Supply Chain Matters continues to highlight exponential developments in advanced technologies that will eventually impact various industry supply chains with an update on increased investments in autonomous driving technologies for trucks.
In November of 2016, Supply Chain Matters observed why increasingly high-tech and semiconductor technology providers wanted to position themselves in automotive value-chains. There have been quite several significant merger, acquisition and strategic product development announcements involving automotive supply chains and the stakes involve which company will ultimately control and benefit from the movement of more advanced technology being embedded into value-chains of automobiles and transportation. As we noted last year, a lot of M&A and investment monies are being plowed into the automotive and transportation sector to take advantage of the various movements towards on-demand, autonomous and highly intelligent motor vehicles. This movement presents a competitive dynamic among traditional OEM’s who control brands and markets with those of technology companies that know about software and digital transformation.
It is now becoming ever more obvious that value-chains of short and long-haul trucks are another, perhaps more promising area of long-term strategic interest. The reasons are likely obvious to our readership audience. The increased savings in efficiencies, driver productivity, and overall safety make a case for more near-term investment. There is also the other elephant in the room, namely the continual shortage or turnover of qualified long-distance truck drivers. In September of last year, consulting firm McKinsey indicated in a research report- Delivering Change, the transition of commercial transport by 2025, that by this timeframe, at least one in three new heavy duty trucks will contain higher levels of onboard automation technology, including Level 4 autonomous technologies, that will buffer the need for full-time driving.
Another open question is obviously the receptivity of regulators to various forms of autonomous driving technologies applied to trucking and transport. There are some perceptions that European regulators have been more open to considerations of advanced technology, and have become directly involved in ongoing industry demonstrations of various forms of autonomous driving technology. US federal regulators, on the other hand, seem to be taking a more wait and see perspective. In either case, the receptivity by safety regulators will obviously be an important determinant in timing.
Semiconductor technology provider Nvidia whom originally developed of the Graphical Processing Unit (GPU) chip in 1999, and that ultimately sparked the growth of the PC gaming market. The company has moved on to redefine modern computer graphics and gaming platforms and has made advancements in parallel computing. More recently, GPU deep learning ignited modern artificial intelligence married with digital visualization— which Nvidia describes the next era of computing, has led to the development of autonomous vehicle technologies.
Thus far, Nvidia has been collaborating with what the company describes as a wide range of automotive partners, including Tesla, Mercedes Benz, Audi, and others. A recent presentation at an investor conference indicates 80+ companies are currently leveraging the company’s self-driving platform and that every Tesla Motors vehicle now comes equipped with DRIVE PX 2 for full self-driving capabilities
In a company blog posting in March, Nvidia announced that it’s working with PACCAR, maker of Kenworth, Peterbilt and DAF truck brands, on developing technology for autonomous vehicles. The same blog posting further announced a partnership with Tier One automotive parts and systems component producer Bosch, for self-driving car technology.
PACCAR has developed a proof-of-concept self-driving truck with SAE Level 4 (full self-driving) capability built on the DRIVE PX 2 technology. It includes elements of adaptive cruise control, the identification of digital objects along with lane-keeping technology to make trucks safer in long-distance hauling.
Wall Street is increasingly paying closer attention to autonomous driving technology applied to trucks and truck fleets. Earlier this month, Silicon Valley based software firm Peloton Technology raised $60 million in a second-round of funding for expanding its development and market presence in automating commercial truck fleets.
As its name implies in the field of competitive cycling, Peloton Technology supports the ability of trucks to travel in a convoy with a driver in the lead vehicle controlling various following truck (s). While the value proposition is predicated on higher safety and fuel savings, some in the industry are a bit skeptical on the notions and regulatory approval of an automated convoy of multiple trucks controlled by software. Instead, the software provider is initially focusing on supporting a convoy of two trucks, with the lead driver in full control of both vehicles. Peloton is planning development and deployment of its software for 2018.
Current investors in Peloton include Intel Corporation, Omnitracs LLC, Magna International, United Parcel Service and Volvo AB, all various value-chain players in trucking, transportation, autonomous driving and truck component technology.
Future Technology Leaders
If our readers have been scanning various other business and technology media, you have likely read that the trucking industry has struggled of-late because of the compelling need of fleet owners to want to invest in new, more fuel efficient and technology-laden trucks. The likely solution rests both in hybrid powered technologies and in increased levels of safety, driver productivity and automation.
Thus, over the coming months, a number of both established players and high-tech startups will all be vying to be the future technology innovators and leaders. Startups will bring the usual speed, agility, and advanced technology knowledge – all prerequisites for the majority of new business models. To counter new entrants, OEMs must demonstrate agility to both build their own digital capabilities and enter collaborative efforts with partners around the product value chain.
Established names such as Daimler, PACCAR, Scania, and Volvo will be contrasted with those of Otto (recently acquired by Uber), Nicola Motor Company, others and yes, even Tesla Motors.
Exponential technology developments will eventually impact many industry supply chains, the product value-chains they support, and the tools and technologies utilized to move physical goods. As in all things exponential, the question is timing, and the cycles of that timing are accelerating.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
In February, this supply chain industry analyst attended the Oracle Modern Supply Chain Experience Conference held in San Jose California. Through Supply Chain Matters, I have shared several prior observations and takeaways from this conference. We noted the extraordinary attendance, upwards of 2800 attendees at a supply chain management information technology focused conference. We further highlighted the momentum of Cloud-based technology deployments in the many different business process areas that today come under the umbrella of supply chain management along with the building interest levels surrounding Internet of Things (IoT) technology being applied to future supply chain management processes.
There was one keynote that I initially did not share in prior conference highlights, principally because I needed time to absorb the many compelling messages that were delivered. The title was Exponential Organizations and the presenter was Yuri van Geest, Co-Founder of Singularity University. Yuri has a background in organizational design and is noted as a keen observer of exponential technologies and trends. He is a co-author of the book- Exponential Organizations- Why new organizations are ten times better, faster, and cheaper than yours (and what to do about it).
The keynote opened with van Geest recounting the dizzying exponential developments that have occurred in artificial intelligence, alternative energy, biotechnology and medicine, robotics, additive manufacturing, sensors, and drones. His primary message was that most of these exponential technology developments will eventually impact supply chains and the organizations and people that makeup this community. His takeaway message was that the best vision of the future is happening at the peripherals of such technology development.
My initial presumption was that many of the conference attendees would have a difficult time absorbing the stark nature of the messages or would dismiss this talk as that of a technology genius speaking far above an ability to absorb the real implications. Frankly, the conference organizers should have allowed additional time to accommodate all the content as well as to allow for further audience interaction.
Since the conference, I have had the opportunity to read the book and revisit my notes from the keynote. My goal in this blog is help distill what I perceive to be some other key takeaway messages related to future supply chain management organizational purpose, design, and work activities, at least from my perspective after having time to really absorb the content.
Geest did a suberb job of translating today’s far more exponential technology trends to what he viewed as direct impacts on industry supply chains. As an example, he stated that over the next ten years, the exponential developments in 3D printing capabilities will foster the ability to print nearly everything in materials including molecular assembly. The implication is the ability for products to be produced within primary areas of consumption, with the model of contract manufacturing being one of virtual capabilities to receive electronic design information and print on-demand products. A further implication is a more localized supply chain or regional network.
The notions of machine learning or cognitive acquired deep learning technology capabilities will at some point in the future lead to autonomous supply chain planning and customer fulfillment, where algorithms and physical sensing manage supply chain needs. While on the subject of planning, the book declares traditional five-year planning as obsolete, and that in exponential organizations, there should never be more than a one-year planning cycle supplemented by continuous just-in-time learning and events.
Regarding the physical, Geest further spoke to the compelling impacts that IoT focused developments would have on supply chains. In the book, there is a passage that is worth sharing:
“In the same way that today we can no longer handle the complexities of air traffic control or supply chain management without algorithms, almost all the business insights and decisions of tomorrow will be data-driven.”
Obviously, the messages are profound and perhaps threatening to many. None the less, van Geest’s message is that we cannot ignore compelling events and individually, people need to be trained and prepared with new individual and team-based skills.
To better understand the implications, I turned back to book to ascertain what were described as the key competencies of the future Chief Operating Officer, Chief Human Resources Officer and either Chief Data or Chief Innovation Officers.
Here are just a few excerpts to ponder:
- Digital based production and the unbundling of production steps will free the company to focus on its core competencies (customer relationships, R&D, design, and marketing)
- The notion of a recycled materials supply chain where production materials recycled and reused multiple times.
- Internet of Things sensors used to monitor the entire supply chain.
- The need for long-distance transport to drop over time due to the rise of localized production and a closed-loop material supply chain.
- Universal Cloud access to social technologies, data, and services, independent of physical location.
- Data management systems that use methodologies, processes, architectures, and technologies to transform raw data into meaningful and useful business information, available to all teams.
- The need for Big Data security practices.
- The hiring of employees based on overall potential, not just past record of accomplishment, and on the premise of who can ask the right questions.
- New notions of peer-based and continuous learning.
- Reputation measured by contributions in communities and work teams.
The book addresses the obvious question regarding the impact on future jobs. The premise is that the democratization of technology will allow individuals and teams to follow their passions and create new economic opportunities and businesses, far different than work being performed today.
These are heady messages, and will cause some pause or skeptics. We applaud Oracle’s supply chain management conference organizers for hosting such a thought-provoking presentation.
From our lens, there is no denying that the exponential changes occurring in technology and business will eventually impact how supply chains are manifested and managed. The question is in what time frames.
The other obvious question, will teams and individuals be prepared?
We encourage readers to share further thoughts and comments.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
An annual tradition for the Supply Chain Matters blog has been to look back to the prior year’s readership uptake and share with our readers the top ten blog postings of the prior year.
Admittedly, we are a bit late in compilating all of our 2016 readership data but we did want to publish this for readers, clients and sponsors.
The list provides a sense of what particular topics were of the most interest in our over 300 blog postings published in 2016.
In the Dave Letterman style, we start with number ten and work our way down to the number one topic of readership uptake.
Observations on the Rankings for Supply Chain Planning Technology (February 5, 2016)
After industry analyst firm Gartner published its Magic Quadrant Rankings for Supply Chain Planning System of Record applications in mid-January, this commentary shared observations regarding the rankings of vendors. Our takeaway was that the current landscape of supply chain planning, sales and operations planning (SO&P) and B2B supply chain network planning technology was far more influenced by line-of-business and supply chain leadership input needs and requirements. Hence many other sources of information support the buying decision beyond industry analyst rankings.
This Supply Chain Matters commentary explored the implications of a full Cloud-based technology suite in supporting broad supply chain business process needs after industry analyst Bob Ferrari completed nearly two days of briefings and conference presentations related to Oracle’s Cloud based technology offerings. One takeaway provided was to view Cloud from the perspective of a broader focus on an engineered suite of pre-integrated software applications that are continually updated to reflect changing business needs. Why settle for business application innovation every 1-2 years when every 6 months is an option, and with lower capital and overhead costs.
Characterized as one of the largest sporting-goods retailers, Sports Authority was weighted down with debt from a prior leveraged buyout a decade ago. We called attention to a disturbing development in the ongoing bankruptcy process, as the retail chain filed lawsuits with more than 160 suppliers challenging supplier claims to consigned inventories. We opined that this development had significant ramifications for supplier collaboration practices within retail as well as other consumer goods focused supply chains.
A Disruptor is About to Enter the Heavy Truck Equipment Market (June 20, 2016)
Supply Chain Matters has continuously provided our readers visibility to emerging industry disruptors who are leveraging advanced technology and platforms directed at supply chain related business process and asset needs. Such visibility included the entry of Uber and Lyft and their potential to move beyond people transportation. In this posting we provided visibility to start-up Nikola Motor Company and its ongoing development of a Class 8, 2000 horsepower electric powered semi-tractor truck that will be named the Nicola One. The actual unveiling occurred in early December.
Chipotle’s Consumer Trust Crisis Enters a New Critical Phase (February 9, 2016)
One of our early blogs in a series of ongoing commentaries we outlined from a supply chain lens regarding the business, brand and supply chain crisis that impacted Chipotle Mexican Grill after hundreds of consumers were sickened by a series of varying incidents ranging from E-coli outbreaks to norovirus that date back to the summer of 2015. We opined that too much attention was being applied to corporate marketing vs. supply chain and restaurant risk mitigation efforts. It is now April 2017 and the challenges to restore brand trust remain.
Look to the Cloud to Support the Modern B2B Network (September 1, 2016)
This blog commentary addressed an organization’s journey toward mature B2B information integration and how this is made possible by today’s advanced cloud-based platforms, applications and infrastructure. We opined that there is no question that analytics and broader, more predictive business insight capabilities are opportunities to transform B2B business and supply chain business networks. The opportunity — and indeed the necessity — is to leverage an end-to-end business network to synchronize planning, execution, customer fulfillment and more predictive decision-making needs.
Our annual commentary related to analyst firm Gartner’s Top 25 Supply Chain Rankings. Our annual commentaries reflect our beliefs that ranking criteria can be misconstrued, especially when it tends to favor supply chains that avoid major ownership of assets and inventory, or tend to weight other criteria lower, such as sustainability and social responsibility practices.
A Tour of Healthcare Supply Chain Innovation in Action (February 4, 2016)
Executive Editor Bob Ferrari shared impressions and insights regarding a November 2015 visit to the Cardinal Health Healthcare Supply Chain Innovation Lab located in Concord Massachusetts. The lab served as a hub to explore innovative technology approaches such as smart sensors and near-field communications (NFC) in addressing healthcare supply chain product demand and supply inefficiencies.
What are Specific Skill Needs and Gaps in Supply Chain Management? (February 26, 2016)
Supply Chain Matters highlights results and an infographic from a supply chain skills survey conducted by Canadian based Argentus Supply Chain Recruiting outlining what specific hard and soft skills are organizations looking for in their hiring and recruiting efforts. Supply chain skills and talent development content has consistently drawn reader interest.
And now, a drum-roll for our most read 2016 blog:
After announcing Q1 financial and operational performance results, both Airbus and Boeing addressed ongoing challenges related to their supply chains and expected performance for 2016 total aircraft delivery commitments. We shared candid comments from Airbus’s CEO as to the global producer’s most critical new product introductions and clear signs of concerns related to various supply chain challenges. We also called attention to comments from United Technologies regarding the new Pratt and Whitney geared turbofan engine, which turned out to be the weakest link in the Airbus supply chain. Finally we concluded that for the two dominant manufacturers of commercial aircraft, supply chain challenges have once again come back as concerns amid an environment of robust order backlogs. Each has different manifestations and supplier challenges, and each reflects on internal operational scale-up as well. We opined our belief that challenging product design among the most critical supply components, including aircraft engines would continue to be the linchpin towards achieving required production scale-up milestones.
Thanks again to all globally located Supply Chain Matters readers for your continued readership and frequent visits.
Thanks as well to our sponsors, clients, and network contacts for their continued support. We will no doubt, have yet another set of different topics of reader interest throughout 2017.
A final thought, why not consider having your company’s brand appearing as a designated sponsor or advertiser on this blog. Send us an email at info <at> supply-chain-matters <dot> com and we will respond with all of the information.
© Copyright 2017. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.
Last week, SAP SE announced changes to its high-level Executive Board which from our lens, provides evidence of changing strategies, business focus and possible succession planning in the months to come. An important insight to the meaning of these moves is likely the title of the press release: “SAP Promotes Proven Leaders to Strengthen the Company.” (our bolding)
According to the announcement, two existing senior executives, Robert Enslin and Bernd Leukert now have expanded leadership portfolios and likely additional oversight over the integration of SAP’s Cloud-based technology strategies. In addition, the Supervisory Board of SAP has named two other executives to be new members of the Executive Board.
Enslin, the head of Global Customer Operations, was designated to be president of the new Cloud Business Group which will oversee SAP Ariba, SAP Fieldglass, Concur, SAP SuccessFactors, SAP Hybris and the SAP SMB Solutions Group organizations. That obviously implies singular leadership and accountability of all of SAP’s prior Cloud-based acquisitions in addition to the SMB business. Enslin has consistently been a rising executive star in the SAP sales organization and a long-time confidant of CEO Bill McDermott who also rose from the field leadership ranks. By our lens, the move most likely implies more consistent and focused go-to-market and selling strategies across the entire SAP Cloud portfolio as well as stepped-up efforts for strategic integration of technology components.
Leukert, a 23-year veteran of SAP and prior CTO and head of Products and Innovation now has an expanded leadership portfolio to accelerate “SAP’s platform and digital transformation strategy.” SAP describes Leukert’s responsibilities to include the entire technological foundation of all of SAP’s products as well as application development for lines of business. In addition, Leukert heads strategic innovation and new growth opportunities in areas such as Internet of Things (IoT), Industry 4.0, and SAP S/4HANA. He is also responsible for leading design and user experience for all SAP applications. Our readers might be interested to know that Leukert once had SAP supply chain development experience serving as vice president for installed base development in supply chain management, including in-memory database technologies in 2011. Since 2011, he has been responsible for development of SAP Business Suite and the SAP Business One application. In other words, he has been the go-to executive for addressing and coalescing technical development strategies during his tenure.
In conjunction with these latest technical leadership moves, SAP Cloud Platform executive Bjoern Goerke was appointed to be CTO for SAP, reporting to Leukert. According to the announcement, Goerke will be tasked with advancing the company’s technology strategy and serve as a key external spokesperson.
The fill the void created by Enslin’s singular leadership of the Cloud Business unit, SAP named two female senior executives, Adaire Fox-Martin, and Jennifer Morgan, to the Executive Board. From our lens, these are long overdue moves to balance out a traditionally male-dominated leadership body. However, the Executive Board’s prior track record with female co-leaders has not been all that stellar, and we trust that will change with these latest moves. Both executives are noted in co-presidency roles of Global Customer Operations, overseeing all SAP regions. Fox-Martin will oversee EMEA and Greater China while Morgan will oversee the Americas and Asia-Pacific-Japan regions.
Those that are familiar with SAP sales organizations probably know that it can at times, be a stressful and competitive environment, thus two female executives rising to the Executive Board is a good sign. Consider that McDermott originally cut his teeth in leading SAP’s North America and then Americas field groups.
An additional move was current EMEA President Franck Cohen appointed to the role of Chief Commercial Officer to lead SAP’s channel business
Steve Singh, president of Business Networks and Applications, who came to SAP with the Concur Technologies acquisition will leave SAP at the end of this month. Singh will reportedly return to his start-up roots outside of SAP.
These executive changes come just prior to SAP’s report of Q1 financial performance and of annual SAP Sapphire and ASUG customer conference held in May.
Similar to last year, SAP customers can likely anticipate another round of unifying messages centered on more cohesive technology adoption strategies, easier means to adopt SAP applications and technology, and perhaps a clearer articulation of business and technology strategy moving forward, especially concerning SAP S4/HANA.
The key for customers and supply chain technology teams is to key-in on these two specific executives with the broadest portfolios as to their stated goals and actions now and in the months to come.
Last week, Amazon.com announced that it had made a major investment in fuel cell provider Plug Power, Inc. contingent on the company making major milestones.
The deal reportedly concerns the development of a new generation of hydrogen powered electric forklifts and other equipment services, and is valued at upwards of $600 million. The CEO of Pure Power indicated to media sources that his company plans to work more closely with the online giant in collaboration of the application of fuel cell technology, including faster charge times of powered industrial trucks in Amazon’s customer fulfillment centers. Both companies have been working together for a year now in installing the technology.
Pure Power reportedly had nearly $85 million in total revenues in 21016, and with this agreement, Amazon plans to invest $70 million in equipment purchases this year. With the agreement, Amazon has been granted warrants which will vest when certain spending is met, and if fully vested, Amazon would gain a 19 percent stake in Pure Power.
In the case of material handling equipment, charging of conventional lead acid batteries can take considerable hours of electrical power draw, along with dedicated chargers. Fuel cell technology can fuel equipment in a matter of minutes, saving on energy costs and they do not require dedicated chargers.
In its reporting of the Amazon move, The Wall Street Journal indicated that Wal-Mart has invested heavily in Plug Power’s technology. In 2016, the global retailer was the only customer contributing more than 10 percent to Plug Power’s top-line revenue. It will be interesting to observe how the Wal-Mart relationships fares now that Amazon has invested in the company.
This deal has parallels to that of 2012, when Amazon acquired warehouse robotics technology provider Kiva Systems for $775 million. At the time, there was considerable speculation as to why Amazon would pay so much for such technology. Since that time, Kiva robots now proliferate Amazon distribution centers in assisting with picking operations and fulfillment center space optimization. Kiva became an in-house fulfillment center automation innovator for Amazon. The Kiva technology was essentially removed from the market and solely dedicated to Amazon’s internal operational deployment needs. In 2014, a security equities analyst estimated that Amazon was reaping $400-$900 million in annual cost savings as a result of Kiva technology deployment, more than compensating for the investment.
Last year when Amazon began leasing air freighters for dedicated operational support, it also took equity investment positions in the air transport carrier firms providing and operating the air freighters. This is consistent with an Amazon policy for having equity interests in strategic partners. As technologies and services become more mainstream to Amazon’s operational plans, it can leverage its equity investments to secure additional leverage in negotiations.