ASUG con­tin­ues its 2022 inter­view series with indus­try- and tech­nol­o­gy-focused SAP lead­ers in this dis­cus­sion with SVP and Head of SAP North Amer­i­ca Dig­i­tal Sup­ply Chain, Dar­cy MacClaren.

This inter­view explores the SAP per­spec­tive on cus­tomers’ cur­rent, con­tin­u­ing sup­ply chain chal­lenges, as well as the real­i­ty of con­tin­ued dis­rup­tion. Dar­cy offers rec­om­men­da­tions to orga­ni­za­tions on how to best respond and adapt. This dis­cus­sion pre­ced­ed the SAP announce­ment of its plan to acquire Tau­lia ear­ly this year, which, SAP CFO Luka Mucic not­ed, ​“strength­ens our port­fo­lio and adds val­ue to a point that is key to every com­pa­ny: finan­cial flex­i­bil­i­ty and sta­bil­i­ty. With that, they con­tribute to mak­ing sup­ply chains more resilient.”

This is an edit­ed ver­sion of the full conversation.

Q. What have you, and what has SAP, been hear­ing from North Amer­i­ca cus­tomers about sup­ply chain, cur­rent chal­lenges, and oppor­tu­ni­ties in North America?

A. What we’re hear­ing, and it’s con­sis­tent, whether it’s a large com­pa­ny, small com­pa­ny, con­sumer com­pa­ny, high-tech com­pa­ny — it’s all the same. And it’s that dis­rup­tion is the new nor­mal. It’s going to con­tin­ue. The key to suc­cess is being agile, resilient, intel­li­gent, and sus­tain­able to han­dle the dis­rup­tions going forward. 

The key area that folks are strug­gling with, that does vary by indus­try, is not hav­ing key raw mate­ri­als or con­tract man­u­fac­tur­ing avail­abil­i­ty. The work­force is chang­ing; there is a lack of work­force, the retire­ment of the work­force. That all is changing.

The big theme is that every­body wants cus­tomers who want their prod­ucts how they want it, deliv­ered when they want it, at the qual­i­ty they want it; but you have to do that in a smart, prof­itable, opti­mized, and sus­tain­able way. With the ongo­ing risks, that is what every­body is strug­gling with.

Q. Is there any­thing, in the sup­ply chains in any par­tic­u­lar indus­tries, that is either improv­ing or show­ing signs of improvement?

A. You are see­ing busi­ness mod­els chang­ing. The vis­i­bil­i­ty of what is going on in the net­works is improv­ing. It all starts with being con­nect­ed; the more con­nect­ed a com­pa­ny is with its ecosys­tem — with sup­pli­ers, its cus­tomers, its con­trac­tors, its logis­tics ser­vice providers. The more con­nect­ed they are, the bet­ter their abil­i­ty to respond to a dis­rup­tion, to an unknown. 

Com­pa­nies are work­ing on get­ting con­nect­ed and get­ting vis­i­bil­i­ty. After they are con­nect­ed, they want to add intel­li­gent tech­nolo­gies to han­dle the dis­rup­tion and to be ful­ly inte­grat­ed in what we call the dig­i­tal thread to auto­mate process­es. That is the theme we’re see­ing. Dis­rup­tion is mas­sive. You need to know about it. You need to auto­mate it. And you need to respond. The more you can do that in an intel­li­gent, auto­mat­ed way, and com­mu­ni­cate that to all involved par­ties, the bet­ter off your sup­ply chain is going to be. 

Q. What are the most recent SAP solu­tions and approach­es to resolv­ing sup­ply chain issues and challenges?

A. Con­sid­er the net­work of net­works. SAP learned a tremen­dous amount from our acqui­si­tions — Ari­ba, Field­glass, Con­cur — all about how to build large, scal­able, secure net­works. So when we look at these net­works — and we cre­at­ed new ones our­selves, with our Logis­tics Busi­ness Net­work (LBN) and our Intel­li­gent Asset Net­work (IAN) — we real­ized a cou­ple of key ele­ments. First, the net­works need­ed to be open. So in our Logis­tics Net­work, we’ve made it open, which makes it easy to con­nect to oth­er networks. 

One of the most inter­est­ing tech­nolo­gies com­ing out is SAP mov­ing to one net­work. It’s the idea that, when you join our net­work, you’ll have access to all these oth­er net­works as well, because we’re bring­ing them all togeth­er in a com­mon user inter­face. It will be secured, it will be scal­able. It will encour­age col­lab­o­ra­tion, whether it’s col­lab­o­rat­ing with your prod­uct design peo­ple, know­ing it’s secured, or it’s your logis­tics ser­vice providers. Not only can you learn how the assets are per­form­ing in your orga­ni­za­tion, [but also,] you get the ben­e­fit of learn­ing how all these assets around oth­er orga­ni­za­tions are per­form­ing, around one shared, com­mon user inter­face across all SAP. This is huge. With the size and scal­a­bil­i­ty of SAP, you can imag­ine how quick­ly these net­works will build and scale. That’s num­ber one. To dig­i­tize an orga­ni­za­tion, you need to get every­thing con­nect­ed, and this is a way to make it easy to get con­nect­ed — not point-to-point con­nec­tion, but con­nect network-to-network. 

This is a work-in-process. The idea is to build a net­work of net­works. It is a work-in-process to have a sin­gle uni­fied net­work, but it is com­ing fast.

Also, with intel­li­gent tech­nolo­gies, we have robust, scal­able appli­ca­tions that can come pre­con­fig­ured, such as inte­grat­ed busi­ness plan­ning. It can come pre­con­fig­ured for a con­sumer com­pa­ny, for instance. You can turn it on, and as long as you use best prac­tices, you are good to go. You could get up and run­ning real­ly in a mat­ter of days if you take it right out of the box. You can roll out the basics all the way across the globe and it will hold up. In addi­tion, our intel­li­gent tech­nolo­gies go across the entire plat­form, not just the sup­ply chain plan­ning tools. You can use them and embed them in your process­es across the entire SAP port­fo­lio, includ­ing sup­ply chain. So, if you want to use machine learn­ing or RPA or arti­fi­cial intel­li­gence, you can put that into our Busi­ness Tech­nol­o­gy Plat­form (BTP). From a strate­gic view­point at SAP, our BTP is right up there with SAP S/4HANA — SAP S/4HANA, BTP, and our sup­ply chain prod­ucts are con­sid­ered strate­gic from a Board per­spec­tive and development. 

Q. Is there an SAP prod­uct and tech­nol­o­gy roadmap spe­cif­ic to sup­ply chain? 

A. Sup­ply chain prod­uct devel­op­ers and the SAP S/4HANA devel­op­ment team work as one. There is a roadmap for Design to Oper­ate, the sup­ply chain prod­ucts. Design to Oper­ate refers to every­thing you do with your prod­uct, from design­ing it, all the plan­ning and the sched­ul­ing, the man­u­fac­tur­ing, the deliv­ery of those prod­ucts, and how you oper­ate either your plant or the asset in the field.

The five pil­lars — Design, Plan, Man­u­fac­ture, Deliv­er, and Oper­ate — of Design to Oper­ate are con­nect­ed by a dig­i­tal thread, so you can tell if a machine breaks down, you know the orders it affects, to check qual­i­ty, to check oth­er orders, expe­dite oth­er orders and get a con­tract man­u­fac­tur­er or per­haps a con­tin­gent work­er to fix it. It’s all con­nect­ed and I can do this in an opti­mal way and com­mu­ni­cate to all par­ties involved. That’s Design to Oper­ate. Each of those pil­lars has a sep­a­rate devel­op­ment plan to keep them com­pet­i­tive in the mar­ket. Although the real dif­fer­en­ti­a­tion is their con­nec­tion to be nim­ble, agile, and real time, they still have to hold up as indi­vid­ual solu­tions. You still have to have a best-in-class ware­house sys­tem, trans­porta­tion sys­tem, and plan­ning sys­tem, but the beau­ty is the inter­con­nec­tiv­i­ty. The devel­op­ment teams work tight­ly cou­pled under the same group, but they have their own roadmap. 

[For fur­ther infor­ma­tion, check out SAP resources, includ­ing: Dig­i­tal Sup­ply Chain Man­age­ment (SCM) Soft­ware Solu­tions | SAP Road Map Explor­er]

Q. If you were going to sin­gle out any­thing of impor­tance to the cus­tomer com­mu­ni­ty regard­ing sup­ply chain in 2022, what would that be? 

The game-chang­er for SAP — because it changes the per­cep­tion, what peo­ple think of us — is the Man­u­fac­tur­ing pil­lar. It is Indus­try 4.0. It is every­thing we are doing to auto­mate the plant and take that automa­tion into real-time exe­cu­tion. We take that and add into it all the machine learn­ing and arti­fi­cial intel­li­gence. We’re not just back office. We’re doing all this inno­va­tion and you see it in our inno­va­tion hubs. We’re putting in so many resources and invest­ment. The enhance­ments and the new tech­nol­o­gy we’re putting into the man­u­fac­tur­ing area is the biggest growth area. 

Q. If you were to artic­u­late a top-five list of rec­om­men­da­tions — giv­en issues that come up for cus­tomers in sup­ply chain, and SAP answers to resolve them — what would those rec­om­men­da­tions be?

My num­ber one rec­om­men­da­tion, when com­pa­nies are look­ing at trans­form­ing, is to start now. When is the sup­ply chain dis­rup­tion going to stop? It’s not. So you can’t wait. You’ll nev­er be in a good posi­tion. Start your trans­for­ma­tion now. It can be a lit­tle ​“t”; doesn’t have to be a great big ​“T,” but start walk­ing now. Look for quick wins, high val­ue. You need to have an over­all vision of where you want to go, with the cus­tomer in mind always. You need to have your big vision, but then you need to break it down into high-val­ue, doable projects to get momen­tum. Then it’s all about get­ting con­nect­ed — how to get con­nect­ed. Then, final­ly you need to ready the orga­ni­za­tion. If you real­ly want to achieve that vision, you are going to need some change man­age­ment. You are going to need to change met­rics. Every­one has to under­stand the vision and why you are doing what you are doing. Final­ly, it’s your peo­ple, chang­ing the orga­ni­za­tion, get­ting the right peo­ple, because the jobs will change once you put these tech­nolo­gies in. 

When you talk about sup­ply chain prac­ti­tion­ers, if they are going to suc­ceed, if they are going to be sup­ply chain exec­u­tives, they are going to have to embrace tech­nol­o­gy. That’s the way it’s going. A lot of them do it with their gut. But it’s too com­pli­cat­ed. It’s too mas­sive. It’s too fast. Those who embrace tech­nol­o­gy and do it well are going to be the lead­ers, both from a com­pa­ny per­spec­tive and from an indi­vid­ual prac­ti­tion­er perspective.