“The next 3 years will be more impactful than the last 50 years”

The quote in this headline is from Sam Yen, SAP Chief Design Officer and Managing Director of SAP Silicon Valley.  It captures the dynamic promise of digitization, and also evokes the potential peril of ignoring the trend.  In Sam’s keynote at the recent SAP Leonardo Live event in Frankfurt, he spoke about the role of design and design thinking as organizations try to re-imagine their business models to take advantage of disruptive technologies.  But for me, the quote drove home the importance of actively pursuing transformation, even as it set the stage for the many examples of digital transformation featured at the event.  I’ll touch on a few of them here.

Marty Groover, Operational Technology Leader for Caterpillar Building Construction Products in Sanford NC, has been thinking a lot about business transformation lately.   He’s been helping Caterpillar implement what they call Live Factory, using SAP Leonardo tools.  This includes SAP’s Digital Boardroom to enable real-time analysis and simulation at the business level and all the way down to plant operations.  It also includes SAP Digital Manufacturing Insights to provide a common manufacturing operating view by region and plant, together with standard and personalized KPIs, SAP Vehicle Insights for manufacturing inventory logistics optimization, kitting, picking, and replenishment, and SAP Predictive Maintenance to head off significant machine failures.

Alan Amling, VP of Corporate Strategy, UPS and Sarah Clevinger, Sr. Business Development and Strategic Partnership Manager, HP Inc. spoke about innovation in their session, The Transformation of Manufacturing and Supply Chain by Industrial 3D Printing and ‘The Digital Thread’.    According to Amling, UPS is re-imagining itself as a connectivity company that must adapt to the evolving supply chain ecosystem as the way the sellers and buyers connect continues to change.  3D printing therefore can play a big role as supply chains evolve from warehouses of parts to on-demand manufacturing.  UPS’s vision is to become a provider of global on-demand manufacturing capabilities.  They also see an opportunity for producing custom products on demand, and for providing instant access to both small lot/prototype and volume production capacity.

HP’s (Sarah Clevinger’s) presentation made the point that as mass production is being replaced  with “lot size 1”, supply chains with long order fulfillment processes are replaced, making room for “just-in-time” onshore, localized production and distribution.  In the process, Design will become increasingly democratized as the dominance of brands gives way in favor of open business models.  Where can we see that innovation today?  Footwear.  50 year trends show declining order lot size and shrinking warehouse inventory coupled with dramatic increases in product variation and customer influence.  In the near future, customers will expect to buy fully customized shoes on demand.  Customers would scan their feet in 3D, and get a pressure scan at a retail location.  The system would generate recommendations and then generate the required shoe geometry.  3D printed insoles could be created (this can be done today), and personalized lasts made for the custom shoes.  Eventually, it will be possible to create fully customized, branded, shoes, with custom midsoles, custom outsoles, and custom uppers.  Sounds good to me!Future footwear customer experiience

Three years is a blink of an eye when it comes to digitization projects.  If you don’t start now, where will you be in three years, when your competitors have instituted not only more efficient technologies, but brand new services, and new ways of delighting your customers?