Posts tagged supplychain

How to Negotiate with Powerful Suppliers 

 

Sharing insights from Prashant Dedhia who describes how to navigate in supplier relationship management in a global landscape.

Source: How to Negotiate with Powerful Suppliers in Procurement and Supply Chain

Authored by | Prashant Dedhia
In many industries, the balance of power has dramatically shifted from buyers to suppliers. A classic example comes from the railway industry. In 1900 North America had 35 suppliers of cast rail wheels; railway builders could pick and choose among them. A century later no one looking to build a railroad had this luxury, as only two suppliers remained. Today there is just one, which means that railroad builders have no choice but to accept the supplier’s price.

The shift has come about for various reasons, any or all of which may be in play in a given industry. In some cases, suppliers have eliminated their competitors by driving down costs or developing disruptive technologies. In others, fast-growing demand for inputs has outstripped supply to such a degree that suppliers have been able to charge what they want. In still others, buyers have consolidated demand and forced suppliers’ prices down so far that many suppliers exited the market, giving the remaining few more clout.

Whatever the reason, companies that have gotten into a weak position with suppliers need to approach the situation strategically. They can no longer rely on hard negotiations through their procurement offices. To help with the strategic reappraisal, we’ve developed an analytic framework with four steps, in order of ascending risk. Companies should start by assessing whether they could help the supplier realize value in other contexts. If not, they should consider whether they could change how they buy. They should then look at either acquiring an existing supplier or creating a new one. If all else fails, they must consider playing hardball, which can have a lasting impact on the relationship and is the last resort.

Let’s look at each step in detail.

#1 Bring New Value to Your Supplier

This is the easiest way to redefine your relationship with a powerful supplier. It can rebalance the power equation and turn a purely commercial transaction into a strategic partnership. You can provide new value in several ways. For example:

Be a gateway to new markets.

The quickest and least expensive way to redress a power imbalance is to offer the supplier a market opportunity that is too good to pass up in exchange for price concessions. Finding the right carrot can take some digging. Here’s a case in point: A beverage company was facing annual price hikes from a beverage packaging supplier. It seemed to have no way out; the supplier had patented its manufacturing process, and its pricing was lower than that of other sources.

But as it happened, the buyer was about to enter two large developing markets in which the supplier had tried but failed to gain traction. The procurement manager realized that the company could give the supplier’s products a foothold in those markets. She and her team put their heads together with the marketing team and presented the supplier with an offer that was hard to refuse: In exchange for a 10% price reduction globally, the company would use the supplier’s cans in the new markets.

Reduce the supplier’s risks.

If a company is well placed to help a supplier reduce its price risks, it can demand some concessions in return. For instance, a large chemical company was working with a single, recalcitrant supplier. To produce titanium dioxide it required feedstock manufactured to tight specifications, and only that supplier could meet its needs. When the chemical company tried to increase its order, the supplier claimed to have limited capacity and demanded a price premium.

Given the cyclical nature of the industry, the company surmised that the supplier would jump at the chance to lock in a long-term contract—a commitment other customers lacked the financial strength to make. Procurement worked closely with a team from finance, which created detailed models to determine a price range that would let the supplier generate returns of 15% on invested capital. The supplier agreed to a multiyear contract with prices that would not fluctuate more than 10% annually, and the chemical company got a 10% discount from the original quote.

#2 Change How You Buy

If no opportunities exist to help the supplier create new value, your next best alternative is to change your pattern of demand. Because this strategy can have implications for other parts of your organization, it requires close collaboration with any functions that could be affected. A company can change its demand patterns in three ways, all of which may require intensive data collection and analysis.

Consolidate purchase orders.

This is the least-risky option and the easiest one to implement. It may involve little more than acting on an internal audit of procurement data.

At one aircraft manufacturer, various business units were independently purchasing components from a large supplier, which was doubling or tripling the prices it had originally quoted. The supplier was reaping gross margins of about 20%, whereas the aircraft manufacturers were only 10%. And deliveries were unreliable, which drove up the manufacturer’s overall costs. Individually the business units lacked the power to force a change in behavior. But the unit CEOs got together, consolidated their spending data, and went to the supplier’s top executive with a threat to suspend all purchases unless changes were made. The supplier became far more responsive, cutting prices so that its margins were also about 10% and improving the timeliness of deliveries. Small companies that don’t order through multiple units can form purchase consortiums with other firms in their industry. In 2008 an oligopoly of four suppliers controlled the ATM market in one European country. To counterbalance the group’s power, four banks created a purchasing consortium for ATM parts and maintenance, ultimately cutting their ATM costs by 25%. To succeed, consortiums must align their members’ interests and have the right governance in place. To avoid raising antitrust issues, they should not be too powerful themselves, which means that this approach is best suited to relatively fragmented, competitive industries.

Rethink purchasing bundles.

If a company cannot create large purchasing bundles within product categories or geographies, it should consider purchasing across them. One telecom company dealing with a powerful supplier for a particular component gained price concessions by pointing out that it also bought other components from that supplier—ones it could easily obtain elsewhere. Similarly, a global chemical manufacturer accustomed to buying a key ingredient from two suppliers, one in the United States and one in Europe (and each with a monopoly in its region), announced that it was considering consolidating to a single supplier and began a qualification process to choose which one. By awarding a single global contract, it would have given the winner a toehold in the loser’s monopoly territory. Faced with the threat of competition, each supplier agreed to a 10% discount. At other times the right strategy is to pick apart your existing bundles; this may enable you to create competition among suppliers where none previously existed. When a consumer goods company decided to renegotiate its contract with a powerful information provider that offered an integrated global product and services package, the procurement team quickly realized that it needed to differentiate between data (for which the supplier held a monopoly in some geographies) and analytic services (for which the market was generally competitive). It also decided to negotiate at a country level—enabling suppliers that could cover some but not all geographies to participate. As a result, it obtained savings of 10% on data and 20% on analytics.

Decrease purchase volume.

The third way to alter demand is to shift volume away from a powerful supplier, ideally by switching to a substitute or lower-cost product. The mere threat of this can increase the supplier’s openness to negotiation—but the buyer’s organization needs to stand behind its negotiation team and be willing to revisit what it purchases. Determined to reduce IT costs, one retailer we advised determined that most of its staff members did not need to create documents—they needed only to read them. It was able to eliminate 75% of its office software licenses, replacing them with a lower-cost, read-only alternative.

#3 Create a New Supplier

If options for changing your company’s demand profile aren’t available, you should next explore creating a completely new supply source. Like the first two strategies, this ultimately shifts demand away from powerful suppliers, but it tackles the other side of the equation. It is most likely to be necessary for industries where price negotiations have gone so far as to drive most suppliers out of business, effectively giving the survivors a monopoly. Of course, such drastic action risks alienating your supplier completely and may change your company’s business model. It will also alter the competitive dynamics and perhaps even the structure of your supplier’s industry and your own. For these reasons, it is a risky proposition, but if well executed, it can transform your prospects. There are essentially two options:

Bring in a supplier from an adjacent market.

The easiest way to create a new supplier is to bring in a competitor from an adjacent geography or industry, one that might not otherwise have entered the market. One major airline reduced its food costs and improved quality by enticing a European catering company to enter the U.S. airline-catering market, which had been controlled by two well-entrenched suppliers that were reluctant to lower prices. The new entrant had an innovative, off-premises production model that enabled it to offer higher-quality food at significantly lower prices in exchange for longer-term contracts.

Because the airline would need to give the new supplier a multiyear agreement, the procurement team shared its plans with the airline’s chief operating officer, its head of airport operations, and its head of catering. After aligning these key functions on the strategy, the airline announced that it had awarded its contract at a major U.S. hub to the new entrant. After losing that share of business, one of the established suppliers replaced its management team and took a more collaborative approach with the airline.

Vertically integrate.

If no plausible new suppliers are to hand, consider making yourself the new supplier by investing in the requisite assets and capabilities, possibly in a strategic partnership or joint venture with a company that has some of those assets and capabilities. If you’re lucky, a credible threat to take this action will be sufficient to shift the balance of power, as was the case with a paper company that relied on a regulated utility for electricity.

Unable to secure a better rate from the utility, the company began planning to build its own power plant—and it made sure the utility knew about its plans. It spent nine months finding a location, securing pipeline capacity, getting permits, and partnering with a dryer company that wanted to use the steam that the plant would generate. The strategy worked—the utility agreed to reduce its rates by 40% to prevent the company from building the plant. The danger with this approach, of course, is that your threat to vertically integrate may be called. So before embarking on this option, make sure that the new venture could deliver value that exceeds the investment costs and compensates for the added management attention and the hidden risks and challenges that might arise.

#4 Play Hardball

If everything else fails, canceling all your orders, excluding the supplier from future business, or threatening litigation—or some combination of those actions—may be the only answer, short of going out of business. These are truly tactics of last resort.

A global financial services firm had its back against the wall because it had to reduce costs by $3 billion. To cut IT infrastructure costs, it asked its major hardware supplier for a 10% price decrease. When the supplier refused, the firm’s chief information officer contacted the supplier’s CEO to say that all the supplier’s projects in the company were suspended, effective immediately. Within an hour the supplier was deactivated in the payment system, and the procurement, IT, and development teams were notified that they were no longer to work with it. Faced with the costly loss of existing and upcoming projects, the supplier quickly agreed to the price cut.

Then there’s litigation. In the early 2000s a security company that provided cash transportation services to banks decided to increase its rates by 40%. Because it controlled 70% of the market, its customers had few alternatives. But one bank that faced significant margin pressures wasn’t ready to accept the price hike. To better understand what was driving the increase, it asked to review the security company’s financial statements, which revealed only a 10% cost increase—nothing that would justify the drastic hike.

If all else fails, canceling your orders, suspending future business, or threatening litigation may be the only answer.

The bank took a two-pronged approach. Its chief operating officer met with the COO of the security company to explain that the increase was unacceptable and would undermine their relationship. And the procurement team threatened to join forces with other financial institutions and bring the matter to the attention of the national authorities in charge of restricting monopolies. The security company backed down and instituted a price increase more in line with its cost increase.

As we’ve shown, companies negotiating with powerful suppliers have plenty of ways to redefine the relationship. Whichever option they choose, they need a clear understanding of the problem, an ability to work on it across functions, a willingness to think outside the box, and strong analytical capabilities that can reveal the enterprisewide picture and generate useful insights. It’s also important that senior executives commit to strategic rather than tactical moves. With these elements in place, what had seemed an impossible negotiating task becomes one that is merely challenging.

Author Credit: Petros Paranikas, Grace Puma Whiteford, Bob Tevelson, Dan Belz

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Operations or Supply Chain Excellence?

I’m sharing great insights from Innovation Enterprise via Micha Veen who explains simple tips to master supply chain excellence pinned Operational Innovation.

Source: A Refreshing Innovative Approach To Supply Chain Excellence | Articles | Chief Supply Chain Officer | Innovation Enterprise 

Operational or Supply Chain Excellence has been one of the buzzwords that is often heard around senior Supply Chain Execs. However, is excellence the right terminology, or do we need to rename ‘excellence’?

Due to globalization, continuous creation of new small ‘global’ businesses that can compete with established organizations, leading supply chain organizations have started to look beyond ‘operational excellence’, best-in-class, benchmark data and industry metrics, towards using a combination of their own internal and tailored external relevant data to continuously review, assess, and adopt evolving leading-edge processes, technologies and behaviors to stay ahead in this ever increasing competitive business landscape.

This new approach, named Operational Innovation, has become an effective methodology to deliver transformational impact through the following elements…

Innovative solution design

Instead of spending a lot of time and effort in designing the optimal operational and supply chain solutions, successful organizations focus on creating a solid solution foundation, which is constantly reviewed and improved with cross functional teams to deliver cross-divisional, fit-for-purpose solutions.

Close collaboration

Instead of phased hand-offs between subject matter experts, technology specialists, operational teams, sales, finance, etc., leading innovative supply chain solutions should be created through continuous close collaboration with all impacted process participants at every stage of the supply chain journey.

Use of Robotics and Blockchain Technologies

A recent article (How will manufacturing robotics change in 2017) describes how robotics will change the industry as early as 2017. The article describes how by 2019, 35% of leading companies in logistics, health, utilities, and resources will start implementing robotics to automate their operations. Additionally, supply chain blockchain technology has started to be utilized in supply chain organizations to deliver additional benefits. A recent article describes clearly the impact that Blockchain has on Supply Chain.

End-to-end Solution integration

The key to delivering true Supply Chain Innovation is the manner in which organizations integrate end-to-end processes, technologies, data, and internal vs. external organizational units. Due to the external focus on innovative technologies, many organizations are still only focused on technology integration, but leading businesses have started to explore how different cloud solutions can be integrated across their partners and customers, creating hybrid learning organizational models which go beyond the traditional joint venture organization models.

Continuously generate value

In supply chains it’s crucial to continuously generate value. Through the use of innovative technologies, solution partnerships, operational models, etc. leading supply chain organizations are known to continuously review, adapt and improve their supply chain environment to deliver operational innovation. It allows supply chains to continuously deliver ‘new and improved’ excellence.

In today’s world, Supply Chain Excellence is not enough. There is no ‘end-station’. It’s critical for supply chain organizations to adopt an ongoing innovation journey, which requires people with the right mindset, experience levels, attitude and curiosity to deliver supply chain innovation….

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Blockchain: The Best Way to Decentralize Supply Chains

 

This is a recent article written by a brilliant colleague Harry Goodnight. Great insights and perspectives on blockchain technology and why decentralization is a good thing for modern supply chains.

Source: http://www.supplychaindive.com/news/blockchain-Sweetbridge-decentralization-supply-chain-management/504362/

In business and economics, decentralization often refers to the ability to participate in a market and exchange value between peers without the interference of a third-party intermediary who most likely controls and restricts barriers of entry. As Ethereum co-founder Vitalik Buterin explains in his blog post “The Meaning of Decentralization,” blockchain is politically and architecturally decentralized, meaning no entity one controls it and there’s no central point of failure in its infrastructure. In this way, a decentralized supply chain would allow for a frictionless vehicle of business-to-business value exchange amongst even the smallest players in the industry.

Decentralization is defined as the transfer of power away from a central location or authority. As a concept, it is not new; as a business model, however, it is a powerful idea. Some sociologists claim that decentralization and centralization theories have actually been occurring in cycles for the last 4,000 years, causing the rise and subsequent fall of ruling states and empires. Throughout history, the core theory behind decentralization has remained the same: dispersing power from authorities and empowering smaller, individual entities with the ability to act in their own self-interest.

Why decentralization is necessary for modern supply chains

This is especially necessary in the supply chain industry, which has historically suffered from a number of issues that hinder its efficiency. Its main roadblock is that current supply chains are unable to become agile, which poses a significant problem in a market in which they must be able to change their configurations quickly and continually to meet the constantly-changing dynamics of supply and demand. Another major disadvantage is that methods of communication tend to vary greatly, with some companies still relying on manual paperwork. As a result, data storage becomes locked away in in proprietary systems that don’t allow for collaboration.

Supply chain companies also tend to face cultural and organizational issues, such as executing operating plans due to corporate goals, board restrictions and the competitive nature of the market. Consequently, companies have revoked social contracts, mistreated skilled laborers and underutilized their professional talent assets.

This mismanagement has serious financial consequences: for instance, $4.2 trillion is locked up in net working capital in today’s supply chains. By allowing today’s virtual supply chains to break from the company-centric, server-based environments in which they currently find themselves, they will become less brittle, more scalable and fully leverage the underutilized skills and assets available in modern-day business networks. Even a 1% improvement in Invoice-to-Cash cycle times would immediately return about $42 billion in cash to operations.

How can blockchain remedy the issues of centralization in supply chains?

When looking at its positive implications, blockchain is the most logical next step for supply chain managers and logistics providers. Blockchain was brought to the mainstream through cryptocurrencies like bitcoin and Ethereum. It creates an unchangeable digital ledger that provides a record of financial transactions in chronological order. This technology has been increasingly adapted to address gaping deficiencies in other fields, from education to voting to real estate. Through blockchain, massive networks of decentralized autonomous individuals and organizations can grow and operate seamlessly within a decentralized, distributed operating platform.

Blockchain also provides an efficient and viable solutions to the aforementioned hurdles that are restricting today’s supply chain. Specifically, it offers opportunities to synchronize processes that occur within supply networks, resulting in reduced Cost-of-Goods-Sold (COGS) and more cash freed from working capital.

The solution to many of these recurring issues in supply chain primarily involves people. By creating networks of skilled individuals and decentralized autonomous organizations, immense value can be brought to companies, supply chains, and customers. These networks align economic incentives so that everyone prospers, based on their contributions of time, skill, and intellectual property. These contributions are monitored and administered through outcome-based smart contracts on the blockchain. This new vision of decentralization has the potential to radically transform the supply chain space.

Guiding Your Team Through Sustainability

I’m sharing insights from Jennifer Woofter, chief-consultant at Strategic Sustainability Consulting. Interesting perspective in addressing the management of change which can often be much larger than the green-change initiative.

Source: Guiding Your Team Through Change, Sustainably — Strategic Sustainability Consulting

Change can be difficult. Whether it’s a shift at work or in your personal life, embracing change can be a challenging issue for many people. For companies moving toward greening the workplace, it’s key that they remember that even small changes can result in small stressors to employees. It’s important to recognize the added stress and think from employees’ perspectives during the transition. Organizations that are working to be more adaptive and innovative may find that the resulting culture change becomes a huge roadblock to their efforts as employees resist or respond to the stress.

Innovation and change require leaders and employees alike to embrace new behaviors, which may initially seem antithetical to existing corporate culture. When making such dramatic shifts, it’s vital that leadership understands it’s impossible to dictate optimism, trust, conviction or creativity and consider the needs of everyone in the company.

With that in mind, the entire team should work together to establish a joint purpose and utilize internal efforts to make sure everyone on the team is onboard before changes begin.

One of the best ways to motivate employees, particularly during a transition is praise. Praising people not only motivates them, it also encourages and inspires them to do even better.

If you are helping to lead a cultural movement toward a greener workplace, consider these tips:

1. Frame the issue in a way that will excite your employees and motivate them to action. In order to engage your team’s commitment you have to inspire a desire and responsibility to change. A good organizational purpose calls for the pursuit of greatness in service of others and asks employees to be driven by more than simply personal gain.

2. Demonstrate quick wins that can show how actions toward change are working. Instead of simply declaring the culture shifts you want to see, highlight examples of the actions you expect to see more of in the company.

3. Create safe havens. If you intend for individual to act differently, you might find that changing their surroundings in order to support new behaviors to be incredibly helpful. Outposts and labs are often built as a way to give people a safe space to embrace new beliefs.

4. Embrace symbols that will help create a feeling of solidarity and demarcate who your employees are and what they stand for to the outside world. Symbols can help define the boundary between “us” and “them” for movements and can be as simple as a T-shirt, bumper sticker, or button supporting a general cause, or more elaborate like a new corporate brand identity. Internally and externally, such an act can reinforce a message of unity and commitment — that an entire company stands together in pursuit of a singular purpose.

It’s important to remember that even with the best guidelines, and the best intentions, change isn’t easy. While harmony tends to be most people’s preferred environment at work, a moderate amount of friction should be considered positive during a transition. Creating a culture shift with a complete absence of friction probably means that very little has actually changed. So explore the places where change faces resistance in your office. These areas may indicate where the dominant organizational design and culture need to evolve.

And culture change can only happen when people take action. While articulating a mission and changing company structures are important, keep on tackling the tough issues after you’ve shown people the change you want to see.

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8 Fundamentals for Achieving AI Success in the Supply Chain

Sharing point of view from  Greg Brady is the CEO and founder of One Network Enterprises, a global provider of a secure and scalable multi-party business network. For more information, contact the author at gbrady@onenetwork.com or visit http://www.onenetwork.com. Enjoy!

Source: 8 Fundamentals for Achieving AI Success in the Supply Chain – Supply Chain Management Review

There’s a lot of buzz and hype about artificial intelligence (AI) in supply chain management (SCM). That’s understandable given its potential. AI can offer a huge benefit to supply chain managers, but only if it is based on solid fundamentals that take into account the diverse and dynamic nature of today’s modern supply chains. More importantly, it needs to consider the availability of the timely and accurate data needed to make smart decisions.

Before addressing what AI can do, it is critical to first understand what it is. In the simplest terms, AI is intelligence exhibited by machines, or when machines mimic or can replace intelligent human behavior, such as problem solving or learning. In essence, AI is machines making decisions whether that is deciding which chess piece to move where, or how to adjust an order forecast based on changing demand.

Despite its benefits, when looked at through the lens of a supply chain executive, AI is relatively useless unless it’s able to add value to support better decision-making.

Why AI Hasn’t Delivered in SCM

In the race to use AI, many companies have made attempts to implement it, but the results have been disappointing. This is because typical SCM systems today:

  • Require armies of expensive planners
  • Run complex engines at each step in the process and at each node in the supply network
  • Are usually in conflict with other functions and/or partners
  • Miss huge opportunities hidden in the network because they are locally sub optimized
  • Work on stale data and thus promote bad decisions
  • Use dumbed-down, over-simplified problem models that do not relate to the real world

These SCM limitations have severely suppressed return on AI investments. For example, typical Retail/CPG supply chains still carry 60-75 days of inventory. The average service level in the store is about 96 percent, with promoted item service levels much lower at the 80 percent range. The Casual Dining segment on the other hand, carries around 12 – 15 days of inventory with relatively high waste and high cost-of-goods-sold. So, unless AI can make a significant impact on these metrics, it’s simply not delivering.

Key Requirements for AI in Supply Chain Management

Having worked with hundreds of supply chain executives, on dozens of software implementations, I’ve studied the AI issue a lot. What I have found is there are eight criteria that are required for a successful AI implementation. Miss one of these and you’ll be lucky to achieve mediocre outcomes, but when you meet them all, you can indeed achieve world class results. For the AI solution to offer optimal value in supply chain, it important to ensure the following:

1. Access to Real-Time Data 
To improve on traditional enterprise systems with older batch planning systems, new AI systems must eliminate the stale data problem. Most supply chains today attempt to execute plans using data that is days old, but this results in poor decision-making that sub-optimizes the supply chain, or requires manual user intervention to address. Without real-time information, an AI tool is just making bad decisions faster.

2. Access to Community (Multi-Party) Data 
The ability to access data outside of the enterprise or, more importantly, receive permission to see the data that is relevant to your trading community, must be made available to any type of AI, Deep Learning or Machine Learning algorithms.

Unless the AI tool can see the forward-most demand and downstream supply, and all relevant constraints and capacities in the supply chain, the results will be no better than that of a traditional planning system. Unfortunately, this lack of visibility and access to real-time, community data is the norm in over 99 percent of all supply chains. Needless to say, this must change for an AI tool to be successful.

3. Support for Network-Wide Objective Functions
The objective function, or primary goal, of the AI engine must be consumer service level at lowest possible cost. This is because the end-consumer is the only consumer of true finished goods products. If we ignore this fact, trading partners will not get the full value that comes from optimizing service levels and cost to serve, which is obviously important as increased consumer sell-through drives value for everyone.
A further enrichment of the decision algorithm should support enterprise level cross-customer allocation to address product scarcity issues and individual enterprise business policies. Thus, AI solutions must support global consumer-driven objectives even when faced with constraints within the supply chain.

4. Decision Process Must Be Incremental and Consider the Cost of Change
Re-planning and changing execution plans across a networked community in real time can create nervousness in the community. Constant change without weighing the cost of the change creates more costs than savings and reduces the ability to effectively execute. An AI tool must consider trade-offs in terms of cost of change against incremental benefits when making decisions.

5. Decision Process Must Be Continuous, Self-Learning and Self-Monitoring
Data in a multi-party, real-time network is always changing. Variability and latency is a recurring problem, and execution efficiency varies constantly. The AI system must be looking at the problem continuously, not just periodically, and should learn as it goes on how to best set its own policies to fine tune its abilities. Part of the learning process is to measure the effectiveness “analytics,” then apply what it has learned.

6. AI Engines Must Be Autonomous Decision-Making Engines
Significant value can only be achieved if the algorithm can not only make intelligent decisions but can also execute them. Furthermore, they need to execute not just within the enterprise but where appropriate, across trading partners. This requires your AI system and the underlying execution system to support multi-party execution workflows.

7. AI Engines Must Be Highly Scalable
For the supply chain to be optimized across an entire networked community of consumers to suppliers, the system must be able to process huge volumes of data very quickly. Large community supply chains can have millions if not hundreds of millions of stocking locations. AI solutions must be able to make smart decisions, fast, and on a massive scale.

8. Must Have a Way for Users to Engage with the System
AI should not operate in a “black box.” The UI must give users visibility to decision criteria, propagation impact, and enable them to understand issues that the AI system cannot solve. The users, regardless of type, must to be able to monitor and provide additional input to override AI decisions when necessary. However, the AI system must drive the system itself and only engage the user on an exception basis, or allow the user to add new information the AI may not know at the request of the user.

AI in the Real World Today

Sounds good in theory, but how does it work out in practice? Now that we have addressed the key fundamentals, let’s look at how some actual companies have achieved applying these criteria.

For instance, one of the major problems in Casual Dining is anticipating and meeting demand for the restaurants, corporate owned or franchised. This is especially important during Limited Time Offers (LTOs). Using the eight criteria outlined above, a global, casual dining company connected to a real-time, multi-party network, and was able to rapidly achieve their objective function – excellent customer service at the lowest cost.

The company constantly monitors Point-of-Sale (POS) data, and is using AI agents to recognize and predict consumption patterns of consumers. In addition, intelligent AI agents create the demand forecast and then compare it to the actual demand in real-time. When there is significant deviation, the agents make the decision to adjust the forecast, and additional agents adjust replenishments. They then propagate those adjustments across the supply chain to trading partners in real time at all times considering the cost of change and the propagation impact.

This drove a remarkable improvement in forecast accuracy. During promotions, the company achieved over 85 percent forecast accuracy at the store level and even higher at the DC level. This represents at least a 25 percent improvement over traditional approaches.

Intelligent agents also optimize restaurant orders autonomously by recognizing the impact of projected restaurant traffic trends and impact on LTOs and therefore the orders. The system runs on an exception basis but allows the managers to review the decision criteria and override orders where the managers may have local information such as inventory issues or local store traffic issues. This has resulted in much faster order placement and order accuracy of over 82 percent, which reduces both inventory and waste dramatically while increasing service levels to the consumer. This is a significant improvement to all other known implementations in the marketplace.

Because the algorithms are highly scalable, they are processing over 15 million stocking locations continuously throughout the day.

Prior to the AI-based, multi-party execution system, restaurant managers had to interact with nine different ordering systems and manually create their own orders based on general guidelines, rules of thumb, and spreadsheet-based or manual calculations.

With AI implemented on a sound foundation, this company can now anticipate, manage, and serve demand at the lowest possible cost. During LTO’s, when demand fluctuations would overwhelm a restaurant manager, intelligent agents monitor demand in real time, and autonomously orchestrate the supply chain to align supply with demand. Thus, the company can meet its goal and maintain high service levels while reducing cost to serve.

These are not isolated results. Also in the food marketplace, another CPG-Retail implementation achieved 99 percent in-stock, in-store, with 25 days of supply (DOS) across the supply chain.  The inventory results are less than half the standard DOS in this marketplace and 3 percent points higher in in-store in-stocks
AI-based solutions are being deployed at two large automotive tier one suppliers with results ranging from 16 – 40 percent reductions in inventory as well as significant reductions in expedited freight costs.

AI Delivers Value in SCM Today

As you can see, laying the proper groundwork for AI pays huge dividends. There’s no doubt that AI offers even greater promise in the future, but, as these results show, there are significant benefits and dramatic results waiting for companies that focus on the fundamentals and put AI to use today.

The beauty of AI-based solutions is that they learn and drive continuous improvement over time. They get more precise and sophisticated as they gather more data and more experience. The sooner you start, the better the results you’ll see in future, and the further ahead you will be. With the right AI solution in place, you can outpace your competitors today, and be well positioned for reaping even bigger rewards of AI’s promise tomorrow. ~Greg Brady

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2017 Trends in Corporate Sustainability 

I’m sharing insights from Amy Augustine. She elaborates on trends in sustainability, particularly clean-energy policy. Enjoy!

Source: 7 Trends That Will Drive Corporate Sustainability in 2017

As we confront a new political climate that is inspiring both uncertainty and rising citizen action, I am more convinced than ever that business must play a critical role in achieving a sustainable, equitable and clean-energy future. Bold leadership, as well as individual and collective action from influential companies and investors, is critical to ensure continued progress in achieving the ambitions of the historic Paris Climate Agreement and the U.N. Sustainable Development Goals.

Fortunately, companies we engage with here at Ceres continue to demonstrate that sustainability is not just good for the bottom line; it is the bottom line. Despite backward steps in Washington, there is unprecedented clarity in the business community – especially from the Fortune 100s – that building a healthy, low-carbon economy is irresistible and irreversible. Examples of this are popping up everywhere, although still not at the pace and scale we need.

These seven key corporate trends are ready for primetime and will be critically important in advancing our sustainability goals, no matter the political winds in Washington.

Read More

1. Corporate support for clean-energy policy is accelerating

Corporate energy buyers want renewable energy – and not just to help them meet their own greenhouse gas reduction goals. Renewable energy prices are increasingly cost-competitive in many parts of the country, and they remove the long-term risks associated with fossil fuel energy price volatility.

More than 900 companies and investors are calling on President Trump and Congress to keep the U.S. in the Paris Climate Agreement and to support low-carbon policies in the U.S. And nearly 100 global companies have signed on to to the RE100 initiative, a commitment to source all of their energy from renewables.

Lacking a national carbon mitigation strategy, states and cities will continue to be the platforms on which we’ll see meaningful clean-energy progress. In Michigan, Ohio and Virginia, among other states, companies are helping to shape policies that strengthen and increase access to renewable energy, leading to more clean-energy investment and jobs in those states.

Stay tuned for our upcoming Power Forward report this spring documenting these trends among Fortune 500 companies.

2. More investors expect companies to disclose climate-related risks and opportunities

The Task Force on Climate-Related Disclosures (TCFD) – whose leadership includes Ceres member companies such as Bloomberg LP and JPMorgan Chase – recently published a specific guidance on how companies should evaluate and disclose climate risks in financial filings.

Investors and global stock exchanges are taking notice, especially in regard to how carbon-intensive companies are analyzing business impacts under scenarios where carbon pollution is reduced at levels that would limit global warming to 2-degrees Celsius or less – the goal of the Paris Climate Agreement.

More than ever, investors are aiming these questions at energy-intensive companies like ExxonMobil and Chevron, which are already struggling financially as global oil demand is waning.

3. Companies are advancing human rights reporting and performance

Companies are facing unprecedented scrutiny on their human rights performance and reporting. In 2015, the nonprofit group Shift that helps organizations to implement the U.N. Guiding Principles on Business and Human Rights (UNGPs), developed the UNGP reporting framework, which companies such as Ericsson, Nestle, and Unilever are already utilizing to strengthen human rights reporting and performance.

Ceres is now collaborating with Shift to advance corporate adoption and implementation of the framework to drive improved human rights performance across direct operations and global supply chains.

4. Water risks are rising on the investor agenda

Water crises such as prolonged droughts and extreme precipitation events – been in California, lately? – were again among the top five global impact risks in an annual report from the World Economic Forum.

Increasingly, companies operating in water-stressed regions are proactively taking action to conserve and protect water sources. General Mills, Gap and PepsiCo, are among a growing cadre of companies engaging with California policymakers on the urgency for stronger water management policies in this water-starved state.

5. Competence on sustainability is becoming a measure of board effectiveness

Corporate boards have a key authority and responsibility to boost corporate attention on long-term sustainability risks like climate change. Large investors are increasingly focused on the role board members can play on sustainability. U.S. pension funds CalPERSand CalSTRS, for example, both recently updated their governance principles to explicitly request that company boards have stronger experience and expertise on climate risk management.

In the coming months, investors and other stakeholders will be looking to engage with key governance experts within companies on this topic, including corporate secretaries and general counsel.

6. SDGs will be a bigger driver of strategy and action

In 2015, more than 190 world leaders committed to 17 Sustainable Development Goals (SDGs) aimed at ending extreme poverty, eliminating longstanding inequalities and fighting climate change.

Worldwide momentum behind these internationally supported goals continues to gain strength, and at the upcoming Ceres Conference we will hear from Novozymes, BASF and Intel about how they are aligning their commitments and business strategies with this global vision.

7. Sustainable sourcing is becoming the new norm

Access to reliable, affordable supplies of key inputs is threatened by climate change, water scarcity risks, and the use of unethical practices like deforestation and forced labor. Agricultural supply chains are feeling some of the biggest pressures, leading to stronger action by investors and companies themselves to push for strategies to assess and manage these risks.

This spring, Ceres will release an interactive tool called Engage the Chain to help investors and companies better understand wide-ranging agricultural commodity risks.

No doubt, company actions on all of these fronts will continue to evolve – and, hopefully, accelerate. Such leadership is more essential than ever.

The Amazon vs. Retail Battle

 

Source: The Amazon vs. retail battle: Explained 

It’s no secret that Amazon is revolutionizing the retail industry. But what does that actually mean?

Which retailer is Amazon targeting now? Amazon newest target isn’t a retail chain at all — it’s your local convenience store.The company rolled out a new service today called Amazon Instant Pickup, which lets customers order basics like chips, soda and toothpaste. You can then pick them up from an Amazon locker in just two minutes.

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Isn’t mimicry the sincerest form of flattery? Not if you’re a retailer that wants to stay in business. Just ask Dick’s Sporting Goods (DKS). Dick’s earnings report disappointed Wall Street on Tuesday. The retailer lowered its full-year profit forecast today because of “a challenging retail environment.” Its stock fell more than 20%. Sound familiar? Last month, Amazon filed a patent to launch a competing meal-kit delivery service. Blue Apron’s shares plunged 11% following the news. And grocery stocks got clobbered after Amazon announced plans to buy Whole Foods (WFM) for $13.7 billion back in June.

Is Amazon a death sentence for traditional retailers? Not necessarily. Retailers like Home Depot (HD) are surviving by selling things you can’t buy on Amazon. Today, Home Depot reported record sales last quarter and bolstered its outlook for 2017. Home owners and professional builders alike still prefer to go to stores to test out home products, especially big ticket items like flooring and appliances.

The world’s most valuable resource is DATA

 

Source: The world’s most valuable resource is no longer oil, but data

A NEW commodity spawns a lucrative, fast-growing industry, prompting antitrust regulators to step in to restrain those who control its flow. A century ago, the resource in question was oil. Now similar concerns are being raised by the giants that deal in data, the oil of the digital era. These titans—Alphabet (Google’s parent company), Amazon, Apple, Facebook and Microsoft—look unstoppable. They are the five most valuable listed firms in the world. Their profits are surging: they collectively racked up over $25bn in net profit in the first quarter of 2017. Amazon captures half of all dollars spent online in America. Google and Facebook accounted for almost all the revenue growth in digital advertising in America last year.

Such dominance has prompted calls for the tech giants to be broken up, as Standard Oil was in the early 20th century. This newspaper has argued against such drastic action in the past. Size alone is not a crime. The giants’ success has benefited consumers. Few want to live without Google’s search engine, Amazon’s one-day delivery or Facebook’s newsfeed. Nor do these firms raise the alarm when standard antitrust tests are applied. Far from gouging consumers, many of their services are free (users pay, in effect, by handing over yet more data). Take account of offline rivals, and their market shares look less worrying. And the emergence of upstarts like Snapchat suggests that new entrants can still make waves.

But there is cause for concern. Internet companies’ control of data gives them enormous power. Old ways of thinking about competition, devised in the era of oil, look outdated in what has come to be called the “data economy”. A new approach is needed.

Quantity has a quality all its own

What has changed? Smartphones and the internet have made data abundant, ubiquitous and far more valuable. Whether you are going for a run, watching TV or even just sitting in traffic, virtually every activity creates a digital trace—more raw material for the data distilleries. As devices from watches to cars connect to the internet, the volume is increasing: some estimate that a self-driving car will generate 100 gigabytes per second. Meanwhile, artificial-intelligence (AI) techniques such as machine learning extract more value from data. Algorithms can predict when a customer is ready to buy, a jet-engine needs servicing or a person is at risk of a disease. Industrial giants such as GE and Siemens now sell themselves as data firms.

This abundance of data changes the nature of competition. Technology giants have always benefited from network effects: the more users Facebook signs up, the more attractive signing up becomes for others. With data there are extra network effects. By collecting more data, a firm has more scope to improve its products, which attracts more users, generating even more data, and so on. The more data Tesla gathers from its self-driving cars, the better it can make them at driving themselves—part of the reason the firm, which sold only 25,000 cars in the first quarter, is now worth more than GM, which sold 2.3m. Vast pools of data can thus act as protective moats.

Access to data also protects companies from rivals in another way. The case for being sanguine about competition in the tech industry rests on the potential for incumbents to be blindsided by a startup in a garage or an unexpected technological shift. But both are less likely in the data age. The giants’ surveillance systems span the entire economy: Google can see what people search for, Facebook what they share, Amazon what they buy. They own app stores and operating systems, and rent out computing power to startups. They have a “God’s eye view” of activities in their own markets and beyond. They can see when a new product or service gains traction, allowing them to copy it or simply buy the upstart before it becomes too great a threat. Many think Facebook’s $22bn purchase in 2014 of WhatsApp, a messaging app with fewer than 60 employees, falls into this category of “shoot-out acquisitions” that eliminate potential rivals. By providing barriers to entry and early-warning systems, data can stifle competition.

Who ya gonna call, trustbusters?

The nature of data makes the antitrust remedies of the past less useful. Breaking up a firm like Google into five Googlets would not stop network effects from reasserting themselves: in time, one of them would become dominant again. A radical rethink is required—and as the outlines of a new approach start to become apparent, two ideas stand out.

The first is that antitrust authorities need to move from the industrial era into the 21st century. When considering a merger, for example, they have traditionally used size to determine when to intervene. They now need to take into account the extent of firms’ data assets when assessing the impact of deals. The purchase price could also be a signal that an incumbent is buying a nascent threat. On these measures, Facebook’s willingness to pay so much for WhatsApp, which had no revenue to speak of, would have raised red flags. Trustbusters must also become more data-savvy in their analysis of market dynamics, for example by using simulations to hunt for algorithms colluding over prices or to determine how best to promote competition.

The second principle is to loosen the grip that providers of online services have over data and give more control to those who supply them. More transparency would help: companies could be forced to reveal to consumers what information they hold and how much money they make from it. Governments could encourage the emergence of new services by opening up more of their own data vaults or managing crucial parts of the data economy as public infrastructure, as India does with its digital-identity system, Aadhaar. They could also mandate the sharing of certain kinds of data, with users’ consent—an approach Europe is taking in financial services by requiring banks to make customers’ data accessible to third parties.

Rebooting antitrust for the information age will not be easy. It will entail new risks: more data sharing, for instance, could threaten privacy. But if governments don’t want a data economy dominated by a few giants, they will need to act soon.

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Blockchain Will Do to the Financial System What the Internet Did to Media

 

Source: The Blockchain Will Do to the Financial System What the Internet Did to Media

Even years into the deployment of the internet, many believed that it was still a fad. Of course, the internet has since become a major influence on our lives, from how we buy goods and services, to the ways we socialize with friends, to the Arab Spring, to the 2016 U.S. presidential election. Yet, in the 1990s, the mainstream press scoffed when Nicholas Negroponte predicted that most of us would soon be reading our news online rather than from a newspaper.

Fast forward two decades: Will we soon be seeing a similar impact from cryptocurrencies and blockchains? There are certainly many parallels. Like the internet, cryptocurrencies such as Bitcoin are driven by advances in core technologies along with a new, open architecture — the Bitcoin blockchain. Like the internet, this technology is designed to be decentralized, with “layers,” where each layer is defined by an interoperable open protocol on top of which companies, as well as individuals, can build products and services.

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Like the internet, in the early stages of development there are many competing technologies, so it’s important to specify which blockchain you’re talking about. And, like the internet, blockchain technology is strongest when everyone is using the same network, so in the future we might all be talking about “the” blockchain.

The internet and its layers took decades to develop, with each technical layer unlocking an explosion of creative and entrepreneurial activity. Early on, Ethernet standardized the way in which computers transmitted bits over wires, and companies such as 3Com were able to build empires on their network switching products. The TCP/IP protocol was used to address and control how packets of data were routed between computers. Cisco built products like network routers, capitalizing on that protocol, and by March 2000 Cisco was the most valuable company in the world. In 1989 Tim Berners-Lee developed HTTP, another open, permissionless protocol, and the web enabled businesses such as eBay, Google, and Amazon.

The Killer App for Blockchains

But here’s one major difference: The early internet was noncommercial, developed initially through defense funding and used primarily to connect research institutions and universities. It wasn’t designed to make money, but rather to develop the most robust and effective way to build a network. This initial lack of commercial players and interests was critical — it allowed the formation of a network architecture that shared resources in a way that would not have occurred in a market-driven system.

The “killer app” for the early internet was email; it’s what drove adoption and strengthened the network. Bitcoin is the killer app for the blockchain. Bitcoin drives adoption of its underlying blockchain, and its strong technical community and robust code review process make it the most secure and reliable of the various blockchains. Like email, it’s likely that some form of Bitcoin will persist. But the blockchain will also support a variety of other applications, including smart contracts, asset registries, and many new types of transactions that will go beyond financial and legal uses.

We might best understand Bitcoin as a microcosm of how a new, decentralized, and automated financial system could work. While its current capabilities are still limited (for example, there’s a low transaction volume when compared to conventional payment systems), it offers a compelling vision of a possible future because the code describes both a regulatory and an economic system. For example, transactions must satisfy certain rules before they can be accepted into the Bitcoin blockchain. Instead of writing rules and appointing a regulator to monitor for breaches, which is how the current financial system works, Bitcoin’s code sets the rules and the network checks for compliance. If a transaction breaks the rules (for example, if the digital signatures don’t tally), it is rejected by the network. Even Bitcoin’s “monetary policy” is written into its code: New money is issued every 10 minutes, and the supply is limited so there will only ever be 21 million Bitcoins, a hard money rule similar to the gold standard (i.e., a system in which the money supply is fixed to a commodity and not determined by government).

This is not to say the choices Bitcoin currently offers are perfect. In fact, many economists disagree with Bitcoin’s hard money rule, and lawyers argue that regulation through code alone is inflexible and doesn’t permit any role for useful discretion. What cannot be disputed, however, is that Bitcoin is real, and it works. People ascribe real economic value to Bitcoins. “Miners,” who maintain the Bitcoin blockchain, and “wallet providers,” who write the software people use to transact in Bitcoin, follow the rules without exception. Its blockchain has remained resilient to attack, and it supports a robust, if basic, payment system. This opportunity to extend the use of the blockchain to remake the financial system unnerves and enthralls in equal measure.

Too Much Too Soon?

Unfortunately, the exuberance of fintech investors is way ahead of the development of the technology. We’re often seeing so-called blockchains that are not really innovative, but instead are merely databases, which have existed for decades, calling themselves blockchains to jump on the buzzword bandwagon.

There were many “pre-internet” players, for example telecom operators and cable companies trying to provide interactive multimedia over their networks, but none could generate enough traction to create names that you would remember. We may be seeing a similar trend for blockchain technology. Currently, the landscape is a combination of incumbent financial institutions making incremental improvements and new startups building on top of rapidly changing infrastructure, hoping that the quicksand will harden before they run out of runway.

In the case of cryptocurrencies, we’re seeing far more aggressive investments of venture capital than we did for the internet during similar early stages of development. This excessive interest by investors and businesses makes cryptocurrencies fundamentally different from the internet because they haven’t had several decades of relative obscurity where noncommercial researchers could fiddle, experiment, iterate on, and rethink the architecture. This is one reason why the work that we’re doing at the Digital Currency Initiative at the MIT Media Lab is so important: It is one of the few places a substantial effort is being made to work on the technology and infrastructure clear of financial interests and motivations. This is critical.

The existing financial system is very complex at the moment, and that complexity creates risk. A new decentralized financial system made possible with cryptocurrencies could be much simpler by removing layers of intermediation. It could help insure against risk, and by moving money in different ways could open up the possibility for different types of financial products. Cryptocurrencies could open up the financial system to people who are currently excluded, lower barriers to entry, and enable greater competition. Regulators could remake the financial system by rethinking the best way to achieve policy goals, without diluting standards. We could also have an opportunity to reduce systemic risk: Like users, regulators suffer from opacity. Research shows that making the system more transparent reduces intermediation chains and costs to users of the financial system.

The Takeaway

The primary use and even the values of the people using new technologies and infrastructure tend to change drastically as these technologies mature. This will certainly be true for blockchain technology.

Bitcoin was first created as a response to the 2008 financial crisis. The originating community had a strong libertarian and antiestablishment spin that, in many ways, was similar to the free-software culture, with its strong anticommercial values. However, it is likely that, just as Linux is now embedded in almost every kind of commercial application or service, many of the ultimate use cases of the blockchain could become standard fare for established players like large companies, governments, and central banks.

Similarly, many view blockchain technology and fintech as merely a new technology for delivery — maybe something akin to CD-ROMs. In fact, it is more likely to do to the financial system and regulation what the internet has done to media companies and advertising firms. Such a fundamental restructuring of a core part of the economy is a big challenge to incumbent firms that make their living from it. Preparing for these changes means investing in research and experimentation. Those who do so will be well placed to thrive in the new, emerging financial system.

Internet of Things Revolutionizes the Wine & Spirits Industry

 

Source: Beverage Alcohol Gets a LOT Smarter | James Fellowes 

The adult beverage industry is transforming as the ‘Internet of Things’ revolutionizes everything from packaging to how we order drinks.

Smart technology is profoundly influencing the way people buy and consume things across every category, and the alcohol segment in no different. We can be sure that in the very near future it will be impossible to imagine how we functioned in a world of ‘dumb’ disconnected products. It has been reported by the World Economic Forum that the overall number of connected devices is expected to double within the next four years, from 22.9 billion in 2016 to 50.1 billion by 2020.

In this nascent era of connectivity, new devices help us buy our favorite products more efficiently and new packaging informs us about everything from terroir to tampering. Brands can utilize the data collected from smart systems to improve their products and tailor them to consumer tastes. With an eye on innovation and efficiency, smart technology developers are quickly revolutionizing the way we live – and drink.

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Smart On-Premise Devices

Two new products allow imbibers to replenish their drinks on-premise without waiting at the bar. Bacardi-owned Martini recently launched a new Smart Cube that communicates with bar staff when it’s time to pour another drink. The device is added to a customer’s drink like an ice cube and then monitors the drink level in real time. It also keeps track of how many drinks have been consumed to prevent over-serving.

Malibu recently introduced their ‘Coco-nect’ cups which allow consumers to place an order for a new drink by simply twisting the base of the cup. The cup sends the order to the bar while also pinpointing the customer’s location so that the drink can be delivered to them. Once the order has been received by a bartender, the bottom of the cup changes color to let the client know that their drink is on its way.

Iowa-based startup FliteBrite has created smart beer flight paddles that help drinkers keep track of which beer they’re trying. The device also connects to an interactive app that gives detailed information about each brew. While it doesn’t currently offer the option to order more beer, one imagines that this is the next step for devices such as the FliteBrite.

Tel Aviv-based startup Glassify have developed a line of ‘smart glasses’ embedded with an NFC chip that work with a smartphone app to offer consumers incentives like free chasers, happy hour specials or food combos. The app also hooks into a bank account, allowing customers to buy drinks for their friends or go out without their wallet. While it’s fun for consumers, the glasses could also be a boon for businesses interested in tracking specifics about their sales, from what time of day certain beers sell best to which brews are more likely to be drunk in sessions.

 

Several companies have introduced innovations to draught systems that provide businesses with helpful analytics. TAPP is a cloud-based battery-powered smart tap handle that can track beer sales in real-time and report the timestamped data back to beermakers. The system also has options for consumer interaction, either through their smartphones or through screens in the bars.

Indiana-based start-up SteadyServ offers a similar cloud-based system that helps outlets keep track of inventory, letting them know when something needs to be reordered or if a keg will need to be changed soon. The start-up’s technology uses electronic tags to identify each beer and puts a scale under each keg. The scale monitors beer levels, giving bars essential information about what is trending or what to run on special (for example, if a keg is getting old). Nevertheless, the exciting aspect for consumers is that SteadyServ integrates with social media, letting beer fans know what’s freshly on tap and what’s about to run out at their favorite pub.

European technology company WeissBeerger has created a similar smart bar system. With the goal of “turning drinks into data,” WeissBeerger offers an integrated Beverage Analytics Hub that connects with coordinating smart bar devices via cloud technology. From monitoring keg freshness and temperature controls to consumption data, the company helps businesses serve their customers more efficiently.

Smart Home Devices

Molson Coors has taken a page from Amazon’s book and launched a connected button that allows consumers to easily order more Carling beer in the UK. Similarly to the Amazon Dash button, the Carling Beer Button syncs with an accompanying smartphone app. When pressed, it adds Carling beer to an online shopping basket at one of four retailers, Tesco, Asda, Morrisons and Sainsbury’s.

Bud Light created a smart mini fridge for the California market which holds up to 78 beers. The branded connected appliance connects with an app via wifi to let consumers know when supplies are running low. The app is also programmable with user’s favorite sports teams, allowing them to receive updates when game day is approaching. The app integrates with the beer-delivery service Saucey, allowing users to order beer for delivery in Los Angeles, San Francisco and San Diego.

In Canada, The Bud-E Fridge is part of their Goal Lab range of smart offerings which also include the Goal Lamp Glasses.

http://budweiser.ca/goallab/en/

Smart Packaging

Pernod Ricard recently launched 45,000 NFC-enabled smart bottles for its Malibu coconut rum brand in the UK. Consumers can access digital content and experiences by tapping their NFC-enabled android phone on the bottle’s sunset image. Content includes instant-win competitions, user-generated content competitions, drink recipes, a bar locator service and a music playlist. The connected bottles are available exclusively through Tesco.

Several brands have utilized smart bottles that can be authenticated and tracked in order to combat the uptick of counterfeit wine and spirits. Ferngrove Wine Group, Johnnie Walker Blue Label and Barbadillo sherry have both turned to Thinfilm enhanced bottles that monitor whether a bottle has been opened and wirelessly communicates with a coordinating app. The Thinfilm carries tagged information with unique identifiers that allow brands to authenticate and track their products, even after the factory seal is broken. Thinfilm can also be used to communicate product information to consumers through their smartphones.

Medea Vodka created a fun party trick with their bluetooth enabled bottles with customizable LED message bands. The bottles can be programmed with a bespoke message that will scroll across the band. Messages are controlled through an app developed by the Medea team. The app knows which bottles are nearby and available to be registered. Once a bottle is registered to one phone it cannot be controlled by anyone else. The customizable bottles allow users to create their own messages for any social occasion.

What’s Next

As our belongings become more connected, we will develop the expectation that these devices will take care of our everyday chores. For instance, a refrigerator could be programmed to automatically reorder beer once supplies drop to a pre-programmed level.

Smart sensors and devices help us collect data and buy and sell more efficiently. What will we do with all of this data? The biggest boon coming from the ‘internet of things’ is the amount of intelligence we are gathering that will drive innovation and inspire new products and services.

Source: RADIUS