As society swiftly approaches the year 2020, it is imperative that businesses of all industries utilize technology in the smartest way possible if they are to succeed and continue to grow while staying ahead of the competition.
Digital transformation remains the competitive edge because it drives innovation, creates unique experiences for both employees and customers, and provides a secure automated environment.
Digital Transformation Overview
For those unfamiliar, digital transformation is the method a business uses to modernize itself by replacing or updating clunky mechanical or human processes with new digital workflows and systems throughout their entire organization.
For a deeper dive into all aspects of digital transformation in supply chain and procurement, you can check out some of the books in this mega resource of digital transformation books.
The most vital part of digital transformation is the framework which is a variety of tools that help leaders and managers smoothly navigate a business’ conversion.
The Digital Transformation Process
There are numerous digital transformation frameworks to choose from, however, it is important to remember that each involves strategic maneuvers rather than a strict set of rules as successful transformation is about thinking, then incorporating these ideas into your business model.
Once it has been decided that a framework, or transformation strategy, such as THRIVE will be implemented, the next step is to employ the framework throughout all divisions of the organization while continuing to conduct business with the highest integrity.
During the implementation of the framework, it would be folly to not expect problems, so plans must be in place to rise above them. Such plans involve creative brainstorming via focus groups and the cost analysis can ameliorate inefficiencies when implementing a new solution.
Of all the difficulties that can be encountered during digital transformation, an organization’s supply chain is the most challenging because its importance is often overlooked, which is a problem in and of itself.
According to a 2017 study conducted by McKinsey, “companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent—the largest increase from digitizing any business area—and annual revenue growth by 2.3 percent.”
Companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent—the largest increase from digitizing any business area—and annual revenue growth by 2.3 percent."
Supply-chain and procurement digitization is central to the transformation process because it goes hand-in-hand with the restructuring of a business’ overall operations.
Studies have indicated that if all departments of an organization update their operations yet choose to ignore the upgrading of their supply chain, the company will fail to evolve properly and suffer financially.
The good news is that smart application of digital technology can enable companies to transform the way their supply chains operates.
How to Remain Competitive During Ongoing Digital Disruption
To remain competitive on a global scale and keep up with the likes of fast innovating companies like Amazon - there is no better time to initiate the digitization process before it is too late for an organization to catch up.
Utilizing proven digital transformation frameworks can support the prioritization and help overcome some of the challenges of change.
Partnering with an experienced procurement and supply chain digital transformation consultancy, like Visichain, who can tailor solutions unique to your supply chain needs and properly manage your company transformation process at scale can be the difference that makes the difference in this highly dynamic and complex environment.
Company Culture During the Transition
The best way to ensure a company’s vision does not become eroded during the conversion is to pay equal amounts of attention to the following performance goals:
- healthy decision-making
- end-to-end customer engagement
Supply chains ebb and flow over time, so it is important to evaluate former and current questionnaires and surveys of employees and business associates during the digital transformation process to remain up-to-date with the requirements from all stakeholders touched by change.
Digitization of Procurement
Another business critical area where digital dominates if you want to remain competitive is procurement, which involves sourcing activities such as market research, vendor evaluation, and the negotiation of contracts related to how goods and services are acquired.
It is not difficult to see how supply chains and procurement are interrelated. Not only are they essential to a business’ success, they are both ever changing and deserve equal attention when executing a digital transformation initiative.
According to research conducted by the Hackett Group, “32 percent of procurement organisations have implemented a digital strategy – and only 25 percent have the requisite skills and resources. This is in sharp contrast to the study’s findings that nearly 85 percent of all procurement organisations believe that digital transformation will fundamentally change the way they deliver services over the next three to five years.”
It appears that businesses sideline procurement during digital transformation because operating budgets are expected to experience slow growth. But, like supply chains, ignoring the gains to be made in procurement via digitization will lead to a company’s economic decline and possible failure as cyber risk, heightened competition, and disruptive innovation will rear their ugly heads.
“Chief Procurement Officers (CPOs) and supply chain management leaders are now equipped with volumes of data generated using IoT, social media and big data available in the public domain. The biggest challenge for today’s business is to quickly recognize this opportunity and stay ahead of the game.”
When digital security is not a top priority, crisis can lurk.
Take for example the incident where computer security expert, Chris Roberts, claims to have hacked into United Airlines’ in-flight entertainment system while on-board, then caused the plane to change direction.
While experts disagree on whether he did indeed accomplish this and if such a breach is even possible, it is a perfect example of why it is urgent for companies to successfully integrate digital transformation across all their departments and platforms as quickly as possible.
Roberts’ stunt not only puts a spotlight on why airlines need to upgrade their digital networks to ensure data and operational security, but it also opens a can of worms about how the government and companies indirectly associated with the airline have failed to conduct thorough and comprehensive digital transformation processes to control access priveleges and secure critical data.
“United Airlines has reportedly launched a probe into a breach of its computer system that took place around the same time a hacker group stole the data of tens of millions of US government employees and insurance holders. The two incidents may be linked,” according to a Reuters report.
The Clock is Ticking
A few years ago, many companies were under the impression that they had more than enough time to upgrade all their departments and platforms, but this has proven to be a fallacy.
With the advent of G5 cell phone technology, it is now a matter of survival for all organizations to quickly get "up to speed" and remain competative.
Should companies choose to drag their feet or stick their heads in the sand, they risk complete financial ruin because:
- their customers will lose faith and trust in the company and turn to their competitors
- they will become a victim of cybercrime
- they will never catch up to the ever changing technology as it continues to move at breakneck speed
Do or Die - Market Dynamics Force Real Time Supply Chain Agility
Today’s consumers are very savvy as they are all carrying smart tech wherever they go, so it is easy for them to verify best pricing and read customer reviews on the fly, then choose the company and products they feel good about investing in.
Businesses also need to consider how the younger generations are shaping the economic landscape as they are the ones who are keeping up with technology and want to do business with companies who are just as technologically advanced.
“32 percent of procurement organisations have implemented a digital strategy – and only 25 percent have the requisite skills and resources. This is in sharp contrast to the study’s findings that nearly 85 percent of all procurement organisations believe that digital transformation will fundamentally change the way they deliver services over the next three to five years.”
If a company chooses to forego even a single aspect of their digital transformation journey because they think they are saving money, their entire system will eventually sputter and fall apart, which is why it is imperative that businesses pay special attention to their supply chain and procurement.
After all, procurement and supply chains are situated upon the tip of the spear when the threat of a disruption with artificial intelligence, the Internet of Things (IoT), and blockchain technology is at an all time high.
Can You Stay Ahead of the Game?
With everything considered, we are at the eleventh hour.
According to IBM “Chief Procurement Officers (CPOs) and supply chain management leaders are now equipped with volumes of data generated using IoT, social media and big data available in the public domain. The biggest challenge for today’s business is to quickly recognize this opportunity and stay ahead of the game.”
It is time for businesses to grasp the proverbial brass ring by investing in the digital transformation that will help them achieve their vision and remain relevant as society skyrockets into the next decade.
Don't Get Left Behind
Schedule a free consultation with Visichain to ensure your supply chain and procurement operations continue to evolve and remain competitive in today's dynamic environment.