"SCM systems need to evolve to benefit from IoT"

 BusinessToday.in   New Delhi     Last Updated: February 13, 2018  | 18:10 IST

Across the world, companies are adopting Internet of Things (IoT) solutions. Today, the benefits that IoT solutions offer are a key determinant to the financial strength of companies. Among the areas where IoT is being used heavily is supply chain management. Abhimanyu Prabhavalkar, VP, IoT Cloud, Oracle India spoke to Business Today's Anup Jayaram on the way ahead for companies that have adopted IoT solutions and the concurrent benefits.
Excerpts:

How do you see IoT changing the dynamics of ERP & SCM?

Supply chain management systems (SCM) have always focused on minimizing variance to have better control. However, today companies need to redefine their SCM strategies by not only getting products faster, cheaper and of better quality, but by providing the right information to managers so that they can make informed decisions in real time. IoT allows SCM systems to not excessively worry about minimizing variance, but use it to gain competitive advantage.

IoT opens-up a new frontier for ERP systems by which insights from connected devices can be used to make business processes smarter and responsive. One can now track products across the entire lifecycle. However, very few companies have been able to consume IoT data into their ERP and SCM systems due to inherent inflexibility of legacy systems. These systems must evolve to benefit from the data by IoT.

What can a CFO expect from an IoT cloud solution for it to become a powerful tool?

Their expectation is based on the ability to achieve business outcomes. One difficulty with many IoT solutions is the lack of clarity and the ambiguity about return on investment or ROI. Business leaders want clarity on ROI while avoiding cost and time overruns. For them, IoT is about deriving useful analytical insights that can be used to add value to customers. By drawing on connected data, CFOs want to have a complete view of the business and external conditions that may impact the business. They want IoT solutions to help uncover cross-departmental insights that can lead to identifying new revenue streams or assist in optimizing current ones.

What challenges are CFOs facing and how can technology can help overcome it?

CFOs need to think about not just minimising the cost of operation by increasing efficiencies, but also to effect steady revenue growth. With global production and distribution, and increased reliance on outsourced partners, there is increased risk and volatility in the supply chain. The challenge lies in shifting the focus from financial reconciliation to deriving right analytics and business insights from data.

It has been proven that the main reason for unplanned asset write-offs is the inability to locate those assets and almost a quarter of total operating costs are for asset maintenance. Using IoT, businesses can save up to four hours every week for employees to locate, track and maintain assets. Another example is that IoT enabled business applications can enable formation of newer and profitable business models, such as 'Product as a service' which could be recurring revenue streams.

The information collected from IoT enabled supply chains can be turned into value-added services which can be sold for additional revenue generation. IoT and big data analytics enable CFOs to have visibility across the product lifecycle and more importantly into the quality of customer experience which is an important factor for the health of the revenue streams.

In which industries is Oracle witnessing maximum momentum for IoT cloud solutions?

IoT is revolutionizing the way businesses function. Oracle IoT Cloud Applications and IoT Cloud Platform have helped many companies to improve efficiency of operations, sparking innovation to improving their products/services and discovering new business models.

Many customers have transitioned to 'Smart Factory' by integrating robot, machine and process monitoring data with ERP to modify production processes in real-time. They have already started to provide better customer experience through higher supply chain transparency and staying ahead of competition by integrating new technologies. Many customers adopted IoT to modernize their transportation and logistics by having real-time visibility on movement and condition of goods and health of fleet vehicles to enhance customer experience.

Electric and water utilities are using Oracle IoT applications to deliver insights into energy efficiency to customers and track the water usage in a smart manner; while increasing operational efficiency by data-driven diagnostic & predictive maintenance.

Can you talk a few trends that are driving this space?

As enterprises adopt digital strategies, IoT presents key transformative innovations that help modernise the digital supply chain. One is the change in the consumption model from ownership to 'As a service' or 'Pay as you go'. This trend changes the revenue and customer service model for manufacturing companies. With more connected assets, the focus is shifting from reactive or scheduled maintenance, to more of predictive and prescriptive maintenance to minimize unplanned downtime.

Another trend is the change in the service model from that of centrally executed, to more of self-serve and guided service model - whereby customers could avail the online facilities (such as Over the Air configurations etc.) to service products on their own. With sensors attached to products, it's possible to have ears and eyes in real-time on how products are being used by customers.

Considering the hype on IoT, what is Oracle's differentiator?

One survey points out that 60 per cent of projects get stalled because IoT initiatives become more complex than expected. We believe the two reasons for these failures are - excessive focus on 'things' & 'protocols' while not having enough focus on business outcomes. At Oracle, we kept this in mind when we started to build our IoT Cloud products. We firmly believe that "IoTfying" business applications -such as ERP, SCM, CRM and extending them to the physical world - provide the biggest benefits to businesses.

Our is focused on "IoTfying" business applications by extending them to the physical world as well as integrating organisational silos (Design, Manufacturing, Logistics, Transportation, Service) in real-time throughout the digital supply chain.

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