that, if we can do that, you know. What might that look like?

Tom Raftery [00:10:23] The cool the cool thing is that I’ve done a lot of work on this. The cool thing is, speaking of renewables, that the transition to those is happening not fast enough, but it is happening. And it’s happening not because people are suddenly turning into tree huggers. It’s actually happening because the renewables are a) cheaper to roll over than any fossil fuel alternative and b) faster to roll out. There’s a new offshore wind park being built in the UK on the Dogger Bank. It’s 3.6 gigawatts. That’s three and a half nuclear power plants worth of wind, offshore wind, and it’s being built in two years from start to finish. There is an equivalent. There’s an equivalent called Hinkley C in the UK again, Hinkley C is a nuclear power plant. It’s 3.5 gigawatts. so, comparable power output. It’s going to take 10 to 15 years to build it out. Whereas the wind park the offshore wind 2 years. so, right there and you know, nuclear has a place. I know some people are against it. It’s a polarizing generation, but it is carbon free, essentially, once you’ve built the nuclear plant, it’s carbon free. But it doesn’t scale. It does not scale. Renewables scale massively. There’s. Because, again, down to economics. There is a solar farm being financed right now to be built in the north of Australia. It’s called Five B. I think if I remember correctly, it’s being it’s being financed by, amongst others, Mike Cannon-Brookes from Jive. And it’s going to be ten gigawatts, 10 gigawatts, 10 nuclear power plants worth of solar with 22 gigawatt hours of storage. so, 22 nuclear power plants worth of storage in the Northern Territory in Australia. They’re going to draw a big cable off to the right to power the city of Darwin. And they’re going to draw an even longer cable north three and a half thousand kilometers to power the city of Singapore. And again, it’s down to economics. It’s because it’s the cheapest way to do it. Australia has vast, vast, vast tracts of unused desert which can be used for these kinds of projects, which can be used for turning Australia into a hydrogen economy. You know, they can just put a massive mass of solar plants, generate as much hydrogen as possible and sell the hydrogen off into the global markets for electricity generation or for transportation.

Deborah Dull [00:13:07] It’s amazing. I’m so, glad you brought that example up, Tom. And just to reiterate the brilliance and excitement around circular models. One of the tenets is a shift to renewable sources of energy. And, you know, there’s two questions to ask yourself on. If a model is circular or if it just falls under CSR, and that’s is it making you more money? You can go faster, and you could be cheaper if you’re looking at something like a circular business model and in supply chain. I don’t know how many more levers we have left to pull to get faster, cheaper. We’re pretty fast and we’re pretty cheap, free in most cases or nobody’s paying for it at least. We have a cost. so, we have to start thinking of other levers to pull to add additional value back to organisations we support. And so, the examples you’re giving are brilliant because we’re going faster, it’s cheaper. And then if we think about, let’s say, a spare part to support one of these farms that’s going in, we could start from scratch, start from the metal, from the earth. But that takes more time and it’s going to cost you more if you can refurbish and use B channel parts or even your own parts refurbishing or shocking, I see a world where all similar parts will be refurbished and shared and within a single industry it’s going to be much, much faster and it can be much, much cheaper because you’re not starting from virgin raw materials anymore. so, I think it’s a fascinating model. And the biggest message to get through this is you can make more money as a company. And it just so, happens that it’s also great for the planet. so, it helps to span this gap of the sustainability drive that we all know needs to happen. And the sheer economics of running an economy that we’re all becoming very aware of these days and I think is just a lovely example. so, thanks for sharing.

Tom Raftery [00:15:03] Yeah. And you mentioned something earlier, Deborah. You were I mean, you used the expression that a lot of people use of “throwing things away”. And I remember, I can’t remember when it was or where it was, but I remember reading some point somebody saying that “There is no away”. Away is not a place. It doesn’t exist, you know? You know, so, throwing things away doesn’t make sense. It is not a thing.

Deborah Dull [00:15:30] You are just moving it to someplace else. Yeah, exactly. I actually think in the next… After we mine the ocean for plastic and let’s not be mistaken, that’s exactly what companies are doing now. We are we are now mining the ocean. We will move to landfills. I’m guessing in the next 10 years because we are running out. We’re running out of gold. We’re running up copper. It is still on the surface of the planet. To your point, unless cities are burning and a lot of people say, oh, cool, you’re burning garbage to create energy. But that’s actually not great because you’re losing all the value in the material. So, yes, you’re getting a short-term boost of energy. But actually, in reality, that’s the closest thing to “away” that we have is to burn something and you can no longer get it back again. so, much better is to find a way to retain the value of that item and reuse it as many times as you can.

Sheri Hinesh [00:16:21] Yeah. What we’re what we’re talking about here in describing is really this shift where supply chains who have traditionally been viewed as maybe transactional. And this cost improvement, you know, riddle it down to as efficient as possible. They’re really transitioning to an innovative catalyst that is a strategic partner at the table. And in the future of work. In the future of business. Competitiveness will be defined how your supply chain can execute and innovate. And that’s where we really believe that that’s where the future’s heading. All of the things that are described in in circular economy and sustainability. Yes, you can do well and do good, but there is a business case to be made for why. How you connect people is equally as important when you think about purpose, economy and experience economy. People want to show up at work and not leave their values at the door and be a part of something that’s truly transformation on EPIC. And this is the opportunity that supply chains have because we are so, in the end and we are a tapestry of different professionals. You know, when you when you say supply chain, what does that even mean anymore? It could mean data science. It could mean sourcing and procurement. It could mean your own distribution. Logistics. It could mean inventory. Deborah loves inventory. If you ever meet Deborah Tom face to face and bring up inventory, make sure you have a stiff pour of whisky because she will talk to you for hours.

Deborah Dull [00:18:03] Digital inventory is also super interesting. I had a whole section in my thesis on it. Punch line. It basically comes down to master data, which is also a very interesting topic. People roll their eyes, but it’s not, so. It’s often considered the inventory of a digital digital goods supply chain. If you’re moving around digital goods, it’s your master data and that the way you manage your master data is similar to managing inventory and you can use a lot of the same principles. Super fascinating. I love this stuff. That was not even a whole stiff pour Sherri. so, that was like half a finger.

Tom Raftery [00:18:42] I had no whisky ready. Jeez, Deborah, come on. You could’ve warned me.

Deborah Dull [00:18:46] I know next time that’ll be a different one. We do something called drink and learns on our podcast and we invite you to come to a drink and learn where we drink and learn. And it’s really super fun. And you’re you’re open. You’re openly invited Tom anytime.

Tom Raftery [00:19:00] I appreciate it. Thank you. I have listened to your podcast, so, I’m aware of some of these things. Thank you. But for people for people who haven’t listened. This is a good learning experience. And I’ll put a link to your podcast in the show notes as well. Just in case, you know, people are not aware of, but they can follow through and subscribe and do subscribe folks like and do subscribe to this one, too. Just just in case you’re not already subscribed. We’re coming towards the 20-minute mark. We’re at 18.50, right now. Is there any final thing you want to say to people who, you know, have been listening so, far who’ve made it this far into the podcast? Any last messages you want to leave with them?

Deborah Dull [00:19:36] Absolutely. Look. OK. You’re pointing at me, so, we’re all. And we’re all we can see each other right now. so, my final words are, look. There’s enough bad news happening in the world. We are all probably indoors for something going on two to four weeks depending on where you are in the world. And there is another way to connect with each other. One use of this digital technology that, yes, is using energy and a server somewhere in the world is that you can find a new community. We have something that we call the supply chain rebel who really describes if you feel different than those around you. If you feel like you’re pushing back, if you feel like perhaps you don’t have a community connect to. We are your community. And whether you are feeling too old, too young, not experienced enough, too edgy, too soft, whatever the too is that you’re feeling in your surroundings where your people. so, do come join together with us. We have a great time and we really look forward to connecting with you all.

Sheri Hinesh [00:20:42] Yes. Thank you, sir. Thank you so, much, Tom, for inviting us. The disruptors, the Rebels. And in final message, like Deborah said, find us supplychainrevolution.com. I have admired Tom’s work and his point of view for many years. And I salute you and your fabulous swagger. I love the hat. I love your brand. So, we’re we’re just really thrilled to find others. And I think right now the the opportunity is there are others out here like you and we can unite, especially across digital platforms, social platforms and really change the world. I think that sometimes people forget the impact that you can have in the world we share. And that’s really this message that we would hope you walk away from, that you can change the world.

Tom Raftery [00:21:36] Super, super, Sherri. Deborah, thanks a million for joining me on the show today.

Deborah Dull [00:21:43] Thanks, Tom.

Sheri Hinesh [00:21:43] Thank you.

Tom Raftery [00:21:46] 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 Dot Raftery at SAP dot 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 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.

Digital Supply Chain, Industry 4.0, and IoT/Edge Computing – a chat with Elvira Wallis (aka @ElviraWallis)

On this second Digital Supply Chain podcast on the theme of Industry 4.0, I had a great chat with Elvira Wallis (@ElviraWallis on Twitter and Elvira Wallis on LinkedIn). Elvira is the Global Head of IoT at SAP, so obviously I was keen to find out her take on how Digital Supply Chain, IoT and Industry 4.0 intersect.

We had a great conversation covering Supply Chain, Internet of Things, Edge Computing, Cloud – their use cases, challenges and opportunities.

Read the full transcript of our conversation below, or listen to it using the player above.

Elvira Wallis [00:00:00] The Internet of Things is a key enabler for industry 4.0, and it is required to make industrial IoT, to make industry 4.0 possible because you need to connect to sensors, you need to connect to autonomous systems. You need to connect to CoBots. You need to connect to big data lakes and so forth.

 

Tom Raftery [00:00:21] 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. Hi, everyone, welcome to the supply chain podcast. This is another of the industry four-point all themed podcasts of the digital supply chain podcast. And my very special guest on the show today is Elvira Wallis. Elvira would you like to introduce yourself.

 

Elvira Wallis [00:00:48] Sure Tom. Thanks for having me on the podcast. So hello, everyone. My name is Elvira Wallace and I am running Internet of Things here at SAP.

 

Tom Raftery [00:00:58] Super. Well, that’s a great role. Can you tell me Elvira, we’re on the obviously Industry 4.0 themed podcast today, so how are we connecting Industry 4.0 and Internet of Things? Cause, you know, for a lot of people who think about Industry 4.0, they might think about maybe, you know, improvements in manufacturing and things like that. But it is just that? Is it more than that? How do you how do you see Industry 4.0 and the connection to IoT?

 

Elvira Wallis [00:01:27] Yeah. So, let me maybe start with some, you know, regional flavour here. In Europe we often like to call things industry 4.0. If you look into North America the same phenomenon, namely the phenomena of an industrial transformation using new digital technologies such as Internet of Things or Edge and cloud computing, big data lakes and so forth, is termed industrial IoT, so dependent on the region of the world, the terms industry 4.0 and industrial IoT are used interchangeably and referring to an industrial transformation using new digital technologies. And if you didn’t go to Asia, it’s called ABC Country 2025 or D E F Country 2030. In other words, we’re all talking about a phenomenon of industrial transformation which we often call Industry 4.0 in Europe. And it requires new digital technology such as the Internet of Things, edge and cloud computing, big data lakes. So, in other words, the Internet of Things is a key enabler for Industry 4.0. And it is required to make industrial IoT to make industry 4.0 possible, because you need to connect to sensors, you need to connect to autonomous systems, you need to connect to Cobots, you need to connect to big data lakes and so forth. So, you need an enabler. And the key here is, all of that data in and by itself is relatively uninteresting. Where SAP comes in… And that has to do with our rich history and also our hopefully very rich future is bringing this type of data with our technologies in the context of business processes.

 

Tom Raftery [00:03:21] OK, OK. Now, for people who may be unfamiliar… We’re obviously not a hardware company. We’re a software company. And IoT is very much a mix of hardware and software. So, where do we fall into that kind of ecosystem?

 

Elvira Wallis [00:03:37] It’s a very, very good notion that you bring up. Clearly, Industry 4.0 as well as Internet of Things is not a one person’s island. Whoever sets out with the idea of it’s me, myself, and I shall fail miserably. It is an ecosystem play that requires the OT players, it requires the hardware players. It requires some clearly various software companies and even into software realm, it’s not SAP alone, it’s us and our esteemed ecosystem. Where SAP is playing is clearly solely in the realm of software, right? Not hardware. Of course, we have a lot of hardware partners that we work very closely with so we can recommend to our customers in specific situations, specific types of hardware.

 

Elvira Wallis [00:04:23] So we’re not ignorant, we’re just not owning that space. Yet to your question, where we’re playing, we’re playing in two places if we cut it very broadly. One is the cloud where we have, of course, the applications that run in the cloud as well as the underlying technology for Internet of Things that works in conjunction with the applications and the second realm where we’re playing is edge computing. The world is moving more and more towards distributed computing. And when SAP says edge computing, we’re of course again referring to software and our software runs on various types of hardware, very close to the source of data. And as to the hardware we run on we’re agnostic, we play with many of the key industry leaders here.

 

Tom Raftery [00:05:17] OK. OK. So, for anyone who is unfamiliar with the concept of edge computing, could you just give us a 101 on that?

 

Elvira Wallis [00:05:25] Oh, definitely. And it’s one of my favourite topics. So, let’s not start with, you know, with SAP. Let’s start with the trends in the market. Right. Great. And. If we put it very, very generically, then edge computing is a new form of distributed computing, meaning not all data will be processed in the cloud. Some data will be processed at the edge. So, what is the edge? It’s basically edge computing means running data applications and business processes near the source of that generated data. So, the source of the generated data could be a factory, a plant, a mine. And it refers to the concept of running the data running the application, the business process near to the source of the data, and if people now say, oh, isn’t it very far away and do we need to deal with that today?

 

Elvira Wallis [00:06:19] Maybe some data points, Tom. If we’re if we’re looking at edge computing, it has been growing steadily in the past and if you if you listen to the analysts, Gartner, for example, predicts that by 2025, 50% of enterprise generated data would be created and processed outside a traditional centralized cloud data centre. Now, 50%, is that a lot or not? Well, that would be up from 10% in 2019. So that’s quite a big growth in the ability to, you know, extend and run business processes at the edge, meaning in the plant, in the factory close to the source of data that enables customers to automate and run their operations independently, and that’s what a lot of people want in the world of industry 4.0, in the world of industrial I.T. in order to endorse the digital transformation. They say, hey, my plant, my factory needs to run independently of the cloud. So, in order to endorse the cloud, we see a new form of distributed computing, namely the edge. And the edge addresses customer concerns with running and low latency. Right. Very often we hear that I need to run low latency, low bandwidth. And then let’s not forget in many places of the world there, specific security and regulatory requirements which says, hey, the data must be processed locally instead of in a centralized cloud. So, it can also be regulatory reasons why edge computing starts to prevail. And if you listen to some more data points and then IDC, for example, predicts that by 2023, 70 percent of IoT deployment will include edge-based decision making, right. So, the decisions will be made decentral supporting the organization’s agenda. So, meaning we can do industrial IoT. We can do industry 4.0 without it, meaning some central cloud-based system taking over. Local autonomy can happen if edge computing is involved. And if we look at the IDC saying they’re saying, OK, 70 percent of all enterprises will run varying levels of data processing at the edge. And that also means organizations will have to spend a lot on IoT edge infrastructure in that timeframe.

 

Elvira Wallis [00:08:53] So I think edge is here to increase in prominence and in relevance for our customers, and it’s a good idea to get prepared. I mean, we at SAP we’re very well positioned to run data driven business processes at the edge. We can run manufacturing processes at the edge orchestrated from the cloud, and we provide our customers the option to run applications in a hybrid approach meaning, at the edge and clouds and this hybrid cloud edge offering helps customers accelerate the transition to the cloud by addressing their need around data privacy, around security, around latency and regulatory requirements.

 

Elvira Wallis [00:09:37] Now, going back to no person is alone. It’s, of course, clear that we also in the realm of edge computing, we’re in need to be committed to a strong ecosystem. No one can do it alone. You need the hardware providers, and we have announced strategic partnerships with the hyper scalars and also in some cases regional industry specific players in IoT and edge where we leverage the strength of all the players in the ecosystem to help our customers be successful. It’s a joint digital transformation where SAP participates together with our customers and our partners.

 

Tom Raftery [00:10:14] OK, super, super for any of our customers, potential customers or just anyone who’s listening, who is interested on embarking on some kind of industry 4.0 project. How do you start something like that? Where do you kick off?

 

Elvira Wallis [00:10:35] And so it’s a very good point to raise. My first perspective would be. There is no one size fits all right? Customers are. By and large, all increasingly challenged to adapt to ever changing conditions. Now, mind you which of these conditions is the most prevalent and in which line of business is it the trade wars? Is it managing the global supply chain? Is it skills shortages? Successful customers need to embrace the digital transformation right to discover new ways to solve their business problems and to keep their customers engaged. Because this is also to do with customer experience and customer loyalty. Now, customers might start in different areas. They all centre on their customers. But whether they start with reinventing production to centre on their customers or whether it is connecting various departments in their company to overcome their own segregation of duties in a way that is hindering success. That is something that customers really will vary. In other words, SAP can help make industry 4.0 an everyday reality. Now where customers start, whether it’s with the intelligent asset and managing the overall equipment effectiveness or whether it’s the intelligent product where customers want to understand the business impact of design and engineering changes in products, or whether it’s the intelligent factory where IoT helps enterprises to be agile and deal with varying production volumes and new manufacturing technologies, or whether it is with empowering people so that people can fulfil complex tasks with a fast work-around that is really dependent on the customer need. We need to understand that it’s important to centre on the customers and connect the entire company, but it doesn’t mean you need to start everywhere at the same time with the same urgency. Our clear perspective is customers have a choice where they start and we recommend to start somewhere, where of course there is an immediate need and it can be time boxed because nothing is more convincing than initial positive results and then you can widen the exercise.

 

Tom Raftery [00:13:02] Okay, very good. What kind of challenges are companies likely to face on a journey like this? I mean, you mentioned, you know, having skilled staff there. Is it is the staffing or is it technology or is it a combination or is it something else entirely and you know, having then identified a couple of the challenges, what would be ways of overcoming them?

 

Elvira Wallis [00:13:28] It’s a very good question. And there are some interesting studies out there in the market that I enjoyed. One is by McKinsey and that study showed clearly that the success rate of these digital transformation projects are not necessarily tied to the area within which they are started. So, you couldn’t say, oh, let’s start it in production or let’s start around the asset and as it is more successful than production or, vice versa right? What they showed is it is other factors that correlate with success. In other words, the more initiatives a customer ran. So, in other words, if they addressed digital transformation in more lines of business, they were likely to be more successful than if they were just doing what I would call island exercise in one area. So, spreading wide helps clearly with the RoI. The other thing that some of the studies showed is time boxing is key, having a line of business sponsor is key. So, in other words, it doesn’t work if you have just some little IT exercise or if it’s just some innovation centre not connected to the line of business. So, sponsorship, time boxing, clear KPIs as to what do we want to achieve, and which problem do we want to solve. In other words, all that is more successful than what I would call analysis paralysis and looking for the perfect case. Or the what I would call research approach where let’s take some sensors and collect them and produce a dashboard. So, you need to have a clear proof business problem to solve, a business sponsor, time boxing, clear KPIs and ideally more than one initiative. Spreading it and seeing what are the successful front runners and building on those. Those are clearly some of the what I would call non-technology challenges in a way they are common sense that we learned from various studies, but also from working with our customers.

 

Tom Raftery [00:15:30] OK. OK. Very good. We’re coming up towards the end of the show, now Elvira. Is there any question that I haven’t asked you that you think I should have?

 

Elvira Wallis [00:15:44] It’s a very good question. I would say when we look at the type of use cases, what kind of typical use cases do we see is one question that I very often get asked and I mentioned before, yes, we have the area of intelligent asset, intelligent product, intelligent factory and empower people. Now, another dimension to look at it would be what type of goals are people pursuing? Is it about new business models? Is it about efficiency? Is it about customer experience? In other words, what type of goal do people look at? And one thing I’d point out is we see increasingly people looking at some product as a service offerings. Now, that doesn’t work for all types of offerings, but that is something that we see a shift to product as a service in the construction, transportation, hospitality, realm and insurance industries. Where we see a shift and I believe we look at new customer experience, in other words, does my digital transformation help me create a better, better customer experience is clearly something that we see where people look at their customers, but also their customers customers. And I would encourage people to take that line of sight to look in addition to the productivity gains and the overall production. Really the focus on the customers and to put that at the forefront and the centre of a digital transformation.

 

Tom Raftery [00:17:17] Superb. Elvira if people want to know more about Elvira, or IoT, or Industry 4.0, or any and all of the above where would you have me direct them and feel free to give multiple links? I’ll put them into the description of the show notes when I publish this.

 

Elvira Wallis [00:17:35] Oh definitely join me on Twitter. Join me on LinkedIn. And of course, we have our flabbergastingly great web site SAP.com/IoT. And not to forget, we’re going to run an openSAP IoT course in the near future. And I would really appreciate you joining us in that openSAP course.

 

Tom Raftery [00:17:56] Fantastic. I’ll have links to all of those in the show notes. OK, that’s been great. Elvira. Thanks a million for joining us on the show today.

Elvira Wallis [00:18:01] Thank you, Tom. It’s always great to be one of your interviewees.

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.

Industry 4.0, Digital Supply Chain, and Sustainability – a chat with Hans Thalbauer

The buzz around Industry 4.0 is starting to grow so I decided it might be interesting to have a series of interviews themed around Industry 4.0 here on the Digital Supply Chain podcast. 

To kick off this series I asked my friend, and colleague Hans Thalbauer to come on the show to talk about where he sees the relationship between Digital Supply Chains, Industry 4.0, and how they can help organisations become more sustainable.

We had a fun, wide-ranging conversation covering manufacturing, connected assets, and the importance of using data for decision making in supply chains.

Check out the audio of our conversation using the player above, and/or the transcript below:

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.

 

TR: Hi everyone. Welcome to the digital supply chain podcast. This episode is one of the series that are themed around Industry 4.0 and my guest on the show today is Hans Thalbauer. Hans, welcome to the show.

 

HT: Thank you very much.

 

TR: Hans, could you, for anyone who doesn’t know, could you introduce yourself to our audience?

 

HT: Yeah, absolutely. I’m if you will, a supply chain veteran. I was working in the supply chain space all my life. I’m with SAP 20 years. All these 20 years I was in supply chain, manufacturing, product life cycle management, operations areas. I’m working with customers around the world and having fun doing that.

 

TR: Good stuff, good stuff. And we’re, we’re on the digital supply chain podcast on the series that is themed around industry 4.0 for anyone who’s unfamiliar Hans, could you tell us what you think Industry 4.0 means, what actually is industry 4.0? Cos it’s kind of a buzz term that’s out there and everyone’s kinda got their own definition. What, what do you think industry 4.0 is?

 

HT: Yeah, you’re totally right. There are many, many definitions about industry 4.0. And if you will, there are also different nuances to industry 4.0 dependent on which region or which country we are. And so, if you just take it from, I think their original definition we are talking about the fourth industrial revolution. We are talking really about a step change in productivity. We are talking about really something significant happening to industries, manufacturing industries. And the digital transformation for manufacturing industries. Industry 4.0very often actually is narrowed down to manufacturing and operations, which is true, right? So there’s a lot happening in these two spaces in these two areas, but it goes beyond, it’s really about the digital transformation of manufacturing industries which is of course much broader than only the manufacturing and operations part. This would be my high-level positioning or, or definition of industry 4.0. So it’s really about the digital transformation of manufacturing industries.

 

TR: Okay. And again, we have a lot of terms here. This is the digital supply chain podcast and we talk about digital supply chain quite a lot, but we also have industrial internet of things and industry 4.0. Is there a, a kind of a natural segregation between those terms or are they kind of the same thing, just you know, different ways of looking at things or how do you see that?

 

HT: They’re the same and they are not. I mean, industry 4.0 obviously started in Germany ¬†with the government initiative about, I want to say even seven to 10 years ago. And really started with the idea of there will be a big change. How can we prepare the industry for this change? The idea is that data are valuable and can be leveraged much different than ever before. Technology like machine learning, artificial intelligence can be leveraged in a very, very different way and really make a big change in how companies run manufacturing. How can actually companies be successful going forward. That was kind of the basic idea and leveraging data in order to do that.

 

In the US industrial internet of things has been created.  Very similar approach going in the same direction. It is broader and narrower at the same time. It has not a strong manufacturing focus. It has much more of a consumer focus and much more these IOT solutions related to consumer products, consumer usage and there are many, many examples of which  everyone is aware around the world from yeah all the products which have been introduced and really have the connectivity and really are consumer oriented. And I think everyone is using them every single day. And so this is kind of where the US discussion has gone much more IOT centric than industrial centric.   

 

If you go to China, there is of course a plan which is called China 2025 which is really also looking into productivity gains in manufacturing. Right? And there it’s really very, very much on manufacturing focus. If you go to Japan, it’s a robotics focus. If you go to India, it’s about Make in India, right? So the big slogan, how to introduce actually a much more efficient and manufacturing industry in India. And so there’s a common thread to all of this. All of it has to do with we get data from machines, from assets, from things, and we want to leverage this data in order to be more efficient, in order to be more precise, to predict outcomes, you know in the future, and really do things differently.

 

By the way, I also would say that industry 4.0 and sustainability go hand. The efficiency in manufacturing. The reduction of energy consumption in manufacturing, the reduction of water consumption during the production processes, all of this actually goes hand in hand. And so both topics for me are connected.

 

TR: Right? No, it is interesting you bring that up because sustainability is obviously a topic that a lot of people are interested in at the moment. It’s, it’s quite a hot topic, but a lot of people may not be aware that obviously sustainability is about doing away with waste. It’s about maximizing use of resources for the, you know, maximizing the, the outcome or the output using the minimal inputs. So it’s getting rid of waste. So to your point, yeah industry 4.0 is all about that, it’s all about getting the best outcome for the minimum inputs or the least waste.

 

HT: Yeah. It’s, it’s really perfectly defined rates are, and what you discussed is perfectly correct. Because when you think about it in the context of sustainability, we are talking about the circular economy. What does it mean? I need to be connected. I need to be connected to the business partners I need to be connected to the things, the more connectivity I have, the better I can manage actually their efficiency. And efficiency in transportation where I really make sure that the truck is never empty. That the truck really has actually the ¬†shortest route to between point A and point B. So it’s all about reducing waste. It’s about water consumption, right? So water consumption, a big, big topic actually during production processes. If you can reduce that also in the product itself, if you can reduce the water in the products, big topic. If you think about energy, it’s biggest topic by itself, right? So with using the energy and then you see actually what companies are doing around the world and especially in the manufacturing industries how they go about ¬†sustainability. It’s really taking the ¬†idea of how can I reduce the carbon dioxide impact? How can I reduce the energy by itself or their consumption by itself. So all of this actually plays hand-in-hand with if I’m more efficient and I can be more efficient with industry 4.0 concepts, then I’m better off not only in my productivity but actually also in my sustainability efforts.

 

TR: Yeah, absolutely. And so ¬†you mentioned different regions like Japan and India and America and Germany. Everyone has kinda got a different focus on it. Are they all industry 4.0? I mean what I’m saying is we’ve, we’ve titled it in some kind of way, IIOT in the U S Industry 4.0 in Germany, but is it all really the same thing? Is it all about maximizing our outputs and minimizing our inputs to get the best results for everyone?

 

HT: I think there is, there is something common around this, right? And then the common things around this is really connecting the assets, connecting the machines, getting the data. So now we have the data, now it’s about getting insights, right? So, okay, good. Now we can see actually much more. It’s a big step forward. I built these data lakes andand, and. The next step needs to be that I really learn from this data. And so there’s a massive amount of data. If you just think about every using the machine, every single assets delivers every milliseconds, hundreds of data. And so you get really this big, big data lakes. So we need machine learning, we need actually algorithms which are able to deal with this data. And I think technology made huge progress there.

 

So we do have technology in place in order to really understand the data and have machines telling us what it really means. So machine learning and artificial intelligence plays a huge role in this context. Why? Because what this leads to is that I really change the way how I run my business. At the moment every single supply chain in the world is an alert driven, reactive supply chain, which means something happens and I need to correct it, right? I’m always actually running after the fact something happened and I always tried to correct it. This is the thing. Exception-based management, exception-based management, alert driven, supply chain, whatever you want to call it. And this is really what, how everything is built up. But what if I can turn this around? What if I can use this data now in order to predict an outcome? Right? So, and this is a big thing and I think it’s not yet well understood in the market that this means all the supply chain around this world become predictive supply chains. So I predict not only the maintenance, I predict the quality of a product while I am producing the product, right? So reduce waste dramatically. It doesn’t go through the entire production line anymore and at the end I find out in quality control that well, it doesn’t meet my criteria. I can do that while I’m producing. I do the same on, on transportation. Right? So I don’t waste the time of, of waiting for a delivery. I can predict actually it might come exactly at this time. Right. And I predict that something might be in the way which doesn’t allow me to deliver at this time. And I can inform all the people who are involved before things happen. Right? And it’s always about, I really am enabling people and companies to look into the future and predicting outcome. And with that, reducing ¬†inefficiencies on a very, very dramatic way.

 

TR: Interesting. I’m intrigued that you’re talking not just about manufacturing, but also about the logistics and deliveries because traditionally I think a lot of people would associate industry 4.0 with manufacturing, but not necessarily with the logistics, with the deliveries, with all that kind of stuff. ¬†How, how does that fit in? Well,where, where does, let me ask an even broader question – where does the scope of industry 4.0 start and end?

 

HT: Like I mentioned before, right? So it’s really for me, the transformation of a manufacturing industry and not of manufacturing only, right? So the manufacturing processes, yes, of course. The operation processes. Yes, of course. But it’s really about the end to end processes in manufacturing. Right? We are talking about here, it’s really the digital transformation for the manufacturing industries, which would be, would be, I think, my description of it. And so where does it end? Where does it stop? I don’t know. ¬†It’s really the whole design to operate process. ¬†If I’m more efficient in designing a product if I have feedback and input at the, at the very beginning, if I introduced this idea of‚Ķ I reduce whatever plastic consumption while I’m packaging my goods and all these kinds of things all go in design direction, right? It’s, it’s actually really about building an environment where I’m allowing companies to really look into the future. Like I described it before to start predicting an outcome before things happen. And with that running actually in a very, very, very different way than before. ¬†So, yeah, that’s how we would describe it.

 

TR: Okay. Okay, cool. ¬†So we’re getting to, I got to say, this is a journey, you know it’s, for any company it’s gotto be a series of projects to kind of roll out industry 4.0 technologies, it’s not going to be one individual project. It’s going to be a series of projects and it’s going to be an ongoing journey to get there. But where does it end? I mean, for many people, they’re still very analog, so they have a long way to go. For others, they’re further along the journey, but you know, will it ever end?

 

HT: It is an ongoing journey. It is a transformation. I wouldn’t put an end point on it. It’s really because we get smarter and smarter by the day by learning more and more and using data in a very different way. I would maybe an idea to describe it is we are still living very much in a transactional world, right? If you run the business processes in manufacturing, operations and logistics, it’s very much a transaction. I have a delivery and I transact the delivery, I execute on it and so on. And we changed it around and create a data-driven world ¬†where I analyze I simulate and I just make my decisions based on this information. Right? I’m not just blindly executing a transaction anymore, I start simulating. And now if you, if you start doing that, it’s not necessary to do it for everything at the same time. ¬†Of course, you start in certain areas and then you grow from there, right? And then you find out all of a sudden that, well, if I connect these data, I can be smarter. Right? So I give you an example. ¬†¬†If I’m, let’s say starting in predictive maintenance and I find out in this product, yeah, if I predict maintenance, if I reduce here, the maintenance schedule ends on, I really can save a ton of money by doing that, right? So I’m predicting I’m not just doing blindly scheduling, my maintenance for the asset, I’m really predicting when I need to do it and then I do it. So that saves a ton of money. But then the, the thing is if you really go to this data and then you find out what if we would design this asset differently, if the product would have been designed in the first place in a different way, the product would be more stable, more robust. And so therefore I wouldn’t even need to maintain this, this part which always breaks, right? So now you could start to connecting from maintenance you start now connecting the engineering world, right? So it becomes a maintenance driven engineering process, which doesn’t really happen at the moment. Right? So and now you can build these connections also to manufacturing and to logistics, right? If I understand from these other departments what they need, what would be the impact? What is the influence? If all of this would be much more harmonized, then actually I am better off in total. And so my recommendation is always, okay, start in the area where, where you, you think actually there is the biggest value for you, right? In many cases it’s in the maintenance or in the manufacturing area, but then really think about the possibilities you have. Learn from this data and now start to connect to the other areas, connect to engineering, connect to assets, connect to logistics. And by doing so you become much, much more efficient overall.

 

TR: Sounds like it’s a lot about breaking down silos and making organizations more horizontal.

 

HT: It is right without necessarily an organizational change. Right. So I think, I think actually what is always in the way is if systems or processes would require, we introduce that and this means also do I need to change my organizational set up of the company? Not necessarily. Here what we are doing is we connect these organizations with data. What we need to have is really the data needs to flow. We need to have a data model which allows that. We need to have a data lake where we not have only a data lake for operations and one for manufacturing and one for logistics. No, we need to have the possibility to correlate the data and connect this data and with that actually make every single organization unit in the company much smarter.

 

TR: Okay. Yep. Makes sense. One challenge I guess I see for for organizations is a lot of organizations are still not thinking data first and obviously to go down the route that you’re describing, that’s a mindset then that they need to switch to. And I guess that’s more people than technology thing, but how do we convince organizations to to make that change?

 

HT: ¬†I think actually people would be and are willing very much so to switch to a much more data driven approach. They would be happy to get ¬†¬†the information they need in order to make a decision immediately in real time. They don’t have it right now. It takes a day in order to get a report. By then they have already made decisions hundred times during the day and transformed and executed on a transaction. So what do we need to get to is we need to get the information to the people so that they can make these decisions and I‚Äômabsolutely convinced, I haven’t seen it once where people would be hesitating adopting this type of approach. They really like this approach. There is of course, one aspect, which is very important when you talk about this whole aspect of automation, the whole aspect of everything runs by robots and so on. There is the fear that it takes jobs away, right? And it’s not just a fear, it’s a fact, right? So in manufacturing on the shop floor in their houses what do you see right now is a lot of robotics are in there ¬†and less and less people work in this environment. But you also where it’s very interesting if you look into statistics, the last 10 years, many new jobs have been created. There are new job titles which were not existing before. A chief digital officer, something 10 years ago, if you would’ve said, where’s your chief digital officer? Everybody would have said, what? What, what is that? Now every company has a chief digital office and not just the chief digital officer, but the whole organization around it. Right? Which, which really tells me this digital transformation really opens up completely new jobs and job titles we haven’t seen before, which tells me also that there’s a huge opportunity actually for people. Of course it means education, it means training, it means different skills, but in the services part of it, so operations, maintenance part of it, this is a big job area. And also in this whole data part, it’s a big, big job area with like I said, many new job titles, which we haven’t even seen before.

 

TR: Indeed, indeed. Hans, we’re coming towards the end of the show. We’re up on around 20 minutes now. Is there anything that I have not asked you that you think I should have?

 

HT: No. I don’t think so. I think ¬†the discussion is very, very important. The discussion also needs to be that we need to understand how we really can leverage data, make this transition from transaction to a data driven approach that we go into this ¬†predictive way of running a supply chain. So looking into the future instead of looking always into the past ¬†this will have big impact in how companies run their businesses. Also, I think what is very, very important, it’s not just a hot topic to talk about sustainability. I think actually it’s essential to talk about sustainability and we need to have that as another dimension in this industry 4.0 discussion because this really enabled, Industry 4.0 enables us to be more sustainable and we need to measure it, we need to control it in a much better way and we need to leverage all the concepts which are being created from sustainability, circular economy, the whole waste reduction concepts and so on as part of the Industry 4.0. So it really goes hand in hand in my mind.

 

TR: Super. That’s great. Lastly, Hans, if people want to know more about yourself or about ¬†Industry 4.0 or any of these things, where should I direct them to go? Where should they go?

 

HT: Well, go to sap.com. There you’ll find actually Industry 4.0 on the top where it’s a big theme and where you find a lot of additional material about Industry 4.0 and the approach SAP is taking. Yup.

 

TR: Okay. Super. Hans that’s been fantastic. Thanks a million for coming on the show.

 

HT: Thank you.

 

 

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 and Digital Logistics – a chat with Till Dengel

The logistics aspect of supply chains is increasingly being digitised, and is now often referred to as Digital Logistics.

To find out more about this I invited Till Dengel to come on the show. Till is the Global Head of Digital Logistics Solution Management at SAP, so if anyone could fill me in on Digital Logistics, what it is, and where it is going it would be Till.

We had a great discussion and right at the end Till mentioned that his team had created a digital logistics compendium. This is a very comprehensive ebook with a lot of videos and interactive material for anyone interested in trends and customer stories in this field.

Below is a full transcript of our conversation:

TR: Hi everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery and with me on the show today, I have our special guest Till. Till, would you like to introduce yourself?

TD: Yes. Good morning Tom. I’m very happy to be here. So Till Dengel is my name I globally cover our solution management for digital logistics, which includes our solutions for fulfillment, for warehousemanagement, for transportation, and the Logistics, Business Network.

TR: Okay, cool. Interesting. Just for anyone who isn’t completely aware with logistics, can you give us kind of a logistics 101. What, what is logistics? What does it do?

TD: Well, the logistics I think per definition is the know how goods move through a system and managing that system as goods flows through a supply chain and through different processes in a supply chain. And as we talk about the digitization of logistics processing, it’s basically how to automate and how to process things through warehousing, through a transportation, like scheduling, routing of logistics, or move in a supply chain and then eventually tracking those moves, with solutions for track and trace. But also with visibility tools to provide transparency as the goods move through the supply chain. So it’s really that end to end management and transparency that you’re trying to gain by using technology, as goods flow through a supply chain, or anetwork.

TR: Okay. And obviously the digitization of logistics has given huge advantages and is disrupting the markets;I imagine significantly for our customers. Can you give me some examples of the kinds of things that arechanging, and ways in which our customers are benefiting?

TD: Yeah, so for absolutely, I mean on one thing, technology has changed the game, but on the other side also the way we perceive logistics in our private life. And I think that has a very big impact also on the, on how companies deal with each other. I mean by now we are used to when we order something online that had arrives next day or sometime even same day, and there isn’t, are the same expectation of course, in a business to business environment. And in order to achieve that, you can only do this if you can automate your business processes to a very large extent. And these are the business processes that you have in the warehouse for picking, packing and shipping, but also the business processes around scheduling and routing a truck. So there has to be a lot of automation and that’s obviously, you know, what SAP, where we, where we come from of driving those business processes and trends.

But then there’s of course other technologies which are really changing the playing field in logistics. So one I think is very significant is around internet of things and sensor technology. Um, you can stick a sensor on almost anything today because the sensor technology is so cheap, um, that that you can just put it on some thing and you can track that item as it moves throughout the supply chain. Um, so that’s one big trend that’s changing the game here. Um, the other big one is the blockchain trend of course. It’s still a trend that I would say is I’m moving from its infancy, getting more and more mature. Almost every customer I talked to has at least a proof of concept in the blockchain environment. But that obviously speaks to the supply chain integrity and how goods move through supply chain, tracking on who touched the goods, where did they originate from and and what happens to the goods as they move throughout the supply chain. So that’s another technology that’s very big.

And then the last one I want to mention or the second to last is machine learning and data science. And obviously data science is not new to solutions like, transportation management with automated routing and scheduling. But with machine learning and the advent of machine learning and so many universities, working in this field, there’s just a lot more skills and a lot more knowledge around the topic and the market, which is really useful for the logistics industry, which has a lot of data from all these movements and can make use of that.

And then the last one I would like to mention is the cloud. And why is the cloud important? Well, because you have, different deployment models and you can much more quickly spin up and spin down for example, awarehouse. And we see those quite often with our customers. They are for example looking for that they run a campaign and they’re looking for a, they need a warehouse for six weeks, eight weeks as they ran a campaign in a city. So with the cloud you can spin up warehouse really quickly, run your warehouse processes to your pick pack ship and then spin it down again. So this was not possible many years ago and that’s, I think the big trends that are driving on the logistics industry.

TR: Okay. That’s interesting. That’s four huge trends that are happening and they’re obviously happening at kind of different paces as well. I mean you mentioned that uh, blockchain is very much in its infancy, whereas I imagine cloud is probably further along the line and machine learning is probably somewhere in the middle. How are we doing with, you know, the likes of a customer adoption? You mentioned some and blockchain are doing proofs of concepts, where are we with adoption rates in some of these technologies?

TD: Yeah, I would say the sense that technology and the IOT is probably most adopted just because there has been a lot of investment in those areas in the past few years. And it’s, I mean, building out interfaces and integrating these sensor technologies. Um, blockchain I mentioned, I think it’s, um, there are first few really good use cases. Um, customers are making the business case to invest broader and they are experimentingwith it, which I think is a really good sign that something is moving here. And obviously in blockchain what’s also interesting, it started with a few industries like for example, pharma, which obviously has that need for end to end visibility and enter and tracking of products and batches and everything. But it now moves across into other industries that is also a good sign. So, for example, we’ve talked to a lot of customers from the luxury goods industry, which of course also wants to know the whereabouts of these high value items as they move them through the supply chain and they want to know who touches with them. So thatsthe blockchain in terms of maturity.

Data science I think is a very mature in this industry. Like I said, machine learning is now coming to it, but working with algorithms and more sophisticated methods to determine scheduling ¬†and routing and things like that, that’s been around for 10 years, maybe even more. So I think that’s probably the most mature I would say.

TR: Okay. And then, the adoption of these things depends on many factors. I mean, part of it is skilled resources availability, but part of it as well is potential for outcomes. If something is only going to give me a 1% increase or a 10% increase, does this big difference between the two. In in terms of outcomes, where do you see the the best potential for people with digital logistics?

TD: It’s an interesting point. You mentioned as obviously outcomes is always the end of every business case that, that our customers are driving when adopting those technologies. So when we talk about this data science part and a machine learning part, the outcome of that of course is increased efficiency and increased automation. And if you look at logistics, I mean logistics is reoccurring patterns. There’s only, you know, a certain amount of possibilities and variations that you can move a container through a network, let’s say from Asia to Rotterdam, for example, there’s only a certain amount of vessels, only a certain amount of routes you can take, and a main leg and, and some sequence they can pre leg and things like that. So there’s only a certain amount of variation. So why shouldn’t a system ¬†automatically plan this and support the dispatcher sothe dispatcher doesn’t have to do this manually. So it’s clearly the outcome here is using these technologies like the data science part of it to automatically drive this and by that increase efficiency.

The other outcome of course in the same area is in the warehouse management space. I mean many warehouses these days run completely in the dark. Nobody, humans only touch in a very few touch points the product, but there’s a lot of automation already in the warehouse since many, many years. I mean, that of course speaks very much to the outcome and efficiencies and that’s where our customers make the case that they say, I want to come from a manual warehouse into more of an automated warehouse using software and using for example, packaging algorithms and algorithms that run, pick wave and things like that and thereby increase efficiency on automation. So that’s the efficiency side of the outcome.

What’s also very interesting and that’s a change that you’ve seen lately, is that if you look at more of the top line and the revenue portion of it and the customer centricity part of it, many customers we talk to these days look at logistics as a differentiator. In the past that was looked a lot like it’s a cost driver and we need to, you know, drive cost out of the system. Now it’s looked at more and more like if my logistics experience or if my delivery experience is not good, if my parts, my container arrived late, the experience reflects on the product. So the more I invest in product experience, customers tend to also invest in that delivery experience part of it, which is another outcome, but which is obviously not on the cost side and the bottom line, but rather more on the top line.

TR: All right. Very good. Very good. So lots to think on there. Where, where is all this going? You know, we’re seeing trends towards digitization, but you know, where is all this going to go in the next five to 10 years do you think?

TD: Well, there’s obviously a lot of movement in automation in terms of drone technology and self driving vehicles and things like that. I mean, all of that is obviously in the beginning, but I think in the next few years we see a lot of that becoming more and more mainstream. Obviously not everywhere in the world but incertain parts for example. We get already today, um, we connect to, for example robots and, and different parts in the warehouse so robotic technology in the warehouse is becoming mainstream as we speak. And I think this will expand into the yards and it’s been expand more and more onto the roads or maybe on, you know, some closed roads or from specific lanes where you see automatic driving and, and things like that. So, I think that’s one big trend that’s happening.

And then the other big thing is the rise of the networks, which we haven’t talked much about. So logisticsnetworks basically, meaning that you can manage a business process with your stakeholders, with your partners, or a shipper can manage that with the 3PLs and the carriers. They can all get together online in one single system in the cloud and manage a business process end to end. So that obviously contributes a lot to the business process execution capabilities and the efficiencies of that end to end processing, but also to the transparency that you can provide as if everybody that participates in that supply chain is on one single system. So I think here we will see a lot of that.

And if you look into where investment money is going these days on VC capital is going is exactly in that area of business networks across the different modes and across the different regions of the world.

TR: Interesting. Great. One final question Till. This is a question I often ask people at the end of the show, just in case I’ve missed something. Is there any question that I haven’t asked that you think I should have?

TD: Usually that is the question is, you know, around we talked a lot about automation and efficiency and those things. So usually there is always the question of what does that mean in terms of will there people be in the, I mean the logistics is a huge industry. Will the people be put out of jobs and things like that. And I think the interesting part around that is, I think, you know, the manual labor parts in the warehouse and transportation and things like that and I think they will definitely be challenged in my perspective because there is a robot, there’s more and more automation coming in, similar to what we’ve been seeing in the manufacturing industry a few years back. But on the other side there is a lot of skills and a lot of new employment opportunities around the topic of data science, machine learning, and digitizing these end to end supply chains,which is obviously a different kind of job. But here we definitely, and that’s what we hear from our industry councils and from customers we speak. There’s still a huge skill gap. And for example here in central Europe, it was identified that skilled people, in the logistics industry that know the process, that knowthe industry and that know technology, a huge gap and actually imposing a risk on the digitization of global supply chains.

TR: Interesting. Right, so if people want to know more Till, about Till or about digital logistics, our supply chains or any of the topics we’ve discussed today, where would you have them go? What, what kind of links would you like me to put in the show notes?

TD: So you’ll find myself on LinkedIn. I‚Äôd be very happy. There‚Äôs a lively community going on. Very happy to connect to anyone that wants to be connected and talk more about the logistics industry, which I’m very passionate about. That’s LinkedIn. Otherwise, sap.com of course there is a, a very large area around logistics and supply chain. And the last topic Tom I‚Äôll provides you with a link to what we have created which is ourdigital logistics compendium, which is a very comprehensive ebook with a lot of videos and interactive material for anyone that’s interested in what’s going on in terms of trends and what are customers doing, obviously using our software in this field.

TR: Oh very good superb. That’ll be very useful, I’m sure for lots of people. I’ll definitely put a link to that in the show notes. Thanks a million for that.

Till that’s been great. That’s been really interesting. I’ve learned a lot. I hope all our listeners have as well. Thanks a million for coming on the show today.

TD: Thank you so much.

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.

This podcast was initially published on the DigitalSupplyChainPodcast.com website

The advantages of Digital Supply Chains – a podcast with Johannes Drooghaag (aka @DRJDrooghaag)

I started a podcast series called The Digital Supply Chain podcast over on DigitalSupplyChainPodcast.com¬†(because I have no imagination and that can’t hurt the search engine rankings!).

For the most recent episode I used Lately‘s transcription service to output the text of the podcast so I could add it into the post but Buzzsprout, my podcast host doesn’t allow posts with a lot of text, so I decided to post the podcast, and the full text of the conversation here. I hope you like it – do let me know in the comments how I could make it better.

This is episode 17 of the Digital Supply Chain podcast. In this episode I interviewed Dr Johannes Drooghaag (also known simply as JD, and @DRJDrooghaag on Twitter).

We had a wide-ranging conversation on Digital Supply Chains covering many aspects including Manufacturing, Industry 4.0, and cybersecurity.

Check out the podcast above, and the transcript below:

TR: 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.

TR: Hey everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and my special guest on the show today is JD. JD would you like to introduce yourself?

JD: Well, thank you Tom. First, first of all, thank you for having me on your, on your podcast. I’m really appreciate this opportunity. Um, my name is Johannes Drooghaag but it’s shortened to JD because that’s much easier and it doesn’t hurt so much to pronounce. Um, I started my career in industrial automation, the classical way, putting a lot of robots and a lot of sensors and a lot of PLCs in a factory. And through time I learned that there are other options and that we can do a lot more with the, with the data we are collecting and turn it into information or what I prefer actionable information. After some 25 years career in corporate roles, I decided to start my own consulting company and I’m focusing on those two fields on the, on the one hand and the organizational side, do human being that is working with the information. And on the other side, the technology that is creating the data out of which we can create that actionable information. I’m 30 years on the, on um, on the road now and I keep learning every day. And that’s one of the reasons why I’m with you today, Tom, to keep learning from you as well.

TR: Oh dear. No, no pressure on me. So no. Okay. So I, I typically start the show asking the guests on the show to give me their personal definition of what a digital supply chain is. Because you know, everyone has a kind of a slightly different approach to it. It’s a broad topic. So how do you define digital supply chain JD?

JD: Well, for me, the digital supply chain is basically the digital twin, so to speak, of the classical supply chain, which as we all know it with, with all the parts moving and the orders. And the digital supply chain is, is the digital twin in which we can do two things. We can constantly respond to what is happening because we need to respond much faster than we used to do in the past. In the past we had mass production, we had large batches, we had orders which were sent out months before we start producing. Nowadays we have to, we have much more dynamics. Orders are changed, we have smaller volumes, we have smaller production batches. We even want to avoid production batches. We want to create, um, single piece flows in our factories. And the second thing we can do is we can start simulating in our digital supply chain. We can do real what scenarios without actually having to touch the process. So we can start looking for opportunities and for optimization, uh, items. We can also look back to the past and see what failed, what didn’t do, what we were expecting that it would be doing and how can we prevent it and what can we learn from that. And that for me is the digital supply chain. The information that we on the one hand get from the existing supply chains, which are much more complicated than they were in the past. And on the other end, the learnings, the organizational handling of that digital supply chain.

TR: Excellent. Excellent. Very good. Very good. You, um, you started off saying that there were kind of two aspects to, uh, your, looking at digital supply chain. One was the human side and the other was the actionable items. Uh, you know, I’ve, I’ve often said that, in these kind of scenarios that the technology is generally very straightforward. It’s getting people to change because the hard part is, is that, is that your, inkling as well that, you know, technology is generally straightforward. People are hard?

JD: Well, we can make the technology as complicated as we want, but that doesn’t lead to anything, right? So if we put, if we start with a straightforward concept and then make sure that the people who we expect to work with it also actually understand what we are expecting from them, which, which kind of responses we want, then we see that there is a, um, an enormous gap because most people are already pretty much loaded with their actual work. Um, and, and we need them to first of all have the mindset then what that when the system is telling them something, they should take it serious. And now on the other hand, they need to understand what the difference is between some kind of general status update and an urgent item that they actually need to respond to. Now having three decades of experience, I have learned a couple of things. First of all, people do not really trust the system because there’s always something which is not right. If we take a closer look, that means we can learn and we can say, okay, we found something in the system, which is not correct. Let’s improve it. Yeah. But the human behavior is to use that as an excuse almost to also ignore all the other things that they see in the system. And the second thing that I’ve learned is when you’re busy going from A to B and somebody is telling you there’s a smarter way you could go through C and then to B, okay. You were focused on going to B, so you’re not paying attention to that additional information. And that’s an enormous challenge on top of the normal change management and organizational challenges we already have.

TR: Yeah,indeed. And how do you overcome that?

JD: Well, the first thing that I always do with my clients is start with the people and look at what their routines are and look at what kind of information they would need instead of the information that they have. Because what I see in my experience is that most service providers make the mistake of just sending more information to the already available information. And production manager or a scheduler or a planner doesn’t need a new report on top of all the reports they need to report or an information overview that tells them what to do and where they should respond to. So I start by filtering. I start by asking them, if you have 20 reports and I take 10 away, which one would that be? Yeah. And the interesting thing is that in most of the time when I ask for 10, they give me 18 because they’re going to use me.

TR: Yeah. There’s a professor of journalism New York whose name is Clay Shirky and he’s got this great quote that I love. He says, there’s no such thing as information overload. There’s only filter failure.

JD: Exactly. I love that.Yeah, yeah, yeah, yeah. No, that’s great. That’s great.

TR: You, you talked as well, uh, not just about the, the people aspect, but of the actionable items. What do you mean by that?

JD: Well, an actionable item. I always take the example of the, of the scada world where I’ve, I’ve spent five years, um, all over the world. If you look at the scada system, you will always have a state to screen where where the operator can see entire refinery or the entire pipeline or any other utilization of that scada. But as soon as the operator is expected to take action, that is automatically put in focus. So at the moment that the operator is expected to take action, the operator sees that action item and that can be a small decision. That can be a big decision, but the system automatically, um, focuses the attention of that operator on that particular item where an action is needed. Okay. Providers of SCADA systems have learned over over the years and they have learned that if you keep that action item in the entire status screen of the refinery, operator won’t notice it because it’s just one little thing in sometimes they have up to a thousand different aggregated devices in the overview and an actionable, actionable item. And an actionable, actionable piece of information means that first of all, the person who shoots take action is informed in the proper way without any kind of distractions. And secondly, the person has a couple of options or has supporting information to make that decision. Now, if I then compare it to what I see, especially in production facilities, that there’s an operator is overloaded with a lot of status written information, which that person should not respond to. And hidden in that stream is that one item where the person should respond to, well then I cannot blame him for not seeing it or ignoring it or pressing the standard button. So the, the popup goes away. Actionable information means to me, I see it when I need it. I get the information I need to take a decision or that actionable information informs me that something is not the way we wanted it to be and I need to do some, some optimizing or it means I need to get some additional resources.

TR: Right. A lot of that sounds like it’s, um, it’s design led issues potentially are maybe not maybe issues with the wrong word, but uh, properly designed screens and user interfaces should do away with a lot of these issues.

JD: Exactly. And then it’s also a system thing because if you look at a supply chain, then it’s not just a screen on a, on a machine. It is a whole stream of information. And if I have somewhere in my supply chain, the change, which was not part of the current, um, planned activities, I cannot wait until that arrives at my facility. I need to respond to that with the appropriate lead time. And if that means a change over in the production planning and that means that I need to schedule some additional machine change over, I need to know that in the proper appropriate time. So we also need to add some intelligence to it. We need to add, um, which timeframes we need. We need to add which kind of materials we need. And if we start figuring that out at the moment that it has already happened, well we are too late, especially when our supply chain is a bit more complicated then the local grocery shop.

TR: Okay. And so you, we have some customers with some very, very complex supply chains. So yeah, like tying all those disparate pieces of data together can prove challenging.

JD: Exactly. I always use this, this lovely example from my own automotive experience. If we look at at the classical, at a car, we have up to 40,000 components. If we look at an electrical vehicle, your favorite topic, we still have about 10,000 components for just one car. Yeah. Now if make one change, just one change, we might have to reschedule, um, a couple of, of those components in the assembly. Now the further we go down the line in that supply chain and we make that significant change, well the more others will have to respond to that. So supply chains are complicated and supply chains are no longer, um, single or dual parties. The same car with, with 40,000 components has up to 1,500 suppliers of those components. And that needs to be managed and it needs to be managed very actively.

TR: Yeah. Yeah. If I needed them or delayed and getting parts to you. Maybe there’s a Coronavirus outbreak and they can’t get their workers to their factories and they have to hold production. It throws everything out.

We are managing the past. With a digital supply chain we are capable of learning how to manage the future

JD: Exactly and if you do that in a in a smart way, and this is what I really enjoy about the digital supply chain because the Corona virus is an example. We have a crisis that might impact our supply chain. Now if we have a properly built and properly designed digital edition of our actual supply chain, that’s the moment where we are capable to say, okay, what happens if we, for example, slow down this line of supply and what does that mean for the other parts? Can we make changes in the capacity or can we increase some full human from another supplier and decrease some folio with this supplier and navigate around that crisis and that crisis never establishes the way we thought. So we can then the next day updated again and we can really start looking forward instead of what most people in the supply chain business always tell me. We are managing the past. With a digital supply chain we are capable of learning how to manage the future.

TR: It’s a, it’s an amazing change isn’t it? In in going from older, more analog technologies where as you write these, say people ran a lays in the past to the digital where we’re analytes in the future. It’s, it’s, it’s, um, I don’t know how to, how to phrase that exactly, but it, it’s, it’s, it’s a huge, huge change in the way people are now able to do business.

JD: It’s, it’s an amazing change and it’s, there’s the simple, in English, we have a wonderful, in German it’s, it’s, it’s almost as wonderful in English we can say, it makes the difference between reacting and acting in the classical analog supply chain management, UI reacting. You’re always reacting to things that have already happened in a digital supply tent. You can act based on the things that you know that will happen because that’s the information you receive. And that’s how you can build your scenarios.

TR: Yeah, that’s it. Exactly. Um, JD. Looking forward the next five, 10 years, where do you see the, the, the biggest, we’ll say potential for change. Um, where do you see the biggest changes that are going to happen? How will they impact?

JD: Well, the biggest changes that I will see, there’s one thing that we are not yet aware of the up to 80% of the production facilities we currently have are built in the previous century classical, uh, built for big batch batches built to, to produce a lot of the same. And companies are starting to learn that you can still use those industry 4.0 and the IOT and the smart supply chain solutions. You just have to be a bit more creative about how to implement them for those, those classical old things. So one of the things that I am already seeing and it’s developing, fortunately that companies are moving forward with their infrastructure, which is in some cases they still plan to use it for the next 20 years. So people stop. I’m believing that all those, all those, those technologies are only available when they build something new or Greenfield facility or to purchase a new machinery. We see that rolling out into the existing infrastructure and that I believe is a wonderful change.

TR: Yeah, yeah, yeah. We, we had an example, I mean, we have, you know, a bunch of examples with different customers, but there was one that, uh, really kind of blew my mind and it was with Harley Davidson. It used to take them 21 days to create a custom motorbike and when they shifted over to digital manufacturing, they brought the time of manufacture from 21 days down to six hours. Just incredible.

JD: That’s incredible. But, but that’s possible.Yeah. Yeah. it’s going back to what you were mentioning, uh, going from facilities which are built to just build lots of, one type of thing. And then when you try and do custom, in this case, motorbikes, it takes a lot more work and takes 21 days. When you switch to a facility which is built to be completely customizable and your lines could be completely fluid, uh, then you can do mass customization and then kind of lot sizes of one and you can drop the time to manufacturer again, in this case of bikes down to as six hours for a custom Harley.

TR: It’s, it’s, it’s really impressive.

…that’s also what industry 4.0 is about. And that is what, what a smart supply chain is about. It’s not just about more data and more technology, it’s especially about becoming more flexible so you can respond to what happens on the market

JD: That’s, that’s, that is really impressive. But it also demonstrates what is possible if you move away from the classical, from the classical patterns. In some cases, that will mean that you actually need to invest in your existing machinery in some cases will mean that you, uh, that you must must reduce some capacity for the mass production, which you don’t need any way, uh, anymore. And in some cases it means that you actually discover that your equipment is doing, is capable of doing much more than you thought it could. You just have to sit down and, and with, with concepts like design thinking, most of it is logical thinking. You need to be able to investigate, to explore, um, to do some, some testing and discover how flexible you can become. Because that’s also what industry 4.0 is about. And that is what, what a smart supply chain is about. It’s not just about more data and more technology, it’s especially about becoming more flexible so you can respond to what happens on the market. Right?

TR: Yeah, that’s true. That’s true. And in the case of Harley, it wasn’t that they did it in the same facility, so they kind of, I won’t say they cheated, but it took a kind of a hybrid approach. Uh, they built a second facility beside their existing facility and then they transferred all of their staff and all their machinery into the new facility. But it was two thirds the size of their existing facility. And yet, and yet, because it was completely digitized, they were able to then, as I say, bring the, the lot times down from days to hours.

JD: Yeah. But, but this is, this will happen in, in many cases and sometimes you have the luxury to say, okay, I’ve got a second production facility and I can basically redesign my existing process with a single piece flow concept in mind instead of batches and long production. In other cases you will have to do that. And we did it at one major automotive supplier, which unfortunately I cannot mention by name. We did it. We did the same thing we did in the existing facility. We started with machine number one and, and eliminated all the batch containers and, and uh, the batch flow, um, and created a single piece flow structure around that and then took it to the next level. And it was very fortunate that we have a very good tie in of the ERP system from, from SAP at that moment. So we could get all the production data, we could get, um, all the, all the settings, uh, the proper product identifications from the system. And we were capable of building a single piece flow throughout the production facility. It took two years because we had to do it step by step and we could not, um, go from, from, um, from the old school to the new school, uh, by just closing down the factory. But one of the results is, is that we decreased the capital on hand to time, which was around 18 days. Um, we’ve decreased that to two days. So from purchasing the material to shipping it to the next facility was reduced by, by more than 80%. That is serious money.

TR: That’s a lot, yeah. That’s impressive. That’s really impressive. Yeah. That’s amazing. Okay. Look JD. We’re coming towards the end of the podcast and uh, typically at this time of the podcast I’ll ask people, uh, is there any question that I haven’t asked you that you wish I had?

JD: Um, one question Tom, and that’s my favorite second topic. Cybersecurity. Um, so if you ask me, um, JD, what would be your top priority in digital supply chain? Besides all the technical opportunities we have and the organizational opportunities we have? I would say cybersecurity has to be the top priority because the more digitized we get, the more risk we have that something bad happens to the digitized world. So cybersecurity, big picture approach, make sure that it is by design and not by coincidence.

TR: Very good, very good. Very good. Yeah, no, hugely important. As we are, uh, opening up our manufacturing facilities and our logistics and everything as we’re opening them up to the internet, we are massively increasing the threat landscape. So yeah, absolutely. Very, very important to consider cybersecurity from, as you say, from the design phase, right through not, you can’t be something that you kind of cobble on afterwards dead right?

TR: So JD, if people want to know more about yourself, what’s the best place they can go to find information about JD?

JD: Well, they can visit me always on my LinkedIn profile or on my website under your JohannesDrooghaag. My website is JohannesDrooghaag.com. Unfortunately, jd.com was already taken, so I kind of,okay. Um, I am on Twitter. I am on, on Facebook, Instagram. Twitter is my main social media exposure. They can find me there under JohannesDrooghaag as well. Um, and otherwise, uh, drop me a note at my website and I will, uh, reply as soon as possible.

TR: Superp, super JD. I will put those links in the description of podcast when I publish it so everyone can have access to them. Thanks a million for taking time and joining me on the show today.

JD: Well, thank you for having me, Tom. It was a great discussion.

TR: Okay, we’ve come to the end to 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 dot raftery@sap.com.

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.

This episode was originally published on the Digital Supply Chain podcast.