architecting next-gen connected supply chains … 0514 architecting next-gen... · architecting...

Architecting Next-Gen Connected Supply Chains (Physical & Digital)

Peter Vanderminden, MBBIndustry Consultant, IoT & Digital Supply Chain StrategiesDirector, APICS, past Director Supply Chain CouncilMay 14, 2015

Enterprise Architecture?

• How many in this room are trained/certified in one of the following?:

– TOGAF, DODAF, ZACHMAN, IASA, CMM, Agile, SCRUM

• How many in this room are trained/certified in one of the following?:

– CPIM, CSCP

– SCOR, Six Sigma, TQM, Viable Systems Model, System Dynamics Modeling

© 2015 Peter Vanderminden

Centralized vs Decentralized Architecture

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Product & Process DesignDesign Chain - DCOR™

Sales & SupportCustomer Chain - CCOR™

Supply ChainSCOR ®

AssistSell ContractPlan RelateIntegrate AmendPlan Research

Plan Source Make Deliver Return

Design

Enable

Domains of Business

Product & Portfolio Product Lifecycle Chain -PLCOR™ Launch ReviseIdeatePlan Develop Enable

Stocked Product (sS1) Make-to-Order (sS2) Engineer-to-Order (sS3)

sS1.1 Schedule Product Deliveries sS2.1 Schedule Product Deliveries

sS3.1 Identify Sources of Supply

sS3.2 Select Final Supplier(s) and

Negotiate

sS3.3 Schedule Product Deliveries

sS1.2 Receive Product sS2.2 Receive Product sS3.4 Receive Product

sS1.3 Verify Product sS2.3 Verify Product sS3.5 Verify Product

sS1.4 Transfer Product sS2.4 Transfer Product sS3.6 Transfer Product

sS1.5 Authorize Supplier Payment sS2.5 Authorize Supplier Payment sS3.7 Authorize Supplier Payment

SCOR: Source Level-3 Processes

SCOR: What Are Your Metrics? Why?

Strategic Attribute Metric (Strategic)

Reliability Perfect Order Fulfillment

Responsiveness Order Fulfillment Cycle Time

Agility Supply Chain Flexibility

Supply Chain Adaptability†

Cost Supply Chain Management Cost

Cost of Goods Sold

Assets Cash-to-Cash Cycle Time

Return on Supply Chain Fixed Assets

Return on Working Capital

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… And to Diagnose Root Cause Issues550+ SCOR KPI’s Help Measure Performance…

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CHALLENGE: TRACKING & OBTAINING METRICS UPSTREAM & DOWNSTREAM

Example: Aircraft Component Supply Chain Lifecycle

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Example: Agriculture Supply Chain Lifecycle

IDC Manufacturing Industry Predictions

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The Internet of Everything

Physical to Digital Evolution

15© 2015 Peter Vanderminden

Do Banks Operate Supply Chains?


Digital Masters

Firms that are "Digital Masters" are 26% more profitable than competitors and experienced 9% greater revenue from physical assets.

Leading Digital: Turning Technology into Business Transformation by Didier Bonnet, senior vice president of Capgemini Consulting and MIT researchers George Westerman and Andrew McAfee.

http://www.itproportal.com/2014/10/14/how-become-digital-master-businesses-profit-technology-adoption/#ixzz3HfE28AxC

Digital Mastery by Industry



Some Digital Masters Exist in all Industries



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http://dailyinfographic.com/wp-content/uploads/2014/03/Xively_Infographic-2-1.jpg

http://dailyinfographic.com/wp-content/uploads/2014/03/Xively_Infographic-2-1.jpg

Pesticide Monitoring

Irrigation

Tractors/Combines Service

Technician

Construction

Smart ProductsGrid

Renewables

Oil/Gas/Coal Recovery and Distribution

Pointsof Sale

Restaurants

Hotels

FuelStations

Patients

Clinics

Hospitals

NursingHomes

MobileCare

SafetySecurity

ComfortLighting

Automation

Manufacturing Integration and

AutomationRemote

Servicing

Predictive and Reactive

Maintenance

Water

Waste

PollutionControl

Fire

Emergency

PublicSafety

Law Enforcement

LettersPackages

Containers

Tanks Bulkware

Games

Events

Sports

TelevisionStreaming

Traffic Buses

Cars

Trucks

Trains

Vessels

Aircraft

Bikes Smart Energy

Smart Pro Services

Smart Retail

Smart Mobility

Smart Logistics

Smart Factory

Smart Cities

Smart Entertain-

ment

Smart Health-

care

Smart Building Home

Smart Agri-

culture

Transforming the business to Connected Operations

Proactive &

predictive service

delivery based on

asset condition

Service

organization as a

growth & profit

center

Connecting devices

enables new

service models

Customer, product

or services insights

enable competitive

differentiation

Information flows enabling Connected Manufacturing and Supply Chain Ops

Equipment,

Sensors

& Devices

Capture granular data and monitor real-time

performance

Design &

Engineering

Vendors, Providers &

Mfg. Partners

Dealers &

Distributors

Optimize equipment and process performance

Design

optimization

Supply chain

collaboration

New service

capabilities

Resource

optimization

Deliver proactive &

predictive services (eg

predictive maintenance)

ID

OEM Cloud & Big Data

Services

Innovation Can Disrupt the Existing Supply Chain… or the Existing Supply Chain Kills the Innovation

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Semi-Radical

Semi-RadicalIncremental

RadicalNew

Near to the Existing

Near to the Existing

New

Business Model

Tech

no

logy

Innovation Matrix

Connected Operations? – Legacy Architecture

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The Industrial Internet:Internet of Things (IoT) – Internet of Everything (IoE) – Cloud of Things (CoT)

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Role of CTO / IT Strategy relative to Innovation Trends

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• Where is your IT strategy operating today?

• Where are your customers moving?

• Imagine if Information as a % of Product is >50% (Based on Value to the customers)

• Think about building systems by skating to where the puck is heading vs. where it is at today.


– Prescribing Doctor

– Pharmacy

– Health Plan

– Producing Pharmaceutical Firm

Example: Physical Product


Logic chip, radio transmitter, LED’s and battery source

would be positioned here

Advanced RFID with sensors

Broken wires indicate, open circuit which is evaluated to

indicate a consumed dose.


Medical Sensor Fabric


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Example: Connected Healthcare Supply Chain Operations

Antenna

Cloud Authentication Registries

Enterprise

Applications

RFID Tag

Reader

Field-level

Authentication

Device

• Increased supply chain visibility

• Trace their products

• Verify their authenticity

• Allow third parties to verify their authenticity

• Make product diversion more difficult

• More effective recall / returns management process

• Compliance with regulatory and customer guidelines for track & trace

• Improved cold chain management

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Imagine a future state scenario where your firm has…• Product Ecosystem of > 1B IoT devices and services

• Every device and service is serialized

• Activation is required for > 600mm, through direct and in-direct distribution channels processed via cloud services

• Receive new activation requests in excess of 100,000 per hour, 45% of which are fraudulent.

• Cloud services to weekly update/patch devices > 400mm

invalidvalid


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Supply Chains to Support Physical

Sales, Revenue Recognition, A/R, A/P, ITToday’s convergence of products and services requires a supply chain that is equally adept at physical and digital operations.


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Physical and Digital Operations (Similarities and Differences)


Enabling firms to deliver transformative connected customer experiences in which both can access and use the data

Consumers

Prospects & social networks

M2

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der

s

Mobility

Logistics

Pharma Mfg.

Healthcare Providers

Retail Pharmacies

Hospitals

Life Sciences & Medical Device

Buildings

CPG Retail

Actor-Based High-Scale Computing

Service-AssistedTrustworthy Communication

Federated Identity and Access Control

Data Storage, Analysis, and Machine Learning

IoT Operational Technology

Workflow, Document Management, Communication & Collaboration

Sales and Marketing Information Systems

Procurement and Logistics

Billing, Collections, and Finance

People Management

Production Control

Customer Service and Support

PlatformServices

Traditional SCM IT

M2

M C

on

nec

tivi

ty P

rovi

der

s

Workflow, Document Management, Communication & Collaboration

Sales and Marketing Information Systems

Procurement and Logistics

Billing, Collections, and Finance

People Management

Production Control

Customer Service and Support

PlatformServicesActor-Based

High-Scale Computing

Service-AssistedTrustworthy Communication

Federated Identity and Access Control

Data Storage, Analysis, and Machine Learning

IoT Operational and Traditional SCM IT Convergence

Mobility

Logistics

Pharma Mfg.

Healthcare Providers

Retail Pharmacies

Hospitals

Life Sciences & Medical Device

Buildings

CPG Retail

Large

Mobile

Micro

Small

Disposable


Large

Mobile

Micro

Small

Disposable

Cloud M2MDevice managementCommand & Control, Data Analytics, Passive & Active


Q: What is the biggest threat to the business if the

physical and digital supply chains are not integrated?

A: Unsecured supply chains!

CLICK

FRAUD

CYBER

PIRACY

MALICIOUS

CODE

MALWARE

NIKEE.COM

BOTNETIDENTITY THEFT AUTOMATED CLICKS

NIKE PAYS FOR CLICKS ON CYBERSQUATTING SITE

CONSUMER BUYS COMPETITIVE BRAND ADVERTISED

CREDENTIAL THIEF BOT-HERDER

Product Activation 101

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Genuine validation seeks to verify that the

consumer has a legitimate copy of their product

Genuine validation is a way to ensure customers

who acquire products they shouldn’t (via piracy,

mis-licensing, victims of counterfeit etc) can be

notified that their product is not genuine.

What is Product Activation?

Product Activation is a set of anti-piracy services designed to verify that products have been legitimately licensed. There are two

main services– Product Activation , which allows user to enable their IoT enabled product, and Product Validation that verifies

whether they have legitimate products.

Product Activation

Licensing

serviceRequest

Use License

Customer

PA On-line

Activation

Services

Product key info

Binding info

Activation ID

Product Validation Why are genuine IoT enabled products important?

Non-genuine products are by far more at risk for malware.

GA Front End

Web Site

Validation

request

‘Genuine’ response

Customer

PA Front End

and Middle TierDatabase

‘Genuine’ response

Check for blocked product key,

Authenticator key check

A Product Key: 4AJ94-AL498-JGGZ8-A94HL

Represents the user’s license to use the software installed on the machine that the key is used to “unlock” or activate the product.

It is used in one form or another for all channels (retail, Volume, OEM, SBC etc)

What makes activation unique when compared to other ways to fight piracy?

It touches ALL customers regardless of how it’s acquired

We can adjust the rules that control activation thus it’s the only way we can react to piracy “on the fly”

Cyberforensics: identifying and tracking stolen products

• Failed activations are mapped in real-time

• Easily establish distribution patterns of stolen keys

• Focus on global hotspots where fraud originates

Firms will struggle to go through the IoT transformation

• Adopting new business models

• Adopting new technology

• Learning to become a software company

• Learning to become a hardware company

• There is high risk of making mistakes to meet customers SLE’s

• May try to monetize the wrong aspects, tend to focus on the direct vs indirect models

• Questions over who owns the telemetry data?

• Challenges concerning Security, Privacy & Transparency

• Mis-Match of existing skills within the organization© 2015 Peter Vanderminden

New Business Models

• Who carries the inventory cost on their balance sheet for

• A case of Coke at Walmart or Tesco?

• A surgical instrument at a hospital?

• A firm adds IoT capability to an existing product, coupled with a SaaS

Mobile app……can they charge for?

• Purchase of the app?

• Monthly access rights to the app?

• Exporting the data to another mobile application?


Keurig Lessons Learned

• Added Digital Rights Management (DRM) to its gen 2.0 coffee machines.

• Locked consumers in to use of only “licensed coffee”.

• Consumer backlash, sales fell 23% YoY.

• Keurig CEO announced plans to bring back a refillable pod (May 2015)


Need for Transparency


Kano Model can assist you to evaluate options


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Transition To Real-Time Enterprise – Key To Success

Business Event

Information Recorded

Information Delivered

Action TakenFocus on reducing

the action distance

• Pricing Adjustments

• Targeted Advertising Campaigns

• Alternate Supplier Orders

• Stocking adjustments

• Project Teams Resourced

• Support teams resourced

• Repair and return logistics management

• Competitor Pricing Moves

• Supplier Distribution Logistics

• Retail Distribution Logistics

• Product demand reporting

• Customization requests

• Service requests

• Returns rates

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Peter VandermindenIndustry Consultant, IoT & Supply ChainPhone: [email protected]

mailto:[email protected]

architecting next-gen connected supply chains … 0514 architecting next-gen... · architecting...

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