Successful digital transformation of the supply chain goes beyond new IT systems – involving new processes and cultural buy-in – according to a recent article from Maine Pointe CEO Steven Bowen in Chief Executive Magazine.
Digital supply chains imply technology, but they go well beyond that, according to Bowen. Beyond the tech, digital supply chains are built on revamped processes, people, and culture. The buck ultimately stops with the CEO, who has to build a culture of collaboration while gaining visibility into the end-to-end supply chain.
Digital transformation is different from digitization, which simply means converting analog to digital – like switching from paper files to computer files. Transformation implies re-evaluating processes, and is more of a revolution than evolution. “This means not only investing in technology but in human capital as well, creating new company cultures that are more supportive of change, and eliciting end-to-end support from all stakeholders,” Bowen said.
The biggest advantage of digital supply, according to Bowen, is that it gives companies the data they need to have true visibility into their business, so they can make better and faster decisions. End-to-end supply chain visibility can unlock better services and products and more sustainable success for all stakeholders.
A transformation which combines technology, new business models, and improved collaboration and insights can enable three major benefits. The first is competitive advantage through improved operating models and operations. The second is deeper insights for better decision making, using data to spot hidden opportunities. Finally, it can improve customer experience, allowing for more responsive call centers, more knowledgeable staff, faster shipping times, and better product availability.
Transformations, can, of course, also fail. CNBC in 2019 reported that 70% of the $1.3 trillion spent on transformation initiatives was wasted on failed programs. The biggest reason for failure was a lack of effective communication, with overall strategy often not shared with employees and stakeholders, leading to a failure of necessary cultural change.
Bowen listed a number of other common pitfalls for transformation initiatives. Top obstacles can include insufficient CEO leadership/sponsorship, no cohesive cross-organizational supply chain/digital strategy, a talent/skills gap across the organization, and a culture deeply resistant to change.
Though communication is important, measuring success can be just as important. “Measuring the supply chain integration and digital transformation program involves setting metrics for how well the program is working – but it also requires metrics along the way to make sure the message is being clearly communicated and all stakeholders are actively engaged,” said Bowen.
Ultimately, Bowen says that technologies like cloud computing, big data, and artificial intelligence should be part of a greater strategy rather than and end unto itself. “Technology spending is likely to be part of any digital supply chain transformation, but that spending must be designed to support a broader plan,” he said. That means sorting out what the expected results will be, and what sort of return on investment can be projected.
