In the second of our selections transcribed from the SAP Sapphire Now 2021 presentations, we have a program of interviews with SAP executives and partners called “Building a Resilient and Sustainable Supply Chain” which is from the supply chain content track.
The live program, hosted at the Sapphire Studio complex, features a detailed introduction from SAP Chief Information officer Thomas Saueressig, and a variety of guests including Scott Guthrie, Executive Vice President and head of Microsoft’s Cloud and AI group, and representatives from the World Economic Forum, Accenture, and SAP customers like DeLonghi, and Arla Food Group.
More coverage from Sapphire Now 2021:
[Melissa Chan]
Welcome, everyone to the SAPPHIRE NOW studio for supply chain. My name is Melissa Chan and I’m your host for the show today.
As we slowly emerge from this unforeseen global crisis, businesses have an opportunity to reshape the way they work, and get even closer to their customers needs. Everything is getting more connected, more digital, and more personalised. Businesses that will thrive are the ones harnessing this amazing opportunity. After an unprecedented year in business, it is time to think about what the way forward should be and how to get there.
Here’s what we have in store for you in the next hour. First, we kick it off with an interview of SAP Executive Board Member Thomas Saueressig, and his guests Scott Guthrie from Microsoft, then it is on to some extraordinary SAP customers like Delonghi, Arla Foods and Doehler Group, together with SAP leadership who will give us regional insights and trends.
We will hear about resetting the world with the World Economic Forum, about resilient supply chains and automated manufacturing, along with other compelling topics. Throughout the show, we will hear from SAP Platinum partners Accenture and Deloitte, and the great value they have to offer.
Now don’t forget to visit our partner showcase at SAPPHIRE NOW calm and keep your eyes open for some special announcements. We’ve tailored this show for you. And we want you to participate, which you can do through the live chat and social media, or social media while host Claire Richardson will tell you how to engage.
[Claire Richardson]
Hello, everyone, and a very warm welcome. We are so excited for this session of SAPPHIRE NOW, and we want you to be a part of it. Now we’ve made it really easy for you to share your comments, thoughts, suggestions, or questions, and I’m going to tell you the best two ways to do it.
Now first, you can just enter any thoughts directly into the live chat. And the second way is to use the hashtag SAPPHIRE NOW on Twitter, I’m just going to show you our gorgeous social media wall and give you an idea of what our audience has been saying so far. So please don’t be shy. I’m going to be monitoring everything that comes in. And you could be lucky enough to end up on our social media wall. So we’ll be checking back in throughout the show. But in the meantime, I’m going to turn it back to you Melissa.
[Melissa Chan]
Thanks so much, Claire. So let’s get started. Let’s hear from SAP Executive Board Member Thomas Saueressig and his guest about a resilient supply chain from design to operate.
[Thomas Saueressig]
Today’s supply chains face unprecedented challenges. A global pandemic trade barriers and changing consumer behaviours are just some of the forces increasing pressure on supply chains. Supply Chain concerns are no longer behind the scenes. They are front and centre.
Welcome to this year’s SAP Sapphire Now, my name is Thomas Saueressig. I’m the Executive Board Member responsible for all SAP business applications. It’s my clear goal to prepare your business to handle unexpected events impacting your supply chains. Businesses are realising they need to optimise end-to-end business processes along the entire supply chain beyond the four walls of their own company.
Even more important, the customer experience doesn’t stop with the purchase experience, and the supply chain is a significant driver for the customer experience. Here’s where SAP’s intelligent enterprise strategy comes in. It’s based on a seamless interoperability across our entire portfolio of products that we can provide like no other company. SAP is designed to operate framework delivers an end-to-end customer centric supply chain with the SAP Business Technology Platform as the foundation.
Our customers are not shy about telling us their supply chain challenges and we have been listening. They need four key ingredients to build resilient supply chains. First, agility: to be able to sense predict and respond to disruptions. Second: increased productivity by digitalising industrial processes with industry 4.0. And third: interacting in a network to run collaborative and connected business processes. And finally, let sustainable business practices be our guiding purpose.
So how does SAP help you achieve agility and productivity in a global network economy while acting sustainably.
First, we start by giving our customers the agility they need through synchronised planning. We envision planning as a continuum from demand to supply production, and logistics. Our solutions enable customers to get a complete view of their supply chain and evaluate multi-echelon impacts.
That’s what you need to mitigate risks. Synchronised execution gives you the ability to execute smoothly from order to final delivery in our market leading solutions of extended warehouse and transportation management.
We recently introduced and delivered the latest innovation with the planner workspace. It helps users to plan analyse and solve supply chain issues centrally. Now we are adding a new capability. The Next Generation visibility. It enables end users to see the status of orders and impact of disruptions directly. We see synchronised planning as the key ingredient for agility. And we differentiate our offering by bringing together scenario-based planning with synchronised execution.
Second, let’s see what we can do to improve productivity. Your business achieves more when your factory and planned processes become smarter, more connected, and autonomous, and your people are empowered to run them intelligently. With industry 4.0 companies are aiming for digital factories at enterprise scale. But let’s be honest, we’ve been talking about industry 4.0 for more than a decade. It’s time to execute and make it a reality. Now.
With industry 4.Now we are bringing together engineering, logistics, production, maintenance, and service processes to run truly intelligent factories and plants. Infused with smart and predictive technologies, and a strong cloud edge strategy. We leverage SAP HANA natively to deliver new scenarios, which were not thinkable before, while also being able to simplify the application, as well as the data model.
We launched significant innovations in our industrial Internet-of-Things portfolio, like enabling smart sensing capabilities, and the bring-your-own-data lake model for SAP S/4HANA and digital Supply Chain Solutions.
We digitised product development through SAP enterprise product development in our design portfolio. In this context, I’m happy to launch the mixed reality viewer for Microsoft HoloLens. As well as the augmented reality viewer for iOS and Android. Users can view 3d models of products and assets. Combined with business data for improved decision making. We push service and maintenance management to the next level with various innovations.
One example of this is asset performance management. It provides a closed loop between maintenance strategy, and planning through failure prediction and maintenance execution, and back to strategy.
We help to create a single digital thread from design in an engineering department through production on the shop floor, to maintenance and service operations. And all the way until an asset is sunset, and partners are key to making that happen.
We are proud to partner with leaders like Microsoft and Siemens, just to name two. Together with Microsoft, we are reinventing digital manufacturing operations. Later, I’ll be joined by a very special guest from Microsoft to talk about the exciting partnership. But first, let’s focus on our innovations in this space. With SAP Digital Manufacturing Cloud we combine robust edge computing on the shop floor with intelligent factory and plan processes in the cloud, combining the best of both worlds and this enables businesses to run mission critical processes with highest availability and scale by leveraging the innovation speed of the cloud.
I’m also proud of the progress we are making together with Siemens. By teaming up we are putting our customers on a faster path to creating a digital spread. Last year, we added Siemens Teamcenter to our product lifecycle management portfolio, and the integration with SAP S/4HANA is about to follow. The integration with unique differentiating capabilities will be a game changer.
Now we’re taking the next step by complementing the Siemens solution portfolio with SAP solutions like SAP asset strategy and performance management. In addition, Siemens is implementing SAP asset intelligent network at their plans proving the value of our partnership on its own.
Coming to the next key capability. Our solutions transform fragmented supply chains into a unified, intelligent, and collaborative network. The SAP Business Network is the largest network of its kind, combining the SAP Ariba network, logistics business network, and asset intelligent networks to name a few. It enables collaboration, process orchestration, and create visibility with suppliers, manufacturers, logistics providers, and others.
In executing on our vision for the SAP Business Network, I’m happy to introduce our new Trading Partner Portal, delivering a unified experience to maximise responsiveness to customers. And we also help to build industry specific networks and alliances. We are proud to be a founding member of Catena-X and network to solve complex challenges in the automotive industry.
And last, but certainly not least: sustainability. Just as end-to-end processes extend beyond a company’s own four walls. So do emissions. The carbon footprint accumulates along the value chains and across industries and companies. We know that supply chain emissions are 5.5 times higher than companies’ direct emissions.
Last year at Sapphire, we announced Climate 21 and delivered SAP Product Carbon Footprint Analytics as promised. With our new product SAP Product Footprint Management we are now enabling customers to evaluate and assess their carbon footprint at scale. And the link between resource reuse and emissions is only becoming clearer.
45% of co2 emissions can be tackled by transforming the way goods are made and used. The pathway to a low carbon future is circular. What’s waste or output for one company can be a valuable resource or input for another. With our profound knowledge of business process software, we can identify those opportunities. We will contribute with various solutions, such as the new SAP Responsible Design and Production. By making circularity, a key principle of product design and production, manufacturers can reduce waste and unlock new value.
To sum it up, SAP helps you to achieve agility and productivity in a global networked economy while acting sustainably. And of course, we are not doing this alone, but with great partners, such as Microsoft. I’m happy to welcome Scott Guthrie Executive Vice President and head of Microsoft’s Cloud and AI group, to talk about his experience at Microsoft with our digital Supply Chain Solutions.
Scott, it’s so great to have you here with us today. Microsoft itself runs highly complex supply chains for the hardware business but also for sure for the cloud computing business. Can you tell us a little bit about how you benefit from SAP’s Integrated Business Planning solution?
[Scott Guthrie]
Yeah, thanks, Thomas. And it’s really great to be here. You know, Microsoft and SAP have had a long-standing trusted partnership for 25 years now. And we’ve been working together to bring SAP solutions on to Azure, through the digital supply chain initiative. Through SAP’s Integrated Business Planning is a best-in-class planning solution. And running it on Azure provides increased resiliency. And Microsoft itself has been running SAP IBP in the devices supply chain for three years now. And we’re excited to have recently launched the first release for our cloud supply chain, this past March, which has sort of implemented the ability for us to do both demand and supply matching.
You know, like most supply chains during COVID, we’ve increased our resilience and focus around resiliency, including the ability to position and manage our inventory and buffer globally, and reduce our end-to-end cycle time. And SAP is an incredibly important part of that journey.
[Thomas Saueressig]
I think both of our companies believe in ecosystems, because partnerships are absolutely essential: because we all know that we cannot solve all the problems on earth so we need to join forces. And I’m quite frankly very, very excited about what we do together with regards to industry 4.0, and how actually we reinvent manufacturing operations with highly-scalable cloud, but also robust edge computing. Can you tell us a little bit about this initiative?
[Scott Guthrie]
Absolutely. You know, I think it’s the Industry 4.0 initiative we’re doing together, you know, is an example of where we’re really partnering deeply to drive the partners and the ecosystem forward. Yeah, I think industry 4.0 offers a unique opportunity to unlock the immense value that’s currently in various manufacturing silos and move the critical capabilities of manufacturing to the next level of productivity and impact.
Sustainability, energy reduction, and increased production output are all areas of value that industry 4.0 has the potential to unlock. And the Microsoft and SAP partnership and industry groups, such as the Open Manufacturing Platform, and the Open Industry 4.0. Alliance, it was really focused on enabling large scale productive adoption of industry 4.0 and extending the value of the SAP Digital Manufacturing Cloud to not only leverage Azure, but bring modern digital manufacturing capabilities into the production environment, using our Azure Stack Edge hosting capabilities that are critical, as well as the critical SAP DMC capabilities, is really a unique value proposition that we are doing together that reflects our shared perspective.
[Thomas Saueressig]
Yeah, absolutely. And I think the interesting piece is also that there’s so much exciting opportunities also, ahead in our partnership. And so it would be actually great to share some details and the value for our customers, what’s coming next?
[Scott Guthrie]
Yeah, I mean, what’s great is there’s so many great initiatives already happening now across Microsoft and SAP and the investments into SAP: S/4HANA, for example, on Microsoft Azure, to accelerate migration to increase operational efficiency, strengthen security and resilience, and really empower developers with an innovation ready platform is one that you know that we’re working closely with many, many customers and partners throughout the industry on.
And we in fact, run ourselves. Both companies on top of Azure with it. We’re doing continuous innovation with the integration of Microsoft Teams across the SAP solutions portfolio to help create seamless employee collaboration across business workflows, engage business partners and suppliers based on real-time data, and simplify the remote sales experience with embedded in app collaboration. And you know, it is it customers across all industries are continuing to digitally transform and move their on-premises, SAP S/4HANA to the cloud. They’ve shared how running on Azure is providing the velocity, the availability, the scalability, elasticity, they need to… increase the visibility but also drive more transformation and efficiency within their businesses.
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And you know, two examples of just some joint customers that we’re working with of literally hundreds and thousandss would be Walgreens/Boots, as well as Carhartt. SAP S/4HANA was able to give the Walgreens/Boots Alliance, real-time visibility into their inventory, which was critically crucial for them as a major pharmacy during the pandemic. And they’re operating in 25 countries, and having to deal with real-time healthcare needs because of COVID. And they chose to run SAP S/4HANA on Azure, because of its agility and flexibility to scale up and out quickly to meet their business needs. And now they have access to their data in one place, integrated into their cloud, they can now offer the best possible customer experience online, and in their stores. And I think that just speaks again, to the deep partnership we have between the two companies. And you know, really the power and the magic that it enables for all of our partners and our customers together.
[Thomas Saueressig]
Yeah, I couldn’t agree more. This is a great example, and I’m also very excited about the strategic partnership, and also to take it really to the next level joined together. Scott, thank you so much. It was a great insight and we wish you for sure to stay safe and healthy. Thanks so much, Thomas.
So what have you seen today, SAP is with you to handle disruptions impacting supply chains, while at the same time strengthening customer experience, and setting the foundation for future growth. Let’s evolve to resilient supply chain by becoming more agile to sense, predict and respond to disruptions by increasing productivity through the digitalisation of industrial processes. By improving connectivity with business partners to enable next level collaboration through our global network. By implementing and running sustainable business practices
The breadth and depth of our SAP digital supply chain portfolio is unparalleled. Using our SAP Business Technology Platform, we leverage the latest technology such as the industrial Internet-of-Things, Artificial Intelligence, and Augmented Reality, as well as cloud and edge computing. And we are continuously innovating together with you. Thank you very much for listening.
[Melissa Chan]
Thanks Thomas and Scott for the introduction to those most important topics which are on top of mind for most of our audience. Lots of interesting announcements coming up next.
I am welcoming our regional SAP leadership team John McNiff (head of digital supply chain EMEA north), Mike Wade (General Manager, digital supply chain EMEA south), and Andreas Wagner (General Manager, digital supply chain, Middle East and Europe).
Welcome everyone to the studio. I wanted to start with a question for all of you, which is how are the market dynamics in each of your regions impacting the supply chains of your customers? Why don’t we start with John?
[John McNiff]
Okay, thanks, Melissa. So, in my region, you know, we have a mature market, and there’s a lot of industry diversity. Before recent events, a lot of customers were really struggling to transform quickly. They knew they had to, but they weren’t going quickly. What’s happening now, though, has really accelerated that. What excites me the most in our region is the opportunity that that brings so the most persistent requirement and request is around resilience.
To get resilience, you need total transparency of the complete network. If you can see it, then you need to respond, and to respond, as you heard Thomas say, you have to synchronise then the execution both internally across departments, but also externally.
And the second thing that’s really cool: I think our region I believe what we lead in is all about sustainability. It’s not only survived the pandemic: it’s thriving, it’s front and centre. And increasingly, all customers are looking to have a strategy around co2, when you consider that 94%, according to McKinsey of supply chain, creates the carbon footprint, it creates a great opportunity to transform better.
[Melissa Chan]
And Mike, are you seeing the same thing in your region?
[Mike Wade]
It’s slightly different. I think with this in this incredibly diverse region, what we’re seeing is the emergence of governments focusing their resiliency on in-country manufacturing capability, and no doubt that has been prompted by the pandemic.
One example is here in the UAE, United Arab Emirates, which has launched an initiative called Make It in the Emirates, which is the UAE is National industrial identity to support domestic manufacturing. The UAE has a target to increase its industrial revenues to just under $82 billion over a 10 year period. Now, this creates a significant shift in how supply chains will be planned and operated here in this market. And actually, what this also does, is brings an increased focus on the need to develop the required people skills, especially in those countries, which have not previously focused as strongly on manufacturing. And then across the southern Mediterranean countries and European countries, we’re also seeing an increase in funding from governments to invest into that manufacturing capability.
[Melissa Chan]
And Andreas, your thoughts?
[Andreas Wagner]
Well, as Thomas mentioned earlier, you know, a key topic for our customers here in EMEA is definitely synchronised planning in the past 12 to 16 months. So all parts of the company need to be networked. And you know the planning of customer requirements is transferred directly to production and the logistics process is controlled from there.
And let me give you another recent example: microprocessors are currently very scarce and extremely competitive commodity especially among car manufacturers after the shutdown of several plants.
So this higher supply chain complexity and demand uncertainty really requires segmented supply chain strategies to balance risk and opportunities. And we in EMEA, we are working closely with several customers from the automotive sector to help achieve this required agility by combining strategic and operational planning. And on top we are also working in an automotive network Thomas mentioned it also Catena-X, and extend the ecosystem with the objective to create a uniform standard for information and data-sharing throughout the entire automotive value chain.
[Melissa Chan]
Great, John, how do you see SAP helping your customers in terms of enabling the supply chain initiatives in their business?
[John McNiff]
Now, I mean, we’ve got hundreds of great cases around the historic benefit to inventory reductions, working capital. I think the thing that really excites me is these new opportunities that we talked about. Things like embedding sustainability as a value-driver, right across over processes. You know, it’s not just the producers, the manufacturers but also the extended net work if you think about service companies like … logistics, who traditionally was a trucking company, that lots of go digitalised, with the aim of providing better customer service, and ultimately, to give good data real-time back to their customers. And that’s going to not just be a nice to have in the future, it’s going to be something that’s mandated. And plus, hopefully you’ll hear later from Arla Foods did a great initiative to drive responsiveness through demand sensing. And now we’re looking at how do you also embed the value driver of sustainability into their planning processes? So lots of great cases.
[Melissa Chan]
And Andreas, why do you think people select and decide to go with SAP?
[Andreas Wagner]
Well, following the statement of the World Economic Forum, end-to-end visibility and transparency across the supply chain can only be achieved through interoperability and data sharing between disparate systems. So we at SAP, we are in a leading position to support our customers in two ways.
First, we already deliver a broad and integrated solution portfolio to cover the supply chain end-to-end. And second, we extend our portfolio continuously with the latest technologies and the clear roadmap to be the trusted adviser for our customers to become digital champions.
And let me underline this with a recent study conducted by PwC among 1600 supply chain managers, and they have identified so called Digital Champions. I mean, these digital champions are leaders in digital supply chain, and they have invested heavily in technology and impressive results in logistics, cost reduction, payback on investment and even revenue increase underlines the importance of this strategy.
[Melissa Chan]
Got it. Thank you so much. And, Mike, I would love to hear your thoughts on the importance of resiliency in supply chains.
[Mike Wade]
Yes, I thank you for that question. I think what I’d like to just share is that across this region, retail has gone through significant rapid change and growth. You know, online retailing has probably jumped several years of growth in the space of the past 15 months. And we’re seeing a real increased focus on fulfilment operations. It’s a great example of building resilient supply chain capability.
I was in a call recently with a senior executive for an African multi-format retailer, they’re going through a huge supply chain transformation. As a result of the changing customer behaviour and ordering patterns, fulfilment, operations and logistics are the main focus area.
Now this pace of focus on omni-channel fulfilment capability, actually reminds me somewhat of the original wave of growth in online shopping and retailing way back in the early 2000s. The difference this time is that our customers know after 20 years of experience, what is needed to digitally transform their fulfilment and logistics capability and build in resiliency.
[Melissa Chan]
Thank you so much, John, Andreas, Mike for joining us in the studio. We really appreciate it.
Coming up next is an outside-in perspective, here’s our next guests with their point of view about the changed world and where they see the role of manufacturing going forward. This panel will be moderated by SAP’s Amogh Umbarker, Vice President of strategic customer engagements and co-innovation for industry 4.0 and sustainability.
[Amogh Umbarker]
Thank you, Melissa and welcome everybody. It’s a pleasure to host this great thought leadership panel today. First, a warm welcome to Francisco Betti head of advanced manufacturing and production at the World Economic Forum.
[Francisco Betti]
Thank you very much for having me Amogh.
[Amogh Umbarker]
And also a warm welcome to Nicola Serafin, Chief Technology and Operations Officer at the Delonghi group. On a personal note, Nicola, I have to say I love your coffee machines.
[Nicola Serafin]
Delighted to hear that Amogh, and I’m happy to be here today with you.
[Amogh Umbarker]
This is going to be a great discussion. As we all know, recently, the world has been exposed to the fragilities of supply chains. So coming to you, Francisco, the recent health crisis combined with the social and economic issues of the past, created a perfect storm for supply chains, didn’t it?
[Francisco Betti]
It did, however, I want. I think that what is important to flag is that that perfect storm was already forming on the horizon before COVID-19. And it was actually driven by three main mega trends.
Just to outline a bit which those are, I mean, first of all, the fourth industrial revolution, and the new set of technologies from automation … that were helping companies already transform their operations to drive efficiencies and productivities.
Second, of course, climate change, and the need for companies to embrace sustainability and be able to stay in business going forward. And then finally, the socio-economic instability and trade tensions that we observed over the past couple of years that were as well were pushing companies to rethink their strategies. And overall, you know, the combination of these mega-trends were really forcing companies to look at their global strategies and rethink them, and when COVID-19 played, it’s a major accelerator factor, but also stress test.
[Amogh Umbarker]
Thank you, Francisco. This is something a lot of us have not thought about before. Coming to you, Nicola, how did the pandemic impact the longest supply chains?
[Nicola Serafin]
Yeah, definitely our first priority was business continuity. We had to keep our factory running despite cognitive restrictions. And so we increased the shift as to reduce worker’s simultaneous presence on the shop floor.
Then, our second priority was to minimise disruptions. And we made it possible to do certain activities in remote working thanks to the new accessibility to systems, and also upscaling our employees… And we managed for example, some wherever you operational remotely thanks to the advanced warehouse management system. And third, we diversified our supply base. We have been used to have most of our suppliers serving one geographical area. Now we spread out. If we had one supplier in China, now we have developed also one in Europe.
[Amogh Umbarker]
Great points, and good use of warehouse management for remote operations during the pandemic Nicola. So Francisco now that companies like Delonghi have had to rethink and do operations differently. What will this mean for manufacturing and supply chains going forward?
[Francisco Betti]
Well okay, I think that what we are observing is that some of the changes that were adopted to respond to COVID-19 will most likely become permanent. And let me give you some concrete examples. Right. If you look at the progress that was done on the agility, and customer centricity front, well that is likely going to continue because there is an increasing need to adapt to a constant change in demand.
Another example could be the new balance that was found in between automation and employee engagement, employee augmentation, which is required to increase productivity and flexibility going forward.
And then finally, net zero sustainability, which is going to be needed to respond to customer expectations, but also the increasing pressure that is coming from the environment and new revelations that we’ll likely see in the years ahead.
I think that going forward, companies will need to adopt a new mindset and a mindset of what we call continuous adaptations. Now the very good news is that industry 4.0 probably carries a huge promise for success in this space.
[Amogh Umbarker]
Great examples Francisco. We experienced the same at SAP and since you brought up industry 4.0, let me get Nicholas view on why industry 4.0 was so revolutionary. And how did SAP’s industry 4.0 offerings help along his business?
[Nicola Serafin]
Oh, thank you for asking. Industry. 4.0 was paramount in redesigning our plant in Italy four years ago. Its principles were so effective. Agility, flexibility, cost control. The ability to customise. This was a groundbreaking. But there was a hidden extra value in industry 4.0 that we realised that the recent pandemic. Indeed, we never predicted the impact of managing the physical segregation of our employees.
And we have been so delighted to learn of industry 4.0 problem solving abilities for our remote workers. But let’s come back to some industry 4.0 benefits and performances. Thanks to the SAP advanced implementation our productivity increased by 31% in the past four years, and now our asset downtime is reduced by 82% while the end-to-end the data visibility, reduced our planning frozen period from five weeks to just three days, or our minimum order quantities from 200 to just 16 pieces
[Amogh Umbarker]
These are very impressive business outcomes Nicola. Franscisco anything to add to what Nicola just said on the industry 4.0?
[Francisco Betti]
Well I think that he’s absolutely right and industry 4.0 is the is the key here. A great examples of that are coming from our world global lighthouse network, which is a community of some of the most advanced manufacturing companies and facilities from all around the world which are really setting a new benchmark for manufacturing globally, whether it’s on gross cost reduction, sustainability, they are really taking impact to double digit figures, which is unprecedented and quite impressive. And I think that the beauty is that, you know, as they transform digitally, they have noticed improving their operation but they’re also enabling new business models, which is how they’re going to be driving growth in the years ahead.
[Amogh Umbarker]
Yeah, key impact drivers and KPIs which can serve as strong motivators for companies in their industry folders, or initiative. Francisco, our company’s ready to adapt and deploy?
[Francisco Betti]
Well we are constantly surveying companies and what we have realised is that the deployment of industry 4.2 at scale remains a big challenge for for most I mean, based on some latest data 70-75% of manufacturing companies are still stuck in what would be defined by us as the purgatory, which means that they have a significant investment in technology, but not really seeing the return on investment.
Now, the good news is that for an increasing number of companies value is now well understood and some of the outcomes that that Nicola was sharing at Delonghi provides a great example of what can be achieved by Industry 4.0, and I think that we have a great opportunity to learn from from such front runners.
[Amogh Umbarker]
You have very valuable points. Okay, let’s move on to a topic which is at the top of our minds lately, sustainability. Nicola, how has digitalisation affected Delonghi sustainability goals?
[Nicola Serafin]
Definitely when you digitise you have better control. And for example, we lowered our co2 emissions by 7% in 2020, compared with 2019, and our environmental standards have gone beyond the industry best practices thanks to the MAS, the manufacturing distribution system. So now you can enjoy any consumer can enjoy a coffee directly from our machine. Because we are using the same food standards as you might experience with a bottle of water. You do not need to clean arrange before drinking your first coffee, and you are perfectly safe for a great taste.
But we also digitise the testing process of our coffee grinders and our coffee brewers saving more than 100 tonnes of coffee beans per year. Because we are using Artificial Intelligence, applying predictive analytics to testing our machines, and our grinders. These are unique and superior standards that we developed thanks to the SAP technology.
[Amogh Umbarker]
Great achievements in sustainability Nicola. Francisco as you know, SAP has already pledged their support to the UN to the World Economic Forum and the Climate 21 initiative to help our customers achieve their sustainability goals. Do you think a transition to net zero is now a must-have for companies?
[Francisco Betti]
Absolutely, I think it’s a requirement for any company willing to stay in business going forward. And the reason is that there is increasing pressure that is coming from customers, regulators and the environment itself. But most importantly that it’s the right thing to do.
I think that the very good news is that with digital transformation Industry 4.0 we can see that the transition to net zero can be really enabled and accelerated. Think about how digital transformation is helping companies save from water consumption, materials consumption, also enabling recycling, reuse and remanufacturing.
I believe that thanks to industry 4.0 sustainability does not come at the expense of efficiency anymore. And that’s definitely great news.
[Amogh Umbarker]
You have given us a lot of information today, and I appreciate your insights and a great discussion. Nicola, any final thoughts as you continue your journey and Delonghi?
[Nicola Serafin]
SAP has allowed us to develop our business model in the past few years. And I’m eager to see how we can continue this transformation journey in digitalisation towards sustainability together for our future. But I can also say that the experience of Delonghi as a large company could be today, valuable and applicable model also for smaller companies.
[Amogh Umbarker]
And Francisco your final thoughts?
[Francisco Betti]
Yes, Maybe a couple of thoughts Amogh. I think that first of all, there is an urgent need to accelerate the transformation of industries, and to do that in a responsible way. And I think that what I mean by the responsible way, is the opportunity to create and deliver new value not just for shareholders, but also for workers, the environment, and society. I was hearing Nicola, before, you know, the seven, the 7% co2 reduction in emissions in one year is quite unprecedented, and a great example of what can be achieved with industry 4.0.
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And maybe a final thought is that I believe that a key to succeed in this journey is collaboration and collaboration not only across companies, but also with governments, academia, and labour unions. And this is what we are doing with SAP and other partners here at the World Economic Forum.
[Amogh Umbarker]
As we all can see, these changes need to happen now. So the world can come back together and build a great future not only to serve our needs, but also of the next generation. Thank you both for joining us today. And back to the studio.
[Melissa Chan]
Thank you so much for this fascinating conversation. Clair, how are things heating up on social media?
[Claire Richardson discusses the Sapphire Now 2021 social media message board][Melissa Chan]
Thanks so much, Claire. So for those of you out there for listening, I hope you found it all a lively conversation. Now as we keep going. Let’s see what else is coming up ahead.
Every year SAP celebrates the most innovative organisations around the globe who harness the power of the latest SAP products and technologies to disrupt industries. Let’s see who our 2021 winners are.
[A short visual presentation celebrating the winners of the SAP Innovation Awards 2021][Melissa Chan]
One of our 2021 winners in the adoption superhero category is Accenture with reimagined treasury processes to be more digital, intelligent and automated. Let’s now hear from them and learn why customer centric supply chain matters. Over to you a Abadesi.
[Abadesi Onsunsada]
Thank you. Today I’m excited to talk to Michel Roger, Managing Director of Global SAP supply chain lead at Accenture. Hi, Michel. My first question is can you define a customer-centric supply chain and tell us how it’s different to a traditional supply chain?
[Michel Roger]
Sure. So traditionally supply chain has been to full scale, to optimise the cost and really not to serve today’s business which is a more complex product, a more complex client, a new channel, thinking about COVID, than the explosion of the direct-to-consumer type of channel. So now is the time where we have multiple supply chain, we don’t have one monolithic supply chain, but multiple or segmented supply chains, and the customer-centric situation is all about that how you enable that type of multiple supply chain.
[Abadesi Onsunsada]
Incredible. So tell us what value can be captured with a customer-centric supply chain?
[Michel Roger]
Yeah, sure. Again, the supply chain was made for just-in-time, avoiding redundancy, you know? Optimising throughout and what was really the driver of supply chain was to reduce the cost.
And now actually, supply chains start to become a way to differentiate yourself by serving better the customer and then gaining market share through that. So it’s a big deal, that shifting from a very cost-centric to a really revenue growth-centric type of approach.
You give a practical example, I’m working for client. A 20 billion company, and we are, you know, embarking on that journey and start with kind of establishing a business case. And they are aiming at 200 million annual savings, bringing through that type of end-to-end transformation. And considering things like, you know, automation, as you know, to de-multiply your supply chain, you obviously need more automation, especially when you think about order processing, how you can really have kind of a touch-less order processing, how you can also better cope with demand and supply variation. Everybody has in mind the pandemic and how you can really quickly, re-balance your production, re-balance your distribution according to what’s happening in the world. So all that really bring that that value to life, and it’s very significant.
[Abadesi Onsunsada]
Thanks for sharing that advice. So how do you get started on the journey to become more customer centric?
[Michel Roger]
We have three paths that I see most often. One is on many of our clients, there is a supply chain agenda. And it was simple way to start is really, you know, working together looking at you know, the different priority. And then maybe consider some things like segmentation approach.
Another pass that they see actually much more often right now, it’s how you can embrace what is happening on an ERP transformation with SAP S4 at the centre, and how you can shift the conversation from the very IT centric to a business driven type of agenda. And you can bring along connected capabilities because the ERP is important, but there is many surrounding capabilities that you want to bring around like planning, procurement and such things. So, the third path might be a bit more tactical, it’s kind of a continuation of what’s happening with the pandemic. You know, many companies react on, you know, on few things to increase that resiliency and all these as being kind of learning from the pandemic. And you can, you know, take those learnings and make it more robust so that you are getting better prepared for the next wave of, you know, I would call it supply chain shock, whatever shock it is.
[Abadesi Onsunsada]
Thanks, Michelle. So how does a customer-centric supply chain help a company meet its sustainability objectives while staying relevant to customers and operationally resilient?
[Michel Roger]
Sustainability was a bit on the back burner for the last year: everything was about survival. And I think we are getting back almost to normal now. And sustainability is back you see in front and centre of the agenda and supply chains a big piece of that.
I’m proud to say that Accenture and SAP are actually actively working to co-design and co-develop a new set of solutions, the Responsible Production and Design solution that actually will aim at really considering sustainability as part of the core design of the supply chain, and not an afterthought.
[Abadesi Onsunsada]
Thanks, Michelle, it’s been great chatting with you.
[Melissa Chan]
Lots of good advice here. Thanks, Abadesi.
Balancing production is at the heart of our next topic about just-in-time dairy products. My next guests will help me understand what this is all about. With me are Alfred Benny Christiansen, lead architect planning and forecasting at Arla Foods in Denmark, and Alexander Dietrich, head of group logistics at Doehler group in Germany.
Welcome to the studio, both of you.
Benny, I want to start with you. And just tell us a little bit about our left foods and the challenges your business was facing with supply chains.
[Benny Christiansen]
Yeah, first, just to two words on Arla, because I’m conscious, not many may know the company. We’re what we call a very fast-moving consumer goods company, where we produce milk-based products: pack them, ship them and move them to the customers, all within 24 hours. So it’s really within our DNA to move products and move them fast. So whenever we get some milk, we need to move it because our products are perishable.
A few numbers, may be helping you. We are the fourth largest dairy company in the world. But the largest if you measure it in organic milk products. Around 7 billion really euro revenue, and 60 to 70 year production facilities. And leading up to the sustainability question from before we also employ zero carbon, even from the cows to the consumer in 2050.
Now, the challenges, which is probably the interesting part of the question is that, we are in the middle of production sales, like all of you, but we also have this variable input of the milk. So the milk, we don’t have control over how much the cows are producing every day, we have an indication, but we have to take it, we have to move it. And we had a good planning situation in APO, but it was very much, functionally oriented, you did demand planning, you did supply planning, and so on.
And we really were looking for something else, we needed something to give us a better end-to-end picture. We needed to be exception based to only focus on the different exceptions popping up in the supply chain. Because moving so much milk, you can’t have a full picture of everything. And finally, we needed to automate the mundane, you know, good old, polite parado 8020. There’s so much stuff you can just automate, so they can free up the mind of the planner to really focus on a complex.
[Melissa Chan]
Great. So you’ve talked about the challenges. How did you overcome the challenges? How was SAP involved in that?
[Benny Christiansen]
Yeah, well, actually, sometimes you’re allowed to get lucky, because SAP just, you know, launched the IBP, a few years before we were fighting with these paradigm shifts in our planning process. So it was actually a godsend to us because we really needed to go into a scenario mode.
And those of you that worked with APO doing scenarios, it’s a bit of a complicated manner. But doing it with IBP, it’s just a blink of an eye through a scenario, do another 10 more CRM with your colleagues. It’s fantastic. And going then away from you know, rule based alerts to a more AI or machine learning based exception approach. It just fits like a glove, right? So basically, this journey that we are on with IBP is about freeing up the potentials of the planners to really crack the complicated nuts, the big story ahead of us on our journey.
[Melissa Chan]
Amazing. Thank you so much. Well, Alexander, before I throw it to the question, I understand that Doehler is an Innovation Award winner in the category of transformation champions. So for show off, congratulations. What led you to reimagine your logistics process?
[Alexander Dietrich]
So first of all about Doehler. So imagine your in nature, you see all the fruits, vegetables growing around you, that’s around 5000 different raw materials that we can use in our production. So we collect them, bring them into our 50 plants on the globe, and start transforming them, for example, you take an apple, you put this apple base in our machinery, and it is converted into a compound, a fruit, a juice into dried fruits. And all of this is then sold to our customers who do their own magic sell it to you as a consumer and you enjoy it. So that’s the last part in the food chain.
Logistics in this environment can be difficult, diverse manual, and all of this is something we want to change. And this is where we can make use of SAP as well, because we try to automate it, we try to harmonise it across all of these different streams around the globe. So finally, logistics in business life doesn’t need to be different from logistics in your private life. So when you order something at Amazon, for example, you immediately see where the package is when it will arrive, if there is any certain delays, so you can plan around. And that’s what we want to enable our customers as well to do we want them to know where our product is, and finally stick to this when they plan their production.
[Melissa Chan]
And so what are the key actions you did take to make these improvements?
[Alexander Dietrich]
So the first one is always to take a look at your master data to make sure that master data is set in the correct place. Afterwards, we gather our people and try to come into a discussion to say how can we have less processes? How can we have better more lean processes? And then on other among other topics, we figured out that it was important to take it and to make an IT make over. So this is whereSAP came into play and we decided to implement SAP transport management and SAP logistics management in our scenarios. So this is basically the logistics setup for our future.
We created a blueprint that covers 90 to 95% of all the processes around the globe in order to implement this fast inefficient with our team. So after we after this is implemented in one of our plants, you’re able to see what is the truck utilisation? How many trucks did I need? What is the fuel cost impact on any of the deliveries, what is the waiting time in our facility and also at our customer to improve this flow.
All of this put into graphs into reports and made transparent for everybody in the company not only logistics, not only in our little silo, but also to the rest of the supply chain to sales to customer service to enable everybody to work with this for road, ocean, and air transport.
[Melissa Chan]
So much data and shared to a lot of people. That’s super important. Now, what’s interesting is that there is a relationship. That’s why we have both of you on today I understand that Doehler group provides and supplies to Arla. Is that correct?
[Alexander Dietrich]
That’s correct.
[Melissa Chan]
And so can you better explain that relationship and how Doehler was able to help Arla in terms of the logistics?
[Alexander Dietrich]
Arla is a great customer for long years. And we worked together and created a couple of innovations together. And this is also a journey that we want to be on. However, it needs to be a constant innovation, a constant level of challenge for both in order to grow together. And so the more we see from each other, the better it is, for both of our supply chains.
Imagine we supply any pineapple Arla. They want to use in the yoghurt or whatever, the pineapples that we supply are stuck in the vessel Evergiven in the Suez channel. So what do you do? Instead of guessing where it is, when it comes to Arla?
What is the impact, we immediately want to know this, see it, determine any corrective action and first of all inform Arla about this in order to enable them to reshuffle their production. So that’s where we need to go to come into the game, and be there as basically the number one company in this industry to have real-time visibility and all of these live data in order to improve our logistics, and then the supply chain around.
[Melissa Chan]
I think a lot of people never thought about supply chains until they saw the Evergiven getting stuck and so Benny on your end, how does it look like for you?
[Benny Christiansen]
Yeah, well, it’s the bullwhip effect, right? It is compounded. So Doehler is a key supplier for us. And if that scenario happens, and we at the same time get, let’s say, that cows produce more milk, we have a problem where we cannot produce that yoghurt, what do we do? Do we produce a milk, get more butter? What do we do? That also needs to move somewhere in the world? And we’re in before it’s perishing. So really, this end-to-end visibility, this information flow is just so important. It’s absolutely key to our success.
[Melissa Chan]
Yeah, well, I certainly hope that no pineapples were stuck on that particular container ship that was bound for Arla. So a question to both of you about working more closely together, Alexander.
[Alexander Dietrich]
So working together is a key element because our logistics performance, our supply chain performance directly impacts our loss performance. So we need to perform in order to make Arla perform. So logistics, business network and transport management will come into our Danish facility in q3 this year directly impacting others’ performance then because we will be able to work with these enhanced systems and then finally enable us to work together with Arla in a more efficient way in the future and basically grow together.
[Melissa Chan]
And Benny, your thoughts?
[Benny Christiansen]
Yeah, no, it’s exactly the same. You know, we tightening all the time, the loop, we’re always cutting out fat, and if Doehler is running in a Ferrari, and we’re running too slow, we need also to, you know, to run at the same pace sharing information. So we can do this, the patch, handover seamlessly all the time every day. Without exception. It’s just there is no fat in the supply chain anymore. Information is king end-to-end visibility is all.
[Melissa Chan]
Thank you to both of you for a fantastic conversation. Really appreciate you joining us.
I can see the two worlds coming together more closely at some point to make the processes even better than they are now let us have a quick look into online reactions. Claire.
[Claire Richardson discusses the social media message board][Melissa Chan]
Thanks, Claire, let’s take a minute to hear from our Platinum partner, Deloitte, about building a supply chain that is resilient, efficient and integrated for value. Once again, over to you, Abadesi
[Abadesi Onsunsada]
Thank you. Today I’m really excited to talk with two incredible leaders from Deloitte: Chip Kleinheksel, principal and global SAP CTO, and Fal Thompson, Managing Director.
So what does a resilient supply chain mean to Deloitte and its industry leading clients?
[Fal Thompson]
It’s a combination of a couple of things. It’s the rise in the sourcing and procurement practices in terms of the just-in-time, requires the increased outsourcing and the increased supplier collaboration. From an external perspective, it’s also external emerging factors such as cause increased demand from a customer perspective for full transparency, increased transparency, social media and the responsibility that comes across with it. And then thirdly, I would say it’s the risk exposure that has now increased within our supply chain that have opened more and more pressure on having more resilient supply chains, supply chain operations for from an end-to-end perspective.
And as it relates to our customers, you know, I think for them, it’s more around finding the right balance into as they think about resiliency, across risk and cost and providing the agility and the ability to be able to recover quickly. So some of those, you know, pillars consist of things like having better visibility, having more flexibility in the collaboration with their suppliers and their end customers and overall control that is supported by a governance by people process technologies that they may put in place. And then finally, I would say, you know, there’s several benefits to having that, right. The companies aren’t able to prevent things that might be disruptive, such as you know, shipping ports, shutting down, etc. But having a flexible supply chain and having alternate modes of transportation may provide the ability to shift in the event that does happen, or better visibility into a supplier performance may not really prevent a supplier from going bankrupt, but they can anticipate more problems and have mitigations plant mitigation plans in place.
[Abadesi Onsunsada]
Chip can you tell us a bit more about the vision of the built to evolve kinetic enterprise?
[Chip Kleinheksel]
Absolutely, you know, to be able to empower the things that Val just talked about. Gone are the days of a static application stack that’s built to last. Rather, it needs to be built to evolve agile, dynamic, and perpetually ready to move. And it’s empowered by a couple pillars. Powered by being responsive, enabled by cloud running to be able to scale up, scale down and scale on demand. It uses a clean core, minimising technical debt, and being able to embrace agility. It’s leveraging intelligent apps. So surrounding that clean core to still embrace innovation, and embrace enhancement. And lastly, it’s inclusive. It’s recognising that there’s multiple applications in the landscape that need to be highly connected through API’s, and taking into consideration all data, not just relational data, but relational to IoT, to the customer experience. All empowering the kinetic enterprise.
[Abadesi Onsunsada]
Sounds incredible. Val, I want to come back to you and talk more about the kinetic supply chain. We know that it integrates digital capabilities across procurement, planning, distribution and operations. What are the big opportunities to innovate in each of these areas?
[Fal Thompson]
Yeah, if you, you know, just let me just start a little bit around some of the stats from a recent survey that we just conducted around this.
Around 30% of our supply chain leaders responded with they have a heightened customer demands and mandates for more faster, more accurate and unique fulfilment as their top business priority as they move, as they rethink their supply chain and the resiliency in their supply chain. And 60% of them are in some type of a journey towards transforming to a digital supply chain networks in the next 12 months and about 50% 49% to be specific of our customers have warehouses and distribution centres that managers say that they’re still using manual processes currently in their order fulfilment, and not using any lean optimisation practices.
So what this allows is for an opportunity to look, you know, think about moving the additional supply chain that are more discreet and static to a more of a dynamic capability. That the kinetic supply chain allows you to embrace and embody. It’s a shift, it’s a mindset shift really, you know, to think about this from a static to a dynamic, but it truly allows work. to proactively since demand shifts the capabilities they have based on any supply disruptions, and to be able to quickly configure and be agile to address any of the disruptions in the market.
[Abadesi Onsunsada]
It’s been an absolute pleasure to hear your insights thank you so much.
[Melissa Chan]
You’re almost at the end of the show. And thanks to all our amazing speakers today. We hope you enjoyed this show and gained insights as you continue with your own transformation journey. This is only the start of the day. So please make sure to join our upcoming sessions to hear more customer stories and get more insights on SAP’s and our partner’s solutions. As Sapphire Now continues, SAP experts are standing by to answer your questions, so please engage and reach out to them. As we consider the role each of us plays in this ecosystem. I want to express our gratitude to all the SAPPHIRE NOW sponsors and remind you once more, to visit our partner showcase at Sapphire.com. With that, thank you for watching, and stay safe. I’m Melissa Chen and see you next time.
