How to Digitally Transform your Supply Chain

by Joe LaMantia and Ron Quick

Digital transformation of your company’s supply chain can quickly lead to significant advantages. With increased availability of digitized supply chain information throughout your organization, it’s easier to act on opportunities to improve operational performance and seize competitive advantages.

How can your company take the steps necessary to create effective digital transformation? And what benefits can you expect once that transformation is complete?

What are the key early steps of digital supply chain transformation?

Determining where your company currently stands as it prepares for a potential digital transformation is crucial. With an honest assessment of current levels of readiness and ability to change, taking specific actions is that much easier.

The concept of digitization, both generally and in the specific context of the supply chain, is recognized as valuable by many businesses. However, it’s also viewed in somewhat vague terms as an eventual goal. Many organizations haven’t dedicated the resources necessary to make progress toward it.

Company leaders must make a lasting decision to follow through on digitization, and to address it with the necessary importance to support a change. As a wide-ranging transformation of the supply chain, this goal isn’t a finite project. It’s an ongoing effort that will need to adjust over time. With that said, the benefits of a successful digital supply chain transformation effort will also continue to pay dividends.

There are three crucial areas to keep in mind when it comes to change management efforts in this space:

1. Technological needs

Technology is at the core of a successful digital supply chain transformation. Your company needs the right infrastructure in place to ensure stability, security, broad access and consistent analysis of the data generated and stored. Some key considerations include:

• Developing a basic digital readiness strategy that can incorporate this new approach to supply chain management and oversight.
• Assessing the varying levels of technical sophistication amongst your partners across your supply chain and implementing solutions that address these potential differences.
• Having the technological resources in place to commit to digital transformation.
• Determining the value of working with an outside expert that can evaluate your current level of readiness, the differences in sophistication between you and your partners and provide individualized guidance on where to start and how early wins in the process can be identified.

2. Company culture and change management

For most organizations, a complete, long-term commitment to digital supply chain transformation is necessary before many other steps can be taken. Company leaders must be prepared to implement systems that convert business data into a digital format. Then they must utilize advanced analytical tools that provide many of the advantages associated with digital transformation.

Change management is crucial in this context. A digital supply chain will create change for the better, but will do so by eliminating processes and workflows that employees are comfortable using. For effective change management related to company culture and change management, your business must:

• Develop and emphasize a lean corporate culture that recognizes the benefits of increasingly efficient operations.
• Identify areas of significant change, explain these changes to staff ahead of time and offer explanations of the benefits the digital transformation will bring to their day-to-day lives as employees.
• Promote quick-hit improvements to staff, through various formal and informal channels, to demonstrate the value of the supply chain’s digital transformation.
• Consider how an outside expert can facilitate the process, helping to train and educate staff as they transition to new systems and workflows.

3. Involvement of stakeholders

We’ve already looked at the involvement of supply chain partners within the technological perspective. In broader terms, there are a few things to keep in mind about involving your suppliers and customers:

• Customers will have a basic level of engagement with a supply chain and its digital transformation process.
• Suppliers have a larger role to play, especially when it comes to top suppliers and those that provide key components and raw materials.

Reviewing current methods of communication, especially with tier-one and tier-two suppliers, is a vital consideration. While handled through digital means, emails and attachments still create data silos and require re-entry of information into data systems to maintain accurate records.

As businesses consider moving to more advanced solutions for supply chain data management, they need to keep their partners – especially top suppliers – involved in the process and appraise them of any changes that could affect important and routine interactions.

What are the short- and long-term benefits of digitally transforming your supply chain?

With an understanding of the crucial factors involved in a successful digital transformation of your supply chain, it’s easier to see how this change can benefit your business.

Short-term advantages

• Faster, more accurate transactions.
• Increased speed of inventory.
• Easier and quicker access to relevant information related to supply chain operations.
• Increased agility: The ability to more quickly act and react to changing circumstances related to suppliers, customers and many other factors.
• Enhanced internal collaboration and person-to-person sharing of information, thanks to the integration of back-end systems.
• Similarly, better integration with supply chain partners’ business systems.
• More secure storage of information, protecting a company’s intellectual property.
• Controlled access to data reducing the opportunities for unauthorized access and misuse.

Long-term advantages

• Faster product development due to the increased ability to share information internally and with suppliers, depending on the specific context.
• Improved competitive posture via a better understanding of workflows and processes.
• Increased insight into operations and potential areas of improvement through data analysis.
• Enhanced profitability, thanks to a better overall picture of the organization, its activities and its relationships with suppliers.

A move to a digital supply chain isn’t something that can be completely accomplished in a day, week or month. It’s an ongoing effort that requires a strong commitment from company leaders, an awareness of internal culture and considerations of the varying levels of technological sophistication between your supply chain partners.

However, with the commitment of company leaders, the involvement of partners, the right support for frontline staff and the necessary tools, your company can make major strides in digitally transforming its supply chain, reap the short- and long-term benefits and position itself for continual improvements in the future.