Transcript Blog: SAP’s Industry Cloud Special Edition- Consumer Products
Josephine Monberg interviews Mark Osborn, Global VP of Strategy & Operations, Consumer Products IBU at SAP and Nathan Anderson, CEO and Co-Founder of Scantrust about SAP’s Industry Cloud in the Consumer Products Industry. Hear about the open innovation platform for SAP, our partners, and our customers, and learn specific Consumer Products solutions in this episode of Industry Insights by SAP.
Hello everyone. And welcome to this episode of our podcast industry insights by SAP. I just want to start off by saying that I think we live in a world today that’s quite unpredictable. I’m sure you’re all nodding your heads right now. Our lives have completely shifted. And I think something else that has shifted is also consumer needs and consumer demands today, they are much more complex. Traditionally businesses used to operate thinking about the two moments of truth, right? The moment a customer buys the product in the store and the moment they use the product at home, that is no longer the case. Now the store is digital and products are everywhere. This means that companies need to be agile. They need to be innovative and they can’t do this alone, right? They must compete as an ecosystem to deliver higher value in differentiated ways. This requires a platform and infrastructure that provides the latest technologies and enables this co-innovation. And this is exactly what I want to talk about today. So SAP has launched something that’s called industry cloud. And what I want to do is talk about what industry cloud means for the consumer products industry. And to do this, I am fortunately joined by two people that are much smarter than me about this topic, at least. And that is Nathan Anderson. Who’s the CEO and co-founder of a company called Scantrust. And then I’m also joined by Mark Osborn, who’s the global VP strategy and operations at SAP in the consumer products industry. So, first of all, thank you both so much for joining us. And I just like both of you to introduce yourselves. So our listeners know who you are and Nathan CEO and co-founder of Scantrust. Can you tell us a little bit about yourself?
Sure. Happy to, and thanks for having us on today, Josie, and I’m really happy to dive into this topic, which is it’s been an important topic for awhile, but it’s even more imperative in the current environment. And so a little bit about I started Scantrust- I was fellow co-founders based in Switzerland around six years ago, originally born and raised in a small town in Vermont. But cut my teeth in my career in China, which very much was a market well before, of course the pandemic that has been facing some of these challenges that we see at a larger scale today with CPG products. So you know, what we’re doing at Scantrust really is developing a connected packaging platform which helps companies to digitize the physical stuff, the products that we buy in the stores or increasingly online and give that a unique digital identity, you know, through Items such as a QR code that allow for consumers and users in the supply chain to interact and know more about the product that they’re buying and selling as well as bringing a tremendous amount of intelligence to the product supply chain, to mitigate risks through increased supply chain visibility, and drive new growth opportunities for engaging with consumers.
So really, really important company that you founded and also a partner of SAP. But before we get into that, Mark, I’ll transition over to you. Can you introduce yourself to all of our listeners?
Sure. Thanks Josie. Thanks for having us on. And I feel like Nathan and I are old friends by now talk about this topic together for quite some time. It’s obviously top of mind for SAP and the industry. So it’s great to be able to have this kind of forum that continue the conversation. So as Josie mentioned, I’m Mark Osborne, I’m vice president of strategy and operations for the consumer products industry here at SAP. And in my role, I sort of take a future view of where we think the industry is headed and to understand the kinds of investments and innovations that we as SAP should be considering, but also the kinds of partnerships that we should be considering. So I’ve been working very, very closely with the SAP IO organization, which Nathan and his company, or an alumna of one of the Foundry cohorts that we ran and trying to understand, you know, where we may have opportunity to look at innovative companies that bring differentiating capabilities to the vertical edge of SAP’s capabilities in an industry context and apply those to conversations like these.
Thank you, Mark. And for those who don’t know what SAP IO just super quickly, I’ll just add that it’s a team within SAP organization that invests in startups and the idea is really to bring them into the SAP ecosystem. And that was the program that I think like a Scantrust that you guys were part of. So we’re transitioning back now to the topics. So what I’d love to do as a start, and I alluded to this in my introduction is to talk a little bit about how the consumer needs are changing in today’s world, right? Because like I said, at the beginning, we live in a really fast paced world. So starting off with you, Mark, how do you see consumer needs change?
Yeah, there’s some recent Nielsen research that I think phrases it really well. And they say that consumers are beginning to buy the change that they wish to see in the world. And we see this, especially accelerating through the pandemic as consumers are clearly beginning to associate the products they buy with key outcomes like health and wellness and safety and trust. And even before the pandemic, that same research was showing globally that consumers now have a very strong expectation that companies should actively work to improve the environment and the communities in which they operate. The consumers are showing a preference for brands that can demonstrate a commitment to sustainability, and that they’re willing to pay a premium for products that help contribute to some of those outcomes I mentioned like their health and wellness and safety.
So thank you for that. Mark. Nathan, what are you seeing in terms of how consumer needs are changing in today’s world?
Well, first of all, fully agree with everything Mark highlighted. And in fact, you know, I think what’s important to point out that this was indeed, something that was happening well before the pandemic. It’s one of the reasons Scantrust came into existence, to give consumers more information about the products they’re buying and using on a day in and day out basis. And, what we saw even before the pandemic was that companies that were embracing increased transparency in the product that were sharing relevant information about traceability, sustainability related to the ingredients of their products were starting to see an uplift and, just sharing some more empirical data. You know, one of the things that happens when we accompany runs a Scantrust campaign is that we’re actually collecting first party data related to the consumer, how they’re interacting with the product at the point of sale or post-purchase. So this data is incredibly valuable. It goes well beyond just a survey from Nielsen. And so what we’re seeing is across the board, since the pandemic started, whether you know, consumers, you know, viewing of content related to sustainability related to health and wellness related to the ingredients in the products across the board is increasing. And it’s not just increasing the small amount it’s significantly increasing. And we’re talking, you know, in some campaigns, 30, 40% more interactions on these these types of content, the dwell time increasing, and also the amount of consumers who are going into e-commerce. So there’s always channels to drive. Purchase online has been increasing same full as well. So there’s really, you know, what we’re seeing as a trend line that was already happening, and that was going to play out over three, five, you know, seven years is now being compressed significantly. And we really see, you know, things that probably would have taken three to five years to change are happening now and happening over the coming 12 months.
Mm. So I think it, I mean, it’s clear that we are in a time right now where innovation is critical, right? Like companies cannot avoid it and SAP we’re also taking a new approach to innovation. And so just this question is for you, Mark, what about our current climate? Do you think requires this new approach that we’re taking to innovation?
Yeah, there’s this great saying, you know, things will never be as slow as they are right now. And both the pace of business and the changing nature of consumers will only continue to accelerate. So this is driving a need for a new level of flexibility and agility. And, you know, here again, the pandemic has shown us that we live in a world that’s complex and multidimensional, and increasingly impossible to predict. As you mentioned at the outset Josie. So as a result, I think what we’re seeing is a shift in the discussion, you know, and where investments in capabilities for flexibility and agility and responsiveness and resiliency and transparency are going to be more valuable than investments in capabilities like predictability and forecast accuracy as an example. So this is true of consumer products companies, as much as it is true for SAP, you know, our solutions have to be easy to consume. They’ve gotta be faster to deploy, and they’ve gotta be more flexible and extensible to allow us the capability to be able to offer differentiating capabilities from partners like ScanTrust.
How do you think this new approach allows partners like scantrust to innovate with customers, right? Because that’s really essentially what we care about is how can we, how can we help our customers to innovate?
Sure. Yeah. The SAP industry cloud strategy is an integral part of our overall SAP intelligent enterprise strategy. So to be an intelligent enterprise consumer products companies need the business process foundation that SAP offers to enable these end to end processes. But at the same time, they need the flexibility to be able to innovate with industry specific capabilities all the way to that vertical edge. So for SAP, this is where a partner like scantrust becomes a differentiating extension of our customer’s core processes and capabilities. You know, our customers have the flexibility to work with a partner like scantrust that enables that capability for traceability and consumer engagement through packaging, but also integrates with a larger value network associated with our SAP logistics business network. So this helps consumers get more information about where the products that they buy come from, but it also as Nathan mentioned gives consumer products companies a new opportunity to engage consumers directly through packaging in a way that would have been impossible at scale, just even a very short time ago.
So it’s really combining kind of getting the best of both worlds. Nathan, what has your experience been like working with SAP and an industry cloud?
Yeah, well really, I mean, I think one word captures it is acceleration. And so we were already moving pretty fast and growing quite fast at scantrust and we really saw it was kind of a, we felt ourselves being pulled or pushed if you will, into the SAP ecosystem by our clients, because essentially what happens in our business, you know, we’re offering something that’s new and innovative. Many cases it’s the first time that a business is doing a connected packaging product at scale with us. So typically it’s the classic land expand and we hope expand again right with our business where you get in there, you have a project, you demonstrate its value. And, you know, we work with global multinational companies and one consistency happened with that is that they were all very often SAP. And while you’re doing a one-off pilot project, even if it’s a large scale project and you can kind of do that out of the bounds of the existing infrastructure of a company, you know, as we started to prove out these, these pilots and demonstrate the value and people said okay, now we want to take this at scale. We realized very, very quickly that, you know, just trying to do it on our own, wasn’t going to work. And so we were able to, you know, via sap.io, we got brought into the SAP ecosystem. We were able to understand the lay of land. We were able to get access to technical resources, to build some really cool integrations which one on our side made our solution more valuable, it allowed us to integrate in seamlessly and well, I think we’ll, we’ll talk about that a little bit later if you want to dive into it. And then at the other side, it gave us access to an amazing sales force as well, right. SAP has just a slightly larger sales force than we do at scantrust. And so, you know this really helped improve the visibility of scantrust and our brand equity. And then we of course knew that kind of going in that thought that would be the case. And it proved to be one area that I was quite surprised about. I didn’t really think through fully is that, you know, the people we sell to our solution to you know, the same people that are buying SAP solutions looking to implement these innovations, you know, the CIO is chief digital officers, brand managers, marketing managers, you know, when they have a problem, they have no shortage of people, you know, knocking on their door, both good quality and lower quality solutions. And just to sift through the people, knocking through the door, it’s a full-time job. And one value we’ve seen is through the rigorous process that sap.io puts into to bring in and evaluate companies. And then kind of really ran us through the ringer during the bootcamp would we call it is it is it allows clients and brand owners to really have us filter for them where they know, okay, if a company is coming through this channel, okay. They have a certain there’s something going on with their, and they’ve reached a certain level of quality and ability to integrate and scale. So I think it helps these brand owners to have, you know, kind of narrow the funnel really that their view, so they can focus on what they do best and not have to spend a full time just evaluate any companies all day.
Yeah. So, it’s really a, it’s a win-win for everyone, right? For you as a partner for SAP, and essentially most importantly, for our customers who harness the innovation that comes from working with startups like yourselves. So you touched on this a little bit before Nathan, I do actually want to get into the technical parts of it. So how exactly let’s do it. So how exactly is scantrust plugged into SAP?
Sure. Yeah. So we start out, we see a lot of areas where we’ll plug in eventually, but where we started out is within the material traceability option in the SAP logistics business network. And it really was largely in a response to this consumer pull and demand. We’re seeing in the market that we alluded to in the beginning. And we saw an opportunity to partner with SAP to really provide, you know, an end to end traceability and transparency solution to help brand owners, you know, restore and enhance trust for their products, and drive and improve consumer engagement within the food and beverage industry using unique QR codes to provide a digital identity for a product that you know, through these intelligence products, pulling information from a blockchain to drive trust. So really what the material traceability option within the SAP logistic business network does is it allows for food and beverage companies to trace the ingredients. The key ingredients are all ingredients of their products,ut of batch level all the way back to the origin, right? So this is really providing that kind of farm to fork traceability that is needed if you want to sell a story of transparency and this valuable supply chain data which is being collected and stored within the material traceability option, we can link this to our integration, link this up to the scan trust platform in a very seamless way. So these unique QR codes, which are applied to products, get this personalized batch level information attached to it. So what happens when a consumer scans a product they’re pulling this information directly from the material traceability solution to see exactly what went into the products they are buying. So if you were to scan a product today and a month from now, you’re going to see, you know, different information. This is dynamic, and really gives you a view of the product that you’re buying, you know, the journey it took through you to you, how long it was, where the product was. And this is really game-changing as I alluded to earlier in the call, that companies that are moving forward and providing such a solution are really winning the consumers trust. And, you know, they’re buying with their wallet. So we’re really excited about what this offers, and as a solution, and be able to be able to really in store trust back in the buying decisions of the consumers. And to really allow companies to tell a story about the wonderful products that they’re offering in a way that resonates to consumers and that they can access easily.
Hmm. Mark, do you have anything to add to that?
Yeah, I mean I think, you know, all of the consumer preferences and the trends that we’ve talked about are only going to continue to accelerate. So all of the, you know, issues around environmental sustainability and traceability and trust will continue to just become more and more important. So I think, you know, all of the great capabilities that Nathan just mentioned together with SAP are really going to help us as a kind of a combined group here help our consumer products, companies address those challenges. So you offer that foundation that Nathan mentioned. But, you know, in conjunction with scantrust and other partners, we’re able to offer that traceability, that visibility from the farm to the fork or the ocean to the table and extend that all the way through to the point of delivery to the consumer. So for SAP, scantrust really extends our value proposition, and by enabling that consumer packaging to be engaging and give consumers that visibility back into the Providence of the foods or the products that they buy. And at the same time, it gives them a consumer products companies, a whole new capability. You know, Nathan mentioned this first party data, the ability for consumer products companies now to engage consumers directly through packaging and to get at some of the data and insights that Nathan mentioned is critically important net new capability that will really extend not only the trust that consumers have in those products, but also the ability of consumer products companies to start to develop more relationships, deeper relationships with those consumers based on that trust. So it really becomes a differentiating aspect of what SAP can bring to the market through partners like scantrust, but also a way for consumer product companies to develop a whole new set of relationships that weren’t possible or available to them before.
Hmm. So I think we are, when we think about industry cloud, and we think about the way that we work with partners like yourselves, Nathan’s scantrust, and a lot of other partners, it’s really how we are looking, how we want to operate in the future, right. How we want to innovate with customers and collaborate very, very closely. So now I want you to take out your crystal ball and do something which I think is close to impossible in today’s world, which is to look into the future and what I’d love for you to tell everyone who’s listening is what key issues you think SAP and scantrust can help consumer product companies in dress in order to be successful moving forward.
Sure. Yeah. And ultimately that’s a, you know, that’s one of the more important questions out there. And I would say that it’s, you know, my answer, it doesn’t apply just to SAP and scantrust it really applies to, you know, anybody within the industry cloud platform that is working together because ultimately the success of creating a full in this case, what we’ve just talked about, an end to end, you know, traceability and transparency through the supply chain, it takes multiple solutions working together and people realize they need to move forward and do digital transformation projects to keep up with the changes and stay competitive and not only win the hearts and minds of consumers. And very often, historically that has been looked at as, you know, as people kind of get scared of it, because these are big, huge digital transformation projects. Oh, how long is this going to take how expensive it’s going to be? And yeah, I’m not going to like these, aren’t the easiest projects. You don’t just slap your credit card down, and tomorrow you start up like a SAS solution. But one of the benefits we see, and one of the things I think we see that the industry cloud is going to accelerate and why we built this integration. It is, it’s a classic example of a one plus one equals three. And by creating these tight integrations across solutions that help solve problems at different points in the supply chain, you’re really able to accelerate the deployment. And so, you know, something that maybe historically would have taken you a couple of years can now really be done in a couple of months. And that’s really exciting because that’s quicker time to value. That’s less time and money and effort you’re spending before the solution is deployed. And so I think that’s one message that I want to leave. And I see that will be accelerated by these types of co-solutions and partnerships is that the right digital solutions will allow you to deploy much faster than, you know, classical it infrastructure projects. And we’re seeing that already happening today. It’s very exciting.
And Mark, what are your thoughts on the future and how you think that you can partner with companies like scantrust to help consumer products be?
Well, I think the flexibility and the agility that Nathan was just alluding to is key because all of those consumer preferences that we’ve seen accelerating, one of the things we’ve talked about, like environmental sustainability and traceability and trust, they’re only going to continue to accelerate. So, you know, together SAP and partners like scantrust can help consumer products, companies address these challenges because as need to know that SAP offers the foundation that allows companies like his to plug into a global ecosystem of value network players that can then offer that traceability and transparency for consumers from the farm to fork or the ocean to the table, you know, all the way through the final point of delivered to them. So for us partners like Scantrust to help extend the core value proposition that we offer in their case, by enabling the packaging to be engaging for consumers and giving consumers visibility into the provenance of the food products that they buy. But also more notably, I think for consumer products, companies, themselves, giving them access to, as Nathan mentioned earlier, that that first party data you know, the ability to develop those relationships directly with consumers, through engaging with packaging on the basis of that trust that consumers have in the products in a way that would have been previously unavailable to these companies. So it’s really opening up a new window of opportunity for the consumer products industry and be able to be much more flexible and agile in the face of changing consumer needs and to be much more in tune with how those needs and preferences are changing.
Hmm. Well, thank you both for bringing out your crystal balls and thank you both so much for coming on this podcast. I thought it was so exciting not just to learn more about industry cloud and how we’re this new approach to innovation, especially related to the different industries that we cover, but also really how companies today and especially consumer products should think and act right, which is to think about being very agile, to be able to move really fast and innovate in an ecosystem. So not just in silos, but really partner up, which I think is the key theme for 2020 that actually for the entire world. So, thank you both for coming on the show and to everybody who listened to this episode, thank you so much for listening in, stay tuned for more industry cloud episodes, as we also cover under other industries. And yeah, I hope that I’ll see you guys on the next episode. Bye everyone.