V-ZUG AG – Premium household appliances from Switzerland

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Digital Product Enhancement via Supplier Collaboration

CIPS

Stephan Keller Zug, GIBZ, May 9th 2019

vzug.com

Scope and aim of the presentation

CIPS| 9 May 2019 | Premium household appliances from Switzerland 2

The future challenges

Direct Material

200 MCHF

1000 Suppliers

Indirect Material

150 MCHF

2500 Suppliers

The future task for an

industrial procurement

manager is to master the

top of the strategig

supply chain for…

Virtual

Products

Let us talk about this

Boring!

Boring?

No, but it is not part of the future

challenge!

Why?

Because:

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V-What? V-ZUG at a Glance

Domestic Market

Swiss Market Leader, strong brand recognition

In every 2nd household

Broad product portfolio, covering all segments

Strong service presence

90% of sales

International Markets

Selective international strategy

Sales & Service presence in Europe, Greater China and Australia

Distributor Markets

Focusing on luxury / premium segment

10% of sales

V-ZUG

Household Appliances (Cooking & Washing)

Revenue 600 MCHF / ~2’000 employees

Long history and tradition (founded 1913)

Swiss Made

Premium brand, known for its design, techno-logy, quality and service

Technology leadership / innovation

Traditional Business Model: Device-Oriented Approach

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Value proposition: Sales & service of outstanding devices Innovation: “Device-oriented innovation based on deep technological skills, executed with Swiss perfection” Go-2-Market: Strong B2B-focus

Question: “Is this approach also suitable

for the next decade?”

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Recipes /

Inspiration

Planning Grocery Delivery

Storage /

Cooling

Preparing

Cooking Serving Cleaning

Cooking Process

Appliances Level

Go-to-Market Starting Point Sales of Appliances

Customer /

User

Fridges Cooktops Steamers Ovens

Dishwashers

Digital Customer Experience / Seamless Journey

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Our Challenge Defend Interface to Customers

Recipes /

Inspiration

Planning Grocery Delivery

Storage /

Cooling

Preparing

Cooking Serving Cleaning

Threat Digital interface to the customer, becoming main differentiation factor, occupied by competition / new players C

ustomer /

User

Commodity? Appliances

Cooking Process

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Our Strategy Combine Digital Layer with Strong Products Our Strategy

Combining the digital layer with technologically differentiating products offers “real” USPs

Appliances combined with digital layer

Cooking Process

Digital Customer Experience / Seamless Journey

Customer /

User

Recipes /

Inspiration

Planning Grocery Delivery

Storage /

Cooling

Preparing

Cooking Serving Cleaning

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New Definition of Term “Product” Physical & Virtual

Physical Part

Product

Digital Part

• Device • After sales service • Built in logics • HMI • Sensors

• App • V-ZUG Digital Service,

e.g. individual refinement recommendation

• Ecosystem service: e.g. grocery delivery

• Data based services

Examples

Where could AI play a role within the “Food Chain”?

Cooking Process

Digital Customer Experience / Seamless Journey Recipes

/ Inspirat

ion

Planning Grocery Delivery

Storage /

Cooling

Preparing

Cooking Serving Cleaning

Personal recommend-dations based on - behavior,

preferences - Available

ingredients - …

Timerless cooking - Sensor based

real-time monitoring and control of cooking process for a perfect result

Generation of structured recipes out of any source - Step-by-Step

guidance - Ingredients

Inventory Recording - Image

recognition - Combination of

multiple information sources

Multi-device cooking - Finding

optimal cooking process, distribution of cooking tasks to devices

Creation of individual multi-grocery shopping lists

Dish washing management - Automated and

efficiency oriented generation of dish washing tasks (loads & programs)

Our Approach Co-Creating with partners

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V-ZUG Lab

“Invent the Future”

Interdisciplinary teams (HW, process engineering, SW, IoT, Cloud, Marketing, Customer Insights, Finance, Digital…)

Internal (V-ZUG knowledge) and external partners

Agile development approach

Output: PoCs, MVPs

IBM IoT Center Munich for AI in the cooking process

PreciBake Video Content analyse

milani design for shaping the customer journey

Digitalstrom and others for the device ecosystem

Sidechef for Recipes

Bring! for food deliveries

….

cooperation

Consequences

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- Device Connectivity

- Integration of devices over cloud is a prerequisite for - New digital business models - Efficiency increases (e.g. service, predictive maintenance)

- Integration in ecosystems (horizontal & vertical)

- Integration of devices into digital ecosystems will change device requirements. Components of devices (sensors, electronic, control, connectivity) will rather support an overarching system (home, kitchen) and will not just serve the own functionalities

- Data is the basis for digital business models, data analytics / AI is becoming a core discipline for V-ZUG

- New skills, capabilities and methodologies are required (software, IoT, business modelling, direct-to-consumer channel, agile, design thinking,…)

vzug.com

What does it mean for procurement?

CIPS| 9 May 2019 | Premium household appliances from Switzerland 12

We need to source services that are a relevant part of our «direct material»

End

User

V-ZUG

3rd

Party

Tier1

3rd

Party

Tier 2

Inspiration

1st Contact

Represented

in VZ APP

Placing an

order

automatically/

manually

by inventory mgmt? Pro-

cureme

nt

Food

delivery

Preparing

Food Step by step

instruction

Feelance

Video supported White Label

App

VZ and 3rd party

Recipes

Provider of

App

Videos and

Tutorials of VZ

Recipes Recipes

3rd party Recips

App connections

Recipe

enhancement

Choose cooking

device

Broad Food

knowledge

Ontology

Recipe to Process

Data and

Patterns

Video content

analysis

Numeric Models

vzug.com

What does it mean for a Food Ontology?

CIPS| 9 May 2019 | Premium household appliances from Switzerland 13

Food Ontology

Deep Learning Loops

Machine Learning algorithms

User Feedback

Sensor signals

General Architechture

Data lakes

…

Refinement

Ingredients data

Processing data

Oven Ontology

Refinement Partners

(Kuhn Rikon)

Guided Cooking

IT-Tec

Computational Performance

Cloud, algorithms, publicly

accessible knowledge

Recip Partners

IP Rights

Expert Groups

Regional aspects

….

Food Science

Chemistry

Composition, Health, Refinement

reactions

Who Is contributing

What

Under which

conditions?

Value Streams

V-ZUG AG – Premium household appliances from Switzerland

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THANK YOU

V-ZUG Ltd – Swiss perfection for your

home