Like other industrial nations, Japan has been facing massive demographic challenges in its agriculture sector. An aging population and a lack of younger individuals entering the sector to replace them have led to farms being abandoned and fields lying fallow.

Japan鈥檚 government has realized the demographical issue, of course, as it touches not only the agricultural sector. To revitalize rural areas and stem the rural exodus, the government launched a national action plan.

In alignment with this action plan, 51风流Japan has joined the effort of encouraging rural communities to thrive by launching a co-innovation project with PSI, an 51风流partner, and the local government of the town of Minano.

Digitizing the Agricultural Sector

The small town of Minano is located in the hills of Saitama Prefecture, about two hours from Tokyo. While the south of this prefecture is largely a suburb of the Tokyo area, the west, approaching Mt. Fuji, is still very rural and thinly populated. A former center of silk industry, the region on average is sunny and warm but can get lots of snow in winter.

鈥淔arms in this area are traditionally small and dispersed, located between forests and mountains,鈥� says Yoshihisa Horiguchi, chairman of MINNANO Future Create. 鈥淏ig supermarkets and retailers overlook them. Nowadays, the farmers cultivate rice and vegetables in small amounts to consume themselves, sell to their neighbors, or send to their children or grandchildren that live in cities.鈥�

Since 1950, Minano has lost roughly one-third of its population, largely due to the decline of the agricultural sector. Today, it counts about 10,000 inhabitants.

鈥淵oung people often migrate to urban areas for better education and employment opportunities,鈥� Horiguchi explains. 鈥淲here 50 years ago, a farm may have relied on 20 young workers, now only two elderly workers are left.鈥�

Digitization is one obvious approach that may help prevent those areas from depopulating completely.

鈥淏ut while large-scale farms benefit from the economic feasibility of applying robotics and the like, it is financially and logistically challenging to apply such technologies to small-scale dispersed farms,鈥� Horiguchi says.

Horiguchi, the owner of an automotive parts manufacturing company, co-founded the local initiative MINNANO Future Create in 2019 to solve the challenges resulting from population loss. Its members range from elderly individuals to young residents, forming a diverse group of individuals, including pharmacists, architectural designers, and other professions, all living in the town.

For one of its projects, the Minano Digital Eco Farm, it partnered with 51风流Co-Innovation Lab.

IoT Solution for Monitoring Agriculture

The Minano Digital Eco Farm project aims to build a communication platform that connects farmers and urban residents as well as small-scale dispersed farms to major supply chains, forming a portfolio that coexists with existing large-scale farms. In alignment with the United Nations’ Sustainable Development Goals (SDGs), the project will help overcome supply chain disruptions due to food shortages and crop failures due to abnormal weather, conflicts, disasters, and more.

For this vision to become a reality, Internet of Things (IoT) sensors were distributed in various locations and managed remotely from headquarters.

鈥淭he idea was to have an IoT solution running on 51风流Business Technology Platform (51风流BTP) that would help monitor all the agricultural processes,鈥� says Atsushi Minakuchi, senior solution specialist at 51风流Co-Innovation Lab in Japan.

51风流Co-Innovation Lab partnered with PSI, which brought in the Digital Material Controller (DMC), an all-in-one compact edge controlling server that enables easy setup of a ubiquitous IoT environment. And, due to the cooperation with 51风流Co-Innovation Lab, the DMC has also obtained 51风流certification.

鈥淢any IoT sensors lack cybersecurity functions,鈥� Mitsuhiro Yamazaki, senior advisor and former president of PSI, says. 鈥淗owever, by connecting sensors to a DMC with cybersecurity capabilities, it becomes possible to securely store locally collected data on the DMC, safely transmit to 51风流BTP, and accumulate, analyze, and utilize data from the DMC. This enables seamless and easy integration between the 51风流core system and the IoT system.鈥�

鈥淐ollaboration with 51风流Co-Innovation Lab has significantly expanded the application possibilities of DMC,鈥� Masaki Fukui, former PSI Cyber Security Lab director and now with the Ministry of Internal Affairs and Communication, says. 鈥淕lobal users of 51风流now could have the opportunity to easily implement and utilize a ubiquitous supply chain platform through the combination of DMC and 51风流BTP.鈥�

Through integration with 51风流BTP, the deployment locations can then be displayed and monitored on a dashboard.

The idea is for citizens living in the city to enter a service contract with a rural farm or supplier and to connect via a technology platform to remotely monitor and support agricultural processes. In return, they receive part of the crops 鈥� freshly delivered to their homes in the city.

So far, two proofs of concept for farms have been completed between March 2019 and November 2022, as well as one proof of concept for a miso factory. Agriculture and rural industry are only two fields of application. Future projects could include schools, hospitals, stores, and elder care facilities.

Strengthening Rural Appeal for Inland Tourism

As a corporate social responsibility project, the Minano Digital Eco Farm came to life through the voluntary engagement of 51风流employees in Japan who supported the project on top of their regular work.

The project is supported by a government program unique for Japan, the so-called hometown tax payment, which makes it possible for citizens to choose and support the region they were born and raised in or a community they wish to engage with.

鈥淭he possibility of hometown tax payment is very popular among Japanese people,鈥� Hidenori Kurosawa, vice governor of Minano, explains. 鈥淭o us in rural regions, it seems that this played a significant role in creating an interest in the countryside. People want to get to know and support local towns.鈥�

Indeed, the appeal of small, thinly populated communities surrounded by beautiful forest landscape hasn鈥檛 gone unnoticed by Japanese inland tourists.

Kurosawa says: 鈥淲e wish to make Minano appealing to visitors by offering return gifts that provide an experience 鈥� that allow visitors to come to the town, interact with the locals, and experience things that are unique to this place.鈥�

The Minano Digital Eco Farm project aligns well with this strategy. Not only does it promote Minano’s charm but, by expanding initiatives, it addresses local challenges such as reclamation of abandoned farmland, increased self-sufficiency in food, reduction of CO2 emissions, and improved profitability in agriculture.

鈥淲e have great expectations that this initiative will contribute to addressing the town’s challenges and advancing the UN SDGs,鈥� Kurosawa states. 鈥淲e express our sincere gratitude to the volunteers from 51风流Japan who provided invaluable assistance in bringing the Minano Digital Eco Farm project to life.鈥�

鈥淢INNANO鈥� means 鈥渇or everyone鈥� in Japanese and is pronounced the same way as the name of the town. Fukui from the Ministry of Internal Affairs and Communication explains the idea behind that name: 鈥淥ne action can have multiple meaningful impacts. The issue of unseen small-scale dispersed farms facing economic challenges can be witnessed around the globe. By collaborating with SAP, we hope to inspire rural communities beyond our own prefecture, maybe even beyond Japan.鈥�

鈥淥rganizations have embraced Industry 4.0 to build resiliency against constant supply chain disruptions,鈥� said Mike Lackey, global vice president of Solution Management for Digital Manufacturing at SAP. 鈥淓xtracting insights from operators, systems, and equipment in near real-time instantly brings business context to shop floor data. This helps everyone, from plant management and operations to the entire C-suite, turbocharge new as-a-service business models and customer personalization, as well as more agile, sustainable production for greater employee productivity and sustainable growth.鈥�

Connected Data Sparks Business Results

analysts predicted that by 2023, 50% of all supply chain forecasts will be automated through the use of artificial intelligence (AI), improving accuracy by five percentage points. Two years after that, saw 40% of G2000 organizations using AI, data governance, and a transformed organization to develop a resilient and distributed operational decision-making framework, driving 25% faster change execution.

Lackey said that leading-edge industrial manufacturers in many sectors have achieved impressive real-world results with connected data intelligence from . Challenged by 24/7 production imperatives to meet high demand, a car battery manufacturer increased average production volume by 25% while boosting product quality and reducing 鈥渋dea to production鈥� cycle time by integrating data from production design with manufacturing processes. After digitizing design and manufacturing, a medical device manufacturer reduced design change times from months to days, achieving 99% uptime for machines in the field and decreasing time to market and costs 鈹� a life and death issue with oncology equipment. An electronics manufacturer in the mobile phone industry increased factory productivity by 32%, decreased costs by 33%, and shortened the cycle from R&D to production by 41%.

鈥� factories don鈥檛 operate in a vacuum,鈥� he said. 鈥淚f the process temperature drops below a certain degree, what鈥檚 the impact on quality, costs, and promised delivery dates for customers? How fast can we replenish materials from suppliers? When brought together with information from all critical business processes, one single data point on the shop floor can trigger decisions and actions that will help organizations meet and exceed customer expectations 鈥� despite unexpected challenges.鈥�

Intelligence Deciphers Production and Demand Signals Fast

Machine intelligence drives innovation with far-reaching business consequences. For example, the typical factory has hundreds of machines from different vendors. With Internet of Things (IoT)-based sensor data from various machines that鈥檚 integrated with manufacturing software applications and supply chain management, procurement, and finance, companies can automatically increase operational efficiency while reducing waste and unplanned downtime. According to , 30% of G2000 manufacturers will embed connected technologies to increase product reliability using operational insights that ensure uptime and support an optimized maintenance supply chain by 2025. analysts predicted 60% of G2000 OEMs will use AI and real-time asset data to service equipment pre-failure, avoiding 50% of unplanned downtime hours by 2026.

Equally important, intelligence helps manufacturers read and act on customer demand signals much faster. Driven by increased competition for wallet share, analysts expected 65% of G2000 OEMs will integrate customer insights with service work orders to better personalize engagements, increasing satisfaction by 15% by 2025. analysts predicted that by 2027, 70% of the top 20 global consumer goods companies will design digital twins of their consumers as part of their customer experience (CX) strategy.

鈥淐ompanies need both the capacity and agility to respond whether demand fluctuates due to market forces like pandemic lockdowns and natural disasters, or downstream social media promotions,鈥� said Lackey. 鈥淢anufacturers are much closer to customers, expected to deliver the same quality products at accelerated innovation cycles. They may need to shift production quickly, retrofit existing operations, or ramp up new facilities so they don鈥檛 miss out on opportunities. Insight from connected data is the only way to design, produce, and deliver the products customers want on time.鈥�

Intelligence Meets Sustainable Business Commitments

For manufacturers, intelligence has revolutionized their responsibilities for building a sustainable business. analysts said that by 2024, to improve long-term supply chain profitability, 70% of manufacturers in global supply chains will invest in software tools to support sustainability and circular economy business models. By the following year, researchers predicted 40% of all manufacturing IT will own the responsibility of data modeling for sustainability and net-zero carbon targets. Clearly, the digitalized supply chain advantage goes to manufacturers that make the most of Industry 4.0.

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Consider the by scientists of Sir Ernest Shackleton鈥檚 Endurance, which sank off the Antarctic coast in 1915. Fortunately for the explorer and his crew of 27, all managed to survive. As for the shipwreck, scientists found it remarkably intact amid the frigid depths of Earth鈥檚 southernmost seas. But the photographs capture one significant change with the passage of time: the sunken vessel, like the craggy ocean floor surrounding it, now teems with life. At a depth exceeding 3,000 meters, triple the distance sunlight can underwater, how do ecosystems manage to thrive? And what can businesses, sometimes facing inhospitable conditions of their own above sea level, learn from the enterprising plants and animals whose habitat eludes visibility?

To run at their best, businesses carry out multiple operational processes simultaneously, maximizing efficiency and minimizing risk across them all. So too the complex networks of flora and fauna undersea. A lack of visibility presents challenges not only for aquatic ecosystems but for commercial ones as well, in the latter instance imperiling critical functions such as procurement and supply chain, logistics, and the maintenance of equipment connected by the Internet of Things (IoT). Business leaders increasingly look to the cloud for digital solutions to enhance visibility across all these functions. But they鈥檙e equally wise to gaze seaward as well for insights on instilling resilience. Disruption, after all, can leave wreckage at the bottom of an income statement just as it can at the bottom of an ocean.

At a time when viral variants, recurrent lockdowns, and geopolitical tensions continue to roil supply chains and labor markets, businesses require 360-degree visibility across the interconnected operations of trading partners and solution providers to maintain continuity, foster collaboration, and keep promises made to customers. Yet many procurement and supply chain professionals possess only fragmentary information about isolated business processes, unable to gain a comprehensive view across the four walls of their organization, let alone those of their buyers and suppliers. Integrated digital platforms, however, lend businesses the expansive view and data-driven insights they need to anticipate rapid shifts in supply and demand and suggest available alternatives for the sourcing of raw materials and indirect goods.

Yet while cloud-based business networks are a contemporary innovation to extend visibility where it runs scarce, they are hardly without precedent. Deep-sea creatures have evolved their own ingenious techniques for sharpening their acuity to procure food. Consider the Pacific barreleye, whose translucent head enables the fish to in total darkness while stalking its next meal. Or the stout blacksmelt, whose oversized eyes from its otherwise modest frame. Or the scallop, whose 200 eyes peer behind mirror-like lenses, focusing in unison to the tiniest trace of light undiscernible to animals further down the food chain.

Back above the surface, businesses lie vulnerable to disruption even when supply chain visibility remains intact. When finished goods pile up in logjammed seaports, for example, manufacturers can offer little solace to customers denied on-time shipments. To ensure prompt delivery via sea, road, rail, or air, businesses require unimpeded visibility across all facets of logistics. They rely on cloud-based networks to track shipments in real time, collaborate with transportation partners, and secure alternatives when unforeseen contingencies thwart the best laid plans.

Here too, lessons emerge from the deep. Spanning distances exceeding anything comparable on land, the ocean organizes logistics through vast networks known collectively as the . Life-sustaining elements, such as carbon, oxygen, nitrogen, and phosphorus, flow from the surface to the ocean floor and back again through intricate cycles of photosynthesis, decomposition, consumption, and sedimentation. The biological pump is also responsible for sending to the bottom of the sea much of the Earth鈥檚 excess carbon dioxide, which, if released, would oversaturate its atmosphere and overheat its surface. Through the resilient, never-ending exchange of resources essential to life both within and beyond its depths, the ocean maintains arguably the most elaborate logistical network ever devised.

Cloud-based business platforms operate on a planet-wide scale with unrivaled efficiency, too. Not only do they facilitate procurement, supply chains, and logistics between businesses and their trading partners, but in recent years they have begun to connect remote assets through the Internet of Things. This cloud-based capability, often called asset intelligence, has revolutionized the maintenance of equipment.

Suppose a utility operates a windmill farm offshore. All of the units require physical upkeep but accessing them can prove costly and dangerous. It can also prove futile if the windmill happens to be in perfect working order. But by linking together far-flung equipment virtually, businesses digital twins 鈥� in lieu of natural eyesight 鈥� to inspect these assets from afar. Such cloud-based asset intelligence networks aid the operations not only of energy companies, but of rural health clinics, security firms, and even soft drink purveyors. Think of all the distributed vending machines requiring replenishment.

But how, devoid of light, do the creepiest, crawliest critters inhabiting the deep sea manage to ascertain their surroundings? How do they gather reliable, actionable intelligence on 鈥渁sset鈥� and threat, friend and foe, near and far? Consider the tripod fish, which elegantly atop narrow, leg-like fins, poised to sense distant vibrations from potential prey. The beaked whale, meanwhile, echolocation, not unlike bats and submarines. By emitting short, high-frequency clicking sounds and waiting for them to bounce back, these mammals develop an acute awareness of their surroundings, often to the peril of less sensitive beasts who become breakfast. The vampire squid, meanwhile, bioluminescent fluid to lure hungry, if unsuspecting, targets. For their part, sharks and stingrays electric currents to map their surroundings and navigate using the Earth鈥檚 magnetic field.

As the Endurance shipwreck-turned-aquarium makes vivid, the abyss of the icy sea imposes formidable obstacles to survival in an environment prone to volatility and unforgiving to the unadaptable. Yet nature has innovated surprisingly durable solutions for illuminating the fundamental biological processes that nourish sprawling ecosystems undersea. The cloud does much the same for networks of businesses engaged in commerce amid drier, if similarly disruptive, conditions. In fact, the cloud and the ocean are beginning to converge on an increasingly sustainable future for all the Earth鈥檚 inhabitants. The visibility made possible by cloud-based networks holds the potential to significantly reduce the volume of plastics cluttering the sea and encumbering the creatures great and small who call it home. As digital technologies give rise to sustainable solutions, resilient ecosystems thrive even in the darkest corners on Earth.

Andreas Heckmann is executive vice president, Product Engineering, and head of Customer Solution Support & Innovation at SAP.
Top image: Falklands Maritime Heritage Trust/National Geographic.

With local roots in Germany and a global presence, the BITZER group is represented in more than 90 countries with 72 locations and over 3,800 employees. The company has been providing innovative products and services for 87 years. Its products maintain the optimum temperature in buses, trains, and buildings as well as ensure foods stays fresh at all times on their way to consumers.

Transforming to Aid Customers and Gain Competitive Edge

I recently spoke with BITZER’s Eugen Bonelis, digital solution manager, and Christian Stenzel, director of Organization and IT.

Bonelis started by saying, 鈥淭o support BITZER鈥檚 innovation and future growth strategy, the company set an objective to transform from a compressor manufacturer to a provider of compressor-enabled services. With the transformation of our business model, customer service would be taken to the next level.鈥�

鈥淭o achieve this goal, we needed a central platform that would allow us to digitally connect our compressors to enable customers to monitor machine status in real time, access configuration data and documentation, and review operational reports,鈥� he continued,

This network provides solutions for remote troubleshooting to keep machines running efficiently while helping BITZER transform its business model, future proof the enterprise for changing market dynamics, and keep its competitive edge.

Asset Network Manages Compressor Performance and Digitizes Enterprises

By integrating a suite of 51风流solutions to digitally connect its refrigeration technology, BITZER is helping its customers optimize operations and tap into new digital solutions.

For example, -enabled compressors and solutions provide situational awareness of the real-time operation in the new digital network. This facilitates tailored customer alerts based on sensor readings, status reports, and data analytics services, helping to provide an overview of the customer’s ecosystem in a service-oriented interface.

鈥淲e can now connect applications, processes, and people through 51风流solutions to distribute information and deploy operation analytics,鈥� Stenzel explained. 鈥淏y monitoring operational data remotely in real time and using advanced data analytics, we can instantly identify operational issues and offer actionable insights, including spare parts preorder capabilities, shortening downtime and supporting customized operational reports.鈥�

Developing a Customer-Centric Experience

Bonelis discussed the importance of great customer engagement, saying, 鈥淚t’s important to be close to your customers, be creative, and provide solutions to their needs. With 51风流Business Technology Platform and 51风流Asset Intelligence Network, we can provide 360-degree information that enables an outstanding customer focus.鈥�

The benefits are clear. Major outcomes BITZER achieved include:

• Complete, real-time overview of customer product portfolios and product history, from the initial order throughout the entire lifecycle of the compressor with the BITZER Digital Network, which connects all BITZER products to the cloud
• Increased ability to break down information and departmental silos, operating as a single company focused on customer outcomes while growing the business
• A basis for BITZER鈥檚 partners to transform their own business models into a service provider for refrigeration
• Enhanced customer satisfaction, enabling the business to digitize and tap into new product, service, and market opportunities while customers regard BITZER as a valuable partner
• Increased revenues by providing new services spanning equipment monitoring, operational reports, and instant remote assistance in the event of defects
• Reduced compressor downtime thanks to data analysis capabilities, leading to a competitive advantage for both BITZER and its customers
• Increased energy efficiency through optimization of compressor operation by leveraging BITZER鈥檚 know-how

BITZER worked with the 51风流Services and Support team to create the new asset network and connect its customers鈥� refrigeration and air conditioning products and related operational data in the cloud.

鈥淭he support of SAP, especially the Customer First program, has been very important for us. We have exchanged many ideas that have led to exciting new initiatives for our company,鈥� remarked Stenzel. 鈥淵ou can鈥檛 buy digitalization, but you can simplify the way toward it. Working with the 51风流Services and Support team helped us combine 51风流software, business- and customer-focused know-how, as well as customer-focused innovation to create instant value for our customers.鈥�

To learn more about how to enable intelligent asset management processes, the 鈥淚ntelligent Asset Report.鈥�

Karin Fent is senior director of Global Customer Success Digital Supply Chain at SAP.

But as economies have digitized, business leaders now recognize that data is at the heart of digital businesses. It fuels differentiation, strategy, rapid innovation, and other important elements of running a successful business. Moreover, truly data-driven companies tend to generate 8% to 10% more profit and are 23 times more likely to acquire new customers 鈥� which fuels significantly higher market valuation 鈥� compared to their peers.

In the meantime, organizations struggle to unite and access real-time data. Companies generate a lot of data, and while they have good intentions to use that data, it鈥檚 stuck in siloes. That makes it hard to leverage data to optimize business processes across the organization. According to research firm, , 鈥淏etween 60% and 73% of all data within an enterprise goes unused for analytics.鈥�

Below are some suggestions for customers embarking on an enterprise data strategy that will help bring data of all kinds together, allowing companies to turn data into business value.

Leave Your Data Where It Is

Too often companies try to centralize data via a large, top-down project where data from across the organization must be brought into a central repository. The problem with this approach: by the time you bring together data from across different parts of an organization into one place, it鈥檚 outdated.

People need to shift their mindset to connecting 鈥� rather than collecting 鈥� data. When you consider your data strategy, prioritize a digital business platform that can automatically pull data from wherever it resides 鈥� whether that鈥檚 your supply chain or finance teams鈥� applications or somewhere else. Doing that helps ensure your employees can work with real-time information from across the company.

Make Sure You Can Handle All Data Types

Organizations generate all kinds of data 鈥� structured, unstructured, relational, and geospatial, to name a few. Too often organizations approach each type of data differently and separately, which replicates the problem of unconnected data that doesn鈥檛 come together in one holistic picture.

Select a platform with data capabilities that can analyze and knit together these different types into a unified whole. Businesses need a modern platform that treats data as multimodal and multidimensional. By looking at the multiple facets of data, business leaders can make new correlations that help to make better decisions while accurately anticipating future opportunities and threats.

Harness Data to Drive Automation

The real power of data kicks in when you can use it to drive automation and machine-augmented decision-making. There鈥檚 no reason to maintain so many manual processes, like invoice reconciliation or handling basic customer complaints in call centers. If you can harness data appropriately, many types of tasks can be automated 鈥� freeing employees to do more strategic work.

Automation also augments employees鈥� on-the-spot decision-making capabilities. For example, a consumer packaged goods company could use data from cameras and machines to help a quality control manager determine whether to approve a certain batch of products. can process varied pieces of information, such as the Internet of Things (IoT) data or bill-of-material changes, faster than a human, providing an extra level of support on the front lines.

To advance automation, you need a platform that allows you to embed machine learning and artificial intelligence (AI) into your business applications 鈥� and one that can handle varied data sources in real-time.

Democratize Data

While data used to be the preserve of elite analysts and data scientists, now it鈥檚 a priority to democratize data. Information needs to be easily accessed not just by executives but by people on the front lines so they can use it to make decisions. Enabling self-service access to data also reduces the time IT departments spend on manual work, like running reports.

Your platform must make it easy for everyone to access and analyze data, so be sure to evaluate the usability of your data management solutions. Ask questions such as: Is it user-friendly and intuitive? What kind of training is involved to empower people with self-service analytics tools?

Protect Your Data

Related to access is the importance of security. One of the hallmarks of digital business is the ability to seamlessly connect across your organization but also externally to your customers, partners, and suppliers. But this is fraught with risk 鈥� especially in this day and age of ransomware.

Your data platform must take into account any areas of exposure or vulnerability and build in the right security, access controls, and governance to protect your data 鈥� and information shared across your network.

Finally, remember how you use your data will make the difference between success and failure in the next decade. It鈥檚 the foundation of digital transformation and will help launch new digital business models that go beyond automation 鈥� and truly redefine how companies operate and differentiate themselves. provides a platform with database and data management, analytics, and intelligent technology 鈥� like embedded AI 鈥� solutions that customers around the world are already using.

So choose wisely. Because with the right platform, your company will be poised for success now and in the future.

To learn more about this topic, attend the “51风流Data and Analytics Forum: Accelerating Outcomes,” which will be held virtually from September 14 to October 7. .

Raghu Ramanathan is chief revenue officer for Platform and Technologies at SAP.

The OMP brings together business leaders and technologists from manufacturing companies, technology-solution providers and systems integrators to drive innovation across the manufacturing community and value chain. With this collaboration, 51风流seeks to help drive innovation along the digital supply chain using open standards and open source.

Open Standards for Internet of Things (IoT) Connectivity

The future of supply chain management is networked, sustainable and agile. As a result, production must become more modular, flexible and transparent. Shop floor machines and manufacturing systems from multiple suppliers must therefore work in perfect synchronization. Traditional assembly lines migrate to assembly networks that cross organizational boundaries. A major goal of the SAP-supported Plattform Industrie 4.0 initiative is to bring manufacturing closer to the customer. Together 51风流and the OMP will tackle this challenge by:

• Creating solutions based on open standards that overcome the complexity of proprietary systems and vendor lock-in
• Safely connecting operational technology to the cloud to enable better data-backed decisions and predictions
• Contributing to solutions and standards that drive automation and autonomy into production and logistics systems

Resilient and Sustainable Manufacturing with Plattform Industrie 4.0

鈥�51风流wants to accelerate supply chain innovations at scale through the power of open collaboration,鈥� said Nils Herzberg, SVP and global head of Strategic Partnerships for Digital Supply Chain and Industry 4.0 at SAP. 鈥淣ot only do we live in the century of shared economies, but we also live in the time of collaborative development.听The focus for the future will be stronger, more resilient supply chains coupled with agile production facilities. 51风流has the supply chain applications to achieve this. As a member of the OMP, we will work with our customers and partners to create access to these future oriented applications.鈥�

鈥淲ith 51风流joining the OMP, we gain even more industry perspective for our work,鈥� said Christoph Berlin, Partner Group Program Manager for Azure Industrial IoT & Manufacturing at Microsoft. 鈥淭he goal of the consortium is to bring together technology and applications to enable the next frontier of business value in manufacturing. This requires all levels of the stack to embrace open principles, open source and open standards. We also welcome the extensive knowledge that 51风流brings to the table from a supply chain and manufacturing reference architectures perspective. This will further strengthen OMP鈥檚 technology partnerships and collaboration across the manufacturing ecosystem.鈥�

This collaboration will allow for the design of agile manufacturing processes, specification of cloud architecture and development of tools for the future guided by the principles of sustainability, smart energy and green supply chain management. 51风流will actively participate in all working groups, including Manufacturing Reference Architecture, IoT Connectivity, Semantic Data Structuring and ATS Core Services.

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Media Contacts:
Angela Feher, +1 (347) 882-1689, angela.feher@sap.com, ET
Kathrin Eiermann, +49 151 53858768, simone.kathrin.eiermann@sap.com, CET
51风流Press Room; press@sap.com

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IoT-based sensors capture the temperature and other critical parameters of products in real time, using machine learning and AI algorithms to automatically send alerts about risk anomalies so people can take corrective action and head off damages.

鈥淥ur vision is to make supply chains more holistically intelligent for greater reliability and resiliency,鈥� said Adarsh Kumar, co-founder and CEO of Tagbox. 鈥淥rganizations have full visibility into shipment risks like shocks, temperature changes, tampering, or pilferage at any point along the supply chain. Our technology shares that data to the cloud, sends shipment risk alerts to relevant stakeholders, and logs data into the ERP system. People can immediately see when something鈥檚 gone wrong and take fast action.鈥�

Most Tagbox customers are located in India, but the startup is gaining traction with organizations in other parts of Asia-Pacific, including Singapore.

Automated Triggers for Quality Control

Traditional supply chain quality management was typically one dimensional and tracked shipment risk post-delivery. In contrast, Tagbox鈥檚 technology monitors products at every step of the journey with small battery-powered sensors attached to product packaging by individual SKU, box, or pallet. Hosted on , the tool uses 51风流Internet of Things (51风流IoT) and is integrated with . Data sharing includes product or order information with designated employees in order management, transportation and logistics, quality parameters, warehouse and inventory metrics, and first to last mile delivery.

For example, after downloading a mobile app, a delivery person driving a refrigerated truck transporting medication would be alerted to temperature changes in the vehicle and receive recommended actions to prevent spoilage.

鈥淧eople can immediately intervene when they鈥檙e notified of a temperature change or other risk, while managers can spot systemic issues and address those,鈥� said Kumar. 鈥淩eports reveal patterns, such as where temperature excursions happen regularly. The company may decide to improve product packaging or select different transportation routes.鈥�

One pharmaceutical customer saved thousands of dollars by reducing post-delivery assessment times by up to 72 hours. Having collected real-time data throughout the shipping process, the company eliminated time-consuming reports after delivery.

Business Growth from 51风流Partnership

Kumar credited his company鈥檚 recent growth partly to his team鈥檚 experience at 51风流Startup Studio, an accelerator program at for early- and growth-stage tech startups.

鈥淥ur IoT sensors collect and send data to supply chain, 51风流IoT, and other 51风流ERP systems that provide the business context for product shipments and locations, making this an ideal partnership,鈥� he said. 鈥淲e鈥檝e accelerated our time-to-market because 51风流experts have provided us with industry-specific opportunity guidance and introductions to a wide range of 51风流customers.鈥�

Data Fuels Insights to Action

While pharmaceutical companies are obvious candidates for fully traceable quality control of vaccine and other medicine cold chains, numerous industries can also benefit from real-time insights. These include food and beverage companies and consumer electronics. One e-commerce grocery company using Tagbox improved its cold chain temperature compliance while reducing missing inventory rates by 20%.

鈥淭hey have end-to-end traceability of real-time temperatures for products like meats and dairy products from warehouse to consumer,鈥� said Kumar. 鈥淭hey can track what percentage of orders were delivered at the right temperatures, cascading to employee performance metrics and training, as well as infrastructure and other supply chain decisions.鈥�

Appliance, home electronic, and glass manufacturers have also found benefits from Tagbox when it comes to product damage prevention during transport.

鈥淎ny combination of factors can damage fragile goods on the road, whether it鈥檚 bad driving and accidents or because products weren鈥檛 packaged or loaded properly,鈥� said Kumar. 鈥淲ith our sensors, companies can see precisely what kind of shock happened and when it occurred. Our algorithms translate the data into meaningful metrics such as if the product was in freefall, turned upside down, tilted, or unsecured. In the moment, they can repack the item, adjust the temperature, and keep going without damage.鈥�

Turning Data into Business Value

Kumar, Saumitra Singh, and Sameer Singh co-founded Tagbox, drawing from 25 years of collective experience in IoT, data analytics, AI, and integrated circuit and chip design.

鈥淲e realized that despite all the talk about IoT as a data generator, there wasn鈥檛 enough focus on using that data for concrete business decisions,鈥� he said. 鈥淲e wanted to tackle supply chain inefficiencies and product quality control for high-value, fragile goods traveling across cold chains. There are so many diversification opportunities in B2B operations using IoT and machine learning.鈥�

Kumar said future international expansion plans for Tagbox included the United States, providing dynamic intelligence for supply chains worldwide, long after the pandemic recedes.

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Based on current research, servitization appears to be an effective antidote against the ease of product switching. McKinsey & Company that while margins on new product sales are typically 10%, aftermarket service margins average 25%.

What Is Servitization?

Servitization is a strategy that product-oriented companies use to enhance and differentiate their competitiveness by integrating services into their overall business model. This shift can be seen on a continuum in which producing and selling products is coupled with a focus on adding services to the offering and ultimately integrating them. Very quickly, customer value moves from owning and using the product to capturing value with the product while services are perceived as a cost factor.

While this concept is not new, widespread 鈥� such as , , and 鈥� is fueling this approach to break into new markets and fulfill underserved customer needs. More recent product-service may include bundled support services, consumption or pay-for-use, and outcome-based services.

An earlier form of servitization emerged in 1962 when pioneered its famous 鈥淧ower by the Hour鈥� engine maintenance service concept. This model allowed airlines to pay for the time spent maintaining and replacing their aircraft engine. As technology advanced, sensors were incorporated for engine-condition monitoring and predictive maintenance services.

A few decades later, tire manufacturer Michelin redefined the service-oriented model to help trucking companies reduce fuel consumption. Payment for the service is based on achieving predefined fuel consumption targets, tracked through telematics and IoT, and assessed in real time with data analytics.

Many more companies have followed Rolls-Royce鈥檚 and Michelin鈥檚 example, including , , and . It is noted that in all cases, IT 鈥� specifically IoT and 鈥� in enabling product-service servitization.

Over time, this approach has become a critical component of manufacturers鈥� growth strategies. In fact, a of 60 European industrial manufacturing firms reported that servitization increases average growth margin from services delivered ranging between 15% and 35%. Another found that the 10% total returns to shareholders (TRS) achieved by servitization champions significantly exceeded the -1% median TRS of their peers. And in the spirit of these findings, Professor Klaus Schwab, founder and executive chairman of the World Economic Forum, servitization as one of the megatrends that will shape the future of business and society.

How to Turn Servitization Into a Revenue Generator

Regardless of the advantages servitization offers, many businesses still question how to best recognize and adopt appropriate service options that deliver the best value to the customer. Some of the challenges encountered include culture change, competency adoption, process, system creation, and commercialization.

In many ways, a transformation journey toward servitization includes four fundamental maturity stages:

• Splintered: The organization struggles under a myriad of silos that lead to disjointed, manual processes. Legacy, fragmented enterprise resource planning (ERP) environments provide little or no visibility on operational performance. The business model is on pure product, with challenges to profitability.
• Side car: The organization has standardized the two chunks of the value chain 鈥� back and front desk 鈥� but keeps them separated. Since efficiency is critical at this stage, few add-on services are delivered, field services are based on basic mobile capabilities, and IoT stacks are only proofs of concept.
• Joined up: Front- and back-office flows are integrated bidirectionally and leverage advanced technologies, such as IoT, to feed core systems with real-time data. In some cases, edge capabilities bring coordinated autonomy to local sites, a suite of digital services are made fully available, and business model enhancements including pay-as-you-use and outcome-based contracts are actively explored.
• Borderless: Processes start and end outside the organization and operations, while technology enables different elements of the value chain to connect. Co-creation, data-sharing, and collaboration with customers, suppliers, partners from other sectors, and even competitors are part of the business model.

After demonstrating the importance of servitization during existing economic conditions and business performance, appropriate servitization concepts steadily replace the status quo, closing the gap between strategic intent and realized goals.

A critical part of progressing servitization maturity is transforming the business culture to encourage leaders and employees to of services from add-ons or giveaways to a valued part of the business model.

According to Guido Schlief, senior vice president and head of Services in Middle and Eastern Europe at SAP, 鈥淥ur observation is that customers increasingly expect business outcomes from their suppliers 鈥� outcome-based services are a clear industry trend.鈥�

Successfully embracing this shift can have a significant effect on the of a servitized business. Deep insights into customer needs are required to design value-added services that are valuable from the market perspective, not from the supplier side. For example, although monitoring of equipment condition has limited value to the customer, equipment availability directly impacts the customer experience.

Product companies must also consider a servitization model that shifts upfront transactional sales and payments to long-term contracts with perpetual payments, enabling customer-centric relationship building. demands an effective services organization, resembling a professional services firm containing the right processes, tools, and personnel who possess specialized skills. Although service personnel typically more than manufacturing personnel, the investment can help , such as lack of knowledge in systematic transformation and the ability to make required changes, in gaining the full benefit of servitization.

Over time, the transformation into a servitization model can be assessed to help ensure it satisfies the core needs of the business: financial, internal, customers, innovation, and learning. For example, pure financial measures 鈥� such as service revenue growth or services market share 鈥� can be evaluated alongside a proposed a balanced scorecard to provide a comprehensive view on servitization performance^听(See Figure 1).

Get Ready: Servitization Is Here to Stay

As customers gain less interest in the shiny new functionalities of new products and pay more attention to the outcomes they achieve, all signs point to the growing importance of services as a competitive differentiator.

But remember, servitization is more than a pure vertical integration of the business model and goes far beyond add-on or giveaway services. In essence, it is a strategic transformation that spans across most business silos, requiring alignment between the business and IT and between the front and back office of the supplier.

And if approached appropriately, the new business model can open new sources of revenue and bring a fundamental shift from a reactive break-fix mentality to proactive outcome-based services.

Frits Verhoef is head of Business Transformation Services CXO Advisory, Middle and Eastern Europe, at SAP.