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The insideEdge

Up close with SAP's Hans Thalbauer

by Hans Thalbauer | SAPinsider, Volume 17, Issue 3

August 4, 2016

The ultimate goal of a digital transformation is to become a live business — a business that can turn on a dime to meet evolving customer demands. To meet this goal, organizations must digitize the extended supply chain, empowering themselves to produce the products demanded by customers in the digital economy. This means investing in the Internet of Things (IoT) to build an integrated network of connected products, manufacturing, and assets that enables real-time decision making. Discover how you can make this transformation in your supply chain to meet the goals of your organization’s digital transformation. 

The ultimate destination of a digital transformation journey is a live business. The industrial equipment manufacturer that meets evolving customer demands by selling a service instead of a product; the freight company in sync with weather and traffic patterns, fuel consumption, and predictive maintenance; the retailer that leverages sentiment data to customize products to each consumer — these are examples of live businesses that are all around us and are tomorrow’s market leaders.

An important step to becoming a live business is digitizing the extended supply chain. And to do that, companies have to build their business models on a framework of four digital priorities: customer centricity, individualization, collaboration with suppliers and partners, and real-time adjustments to resource scarcity. The technology that ties these elements together best — and therefore the technology that is most imperative to digitizing the extended supply chain — is the Internet of Things (IoT). 

By tightly integrating operations with the signals received from this network of connected products, manufacturing, and assets, stakeholders are empowered to make decisions in real time based on a holistic view of what is happening at the moment. The effect of those decisions is then reflected in real time across the entire extended supply chain. Effective management of a connected network, then, is a prerequisite for a smart, live business.

The linear method of moving an order through production and distribution is no longer sufficient. Instead, organizations must build business processes around sensor data signals from connected assets in a tightly integrated network in order to pivot in real time for even minor fluctuations. This agility creates a sliding production model whereby demand for products and materials is met at a granular level. Analyzing real-time signals also enables a company to be far more predictive — and not only as it concerns demand sensing. By knowing when a machine will fail, or how a sudden change in weather will affect operations, a company can take preventive action to minimize or completely mitigate disruption.

How does a live business create this agility? Collaboration is critical, of course, to correlate all of this real-time insight into a cogent snapshot of operations, and this is where we see the significant impact that becoming a live business has on the work environment. Because when customer centricity, individualization, collaboration with partners, and attention to resource scarcity are all incorporated into a larger network of connected products, assets, and manufacturing, an organization’s momentum will snowball on the way to its ultimate destination.

The digital enterprise that coalesces around the four digital priorities and embraces the nearly unlimited opportunity afforded by IoT cannot help but become a live business. It is the natural byproduct of having end-to-end supply chain visibility and seamlessly orchestrating business processes around a network of connected products, manufacturing, and assets.

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Hans Thalbauer
Hans Thalbauer

Senior Vice President
IoT and Digital Supply Chain

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