Digital Disruption in the Industry

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1 Digital Disruption in the Industry Document for Discussion June Copyright 2016 Accenture. All rights reserved.

2 Mankind is on the threshold of a new technological revolution that will fundamentally change the way we live and the way we work + Unprecedented access to technologies radically changes how business will work in coming 5 years 4. Industrial Revolution based on Cyber-Physical Production Systems Industry 4.0 Cyber-Physical Production Systems. combine communications, IT, data and physical elements: 1. Industrial Revolution through introduction of mechanical production facilities 2. Industrial Revolution through introduction of mass production based on the division of labor and electricity 3. Industrial Revolution through introduction of electronics and IT for a further automatization Industry 3.0 Industry 2.0 Industry 1.0 Introduction of electronics and IT Mass production Mechanical production Decreasing cost in computing. Ubiquitous connectivity - proliferation of Smartphones Rise of cloud and big data Disruptions of corporative operating models End of 18th Century Start of 20 th Century Start of 70 s Today 2 Copyright 2016 Accenture. All rights reserved.

3 External Focus (Go Digital) But what does DIGITAL mean? Digital: (adjective); that implies a significant information intensity and customer and business resources connectivity Digital Business: (name); corporation that integrates digital technologies to generate revenues and profits through innovative strategies, products, processes and experiences Digital Business Model Digital Client Commercial Digitalization Revenue enhancement through digital services, marketing and sales Revenues Channel Digitalization Digital Business Model Process Digitalization Profitable Growth through digitalization of the whole business model across the whole organization Digital Company Operations Digitalization A serious digital transformation should encompass external (Go digital) and internal (Be digital) focus Internal Focus (Be Digital) Margin Efficiency and productivity enhancement through digitalization of operations (sensorizing, analytics, augmented reality) + 3 Copyright 2016 Accenture. All rights reserved.

4 10 trends to foster the success in digital transformations and the identification of potential in new business models GO digital Align value proposition with customers demands The digital route 1 to market Inspire trust to the most valuable customer 2 3 Create an Omni channel digital experience 4 Leverage the e-commerce opportunity New Business Models 9 New services through sharing economy 10 Digitally-led partnerships and M&As BE digital Ensure delivery of value proposition The 4th industrial revolution: IoT and smart factories 5 Client 4.0 The workforce of the future 6 The digital Back Office 7 8 Innovation and Smart R&D 4 Copyright 2016 Accenture. All rights reserved.

5 GO DIGITAL - align the value proposition with customer requirements, increasing communication and ensuring their confidence + GO digital Align value proposition with customers demands BE digital Ensure delivery of value proposition Example: The digital route 1 to market Inspire trust to the most valuable customer Client segmentation Value proposition dynamic adjustment Delivery The consistency: 4th industrial sense revolution: & react IoT and smart factories Chevron Big Data Example: 2 3 Create an Omni channel digital experience Client Leverage the e-commerce opportunity New Business Models 9 New services through sharing economy 10 Digitally-led partnerships and M&As Web / Mobile Advanced demand Innovation and Industrial Sharing One customer experience in Applications forecasting 8 Smart R&D (machine capacity, lab all channels Dynamic price and equipment) Operate through digital margin leakage experience with customers, management The workforce suppliers, of the partners The digital Back Example: 5 Sales force Digital future Office tools 7 Baosteel Ecosystem Platform 6 Gerdau egerdau platform Telenor Norway CRM & Business Analytics Examples: Unilever Salesforce Platform Ecosystem Nespresso Omni-channel commerce solutions 5 Copyright 2016 Accenture. All rights reserved.

6 Go digital examples of innovative digital initiatives Chevron Big Data Chevron has invested in Big Data start-ups and platforms like MAANA or Veros to turn data into useful decision making for business < 7 Copyright 2016 Accenture. All rights reserved.

7 Go digital examples of innovative digital initiatives Telenor Norway CRM & Business Analytics Telenor Norway has increased the number of orders processed each week from 400 to 10,000. Up to 98 percent of all wholesale customer orders are now processed online < 8 Copyright 2016 Accenture. All rights reserved.

8 Go digital examples of innovative digital initiatives Unilever Salesforce Platform Ecosystem Unilever built and implemented a new digital social platform, that will help connect its marketers, brand managers and partners in 190 countries, through, the enterprise social networking technology < 9 Copyright 2016 Accenture. All rights reserved.

9 Go digital examples of innovative digital initiatives Nesspresso Omni-channel Commerce Solutions Nesspresso will offer a more personalized and complete customer experience and benefit from streamlined and consistent technology and processes across the 41 countries in which it operates < 10 Copyright 2016 Accenture. All rights reserved.

10 Go digital examples of innovative digital initiatives Baosteel Ecosystem platform Baosteel invested remarkably in 2015 in creating an ecosystem to expand from pure manufacturing to services. The company invested 270 million in capital to the new platform Baosteel has been active in ecommerce over ten years: monthly online revenue was over 10 million already in In 2014 Baosteel (Baoshan Steel) reported total ecommerce revenue of 2.1 billion. They launched new Ouyeel Commerce in February 2015, intending to build an iron & steel service platform integrating ecommerce, logistics, data services, financial services, and technical services, and also to guide new orders of iron & steel circulation The company invested 270 million in capital to the new platform that comprises from products and services of Baosteel and 3rd party suppliers Baosteel sees ecommerce as a way to expand into services, which is part of their strategy transition Broad ecosystem integrating information, transaction settlement, logistics (e.g. 4PL) and warehousing, processing and distribution, investment and financing, financial intermediaries, featured services for technologies and industries ecommerce features include all the usual functions from information and ordering to precise tracking and history information < 11 Copyright 2016 Accenture. All rights reserved.

11 Go Digital - egerdau which was launched in November 2014, is an e-commerce platform that brings technology enhancements based on customer s needs Digital Solution Implemented Relevance + Phase I: Gerdau SA global solution launched in 2014 With the egerdau platform, customers can: Search for product availability by size, type and mill location Consult current and future rolling mill schedules Place and review orders, check shipments and consult financial statements Phase II: launched in 2015 bringing more enhancements to customers, making it a differentiator in the industry customizable homepage dashboard with customer-specific information, user preferences, notifications and market reports live-chat with the Gerdau sales team The egerdau platform saves Brazil-based Gerdau and its customers time, increases customer engagement, downloads and retrieves customer documents, and facilitates an ease of doing business egerdau allows more time for Gerdau s sales team to manage customer accounts, because the tool supports the operational aspects of the sales process Additional benefits of the egerdau platform include steel market news, which is updated daily and updates about Gerdau products and services Benefit More engagement with customer: activity between the original site and new site has more than doubled Save customer time: more than 6,000 documents have been downloaded Increase customer satisfaction 12 Copyright 2016 Accenture. All rights reserved.

12 Be digital - ensuring the delivery of the value proposition, being more agile, flexible and efficient than ever along the value chain GO digital Align value proposition with Examples: customers demands ThyssenKrupp slab finder BE digital Ensure delivery of value proposition Predictive asset analytics (RUL) Automation (warehouse internal logistics, stock visibility, slab finders) Remote control The digital route 1 to market Inspire trust to the most valuable customer Examples: The 4th industrial revolution: IoT and smart factories 5 Enhanced safety through monitored wearables and 2 3devices New roles, new skills, new culture Marathon gas monitoring Create an Omni channel digital experience Examples: Baxter - Human-robot collaboration Client 4.0 The workforce of the future 6 Digital capabilities development Use of mini-bots Spend analytics Self-service procurement 4 Leverage the Open Innovation e-commerce opportunity The digital Back Office 7 Examples: New Business Models 8 Innovation and Smart R&D 9 New services through sharing economy involving clients, partners and suppliers Innovation hubs Michelin tire as a service 10 Digitally-led partnerships and M&As Example: Shell Innovation Hubs + 13 Copyright 2016 Accenture. All rights reserved.

13 Be digital : ThyssenKrupp implemented an AIP Slab Finder analytic model to improve the capability of their slab finding process Accenture AIP Digital Solution Implemented Slab demand (ISO grade) Customer ID ARM based Analytical model Relevance The steel maker experienced excess inventory of slabs and coils due to cancelled orders, non-prime yield and excess production Manual and rule based slab matching techniques have limited effectiveness: Don t fully consider downstream processing options (e.g. additional edging) Fail to differentiate critical from non-critical grade characteristics Implement an analytic matching solution that used machine learning techniques to identify suitable matches from matches made in the past Benefit Top line impact Reduced order cancellations (by the Steel Producer) Higher customer satisfaction (e.g. delivery reliability) Bottom line impact Reduced working capital (e.g. optimized inventory levels) Reduced search time Optimized production mix 14 Copyright 2016 Accenture. All rights reserved.

14 Be digital examples of innovative digital initiatives Marathon Mobility Marathon has invested in a Wireless multi-gas detector that monitors continuously exposition to dangerous gases. Plant managers can monitor all employees status, position and safety Real time employee gas monitoring Accenture developed a unique safety solution for Marathon Oil that relays gas detector alarms in real time and allows for workers to be located and rescued. Safety is improved through continuous gas monitoring for each individual as well as motion sensors. In plants across the oil and gas industry, the single biggest challenge for safety and operations managers is how to keep employees safe. Marathon Oil teamed with Accenture to develop the Accenture Life Safety Solution a wireless-enabled multi-gas detection system that helps protect workers in potentially hazardous environments. The solution combines Wi-Fi and location-based technologies with gas detectors to allow companies to remotely monitor incidents in locations previously not suited for wireless networks. < 15 Copyright 2016 Accenture. All rights reserved.

15 Be digital- Human-robot collaboration enhance labour efficiency - in repetitive tasks that can be automated reducing output variability, increase output and reduce safety risks Digital Solution Implemented Baxter - Humanrobot collaboration in Standby Crew Machines Co. Relevance Programming can be done by factory technicians and operators. When numerous robots perform the same tasks, instructions can be replicated across wireless networks program once, instruct many Increased sensors prevent collations and safety measures Accenture: We have the Baxter robot installed in multiple sites across the company and we continue to explore their capabilities. Benefit Case Study Standby Screw Machining Reduce man hour at milling machine by 50% Automate sorting, reducing man hour by 100% Used in traditional business with success to enhance labour efficiency 16 Copyright 2016 Accenture. All rights reserved.

16 Be digital - New business models leveraging data and adjusting value proposition to client New services over customer data Information about distance, speed, acceleration, braking and other parameters Tires temperature and pressure control systems. Tires status tracking New business model & services leveraging realtime customer insights Better customer knowledge, interaction models and value management Unified the vision of the consumer fully integrated within the operating model Real time operation / interaction Managing customer digital interaction and outbound actions 17 Copyright 2016 Accenture. All rights reserved.

17 Be digital examples of innovative digital initiatives Shell Digital Ecosystems / Innovation hubs Several stable partners (Google, MIT, Microsoft, Draper, Apple and Novartis) and access to many other talent pools Founded in Boston in 2013 as a commercial start-up company inside Shell Digital disruption as key enabler for growth Iterative growth stories, using analytics and traction metrics to test hypotheses and continuously enhance the customer offer From static, functional teams to crack squads drawn from across the organization (and beyond) to solve for the customer, not for the function From renting non-core transactional capabilities to forming strategic partnerships that enable new customer offers < 18 Copyright 2016 Accenture. All rights reserved.

18 Be digital examples of innovative digital initiatives Tenaris Using Google Glass for Plant Maintenance Accenture is partnering with Tenaris (supplier for tubes for energy industry) to automate maintenance operations of one of their facilities inn US with the help of Google glass technology. This will one of the first instances of usage of wearable devices for real world operations; until now these devices have been primarily used in controlled environments and for demonstrations. < 20 Copyright 2016 Accenture. All rights reserved.

19 28 Copyright 2016 Accenture. All rights reserved.

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