opensap escm1 transcript

7/25/2019 OpenSAP Escm1 Transcript

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openSAPDigital Transformation Across the ExtendedSupply Chain In a Nutshell

Unit 1: How Digital Transformation Is Impacting the Extended Supply Chain

00:00:12 Hello and welcome to the openSAP course on Digital Transformation Across the ExtendedSupply Chain - In a Nutshell. My name is Hans Thalbauer, I'm Senior Vice President forExtended Supply Chain at SAP.

00:00:24 This is a one-week openSAP course in which solution experts from the extended supplychain solutions management team will guide you through the topic.

00:00:33 This course consists of six units. After each unit, we have a self-test for you, and at the endof the course, you prove your knowledge in a final exam.

00:00:46 In this first unit, I will give an overview of what digital transformation means and the impact ithas on the extended supply chain. Business challenges of a digitized supply chain - where

does customer centricity fit into digital transformation?00:01:04 Defining customer centricity, demand sensing, omni-channel sales, omni-channel fulfillment.

Digitization will reinvent the world economy.

00:01:17 Individual businesses and societies are becoming interconnected in real time, leading to anew digital economy that is more collaborative, intelligent, responsive and efficient

00:01:29 with a dramatic increase in productivity and economic value. The digital economy willtransform the way we live, we work, how business runs, and how society functions.

00:01:40 And it will do this in a timeframe that is radically shorter than any major economictransformation in history. Over the past few years, networks have evolved that haveconnected individuals, groups, and organizations.

00:01:54 We started with people networks, like Facebook and LinkedIn. This was followed bybusiness networks, such as the Ariba business network.

00:02:01 The Internet of Things made these networks even more connected by bringing connectivityto literally everything. This has resulted in a new digital economy where everything isbecoming digitized.

00:02:14 Everything and everyone is connected, everything is being shared via the Cloud.Everything is now personalized, and everything is directly available.

00:02:24 There are more examples in businesses today. Uber is one of the world's largest taxicompanies but owns no taxis.

00:02:32 Uber is not just another taxi company, it is transforming into an urban logistics company with200,000 drivers, roughly double the size of the UPS delivery workforce.

00:02:42 Airbnb is one of the largest accommodation providers but owns no real estate. Alibaba isone of the world's largest e-commerce companies but owns no inventory.

00:02:51 Netflix is one of the world's largest movie houses but owns no cinemas. Apple is one of theworld's largest music distributors, but owns no music.

00:03:00 Amazon is one of the world's largest book distributors but owns no books. This shows usthat huge transformation is already going on and it is disrupting and changing completeindustries.

00:03:12 To be in a position to capture and create these opportunities, companies must develop anenvironment in which they can manage information and process it simultaneously acrossthe extended supply chain.

00:03:26 In this proactive state, an organization begins to transition into a real-time enterprise. Thisnew evolution of supply chain is more connected, more intelligent, more responsive, andmore predictive.


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00:03:39 This transformation has and will continue to transform the business processes and systemsthat are required to remain competitive. It will change how we design, plan, respond, make,ship, and operate our products and assets.

00:03:55 We are seeing several business drivers coming together with the company supply chain inthe center of the storm. You have to serve your customers in a different way, you have topartner and collaborate with suppliers and partners in real time.

00:04:10 You have to leverage and optimize your resources, be it the people you employ or thematerials you manage. You have to maximize and maintain your assets.

00:04:22 The key to this is a digitized data thread across the lifecycle of your products, from design tosunset. This enables a flow of information across all functions of your extended supplychain.

00:04:34 You need to create a digital framework to support the extended supply chain. Let's first talkabout customer centricity.

00:04:41 Customer centricity has been talked about in the context of supply chains for several yearsin form of demand-driven. But with connected and informed and influential customers,demand-driven has evolved into market-driven.

00:04:56 Customers are more informed and connected. They can see tweets, comments, likes forproducts that they are looking to buy.

00:05:06 We need to sense and capture all forms of demand from both structured and unstructuredsources. We are seeing more and more channels, omni- channels, emerging to servecustomers.

00:05:16 And this brings with it more complexity for the supply chains that support them. So we needto think like customers and deliver what they need and how they want it.

00:05:27 To satisfy omni-channel sales, we need omni- channel fulfillment. If I order somethingonline, I expect a delivery on the same day or at least the next day.

00:05:36 All of this introduces the need to think about demand differently. Customers can order onlineor in person.

00:05:44 We can't compete with aggregated demand anymore. We need it at the detailed level.

00:05:50 This is to service a channel, market sector, a town or city specifically. The second element

is about individualized products.00:06:03 And customer centricity goes even further - as a customer or consumer, I want to order

goods specifically designed or customized for me. Personalized solutions and products areeverywhere.

00:06:15 I can configure my own car, personalize my own drinks in vending machines, design myown sneakers. And even print my own personalized key chain, phone cover, or chocolatebar.

00:06:29 We see the need to deliver individualized products, for harnessing products and assets, andthe Internet of Things to drive real-time insights, a new business model.

00:06:40 A common feature of most companies, the personalization strategy, is a strong productplatform that is used as a basis for customization.

00:06:51 You see this when you buy anything from a car to a computer to a cell phone. Asmanufacturers seek to keep up with the need for personalized products and keep up withthe changing demand market,

00:07:03 they are looking for agility, to a manufacturer with a lot size of 1. They are building smartproducts and leveraging smarter assets that are Internet-of-Things- enabled.

00:07:16 The Internet of Things and Industry 4. 0 are changing traditional business models byconnecting people, products, and assets. 3D printing is another example of a disruptivetechnology that can bring the individualization of products much closer to the end customer.

00:07:34 The sharing economy is the third element of this framework. Meeting these demandingcustomers takes a collaborative effort from several partners across the business network.


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00:07:44 It is not limited to collaborating with your immediate supplier but a business network with allyour suppliers at tier 2 and 3 level with all your customers, all your logistics serviceproviders.

00:07:58 We also now have the ability to connect to all the smart machines and connected assetsnow connected to your network. Business networks help manufacturers to gain thenecessary insights into customer needs,

00:08:12 suppliers' actions and contract manufacturers' performance and equipment usage. This notonly ensures that quality and standards are kept high, but also that increased demand forsustainability is met.

00:08:27 The transparency process improves collaboration, decision-making as well as flexibility torespond to changing customer and economic demands.

00:08:37 The fourth and final element of this framework is about resource scarcity. Build asustainable organization that is cognizant of the resource scarcity of labor and naturalresources.

00:08:50 Digital transformation is changing the jobs and functions of supply-chain practitioners. Theyneed to leverage Big Data, both structured and unstructured,

00:09:00 now available from informed customers, connected assets, social media, the Internet ofThings. This drives the need for data scientists who can analyze and make sense of this

wealth of information in real time.00:09:13 To manage increasingly fluctuating demand, we are also seeing a huge rise in the use of

contingent labor. At the same time, where and how labor is utilized is evolving.

00:09:25 For example, in warehouses we are seeing augmented reality capabilities optimizing theworkforce and increasingly robotics replacing the workforce.

00:09:36 The second aspect is the scarcity of raw materials and the shrinking natural resources, suchas water, in the world. This is really a challenge of sustainability and how we can bettermanage the world's natural resources

00:09:50 and find alternate sources to design, source, make, and distribute the products we need.Many organizations are leveraging sustainable operations to improve products andprocesses to operate profitably.

00:10:04 This requires the management of energy and environmental resources as effectively asfinancial and human resources. It establishes a solid foundation to address thousands ofpermitting, pollution, prevention and environmentally-managed requirements.

00:10:23 These four different points of view need to be prioritized based on your company's prioritiesand challenges. Customer centricity is highly relevant to consumer product companies,

00:10:34 retail and life science companies which are already completely demand-driven.Individualized products lends itself to discrete manufacturing and engineering companies

00:10:45 which look to leverage M2M connectivity and the Internet of Things in the context ofmanufacturing and the challenge of the lot size of 1.

00:10:55 Resource scarcity, process industry, consumer products, metal, and mining. The sharingeconomy is a huge topic - transportation, logistics service providers, and wholesalers.

00:11:09 The digital core - and think about the end-to-end- visibility of the digital core bringing this all

together - the digital core of the extended supply chain and how business processes todesign, plan, produce, deliver, and operate

00:11:21 products and assets need to evolve to enable end-to-end visibility. And to bring togetherbusiness processes and analytics in real time to be smarter, faster, and simpler.

00:11:33 S/4HANA Enterprise Management is the center of these digitized business processes. Itenables real-time, mission-critical business processes across your entire enterprise,

00:11:43 from order to cash, to produce to pay, to plan to product. It enables one single source of liveinformation and a new personalized user experience that delivers instant insights on anydevice.

00:11:58 This results in a faster business outcome with reduced operational cost thanks to simpler IT,increased competitiveness with integrated fast and flexible business processes, and higher

employee productivity with focus on value- added tasks.


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00:12:16 SAP is delivering the digital supply chain across all areas with cloud and on-premisedeployment options. For example, to support the fast changing environment of customercentricity, we have integrated business planning capabilities

00:12:32 to plan and re-plan in real time. When it comes to individualized products, we havecapabilities such as the asset intelligence network and connected manufacturing.

00:12:41 To support the sharing economy, we have the business network to enable collaborationacross your partner community. And we deliver sustainability across your resources.

00:12:53 We have solutions such as product safety and stewardship. In the center providing thedigital core is S/4HANA.

00:13:01 You will learn more about these solutions as you walk through the remaining five units of thecourse. That was the first unit of this openSAP course in which I explained that the digitaleconomy is already here.

00:13:17 Your extended supply chain can be a competitive differentiator in digital transformation.Thank you for joining and don't forget to take the self-test we've prepared.

00:13:28 In the following unit, you will learn more about customer centricity.


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Unit 2: Customer Centricity

00:00:10 Hello, and welcome to the second unit of the openSAP course on Digital TransformationAcross the Extended Supply Chain - In a Nutshell.

00:00:18 My name is Richard Howells, and I'm the Vice President for Solution Marketing at SAP forExtended Supply Chain. Unit 2 of our one-week course is all about the digital transformationand why customer centricity is one of the main driving principles.

00:00:35 In the unit, I'll explain what are the business challenges driving the need for digitizing theextended supply chain; why customer centricity is one of these major drivers;

00:00:46 and discuss some specific examples and need of enabling customer centricity, specifically,the importance of demand sensing, omni-channel sales, and omni-channel fulfillment.

00:00:59 In the first unit, we discussed the overall business case for digitization across the extendedsupply chain. And we touched on the four main pillars of customer centricity, individualizedproducts, resource scarcity and the sharing economy.

00:01:14 In this unit, we'll focus on customer centricity. First of all, let's discuss the businesschallenges.

00:01:24 The global markets have had dramatic shifts on two dimensions, geographically and

demographically. In the first part of this century, we've witnessed a near doubling of themiddle class.

00:01:35 And this growth is taking place in the emerging markets. In fact, a report by Ernst andYoung has estimated that by 2030, 3 billion people are expected to enter the middle class,

00:01:46 mostly in the emerging markets. It's also estimated that 225 million people in Asia canalready count themselves as middle class.

00:01:55 This of course increases the demand for products as well as stretching the logisticsnetworks that must satisfy this demand. Then we have the demographic challenges.

00:02:06 The 21st century consumer is always on, always connected, and doesn't make a movewithout consulting the Internet. The millennial generation has emerged as a major demanddriver

00:02:18 with access to huge amounts of information about products and trends and what's hot andwhat's not via social media. And the Generation Z teenager, like my children, will expecteverything to be available via mobile devices.

00:02:36 These dynamics are changing the way that companies are conducting business.Manufacturers are consistently looking for a new way to grab a customer's attention.

00:02:47 As a consumer, I can buy through numerous channels at any time on any device. I can buyfrom the comfort of my own home via a PC or mobile device.

00:02:57 I can get messages from a store as I'm walking past it on my mobile phone, with new offersand deals just for me. I can check out a product online and buy it in the store; this is calledwebrooming.

00:03:11 Or I can check something out at the store and search for a better deal on line -showrooming. This new customer experience is changing the way that businesses senseand shape demand,

00:03:22 design and make products and deliver based on omni-channel execution. Customercentricity has been talked about in the context of a supply chain for several years in the formof demand-driven.

00:03:37 But with connected, informed and influenced consumers, demand-driven has evolved intomarket-driven. Historical forecasts, orders and even point-of-sales data are not the onlysources of data to drive replenishment processes.

00:03:54 Of course, we need all of that data, but we also need many other points of reference to fullyunderstand demand. We not only need a sales forecast, but we sometimes need a weatherforecast or a traffic forecast,


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00:04:06 which can help predict surges or drops in demand in specific regions. We not only needsales orders but market reports and sentiment analysis to see what is trending in a specificcity.

00:04:19 We need all the sources that describe the market and where the market is going at the mostgranular level. Why is this important?

00:04:27 Because the customer or consumer is becoming more demanding. If I order somethingonline, I expect delivery the same day, or at least the next day.

00:04:35 This introduces the need to think about demand differently. I can't compete with aggregateddemand anymore.

00:04:42 I need it at the detail level to service a channel, a market center, and specifically a town orcity. In this context, visibility and real-time information gathering is very important.

00:04:55 The concept of a Supply Chain Control Tower provides end-to-end visibility. Traditionalsupply chain processes where a planning run takes 4 to 6 hours are not acceptable.

00:05:05 We need information in real time in an environment to enable you to simulate differentscenarios. Can I add an additional shift? Can I reroute a shipment? What is the most cost-effective approach?

00:05:20 Omni-channel sales is introducing complexity. And the speed required to fulfill the demandand the distribution network to support the omni- channel approach is critical.

00:05:31 Exploding customer-demand data, both structured and unstructured, needs to be capturedand harnessed to develop and monetarize innovative business models.

00:05:41 It is reported that only 42% of companies say they know how to extract meaningful insightfrom the data available to them. Demand planning in today's fast-paced, fast expanding andrapidly changing economy is not an easy task.

00:06:00 Supply chain leaders are expected to quickly react to changes and improve efficiency,productivity, and customer satisfaction levels. With the digital economy come digital demandsignals from customers leveraging social media and mobile devices.

00:06:15 The ability to capture and analyze this unstructured sentiment data is key. It's a keycapability of getting closer to that consumer and a clear picture of real-time demand.

00:06:25 And when the customer has the ability to place orders through any channel in real time, they

also expect the order to be filled in real time or near real time.00:06:35 We are seeing the "Uber effect" across logistics processes. Same-day deliveries are the

norm, retailers are enabling customers to buy online and pick up at the nearest store.

00:06:45 And you can even get drivers who are offering city pickups and delivery to your doorstep.We see major retailers bringing the online experience to the store, and the store experienceto their online sales.

00:06:58 And, as a result, changing the logistics process to ship orders from anywhere. With thestore, warehouse, and DC all being fulfillment hubs to minimize inventory and maximizecustomer service.

00:07:10 As same-day delivery scenarios become the norm, we need to rethink our distributionnetworks. Forward-thinking companies are already leveraging telematics and Internet-of-Things signals from trucks

00:07:19 to optimize and reroute deliveries to speed up the transportation processes. Customer-centric processes are created by harnessing orders, forecasts, point of sales,

00:07:32 and channel and social data to sense both short-term and long-term demand. Driving thisactual demand data through the extended supply chain

00:07:40 and connecting this data with R&D, manufacturing and supply chain processes enable thedesign, production, and delivery of the most profitable solution and services to theconsumer, while maximizing customer satisfaction.

00:07:54 I'd like to show a short demonstration of customer-centric business in action. In thisdemonstration, I'll play the role of a demand planner and a transportation planner.

00:08:06 First of all, I'll be Tracy, the demand planner, who wants to take a look at the status of all thedifferent orders.


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00:08:13 Tracy is responsible for a product called the XWatch, which is being brought to market atthe moment. And I can go to my planning cockpit and I can see very quickly from what'shighlighted in red that I have a few problems.

00:08:29 My days of supply are below where they want to be and trending down. My on-shelfavailability is trending down.

00:08:35 And I can see, if I look at the graphic here, that I have a problem on the West coast of theUnited States. If I click on that, I can drill down and see more information.

00:08:45 And what I see here is I've got a projected stock out in San Francisco, in the top left-handside here, which is going to cost me 65 million dollars if I don't do something about it.

00:08:55 If I look at the graph in the middle, I have three locations where I have inventory. And I cansee that the projected inventory in San Francisco is going negative (the blue bar) over time,but I have orders coming in.

00:09:09 I can also see that I have lots of inventory in other locations, so, for example, in Las Vegas,I have lots of inventory. But I don't have the inventory in San Francisco where I need it.

00:09:19 Let's drill down into a little bit more detail to find out what's going on. So here I can see thedemand by location over time.

00:09:29 And I can see that the red bar here means I have a lot of demand in San Francisco. I have a

little bit of demand in Las Vegas, the blue bar.00:09:38 And I have very little demand at all in Los Angeles. But I can also see that there's been a lot

of activity in demand in that San Francisco region.

00:09:50 What I now want to do is really look to see what's happened since I did the planning runlast. I want to drill down and see how that demand has changed from real-time demandsignals, from the stores, from sentiment analysis.

00:10:02 So if I rerun my statistical forecast, I can see that the demand is actually higher than I'dpredicted. And it was high already.

00:10:10 I can also see, if I look at the bottom of the screen here, that I have inventory available atthe different locations. Let's drill down into a little bit more detail.

00:10:19 And I can see that I have lots of inventory in Las Vegas, but I'm going negative in San

Francisco. And if I look at the chart at the bottom, I can also see that I actually have ashipment coming into Los Angeles.

00:10:33 But the system, based on previous rules, was sending that shipment to Las Vegas where Idon't need the inventory and not to San Francisco where I do need the inventory.

00:10:44 So I want to try and optimize that inventory; I could do this manually or I could leverage theinventory optimization capabilities.

00:10:52 And if I click on that, the system has worked out that that was a problem. It's changed thedemand to now say when that shipment comes in to the port of Los Angeles,

00:11:03 ship those goods to San Francisco and not to Las Vegas. And that as you can see meansthat I now have enough inventory to satisfy the demand in that particular location andregion.

00:11:15 But I still have enough inventory to satisfy the demand in Las Vegas, so it was a good

choice. So now I want to action that, I want that to really take place.

00:11:25 I want to cancel the one delivery and replace it with another. So I can leverage thecapabilities of collaboration to send a message to John, my transportation planner, to makethose changes.

00:11:38 I can also leverage the collaboration tool to tell everybody else involved in that decisionwhat changes have been made. So they now have full real-time visibility into the changethat the planner is recommending.

00:11:51 So John now, the transportation planner, wants to look at his cockpit. And he can see, if Iupdate the map, that there were two shipments possible.

00:12:00 The planned shipment that was going from LA to Las Vegas. And the new recommendedshipment to go to San Francisco.


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00:12:11 So John wants to select that one; he then wants to be able to plan in real time how thatrerouting affects his transportation planning. And he can see that there is a truck availableto move those goods from Los Angeles to San Francisco.

00:12:26 So he clicks on that, and he can now do a load to make sure that he optimizes the truck ortrucks required to ship those goods. So the next day, when Tracy looks at her planningcockpit, she can see that life is good,

00:12:43 that the shipment has been switched, that we're now getting enough inventory in the rightstores, at the right place, at the right time. All based on those demand signals that werecoming in in real time from the different locations and the different stores.

00:12:59 So the problem has been solved for the moment. So what are the takeaways from thiscourse?

00:13:08 That was the end of the second unit in which I explained that customer centricity is changingthe way we do business, that businesses today are market-driven.

00:13:20 Omni-channel enablement is key from a sales and fulfillment perspective. Please don'tforget to take the self-test we've prepared for this unit.

00:13:32 In the following units, you'll learn more about individualized products. Thank you.


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Unit 3: Individualized Products

00:00:15 Hello and welcome to the third unit of the openSAP introduction course on DigitalTransformation Across the Extended Supply Chain.

00:00:22 My name is Mike Lackey and I am Global Vice President for Solution Management forManufacturing. Covered in this unit, Unit 3, of our one-week openSAP course is all aboutthe digital transformation and individualized products.

00:00:41 In this unit, I will explain what role individualized products play in digital transformation.Some of the key drivers of individualized products include the platform, configuration,

00:00:55 personalization, Industry 4. 0, lot size of one, and digital inventory. We see four main pillarsof the digital transformation of the extended supply chain.

00:01:08 In the previous session, we talked about customer centricity. In future sessions, we willdiscuss the sharing economy and resource scarcity.

00:01:17 But in this unit, the focus will be on individualized products. How they are becoming thenorm and how this affects how we design, make, and deliver products moving forward.

00:01:33 So what are some of the business trends driving the need and demand for theindividualization of products and solutions in the market today? Individualization: As

customers are becoming more knowledgeable and demanding,00:01:49 they expect and demand a unique, personalized customer experience. They not only want

to order a product whichever way they want, be it in a store, online, or via their mobiledevice,

00:02:02 they also want to get it personalized to their individual needs. Customers are now expectingthe customer experience to also be customizable experience.

00:02:13 Personalized solutions and products are everywhere. You can design your own sneakers,customize your own drinks and vending machines,

00:02:20 configure cars and motorbikes, and print your personalized chocolate. The speed ofinnovation: These empowered customers also expect the products to be delivered now.

00:02:34 Products have to be brought to the market faster than ever before to remain the first mover.Studies continue to emphasize that early adopters are winning.

00:02:44 Shorted product lifecycles and faster innovation cycles are increasing pressure onmanufacturers to increase the time to market by enhancing the handoff from design toproduction.

00:02:55 Companies want to maximize the return on investment before the next innovation wave ornew disruptive technology makes their current products obsolete.

00:03:04 Collaboration with partners to drive flexible, open and dynamic innovation processes iscritical. And customer input needs to be built into the process to both identify and respond totrends in the market.

00:03:18 Smarter products are driving new business models. Companies are embedding sensors intheir products and, as a result, are becoming more and more technology companies,

00:03:29 hiring software engineers, and rethinking the value delivered by their products. For example,

John Deere tractors are now equipped with sensors to transmit moisture and temperaturedata from the fields.

00:03:41 Kaeser Compressors reimagined their business and moved from selling products to sellingby compressed air by cubic meter service. This business model requires meteringcompressed air remotely and bundling this information into the charging and billing process.

00:03:59 They leverage smarter sensors embedded into the compressor to minimize unscheduledmachine downtime throughout IoT-enabled predictive and preventive maintenance.

00:04:12 The platform for personalization, this common feature of most companies - personalizationstrategy - is a strong platform that is used as a base for customization.

00:04:23 This has been common in the car industry for several years with companies such as BMWallowing you to customize your base model to order.


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00:04:32 The Apple iPhone has another great example of a platform as anybody can buy one of afew base models and then customize their own device with apps and visual effects.

00:04:42 This means that from 5 or 6 base options, everybody has a personalized device. There is aneed for a product innovation platform, which brings together MCAD and ECAD models aswell as software.

00:04:56 Once released by the engineer, all the product variants become immediately available in theWeb channel and customers can order their individualized product variant, enabling a

demand-driven engineering and manufacturing process.

00:05:10 Faster innovation cycles requiring the digital handoff and bidirectional collaboration ofengineering design data for consumption by manufacturing is driving connectedmanufacturing.

00:05:21 Managing the product lifecycle from cradle to grave has become a key initiative formanufacturing customers. 3D printing has revolutionized industries over the past few years.

00:05:35 And I've seen the emergence of technologies such as 3D printers having a growing effecton our extended supply chain processes. Sneaker manufacturers are prototyping the abilityto print a unique 3D printed running shoe

00:05:47 midsole which can be tailored to the cushioning needs of an individual's foot based on yourrunning style on the treadmill in the store.

00:05:56 Logistics service providers are investing in 3D printing farms to provide value-addedcustomization services just prior to shipment. Chocolate manufacturers are enablingcustomers to personalize their favorite treat by printing unique shapes or edible messages.

00:06:15 This additive layer of manufacturing enables us to rethink how we design, produce, andbring products to market and provide competitive differentiation and personalization to ourproducts.

00:06:30 Configuring a product to lot size of 1. As manufacturers seek to keep up with the need forpersonalized products and keep up with the changing demand market,

00:06:39 they are looking for the agility of a manufacture of a lot size of 1. Harley-Davidsoncompletely reconfigured their York, PA facility

00:06:47 to enable all machinery and logistics devices to be equipped with sensors and locationawareness. The factory reduced the lead time to produce customized motorbikes from a 21-day cycle to six hours.

00:06:59 And now you cannot find two bikes in sequence that are the same. Each model has morethan 1500 configuration options and one motorcycle off the line every 89 seconds.

00:07:12 Industry 4. 0. The Internet of Things and Industry 4. 0 are changing traditional businessmodels by connecting people, products, and assets.

00:07:21 Manufacturers are investing in how these new technologies can help their customers getmore value and that new business engagements can change established business models.

00:07:32 Digitized inventory and personalized solutions. Companies are also understanding the fullpotential of the interlock between physical and digital assets and Internet of Things.

00:07:42 We are witnessing new use cases across industries with breathable or breathtaking results.

Car manufacturers allow you to configure a car online with the options, colors, andconfigurations you need.

00:07:55 Coca-Cola have introduced the Coca-Cola Freestyle, a touchscreen soda fountain thatenables consumers to personalize their soda with over 100 different combinations.

00:08:05 And Nike has introduced NIKEiD where you can personalize your own shoes, bags,backpacks, and other accessories.

00:08:14 Logistics service providers are investing in 3D printing farms so that they can provide value-added services literally at the end of the runway

00:08:23 before a customized product is shipped around the world. Now I'd like to take you through ademo here on my iPad

00:08:32 of how this responsive manufacturing can become reality. If I come here I'm going to jump

into our connective product solution


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00:08:43 where I'm going to be able to design, structure, and manage the engineering data. Fromhere, I'm able to set up the data and then go into the system here and add more of thestructure

00:08:58 to what's it going to take to build this product and what it takes to actually configure thisproduct. On the next screen, I'm going to add the dependencies and the variants that gotogether;

00:09:10 how, in the selling cycle, to know that as you make one selection, what effect that has onthe other selection. To make sure that you are configuring the correct robotic arm here.

00:09:25 From connective product, I'm going to go into the e-commerce site. This e-commerce site isactually powered by hybris.

00:09:31 I come into this site and I can go and order a robot, but first what I'll do is configure therobot. I come in here and as I go into the pages, I find by the specifications which robot bestfits my needs based on the payload.

00:09:46 And I'm going to ask it to configure it. As I go through the specifications and start selectingwhich robot best meets my needs,

00:09:54 I also have the ability to go in and look at the robot in 3D. The same 3D visualization thatwas used in the design process is now passed down into the sales process

00:10:07 so that I know I am selecting the right robot for Once I have it configured, I can add it to the

cart.00:10:14 And now I can do the process and check out and order my individual robot that is configured

for my needs. Now the order has been processed and sent into S/4HANA.

00:10:28 When I come in here and I look at my MRP on HANA's dashboard, I see that I have fourproduction orders that are missing components. I drill in here by clicking on the Fiori screenhere, the Fiori dashboard,

00:10:43 And I see that the order that was just processed is missing a component. We're missing oneof our drive covers.

00:10:51 It tells me exactly what I'm missing and what the situation is. So I now say: MRP, please tellme what my options are.

00:10:59 So I drill down into the next space, now not only is it telling me that I'm missing a

component, it's going to tell me my best option for rectifying the situation.00:11:08 I can either accept the order delay and communicate that to my customer. I can transfer

material from a different plant or order, I can reschedule, or I can do an expedited order.

00:11:19 In this case here, I have components that are in another plant and I'm just going to transfer.Now I've transferred the material, it's on its way, I look at my schedule.

00:11:30 I'm actually going to meet my production time. Going back into my dashboard, now we cansee that only three production orders actually have missing parts.

00:11:40 And the order that was just entered into the system is now ready to go into production. So Igo into production, and the production order and the bill package has been passed down toour SAP manufacturing execution.

00:11:56 Now on the shop floor, the operator is looking that I have a production order for one robot.We're making one robot that has been customized or configured for this particular customer.

00:12:08 So I go into it and the first thing I do is look at my work instructions. Once again, the same3D visualization that was used in the design and selling process is now being transferreddown to the shop floor

00:12:21 so that we can actually see how to produce this unit. It tells me my safety rules, whatequipment I need, and what tools.

00:12:31 At any time in this process by touching the screen here, I can launch a non-conformanceand say I have a scratch on this housing. Or be able to actually communicate to the designteam on something that is wrong in the production process.

00:12:47 I do not have any non-conformances so I'm going to go to the next step and I'm going toassemble my product. Here it's telling me the components that I need to assemble.


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00:12:55 It's telling me that by clicking on Add I can add it to the as-built record. In the next part hereis that as I add this cover to the robot, I need to collect data.

00:13:05 Note that the data is automatically being collected from the Torque wrench. But not only amI collecting data and validating that I am collecting not just data,

00:13:13 but I am collecting valid data that leads to a quality product that's within the maximum rangeof that. If not, it would give me a flag and allow me to go in and take another reading

00:13:24 or correct it here at the operation before it is passed on to the next step along the way. Sowhen I get out of here, I have my as-built summary report

00:13:35 that tells me this is the genealogy or the DNA of that robot. It tells me every material thathas been consumed by what resource, by what supplier, what component.

00:13:46 The whole history of how that unit is made is right here on a single screen at my fingertips.From here, I'm going to jump out of this report and I'm going into my production cockpit,

00:13:59 which has been created in our manufacturing intelligence and integration product MII. Itgives me the key KPIs that I, as the plant manager, need to make sure my plant is running.

00:14:09 How am I doing plan versus actual? First-time quality, first-pass yield and operationalequipment effectiveness, how efficiently am I running my equipment?

00:14:20 And safety and downtime - cost data that I need to validate how well my plant is running.From the production cockpit, I'm going to go over into S/4HANA.

00:14:32 And I'm going to look from a corporate controller standpoint, it ties back into my financials.You can see not only the cost of goods by plant, I can see it by site, I can see my capitalexpenditures.

00:14:46 I can even see here in Scrap that I'm at a negative 3. 27%. But it's actually trending in theright direction, it's continuing to go down.

00:14:54 So we took this from how we configure and design our product, passed it into hybris for thatintuitive customer interaction of how they configured the robot that met their needs, how itwas passed down through production, through MRP,

00:15:10 scheduled into production where our SAP manufacturing execution took the operator

through the process of producing the part. And the ability to display dashboards allowed meto monitor and give me visibility into my global operations.

00:15:26 And that was our demonstration. So the key takeaways:

00:15:33 This was the third unit of this course in which I explained that the demand for individualizedproducts is growing. This is changing the way we design, make, and deliver to ourcustomers.

00:15:44 Designing for personalization means building a product platform. And manufacturing has tobe geared for the lot size of one.

00:15:54 Products need to be smarter to take advantage of the Internet of Things. Please don't forgetto take the self-test we've prepared for this unit.

00:16:03 In the following unit, you will learn more about resource scarcity. Thank you for your timeand attention.


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Unit 4: Resource Scarcity

00:00:10 Hello and welcome to the fourth unit of the openSAP course on Digital TransformationAcross the Extended Supply Chain - In a Nutshell.

00:00:19 My name is Mary Kilgo, and I am Senior Director Extended Supply Chain, Environment,Health and Safety Solutions. Unit 4 of our one-week openSAP course is all about the digitaltransformation and resource scarcity.

00:00:38 In this unit, I will explain what we mean by resource scarcity and how it affects businessesby impacting talent acquisition.

00:00:48 And we'll talk about changes to the nature of work in the 21st century, environmental andsocial responsibility related to consumption of natural resources and impact to communities.

00:00:59 And, finally, risk management across the global supply chain network. Once we understandbetter what we mean by resource scarcity, then we'll look at strategies for responding in thedigital transformation.

00:01:13 In previous sessions, we discussed the overall concept of the digital transformation in theextended supply chain. We talked about how we need to be more customer-centric in orderto serve the increasingly informed and demanding customer.

00:01:27 And we talked about how the customer experience is increasingly becoming a customizedexperience through individualized products.

00:01:36 In this unit, we focus on the resources required to deliver those products to the customer.And how we can manage the related business processes in a sustainable way.

00:01:46 This includes both the natural resources and the talent and labor that are required to design,make, and deliver the goods. In the next unit, we will talk about the sharing economy andbusiness networks.

00:02:02 So let's talk about the business challenges caused by resource scarcity. Resource scarcityis actually a controversial topic because people tend to either greatly overestimate

00:02:12 or greatly underestimate the threat of resource scarcity. There seems to be little middleground; in one scenario, people believe that resources are not scarce.

00:02:22 And they point to examples like peak oil always being projected to be just a few years away.But humans continue to find new sources of oil or other energy alternatives.

00:02:32 So these people believe that dire predictions about resource scarcity are simply fear-mongering designed to advance certain political or social agendas.

00:02:42 On the opposite side, people believe that resources are scarce and are becoming scarcer.According to UN numbers, by 2050, there will be over 9 billion people in the world.

00:02:54 And as standards of living continue to rise in developing countries, this logically must resultin shortages. People who overestimate resource scarcity say the world just can't handle it.

00:03:06 The reality is likely to be more moderate. But, regardless, it will still present opportunities forsmart businesses.

00:03:13 The ability to adapt quickly is a business advantage, as is analyzing likely scenarios andpreparing for them.

00:03:21 And the digital economy is providing transformational ways to adapt to scarce resources.We see three types of challenges.

00:03:30 So talent acquisition: Finding and retaining talent is not a new problem, but changes in theworkforce are making it even harder. Nearly half the participants in the 19th annual third-party logistics study said they were having trouble finding and retaining qualified employees.

00:03:49 This is due to high rates of retirement of experienced workers at the same time that careerexpectations are changing for those entering the workforce, the millennials.

00:03:59 By 2025, 60 million baby boomers will retire, but only 40 million new workers will replacethem. Millennials consider sustainable practices to be essential


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00:04:11 and the way they blend work and personal life means that meaningful work to them is morethan just a means of supporting their family. In a recent Deloitte study of supply chainexecutives, only 38% say that they were extremely or very confident

00:04:26 that their supply chain organization has the competencies it needs. Traditional supply chainmanagement skills are not sufficient to run a digitized supply chain.

00:04:37 Instead of manual planning processes, now massive amounts of data - that was neverbefore available, both structured and unstructured Big Data - is now available from new

sources,

00:04:48 informed customers, connected assets, social media, and the Internet of Things. What areextended supply chain professionals going to do with this data? And what will now be thenature of their work?

00:05:03 And finally, we're seeing a huge risk in the use of contingent labor to manage increasinglyfluctuating demand. At the same time, where and how labor is used is evolving.

00:05:13 For example, in warehouses we see augmented reality capabilities optimizing theworkforce. And increasingly we see robotics actually replacing the workforce.

00:05:25 Environmental and social responsibility: According to UN numbers by 2030, it's estimatedthat the world will need 30% more water,

00:05:34 40% more energy, and 50% more food. Growth in emerging markets is increasing the

demand for finished goods.00:05:42 At the same time, access to raw materials, such as minerals, oil and even water are

becoming more controlled and increasingly harder to obtain as demand exceeds supply.

00:05:54 In addition, society's expectations continue to change regarding what is an acceptable wayto do business. Both regarding what impact to the environment itself, and also what is faircompensation to the communities that are impacted.

00:06:10 Defining what is allowed or what is fair has historically been dominated by governmentsthrough regulations. But the rise of social media and the immediacy of the Internet hasshifted the balance away from relying on governments to define the rules

00:06:24 and over to public opinion defining the rules. Businesses with complex supply chains arehaving to consider issues that they previously could ignore.

00:06:34 To take one example: The collapse of the Rana Plaza, the garment factory, in Bangladeshin 2013 killed over 1,000 employees. And global brands that had been outsourcing had animmediate and significant impact to their business.

00:06:50 Society did not accept that these global brands were not responsible for the misbehavior ofthe company that operated the factory. It's becoming harder to get away with saying: "Wedidn't know", or "we aren't responsible".

00:07:06 Risk management: Scarce talent, scarce raw materials, increasing expectations forsustainability performance - what do these all have in common?

00:07:17 For businesses, these issues all become a risk management issue. If talent is hard toacquire, how do we get what our business needs?

00:07:28 If the nature of work is changing, how do we make sure our employees and contractors canstill deliver? If raw materials are getting harder to obtain, how do we react to ensure that we

stay profitable?

00:07:41 If social media and the Internet makes our own actions and those of our entire supply chainimmediately visible, how do we control the outcomes?

00:07:51 Risk management is the process that helps companies to identify and prioritize the issuesas well as control or mitigate the results.

00:08:01 In the extended supply chain, risk strategies can address issues such as insufficientresource visibility, high network dependencies, and increasing compliance and regulatoryrequirements.

00:08:16 Now that we have a better understanding of what we mean by resource scarcity and thebusiness challenges, let's look at some business strategies for capitalizing on scarceresources in the digital economy.


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00:08:29 With respect to both talent and environmental and social responsibility, sustainability willplay a particularly important role in how businesses operate moving forward.

00:08:39 Corporate social responsibility is becoming the lens through which a business is judged byits consumers, its investors, its workforce, and even society.

00:08:50 According to Accenture, millennials consider sustainable practices to be essential. And 46%of CEOs reported that employees are second only to consumers

00:09:01 in influencing and guiding their action on sustainability over the next five years. Companiesthat recognize and respond to this will be more successful in the digital transformation.

00:09:14 Supply chain interruptions are another important supply chain risk. Imagine the Internet ofThings providing data that can detect and alert to conditions that might threaten your supplychain.

00:09:27 For example, during a natural disaster, a supply chain network model complete withgeotags can immediately identify which supplier might be at risk as well as identify alternatesources of supply.

00:09:41 Another supply chain risk is product safety. An easy example to understand is producttraceability, we've all experienced a product recall.

00:09:50 The more complex the supply chain, the more complex it becomes to track and trace yourproduct so that you can effectively and efficiently handle a recall if necessary.

00:10:01 At the other end, when you design and build your products, increasingly complexregulations are requiring you to have full knowledge of not only the chemicals and materialsin your product, but also in some cases the source of those materials.

00:10:16 For example, conflict minerals. If you don't know what conflict minerals are, those areminerals mined

00:10:23 in conditions of armed conflict and human rights abuses, particularly in The Congo. Andseveral governments are now reducing trade of these minerals, which means thatcompanies must track the source of those raw materials.

00:10:36 And it's the scarcity of these minerals that allows them to be exploited to fund wars.Solutions that support this supply chain collaboration are an excellent example of managingthe digital transformation.

00:10:50 This need to know exactly what your suppliers are supplying to you, and then tocommunicate to the next link in the supply chain requires very detailed tracking anddisclosure of every component as it moves through the supply chain.

00:11:05 Let me show you more on supply chain collaboration with a short demo. I'm going to showyou our solution called Product Stewardship Network.

00:11:18 And in this scenario, we have customers and suppliers sharing information as I said aboutthe actual products that are moving through the supply chain.

00:11:27 So in this example, the customer is a medical supply company, they make medical devices.And this company can log into the system.

00:11:38 And you see here their dashboard, what they're going to do is ask for declarations from theirsuppliers. So they can go in and request a component declaration.

00:11:50 And when they create this, of course they're pulling information from their ERP system. For

example, the supplier information, and then even the actual part number.

00:12:02 So this is a nozzle used in a medical device. So all this information now will be identical aswe send this throughout the system.

00:12:13 So they send that off to the supplier, and now I'm the supplier. So the supplier gets it, andthey log on to the system.

00:12:20 They would also be able to request declarations from their suppliers. But in this case,they're going to answer the request from their customer.

00:12:28 So they open up this request, and they can see what is being requested. And again, it's thatsame nozzle.

00:12:38 And now they can see what questions are being asked. So in this case, we're being askedabout EU REACH SVHC and also EU RoHS compliance.


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00:12:48 Now the nozzle does have a substance in there that's on the SVHC list. And as you can seewhen I select that, I get the full list of chemicals.

00:12:58 And again, this ensures that everybody is talking about the exact same thing when they putthis information in. And in this case, it's required to give a concentration.

00:13:07 So they enter that information, they have nothing to declare on RoHS and so they publishthat. Now when they publish it, you can see here with the authorizations that they canrestrict or unrestrict the information.

00:13:20 And that means that if there are only a couple of companies, or even one company that theywant to share it with, they can restrict that so that no-one else can see it.

00:13:30 Or if it's something that they don't mind sharing and they don't want to have to fill out quiteas many of these declarations, they can mark it as unrestricted.

00:13:38 So that gives again some security to the system so that you're not giving away informationwithout considering who you're giving it to.

00:13:48 Go back to the customer, the medical supply company, and of course they'll be able to openup that notification and see the information, and they can see there is a substance todeclare.

00:14:00 And they can go ahead and sign it now to their system. And, of course, now that's going toroll up to the product that they're making, the end product,

00:14:08 that needs to be declared then further down the supply chain. So that was just a quick demoto give some sense of how the digital transformation is giving people a chance

00:14:19 to collaborate across the entire supply chain. This concludes the fourth unit of this course

00:14:30 in which I explained the challenge of labor and natural resources is top of mind. The digitaleconomy will change the way companies manage talent, environment, and risk across thesupply chain.

00:14:44 As part of the digital transformation, build sustainability and compliance into your businessprocesses. And finally, the new workforce is ready for the new work.

00:14:54 They have high expectations for corporate social responsibility; they want work that reallymatters. Please don't forget to take the self-test that we've prepared for this unit.

00:15:04 And in the following unit, you will learn more about the sharing economy. Thank you


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Unit 5: Sharing Economy

00:00:11 Hello and welcome to the fifth unit of the openSAP introduction course on DigitalTransformation Across the Extended Supply Chain.

00:00:19 My name is Michael Mack and I am Solution Manager for Supply Chain. Unit 5 of our oneweek openSAP course is all about Digital Transformation and Sharing Economy.

00:00:32 In this unit, I will explain the role of business networks in digital transformation and I will

highlight the different types of networks at SAP. But, first of all, what are sharingeconomies?

00:00:45 Sharing economies originally come from the consumer space and they describe peer-to-peer-based sharing of access to goods and services and also information.

00:00:56 All of this is done via networks. And why is this so disruptive?

00:01:01 When we think about e-mail, it's a traditional one-to-one communication; it's very simple andvery basic. And there's no further communication around that message.

00:01:11 But if we compare that to what's happening with social media - take, for example,Facebook. At the moment we make a connection, we are not making a connection with justone person, we are connecting to a network of friends.

00:01:24 And if you publish something, it's something that is seen by many many people

immediately, and they can react to it. It makes a huge difference really having a platform,really having a network rather than a one-to-one interaction.

00:01:40 Companies that fully embrace the digital networks see tremendous returns on what theyOne example is Airbnb, a start-up founded in 2007, and they have revolutionized the hotelbusiness.

00:01:56 They took a network of travelers and connected this network of travelers to a network ofhosts. And all of this is driven by the power of data and by the power of mobile.

00:02:08 And this is in line with our idea of sharing economies and the extended supply chain. We atSAP not only connect different companies in buying and selling relationships,

00:02:19 but also we connect networks of assets, of equipment, of machines. If you want, this is anextension of the Internet of Things where everything is connected -

00:02:30 the people, the products, the partners, the assets - all collaborating in a network ofnetworks. So what is the value of sharing economies in business? Why is it relevant?

00:02:43 Businesses can no longer be competitive on their own. Inventories have been leaned out,costly infrastructure has been reduced.

00:02:52 Processes have been outsourced, supply chains stretch around the globe. Now everybusiness is more dependent on its external partners than ever before.

00:03:02 It's critical that they share information and processes to align and coordinate their businessdecisions. Often, resources are being wasted, and your business is paying dearly in theform of higher operating costs,

00:03:15 missed sales opportunities, slower cash flow, and escalating supply chain cost and risk.Fortunately, there is a better way.

00:03:23 Business networks will change the way we work with faster, cheaper and smarter

processes. Let me give you a couple of examples of that.

00:03:32 When we talk about faster processes, it's about really having a network where we connectall of the network players into one. Today, we see a lot of one-to-one relationships wherewe have planning or let's say procurement cycles going every week, for example.

00:03:50 But if we want to really extend this reach of the network to include every party in the supplychain, we need to use a network, because it's so expensive to connect and run theseprocesses with every single company on its own.

00:04:05 And it will be faster because we can run this collaboration on a daily basis. On the otherhand, we will also have smarter processes.

00:04:14 New processes can be enabled through the connection of people, partners, and assets in anetwork. We need to share information about uptimes of certain machines or equipment


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00:04:26 to have instant analyses from validity experts of the manufacturing or equipment owners,and also to have enough time to react before there is a machine breakdown.

00:04:37 This will in the end have a higher asset utilization rate and have a more reliable supplychain. And we talk about product compliance.

00:04:46 So we can have best practices shared in a network, for example to have shared informationabout regulations and regulation content that can be used by many companies at the sametime with the same definition.

00:04:58 This will in the end have a better sustainable product and also lower operating costs. Whenwe talk about design networks, we can also see new processes

00:05:08 where we can share and collaborate during the design process and share designs acrossdifferent departments but also different companies.

00:05:16 In the end, that will make your company be more competitive, to have faster designs andproducts faster in the market. This is a huge step forward.

00:05:26 When we talk about cheaper processes, it's really about the business networks, which oftencome with a lot of services. So we have a lot of onboarding services where you can easilyonboard suppliers or partners of any kind to the network.

00:05:40 And this, in the end, lowers your operating costs, your total cost of ownership will bereduced. Ultimately, you want to enable an environment where there is a network that

empowers all partners involved in the extended supply chain00:05:57 to be connected and collaborate with each other depending on the specific role, on the roles

they play in the extended supply chain.

00:06:05 So now let's have a look at some of the networks in more detail. So one of the networks Iwould like to start with is the response network.

00:06:14 Here we are basically connecting with participants of customers, suppliers, contract oroutsource manufacturers. And we are doing traditional supply chain planning or supplychain execution things

00:06:27 like, for example, supplier collaboration, customer collaboration, process or qualitycollaboration. But, in the end, it's a lot about visibility.

00:06:35 So here we have one term we call Supply Chain Control Tower, which combines data from

the network, from the planning and execution space into a single view where you can really,in the end, have end-to-end visibility.

00:06:48 Where you have smart alerting mechanisms, where you can do simulations, where you canreact at very short notice to certain shortages. In the end, it's about collaborative decision-making and really about managing the whole supply chain in a very good way.

00:07:04 Then we talk about logistics networks. So in logistics networks, we're connecting not onlythe people from one company, like for example when we take carriers,

00:07:15 so typically logistics service providers utilize their own trucks but also third-party trucks torender certain services for their customers. So, in the end, we are connecting to carriers, tologistics service providers, to parking space operators, also to terminal operators.

00:07:34 And, in the end, to hub operators, which are for example big airports or huge hubs on thecontinent. So all these people are connected to each other and they can share quickly and

in real time information about certain traffic situations,

00:07:53 certain available parking spaces at the hubs or container terminal. So all of this is shared inreal time and it allows us to better utilize the assets.

00:08:05 And here I would like to give you a demo of this tool, of this network. Therefore, I'd like toswitch; so I'm now taking the role of a transportation dispatcher in one of these logisticsservice provider companies.

00:08:18 So what you see here is a map of the city of Hamburg. There's a huge harbor here, and theproblem with the harbor is that there is limited space.

00:08:29 And as the number of containers arriving in the harbor increases every day, there are a lotof problems here. You need to ensure that there are no incidents, there is nothinghappening unexpectedly.


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00:08:40 Otherwise you end up with the situation where the whole harbor needs to be shut downbecause there is no more available space for containers.

00:08:52 You can see here on the map, in the circles, these are the different cars or lorries or truckswhich I'm tracking. So you can see, for example, I have here a truck which is called the flat-bed truck.

00:09:04 I can only see the license plate of the truck. And it's not that this truck is owned by mycompany as the logistics service provider.

00:09:11 But this could also be a third-party truck or, let's say, a sub-contracted truck that is used forconducting certain transportation orders. And you see there are lots of other trucks on theroad here.

00:09:23 You can also see there are certain road signs saying there is some traffic information. So,for example, the traffic information comes in real time from traffic providers, for examplefrom the motorway companies.

00:09:38 And where you can have updated information about the traffic status. But also, you knowtraffic information can come from the drivers themselves; so they can post an incident sothat others know about it.

00:09:51 And when we see this situation now, let's assume this is a kind of a junction here. A certaintraffic jam was reported by one of the drivers.

00:10:00 And we see here there are lots of trucks on this road, and there are some other trucks goingin this direction to the south of Hamburg where they would like to enter the motorway prettysoon.

00:10:10 So, first of all, what I'd like to do is stop those trucks from all going on the motorway. Sothat they don't end up in a traffic jam.

00:10:19 So one thing I can do is I can add a geofence here, and I just do this visually on the map.That allows me basically to connect or bring these trucks together in a geolocation.

00:10:33 So I say, OK this is the Traffic Jam Hamburg South. And basically what I can do now is Ican send a message directly to these drivers who are in this geolocation.

00:10:50 So I select the geofence here, this is Hamburg South. OK, this is the message, so I send amessage to the drivers saying:

00:11:03 Hi, there is a traffic jam at motorway A7. Please use local streets to bypass.00:11:27 And I can then send this message to all the drivers within this geofence. So they all know

about this situation, and they don't run into this traffic jam.

00:11:35 But what I can also do as a transportation dispatcher is I see that there are some othertrucks on the road that are going further south. But I can also reroute them on the way whenthey are going to the customers.

00:11:47 So I would like to assign a different tour to this truck. So I can say, for example, I'd like toassign to this truck another tour which says Express Tour to Hamburg Finkenwerder,

00:12:00 which is basically here, you can see the airport. And I can assign this tour to this truck,which basically allows me to reroute this truck to first go here instead of going further southhere

00:12:11 to pick up a certain container, for example. So this is a kind of a real-time system allowingme to manage not only my own fleet of trucks but also the fleet of carriers and subcarriers.

00:12:24 So it allows me to have real insight into the situation. And it also gives me the possibility, forexample, to manage a certain terminal, or a harbor, or any airport

00:12:35 where there's limited space and capacity. So this is a huge improvement here for this portsituation

00:12:44 and it allows, for example, to have a higher infrastructure utilization. Then we talk aboutother types of networks, like the product networks.

00:12:53 So this is especially a network where you share information about product compliance andsustainability information. So it's a business network where you bring the suppliers andcustomers together in one network where they share this information.


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00:13:09 So for example, a customer can request from the supplier certain registration forms aboutdangerous goods or any classified materials. And this is necessary, for example, for thecustomer to sell the products in certain markets.

00:13:23 For example in the European Union, there are certain restrictions on how high-techcomponents are built and produced. So that is some kind of regulation, and this can bemanaged in this network.

00:13:36 Every company can use the same regulatory content and also the industry-specific content.So it's kind of a community and it helps to lower the cost and also to have a reallysustainable product in the end.

00:13:54 The last network is the asset network. The asset network is a pretty interesting thing in thesuper exciting area

00:14:00 where we have not only the connection between people and the different partners, but wealso connect here real equipment, so the real machines, to the network.

00:14:10 So it really allows us to bring the asset owner with the service provider and the equipmentmanufacturer in one single network. So there is one common definition of the machine withall kinds of information about service strategies,

00:14:25 about service bulletins, and other information. And this really enables, for example, serviceproviders to have a next-generation of maintenance and service business operations

00:14:36 where they can, for example, anticipate information from the machine. And say, OK, there'sa predicted breakdown in the next couple of weeks.

00:14:45 We need to do some service before this happens. So there's a lot of innovation happeningand it's really in the end about higher equipment reliability and also more efficientoperations.

00:14:58 So with that, we are already at the end of this unit. So, the key takeaways for you: You haveseen the power of networks.

00:15:06 You can see that you can leverage new opportunities with a network. There are lots ofoptions where you can not only collaborate with people and partners

00:15:15 but also with real machines connected via the Internet of Things. So sensors sending theright information in real time into the network

00:15:21 so that all of them can see the information and what the status of the machine is. And youknow, there are different ways and different reasons for collaboration.

00:15:32 So it allows us to really have different processes powered by the network. Please don'tforget to take the self-test we've prepared for this unit.

00:15:42 In the following unit, you will learn more about the digital core of the extended supply chain.Thank you


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Unit 6: Digital Core of the Extended Supply Chain

00:00:12 Hello and welcome to the sixth and last unit of the openSAP course on DigitalTransformation Across the Extended Supply Chain - in a Nutshell.

00:00:22 My name is Richard Howells and I'm a VP in Solution Management for the Extended SupplyChain. Unit 6 of our one-week openSAP course is all about the digital core of the extendedsupply chain.

00:00:35 In this unit, I've explained the business challenges of digitizing the extended supply chainand why we need a digital core to enable this to happen.

00:00:45 I will then explain what is required to enable the digital core across that extended supplychain. In the previous unit, we've covered how to enable processes driven by customercentricity through real-time customer and market visibility.

00:01:01 And the driving need to deliver individualized products by harnessing products, assets, andthe Internet of Things to drive real-time insight and a new business model.

00:01:10 We've explained how to leverage the sharing economy to collaborate across alldepartments, companies, products, and assets. And the importance of building asustainable organization that is cognizant of the resource scarcity of labor and naturalresources.

00:01:24 In this session, we'll focus on the digital core of the extended supply chain and howbusiness processes to design, plan, produce, deliver, and operate products and assets

00:01:33 need to evolve to enable end-to-end visibility. and bring together business processes andanalytics in real time to be smarter, faster, and simpler.

00:01:44 So what are some of the realities that are changing our business processes? Today's worldis both digital and networked.

00:01:52 The pace of data generation is accelerating. It's been estimated that 90% of the world's datahas been generated in the last two years.

00:01:59 Over the next two years, there will be a 40% growth in the adoption of business networks.And by the end of the decade, 212 billion things - from cars to heavy equipment toconsumer appliances - will be connected to the Internet.

00:02:14 By 2020, there will be 9 billion mobile users in the world. And last year alone, 51% ofworkloads were processed in the cloud.

00:02:24 That amount will only grow in the foreseeable future. And these trends are affecting the waythat we need to drive our core business processes.

00:02:34 We need to leverage real-time demand and supply data and move away from lengthy andtime-consuming batch processes. We need to react quickly to market signals happening inreal time across the value chain.

00:02:47 And we need to collaborate not only with customers and suppliers but also with otherpartners, such as third-party logistics providers and contract manufacturers.

00:02:56 We need to leverage technology such as machine-to-machine connectivity and the Internetof Things to collaborate with the smart assets and products now available.

00:03:04 And get closer to our customers and consumers through social networks. But often

complexity is standing in the way.00:03:14 It starts with scattered information and data duplication that create different versions of the

truth, complicating decisions and making it difficult for enterprises to bring good ideas tomarket quickly and profitably.

00:03:28 We have business processes that have been built around long-running batch processes. Infact, according to statistics, between 40 and 80% of our time is wasted on non-value-addedactivities,

00:03:40 sucking up energy from solving real business problems. And finally, technology, the ultimateculprit

00:03:47 where data explosion has shown the limits of current technology to not only run the day-to-day businesses but also innovate. For example, there are systems designed to storetransactional data in one system and analytical data in another,


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00:04:00 which results in data latency and poor decision- making. If not mastered, the increasedcomplexity can create costly complications.

00:04:09 In fact, research has shown that businesses can lose 10% of profit each year due to hiddencosts of complexity. So how do we simplify this increased complexity across the extendedsupply chain?

00:04:24 SAP's vision and strategy is to help customers run simple and to drive the perfectenterprise. We are evolving from a situation where data was moved to the applications to

one where the applications are moving to the data.

00:04:38 To deliver on this mission, we are redefining how enterprise software creates value in adigital, networked, and complex world. S/4HANA was designed to drive instant value acrosslines of business, such as supply chain, R&D, manufacturing, and operations,

00:04:54 and master complexity end to end. As the Internet of Things and Big Data becomeaccessible to any business,

00:05:00 you can now easily connect to people, devices, and business networks to deliver new valueto your customers. You can dramatically simplify the processes and change them asneeded to gain new efficiencies

00:05:12 and eliminate batch processes that slow down business decisions. And business users cannow get an insight into any data, structured or unstructured, from anywhere in real time.

00:05:24 Planning, execution, predictions, and simulations can be done on the fly for faster businessimpacts. From an IT value perspective, this means that S/4HANA creates uniqueopportunities to dramatically simplify the landscape.

00:05:40 Within the extended supply chain, you can now significantly reduce your data footprint andwork with larger data sets in one system to design, plan, respond, make, and deliver acrossthe network.

00:05:52 This not only saves hardware and operational costs and time, but it eliminatesdiscrepancies between the different systems. One common source of live data in onesystem.

00:06:06 Innovation is also made simple with an open platform to drive advanced applications thatleverage social, machine-to-machine, and Internet of Things data.

00:06:14 Business users can leverage a simple role- based user experience based on modern designprinciples, minimizing training efforts while increasing productivity.

00:06:23 And finally, enterprises get choice of deployment - on premise, cloud, and even hybrid todrive easy adoption. And S/4HANA Enterprise Management is at the center of thesedigitized business processes.

00:06:40 It enables real-time, mission-critical business processes across your entire enterprise, fromorder to cash, to procure to pay, to plan to product.

00:06:50 It enables one single source of live information and a new, personalized user experiencethat delivers instant insight on any device. This results in faster business outcomes withreduced operational costs thanks to a simpler IT landscape.

00:07:06 You have increased competitiveness with integrated fast and flexible business processes.

And also higher employee productivity with a focus on value-added tasks.

00:07:20 Let's take a look at some of the key innovations delivered across the extended supply chain.Innovations fall into three different categories.

00:07:29 The solutions have been architected to take advantage of the in-memory HANA platform.We've benchmarked the redesigned MRP logic and it shows performance improvementstenfold.

00:07:42 We have customers that have benchmarked two-hour MRP runs that are now down to fiveminutes. This is not just because it runs on HANA, but also because we've optimized therun to use a lot of parallel processing.

00:07:54 Another great example is inventory management where inventory tables were reduced toeliminate aggregates. And logged optimizing of postings to increase the system throughput.


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00:08:07 Let's talk about the user experience. The new UIs run on any devices, desktops, tablets,and smartphones.

00:08:17 Again, the MRP user interface is a great example as it now delivers real-time insight througha decision-support cockpit. And finally, underlying functionality is built into the S/4HANAcore,

00:08:30 which has been modernized by simplifying and optimizing the technology footprint, and bycollapsing online transaction processing and online analytical processing to make the

functionality more relevant

00:08:42 and designed for fast, data-driven businesses. This eliminates functional redundancieswhich have been built into the Business Suite over the years.

00:08:50 For example, the available-to-promise or ATP and backorder processing is now available, orwill be available on the S/4HANA core, which will cover the advanced functionality, while thebasic ATP functionality will be available in R/3.

00:09:09 Here you see some screenshots from the MRP Cockpit built leveraging the Fiori userinterface. This application replaces multiple disconnected transactions around material andsupply management

00:09:22 and is now delivered in a role-based user workflow. We have similar application examplesof Fiori to help order fulfillment roles,

00:09:30 viewing and managing orders and their status and exceptions. The redesign of inventorymanagement resulted in the elimination of redundancies and aggregations,

00:09:41 resulting in a simplification from 26 tables to Because this data is now stored at the detaillevel, we've enabled simple and high- performance reporting,

00:09:51 both for quantities and values. Simplification has reduced the in-memory footprint, whileimproving the performance and transactional context.

00:10:04 And what does S/4HANA do for asset management? With traditional systems, you oftenhave a lack of insight due to disparate systems and incomplete reporting capabilities.

00:10:14 This results in analysis based on past performance, not proactive driving asset strategies.And often this analysis is only available offline and there are no real simulation andforecasting features.

00:10:28 With S/4HANA, you have real-time insight into asset performance with KPIs instantlyrefreshed. You have visibility in real time into ongoing maintenance activities

00:10:37 with the ability to re-plan schedules multiple times a day. This means you can developmaintenance strategies based on RCM, Reliability-Centered Maintenance

00:10:47 and Failure Modes and Efficient Analysis. You can plan and budget for lifecycle costs basedon risk and performance.

00:10:55 And you simulate, plan, and optimize all maintenance activities. Similarly, when drivingenvironmental health and safety processes, S/4HANA enables real-time simulation andsystems

00:11:09 that enable planning and simulation on live data. You have a simple and consistent userexperience and a simplified architecture.

00:11:21 In the area of product lifecycle management, with S/4HANA, you now have full access to a

complete product data set. This includes the ability to perform multiple-level bill of materialexplosions in real time.

00:11:34 You can run what-if reporting and improve access to information with native SAP HANAsearch modules for PLM. Thank you very much for attending the openSAP course; the keytakeaways that we have from this course are that:

00:11:52 In business today, complexity has increased across the extended supply chain. And byleveraging S/4HANA as a digital core, you enable real-time business insights, real-timeprocesses, and a simplified data model.

00:12:07 Again, thank you for attending the openSAP course on Digital Transformation Across theExtended Supply Chain - In a Nutshell. Please don't forget to take the self-test we'veprepared for this unit.


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00:12:18 And I would like to remind you to take the final exam for this course. By the way, we will alsooffer a subsequent six- week openSAP course soon

00:12:26 that will explain the trends and challenges of digital transformation and the impact on theextended supply chain in more detail. Thank you and goodbye.


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