Concrete instructions for digital transformation in businessSupply Chain Management is without question deeply affected by the disruptive forces of a modern organization, positively as well as negatively. Between Advanced Analytics and AI, agile role models and autonomous warehouses a senior executive is often in danger of losing track in the digital jungle.In these exciting times, with their many turning points, h&z aims to share insights around digital supply chains, their application in business and the so vital transformation to successfully prepare organizations for this challenge. This book provides insights into best practices current supply chain and how CSOs apply technologies and advancements. It also makes daring forecasts about how processes and leadership must be designed so that the digital transformation does not fail in its infancy, but leads to a truly agile organization.

Thomas Mrozek is a partner at h&z and responsible for supply chain management. Mrozek's specialization is making supply chains future-proof, and he works with major corporations and medium-sized businesses to make sustainable improvements to service.Daniel Seitz is a partner at h&z and responsible for supply chain management. Seitz is the co-founder of h&z Supply Chain Innovation Forums. He works to make businesses and organizations reach higher levels of performance by developing innovative concepts.Kai-Uwe Gundermann, Senior Expert and Project Leader at h&z, combines expert knowledge with practical experience for supply chain management. His emphasis is on planning, logistics, production and operating model optimization.Matthias Dicke is a consultant and part of Supply Chain Practice at h&z. In his capacity as digital native and a member of Generation Y, he is particularly interested in working with clients to institute new practices along the supply chain.

Overview of InterviewsBring your clients to the digital worldThey expect it from you.Martin Zehnder, COO, PALFINGER AGPeople are the most important success factor in digital projects.Roland Becker, Managing Director, GLX LogisticsThe development of digital supply chains is an evolution rather than a revolution.Peter Dressler, Senior Director Logistics, InfineonTheres no quick fix when it comes to transformation.Jacob Gorm Larsen, Director of Digital Procurement, Maersk GroupDigitalization cannot be avoided.Hartwig Meinen, Managing Director Logistics, Elflein Spedition& Transport GmbHThe goal is to create awareness at management level first.Thorsten Rosenberg, Executive Vice President& Head of Global Supply Chain, BSH Hausgeräte GmbHIt will become increasingly important for people to retrain and learn new skills.Alexander Gisdakis, Former Head of HR Leadership Culture, Siemens AGTheres no hype when it comes to digitalizationits a fundamentally important topic.Erik Wirsing, Vice President Global Innovation, DB SchenkerCulture has come to occupy a more prominent place in todays companies than it used to.Simon Sagmeister, Founder and CEO, The Culture InstituteWe would also like to thank the following people for their active support, contribution, valuable expertise and shared experiences:Simon Sagmeister (The Culture Institute)Professor Doctor of Engineering Guido H. Baltes, University of ConstancePhilipp Smole, Executive Vice President Corporate Incubator PALFINGER 21stDr Christian Rohrdantz, Managing Director, and Johannes Häussler, Data Scientist, Vidatics GmbH Dr Maximilian Hausmann, Senior Manager, Dr Elena Michel, Manager Data Analytics, rpcThe Retail Performance Company AcknowledgementSupply chain management is without question deeply affected by the disruptive forces of a modern organization, positively as well as negatively. Between Advanced Analytics and AI, agile role models and autonomous warehouses a senior executive is often in danger of losing track in the digital jungle.In these exciting times, with their many turning points, h&z aims to share insights around digital supply chains, their application in business and the so vital transformation to successfully prepare organizations for this challenge. This book provides insights into best practices of current supply chain and how CSOs apply technologies and advancements. It also makes daring forecasts about how processes and leadership must be designed so that the digital transformation does not fail in its infancy, but leads to a truly agile organization.Fortunately, we didnt have to do all this on our own. We would like to thank all contributors from leading industry organizations for their opinions and insights about supply chain management. We would also like to thank the entire h&z family, whose patience and dedication made this book possible.Bring your clients to the digital world They expect it from you: Letter from a COODear digital practitioners,We are in the age of digital transformation. Our lifestyles, the way we work, the way we communicate, and the way we shop are changing and they will never be the same again. One implication of these changes is that those of us in the business of supplying products and services need to adapt swiftly to the rapidly changing requirements of our customers otherwise they will look elsewhere.At PALFINGER we are innovating and driving transformation to shape the future for us and our clients to make sure they stay with us. In our new digitalization program, we are pooling our digital competencies as well as adopting new approaches to the products and services we supply, all for the benefit of our customers. In addition, it is our ambition that the digital assistance systems and tools we use not only make work processes easier, improve support, and support cost-effectiveness they also make every day work safer.These are a few examples of our digital solutions, spanning customer solutions to improved operations:TELEMATICS: Collect data in real time and turn it into value-add for our customers which can be for example displayed in a web portal so that fleet managers and users always know the current condition of our equipment. This minimizes unplanned machine downtimes and optimizes spare-part management.FLEET AND OPERATOR MONITORING: We developed digital tools that boost the efficiency and productivity of our fleet loader cranes. The platform shows which machines are in use and where, and how long they have been operating. The system enables site managers to optimize crane use and loading processes and therefore ensures that the fleet is fully connected and all relevant job data is delivered where it is needed while the operator monitor supports the operation in the field or construction site with relevant data.SAFETY SOLUTIONS: The theft of any of our equipment leads to drastic delays and cost increases for the customers using it, which is why we have developed systems to make sure the risk is dramatically decreased. If machines are moved without authorization, the customer is automatically informed. This not only considerably reduces the risk of theft, it also has the added benefit of potentially reducing insurance premiums.In parallel to these customer-focused services, we have launched the first technology-based projects to improve certain internal SCM operations, including:intelligent loading assistant systems for inbound logisticstraceability of production materialconnected production plantsproduction automationpaperless productionand predictive maintenance through fleet monitoringI am happy to share with you here a few corporate and personal lessons I have learnt in the process of PALFINGERs digital transformation. My hope is that this could be instrumental in helping some other companies with their journeys to digitalization.BUILD UP A DIGITAL ECOSYSTEM: With the rapid pace of technological change we see today it is nearly impossible to stay tuned to the most recent and advanced digital solutions on your own. This is why it is important to build up partnership networks within and outside your ecosystem. We founded ­PALFINGER 21st as incubator, which is an umbrella capturing new possibilities, opportunities and ideas. It is supposed to enable unconventional approaches and fresh fields of expertise. It is a distinct business area that faces up to new technologies and promotes radical ideas with the potential to change our business. It is worth considering setting up a similar kind of organization to help your own company. It should aim to filter out the best ideas, those that would work as part of your companys digital transformation, and to identify opportunities early on. We established an environment in which our colleagues can experiment together, make mistakes, learn from them and develop the products and services of tomorrow through a profound understanding of our customers.One more example of an activity that helped to enlarge our ecosystem and bring in new ideas was Austrias largest hackathon in 2017, which the PALFINGER Group hosted1. More than 100 participants, grouped in 24 teams, competed for the chance to further develop their ideas.The participants were challenged to come up with ideas for seven subject areas:virtual reality, augmented reality, mixed realityintelligent loading assistant for inbound logisticspredictive maintenance through fleet monitoringproduction automationdigital assistance systems3D printing within productionand PALFINGER as a serviceThe three winning teams gave short elevator pitches, supported by videos, simulations and prototypes, that aimed to convince the jury about their ideas. They are now developing their solutions together with PALFINGER.GET THE BASICS RIGHT: If you want to make full use of digital potentials, you must first have a strong IT backbone in place. We are currently running an SAP S/4 HANA project in all our major sites (not all our sites have SAP in place) in a concerted attempt to get uniform and consistent data pools across all regions and sites. Before the decision was made to implement this new ERP system, we carried out a large process excellence project to define standardized projects across the board. I am sure that you agree that it does not make a lot of sense to implement a standard ERP system without having harmonized your process landscape beforehand. You can of course use digital solutions to achieve some momentum where a fully integrated data lake is not needed. But at the end of the day, you need a common IT backbone to be able to scale up successful pilots across the board.STICK TO YOUR TRAITS: There are numerous examples out there of companies that have transformed their business models from being pure hardware manufacturers to system integrators, where they have orchestrated the whole digital ecosystem using the digital solutions available to them. I am convinced that this transformation is only possible if you have the financial power to make the necessary long-term investments. It might, however, be a better idea to stick to your traits and focus on niche segments and applications where you can win the battle, and also prepare yourself for the big solution or disruption. We have therefore ensured that our products are connectable and platform-ready so they can exchange data with our partners within our ecosystem whatever platform solutions are used. ACCEPT TWO SPEEDS WITHIN THE COMPANY: Companies with a long history normally have different maturity levels for process and data quality and IT systems between different regions or organizational units. This is also the case with PALFINGER, with 21 acquisitions over the last decade that have operated as independent units. My advice is to go through a three-step approach to fully address these challenges.STEP 1: Bring all units and regions to the same levels in terms of IT systems and process excellence.STEP 2: Foster innovative ideas within the more mature units with an explore, test, and implement approach. Identify proof-of-concept projects and pilots so they are ready to be scaled up once more units and regions have achieved higher levels of process and data management excellence.STEP 3: Once you have closed existing excellence gaps between the units or regions and you have a harmonized process landscape, the next step is to scale up successful pilots. By doing so you can build up a self-financing pro­ject pipeline, where successfully scaled pilots will generate savings to finance other pilots or proof-of-concept projects that are in the pipeline.In general, I would advise you to have a solid framework to support digitalization. Based on the strength of this framework, you can define your ambition level and select individual initiatives from your innovation funnel on the basis of what contribution they will make to achieving the next level of digital maturity.DONT FORGET THE PEOPLE: It is imperative that you have the right culture in place to be successful in digitalization. PALFINGER 21st works as a fully independent start-up but it has strong links to PALFINGER so that ideas and project funnels can be aligned with technological capabilities and the overall corporate strategy. For example, it works as a catalyst, but in close collaboration with the mother company, to bring agile ways of working and design thinking approaches to areas such as products, software development, and digital projects in general. Our new organization strengthened cross-functional collaboration and led to a new office concept. Both, together with the fundamental organizational changes we have made, play a vital role in further developing our corporate culture.MY CONCLUSION: My last piece of advice is that it is important that you find your own way through digital transformation. There is no prescriptive path, no one-size-fits-all solution for digitalization. You should learn from the successes and failures of other companies that have already been through this transformation and when possible, reach out to them and exchange views. Our experience tells us that other companies are open to sharing knowledge. Many companies are more or less in the same situation and depend on external stimuli in such digitally disruptive times.I hope that you find the best approach for your company and develop a strategic vision to match the level of your digital ambition.Best regardsMartin ZehnderCOO PALFINGER AGABOUT MARTIN ZEHNDER: Born in 1967, Martin Zehnder joined the PALFINGER Group in 2005 as Global Manufacturing Manager for the manufacturing plants. Since January 2008, he has been responsible for the worldwide manufacturing and assembly area as a member of the Executive Board responsible for Production, and since September 2017 for Product Line Management, R&D, Purchasing, Safety& Quality and the Executive Projects Process Excellence and Turnkey Solutions.ABOUT PALFINGER GROUP: For many years PALFINGER has been one of the worlds leading manufacturers of innovative lifting solutions for use on commercial vehicles and in the maritime sector. As a multinational group headquartered in Bergheim, Austria, the PALFINGER Group, which has more than 11,000 employees, generated total sales of more than ¤1.6bn in 2018.

ContentsPart 1General Introduction 10To ensure easy reading, we added some icons for you 10Overview of Interviews 11Acknowledgement 12Bring your clients to the digital worldThey expect it from you: Letter from a COO 13Part 2Enablers for Future Supply ChainsBuilding blocks of the Digital Supply Chain 20Introduction 20Key terms and their definitions 21The Digital Supply Chain Pillars 24Digital applications for SCM today and tomorrow 25The year 2025: Advanced Analytics and AI will lead the way 27The author's perspective 28A strategy ties it all together 28Think about people 29Digital evolution along the supply chain 29The nine digital technologies in detail 32Advanced Analytics: Powerful and indispensable 44Introduction 44What is Big Data actually? What is Advanced Analytics? 45Three key enablers build the Foundation for Successful Implementation and Utilization 49Fields of Application of Advanced Analytics in SCM 57Challenges 59Roadmap to successful implementation of Advanced Analytics 60Conclusion 61Artificial Intelligence: Supply Chains will never be the same 63Introduction 63AI, ML, DL: What does it all mean? 64Don't believe the hype (at least not all of it) 68Why AI in SCM? 71How to enable your supply chain 73The drawbacks 77Conclusion 78Call to action: A checklist for practitioners 79Which concepts for the digitalization of the supply chainare relevant for you? 79Part 3Leverage Enablers for Supply Chain FunctionsDigital Procurement: A key driver for performance improvement 84Introduction: More evolution than revolution 84Procurement 4.0:Comprehensive transformation beyond technology 85Triad for success: Structure, Digital Solutionsand People& Skills 87Evolving capabilities and roles:The buyer in the future procurement setup 92Five tips for digital transformation in procurement 100Outlook 100Future Supply Chain planning: Faster and smarter 102Introduction and status quo 102The future of supply chain planning 105The impact on planning functions 111What is required to achive this step into the future? 113How will planning organizations have to change? 115Lessons learned from supply chain leaders 117Roadmap to success 118Logistics today and tomorrow 121Introduction 121Advantages and limits of digitalization 121New business models and value-added services 123Business models with value-added services 123Lessons for Implementation 129Supply Chain visibility: Connecting the dots 135B2C has it allbut why? 135Background: Supply chain visibility isn't new, but it's changing 136The barriers to SC visibility 137The problems caused by a lack of visibility 140Visibility matters 142How visibility creates value 144A recipe for establishing SCM visibility 146Tips 148Call to action: A checklist for practitioners 151Lessons learned: Procurement 151Lessons learned: Supply Chain planning 152Lessons learned: Logistics today and tomorrow 154Lessons learned: Supply Chain visibility 156Part 4Digital Supply Chains in ActionBeing a leader in a Digital Supply Chain 160Introduction 160Activities today vs.