Digital Enterprise Transformation and the Supply Chain

Stephen DeAngelis

December 22, 2015

“To build advantage,” write Andrew Arcuri and Richard Helm, “organizations must do more than just change. They must transform.”[1] That begs the question: Transform into what? Most business analysts agree the answer to that question is, “Transform into a digital enterprise.” To transform successfully, Arcuri and Helm believe enterprises must pursue two simultaneous strategies — one that addresses technology and the other that addresses everything else (e.g., “the right team, organization, processes, tools, and culture”). IDC Research Vice President Bob Parker agrees. “Digital transformation,” he explains, “is not just a technology trend, it is at the center of business strategies across all industry segments and markets.”[2]

 

Transforming an industrial age company into a digital enterprise can be daunting; but, everyone must start somewhere and that place could be your supply chain. In a webinar entitled Making the Digital Pivot, Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, stated that many supply chains are already becoming more digitized. What that means is that your company may already be on the path to transformation without really having a strategy to make the transformation complete. Commenting on the webinar, Jennifer Baljko (@jbaljko), notes that Cecere stated, “To move through this transition and create more advantages, companies should begin imagining what the digital supply chain can be (or grow up to be), and consider how new technologies, advanced analytics, robotics and visualization could help usher in supply chain advancements.”[3] Irina Rosca (@sustain_SCM) believes that supply chains are getting smarter. “Supply chains are becoming increasingly integrated and more intelligent,” she writes. “Collaboration, knowledge sharing and learning are at the center of intelligent supply chain management. New software and technology developments support end to end supply chain collaborative processes.”[4]

 

Arcuri and Helm observe, “To get their organizations fit to support a transformation, IT leaders must develop a strategy and design an explicit plan to assess and develop the capabilities they need to make the transformation successful.” Obviously, IT leaders can’t develop this strategy in isolation. They need constructive inputs from every corner of the organization. Cecere and Rosca both share some ideas about what supply chain executives can do to ensure their digital transformation plans move forward in a positive and successful way. The first thing these pundits agree upon is that any successful strategy will be a collaborative one. Collaboration begins, Baljko writes, by thinking “about how to close the gap between the commercial and operations teams.” Cecere notes that the digital supply chain creates an opportunity to address “the long tail of the supply chain.” For global companies (or companies with global supply chains), this tail can be very long indeed. As Rosca puts it, “Suppliers and customers are more geographically dispersed than ever.”

 

Using Data Wisely

 

Better collaboration begins with better access to data. When extended supply chains are involved, collaborating is not as easy as it might seem. To get better data, Cecere insists, companies need to improve their sensing capabilities. Baljko writes, “Moving towards digital processes and digital businesses is more about sensing things, Cecere said. The digital supply chain will involve more of a sense, plan, test and learn, shape and orchestrate, and act footprint. Investing in this shift will help companies better address [the] supply chain’s long tail, leverage channel data to learn more about what customers want and how to get products to market, build bigger network value, and increase product customization and personalization.” That is a tall order and one that can only be filled through emerging technologies like cognitive computing. Cognitive computing can help make sense of the data being drawn in from a multitude of sources. And making sense of data is critical. “Due to vast supply chain networks, and various new ways of reaching end consumers,” writes Rosca, “large amounts of data are now available creating new challenges. It is not the use of big data that leads to better decision making in the supply chain management, but rather the use of this data in a smart way.”

 

Advanced Analytics

 

Advanced analytics are going to help enterprises use data in smarter ways. For example, cognitive computing systems can ingest operational data to help them automate routine decisions and they can alert human decision makers to anomalies needing their attention. “Most organizations are very early in their adoption of analytics,” Cecere believes. “They are still investing in descriptive analytics … things that allow us to see but don’t necessarily allow higher intelligence for decision support. Then we have the predictive analytics, which is the optimization that we have supply chain planning. As we move to prescriptive and cognitive analytics, [we] no longer have only an outcome, but an outcome that’s better and based on current data.”

 

Three Steps to Success

 

Rosca offers three steps that will help enterprises build intelligent supply chains. First, she writes, companies must “start with the end in mind.” She elaborates:

“A solid data management strategy for global supply chains starts with the end goals in mind. … All organizations leave untapped knowledge in their internal and external data; the key is to identify where improvements are needed and the specific indicators that can help. More data does not equate to better performance; it is the use of this data that leads to success. Organizations must engage their suppliers, understand common goals to create a data strategy that empowers all actors to make mutually beneficial decisions and enjoy the paybacks. … This knowledge is power.”

Second, Rosca recommends that companies “structure, analyze, and share findings intelligently.” She adds, “Supply chain networks must be structured and governed for global competitive advantage.” Elaborating, she writes:

“Companies must be able to determine their readiness to compete and the right partners that can help them reach their growth goals. Data platforms and predictive analytics empower company leaders and their network to visualize pains, waste and streamline processes. Visibility is a crucial operational capability in international trade. When embarking on a supply chain optimization project, success requires a clear understanding of where the wastes and redundancies lie. … These efforts lead to improved business intelligence, cost cutting in transportation network and better customer interactions.”

Finally, Rosca recommends creating “a collaborative learning environment with the right technology.” The important technology, she insists, is technology that can help automate information processes. “Too many global companies,” she writes, “manage information manually.” She continues:

“Data management can be overwhelming without the right partners. … Working with upstream and downstream suppliers on a collaborative knowledge-sharing platform can help streamline information exchange, provide real time information and reduce overall risk within the network. This is especially important when collaborating with international shippers and freight forwarders. … Through best of breed data exchange protocols, they can share this information with retail partners and update PO/SO and SKU level data on a real-time basis. This can only be achieved if all members of the supply chain network are aligned along the same goals and understand the pains of other partners. … Information must flow through collaborative platforms upstream and downstream so all parties visualize risks, potential disruptions and can proactively engage in offering solutions. As supply chains grow on a global scale, organizations will have to put more trust in their network partners and build value through long term relationships.”

Transforming into a digital enterprise is all about managing data intelligently. Karel Dörner and David Edelman (@davidedelman) observe, “Being digital requires being open to reexamining your entire way of doing business and understanding where the new frontiers of value are. For some companies, capturing new frontiers may be about developing entirely new businesses in adjacent categories; for others, it may be about identifying and going after new value pools in existing sectors.”[5] Regardless of what it means to your specific business to transform into a digital enterprise, your supply chain is an integral part of that transformation.

 

Footnotes
[1] Andrew Arcuri and Richard Helm, “Getting Fit for Transformation,” bcg.perspectives, 22 July 2015.
[2] Editorial Staff, “How Digital Transformation Will Affect Business Over Next 3 Years,” Material Handling & Logistics (MH&L), 9 November 2015.
[3] Jennifer Baljko, “Imagining the Digital Supply Chain,” EBN, 23 November 2015.
[4] Irina Rosca, “Build an intelligent supply chain by putting big data to work,” TradeReady.ca, 9 November 2015.
[5] Karel Dörner and David Edelman, “What ‘digital’ really means,” McKinsey Telecom, Media, & High Tech Extranet, 15 September 2015.