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TRANSCRIPT
Architecting Next-Gen Connected Supply Chains (Physical & Digital)
Peter Vanderminden, MBBIndustry Consultant, IoT & Digital Supply Chain StrategiesDirector, APICS, past Director Supply Chain CouncilMay 14, 2015
Enterprise Architecture?
• How many in this room are trained/certified in one of the following?:
– TOGAF, DODAF, ZACHMAN, IASA, CMM, Agile, SCRUM
• How many in this room are trained/certified in one of the following?:
– CPIM, CSCP
– SCOR, Six Sigma, TQM, Viable Systems Model, System Dynamics Modeling
© 2015 Peter Vanderminden
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Product & Process DesignDesign Chain - DCOR™
Sales & SupportCustomer Chain - CCOR™
Supply ChainSCOR ®
AssistSell ContractPlan RelateIntegrate AmendPlan Research
Plan Source Make Deliver Return
Design
Enable
Domains of Business
Product & Portfolio Product Lifecycle Chain -PLCOR™ Launch ReviseIdeatePlan Develop Enable
Stocked Product (sS1) Make-to-Order (sS2) Engineer-to-Order (sS3)
sS1.1 Schedule Product Deliveries sS2.1 Schedule Product Deliveries
sS3.1 Identify Sources of Supply
sS3.2 Select Final Supplier(s) and
Negotiate
sS3.3 Schedule Product Deliveries
sS1.2 Receive Product sS2.2 Receive Product sS3.4 Receive Product
sS1.3 Verify Product sS2.3 Verify Product sS3.5 Verify Product
sS1.4 Transfer Product sS2.4 Transfer Product sS3.6 Transfer Product
sS1.5 Authorize Supplier Payment sS2.5 Authorize Supplier Payment sS3.7 Authorize Supplier Payment
SCOR: Source Level-3 Processes
SCOR: What Are Your Metrics? Why?
Strategic Attribute Metric (Strategic)
Reliability Perfect Order Fulfillment
Responsiveness Order Fulfillment Cycle Time
Agility Supply Chain Flexibility
Supply Chain Adaptability†
Cost Supply Chain Management Cost
Cost of Goods Sold
Assets Cash-to-Cash Cycle Time
Return on Supply Chain Fixed Assets
Return on Working Capital
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… And to Diagnose Root Cause Issues550+ SCOR KPI’s Help Measure Performance…
Digital Masters
Firms that are "Digital Masters" are 26% more profitable than competitors and experienced 9% greater revenue from physical assets.
Leading Digital: Turning Technology into Business Transformation by Didier Bonnet, senior vice president of Capgemini Consulting and MIT researchers George Westerman and Andrew McAfee.
Digital Mastery by Industry
Leading Digital: Turning Technology into Business Transformation by Didier Bonnet, senior vice president of Capgemini Consulting and MIT researchers George Westerman and Andrew McAfee.
Some Digital Masters Exist in all Industries
Leading Digital: Turning Technology into Business Transformation by Didier Bonnet, senior vice president of Capgemini Consulting and MIT researchers George Westerman and Andrew McAfee.
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http://dailyinfographic.com/wp-content/uploads/2014/03/Xively_Infographic-2-1.jpg
Pesticide Monitoring
Irrigation
Tractors/Combines Service
Technician
Construction
Smart ProductsGrid
Renewables
Oil/Gas/Coal Recovery and Distribution
Pointsof Sale
Restaurants
Hotels
FuelStations
Patients
Clinics
Hospitals
NursingHomes
MobileCare
SafetySecurity
ComfortLighting
Automation
Manufacturing Integration and
AutomationRemote
Servicing
Predictive and Reactive
Maintenance
Water
Waste
PollutionControl
Fire
Emergency
PublicSafety
Law Enforcement
LettersPackages
Containers
Tanks Bulkware
Games
Events
Sports
TelevisionStreaming
Traffic Buses
Cars
Trucks
Trains
Vessels
Aircraft
Bikes Smart Energy
Smart Pro Services
Smart Retail
Smart Mobility
Smart Logistics
Smart Factory
Smart Cities
Smart Entertain-
ment
Smart Health-
care
Smart Building Home
Smart Agri-
culture
Transforming the business to Connected Operations
Proactive &
predictive service
delivery based on
asset condition
Service
organization as a
growth & profit
center
Connecting devices
enables new
service models
Customer, product
or services insights
enable competitive
differentiation
Information flows enabling Connected Manufacturing and Supply Chain Ops
Equipment,
Sensors
& Devices
Capture granular data and monitor real-time
performance
Design &
Engineering
Vendors, Providers &
Mfg. Partners
Dealers &
Distributors
Optimize equipment and process performance
Design
optimization
Supply chain
collaboration
New service
capabilities
Resource
optimization
Deliver proactive &
predictive services (eg
predictive maintenance)
ID
OEM Cloud & Big Data
Services
Innovation Can Disrupt the Existing Supply Chain… or the Existing Supply Chain Kills the Innovation
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Semi-Radical
Semi-RadicalIncremental
RadicalNew
Near to the Existing
Near to the Existing
New
Business Model
Tech
no
logy
Innovation Matrix
The Industrial Internet:Internet of Things (IoT) – Internet of Everything (IoE) – Cloud of Things (CoT)
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Role of CTO / IT Strategy relative to Innovation Trends
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• Where is your IT strategy operating today?
• Where are your customers moving?
• Imagine if Information as a % of Product is >50% (Based on Value to the customers)
• Think about building systems by skating to where the puck is heading vs. where it is at today.
© 2015 Peter Vanderminden
– Prescribing Doctor
– Pharmacy
– Health Plan
– Producing Pharmaceutical Firm
Example: Physical Product
© 2015 Peter Vanderminden
Logic chip, radio transmitter, LED’s and battery source
would be positioned here
Advanced RFID with sensors
Broken wires indicate, open circuit which is evaluated to
indicate a consumed dose.
© 2015 Peter Vanderminden
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Example: Connected Healthcare Supply Chain Operations
Antenna
Cloud Authentication Registries
Enterprise
Applications
RFID Tag
Reader
Field-level
Authentication
Device
• Increased supply chain visibility
• Trace their products
• Verify their authenticity
• Allow third parties to verify their authenticity
• Make product diversion more difficult
• More effective recall / returns management process
• Compliance with regulatory and customer guidelines for track & trace
• Improved cold chain management
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Imagine a future state scenario where your firm has…• Product Ecosystem of > 1B IoT devices and services
• Every device and service is serialized
• Activation is required for > 600mm, through direct and in-direct distribution channels processed via cloud services
• Receive new activation requests in excess of 100,000 per hour, 45% of which are fraudulent.
• Cloud services to weekly update/patch devices > 400mm
invalidvalid
© 2015 Peter Vanderminden
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Supply Chains to Support Physical
Sales, Revenue Recognition, A/R, A/P, ITToday’s convergence of products and services requires a supply chain that is equally adept at physical and digital operations.
35© 2015 Peter Vanderminden
Enabling firms to deliver transformative connected customer experiences in which both can access and use the data
Consumers
Prospects & social networks
M2
M C
on
nec
tivi
ty P
rovi
der
s
Mobility
Logistics
Pharma Mfg.
Healthcare Providers
Retail Pharmacies
Hospitals
Life Sciences & Medical Device
Buildings
CPG Retail
Actor-Based High-Scale Computing
Service-AssistedTrustworthy Communication
Federated Identity and Access Control
Data Storage, Analysis, and Machine Learning
IoT Operational Technology
Workflow, Document Management, Communication & Collaboration
Sales and Marketing Information Systems
Procurement and Logistics
Billing, Collections, and Finance
People Management
Production Control
Customer Service and Support
PlatformServices
Traditional SCM IT
M2
M C
on
nec
tivi
ty P
rovi
der
s
Workflow, Document Management, Communication & Collaboration
Sales and Marketing Information Systems
Procurement and Logistics
Billing, Collections, and Finance
People Management
Production Control
Customer Service and Support
PlatformServicesActor-Based
High-Scale Computing
Service-AssistedTrustworthy Communication
Federated Identity and Access Control
Data Storage, Analysis, and Machine Learning
IoT Operational and Traditional SCM IT Convergence
Mobility
Logistics
Pharma Mfg.
Healthcare Providers
Retail Pharmacies
Hospitals
Life Sciences & Medical Device
Buildings
CPG Retail
Large
Mobile
Micro
Small
Disposable
Cloud M2MDevice managementCommand & Control, Data Analytics, Passive & Active
© 2015 Peter Vanderminden
Q: What is the biggest threat to the business if the
physical and digital supply chains are not integrated?
A: Unsecured supply chains!
CLICK
FRAUD
CYBER
PIRACY
MALICIOUS
CODE
MALWARE
NIKEE.COM
BOTNETIDENTITY THEFT AUTOMATED CLICKS
NIKE PAYS FOR CLICKS ON CYBERSQUATTING SITE
CONSUMER BUYS COMPETITIVE BRAND ADVERTISED
CREDENTIAL THIEF BOT-HERDER
Product Activation 101
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Genuine validation seeks to verify that the
consumer has a legitimate copy of their product
Genuine validation is a way to ensure customers
who acquire products they shouldn’t (via piracy,
mis-licensing, victims of counterfeit etc) can be
notified that their product is not genuine.
What is Product Activation?
Product Activation is a set of anti-piracy services designed to verify that products have been legitimately licensed. There are two
main services– Product Activation , which allows user to enable their IoT enabled product, and Product Validation that verifies
whether they have legitimate products.
Product Activation
Licensing
serviceRequest
Use License
Customer
PA On-line
Activation
Services
Product key info
Binding info
Activation ID
Product Validation Why are genuine IoT enabled products important?
Non-genuine products are by far more at risk for malware.
GA Front End
Web Site
Validation
request
‘Genuine’ response
Customer
PA Front End
and Middle TierDatabase
‘Genuine’ response
Check for blocked product key,
Authenticator key check
A Product Key: 4AJ94-AL498-JGGZ8-A94HL
Represents the user’s license to use the software installed on the machine that the key is used to “unlock” or activate the product.
It is used in one form or another for all channels (retail, Volume, OEM, SBC etc)
What makes activation unique when compared to other ways to fight piracy?
It touches ALL customers regardless of how it’s acquired
We can adjust the rules that control activation thus it’s the only way we can react to piracy “on the fly”
Cyberforensics: identifying and tracking stolen products
• Failed activations are mapped in real-time
• Easily establish distribution patterns of stolen keys
• Focus on global hotspots where fraud originates
Firms will struggle to go through the IoT transformation
• Adopting new business models
• Adopting new technology
• Learning to become a software company
• Learning to become a hardware company
• There is high risk of making mistakes to meet customers SLE’s
• May try to monetize the wrong aspects, tend to focus on the direct vs indirect models
• Questions over who owns the telemetry data?
• Challenges concerning Security, Privacy & Transparency
• Mis-Match of existing skills within the organization© 2015 Peter Vanderminden
New Business Models
• Who carries the inventory cost on their balance sheet for
• A case of Coke at Walmart or Tesco?
• A surgical instrument at a hospital?
• A firm adds IoT capability to an existing product, coupled with a SaaS
Mobile app……can they charge for?
• Purchase of the app?
• Monthly access rights to the app?
• Exporting the data to another mobile application?
© 2015 Peter Vanderminden
Keurig Lessons Learned
• Added Digital Rights Management (DRM) to its gen 2.0 coffee machines.
• Locked consumers in to use of only “licensed coffee”.
• Consumer backlash, sales fell 23% YoY.
• Keurig CEO announced plans to bring back a refillable pod (May 2015)
© 2015 Peter Vanderminden
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Transition To Real-Time Enterprise – Key To Success
Business Event
Information Recorded
Information Delivered
Action TakenFocus on reducing
the action distance
• Pricing Adjustments
• Targeted Advertising Campaigns
• Alternate Supplier Orders
• Stocking adjustments
• Project Teams Resourced
• Support teams resourced
• Repair and return logistics management
• Competitor Pricing Moves
• Supplier Distribution Logistics
• Retail Distribution Logistics
• Product demand reporting
• Customization requests
• Service requests
• Returns rates
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Peter VandermindenIndustry Consultant, IoT & Supply ChainPhone: [email protected]