by Graceanne Bowe, Senior Product Director, SAP Events, WIS
This week in Prague, SAPinsider had the pleasure of hosting supply chain expert Kevin O’Marah of Stanford University, formerly of AMR and Gartner Group, as the keynote speaker at the co-located SCM 2012, PLM 2012, Manufacturing 2012, Procurement 2012, and CRM 2012 events.
The theme of the keynote was “Technology and Productivity: A Time of Revolution.” O’Marah asserted that the world is in the midst of a technological revolution, unlike anything we’ve ever seen before, and that this revolution is a game changer for productivity. He pointed to the most recent issue of The Economist, which reported that US companies are experiencing a dramatic increase in productivity, and suggested that technology innovations are the enabler of this increase. No longer is it enough for executives to be “business leaders;” they must be tech-savvy and knowledgeable enough to be able to harness technology disruptions for the benefit of their companies.
The way O’Marah sees it, innovative technologies in 5 key areas—eCommerce, social networks, digital supply chains, robotics, and systems of record –are revolutionizing the way companies do business.
According to O’Marah, eCommerce will represent 24% of retail sales in the UK by 2015, and 96% of retailers expect eCommerce to change the role of the physical store. eCommerce is not simply an enabler of online transactions, however. It is, to quote O’Marah, “demand management on steroids.” The customer data collected from eCommerce technology enables market researchers to understand customers, their product preferences, and buying habits more deeply than ever before. In response, the organization is able to offer more product variations to suit specific customer needs. Without the limitations of a physical store, the possibilities for product offerings expand significantly. For example, Amazon.com offers 80x the number of SKUs as Walmart and has no less than 70 warehouses. The lesson? Companies that do not leverage the power of leading edge eCommerce technology will be less informed about their customers and not positioned well to compete.
Product positioning and messaging is no longer completely within a company’s control. Through social networks, customers are not only able to express their delight—or dissatisfaction—with a product, their sentiments can be viewed by tens of thousands of network users and subscribers, impacting market perception of the brand or product. O’Marah stated that smart executives will seize the opportunity afforded by social networks to innovate their products and conduct 24/7 real-time conversations with customers in a spirit of open, co-innovation. Companies that do not will quickly learn that all the damage control efforts in the world cannot undo the harmful impact of a negative perception that can spread like wildfire.
Digital supply chains
The Internet and mobile technology is enabling connections between manufacturers and their suppliers and customers all over the world. According to O’Marah, Intel is forecasting that there will be 15 billion Internet connected devices by 2015. By embracing digital technology in the supply chain, companies are truly able to collaborate with customers and suppliers to lower inventory buffers, reduce the risk of experimenting with new products and processes, and resolve problems more quickly. In short, companies with digital supply chains operate leaner, more cost-effectively, and more flexibly than their competitors.
O’Marah turned to the topics of robotics, a technology that holds great promise for mass customization, global production, warehouse management, and order fulfillment. To date, the top 3 robotics makers have installed 700,000 units worldwide. Just last month, Amazon.com announced that it would acquire Kiva Systems, a robotics manufacturer, to improve warehouse management and order fulfillment. According to Bloomberg.com, Amazon sees such promise in robotics as a means to competitive advantage that the company did not simply license technology from Kiva—they acquired the entire company, effectively precluding competitors from leveraging it.
Systems of record
As master data and transactional data proliferates rapidly, it’s critical that companies maintain a system of record (SOR) in order to maintain a single version of the truth, says O’Marah. Failure to do so erodes customer and stakeholder trust. Additionally, it’s difficult, if not impossible, to govern and enforce compliance in an organization that does not have information integrity or stability. To that end, companies need to develop a long-term strategy for maintaining master data and handling infinitely granular levels of transactional data. Those that do not will suffer from a lack of customer and stakeholder confidence.
In summary, O’Marah advised the audience to harness the power of these 5 technology disruptions immediately to improve productivity, as well as to stay ahead of the competition.