D4M 2023 Year-End Review (Part 1)

JJ: A lot of things have happened in the field of digital manufacturing.

JJ: Over the course of 2023, the field of digital manufacturing has:

–        leaned more heavily into smart factories due to AI technologies; –

–        improved technologies in scheduling and planning to prevent future disruptions;

–        in the field of automotive manufacturing, Q4’s production/ERP implementations slowed to a crawl due to auto workers strike, etc

JJ: But, obviously, you’re not here to listen to me talk about it; you want to hear what our experts at D4M International think about 2023 and what to potentially look forward to in 2024!

JJ: So without further ado, I’ll hand you over to the host of this episode, which is D4M Senior Account Executive, Alan Roy.

Alan: Welcome to what – we hope – is going to be an insightful roundtable discussion on the year in review for digital transformation manufacturing trends, especially as it relates to SAP.

Alan: We have the leadership of D4M International today participating in our roundtable. At D4M, our commitment extends beyond providing exceptional SAP services; we deeply care about the well-being of our clients and the industries that we serve. Obviously, that’s self-serving for us; the success of our clients and our industry means success for us.

Alan: However, we often engage in conversations with our customers to understand the health of their businesses, because that correlates directly with our ability to be able to effectively deliver SAP solutions.

Alan: Throughout the year, we’ve been proactive in sharing valuable content from customer success stories to key market insights aimed at providing visibility into developments that could impact your operations. We’ve done this through our various website blogs, video interview series, or through our business intelligence side of the company. But, today – as we reflect on our journey throughout the year at D4M – we thought that it might be beneficial for our customers and prospects to hear about the trends that we’ve observed in the market in 2023.

Alan: Though our experts today are primarily through D4M representatives, today’s roundtable isn’t just about us, it’s about sharing and learning together. And we hope that the trends that we discuss will resonate with you and spark valuable conversations within your own organizations.

Alan: So, without further ado, let me introduce the esteemed participants joining us today for this roundtable discussion.

–        Chuck Stahl is the CEO of D4M International and has been an SAP professional for over 30 years.

–        Jean Yves Durocher is the Chief Operating Officer for D4M and is a founder of D4M’s legacy organization, R3D Consulting.

–        Eric Ybarra is the VP of Global Delivery at D4M who has been practicing international SAP service delivery for a few decades.

–        Raj Krish is the VP of SAP services at D4M and is responsible for all SAP services at D4M.

–        And lastly, Victor Escondon, who is responsible for all D4M’s operations in Mexico and Latin America.

Alan: Let’s start with you, Raj.

Alan: Raj, you’ve done a lot with both in direct and indirect engagements with a lot of D4M customers this year; in my opinion, this puts you in a such unique position that it can provide some valuable (and specific) insight. So, as we look at our first topic, I’d like to direct it to you first.

Alan: From your extensive interactions throughout the year within the manufacturing industry, how would you describe the current state of digital transformation in the manufacturing industry that we service?

Raj: That’s a very good question. Let me start by saying that – from my point of view – the digital transformation within the manufacturing sector has been more advanced in 2023 and – what I mean by “advances” – is that there are not only a greater awareness of digital transformation projects, but there has been a lot more projects in the initiation phase that have happened.

Raj: Now, if you look at the last 3 years, due to covid and other significant challenges that we have had in the business (such as supply chain issues), many companies were not able to focus on digitalization. So, they have been pretty much trying to their keep businesses afloat and making sure their operations are running.

Raj: But, now that those things are in the rear-view mirror, the CIOs and CEOs are able to focus more on the long term goals; which starts with digital transformation. Now, if I have to look at two things that have been pretty much focused within the digital transformation, I would say many organizations have been pretty much focusing on customer experience/their engagement and also improving their manufacturing efficiency/overall analytics around that.

Raj: For example, customer facing applications where the customers are able to place orders and see where their orders are in the pipeline, etc, AND THEN – from a manufacturing efficiency point of view – many organizations are trying to connect devices and use big data with the help of AI and Machine learning to analyze the operations in the real time to make sure that it’s running smooth.

Raj: Therefore, they are able to provide the goods, they are able to ship the goods to their customers and on time and hence customer satisfaction is growing.

Raj: So, these are the two areas where I’m seeing there’s a lot of focus in 2023; and, in fact, I also recently read an article by Gartner where they are saying over 90 percent of the organizations are engaging in various digital initiatives!

Alan: That’s a lot!

Raj: Yeah, that’s a lot. And we are able to see that with many of our customers and a lot of our existing customers are venturing out in digital initiatives and also new prospects are coming to us asking for help in these areas.

Alan: So, you’ve worked on a lot of projects over the course of the year and you’ve obviously engaged with I.T. and business leadership and so forth. Is digital transformation really that first and foremost on their minds?

Raj: Digital Transformation is now becoming the first and foremost priority in their mind, and this shift happened a lot in 2023 because the companies are realizing that it’s no longer a strategic choice; it’s becoming a business imperative in order to survive in the competing market

Raj: So, it’s definitely one of the first things in their mind, and – based on that – they are trying to invest a lot to implement new technologies and also business innovations as part of this.

Alan: So, Chuck and Jean Yves, are you seeing the same thing from customers?  Do you see this renewed sense of importance of the whole digitalization process?

JY: Oh, yeah. Absolutely! I think this year we see a good momentum and – as we’re going to go talk about later – I think this also brings into perspective the acceleration of AI and all the, what I would call the “prerequisite”, phase for corporation want to get into AI and more sophisticated technology.

JY: In the meantime, there’s also operational issues or, in some case, corporation are still in the process of planning to switch to S/4Hana, which requires a significant investment. But, what we see right now is that corporation are working on both fronts: the “prerequisite” for AI and more advanced manufacturing while, in the meantime, moving forward with S/4.

Chuck: I would agree with that; although, I would add to that I’ve seen a much closer connection being created between the customer and the manufacturing floor than I’ve ever seen in the past.

Chuck: There seemed to be a big gap there where customer and customer service was out there and the plant floor was really remote and rarely did those 2 even get close to connecting,

Chuck: But I think the customer is driving some of the innovations and some of the work that needs to be done on the manufacturing floor because of their reach, quite honestly.

Chuck: So, that’s the 1 thing I think that really surprised me about 2023. Is that gap closing pretty dramatically.

Victor: Yeah. And I would also add that, in Mexico, we have been receiving a lot of investment during the last 2 years and much more into during 2023.

We are moving forward, we are adapting industry for us as the principal and standard for the next generation, and industry of the industry is moving forward and embracing all of those changes.

Victor: Now, we cannot just change because we want to change; we require the investment, we require a very good assessment and a budget that needs to be precise. The companies also need to make sure that the people have the skills to move forward because we cannot just move with machines and software – we also need people!

Victor: And – as you can imagine – the Mexican people also needs to learn a lot of our new activities, new technologies, etc.

Victor: Also, whenever we are moving forward, we need to make sure that is moving in the right direction and all of those investments are good investments; so we are not wasting time, money, or resources.

Victor: So this is becoming more and more the way of that we are moving forward into the new era. And, as you can imagine, Mexico has a lot of companies with a lot of new markets and the new perspective of industry, many more are coming to Mexico as an opportunity to enhance their own industries and making sure that they can grow further.

Victor: So, for Mexico, it has been a terrific year; we expect to have a better one in 2024. We need to move with solid with solid state, with solid pillars. The foundation needs to be very good.

Chuck: And Victor, would you agree that there seems to be a resurgence in manufacturing moving into Mexico, especially with the push away from China?

Victor: Absolutely! There are more companies coming into Mexico looking for the opportunity to be here. We are not in only one area; industrial areas are very wide right now in Mexico. So, you can find different states in different parks; most of them have everything that you need to start a company, to build a new company, or to enhance a company that’s already there.

Victor: So, it’s not only a couple of places to come to in Mexico; we have plenty of them. We can go and grow together. There is no limitations in Mexico today; we have people, we have a lot of skills, there is a specialized universities like in Querétaro, where we have a specialized university that is working on aerospace.

Victor: So, as you can imagine, Mexico is focusing more in the new markets, on the needs of the industry and the needs of the world. At this point, we can say that we have been receiving industries from England, from France, from Germany, even from China. Well, you can imagine why China is coming to Mexico; we are receiving investments from China!

Victor: So, this is very interesting because today we are an open market that can receive a lot of companies and make them better; create new products, hire new staff, etc. And the people in Mexico are happy, they are very strong, they like to party, BUT they really have a strong work ethic.

Victor: We really do this in a very formal way.

Alan: So, with the investment that’s being made in Mexico, Victor, do you see – as companies are coming in and as companies enhance their operations in Mexico – that a lot of focus and effort is put to (like what Chuck alluded to) getting a “closer connection” between the customer and the shop floor? Is that an area of investment and even in Mexico that you’re seeing?

Victor: Mexico is more like a big factory as of today. We are producing for the needs of other countries; our market is different and our consumption is different. We are able to produce very good cars, very good TV sets, very good appliances and move forward into that.

Victor: When it comes to industrial parts – such as heavy equipment – we prepare and supply those parts and – somewhere else – the last assembly line is gather is gathering all of those parts.

Victor: So, you can imagine, we are really working more on the industrialized way to make the things good and adapting all of those new tools – in the new era – to make sure that those things that we are building are efficiently created, low cost, and with the highest quality, that’s where we’re moving forward.

Eric: Alan, I think that the companies are really a question themselves – the manufacturing industry are questioned themselves – is still about what is the priorities that they need to follow for the implementation of the digital elements for their transformation.

Eric: A few of our customers has been in a presenting us with that question; and, some of them, has been a direct question about where to start within the manufacturing operations, what elements needs to be 1^st? If it needs to be in the internal logistic? external logistics? In the manufacturing floor? In the planning and execution? or in the order to cash? Etc.

Eric: Then, there has been those questions posted to us – sometimes very directly – where we have been helping those customers that come up and need to be answered first. Here’s an example: one of our Mexican customers that came up with an additional RFP for having a transformation of their ERP system to SAP.

Eric: However, when we start talking to them, they realize (or we helped them realize) that they needed to have the transformation of the show floor first, and THEN the ERP that is dependent.

Eric: In that particular case, that was the recommended first step, just because they have a mature ERP legacy/mature ERP.

Eric: Then that question of “where to start” and “where they can get the greater benefit”, at least in my experience, has been one of the most common denominators in 2023.