Sustainable Supply Chain

Product Life Cycle Management In Supply Chain - A Chat With Ismail Serin

March 18, 2022 Tom Raftery / Ismail Serin Season 1 Episode 209
Sustainable Supply Chain
Product Life Cycle Management In Supply Chain - A Chat With Ismail Serin
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Show Notes Transcript

It has been a while since we had an episode of the podcast focussing on Product Lifecycle management (PLM), so I invited my colleague Ismail Serin, who heads the product management for PLM solutions at SAP to come on the show to talk a little about it.

We had a fascinating conversation discussing what is happening in the PLM space these days, how cloud is helping that trend, and how PLM helps with sustainability wins .

The two links Ismail mentioned at the end of the podcast are

  1. The SAP EPD Community and
  2. The SAP EPD Product Overview
  3. Plus a bonus link to a new short Enterprise Product Development video

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If you want to learn more about supply chain semiconductor shortages, don't forget to check out SAP's recently published Point of View paper on the topic, as well as my podcast with the author of the paper Jeff Howell.

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Thanks for listening.

Ismail Serin:

in the consumer products industry sustainability marketed products, delivered, 55% of the market growth in the last five years. They only represent 16% of the total market, as of today but sustainability market products are growing. and, according to, uh, NYU, a report recently published, sustainability marketed products, also have, uh, basically usually price premium of almost 40%

Tom Raftery:

Good morning, good afternoon, or good evening, wherever you are in the world. This is the digital supply chain podcast. The number one podcast, focusing on the digitization of supply chain. And I'm your host global vice-president at SAP Tom Raftery. Hi, everyone. Welcome to the digital supply chain podcast. My name is Tom Raftery with SAP and with me on the show today, I have my special guest Ismail. Ismail, welcome to the show. Would you like to introduce yourself?

Ismail Serin:

Yes. Thank you, Tom. Thanks for having me. My name is Ismael and I am heading, the product management team at SAP, and, taking care of our product life cycle management applications. we have, in the design portfolio, when you look at the design to operate value chain,

Tom Raftery:

Okay. And what's interesting. What's fun. What's exciting. What's happening in that space, right now?

Ismail Serin:

Tom, actually, when we basically talk with our customers, we observe multiple things happening, across, across the industry. So first of all, basically one of the mega trends we are currently seeing, for our customers using our, PLM product life cycle management applications is the need, to, digitize or digitalize product development processes. So what, what does digitalization actually means? So that's basically buzzword. We kind of keep, always using, but at the end of the day, it is about, automation, right. And, getting away, from Excel based, business processes from email-based business processes, so that you can basically at the end of the day, established, seamless digital thread, right? Where you basically have a product development process, from, from the design stage of a product itself, to be operate stage, digitized right? So what you do that to get away from paper-based processes, right? This is basically what all of the customer conversations we have these days have in common. Right. How can we automate that process and how can we basically make sure that the products we are introducing, or the products we are changing, uh, that we can introduce them faster to the market, and actually deliver the features and innovations our customers actually need. And that's one thing all of our customer engagements, have, these days in common.

Tom Raftery:

Okay. And I mean, that's, that's a long thread going from what you said the design, right the way through to operation. Because, it takes in, the kind of CAD cam drawings at the very start of designing something, right the way through to manufacturer about planning, manufacturer, logistics, warehousing through to delivery, to end customer through, to operation by end customer. And so there's lots of different systems you would have to suspect going through that entire process. So how do you maintain that thread and digitize right the way through?

Ismail Serin:

Yeah. that's exactly the reason why, uh, I am a very big fan of product lifecycle management these days. Because if you look at, the need across all of these line of businesses, you have just mentioned, right they need, product data in order to do something. Manufacturing, needs a manufacturing bill of materials, routings in order to manufacture products. The sales and services team teams, they need our product data in order to sell the products. Right. The, operations teams, they need product data in order to maintain, the product, at the right time with the right quality. So basically what fundamentally happens is that we as SAP, we need to find a way to basically, take the product data from where it originates and that is, in product development and ensure that product data can be integrated across the entire digital value chain, just mentioned. So integration of product data, is one of our key themes when you look at the, how we prioritize our product development. So we want to really make sure, that, uh, product data can be integrated into all of these line of business functions and ultimately product data moves physically from left in the value chain, which is in product development, down to operations. But we don't want to stop there. We also want to, get a product data, from the different functions in the value chain, uh, back into the product development context. So for example, when you have an, asset operating in the field, you want to, understand common failure modes of that specific product in the field. You want to identify quality issues as early as possible, in operations, you want to get customer feedback. You want to identify improvement needs as early as on, right. And that's basically what we basically call closed loop engineering. We want to make sure that as much data points we can basically collect, can be structured from SAP systems, but can also be non-structured systems from other third-party tools, back into the, product development context. So that product managers, quality engineers, You name it, can use the the insights to ultimately develop better products, right. and that's basically what we call the digital thread. and the digital thread, you can say it's a synonym for product lifecycle management, and that's at the heart of our product strategy in PLM, to establish that digital thread, and the integration of product data, across the digital supply chain.

Tom Raftery:

Okay. And I, I assume that to get this digital thread together, you probably need people to be operating in a cloud environment. Would that be a fair assumption?

Ismail Serin:

Oh, yeah. That's, that's, that's a very good observation actually, because usually what happens is when you look at the, this value chain, from design to manufacturing, to operations, you usually have different companies involved in that process. Right. so, this entire, value flow is deeply collaborative in nature. And the cloud, as a technology or deployment model, gives us, great tools to collaborate. so, with the integration, we have, um, based on the cloud services, we can make sure that the OEM of a product can seamlessly exchange, uh, product data, like for example, bill of materials, 3d drawings, spare parts, informations, with business partners across the extended enterprise, right? So you can invite them to collaboration and pretty much what you basically can do in, in social networks, right? You can do this data exchange also, across the design to operate value chain with our solutions we're offering to our customers. and that's, and that's basically one of the key reasons because the collaborations, one of the key reasons why we will see more and more of these workloads and product lifecycle management and moving to the cloud, because only the cloud gives us these, these tools, to collaborate with each other.

Tom Raftery:

Okay. There has been, you know, traditionally it's breaking down now, but there has been resistance among some kind of industries and manufacturing has been slower than many to move to the cloud. Are there, are there other advantages that are now making it seem like it's, uh, you know, you, you have to do it?

Ismail Serin:

Yeah. And, that's also a key learning, for me from last year. so we look, we looked into this question quite extensively, as part of our, cloud strategy. and, we need to go a little bit, back in history when we basically look into the SAP product lifecycle management portfolio, PLM at SAP is deeply interconnected with SAP's ERP processes. Right. because if you want to, sell something or if you want to basically drive accounting and controlling processes or logistics and manufacturing processes, uh, the material, is a key object in an ERP system, right? Because the material itself, and then the ERP system holds everything together. And that basically means that, our customers will use an ERP system and the PLM system. they're basically always were tied together in terms of upgrade cycles. Okay. and as you know, upgrade cycle, for ERP systems, they're quite long in the history, right? we looked into the numbers, recently and you have kind of still a lot of customers out there in the installed base, who use old, ERP releases. And what happens is, when we ship new software based on new technologies, The customers who are on lower releases and quite a few of them can not consume our innovations. But if we, if we decouple PLM from our ERP systems and modularize these offerings, right, we can move faster in PLM. We can, deliver innovations, and customers can adopt the innovations faster than they could do in the past. And that's basically a very important to understand that that is basically the key goal we are trying to achieve, to decouple our PLM. From an ERP still keep it very tightly integrated, but enable our customers to consume new innovations at a faster speed. because, out there the market for, for product development is moving quite fast and products getting more and more complex and our customers, they need. New tools and new software features, to basically address the needs that they have. Right. and therefore the cloud offers us, just the faster way to adoption of this new, new technologies and features we are providing and our solutions.

Tom Raftery:

What about the trade off that you see with cloud solutions? And the trade off I'm talking about is that, you know, I've got my system completely customized to do exactly what I need it to do. And your cloud solution follows all these standard processes, but I've tweaked mine to be slightly different. So mine won't exactly line up with the cloud solutions that you have. How do you, how do you square that circle?

Ismail Serin:

Yeah, that's, also, a dilemma we are in. We have, these. industrial manufacturing companies who manufacture uh complex products. You have automotive OEMs, and all of these basically companies who deeply customized their PLM systems over the last 20 or 30 years, how can we make sure that we, bring them into, a cloud based solution and that's not an easy exercise. Um, and what I fundamentally believe, is, that, for the next years, this will always be, in hybrid world. Right. Uh, but we will see, the, footprint of cloud solutions in this entire enterprise architecture or for company increasing. Right. Let me give you an example. we will, see certain areas, like for example, a requirements management which is, I would say, there are industry standards out there and you can pretty much drive, standardization, in the cloud with these areas where you can standardise something, right. And we're already seeing basically that these areas are, moving faster to the cloud while other areas which are by nature a little bit more complex. like for example, the topic of product structure management, right? that's basic. These are the areas where a lot of individualization happened over the last years, where it's basically a bit more difficult to move them directly to the cloud. So from, from a strategy perspective, we are trying to really, to identify the areas, in the business process, which are easy to standardize. Right. and bring the workloads to the cloud first and then in parallel, have basically, discussions with our customers, to get also more and more of a, complex workloads into the cloud. And, that will always require us to make also trade-offs. and therefore, I think it is also super important for SAP, to provide customization options or extension options are based on the business technology platform. So even if we cannot fulfill something in the standard, I think we, there will be still the need for certain areas, so that customers can develop custom solution. Right. because maybe. That is required to differentiate against the competition. And we then at SAP should give our customers, a tool an extension framework, to build custom developed solutions, but, use basically our applications as a foundation, to do that. And that's how we are trying to approach this complex topic. It's an exciting journey. I can tell you that.

Tom Raftery:

Um, challenging to say the least. No doubt.

Ismail Serin:

Yeah.

Tom Raftery:

And what about any sustainability wins?

Ismail Serin:

Oh yeah. I mean, so, sustainability is kind of, very, very interesting and trendy topic these days. And, our fundamental core belief is that, with our product lifecycle management solutions, what we can help our customers, to decarbonize products. Okay. So that is the value at stake, right. In, in a, basically from a design function of the company. and, what basically also is very interesting to observe. For example, in the consumer products industry sustainability marketed products, delivered, 55% of the market growth in the last five years. They only represent 16% of the total market, as of today but sustainability market products are growing. and, according to, uh, NYU, a report recently published, sustainability marketed products, also have, uh, basically usually price premium of almost 40%. Right. so sustainability is not only basically a de-carbonization of product is not only, basically, it, it basically contributes on all dimensions, right? It helps, it helps us basically to reduce, the CO2 footprint of products, with that we do basically something good for the environment. But at the same time, you can also drive the top line with sustainability market products, And therefore, I think, many companies, especially in the consumer products industry already recognized the strength. and what we want to do is, from an, capability perspective, we want to give our customers a tool, s o that you can really starting from the product development can basically start to work with your suppliers, to understand the total CO2 footprint, for example, of a product you're designing. and based on that early on in the life cycle, the CO2 footprint of a product you're developing. Right. and that again is a collaboration exercise because every time you source materials from a suppliers, you, you want to understand, where does this raw material come from. is it sourced. What are the ingredients, right? what are you using to produce these, materials, right. and, what is basically energy, expenditure for this, piece I'm buying, right. And when, as an OEM, you can basically aggregate all of this information to get from the different suppliers. And then have a transparency. And once you have the transparency, you can basically start to, work with your suppliers, to reduce the, footprint of your product. And that's basically also, again, like I said, right. And very collaborative, process. and this is how we basically can contribute, to the CO2 CO2 targets, out there. I mean, that's, that's um, actually what we're trying to do, to help to develop sustainable products, and, getting the suppliers connected that's key, to achieve that.

Tom Raftery:

Okay. And I'm holding up now. people listening to the podcast, won't be able to see this, but I'm, I'm holding up now, uh, a bag of nuts that happens to be on the desk beside me, that I like snacking on it. I have to, on the back of that packet, you've got the kind of nutritional information, the amount of carbohydrate and fat and fiber and sodium and stuff in that individual packet. This kind of sustainability information you're talking about should enable manufacturers to put on the packaging of their products, the CO2 information of things they're selling to. Is that, is that a fair assumption? I mean, I can look at these packets of nuts or whatever it is of different foods. And, you know, it is mandated that they be reported, you know, per 100 grams or 100 milliliters or whatever it is. I think. It should, I think it should be mandatory and it probably will be soon enough that manufacturers report the CO2 implications of the products they sell and at solution like this should enable them to do just that. No?

Ismail Serin:

I totally agree. and I think history repeats, right? So we saw that, for example, in Germany, on some products, we have something like, well, it's called a nutriti-score. Uh, where they am evaluating basically how healthy this is. And then you get basically, a score, right? Which you then, print on the label, There are also other certificates like vegan certificates that you can print on your packaging materials. and, I'm convinced in, in the future, we will basically also see exactly these, labels are printed on the products we consume on a daily basis, Because, we need to basically create awareness of the CO2 footprint of a product they're consuming, And through that awareness, we can drive a behavior change. and that's basically also very cool, right? If you could contribute to that, Because we give our customers the tool to basically collect all of these insights, but it is so that you can calculate, the, CO2 footprint of a product you're human factoring.

Tom Raftery:

Cool. Cool. Cool. Ismail, we're coming towards the end of the podcast. Now, is there any question I have not asked that you wish I had, or is there any aspect of this we've not mentioned that you think it's important for people to be aware of.

Ismail Serin:

Yeah. Look Tom, I think we have covered almost all of the important topics I wanted to cover in this conversation today, but maybe just to, to, to quickly summarize. Right. so, product lifecycle management is a line of business function to develop products from our perspective is moving to the cloud because companies, they need to develop sustainable products. Right. and that is basically the, one of the key arguments. I wanted to basically convey today. And from that perspective, I think we covered these topics in, in our discussion today.

Tom Raftery:

Super super great. Ismail, if people want to know more about yourself or sustainable product lifecycle management, are any of the topics we discussed today in the podcast, where would you have me direct them?

Ismail Serin:

Yeah, so they can, first of all, reach out to me, of course, via LinkedIn as, as a preferred channel, but I will also send the link for the show notes where they can also read a little bit more about our PLM strategy, for intelligent and sustainable products. We have, uh, a community page, just recently launched where we also on a frequent basis, create white papers, blog posts about the topics we have talked about today.

Tom Raftery:

Phenomenal phenomenal. I'll put the community page in the notes as well, so people can access that easily. Fantastic. Ismail that's been really interesting. Thanks for coming to podcast today.

Ismail Serin:

Thank you for having me, Tom.

Tom Raftery:

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about digital supply chains, head on over to sap.com/digital supply chain, or, or simply drop me an email to Tom dot Raftery @sap.com. If you'd like to show, please, don't forget to subscribe to it in your podcast application at choice to get new episodes, as soon as they are published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks catch you all next time.

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