More than ever, companies are moving towards digitizing their supply chains—here are 4 steps they have to consider for their supply chain digital transformation.
The necessity for supply chain digitization has never been more evident. Given the transparency, agility, and efficiency needed in modern day supply chains, it’s hard to get around the fact their operations have to be digital. Moreover, many of the technologies becoming increasingly important to supply chains either require or are bolstered by digitization. Thus, the future supply must be digital.
An article by GlobalTranz explains,
If the vision of Industry 4.0 is to be realized, most enterprise processes must become more digitized … A critical element will be the evolution of traditional supply chains toward a connected, smart, and highly efficient supply chain ecosystem.
With that said, digital transformation is a considerable endeavour. On top of money and resources, it also requires an entirely new way of operating. As such, digitization, as counterintuitive as it sounds, is every bit as much about non digital factors as it is about digital ones.
This article by Morai Logistics highlights several of the most important factors companies have to contend with if they want their supply chains to have a successful digital transformation.
Remembering the Fundamentals
As important as the innovation that comes with going digital is, it can’t be the only thing supporting a supply chain. Its foundation must remain. Meaning, whatever made the supply chain successful in the first place must remain. In turn, with those fundamentals in place, they can then be further improved by digital assistance. For example, quality control can be further refined by smart sensors. Reliability can be enhanced by forecasting. A healthy digital supply chain should then be a marriage between the old and the new.
A post by McKinsey covers this in further detail,
To be successful in a digital transformation, though, it’s important that your supply chains retain traditional strengths (reliability, predictability, quality) while also allowing for innovation (greater use of automation, quicker responses to changing needs, more transparency across supply chain).
Maintaining Workforce Balance
Just as companies will require a blend of the old and the new in how they operate, the same will apply to their workforce. Not everyone will be technologically proficient and be able to use digital tools. It’s important having people who can make the most of the incredible benefits of digitization. But they aren’t the end all be all. The older supply chain professionals are still required. They have insights and expertise that are going to be timeless. It’s critical for companies not to turn their backs on them once they are digitized.
Promoting Education & Culture
With all that in mind, some aspects of the workforce will require training so that they can adapt to their new work environment. Moreover, the overall mindset of all those across the supply chain will have to transform too. Culture remains arguably the biggest impediment to a successful digital transformation. If companies don’t foster an attitude of innovation, transparency, data-driven processes, and more, their transformation simply won’t sustain itself.
Managing Risks
Finally, it’s crucial that companies remain cognizant of the risks that emerge from going digital. For instance, a transformation can take place without the technological infrastructure to fully support what it’s intended for. Which, in turn, leads to the transformation essentially be caught in stasis until further innovation takes place.
The earlier mentioned McKinsey post emphasizes some other risks that come from transformation,
But probably the most important risks to mitigate are those that can arise from the transformation itself, especially when a transformation loses sync with the technology needed to support it. At one extreme is “pilot purgatory,” in which perfectionism and inflexible processes keep promising ideas from ever reaching scale. At the other, the transformation can end up promising much more than existing technology and practices can deliver.
