Supply chain challenges impact companies of every size, in all locations and industries. Few at SAP are better positioned to see the big picture of what it will take to establish agile, resilient, sustainable supply chains worldwide than Darcy MacClaren, Chief Revenue Officer of SAP Digital Supply Chain.
Recently appointed to the position, MacClaren now takes on the challenge of building a global network and determining a go-to-market strategy for SAP Digital Supply Chain that will be successful worldwide. Her previous role as Senior VP & Head of Digital Supply Chain & Industry 4.0 for SAP North America gave MacClaren in-depth knowledge of all the products, solutions, and people at play in supply chains—insights that are already proving critical to her efficacy in tackling a wide range of supply chain topics, from globalization to the advent of business networks.
“My role is to help our customers transform and create more resilient supply chains, using RISE with SAP and SAP S/4HANA Cloud, and to help them achieve clean core by using SAP Business Technology Platform (SAP BTP),” explains MacClaren.
Below, ASUG asks MacClaren about the current state of SAP Digital Supply Chain, the challenges supply chain professionals currently face, and the role of artificial intelligence (such as SAP's newly announced generative AI copilot Joule) in bolstering supply chain operations.
This interview has been edited and condensed.
ASUG: What challenges do supply chain professionals currently face in establishing supply chains that are sustainable, intelligent, resilient, and cloud-ready?
MacClaren: Basically, they all need to change the tires of the car while they’re driving. These are can-do types of people who get things done and work hard, but most supply chain organizations are understaffed, either because of cutbacks in the company or because they can’t find the right people. This is often the case in logistics; from drivers to warehouse workers and people in plants, organizations can’t find people to do those jobs. So, they’re already overburdened. Still, they’ve got to meet their customers’ demands in the most sustainable, efficient way possible, while also taking on the complexity of risk.
All of this makes it hard to say, “By the way, what you're doing now is not going to work going forward,” right? Ideally, supply chain professionals considering transformation would like to say, “Well, I'm going to wait for a pause in the business, until it's a good time.” That’s the problem: there isn't going to be a good time. We have to figure out how to do this now. Our job is to make it easier for them to transform, to get out of the day-to-day and look ahead, knowing that—in the medium- to long-term—you’ve got to start making sure you have systems and technology in place to embrace what will be the new world.
The second issue is change management, because people’s jobs will be different. They will still have jobs, but their jobs will be different. Transformation will take away more manual work and analysis, and so we’ll be looking for more highly skilled workers to oversee that. Companies need to work toward change management, by having a point of view and a vision for where they believe they need to go. That’s different from before. It’s more about risk resilient agility and sustainability, as opposed to cost and efficiency.
It’s also about when and where you start. The when is now, right? The where depends on the company. What is most broken in your situation? There isn’t one place to start—that depends on the company. What’s critical is to have high value, quick wins to get synergy going. A common place to start, though, is integrated business planning, as well as sales and operations planning, because that sets the strategy for the rest of the organization. Some companies have that down, but for others it’s a great starting point. The key is that you have to start now.
I’d also mention the concept of data. You will never have 100% good data. You don’t wake up one day and say, “Okay, we're done; our data is good.” That's never going to happen. It's an ongoing process. Another way of cleaning up your data is to do integrated business planning. As data is coming in, cleanse it. We have tools to help you verify data, because most companies do need to improve their data. You can do that in conjunction with running a supply chain project.
ASUG: What sorts of strategic changes do you see customers making, so that their supply chains can sustain or optimize current operations while increasing profitability?
MacClaren: Customers are looking strategically across their organizations to see how they should be set up. They're looking carefully at what’s most important for them to be able to access in the event of disruptions—geopolitical, environmental—that could shut down their business, so that they can build supply chains that give them more flexibility. If certain regions, raw materials, or logistics shut down, can they still operate? Evaluating operations triggered folks to look at their onshoring-offshoring mix of manufacturing, at whether they need to reformulate products to allow more variability. Looking across the whole organization, customers need to build in flexibility for longer-term planning, as well as the connectivity they need to be able to react to disruption.
We’re also seeing more networks forming. Fierce competitors, such as German automotive manufacturers, realized they were all missing the same integrated circuits, that they needed to start a consortium to figure out that out. And so, Catena-X Automotive Network was born. We’re seeing more cooperation and more networks forming to make sure industries are connected in a very secure, collaborative manner when it makes sense for them to do so.
Everyone’s talking about generative AI. The whole idea of intelligent technologies—what they mean to my business, how can I incorporate them responsibly at scale—is another area where, particularly in the supply chain, professionals are embracing the change that is coming. The companies that do that best will have an advantage. We already have AI embedded in SAP solutions—in SAP Extended Warehouse Management (EWM), which features AI-enabled slotting recommendation; in SAP Transportation Management, with document processing; in SAP Concur solutions, with travel, expense, and invoice. This is mathematical AI that exists in our day-to-day lives.
What’s new is what you can do with generative AI. With SAP, when you have a full yard and you don't know which truck to unload, AI can read the manifest, understand it, and then tell you which truck to unload first. With all the data SAP has, we’re in an incredible position to unleash generative AI in a responsible way. We’ve had AI teams working on our governance for over 10 years and we’re continuing to find new ways for our customers to leverage AI for business in relevant, reliable, and responsible ways.
We just announced Joule, an advanced, generative AI assistant that will transform the way businesses run. It will be embedded throughout SAP’s cloud enterprise portfolio to deliver proactive and contextualized insights from across SAP solutions for HR, finance, supply chain, procurement, and customer experience as well as SAP BTP, and third-party sources. With Joule, the user can simply ask a question or frame a problem in plain language, and receive quick, contextualized results that adhere to the robust safeguards regarding data protection that SAP has championed for decades.
The fact that SAP is embedding AI in all of our solutions gives companies an easy way to roll this out, where AI is part of your supply chain and part of your intelligent enterprise.
ASUG: What have you observed, from a global perspective, of how companies are specifically responding to the disruption created by the pandemic and focusing on the connectivity of their supply chains?
MacClaren: What this global lens has shown me is the need for standards, which make everything easier for people to connect. SAP embraces standardization. Because of our size and scale, we are often a leader in standards. What COVID-19 taught us—if we did not already know—is how globally connected we all are. Major disruption in China affects the world, and that’s the same if the disruption is in Brazil. We all need to be connected, and standards make that easier. What SAP is trying to do, with our concept of networks, is make it easy for everyone to securely connect to everything in their ecosystems—to suppliers, contract manufacturers, logistics providers, equipment, contingent workers—so people can do their jobs and collaborate.
What’s interesting is how different regions vary their approaches. Transport is different in North America, where trucks travel coast-to-coast, from in Europe, where drivers go home every night. You have to respect whatever the regional situations are. Of course, all kinds of rules focus on sovereign clouds, and companies want to keep certain data in their own countries, with security and processes that make sense for them. This concept of being able to operate as one, while respecting the individual region or country's desire for data protection, has to be dealt with. That adds to the overall complexity.
We always design our applications with security in mind, and our customers can trust that SAP applications are secure. We also have the flexibility to get our applications certified in these different environments and countries, and ensure that they are in compliance with each country’s cloud security requirements —such as those from the U.S. Department of Defense, which has some of the strictest requirements in the world. There is a group that works on our sovereign cloud capabilities, whose role is to go country to country to get certified, to make sure that our cloud applications can run in those regions.
ASUG: How is SAP’s transformation into a cloud company, and its efforts to move its customers from SAP ERP Central Component (ECC) to SAP S/4HANA Cloud editions, impacting the SAP Digital Supply Chain space?
MacClaren: SAP is in full transformation to be a cloud company. In order to innovate as a cloud company, we have to get our customers over to the cloud via RISE with SAP. A key element of this transformation is having clean code so they can take full advantage of continuous innovation on SAP BTP. That same principle extends to supply chains, which work with SAP S/4HANA and RISE with SAP.
When customers implement SAP S/4HANA through a greenfield approach, they’re selecting what’s best-in-class for their industry, with clean code. Those greenfield implementations go up very fast. We’ve seen customers select SAP Integrated Business Planning for Supply Chain along with their greenfield clean code SAP S/4HANA implementation; perhaps they add innovation in SAP BTP, but they get up and running very quickly. It’s easier said than done for global customers with complex supply chains, but even very large life science and chemical companies have been able to transform in that way. We work with customers and with partners to make sure they're on board with the clean code concept. Companies that make a business practice out of customizing code put customers at such a disadvantage.
ASUG: What’s your advice to supply chain customers who are currently weighing their options for digital transformation or building business cases?
MacClaren: With supply chain transformation, those benefits actually can be the trigger for an entire business to move over to SAP S/4HANA. Transformation is about looking more holistically across the organization to come up with the right answers. It’s part of change management and gaining the ability to work as one. Transformation is about getting out of silos—either within your own organization or in your ecosystem, which is where connectivity matters. I always tell people, whatever their roles are, to try to think of transformation in a bigger context, to imagine how they might create that digital thread across their entire organization, to be connected so that they can have agility and resiliency.
ASUG: What excites you about SAP partner initiatives that are supply chain-oriented and intended to help break down those silos?
MacClaren: In addition to the automotive network, what we’re doing with SAP Business Network for Logistics is exciting to me. We’re connecting with shippers, carriers, and all of the networks, so you have this single point of connection. As a company, you don't have to sign up to all these different connectors. You can use SAP as the conduit to connect them for you. From a development standpoint, research and development professionals will be able to collaborate in a safe environment.
Also, if you look at the SAP Asset Intelligence Network, you can connect all your equipment and machines to see how they're operating. This can tell you if a machine’s performance quality drops or is slowing down. The learnings from that are shared in the network in a secure way, so someone else can learn from it. And you can see how we're collecting all this information we're learning from. It’s shared, as appropriate, to folks who should have that information, and it makes everybody better. It’s all about collaborating, making sure your intellectual property is secure, sharing what you want to share, and getting what you want from others.
ASUG: What added perspective has this global role given you on the status of North American SAP customers with regard to supply chain resilience and transformation?
MacClaren: North America is behind in adopting Industry 4.0 and automating factories. Europe and Asia are much further ahead than North America. In fact, if you talk to North American companies, they’ll even say they’re automating but starting with their plants in Europe or Asia. We've made a lot of headway in the last year or so, but what we can learn from our European and Asian counterparts is how they are much more automated from an Industry 4.0 perspective.
On the other hand, North America is ahead in sales and operation planning, and I think they're more mature in this area. This can be dependent on industries. In the life sciences area, both European and North American companies are advanced, and it’s phenomenal. What they accomplished in bringing out the COVID-19 vaccine so quickly is a great example of what you can do when you collaborate, remove distractions, and get people focused on a mission. You can do great things. I’m committed, across all our regions, to helping our customers transform and build more agile, resilient supply chains in ways that best position them for success.
For more from Darcy MacClaren, read our recap of her recent Empowering Women in Supply Chain event and her recent perspective on AI in supply chain.