Q&A with…. Hans Thalbauer, Senior Vice President SAP
What trends do you see in the next 5 years that will impact supply chains?
Today digitization is heavily affecting both commercial business as well as private life and we see that supply chain is a prime example of becoming fully digital. Vast amounts of information come with logistics processes and are as vital as the physical shipment itself. With digital supply chains companies become much more customer centric and have the opportunity to get closer to end-consumers as can be seen from the growing importance of B2C and e-commerce.
This in turn impacts the supply chain as the fulfillment models have to become more flexible and dynamic. Dealing with end-consumers means to deal with omni-channel logistics in which goods may need to be shipped from a distribution center to a store for pick-up or even directly to the end-consumers home. Managing the digital supply chain means managing a demand- and data-driven network that requires responsiveness and the ability to track goods and assets in real-time, and by having global inventory visibility and capabilities to make better, fact-based decisions and quick resolution of issues.
As companies explore new distribution and sales channels for this new kind of customer-centricity, a different supply chain model is emerging based on an understanding of demand at a more granular level. Just like marketing and sales, supply chain professionals in the digital era need a deeper understanding of customers –and what goods and services they really want in a particular city and store, not just at a regional or an aggregated level, who and where they are as well as how they want to purchase and what touchpoints are required, e.g. knowing preferred delivery options and communication channels.
On top of this you want to introduce better service levels and speed into the supply chain which requires a company to connect with suppliers and supply chain partners across a digitally connected business network. In the future this kind of connectedness will go far beyond business partners to incorporate all kind of ‘Things’, meaning any device, asset, equipment, vehicle, sensor, tag which is able to communicate information and provide better insights into the ‘Internet of Things’ for more effective and responsive decisions and execution processes.
Other innovative trends such as 3D-printing, drone delivery and augmented reality are emerging right now and will open up completely new possibilities and have a significant impact on the future supply chain networks.
How will digital technologies support the logistics sector efficiency in the future?
Digital technologies will enable better insights and ensure decision support in real-time. For example Tracking and tracing systems will provide new levels of transparency and will open new opportunities in planning, forecasting, security and customs processes. Digital technologies will provide the opportunity to optimize logistics processes not only in silos, but across the whole ecosystem and in a dynamic, real-time manner. Logistics efficiency will for example improve through an
- Increase in infrastructure utilization and goods throughput
- Higher process automation and less manual interventions
- Reduction in idle times and less emissions
- Increasing awareness of ethical and sustainable business practices (social, ecological/green)
The next step is to leverage digital technology as a source for new, innovative business models. Real-time information is becoming a new global currency and the ability to anticipate or predict change is not only becoming more vital to thriving companies but can provide business opportunities for companies to leverage billions of supply chain data, e.g. to provide insights and benchmarks about price, profitability, business partners as well as about the status of the whole economy and emerging trends.
What challenges and opportunities do you foresee with regard to the Internet of Things?
The Internet of Things (IoT), in combination with cloud computing and Big data, will permeate every home, vehicle, and workplace with smart, Internet-connected devices. When it comes to the extended supply chain, IoT will provide the real-time information required to make good on corporate promises of optimizing processes and improving people’s lives. Greater visibility across the entire supply chain, from raw materials through manufacturing and delivery, will also enable better compliance with external regulations and internal rules.
Having more information about where everything is across the entire supply chain is one dream everyone in the extended supply chain world wants to fulfill. When products, assets and machines can talk, we can have truly end-to-end visibility. Internet of Things allows companies to gain real-time network insights so decision-makers can make more informed decisions for immediate results. It’s been said the future is impossible to predict. But products, services and demand networks, powered by IoT and digital technologies, can simplify the most complex supply chain, manufacturing, and logistics operations conundrums, creating opportunities based on informed strategic planning and real-time decision-making for companies.
What should the EU Institutions do to enhance digitalization of industry and supply chains?
The EU needs to drive harmonization and standardization of legislation such as a single, digital transport document for cross-border and intermodal transport across the community to lay the foundation for sustainable growth and innovation. This requires the ability to drive the development of harmonized data standards and interfaces as well as authentication systems, data protection and data security guidelines for the transmission of shipment, geo- positioning and other logistics data.