Richard Howells, Global Vice President of Extended Supply Chain at SAP, joins SAPinsider Studio at the SAPinsider SCM-CRM 2016 event to discuss how the Internet of Things can help organizations re-imagine their supply chains. This is an edited transcript of the discussion: Natalie Miller, SAPinsider: Hi, I’m Natalie Miller with SAPinsider, and I’m here at the SCM, CRM, and IoT event in Las Vegas, and I’m joined by Richard Howells, Global Vice President of Extended Supply Chain at SAP. Hi, Richard, thank you so much for joining me today. Richard Howells, SAP: You’re welcome, nice to meet you. Natalie: Nice to meet you. So if you want to start by just talking a little bit about your role at SAP? Richard: I’m responsible for all of the go-to-market activities, the internal and the external communication. I do a lot of work with social media and, really, a spokesperson for the SAP extended supply chain solutions. Natalie: At the conference, I know a lot of the conversations are around IoT and digital transformation. Can you talk a little bit about what opportunities SAP customers who haven’t really gone down this road are missing out on? Richard: Well I just gave a presentation on the Internet of Things, and it’s really about capturing real-time information and making informed business decisions based on that. So if you’re not leveraging the Internet of Things, you’re missing out on a lot of opportunities and a lot of information that is readily accessible through the technologies that are now available. Natalie: So it’s just a matter of accessing that data that companies already have? Richard: It’s a combination of accessing new information, whether that be structured or unstructured data. A great example is, most people can access customer orders and even point to sales information from a demand standpoint, but they don’t have the ability to access that unstructured information from social media, from Twitter, from Facebook and things like that, that can influence business and buying decisions. Natalie: Can you give some examples of some of the opportunities that companies that are down an IoT path are already seeing? Richard: So, in the presentation, I talked about four main areas. The first one is around connected assets, having sensors that can track information on assets within your network and then perform predictive analysis on how that asset is performing so that you can send out service technicians to fix the product before it’s broken. Because you always want those products running, and running when you need them, and avoid expensive downtime, which can be unnecessary if you can predict through sensors. Another example is manufacturing companies are reimagining how they make products. One of the examples that I love talking about is Harley-Davidson. They changed their manufacturing process so they can now manufacture customized bikes. They can see that, they used to produce standard products, and then their distributors used to customize them, and there’s a lot of opportunity being left on the table. And they completely re-engineered their manufacturing process so that they can have sensors of every piece of equipment, and then when an order comes in they can adjust the manufacturing line to produce that individual product unique to that order so that, now, no two products go off the line the same, and customer satisfaction is improved. Another example, and they’re presenting at this event, the Port of Hamburg had a business challenge where they knew that at the moment they receive, or process through their facility, nine million containers per year. They know that that’s going to increase to 25 million in the next two years, but they have no extra capacity. They have to do more with the same, or more with less in some cases. And by optimizing the throughput, having visibility of when certain containers are coming in, when certain tankers are coming in with the products, they can then streamline the whole process to make sure that there are trucks to pick up the goods when they arrive and only there when they need to be there, and thus increase throughput and do more with less. Natalie: That sounds like a lot of possibilities. Can you talk a little bit about how SAP is helping facilitate that? Richard: Well, SAP has invested a lot of money in the Internet of Things. What we see, though, is in some cases, the Internet of Things is a technology waiting for a solution. And what we’ve done is prioritize the business capabilities that we need to deliver based on feedback from their customers, whether it be predictive maintenance, whether it be connected manufacturing, whether it be the asset intelligence network. The key is to have a business problem to solve rather than technology for technology’s sake. So we’ve really focused on where we see opportunities for our customers to get return on investment with key solutions. Natalie: What is SAP’s roadmap, and can you talk a little bit about the solutions that are available in this area? Richard: In the extended supply chain area, the most commonly used solution is predictive maintenance. It’s the ability to track assets out in the field, to be able to have numerous Internet of Things sensors feeding information back, and then, through predictive analytics, being able to analyze when a product or when an asset is going out of calibration, when it’s due to break down, so that you can send a service technician out with the right skills, with the right products and the right materials to fix the problem before it happens, and thus optimize the assets. On the manufacturing side, the connected manufacturing solution leverages capabilities that we have had for a while with ME (Manufacturing Extension) and MII (Manufacturing Integration and Intelligence) manufacturing capabilities to really capture and harness the thousands and thousands of transactions that happen per second on the production floor, and then provide the analytical tools to turn that into a business context, to see how you’re performing, to see where you can improve throughput, etc. And then from a logistics standpoint, a logistics network hub is the solution that I referred to a little earlier, and that leverages geo-fencing capabilities and sensors on all of the trucks and the tankers coming into the ports, in this example, and really brings all of that information together to optimize the movement around – I mean, it even goes to the point where they can tell that a tanker’s coming in, and it automatically raises the bridge so they can get under the road, and reroutes the trucks so that they’re not waiting for that bridge to go back down, but finding alternative routes to get to the same location, and thus optimizing the logistics processes within a certain facility. Natalie: So for companies thinking about traveling down this path, can you talk a little bit about their infrastructure? Say their infrastructure that they already have, how can they integrate these products and solutions into their business? Is it getting rid of what they have, or is it integrating? Richard: Absolutely not getting rid of what they had. They can maximize the investment they’ve already made. It’s really providing – and it’s not cost prohibitive anymore to actually capture the sensors or provide sensors on key pieces of equipment. So it starts with capturing the information, and then leveraging that data, something within your existing processes, or even reimagining new processes that you hadn’t thought of before, such as predictive maintenance. Natalie: Richard, thank you so much for being here and sharing your insights, I really appreciate it. Richard: Thank you very much, it was a pleasure.