Tag: SAP

OM in the News: SAP, Blockchain and Drugs

SAP is working with 65 produce, pharmaceutical, tech and shipping companies on an automated blockchain-based supply chain tracking system that it believes will bolster visibility and ensure the authenticity of goods such as food and drugs, reports Computerworld (Aug. 24, 2018). The software giant is piloting its SAP Cloud Platform Blockchain with the goal of helping customers use manufacturing and supply-chain products – augmented by blockchain – to enhance transparency, safety and collaboration.

SAP is not alone in developing such a supply chain tracking system. In January, Maersk and IBM announced a joint venture to deploy a blockchain-based electronic shipping system that will digitize supply chains and track international cargo in real time.

But the pharma industry, in particular, has been under scrutiny to ensure it can trace from origin to consumer the drugs it makes and sells. Last month, the Chinese pharmaceutical firm Changchun Changsheng Life Sciences came under investigation for falsifying records related to the production and shipment of a rabies vaccine. This has led to calls for the entire pharmaceutical industry to adopt blockchain tamper-proof ledgers to track the manufacture and shipment of drugs.  There’s also the problem of drug knock-off companies, which mass produce generic drugs and flood the market with products that may not yet be approved by regulators. Having a product certified as having been tracked from manufacturing to store shelf would ensure authenticity.

Additionally, certain drugs must be transported and warehoused at specific temperatures. IoT sensors would enable that to be tracked, as well as checking the amount of vibration incurred during the shipping process, which could alert managers as to whether damage may have occurred. SAP’s “Advance Track and Trace” application is piloting the blockchain technology with pharma companies such as Merck., Amgen Merck, Glaxo Smith Klein, McKesson, AmerisourceBergen, and Boehringer Ingelheim.

Classroom discussion questions:

  1. What are the similarities between the drug and food supply chains?
  2. Describe how blockchain works.

OM in the News: Reinventing Federal-Mogul’s Supply Chain

Federal-Mogul handles more than 400 million auto parts annually
Federal-Mogul handles more than 400 million auto parts annually

For more than a century, Federal-Mogul  has handled the gritty task of producing hundreds of thousands of auto parts, sticking them in boxes and shipping them to warehouses or stores across the country. Now—aggravated by how much time is lost in the process—the company is spending $100 million to upgrade its supply chain from end to end. Improvements range from an online parts catalog with 360-degree views of products to “picking robots” in its warehouses to help ensure that parts are delivered to customers on time. The $7 billion company produces everything from pistons and engine bearings to windshield wipers and exhaust gaskets.

Over the years, Federal-Mogul has become a patchwork of IT systems adopted from the companies it acquired, writes The Wall Street Journal (Oct. 14, 2015). The push under the new plan is to move the entire company onto SAP enterprise software. “We are facing a proliferation of parts,” says the supply chain chief. “Cars are staying on road longer, so you need to keep those parts, and meanwhile, auto makers are adding more models.”

So Federal-Mogul has opened additional warehouses that feature robotics systems that allow the company to consolidate storage space and offer all of the parts the company makes under one roof. (Using robotics is a page right out of Amazon’s playbook, which has used robots to speed the picking of individual pieces of merchandise for shipping). Radio-controlled, battery-operated robots run across the grid picking up requested containers when orders are received and put them onto a conveyor that will take them to the sorting area–a much more efficient system than at the older warehouses. “You have hundreds of people walking miles every day within the warehouses to get these parts, and that takes time,” says the head of logistics. “There is also the chance that parts get mixed up or broken. Now we have the parts come to the employees.”

Classroom discussion questions:

  1. Why does the firm need the SAP system, and what will the new software do?
  2. What is the advantage to using robots in the warehouses?