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Digital Supply Chain Transformation: From Disruption to Opportunity

09.07.2020

by Gaby Saliby, CEO

If your supply chain isn’t functioning efficiently, I’m sure you can imagine the outcome: missed opportunities, customer complaints, unexplained errors, and overstretched employees. Diagnosis is easy, but change is hard. We’ve all heard stories about companies that spent thousands of dollars and put in years of work on transformation only to see negligible gains. These stories can create fear and cause those on the sidelines to stick with outdated, legacy solutions long after they’ve outlived their effectiveness.

Why transformation fails

So how do you lead transformation when the results aren’t guaranteed? Transformation fails when its potential is misunderstood. Often, a company’s efforts lead to waste because leaders assume change has to be rapid, bold, and exciting—when in practice, real change requires patience, planning, and foresight. We’ve seen meaningful transformation occur when we give ourselves the room to implement these principles, while building a foundation in our company culture that supports employee needs during times of transformation.

Two keys to successful transformation: Technology and Culture (Change Management)

Technology

A supply-chain digital transformation is about establishing a vision for how digital applications can improve service, cost, agility, and track inventory levels—and consistently implementing process and organizational changes that use these technologies to drive operational excellence.

In the past,the lack of supply chain digitization was due in large part to the limited capabilities of available technologies. Fortunately, supply chain management was one of the first business functions to undergo substantial technology upgrades, with applications developed to take advantage of data generated by ERP systems. Those early applications primarily focused on streamlining transactional activities.

However, those technologies didn’t provide transformative capabilities for supply chain management—linking and combining cross-functional data, such as demand, inventory, shipments, and schedules. They weren’t capable of leveraging advanced and predictive analytics to enable more precise planning that could anticipate and prevent problems.

Today, an ever-expanding ecosystem of technology vendors exists that offers digital solutions to meet our complex needs: from predictive analytics that compile large sets of unstructured data and extract useful insights, to artificial intelligence applications that automatically trace performance problems to their root causes, predict declines, and recommend corrective measures. Other advanced technologies, such as robotics and the Internet of Things, will help collect and process information automatically and support decision-making and other activities—or automate them altogether. We’ve entered a bold new world of supply chain digitization.

Culture (Change Management)

That said, improving supply chain performance is a collaborative endeavor that goes beyond just buying and installing new systems or software. To be effective across your organization, most efforts to improve supply chain performance should also involve changes to how your employees and teams share information, consider problems and opportunities, reach decisions, and carry out agreed-upon actions.

We’ve found that cultural change precedes every other update. You’ll find as you go that your teams will identify weaknesses in your rollout or implementation. Their buy-in will accelerate the pace of progress, while their reluctance could bring everything to a halt.

Change management starts with adapting your workforce to new skillsets and a different way of thinking. The upskilling process requires companies to reinvent job titles and functions, blending blue-collar backgrounds of supply chain operations with white-collar knowledge of data analytics and technological savvy.

One mistake we see many companies make is the tendency to create a grand project or all-in-one type of transformation. I strongly caution against this approach. The danger here is that you only give your company one shot at success. Instead, we’ve found that making iterative, bite-sized, evolutionary process changes is most effective long-term. This type of iteration provides room to make mistakes, adapt, and still move forward.

Digital supply chain transformation is as much about cultural change as it is about technology. For supply chain innovation to deliver its full potential, companies must be willing to adapt their processes, capabilities, and management systems. You’ll need the willingness and flexibility to learn, adapt, and change as you go.

Above all, you need to ensure that your people are with you on the journey. Real change happens when everyone is moving in the same direction.

ABOUT THE AUTHOR

Gaby Saliby
CEO of Allios
Business Transformation Leader and a Change Agent