SAP has a very close partnership with Accenture around supply chain and Industry 4.0 so I wanted to invite one of their supply chain experts to come on the podcast.
Max Brandl is the CEO of Salt Solutions, part of Accenture's Industry X, as well as a Managing Director in Accenture so he seemed an ideal candidate. Fortunately, he was more than willing to come on the podcast.
We had a truly fascinating conversation and, touching on supply chain disruption, the shift to cloud for different aspects of supply chain, and the rising importance of sustainability in supply chains. As is often the case, I learned loads, I hope you do too...
If you have any comments/suggestions or questions for the podcast - feel free to leave me a voice message over on my SpeakPipe page or just send it to me as a direct message on Twitter/LinkedIn. Audio messages will get played (unless you specifically ask me not to).
If you want to learn more about how to juggle sustainability and efficiency mandates while recovering from pandemic-induced disruptions, meeting growth targets, and preparing for an uncertain future, check out our Oxford Economics research report here.
And if you want to know more about any of SAP's Digital Supply Chain solutions, head on over to www.sap.com/digitalsupplychain, and if you liked this show, please don't forget to rate and/or review it. It makes a big difference to help new people discover it. Thanks.
And remember, stay healthy, stay safe, stay sane!
It's much easier to see the sustainability effects when we have this digital twin as an end to end process from the beginning to the end analyzed and then we can make the calculation then we can make the recommendations then we can make what if analysis in order to create a more sustainable product in the next face in the future?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 podcast today I have my special guest, Max. Max, would you like to introduce yourself?Unknown:
Yes, hello, Tom. Thank you very much. My name is Max Brendel. I'm now with Accenture for almost a year. Before that, I have been working for salt solutions, which was acquired, we are specialists in digital supply chain. And I also have worked during my career at BCG at SAP and at an engineering company called e plan.Tom Raftery:
Okay, cool. And you mentioned digital supply chains, which is quite fortunate given that this is the digital supply chain podcast. So that's great. You're in the right place, and your base. So your specialty is supply chains and digital supply chains in particular, and you're now with Accenture supply chains have, you know, kind of been hit with all kinds of disruptions in the last year, year and a half, even two years? How How is that affecting them? What kind of things have you seen? What kind of changes have you seen as a result of all the disruptions we're seeing?Unknown:
Yeah, we, you're completely right, we have a very hot face for this topic of supply chain. When I joined, it was before the COVID crisis. It was also already a hot topic, because we have supply chain as an end to end process. Going from engineering until the operations, but now it's even hotter, because we had many issues now in the couple of last quarters and months. I know everybody knows the corona COVID crisis where we had some really big issues with the supply chain, but we also have now political disruptions between trade topics between China and us where we have now a shortage of semiconductor topics. We also have the flat catastrophes in some areas or weather conditions, which are changing so we have a huge bulk of external changes which really require that we completely rethink of our current supply chainsTom Raftery:
and how our supply chains How are they changing to meet those sudden disruptions that are becoming more frequent.Unknown:
There's a variety of measures which we have to take and which the companies have to take in order to ensure that they can deliver the goods to their own customers in time. One topic is which became clear already through COVID-19 was that sometimes we know the direct suppliers and have decided on specific purpose maybe only to use one supplier, but then during COVID with some companies found out that the second tier supplier was the same or the third tier suppliers had a shortage. So we now are much more looking into second tier and third tier suppliers and also making sure that if we have two suppliers or three suppliers, we making sure that not second suppliers still the same. So then it looks for us as if we have now selection but the second tier suppliers the same so we still have a shortage. So this is one point. The second point is that we had to adapt to changes very, very fast in many cases also in terms of weather conditions. So we need to have the supply chain being much more agile, much more rapid, be able to change. The third thing is that we also see increasing risk the further away the goods or the some of the things are shipped. So we have a real tendency to have more local supplies and also more stocks, which makes everything a little bit more expensive of course but it makes it also more resilient with Say the resilient supply chain is a topic. And I like to compare it with the skyscrapers, which you build all around the world. But in an area where you have an earthquake, for example, you have to completely build these skyscrapers in a different way, you have to make them more resilient so that they can withstand earthquakes in a in a much better way. And the same, I think we are now learning with our supply chains, due to the many issues we have been encountering in the last couple of quarters, we also have to make the supply chains more resilient, it will cost a little bit more, but it will help to fit it will have to satisfy our customers and we needed in order to have a smooth flow of production, a small small flow shipment of the goods to our final customers.Tom Raftery:
Okay, and where do supply chains of the future need to go to I mean, this is going to become more of an issue I can imagine moving forward. I mean, we just look at reports, for example of the latest climate change reports and they say disruptions and more extreme weather is going to become more than norm. So how do supply chains? How will they? What do they need to do to change to accommodate that?Unknown:
Yeah, you exactly mentioning awesome. topics around this political area, which I was mentioning, I think the first and foremost topic is the digitalization you what you have been doing maybe 10 years ago that you managed supply chains was with excellent programs and some pencil and paper, this is no longer possible. In order to flexibly react to the many changes, we need to have a digital supply chain. So everything needs to be very well recorded. So this is one point. But in more detail, this means also that we only can manage it in a good way, if we are also open to go to the next step to go to cloud. to cloud topics, because it's much easier in a cloud, it's more scalable, it we have more transparency, we can easier input to a cloud environment information from different parts of the value chain. So Cloud is, for me, a second important topic where we need to move the supply chain to the topic is has much more transparency, much more information about the different goods, which which are there. So have more information collected, where our problems may be, there might be early warning systems so that we see maybe one day ahead of time by analyzing, for example, Twitter messages or things like that, that there might be a problem in this area before the truck driver calls up to the company that he is stuck somewhere. And then it takes another day until we have an alternative shipment. So we need to have much more transparency in order to be kind of earlier and one or two days already can make a huge difference if you know everything earlier. And another topic will be that we also have more standard solutions employed because only with standard software solutions, which monitor everything we can really then quickly find alternatives. So not only monitoring the data, but also have go into solutions into quickly finding the possibilities to switch maybe to another supplier or to fulfill the order at a specific location was a different way. Okay, great. AndTom Raftery:
I mean, you mentioned cloud solutions we've we've seen cloud has been around a long time over 10 years, but it hasn't really penetrated supply chain until the last year or two. Why do you think that is and do you think it is going to actually start to take over in supply chain as well.Unknown:
I mean, we have on clouds adoption rate we have really very different views. We have different adoption rates by industries. We have different adoption rates. For example, in the b2b versus b2c. I think each of us already manages most of his private life. pictures and photographs somewhere in the clouds. So we are, many of us have now adapted to, to cloud storage on the private way. While in the business, it's very different. We also have the challenge, for example, that in some European countries like Germany, we are more worried about cloud than in other European countries like the UK or even in the US or in the US. So we have to, we are on the path here. We are late in Germany, we are late, late in manufacturing, then maybe in other industries. And we are also later a little bit in some areas like the supply chain within the manufacturing, the closer we get to the heart, the more careful people are when we are talking about cloud,Tom Raftery:
and we'll attack after I mean, yes, people aUnknown:
question of time. definitely take off, we will solve security issues ongoingly. And we will have higher adoption rates, I will just say we should not be too late. And if we are only talking to the more worried German speaking people only to the mobile supply chain people only to the more worried industrial people, then maybe we do not get the broad enough picture, we need to be very careful. We need to imply all the security measures but the trends towards cloudification is unstoppable.Tom Raftery:
One of the areas that slowest to move to the cloud, I think is manufacturing. Yes. What What if someone from manufacturing is listening to this? What would you advise them by cloud of what will be the advantages to them of moving to cloud?Unknown:
I mean, there are different ways and manufacturing in the cloud is for sure a very hot topic, which will not fit to every pump company right now. But also within the manufacturing area, we can take several steps, we can take smaller steps, for example, we can have as a first step transparency, we leave everything as it is we leave the critical topics on the MAS as they are, but we get more transparency across different factories, for example, where do we stand with which machine so we only collect some information. And so get slowly an overview where we are, and then slowly get acquainted with was cloud. So I definitely would not recommend. And also we have the topic. And I understand everybody who's looking at manufacturing completely we have in many cases, we have many different ways how we do how we produce a product in one factory versus the other factory, we have different machines, we have different immune systems, we have different processes. So it's it's not a good idea to do too many things at once, I think we should have a step by step process, starting was more transparency was more information. And then we can see where we can start we also have the Greenfield versus Brownfield. So we have many machines, which are long time in place, and everything needs a different approach.Tom Raftery:
Okay, and how are Accenture working with SAP what kind of things are we doing together?Unknown:
I mean, we have many joint strategic initiatives and this very well fits to your previous questions. For example, one strategic initiative from from Accenture and sap is the cloud. So cloudification in all the different areas is a big topic and once again, we see that maybe in areas like CRM, customer relationship management, we are a bit further than in the manufacturing area. So Cloud is one big topic of cooperation. But we also have a second big topic of cooperation which is industry x, exactly what we are talking also about some call it industry 4.0 and we are right now thinking how can we work together in the customer centric supply chain, for example with the sprint two program, because both for SAP as well as for Accenture, this area is a very important growth area where we jointly need to support our our customers much much further and where we also see a big potential like we have been discussing The beginning, because so many changes need to be done, especially on the supply chain. And I always like to make this comparison. We have, for example, 7 billion, I hope that we're billions, right billion people, inhabitants at our planet Earth. But we have 27 billion of IoT enabled devices. So we have many more devices already, which send information which tell us about temperature, which tell us about vibration, and so on. And all this, especially in the supply chain, there are lots of IoT devices, which we could potentially tap into. And this is extremely valuable information, which we are not yet systematically collecting, which we are not yet systematically analyzing, which we are not yet systematically using to make shorter delivery times to make our supply chain more resilient. And last, but not least, also to make our products more sustainable.Tom Raftery:
That's an interesting point, because it brings me to my next question nicely about sustainability. It is becoming a very, very hot topic for many reasons. In fact, I've given a keynote recently called the sustainability imperative a number of times now, and it talks about all of the kind of reasons why sustainability has become so important. But from from Accenture's perspective, can you talk a bit about how you're helping your customers with their sustainability initiatives and supply chain?Unknown:
Yeah, indeed, sustainability term is, for us also a very, very important topic as well as for SAP. To continue this topic of cooperation, we have signed an agreement on sustainability. So SAP and Accenture have jointly signed an agreement on sustainability is this April 2021, because it's a very, very important topic for both companies. And again, we need some ingredients to really some technologies, some success factors to really make it happen. Now, one, I, this is maybe one second is it's a cloud topic where we need to collect a lot of data. Sustainability is a long term topic sustainability is a topic where we need lots of information for so again, clouds lends itself very naturally for bringing together this bits and pieces of information all around for example, a product lifecycle. So this is one important topic again, we need to talk about digitalization, we need to talk how we can optimize processes. So some information comes via the software comes automatically. And very important topic is this end to end process sustainability only makes sense if we look really from an end to end process, or not only at the production of a car, for example, but it the whole lifecycle of a car. How sustainable are we when we looking at the whole lifecycle in until the batteries need to get disposed of. And starting from the engineering or even earlier, it makes no sense only look at I don't know driving the 100 kilometre. And there again comes in a new concept, which is then the digital twin, for example, where we look at this car or at this machine or this product, whatever it is, from the beginning until the disposal until the very end of the life cycle. And it's much easier to see the sustainability effects when we have this digital twin as an end to end process from the beginning to the end analyzed. And then we can make the calculation then we can make the recommendations then we can make what if analysis in order to create a more sustainable product in the next face in the future?Tom Raftery:
Right, good. Yeah, no, sustainability is going to become a huge, huge topic increasingly, as we get closer to, for example, 2030, which is only, you know, just over eight years away, and Europe has set legally binding targets on all 27 nations of a 55% reduction in our climate emissions. And to put that in context for the listeners. We've managed to reduce our emissions 24% in the last 30 years, we need to get to 55% reduction. So that's another 31%. We've got to reduce in the next eight and a half years. So it's a massive undertaking, and it's a legal requirement on all 27 nations and there's going to be a carbon border tax. So people, so countries outside the EU won't be won't be able to take advantage of it. So it will mean massive, massive changes that it'll mean as we get closer to 2030, that every single business decision will be weighed not just on its financial implications, but on its climate implications as well, which means as well, it will be mandatory for all companies to measure and report on their emissions. So there are huge, huge changes coming. So it's going to be really interesting next few years.Unknown:
Yes, and this also means that we have to change our approach a little bit. In the past few years, sometimes we have been optimizing, for example, only the logistics, or only the productions or only the operations like or only the engineering, I call it a little bit negatively, I call it silos, we have been optimizing the silos but now we have optimized many silos already to a great extent, at least to such a high extent that we cannot provide the savings which you are mentioning, from further optimizing these silos. The real optimization can only happen if we look now at end to end processes, if we look at the whole chain. And this again, brings the supply chain and the focus because also the supply chain is the whole chain now, like the world is saying, we are not looking at at only inbound logistics or only at the supply chain in the production space, we look at the end to end supply chain. And they are I'm quite optimistic that we have these high savings or have these higher sustainability, or carbon footprint reduction. If we do it properly. If we really go end to end, this is our only chance to get it or not by further looking at only individual parts of it.Tom Raftery:
Yeah, yeah, absolutely. Max, we're coming towards the end of the podcast. Now. Is there any question that I have not asked you that you wish I had, or any topic was not addressed? That you think it's important for people to be aware of?Unknown:
I mean, for me, the positive outlook is that we have very good chances now. And we are we had a wake up call now with all these issues, like the COVID crisis, or like the political disruptions, but we should now really stay operational, we should not execute on those topics very, very fast. It's a question of time, how fast we are digitizing it. It's a question of time for the topic of sustainability, which you mentioned. Because we have to be fast. It's also a question of time for industrial nations for maybe I'm sitting here in Germany, for Germany, who is very good in machinery, we need to be fast in adopting these changes, and fast in executing the learnings now from from the crisis. So I wish everybody that we are now taking action. And we take this as a wake up call and really change things very fast. Super,Tom Raftery:
super. Okay. Max has been great if people want to know more about yourself or allowed Accenture are about our partnership, or any of the things we discussed in the podcast today. Where would you have me direct them?Unknown:
Yeah, well, anybody can of course, connect to us as Accenture. And to me personally via LinkedIn. I'll provide the links on the next page.Tom Raftery:
Perfect. I'll put those into the show notes so people can have access to them. That's great. Max. Thanks, again for coming on the podcast today. Thank you very much, Tom was a pleasure for me as well. 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 sa p.com slash digital supply chain or, or simply drop me an email to Tom email@example.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.