Tom Kurtz: [00:00:03] I'm not interested now in just maintaining my assets. I'm interested in managing the entire lifecycle of my assets. [00:00:10][7.0]

Tom Raftery: [00:00:13] Good morning. Good afternoon or good evening wherever you are in the world. This is the Digital Supply Chain podcast. The number one podcast focussing on the digitisation of supply chain. And I'm your host. Global Vice President of SAP Tom Raftery. Hi everyone. Welcome to the Digital Supply-Chain podcast. My name is Tom Raftery with SAP. And before we start today's show, I got a wonderful email the other day from someone called Rona, Vaselaar of Bliss Integrated and Rona said:. [00:00:41][28.7]

Tom Raftery: [00:00:42] Hi, Tom. I just wanted to say that I recently started listening to your podcast, and I love it. I'm learning more about supply chain from my job. And I was a little lost on it until I started listening. I'm working backwards, so I've listened to your newest episodes first. My favourite is the episode on Life Flight Technology. I didn't even know that existed. Anyway, I just wanted to say I appreciate what you do and will definitely be a regular listener on your show. I can't wait for the new episodes. So you just dropped today. I'm interested in geopolitical risk and supply chains as I specialise in China studies, and that's obviously a hot topic right now. Hope you have a great weekend. Thanks again, Rona. [00:01:17][35.3]

Tom Raftery: [00:01:18] Rona Thanks a million for that. Doing podcasts can be hard because, you know, you don't often get feedback. So it's wonderful to get feedback like that. So thanks so much, Rona. Having done that on today's show and my special guest on the show today is another Tom. Tom, would you like to introduce yourself? [00:01:35][17.1]

Tom Kurtz: [00:01:36] Absolutely. Thank you, Tom, for the opportunity. My name is Tom Kurtz. I am with SAP and I work specifically in our supply chain practise around asset management. [00:01:46][9.6]

Tom Raftery: [00:01:46] Lovely. And it's it's cool that you're coming on Tom Thanks a million for agreeing to come on the show. It's cool because asset management isn't something that we've discussed a lot on the show. So talk to me about that. I mean, what what what is an assets? Why would you want to manage it? What kind of management can you do? You know, the whole thing. [00:02:06][19.7]

Tom Kurtz: [00:02:07] Sure. Absolutely. And thank you for the opportunity. I am a, as they say, longtime listener, first time caller. Thank you for the opportunity to come on to double, you're not only double your Tom output, but also talk more about asset management. So asset. I'll tie it back to something that is near and dear to you. And your audience is around supply chains. And you you've talked about it some on your show. I'm sure most audience members are seeing this in the in the world today because of where we are with the Coronavirus and the impact it it has to the has had to the global economy. There is an opportunity. We see the opportunity, the supply chain, the importance of supply chain more than ever. And because of that, the part where assets play, it's really the equipment, the machines that make that supply chain go around. And so that those machines you can look at from different perspective. So the terms you hear a lot are the entities you hear a lot about and asset management manufacturers. So or sometimes called OEM original equipment manufacturers, they are the entities that build machines, build, build product, if you will. They call it their product, that that's what they're manufacturing. They are the owner operators, the operators of that equipment. So I buy an asset from a manufacturer. I use it for my purposes, which, by the way, could also be as a manufacturer as I use equipment to do that. Thus, the chain continues, if you will. You hear about service providers, so those that fix said equipment. So when the equipment breaks down, you want to keep it up and running in order to have your optimal efficiency of production. You want to have your machines working at their most optimal pace along the way. So that's what an asset is. You have fortuitous equipment. You'll hear called devices. You'll hear called different things. But that's really the world's asset management then is is the management of that super. [00:04:04][116.8]

Tom Raftery: [00:04:04] And we've we've seen a huge shift in the last, I want to say, decade. I just rolled it out. Maybe it's a little longer, maybe it's a little shorter. But we've seen a huge shift from dumb assets to smart assets. We're getting assets now, which is built in smarts and connectivity. And how is that changing toward the supply chain? [00:04:24][19.4]

Tom Kurtz: [00:04:25] Tremendously. I think it will. You hit it on on the head in terms of from dumped us smart. So you you're hearing a lot more discussion of intelligent assets, connected assets. You hear terms like Industry 4.0, industrial Internet, sometimes I was originally based, but all those things really get at what you're what you've hit on, which is this idea that that we can do more with assets today. And that really impacts a lot of those stakeholders that I just talked about. It impacts them. [00:04:57][32.4]

Tom Raftery: [00:04:57] And just just to interrupt you there, like we should actually clarify that. Just as we have we shifted from dumb assets to smart assets. We've also shifted that you can make dumb assets smart. You can add smarts and connectivity to existing assets. So it's like a kind of a brownfield situation. [00:05:16][18.1]

Tom Kurtz: [00:05:16] You can and that's there's different different approaches to that. And I think some where I was going with the entities. A lot of manufacturers are now seeing it as a value add. So I've I've talked to operators, those companies that use equipment from their suppliers, and they pretty universally say, look, this is a this is a benefit to us. We recognise that if if our arse if our manufacturers build these sensors and build this this intelligence into the product that helps us, we're willing to pay a premium for that. So that's something the manufacturers looking at saying, hey, that's a competitive advantage for me to be able to say I'm going to make my assets more intelligent so that my men, my, my my operators are getting the benefit of that. Or I as a manufacturer, it opens up a lot of opportunity because I as a manufacturer might also see it as an incremental revenue stream for me. Maybe I don't. Well, I talked earlier about one service provider. In fact, those could be the same entity. A manufacturer could say, Tom, I'm not going to just sell you a piece of equipment. I want to sell you a service. I want to sell you value added services around that piece of equipment. So you don't necessarily need to buy the asset. And now now it's just from cap ex topics. It's not that you're not just buying all this equipment and then dealing with your expense line item in terms of how to manage that equipment. Maybe you want that service from your manufacturer. And that's, of course, something for each individual entity or company to make. But the flexibility is created and we all know that with flexibility within it, technology enablement comes opportunity. [00:06:52][95.1]

Tom Raftery: [00:06:52] OK. And I mean, there are there are all kinds of things that this enables, right? I mean, you can enable the likes of a shift from scheduled maintenance to predictive maintenance. You can have a whole business shift, as you alluded to there, from selling products to selling services. I mean, we had in VR robotics on last week talking about doing robots as a service. You know how our our company company's dealing with these kind of shifts? Because it is it is a huge shift, not just not just the the way of going from scheduled maintenance to predictive maintenance. That's not as big a shift, I have to think, as the whole business model shift, which for companies shifting a business model has all kinds of implications. I mean, we're seeing it ourselves in as SAP, where we're shifting from selling on brand to shifting to the cloud, which is a similar kind of paradigm shift, is it as well. [00:07:47][54.4]

Tom Kurtz: [00:07:47] It's interesting, you mentioned the on premise to Cloud, because I think you you covered a hit on a couple of really good things there. One is when you when you look at on premise to cloud that that is the mentality there is. I as an operator of this on premise software, I don't want to be the operator of it anymore. I want to outsource as much of that as I can or whatever my model allows me to do. So that's what sort of the the value prop of cloud in a way is OK, I, I can USCAP, for example, has cloud software. If I'm a peak customer, I can say I don't want to manage this internally anymore. I can shift my I.T. model SJP, you can manage more of it. Now it's a similar way with the as a service that we talked about. It's that similar mindset of I don't necessarily want to manage this on a day to day basis. I want to outsource that to my supplier. So that's an example there. But one other thing that you really hit on that I want to point out is you're right. This this this shift, I think you see it even just in terms of how they the analysts in the market talk about it. So historically, you heard a term, an acronym called EAF Enterprise Asset Management, and that is that's been around for decades. That's the world of maintenance and work order management. So the ability to plan around minus mean maintenance planners and organisations, those are individuals that worry about how am I going to plan out all the maintenance that all my assets need in my organisation, the work execution. So the actual putting out there of work orders for the technicians to execute on. Speaking of technicians, the resource scheduling, so scheduling systems, how do I manage the workers that are out there? Mobility system. So those technicians, especially in the days of COVID today, you know, I don't necessarily want to go into the office every morning before I get in my truck and go out and do the servicing in my warehouse and the different factories I have. But I want to be able to have mobile devices and have access to that work order. So that's the world of the historical world of enterprise asset management. You're now seeing a lot more what the market's calling APM Asset Performance Management. And so I was at an event last year where I heard a customer and this I always use this because I really like how she put it. Her statement was, I'm not interested now and just. Maintaining my assets. I'm interested in managing the entire lifecycle of my assets. OK. So then it's so. OK, so what does that mean? What what is what else is in the lifecycle of that ness of everything I just described in the. Is gets at the manager at the maintenance execution and the planning and management APM Asset Performance Management gets at more of the strategic. And you're what you talking about the more predictive side of things. So some of the capabilities you see there is I want to strategize and and segment my assets differently. So you think about if I have a factory of assets that I'm managing, they're not all the same and I shouldn't treat them all the same. And I shouldn't make maintenance plans that have costs associated with them that are the same. So in other words, this passive Atreus on the left might have less frequent failures. They don't go down as much or when or when they do go down. It's not a big deal. It's not expensive. There's no safety critical of what they call criticality. So there's less risk, less criticality. This batch of assets on equipment on the right might be different. It might be they go down more frequently or when they do go down, it's a big deal. There's the risk. Criticality is higher. So I just naturally, I would probably want to treat those two segments different. So having systems that can help me put my strategies together, how do I do my maintenance strategy? So that's not about execution. That's about upfront strategizing around how I'm going to handle my assets. Interesting you mention about the. Yeah, and you mentioned the predictive side, too. That's another piece of of enterprise asset management. The ability to manage these work orders is more reactive. It's very valuable and it's very necessary. But can I augment that? Can I also. These these Sencer these days that these assets, as we mentioned, are much smarter now. They have they're able to communicate things to us through the sensors embedded. So can I, through that information, apply machine learning to it apply what we call condition monitoring or just being able to read the the assets read read the measures directly, the indicators directly. That helps me plan more proactively as well. So now when you start to bring all this together and the third third piece to third piece of capability on APM would be around collaboration. So all these providers that I talked to are all these stakeholders, those making the machines, those operate the machines, those fixing the machines, the ability for all of them to be on the same network and share information about those the same way a logistics network would work or a procurement network would work. This is a maintenance deck with the ability to NASA network, the ability to be able to connect there. So you bring all these together. You're going back to what that woman said at the event last year. She's not just met maintaining her assets. She's now managing the entire lifecycle of those assets. [00:12:57][310.0]

Tom Raftery: [00:12:58] Prioritising as as you rightely said, prioritising one over another. If it's if it's a machine that is critical to the manufacturer of of your devices, it can't go down. So you have to make absolutely sure that you're getting all the data from it. Whereas if it's one over on the left side, maybe it's part of the paint job or something that if it goes down, doesn't really matter so much. [00:13:20][22.1]

Tom Kurtz: [00:13:21] Exactly. And that that method, they would call it run to failure. You know, it's still a valid method to say we are going to let this fail. You know why? Because I can I can make a phone call and I have a spare part tomorrow or we've got inventory of the spare parts where. So it's not again, your risk criticality assessment says this isn't a big deal if this one fails, these other ones that are going to treat differently. [00:13:44][23.7]

Tom Raftery: [00:13:45] Fascinating. Fascinating. On a different topic, kind of different topic, I guess we're still talking assets and connected assets and things. I know that, for example, I mean, there are lots of different stories about, you know, assets as a service. And you've got Philips lighting is a classic example, although I think the calls signify no. You know, they they they own all the lights in the city of Los Angeles, for example. And, you know, there are loads more examples like the Envir Robotics. When I mentioned earlier one of the cool things about having connected assets and one of the the obvious ones is that you can use the data back from those devices for billing purposes. It's an obvious one. You have to have that in place or else you can send bills. You have to know how much the devices are being used. But another use of that data is that traditionally when devices were not connected, manufacturers had to kind of, you know, stick their finger in the air and go, well, I guess our devices in the way that are being used in this way, in these kind of environments. And this is what I should optimise for in my manufacturing of those devices. But now the manufacturers have got access to all that. Data from the devices are actually being used in the wild. And now they can feed this data into their R&D and say, look, this is. How would the devices are actually being used? Maybe the next version of the device should have more, let's say, temperature variety that it can, that it can. I don't know what the correct terminology for this is, but know a wider a wider range of temperatures that it can operate under or a wider range of humidity, or maybe it should be able to operate for longer or shorter periods or whatever else it is. Is that is that something that we're actually seeing? I mean, it's it's an obvious use case, but is it something that's actually being used in the wild? [00:15:30][104.7]

Tom Kurtz: [00:15:31] It absolutely is. And that's a I'm really glad you went down that path, Tom, because I think this is so what I would refer to that as is really a closed loop process between design and operation. So it s a p anyway. We talk about we talk about five stages design, plan, build, deliver or manufacturer deliver an opera. And so those are the kind of the different stages. And you've had a lot of guests over your episodes talking about different stages of that, whether it be logistics, business planning and so forth. This operate piece technically comes at the end of the design, please technically comes at the beginning, the beginning and the end. That's a linear statement. And what we were wanting to do is create more of a cycle, a linear a circular motion and closed loop process for that, because that'll happen right now. And I think a great example of this and in our own world at SJP is with a newly announced partner with WAS. So Siemens is obviously they manufacture equipment, but they they do software on the PLM side of the product lifecycle management, a lot of the design and engineering. As a part of that, there's a function called service engineering and service planning. That's the so I talk about Asset Management EAF and APM and all that that I already talked about. You'll hear Siemens talk about SLM service lifecycle management, because what will happen is coming out of that engineering process, there's information that absolutely downstream you want. So you have something called an E bomb in the engineering world, engineering build materials that translates in the manufacturing world into an M bomb. Manufacturing build materials translates into the service and asset world as an S bomb service bill material. So the engineer really what the engineers are saying is a service technicians, these. This is what you need. This is the service parts that are that are going to be required. This is the working instructions. This is information like that from a service planning standpoint. These are the failure modes that you might incur. This is why what would potentially cause it to fail? These are the frequencies within which we expect. So all that information you can imagine the advantage to your operations team can have with that information. Same way as you just said. Now we have real all the engineers. It was this is what we think's going to happen. This is we're going to build some of them. Now, once you have the actually operating in the real world, it's not design anymore. It is actuals. It's an operation in the real world. To your point, let's feed that back in. So that's the catalyst for the as SAP Siemens relationship. And you're seeing this and a lot of organisations, those stakeholders, again, going back to the manufacturers, the operators and service providers, having an ability to connect all the information through something like a business network is important. And being able to integrate systems. And so we are seeing in the wild. Absolutely. [00:18:24][172.7]

Tom Raftery: [00:18:25] Interesting. I'm glad you brought up the fact that, you know, they're getting a lot of information because these connected assets. I mean, if we think about, let's say, a smart metre, because I happen to come from an energy background. So I happen to know a bit about, you know, utility metres. And typically the data coming from a metre would come from a metre read every month or every two months. And so you get one reading every two months. And when you change that to one smart metre reading every 15 minutes or whatever it is, you're talking about thousands of reads per day or per week, you know, instead of one every two months. So you're you're talking way more information coming in. And that's for one smart metre or one asset. One device, whatever it is. And you multiply that by tens of thousands of devices or assets that you manufacturer. And, you know, as you keep manufacturing, that builds up and open up. And, you know, that brings us to the kind of topic of big data. And you mentioned earlier as well the fact that we're seeing a shift to cloud. And I think the two things have got to be related because manufacturers are not in the business of standing up data centres to handle all the sudden flood of information from their connected to devices. So this has got to be a big factor as well. Beyond the shift to cloud, right? [00:19:46][80.8]

Tom Kurtz: [00:19:47] Oh, absolutely. In fact, you know, it's I I've been in this this asset management business for a while, but I have even longer been tied to a variety practises at SJP in and, you know, one of our. More successful customers. They they didn't start. I used to joke, you know, IoT he was such a buzz word. Still is a buzz word, but no one calls me asking, you know, how many IoT? How many IoT. Can I buy from you? Right. How many it does. It's not the IoT and enabling function, but like one of the successful customer, it was a data problem. It was it was a train company and they had it. And when and when it comes to train companies, it's not just we have a carriage or we have a car. It's that car has an HBC system with it and it has doors that open it shut and has a brake system. And it has all these different things and those are all censored. And so those all have parts. And so this company had terra bytes of data that they didn't have a strategy for. And so there they all with. The other thing they had is a gigantic maintenance budget item. Right. I mean, they they spent a lot on maintenance every year. Yeah. So they put those two together and said, can you help us structure a data architecture? And then once we understand how we're going to manage this data, we can decide what to do with this data. So it all started with a business problem, which is we spent a lot of maintenance. And then someone also said, well, we have a lot of data about the things we fix. How do we put something like this together? So it's absolutely the case. Data is a big part of it. I think how companies manage that information and that's the other thing, too, is there's there's different. I mean, we're lucky to get in all the details in our time here. But you start to get in things like edge computing. How much do you want to process at the edge before you centralise it into a central cloud data store and so forth? So there's definitely different touch points when you come to getting these connected devices and actually doing doing smart things with your smart devices. [00:21:48][121.6]

Tom Raftery: [00:21:50] And where's it all going? Tom, what's what's what's coming down the line? And asset management. What's the next big thing. [00:21:57][6.9]

Tom Kurtz: [00:21:58] The next big thing in asset management. I do think what we touched on in terms of this closed loop with with with with the engineering, a better linkage between the engineering and the operations. I do think there's a ton of potential, a ton of opportunity there. I think it it is something that we're doing. I think we've just scratched the surface of it. I think it's when when I know when we announced our relationship with Siemens that we had a lot of customers joking. That's all we've been waiting for this. This is because they're they're they're they have Siemens equipment. They use Siemens from appeal and perspective, SJP operations, whatever. But, you know, they see an opportunity there. So I think I do think that's one of the the next big things. And I think it's also related to that. Is this just where the the the world, this world's supply chains been going with Industry 4.0, with this idea of demand, Teligent factories being able to to drive that thing called Owyhee ineffectiveness, optimal, proven effectiveness and being able to to really be effective and how we do that and have quality and what we produce have uptime in the assets that we use to produce it. All of that's going to continue to be big, I believe. [00:23:12][74.5]

Tom Raftery: [00:23:13] Interesting. Yeah. Yeah. You talked about the maintenance and the train company and you know that that's a nice win. I remember that story. Well, it's a nice win because, yeah, it saves the train company a truckload of money. But it also means that our passenger safe road. Right. Is the case where a carriage load everything. But it also means it's a big safety win as well. You know, the train company's customers are safer. And if we think as well about feeding that data from the operation back into the engineering, it means that a lot of devices can know because that it's being seen how they're being used in the world can not only become more more efficient, but also safer. The efficiency wins mean that it's a sustainability win because you're not, you know, making stuff that's going to be used differently to how you thought the energy is. The energy use of the device over its lifetime is going to be far better optimised. So again, and people are going to be safer as a result. So it's it's a double sustainability when I think is is is that the only kind of sustainability winds we get out of this or are there other things that have not thought of. [00:24:25][72.1]

Tom Kurtz: [00:24:26] Well, I think I mean, I think that's that's a big thing. You use the term optimisation, and I do think you're optimising a lot, whether it be like you said, you're you're you're getting. You've got you've got you're getting better at predicting things or at least getting validation back. So that closed loop process between engineering operations, we talked about the effectiveness of with the weird naturally going to make this better. So there there's definitely sustainability there. I mean, I think maybe one thing I'd add to it is you're you're getting the equipment is continuing to get more efficient along the way as well. Right. The same way. I mean, this is going into the residential world, but washers and dryers are more efficient, that bathroom facilities are more efficient. I mean, things that can the technology in which one uses to create these things continue. And so what's happening is, again, you bring that chain back into play. If Manufacturer A is making a better product that Manufacturer B is using to make their product that C uses and so on. You're getting that the aggregate of the compounded benefit along the chain as well, because the more everyone along the way is using more efficient equipment. You're creating sustainability along that in which they which is important to in terms of, you know, when you're picking your suppliers and what you're holding your suppliers to in terms of effective, effective equipment production. [00:25:45][79.1]

Tom Raftery: [00:25:46] There's always this thought at the back of my head. I'm not sure if you come across the expression the 10 X problem. It's it's kind of a consumer term which is used about smart devices in the home. So the 10x problem is that if you get a smart, connected light bulb, it's typically 10 times the price of a dumb light bulb. Or if you get a smart connected doorbell or lock ah camera or sprinkler system or whatever else it is, they tend to be roughly 10 times the price of their dumb equivalent. But right at the very start of this, when you're talking about assets, you talked about how organisations, manufacturers are happy to pay for this extra connectivity in the manufacturing sphere. It's not going to be a 10x it's probably gonna be a two to three X at most. Right. And they got a massive economic benefit from us, whereas in the home situation, not so much. You get to play with your you know, your home device or your Google device or your Alexa device or whatever it is. Now, things talk to each other, but there's no big economic win from us. So it's it's two very different worlds. It's kind of a very stark difference between the two. [00:26:58][72.2]

Tom Kurtz: [00:26:58] No, that's a really good point. I think that you you you hit on something, too. You're going to naturally see in the industrial world, in the commercial world, you're going to start you're going to naturally see some economies of scale that you might not get in the in the commercial and residential world, especially when you tie the maintenance costs to it, because that's exactly what this there's a particular one in case a case in point I was talking to to a an oil company, oil and gas company, and that they were the one that specifically said, look, we we do so much for our maintenance and obviously we want to be efficient with this. The more we can have connected assets, the more focussed. If we try to retrofit something to your point earlier, you can do that. But the more I, I have this already coming from the manufacturer, the easier everybody is. So I'd rather pay a little bit more upfront to save money and the amount of time I'm going to use that asset or pay a little bit more upfront and then I'm gonna get years or whatever that the number is of maintenance efficiencies. And you can figure out the why and when the payoff break, even as and so forth. But that's exactly right. I'm not thinking about that necessarily with my light bulb, but I'm sure as heck thinking about that with my, you know, my my fifty thousand dollar piece of equipment,. [00:28:17][79.0]

Tom Raftery: [00:28:18] Tom we've gone way over the 20 minute mark is there, because it's been such an interesting conversation, which is always a good sign. Is there anything that we've not touched on that you think it's important that people be aware of? [00:28:31][12.5]

Tom Kurtz: [00:28:32] One thing I would say is and we're seeing this at SAP right now. So everything I just talked about. You're right. I mean, I'm not surprised we went over because it's fascinating stuff, but it also is real. There's real dollars here. But there's also real complexity. I mean, you're. We were talking machine learning or talk in simulation. We're talking different connexions to a business network. So there's different levels of complexity one can get. And one thing I'd advise those listening are if you if you're consulting with companies that would be targets for this. We do recognise the opportunity to start in a managed way as well. In fact, SICP, that's one of the things that we're doing now is putting a bundled package together with some of our solutions that do this so that companies, they can get started pretty quickly, you know, with a small number of devices, with out doing all that detailed machine learning that can come later without doing a lot of supplier on the network that can come later. But like getting us a small number of suppliers up, getting a small number devices up, getting some initial condition monitoring, going against the sensors there. That's something that can be done in a pretty managed way. And so that's one thing. Maybe a parting word for your audio. Says there's like everything else. There's degrees of this. And levels of sophistication and the ability to start small is absolutely tremendous. [00:29:46][74.0]

Tom Raftery: [00:29:47] Tremendous. Tom, if people want to know more about yourself, Tom carts are about asset management or about those packaged solutions you mentioned or anything else. Where would you have me direct them? [00:29:57][10.7]

Tom Kurtz: [00:29:58] A couple places. SAP dot com is always a great place for general information. If you go to SAP dot com slash E.A.M. Enterprise Asset Management, SAP.com/EAM. There's a lot of information about a lot of the capabilities that we've talked about here today on a personal level. LinkedIn is probably the easiest. My last name is spelled K U R T Z. [00:30:18][20.5]

Tom Raftery: [00:30:20] Excellent. Tom, that's been fantastic. Thanks man for coming on the show today, Tom. [00:30:23][3.7]

Tom Kurtz: [00:30:24] Thank you. [00:30:24][0.3]

Tom Raftery: [00:30:26] OK, 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/digitalsupplychain or simply drop me an email to Tom Dot Raftery at SAP dot com if you'd like to show. Please don't forget to subscribe to it. And your podcast application of choice to get new episodes as soon as they're 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. [00:30:26][0.0]

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