Tag: digitisation

COOs and supply chain management are feeling the brunt of an accelerating business environment further complicated by increasing customer demands for efficiency, personalisation, and convenience. Slow manual processes based on inconsistent information across functional areas spell death for modern supply chain management, with an inability to adapt in real time to changing demands leading to sub-par customer service and potential attrition.

To address these risks, companies are increasingly looking to digitise their supply chains by implementing a cloud-based digital platform that optimises traditional ERP processes while integrating new exponential technologies.

Cloud-based platforms that enable real-time decision making based on accurate big data – generated through traditional processes as well as the growing prevalence of sensors – and predictive analytics powered by machine learning is changing the way companies approach supply chain management. Accenture predicts that the SaaS for supply chain management market will reach US$4.4-billion in 2018, driven by a need to simplify and optimise today’s complex global supply chain networks.

The value proposition is clear: studies by the Boston Consulting Group find that leaders in digital supply chain management enjoy increases in product availability of up to 10%, more than 25% faster response times to changes in market demand, and 40%-110% higher operating margins.

The exponential technologies driving supply chain innovation
Big data matched with real-time predictive analytics is enabling large-scale scenario analysis to give COOs the power to conduct accurate demand forecasting, capacity planning, and advanced procurement with a focus on collaborative optimisation.

With the adoption of sensor technology in every facet of the supply chain and the availability of reliable all-time localisation through GPS, GSM and Galileo-based positioning gives COOs greater data regarding stock opening, temperature, humidity, and more, allowing greater optimisation of existing processes.

Automation through advanced machine learning algorithms that leverage process and sensor data is gradually leading to near-perfect accuracy in process decision making as human judgement is augmented and, in some cases, replaced. By automating supply chain procurement processes through best practice machine learning, COOs and supply chain managers can eliminate opportunities for error and ensure effective event and risk management based on expert systems.

However, the job of the COO and his supply chain management support to lead the organisation into this exponential future is complicated by the need to manage the implications of digital transformation while simultaneously innovating the underlying business model.

The digital transformation imperative
Digitising the supply chain enables companies to integrate, embed intelligence, and visualise all supply chain processes from supplier to customer. This opens the door to live inventory management through a redesigned data model that finally provides true transparency on inventory flows. Placing a digital core at the centre of all supply chain management processes further enables expansive “what-if” and scenario planning to identify opportunities for meeting potential market demand with high levels of service at low cost.

Manufacturing costs are also reduced as detailed constrained planning and scheduling enables agility within the supply chain and optimises the efficient use of capacity.

A traditional ERP simply cannot keep pace with the rate of change and the need to innovate and optimise quickly, accurately, and cost-effectively. Delivery commitments based on outdated data leading to cancelled or delayed orders; inaccurate order prioritisation resulting in unfulfilled strategic customer orders; and difficulties with addressing last-minute rescheduling by priority customers are only a few of the risks companies face when relying on an outdated technology platform for supply chain decision-making.

The business outcomes of digitising the supply chain
With exponential technologies such as IoT, big data, predictive analytics and machine learning integrated to the SAP S/4HANA digital platform, COOs and supply chain management can leverage rule-based allocation check in a single system to ensure the needs of strategic customers are always met. Up-to-date inventory management ensures realistic fulfilment commitments and real-time order confirmations, with advanced segmentation techniques driving business profitability in unprecedented ways.

The business outcomes can be transformative: reducing days of inventory by 10-12%, reducing revenue loss by 10-15%, cutting total logistics costs by 10-12%, and reducing supply chain planning costs by up to 5%. Critically, digitising the supply chain enables companies to run simpler and shift focus more toward innovation – both in terms of improving existing processes as well as developing entirely new business models and revenue streams.
But with a recent Forrester Business Technographic Survey showing only 27% of supply chain management professionals and 22% of logistics and distribution personnel using or planning to use big data analytics, the real question is: will COOs rise to the challenge of digitising their supply chain in time to adapt to an exponential world?

By Mehmood Khan, chief operating officer at SAP Africa

12 signs your business model is broken

The death of a business is not like a car crash and as sudden as many tend to presume, but disasters do happen whether you are prepared for them or not.

History shows us that the warning signs for an industry or business are often present 1 – 3 years before disaster strikes. The savvy entrepreneur or business owner pays attention to these kinds of warning signs and addresses them by taking strategic measures to shift course, but in many instances these signals are not paid attention to, and worst of all, ignored entirely.

Kodak is a well cited example whereby the process of digitization, and the lack of attention to warning signs within their industry, eventually put them out of business.

The Impact of Digitization

Digitization is the process of taking something analog and converting it into a digital form. It is often referred to as the ‘uberization of business’.

When something becomes digitized, it enters a period of deceptive growth. For example, when Kodak invented the technology for the digital camera it slowly evolved from 0.2 megapixels to 0.4, 0.6 and 0.8 megapixels, but it was deceptive because it all looked like zeros. When it finally it became truly disruptive as a technology, it exploded as a marketplace and eventually, it put them out of business.

A Consistent Story

In consulting with my clients, the story is typically the same. They have been selling the same product to the same customer for years, and largely driven by a maturing digitally enabled economy; business models that used be competitive are slowly, but surely, becoming irrelevant.

This manifest into signals or warning signs like consistent declining revenues, sudden, significant loss of market share and many other attributes of a dying business.

The Financial Services Headache

While all businesses should look to adopt an agile philosophy, there are many that simply are not designed to be agile.

Take the financial services industry for example, for the last 100 years of so, banks have largely existed to record the movement of money – essentially the custodians of trust between a buyer and seller. However, exponential technology is beginning to change this for the first time in a century, and it’s causing a significant amount of upheaval in the financial services industry.

From Tally Up to Cryptocurrencies

Imagine going to the local store in Holland, in the mid sixteenth century and not having enough cash to pay for the pig you wanted to roast for dinner. You might have to borrow some money and, to record your debt, the person making the loan would use a tally stick like this one. The stick was notched in the presence of both the lender and the borrower and then split in two, so that each person retained half. You could only prove who owed who money by bringing the two different sticks together; hence the term “tally up”.

Then in 1821, the gold was introduced and we traded goods and services using gold as a physical bearer instrument. But then during the great depression in 1933, to deter people from cashing in deposits and depleting the gold supply, President Franklin D. Roosevelt cut the dollar’s ties with gold, allowing the government to pump money into the economy and lower interest rates.

Most economists now agree 90 percent of the reason why the U.S. got out of the Great Depression was the break with gold. Ever since then, banks have centralized control of the financial system using a fiat money system, meaning the dollar’s value is not linked to any specific asset.

But today, we are seeing the immergence of crypto instruments – an ingenious game changer that has the potential make the banking industry question some of the basic assumptions of its current banking model and imagine a new system of banking – crypto banking.

Disruptive Technologies

The disruptive nature of exponential technologies like the blockchain and cryptocurrencies, cannot be overstated enough. Research indicates, that there are over 700 cryptocurrencies already in market and with central banks from around the world expressing an openness to blockchain; it is only a matter of time before Central Bank issued Cryptocurrencies (CBCC’s) are issued.

This would drive the movement of equity and debt based financial instruments to the blockchain unlocking the means to significantly reduce fraud and improve organizational efficiencies for banks.

A New Trust Protocol

Blockchain as a technology was created as recently as 2009, but it is already putting a linear banking industry onto an exponential curve of disruption.

Thanks to the blockchain, we now have an opportunity to rewrite the economic power grid and the old order of things by essentially redistributing trust – the foundation of any transaction – from a centralized institution and into the hands of financially distributed democracy.

No Industry Is Immune

While it is easy to use the financial services industry as the poster child of an industry that is being threatened by disruptive technologies, the fact of the matter is that no industry or business is immune. For another example, see my opinion piece on how the advertising industry is being disrupted here.

So, here are three questions that will help you understand how to future pace the impact of disruptive technologies:

What are the warning signs that will spell disaster in your industry or business?
The warning signs of disaster are always present in an industry or business. Take the retail industry for example. Amazon is disrupting the way that goods and services are bought using voice.

By offering products at a cheaper price when ordered through Alexa, Amazon is fundamentally changing the consumer journey and the way that goods and services are bought. It also indicates the possible death of the brand we know it and democratizes the retail space in a way that we haven’t seen before.

What will put you out of business?
This question is a difficult one to answer for most business owners, but these days we are living in an incredibly disruptive period so, it’s important to ask the question.

A simple way to get some answers is to ask: “What if?” For example, “what if the consumer journey changed completely?” Or, “what if a cheaper more agile competitor entered your market?”

What is the solution to question #2?
Once you have identified possible answers to what could put you out business, how would you respond to such a threat?

Conclusion

Market leadership is proving to be increasingly illusive. Advances in technology, the threat of new entrants and a digitally connected business environment is making it increasingly harder for companies to remain relevant.

Being clear about possible warning signs of disaster in your industry is the starting point, but careful scenario planning for new eventualities and the ability to adopt a new organization strategy in an agile fashion, will be critical component of the successful enterprise of tomorrow.

By Matt Brown, CEO of Digital Kungfu

My Office News launches

My Office magazine unveiled its new direction at a launch breakfast at the Bryanston Country Club in Johannesburg today.

My Office News will provide both members and readers with a variety of new digital offerings.

The breakfast was opened by shop-sa chairman Hans Servas, in which he introduced the morning’s guest speaker: Matt Brown of Digital Kung Fu.

Brown set about explaining what digitisation is and how it will impact businesses across industries, which is discussed in detail below.

After the talk held by Brown, Rob Matthews of My Office News presented an outline of the product offerings.

Matthews outlined the advantages of digital, which include reduced cost to advertisers; flexibility to change artwork; broader coverage; speed of publishing; and better metrics (regarding delivery and readership).

“My Office is getting 6 000 unique visitors a month, with over 21 000 visits. The majority of the readers are in the Gauteng area, with an above-average concentration in the Western Province. These visitors spend in excess of three minutes on the site.”

The newsletter, sent out once a week on Wednesday, is received by more than 5 000 people with an average of 99,5% delivered and an open rate in excess of 25%.

“We are aiming to grow the database by 8 000 by the end of the calendar year,” says Matthews.

Digitisation and disruptive technologies

The changing digital environment
Digitisation is the conversion of something non-digital into something digital, disrupting it using digital technology.
“When it comes to digitisation, experts are clueless,” says Brown. Many great minds have missed some of the largest technical inventions of the 19th, 20th and 21st centuries. Examples of this include Western Union brushing off the telephone, and the head of IBM questioning the validity of the personal computer.

Drivers of disruption  
The drivers of disruption in the evolution of media include:
Consumer pull – a growing number of people willing to use the product
Technology push – more people are connecting to technology than ever before
Economic benefits – the benefits of going digital are now exponential

‘Digital’ is more than marketing
When digital arrived in South Africa, major advertising agencies bought out smaller ones in order to bring advertising in-house.
In the 1970s, WPP, OmniCom and IPG had traditional companies. Now the most forward-looking digital agencies in this century are Google and Facebook – technology companies.

The six Ds of Digitisation
The process of digitisation is rapid – so rapid that it is now exponential. The six Ds show a road map of rapid development that results in upheaval.

  • Digitisation – when something is presented in ones and zeroes it becomes an information-based technology subject to exponential growth.
  • Deceptive – digitisation can be deceptive in its initial period because growth doesn’t seem that fast, but it soon picks up speed.
  • Disruptive – the digital technologies disrupt existing industries because they outperform them in both effectiveness and pricepoint.
  • Dematerialised – major devices of the 1980s (such as a boom box and a telephone) have been are now in one device – the smartphone. Separate products become one product.
  • Demonitisation – this occurs when commodities (such as vinyl record stores) are made accessible via technology (such as iTunes) and thus become worth less or even free.
  • Democratisation – this is where the marketplace explodes. As more people join the digital world, technology becomes available to more people to use.

In 2000 6% of the world’s population connected to the Internet; 66% of the population will be connected by 2020. Companies like Google seek to democratise technology and connect the world with projects such as Google Loon.

Artificial intelligence
Intelligent machines that can behave like humans has become the next frontier. Many major companies have invested R&D money in this field.
Currently, we think AI is “dumb”; just embryonic technology that is used in “personal assistants” on platforms such as iOS (Siri), Amazon (Alexa) and Microsoft (Cortana).
There are three types of AI:

  • Artificial narrow intelligence – such as Google Maps, this type of AI can do only one thing at a time
  • Artificial general intelligence – this is what we see in current levels of intelligence found in humans
  • Artificial super-intelligence – this level of AI is far more intelligent than all humans combined – and this could ultimately see the end of humanity. Examples of this power has been evidenced in robots that can beat poker players and predict Supreme Court decision outcomes.

Changes in banking
Banks will soon become outdated if they don’t want to adopt digitisation technologies such as BitCoin and Blockchain. High bank fees and the cost of employing humans will render the old systems obsolete. Examples of this have already occurred in the taxi space. Taxi drivers protested the arrival of Uber – so Uber decided to roll out self-driving cars. And Uber drivers then protested

Unlocking value with data
Sensors are being implemented in jet engines to measure data that is returned to data analysts who attempt to reduce risk and improve efficiencies. The sole purpose of this is to learn where money can be saved, streamlining companies and generating value from data.

Businesses must accept reality
“Most businesses refuse to accept the inevitable,” says Brown. “People think that things aren’t broken so why fix it? But if they don’t consider changing, they may be left behind.”
Businesses need to ask the tough questions so they can get the right answers.
“Companies need to bend with the wind. If they are to exist in the future, they need to be agile and change to adapt to the market.”

Consider what will put you out of business and start strategising about how you will address the problems that haven’t become problems yet.

Matt Brown is the CEO of Digital Kungfu, a digital business consultancy that specialises in helping companies accelerate innovation and disrupt traditional markets by enabling them with new ways to do business that serve their customers more effectively and responsively.

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