Modern ERP No Longer Enough

Although we have been emphasizing the need for a modern ERP system to meet continually evolving customer expectations, modern ERP alone is no longer enough. To thrive in the next decade will require business AI (artificial intelligence) to be embedded throughout your ERP system, accompanied by advanced technologies, innovative partners, and supporting learning systems. SAP has invested in the backbone of its system to support future growth which will become an assumption, not a differentiator for those that want to succeed in the next decade. 

For example, at #SAPSapphire, SAP’s generative AI copilot, Joule was a hot topic. When combined with business applications in SAP as well as Microsoft 365, it can “unlock greater employee productivity and will enable enterprises to accelerate customer-centric innovation in a unified experience.” according to Scott Guthrie, Executive Vice President, Cloud + AI, Microsoft. In today’s complex, inflationary environment, clients are looking for ways to increase productivity, engage employees, and educate users. Joule in essence performs like a ChatGPT for ERP. 


AI Driving Customer Value 

Engineering intensive companies such as engineer-to-order (ETO) and configure-to-order (CTO) industries struggle to provide customer value on the fly. Powered by generative AI, SAP can now generate product and configuration recommendations
quickly and accurately in these engineering intensive industries. Additionally, SAP announced additional strategic partnership initiatives with NVIDIA that would allow manufacturing resources to interact with a physically based digital twin of a complex product within a larger, industrial digital twin of the entire factory. This functionality will enable the optimization of the product design and the manufacturing process. 

Additionally, the better your sales forecast, the more likely your order fulfillment process will ensure a superior customer experience. Thus, predictive forecasting capabilities and predictive product and people recommendations (improving close rates) will improve your ability to serve customers with high service levels (OTIF, lead times, delivery performance) and grow revenue. AI also powers e-commerce with shopping assistants and the ability to tailor and personalize service to drive customer value. 


Resilient Supply Chains Makes the Cut

The critical importance of supply chains has been elevated to the executive suite. For example, SAP touted a 10% increase in resiliency of supply chains of their customers implementing SAP solutions. As we discuss frequently, the world is chock full of risks. For example, a few risks that pop to mind include:

  • Geopolitical risk: There is a plethora of risks in today’s environment. For example, China continues to threaten Taiwan, Houthi rebels attack container ships in the Suez Canal, and China is aggressive in the South China Seas. 
  • Weather related impacts: The Panama Canal ‘s capacity was reduced by around 50% in the last year due to drought conditions in Panama, thereby delaying, diverting, and increasing the cost of goods movement.
  • Strikes & other labor impacts: There have been concerns over potential rail strikes, air freight strikes, port strikes, and more. Since logistics is a system of systems, one delay in the supply chain impacts the rest of the supply chain.
  • Regulatory risk: Changing regulations can bring the supply chain to a halt. For example, a Senate probe found that BMW, Jaguar Land Rover and Volkswagen purchased parts from a banned Chinese supplier, some of which were used in vehicles imported to the U.S. VW voluntarily disclosed that some of its vehicles bound for the U.S. contained these parts from the banned supplier that may have used forced labor, which led to holdups at U.S. ports. 

Thus, having a resilient supply chain is of paramount importance. SAP announced an expanded strategic partnership with Google to integrate Google’s Gemini AI assistant with SAP’s Integrated Business Planning (IBP) for Supply Chain and SAP’s generative AI assistant Joule to better predict and mitigate supply chain risks in an unpredictable and volatile global context. We are especially excited about the potential for utilizing AI capabilities with SIOP (Sales Inventory Operations Planning) in the IBP solution. These solutions will help enterprises better predict and mitigate supply-chain risks to minimize disruptions and maintain optimal inventory levels.


Manufacturing Takes a Leap Forward

Manufacturing teams can take a leap forward with digital boards. Instead of relying on manual production boards that are out-of-date within minutes of being written, digitizing this information and displaying on monitors will arm your manufacturing teams with up-to-date information for decision-making. With this process upgrade, they can monitor, rapidly identify bottlenecks / issues, and evaluate solutions, thereby improving operational performance. 

Smart manufacturers are taking this a step further and digitizing their process design. By aligning their systems with the appropriate process steps, they can have work instructions at their fingertips and integrate quality confirmations and visual inspections into the process. Although a standard operating procedure, the recent missteps with Boeing prove the importance of monitoring this critical step. Advanced technologies can take it a step further. For example, digital twins can provide visual clarity and enable a leap forward when tied to IoT (internet of things) and asset management, enabling predictive maintenance and other advanced technologies. 


Proactive Approach to Supply Chain Disruptions & Sustainability

Supply chain disruptions abound, and companies don’t have the information at their fingertips to respond rapidly to changing conditions. For example, Houthi rebels started attacking container ships in the Suez Canal, diverting ships around the southern tip of Africa, extending the trip by 10 days. Depending on your suppliers, routes, customer requirements, and other factors, you could evaluate your alternatives (re-routing through the Panama Canal, re-routing to the West Coast ports of the U.S. and using rail to ship to the east coast, reallocating suppliers) and make the best decision to ensure customer service with the best profitability by using control tower capabilities. Instead of using gut feel or losing precious time for complex analyses, you will gain rapid visibility to your situation, options, and impacts (customer, financial). 

Sustainability control towers provide visibility into your carbon footprint and emissions of your end-to-end supply chain. Although clients want to achieve the triple bottom line, as ESG requirements and environmental regulations increase, having a vehicle to track, monitor, and report this type of information manually is overwhelming. Thus, control tower capabilities can automate required reporting while providing insights into your end-to-end supply chain. For example, proactive companies are incorporating carbon footprint data into their SIOP process as they evaluate suppliers, make vs buy decisions etc. Since it is a system of systems, you might be pursuing aggressive goals with a link in your supply chain while another link might more than offsets all of your efforts. Having these insights, powered with an AI engine will reveal valuable insights. 


The Bottom Line

Companies are at an inflection point. Using old technologies and manual processes will no longer “work”. The strong will get stronger, and the rest will go by the wayside. There will be more opportunities than ever before for those companies that invest in the appropriate talent, technology, and infrastructure as they will leave the competition in the dust, similarly, to driving an F1 car going from 0 to 60mph in 2.6 seconds in a race vs a Yugo going from 0 to 60mph in 14 seconds. They will have the opportunity to grow revenue and secure their position in the market for decades to come. 


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Industrial Robots for Manufacturing and Supply Chain Success