What is digital transformation?

Digital transformation is the process of using digital technologies to change and modify the process, culture, and customer experience to meet the needs of the changing business and digital world.

The ultimate goal that digital transformation targets is to improve the customer experience.

The term can be confusing for some because they assume that it means to convert everything to digital format.

While digitalization is certainly involved, this is not the end result.​

​ The process of digital transformation starts by changing the way businesses do things to meet the needs of the customer and the market.

​How UI Fits In

UI stands for the "user interface" which refers to the platform, physical properties, and interface that customers use to interact with the technology. This is changing rapidly, so this is one of the reasons as to why the changes are taking place within businesses.

When Steve Jobs retook his stake in the company he created (Apple), he fired the top people who had taken over his company and ousted him, then he sat down and started thinking about what he wanted to do next.

One of the people Jobs kept on asked, "So Steve, what do we do now?" He paused a moment, then said, "We're going to 'pretend the universe.'"

​Jobs meant that Apple had to think of things in a whole new way in order to move forward in the technology world. And this is what modern businesses have to do today in order to keep up with the demands of the market.

Customer engagement is at the heart of this change.

Consider the fact that over 4.78 billion people will be on mobile devices by the year 2025 and how your business will be able to appeal to the mobile user, as well as all of the other digital platforms.

​Rethinking for New Business Startups

New business startups today have to be forward-thinking enough to start making this transformation from the beginning. This means planning in digital format from start to finish so that everything will be digitally operations from the start of your business.

It is important to note that what digital transformation looks like for one type of business may not look the same to others

Business owners have to know their industry well enough to understand how it will fit into the digital landscape.

Definitions by Leading Organizations

There are multiple definitions of what digital transformation looks like.

Harvard Business Review sees the process as something that new businesses must think of before they begin or start to get investors. They stress the importance of listening to customers as to what they want and how they envision the future and to have the goal being to establish greater intimacy with customers.

McKinsey & Company stress that there are five pillars of success with a digital transformation including:

  1. Leadership - Strong leadership in all levels of management are important in order to bring in the changes that must be made.
  2. Capability Building - Retraining, the use of AI, and other innovative technologies are critical to the change to digital formats.
  3. Empowering Workers - Employees should feel valued and paid well so that they will feel empowered to "create the universe."
  4. Upgrading Tools - Upgrades are necessary for making sure that business systems can handle the coming changes to digitization.
  5. Communication - Never has communication been more important than at the dawn of the AI age.

​McKinsey noted that, of all of the organizations that attempted digital transformation over the past five years, it was only the businesses who included all of these who captured an element of success.

Accenture calls this "digital procurement," the process of procurement of the best of everything to get ready for a future that is still somewhat unknown. This is a daunting task, but they believe that focusing on marketing, sales, and service using digital technologies and new innovations is the key to success.

iScoop.edu refers to digital transformation as something that not only affects business but also infiltrates into the political environment, entire countries, and the world. Because of the potential impact on entire societies, business owners must take the charge to make this transition seriously and do not think of it in isolation as only a smart business move.

​Why does digital transformation matter for procurement?

Digital transformation involves the process of procurement while imagining what the future holds. No one has a crystal ball, but we can guess the there will be a number of important factors that will influence how businesses will have to fit into the digital landscape of the future.

​Amazonization

This term refers to the far-reaching influence of Amazon in terms of not only its product line but its methods of retail distribution and customer acquisition that have influenced every aspect of the retail market. This doesn't necessarily mean that everyone will shop on Amazon (though millions do every day), but it refers to the effect that the digital technologies and innovations that Amazon is using will be demanded by customers and thus, influence the entire retail landscape.

Competition

How businesses handle the digital transformation will determine whether they will survive (evolve) or fail in the future. 

Just as Steve Jobs said in 1995 that "any business not online by 2005 will fail," it is now true that "any business not making the digital transition will fail." There are just too many technologies and AI-based inventions that customers will want and big tech will lead the way into this unknown territory. Businesses will not be able to compete if they do not evolve with it.

Efficiency

The level of efficiency of the business in the future (those that survive) will have to be something of science fiction levels. 

Amazon is already talking about sending drones to drop packages on people's doors and eager robots on wheels rolling down the street bearing packages for customers to speed up things.

There's even talk of a thousand-mile tunnel that would literally "shoot the packages" through a chute at lightning-fast speeds to deliver packages within minutes rather than days.

Once this revolution comes, there will be no turning back. Shopping online will literally be the same as going to a store and picking it up without having to actually do it!

Accuracy

The level of accuracy that is required and will be required in the future is unlike any expectations of customers in the past. They expect their orders to be correct and delivered to them fast.

How can we accelerate our supply chain digital transformation?

By hiring progressive-thinking tech experts, starting with the larger processes that are the most important, and focusing on the customer experience,  you can increase the speed of your delivery and completion rate by creating a positive customer experience and increasing the speed of order processing.

McKinsey Research's study on supply chain production suggested that companies that make the digital transition faster can expect their supply chains to increase by a minimum of 3.2 percent in a year's time.

Most experts agree that the difference between potential and actual gains from the digital transition of a supply chain is due to technology gaps and management choices.

So business owners must take stock of their technology capabilities and think about who or what they need to add to upgrade their processes to prepare for the digital revolution.

​How can I get started on digital transformation?

For business startups and established businesses, it's important to realize how big this change will be. It is going to require some risk-taking at the corporate level and investment of time and money. But the first thing to do is to educate oneself on the changes that will be required to get started.

What does the process look like?

When it comes to planning for the digital transformation, it's important that business owners know what it looks like.

Below is a series of steps that business owners should perform to make sure they are on target.

  1. ​Start big.      
  2. Hire forward thinkers.      
  3. Make it customer-focused.      
  4. Connect the dots (digitally).      
  5. Empower employees with data-driven stats.

​Conclusion

Forbes Magazine points out that companies who want to be a part of the digital revolution must get in early, much like those who got in on the  dot com domain business in the early days of the Internet.

It's no small feat and business owners must not be afraid to start big and hire people who are smart and daring enough to hit the ground running with the new technologies.

For business owners, they are shopping for sunglasses these days and many have been quoted as saying, "The future's so bright, we've got ta wear shades!"

​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.

Richard McGirr

Do you need to create value and deliver change in your enterprise? With Visichain as your partner, you can leverage over 1 million hours of supply chain transformation experience from some of the largest companies in the world. Visichain drives visibility, productivity, and efficiency throughout your entire supply chain. Supply chain visibility at scale is essential to your business. Starting with the production of products all the way through free on board receiving, your business needs real-time data to help you minimize risk, drive efficiency, and make better decisions. Visichain designs, develops, and implements powerful yet easy to use software. Powerful solutions crafted to help your executives and supply chain managers leverage multiple data systems to partner with sourcing suppliers in real time. When you're ready to kick your procurement transformation strategy into high gear, send me a message through LinkedIn.