How Real World Awareness Will Change Your Business

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How Real World Awareness Will Change Your Business
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How Real World Awareness Will Change Your Business

• How can we sense the important events in the real
  world and quickly respond with behavior that
  leads to success?
• If Real World Awareness means an explosion in
  nerve endings, one response must be for companies
  to build a bigger brain, or even multiple
  connected brains, to understand the vast quantity
  of information and craft a response
• Will any patterns occur in the way business
  reacts to the abundance of accurate information
  that Real World Awareness can provide?
• How can companies prepare?

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Real World Awareness Defined

• Real World Awareness is the ability to sense
  information in real-time from people, IT sources,
  and physical objects-by using technologies like
  RFID and sensors-and then to respond quickly and
  effectively

Manual, batch-oriented,limited information
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The Challenge In Consumer Products

• The consumer packaged goods (CPG) industry has
  one of the most advanced and responsive supply
  chains but has reached a limit of sorts in its
  progress. Real World Awareness may play a key
  role in overcoming this limit
• PG seek to maximize its potential to satisfy the
  customer at the two moment of truth
• when the customer buys the product
• when the customer uses the product

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The Challenge In Consumer Products-cont.

• Manufacturers must therefore respond to changes
  faster then ever
• One response is to pack the distribution centers,
  stores, and shelves with inventory
• Another response is to improve planning and
  demand forecasting
• Moving from push to pull
• Inventory is pulled from the supply chain by
  consumer activity, not pushed to it from
  inventory
• The aim is to streamline processes so that when
  inventory levels start to drop in the store, the
  manufacturer is instantly notified and ,moves to
  replenish the inventory
• Vendor-managed inventory (VMI), starts to
  approach a pull model
• The inventory of cross-docking is moved from the
  manufacturers truck to the retailers truck at
  the distribution center without ever having to be
  stored in the warehouse

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Requirements For A Consumer-Driven Supply Network

• A true consumer-driven supply network has an
  unbroken chain of information from the factory to
  the shelf at the retailer
• Products will be pulled from the consumer in
  response to demand rather than be pushed from the
  manufacturer to the retailer based on a planning
  cycle and demand forecast
• Wal-Mart within minutes of a purchase, the record
  of that sale has been transported to massive data
  warehouse that tracks every sale in every store
• Dell, a direct retailer and also the
  manufacturer, has achieved the amazing feat of
  having a negative cash-to-cash cycle by
  collecting the money for its products before it
  must pay its suppliers

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Feeding The Growing Hunger For Information

• How VMI works
• The level of inventory in the retailers
  warehouse management system is broadcasted
  regularly to the manufacturer
• The manufacturer monitors this level and
  automatically generates a purchase order to
  itself when the inventory level drops below a
  certain level

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Feeding The Growing Hunger For Information-cont.
Replenishment in a customer-driven supply
network is based on a steady stream of inventory
data coming from a large number of points in the
network. Replenishment may take place on a
weekly, daily, or hourly basis, as needed

• Replacing Inventory With Information

Daily and hourly data varies significantly,
which causes changes in algorithms and processes
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Replacing Inventory With Information

• For the consumer-driven supply network, the
  pallets and products may be tagged and tracked by
  readers at many points in the process, including
  while these tasks take place
• Load at the manufacturing plant
• Deliver to distribution centers
• Load again on retailers trucks
• Deliver to stores
• The unaffordable army of employees equipped with
  bar code readers is replaced with RFID tags on
  products and readers at important locations.
• Tags can be used in many ways and in many
  contexts, such as providing a running total of
  items tossed in a shopping basket or displaying
  product information at kiosks.
• All these benefits are based on Real World
  Awareness techniques, such as RFID, which reduces
  the wholesale cost of acquiring information.

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Recognizing Emerging Patterns Of Change

• Preventive maintenance is the practice of turning
  the traditional paradigm for maintenance
  completely around.
• The concept of the adaptive business network was
  created in response to the needs of businesses to
  find a new way of operating that gives them the
  flexibility to respond quickly to unexpected
  changes.

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Recognizing Emerging Patterns Of Change- cont.

• Companies within the network remain autonomous,
  but are able to leverage the networks cumulative
  ability to do the following
• Plan and anticipate demand and supply.
• Execute plans efficiently and effectively.
• Sense events that affect the plans as soon as
  those events occur and then analyze their impact.
• Respond to and learn from ever-changing business
  conditions.

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Recognizing Emerging Patterns Of Change- cont.

• Participation in an adaptive business network
  puts companies in a position to remain flexible,
  resourceful, and profitable in a constantly
  changing business environment
• The adaptive business network provides new
  opportunities to
• Increase profit margins
• Realize cost savings
• Accelerate cash-to-cash cycles
• Improve the effectiveness of corporate
  expenditures
• Capture a greater return on assets

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Preparing For Real World Awareness

• The way that Real World Awareness amplifies the
  value of adaptive business networks probably
  means that it will become a common pattern for
  highly competitive, consumer-facing industries
  that have complicated value chains
• Better Information
• Real World Awareness can overcome physical and
  logistical limitations
• In the first stage, Skill is built in
  data-collection and aggregation
  techniques
• Real World Awareness will likely lead to an
  expansion of data warehouse, data mining, Online
  Analytical Processing (OLAP) techniques, and
  other technologies and analytical techniques used
  to extract meaning from the increased amount of
  data

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Preparing For Real World Awareness- cont.

• Better Information- Cont.
• The sort of questions that companies may find
  useful to ask in advance include the ones in this
  list
• Where will real-time information help?
• What important information is unavailable?
• What information could suppliers and partners
  find valuable?
• How will processes have to be changed?
• What analytical capabilities will be needed?
• What new metrics can be monitored?

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Preparing For Real World Awareness- cont.

• Process Improvements

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Preparing For Real World Awareness- cont.

• Process Improvements- Cont.
• The following sorts of questions lead to the
  discovery of areas in which Real World awareness
  may be able to extend automation or improve
  processes
• Where are errors and delays?
• Where do the processes need to speed up?
• How could processes change to take advantage of
  better information?
• What automation does better information make
  possible?
• What processes have bottlenecks?
• What can be done to improve partner and supplier
  processes?
• What type of data should be stored on the tag for
  use by other parties?
• What is the right distributed data architecture?

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Preparing For Real World Awareness- cont.

• Business Innovation
• Management by exception and insight means that
  organizations retool from being hands-on actors
  who guide the execution of processes to
  quick-response teams who react to alerts raised
  by automated systems
• Business innovation is the most challenging
  aspect of Real World Awareness that will lead to
  significant cultural change and deep questions of
  corporate identity

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Preparing For Real World Awareness- cont.

• Richer Models
• It will be a mirror of the world that can tell
  where hundreds of thousands or millions of
  objects are at any given minute
• The model must be carefully designed to support
  the processes and responses involved in the
  related business scenarios
• Distributed Intelligence
• In the future, embedded systems as part of RFID
  tags, RFID readers, appliances, and machines will
  drive the distribution of computing power in the
  network and will perform local business logic
  that leverages the available local data

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Preparing For Real World Awareness- cont.

• Connectivity
• Wireless networks are crucial to allowing devices
  with Real World Awareness to be spread over
  factory floors as well as unwired of
  difficult-to-wire environments at low cast
• Standardization
• EPC global, which was the off-spring of the MIT
  Auto-ID Center, has provided that standard so
  that companies can rest assured that tags written
  by on company can be read by another
• Standards also allow systems originally developed
  for closed-loop operation inside a company to
  easily become part of an open-loop architecture
  that spans company boundaries

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Preparing For Real World Awareness- cont.

• Automated Analysis and Response
• Automated responses may have different facets,
  from business process management systems
  triggering workflows to rules-based systems for
  automated decision making in certain situations
  to new mathematical algorithms providing decision
  proposals in certain situations
• Business Challenges
• Responding to Increased Demands for Analytical
  Ability
• Real World Awareness requires a company to build
  its analytical capabilities, supported by
  business analytic technologies, like OLAP, data
  mining, and predictive analysis, as well as the
  ability of its users to leverage such techniques
  to gain the business insights needed to drive
  business decisions at any time

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Preparing For Real World Awareness- cont.

• Managing Change
• One of the biggest challenges in introducing many
  technology is understanding a companys capacity
  for change
• The Cultural Shift to Manage By Exception
• Companies will have to develop a much richer set
  of responses, a playbook of sorts that will
  enable rapid responses that are anticipated and
  that accelerate the crafting of responses to new
  situations
• Creating a Vision and Defining an Identity
• Each company will have to understand how to make
  its strengths work for it in the new world that
  Real World Awareness will bring

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Applications Of Real World Awareness

• Here are the sort of innovations that these
  technological advances will enable
• Phones tagged with RFID chips that also have RFID
  readers to allow advanced services, such as
  in-store product comparisons based on the
  retrieval of information linked to tags.
• RFID tags included in surgical devices, such as
  sponges, to make sure that no such device gets
  left inside a patient.
• Temperature sensors attached to shipments of
  fresh fool, like fish, to ensure that
  refrigeration remains constant.
• Sensors and adaptive headlights in cars to ensure
  the best light distribution in driving through
  curves at night.

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Interview with Keith Harrison, PG
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Interview with Keith Harrison, PG- cont.

• Q What is the outlook for PGs manufacturing
  and supply chain systems ?
• We are clearly seeing a dramatic increase in the
  pace of our innovation and the complexity of the
  supply chains and the distribution systems. We
  are now looking at six or seven different kinds
  of retailing channels and trying to respond to
  the needs of each and in a very differentiated
  way. The challenge is to find ways to accommodate
  this higher-throughput, more innovative, more
  customized, and more differentiated world.
• Q What pressures are driving changes at consumer
  products manufacturers ?
• Rapid change is coming from two fronts the
  accelerating pace of innovation and the move to a
  demand-driven paradigm. To become more demand
  driven, the manufacturing base is going to have
  to be flexible, highly skilled, and responsive.

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Interview with Keith Harrison, PG- cont.

• Q How will you adapt ?
• We want manufacturing driven by actual consumer
  demand, not forecast. We have been working to
  transform our supply chains into a real-time
  information system that is linked end to end, is
  much responsive, and is much more capable of
  managing complexity and differentiation.
• Q What challenges will you face in making this
  transformation ?
• The challenge is achieving that efficiency with
  the sort of sorter runs required to be responsive
  to real-time demand. Adaptive manufacturing
  capability is going to be key. The logistics
  capability, and the ability to deal effectively
  with customers, and the ability to integrate
  suppliers, and the ability to understand time and
  losses across the entire supply chain are going
  to be the areas of growing importance and growing
  focus as we move forward in building out this
  consumer-driven supply network.

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Interview with Keith Harrison, PG- cont.

• Q What sort of companies will win this race ?
• The winning companies down the road are going to
  be the ones that have the winning supply chain
  capabilities. I think the battle for the consumer
  is increasingly going to be fought and won at the
  store shelf. And, therefore, supply chain
  capability is going to be an offensive, strategic
  tool for companies to use to win the battle for
  the consumer.

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Interview with Ron Dennis, Chairman and CEO,
McLaren Group
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Interview with Michael Dell, Dell Inc.

• Q Dell is one of the rare companies that
  manufactures its products and also sells directly
  to its customers. Why is that important ?
• We have, we think, an advantage in that we are in
  direct contact with our customers. And so we have
  real-time information about demand and the
  requirements, and its not filtered through a
  series of distributors or dealers. RFID is one of
  the things that can improve that efficiency
  further still because it provides better
  information.
• Q How do you identify the right moment and the
  right recipe for developing new capabilities ?
• Because were in the IT business, we ourselves
  tend to be an early adopter. We tend to use
  things internally in our IT environment before we
  take them to our customers. Our IT team is
  leveraging much of what were selling and we
  believe that our IT structure is the best example
  of how to run a very large and growing enterprise.

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Interview with Michael Dell, Dell Inc.- cont.

• Q RFID is one of these new technologies
  currently being tested and evaluated. Are you
  evaluating its riskiness, or have you embraced it
  already ?
• Thats one technology that certainly has a
  significant impact for resellers. Were using it
  already in our manufacturing environment. It
  started at the pallet, but eventually it will go
  to the actual device. And any time you can
  improve the quality of information, the
  opportunity for business process improvement
  follows naturally.

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Interview with Ron Dennis, Chairman and CEO,
McLaren Group
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Interview with Ron Dennis, Chairman and CEO,
McLaren Group

• Q Team Mclaren Mercedes takes Real World
  Awareness into one of the most challenging and
  high- performance sports. How does it work?
• Choosing a high enough frequency to provide a
  reasonable bandwidth (ex microwave) and then
  split the data into many small pieces and send
  these pieces concurrently over a range of finely
  spaced carrier frequencies. Turning this concept
  into reality requires some heavy-duty processing
  in the car and garage and high fidelity in the
  Radio Frequency (RF) electronics.

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Interview with Ron Dennis, Chairman and CEO,
McLaren Group- Cont.

• Q So, how does data from a sensor on the car
  find its way to the race engineer in the garage?
• The measured value from the sensor on the car
  find the sensor is logged in the ECU (Electronic
  Control Unit) and sent in a data stream to the
  transmitter. The DSP (Digital Signal Processor)
  in the transmitter then modulates the data
  (assigns data to different carriers), encodes the
  result, and arranges the carriers into a
  sequence, adding pilot (reference) carriers that
  will be used by the receiver to help line up the
  data correctly at the other end. The data is then
  manipulated further to establish an optimum
  configuration for transmission.

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Interview with Ron Dennis, Chairman and CEO,
McLaren Group- Cont.

• Q Is the data secure?
• The data has a unique identifier embedded in
  every message that is recognized only by the
  teams garage software. The messages are also
  scrambled prior to transmission, providing an
  extra level of security. The decoding of the
  transmitted data stream relies upon the complex
  processing that is done by the DSP in the
  receiver itself, and these receivers are
  available only from McLaren Electronic Systems.
• Q Is there ever perfect coverage?
• It exploits the available bandwidth to send the
  data more than once. The system also knows where
  on the circuit the telemetry works best, so it
  can wait until it is in an area of good coverage
  before resending data recorded in the RF black
  spots.

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Interview with Ron Dennis, Chairman and CEO,
McLaren Group- Cont.

• Q What equipment is needed?
• On the car is a transmitter and antenna. In the
  garage is a receiver, its power supply, and a
  splitter box (that allows receivers for two cars
  to share the one antenna).
• Q How is it licensed?
• Every team must get permission to use specific
  frequencies at a race. Everyone uses telemetry,
  so it is vital that systems use bandwidth
  responsibly and efficiently to ensure that
  everyone fits into the available space. The
  telemetry used by Team McLaren Mercedes operates
  at a frequency of about 1.5 GHz and uses up about
  5 to 6 MHz of bandwidth.