Digital Transformation and Automation. Craig Rawlings.pdf · Economic Outlook on Global Trade...

Digital Transformation and Automation

Craig Rawlings

2© 2017 KPMG LLP, a Singapore limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International

Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

2

“There are several macro trends that are colliding.

These are driving amazing, accelerated change across all industries, all companies and all countries.

How we adopt and respond to that change will separate the winners from the losers.”



Economic Outlook on Global Trade

Global reach becoming a

burden, not an advantage?

Share of global profits by multi-nationals fallenfrom

In the past 5 yearsprofits from multi –national firms dropped

of MNCs make an ROE of less than 10%

25%

35% to 30%

40%



Today’s Supply Chains Are Complex And Poorly Integrated

— Manufacturers ERP systems

Factory

Suppliers

DeparturePort

Carrier3PL

InventoryHub

ArrivalPort

Transshipment Port

Distribution Center

DistributorDirect to Market

Modern Retailer

Small retailer

e-Retailer

Consumer

— Current 3PL Track and Trace Solutions — Distributor management systems

— Sales force enablement tools

— Retailer POS systems — Market intelligence

companies e.g. AC Nielsen, Innovate etc.

— Disparate Systems with different maturity

— Lack of integration between multi-partner systems

— Lack of common unified data standards across the supply chain e.g. GS1 standards

— Timeliness and quality of data

Key gaps to address visibility challenge

Current Solutions



Y

Your Former Customer @formercustomer

#customer #digital #innovation #formercustomer#dearretailer #itsnotyouitsme

Dear Big Business

It’s not you, it’s me.

We’ve had some good times over the years, but the truth is, I’ve changed. We don’t want the same things any more. Sometimes I don’t know what I want -but it’s a big world out there, and I know I’ve got more options than when we first met.

You know I’ve been seeing other people. I’m sorry, but what could I do? You haven’t really been there for me when I needed you. At this point in my life, I want to be courted and appreciated. I want to be surprised, and asked for my opinion, and I don’t get that out of our relationship.

Don’t get me wrong - I know you are having a tough time, and I know you’ve tried. But for me, all the little things have finally added up. Maybe if you’d made an effort to get to know me a little better. But I feel like you’ve taken my loyalty for granted. And I know now… I don’t have to settle.

But, hey, let’s stay in touch. Who knows?

Regards,

Your former Customer

240mnActive internet users

in ASEAN, that’s 40% of the total population

ASEAN middle class expected to be

400m by 2020

75%of worldwide

ecommerce growth will come from Asia

Pacific

$1.5tnExpected eCommerce

sales from Asia Pacific by 2019

40% of males

and 33% of females

would buy everything on-line if they could

37%Millenials distrust big business

By 2020, those under

30 will make up 48%of SE Asia’s population



6

The 4th Industrial RevolutionIndustry 4.0 (i4.0) is a shift from digitization to

cyber-physical systems through the union of

technologies such as Internet ofThings (IoT),

robotics, big data and augmented decision

support.The i4.0 opportunities are enormous, but

the investments can be as well.

$4 trillionIoT market estimated to exceed $4 trillion by 2020*

21 billion‘Connected things total installed’ expected to move from

4 billion units in 2014 to 21 billion units in 2020*

*Source: Gartner



CEO Priorities

Innovation is a key issue:

— Integral to growth

— Threat to disruption

— Record levels of

activity

— Impacts growth,

customer, digital,

M&A, data, and

operating model

of CEOs are prioritising new growth

strategies and fostering innovation

of FTSE companies that currently have

corporate venturing teams

of CEOs concerned about the

relevance of their products three years

from now

of CEOs concerned about new

entrants disrupting their business

model

of 2015’s best performing companies

that spent more than 10% of revenue

on innovation

90%75%

66%

61%

60%

Source: 2016 KPMG executive survey



Pillars of the 21st Century Enterprise

Customer Engagement

Changing Nature & Value of Assets

Everything asa Service

Workforce of the Future

CORE ENABLERS

BLOCKCHAIN

THE API ECONOMY

MOBILE ECONOMY

INTERNET OF THINGS

3D PRINTING

CLOUD

DRONES

DATA & ANALYTICS

AI/ COGNITIVE AUTOMATION

AUGMENTED & VIRTUAL REALITY

PLATFORM BUSINESS MODEL

CYBER

CONSUMERIZATION OF B2B &

ENTERPRISE TECHNOLOGY

B2B

Personalization, Customization,

Co-creation & Collaboration

A 21st Century Enterprise delivers the best customer experience, leveraging data collected from customers

to learn & personalize experiences.

Data-as-an-Asset, Intellectual Property, Shared Assets,

Networks & Alliances

A 21st Century Enterprise unlocks value from non-traditional assets - data,

alliances, networks, agility, and other intangibles.

Services vs products, subscribing to what you

need, Process-as-a-Service

A 21st Century Enterprise is more nimble and scales

infinitely faster by accessing services versus

growing internal functions and infrastructure.

Automation & augmentation, Talent gaps, contingent

workforces, collaboration

A 21st Century Enterprise is lean, utilizes digital labor

and accesses skills on demand through platforms

and alternative employment models.



Market Signals --- Analyst Predictions

As-a-Service Economy53 percent of senior vice presidents and above see the ‘As-a-Service economy’ as critical or absolutely critical for their organization, per a survey conducted in partnership with Accenture.

25%

Digital TwinsBy 2020, digital twins for industrial equipment will drive 25 percent reallocation of end-user spend from “procure and maintain” to “service” models provided by manufacturers.

40%

ManufacturingBy 2018, 40 percent of top 100 discrete manufacturers and 20 percent of top 100 process manufacturers will provide Product-as-a-Service platforms

53%

Enterprise Architecture- Digital platformsGartner estimates that by 2018, half of enterprise architecture initiatives will focus on defining and enabling digital business platform strategies

50%



Technologies to Drive Insight

‘Trigger’ events driving technology adoption

Key supply chain trends and issues

Change in cost structure

Supply chain network transformation

Higher operational risk

Merger or acquisition

Supply chain process reengineering

Change in management and culture

Change in reporting requirements

Illustrative

Financial and cost pressuresValue driven

Increasing complexityDifferen

tiated

Increasing speed expectationsAgile

Increasing quality expectationsQuality

Present and future digital trends impact the supply chain at multiple points presenting a need to identify analysis and tools that drive value

e-Commerce

Mobile 2.0

Augmented Reality

Social Media

Analytics

Customization

Mobile Web

Analytics

Supplier

tier n

Supplier

tier 1

Factories

(Manufacturer)

Distributor

WholesalerRetail Customer

Purchasing & Supply

Operations

R&D / Engineering

Customer Services

Finance

Marketing & Sales

Warehouses (owned by Group)

Warehouses (owned by third parties)

Franchise operations

Logistics service providers

Logistics

Manufacturing

Assembly

Gamification

Crowd-sourcing

Supplier Innovation Platform

Additive Manufact

uring

NPD / Innovation

Asset Intelligence

/ RFID

Internet of Things

Forecasting / S&OP

Big Data &

Analytics

SCM entities



Application of Digital Across the Value Chain is a Game-Changer

Revenue growth

Cost reduction

• Improving insight in

customer needs

• Enabling a services

driven business

model

• Integrating with

business partners on

operations level

Procurement

• Reducing time to

deliver

• Optimizing manufacturing footprint

• Optimizing the supply chain in real-time

• Optimizing warehouse management

• Optimizing transport management

Logistics

• Improving equipment

utilization

• Enabling individualized

product manufacturing in

mass production

• Intelligent routing

• Reducing down-time

• Reducing maintenance cost

• Improving first rime right

• Optimizing marketing with

digital quality management

Quality

• Enabling shift from

product- to service sell

• Better understanding

buying patterns with

advanced customer

analytics

• Provisioning of

remote services

• Monitoring in real

time

Manufacturing Customer

• Predicting demand

with sensor data

Sales

• Improving forecasting

accuracy

• Faster development

and product

introduction

• Modelling / prediction

using digital twins of

physical products

• Simulating with (3D)

models

• Optimizing product

design for efficiency

• After sales

monitoring

Product innovation

• Improving product

quality and

consistency



12

Analytics – Where to Start

Start with performance, not data

A performance led approach, which starts with a clear understanding of the operational business need,

focuses the application of analytics towards the specific set of data and analytics required to improve

performance.

Stop managing through backwards looking reporting

Simulation technology now allows companies to learn from past performance to inform the future by

simulating the likely outcomes and impact of business decisions, before they are made.

Decision centres, not control rooms

‘Data clutter’ and ‘cognitive stress’ from wallpaper KPIs are avoided and instead augmented decision

support tools show recommendations, the minimum amount of information required to take action.

Optimise, don’t maximise

Get ahead of competitors by focusing on future performance, looking ahead and learning quickly, rather

than from copying others in your industry and benchmarking historical performance.



13

What are the Leaders Doing?

They are focusing on integration.

A few are moving quickly to integrate their suppliers and customers into a demand-

driven supply chain.

They believe that an interconnected network is the key to future competitive

advantage.

They are connecting to their suppliers and to the external environment through the

cloud.

They are creating the right environment.

They are assessing both the opportunities and the risks of greater value chain

integration.

They are using sensors to predict various supply chain scenarios.

They are improving their controls for increased cyber security and data privacy risks.

They are looking for opportunities to drive

performance

The leaders are rethinking their traditional supply to eliminate unnecessary processes

and waste.

Depending on the industry, some are working collaboratively with their suppliers to

identify new ways of working and to streamline existing processes.



A Few Examples



15

Blockchain – Enhancing Visibility

What is Blockchain?What are its features and

advantages?

How can it enhance the supply

chain process?

Distributed

Each node has a copy of the

transaction ledger enforcing resulting

in high availability

Immutable

Information stored on the Blockchain

cannot be modified by any entity

Trustless

Decentralised, trustless system that

relies on a single source of truth

Secure

Transaction data is encrypted via

complex cryptography rules

Real time tracking and visibility of

product flow across the supply chain

Speed, accuracy and timeliness of

information to all supply chain

partners

Faster finance flows between supply

chain partners

A method of ordering and verifying

transactions in a distributed ledger.

16© 2016 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo

are registered trademarks or trademarks of KPMG International. Liability limited by a scheme approved under Professional Standards Legislation. Document Classification: KPMG Confidential

Blockchain, Track And Trace, And Trade Finance

DLT Platform

flow of fundsOfftake

Agreement

T/C of the trade

agreement

Letter of

CreditPre-shipment

Credit (funds)

Post-shipment

Credit (funds)Financing

flow of goodsGoods

StatusSupplyChain

CertifiedIoT Signals

Trading REPO deals

Provenance Goods

Ownership

Insurance Trade Credit

Insurance

Goods Freight

Insurance

Goods Delivery

Insurance

Tax Export Tax Event Import Tax Event

Bill of Lading

updated

Bill of Lading

updated



Tracks OnlineTraffic

Tracks AllSearch Activity

Reads AllBlog Posts

Reads AllSocial-Media

Posts

Reads AllNews Content

TracksMobile Device

Activity

Maps Countries Top 40 Countries all Cloud hosted on demand 24/7 plus a managed service

Covering any format or data structure• 450,000 Behaviors• 90,000 Brands/Products• 16,000 Topics/Publishers• Any Market, Any Language

Data Sources

Micro-segmentation



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Key TakeawaysBe bold. The leaders are closing the gap between their

ambition and their activity1Think big. Driving enterprise value requires scale and

cross-functional integration through lifecycle integration2Start and end with performance. Profound value is

available from insight driven performance improvements3Plan ahead. You can’t buy excellence in i4.0; it takes work

and a smart strategic roadmap4Assess yourself. Understand where you stand versus your

competitors.5


Cooperative (“KPMG International”), a Swiss entity. All rights reserved.© 2017 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member

firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. NDPPS 623964 20

Digital Transformation and Automation. Craig Rawlings.pdf · Economic Outlook on Global Trade...

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Transcript of Digital Transformation and Automation. Craig Rawlings.pdf · Economic Outlook on Global Trade...