Whether it be Covid19, US-China trade wars or increasing customer demands the world is becoming more uncertain, unpredictable and complex. The demands upon companies and specifically supply chain leadership has never been greater. In this post, we’ll look at the difference between supply chain digitisation and supply chain digitalisation and why it matters.
Digital transformation of supply chains is no longer an option!
2018 was called “the year of retail bankruptcies,” but digital disruption is happening in every industry. The reality is that no matter the field or industry, companies will either adapt or perish. So, the challenge becomes finding all the elements that contribute to digitalisation.
A question of language
Some of the key terms at the heart of digital transformations are misunderstood and often used interchangeably. Digitalisation is a process that, when carried out correctly, can be hugely transformative for a business; this is only possible when an organisation has conducted some level of digitisation first.
Digitisation converts information and products, such as documents, data, and records, into a digital format. Once converted, these resources can be used to upgrade and streamline processes, eliminating the need for basic things such as paper and face-to-face interaction – something which can be particularly helpful in the trying times that COVID-19 has presented.
Why is this important?
According to a 2019 IBM global C-suite study, 84% of chief supply chain officers stated that lack of visibility across the supply chain was their biggest challenge. This has led to inefficiency and waste, not to mention implications for environmental footprint. According to a McKinsey report, as much as 90% of a company’s environmental impact comes through its supply chain. Digitising the supply chain will save companies significant budget dollars as a result of waste reduction, while reducing their carbon emissions.
So, to digitally transform supply chains we need to start with systems, right? Well, no…
To Change the System, First understand the People
“It is not the strongest species that survive, nor the most intelligent, but the most responsive to change.”Charles Darwin
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”Buckminster Fuller
As per McKenzie, 70% of digital transformations fail; one key reason is that organisations do not define the outcomes. Digitalisation is not self-serving; it is to serve the business and the world at large. To make a successful digital transformation, organisations need a clear roadmap to progress and need to start at the beginning.
Transformation needs to start with people, not the CEO, not the C Suite…another Ted Talk is not the solution here. A business needs to understand the people on the front line and in supporting roles, what are their challenges, what are their needs? Only then can you begin to align their wants and needs with the goals of the organisations; now you can ascertain real outcomes for a digital transformation, and not just another game of “C Suite Buzzword Bingo”.
Once a business fully realises the desired outcomes, then it is important to engage with the team at large. In stating the goal and explaining the positive outcomes for both people and the business, you are far more likely to be greeted with an enthused team once any transformation project begins. This is especially important as it is likely they will carry the burden of additional work that will be required initially.
Knocking down the silo’s
A common discovery for any business when engaging the entire team across functions, is how siloed functions and departments still are; this applies to digitalization efforts. Individual initiatives often deliver value at only certain points in the supply chain and fail to translate the value potential across further functions. Others fix problems or take care of the basics (digitisation), but do not have the transformative character to disrupt and give access to greater efficiencies and new opportunities (digitalisation). This is even more true in the world of supply chain and logistics, which has been an historic slow adopter of technology.
Once different functions understand that digitalisation will, among other outcomes, improve interdepartmental functions, you now have teams that are more motivated to embrace the digitalisation process.
It is never the “what” that really changes an organisation but the “why”. We now better understand the “why” and now must address the “what”.
There is a great deal of mistrust when any new technology is introduced and digitalisation is no different but this is no Hollywood dystopian future, this is supply chain and logistics (which has its own dystopian tendencies 😉). Technology, when delivered in line with people’s and organisations wants and needs serves the user – Not the other way around. What use is technology when you move from using a clipboard to data entry on an electronic device?
The term “Disruptive” may be popular in Silicon Valley, but this is not a term to be thrown around the supply chain world as it will only generate fear and mistrust. We must embrace digitalisation and ensure that we enroll our wider teams in this process and align their wants and needs with the desired outcomes of the business. We should deploy an agile digital transformation that not only bolsters the business today but offers new opportunities for tomorrow.
The LogChain platform digitalises systems and processes for companies involved in the chemicals supply chain. This enables seamless visibility and transparency of shipment information throughout the ecosystem.