The root cause of the struggle that many supply chains have with digital transformation starts with a key word — transformation — that’s often overlooked or misinterpreted. It means a significant large-scale change that orients the organization in a new direction, not an incremental improvement or transition to a new system or application. Unfortunately, many organizations aren’t embarking on true transformation. Instead, they’re solving discrete business problems with digital technologies by creating one-off solutions, rather than embracing an integrated approach to addressing multiple problems. Because these types of projects have digital components, they often get mislabeled as digital transformations.
APQC examined digital transformation across numerous research projects and found four primary components:
When defining digital transformation, keep in mind that organizations have different goals for that effort, and the exact nature of each initiative is influenced by its scope, governance, and strategic intent. The nature of the change might be functional, multi-functional, or enterprise-wide. Governance, which determines where accountability lies, might be centralized or decentralized. Strategic intent for the digital transformation entails establishing why the organization is undergoing the change — to achieve greater customer intimacy, improve operational excellence, or drive organizational growth.
APQC research participants cited change management as the most critical success factor for supply-chain digital transformation. The effort can radically alter the substance and nature of employees’ work and required skills. Some employees will be uncomfortable, while others will fear losing their jobs. The depth, breadth, and evolving nature of change involved in digital transformation necessitates a more responsive change-management approach. There is no new normal after the transformation — there is only the next normal.
In 2020, expect to see organizations continue to invest in the foundational elements of digital transformation: data management and advanced analytics. By getting a firmer grasp on data cleanliness, accessibility, and the analytics needed to build algorithms, supply chains will see progress in the widescale implementation of digital transformations.
Digital initiatives are broad transformational initiatives. Leading organizations are establishing strategies for supply-chain digital transformation with a clearly defined scope, governance model, and strategic intent.
Marisa Brown is senior principal research lead for supply chain management at APQC.
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