How can a supply chain tell if digital transformation efforts are on track for success?
A recent Gartner study reports that 62% of supply chain practitioners expect digital business processes to drive more than fifty percent of their revenue within two years.
Time will tell whether these predictions are accurate. For those of us who operate on “expect the best and plan for the worse,” these findings from McKinsey offer a more sober projection:
70% of digital transformation projects are failures, with nearly 20% posing an existential threat to business viability.
Assuming both findings have merit, we can expect 30% of the companies Gartner polled will succeed with their digital transformations. Subjecting optimists in the Gartner study to the cold hard facts from McKinsey adjusts the success rate from 65% to 18%.
Our less bullish interpretation is probably closer to reality, and it’s certainly better news for the 18% of companies that achieve their revenue projections. A smaller group translates to a greater competitive advantage, so supply chains' incentive for successful digital transformation is higher.
It’s safe to assume your company wants to be one of these leaders. This article offers five tips to keep supply chain digital transformation efforts on track for success and ahead of the pack.
1. Beware of Perception Bias: The Problem and Solution
Knowing where to begin with digital transformation requires knowing the end goal. Process improvements must connect legacy processes with a clear vision of the digital future process.
Things start to get fuzzy when picturing the future digital process. It’s a perception problem that can be summed up with the truisms “what you see is what you get” and “you can’t know what you don’t know.” What each of us “knows” about supply chains is limited by personal perception, shaping our future vision.
Here’s a fun experiment: Look around and count every green object you see. How many green things did you see? You probably didn’t notice any red objects, but by repeating this exercise and looking for red, you will.
Likewise, we only know what a legacy supply chain looks like, so for most businesses, that is the model for digital transformation. Instead of digital transformation, companies can only perceive legacy methods and problem-solving. Digital solutions get implemented as performance upgrades to legacy supply chain processes, producing marginal gains.
2. Successful Transformation Makes Things Look Different
Transformation is successful if supply chain processes begin to look different. Digitalization brings new tools and approaches for building innovative solutions, and transforming a supply chain into a digital process should result in something that looks and functions differently. As innovation increases, a method has less resemblance to its legacy origins.
A good process model is invaluable for brainstorming new ideas and makes it easier to find a development path that best supports corporate goals.
3. Focus On Stakeholder Expectations
Every process improvement should align supply chain processes around common corporate goals, and the foremost of these is the purpose: satisfying stakeholder expectations.
- A stakeholder is any party with a vested interest in the outcome, such as customers, shareholders, employees, vendors, government agencies, the general public, or anyone else a business pays attention to.
- Stakeholder expectations include requirements for profitability, sustainability, risk, public relations, team member and customer satisfaction, legal and regulatory compliance, and other corporate objectives.
4. Focus on Logistics
The purpose of logistics is to satisfy stakeholder expectations. Logistics meet stakeholder expectations by delivering the right thing to the right place at the right time. That’s what a supply chain does, so a supply chain is a logistics process.
- Understanding the supply chain as a logistics process is a profound shift in perception that will begin to reveal many problems and solutions you never saw.
- The focus will naturally be on logistics solutions, aligning process improvements around satisfying stakeholder expectations.
5. Start Transformation With Transportation Planning and Execution
The optimal starting point for digital transformation is improving transportation planning and execution processes. Products like the flexis suite of apps that seamlessly integrate S&OP (Sales & Operations Planning), APS (Advanced Planning & Scheduling), provide an ideal entry point and offer these benefits:
- Transportation is rich with opportunities, and cost reductions over 20% are the norm.
- Logistics solutions are high impact, improving efficiency throughout a company and external supply chain partners.
- All enterprise processes ultimately lead to shipping, providing the optimal point in a supply chain for meeting stakeholder expectations.
Conclusion
Following these five tips will keep the digital transformation efforts of a supply chain on track for success and ahead of the pack.
flexis AG offers logistics solutions and services that meet the criteria discussed in this article. We would be happy to discuss your specific needs and how our solution may benefit your company.
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