Five steps for companies preparing to build a digital supply chain strategy
An article by KPMG's Rob Barrett originally published by CIOReview.
No doubt you're thoroughly aware of digital disruption and how it has given rise to new offerings, competitors and heightened customer expectations. Every company is at a different stage in its digital evolution with some sucessfully executing pilots or launching new business models and an equal or greater number perplexed as to where to begin in creating and implementing an effective digital strategy. Further, how do you build in the ability to continue any momentum your business is currently experiencing to leverage disruption for new opportunities?
Whether you want to optimize existing processes or transform entire operations, this article will cut through the hype and help make your digital journey feel a little less daunting. Below is some brief pragmatic advice for companies preparing to build a digital supply chain strategy to compete and provide superior customer service in a digital world.
When it comes to the performance of a supply chain, it's really just a function of two things: how efficient the processes are and how effective the decision-making is. No matter how well an organization streamlines its process and optimizes its operating model, if it still makes bad decisions its performance will suffer. Conversely, if an organization is adept at decision-making, but doesn't have the necessary processes to execute them, then it will perform poorly.
The objective of any digital transformation program should be to improve performance. If the effort is not going to remove friction from a process or improve decision-making, it should not be part of your digital strategy.
It's easy to get distracted or captivated by the newest, shiny technology. Absolutely impressive things are currently possible with big data and powerful technologies. But performance should always be the starting point. Business leaders need to first ask, "What is the performance challenge?" and "What levers can I use to influence performance?"
Forget the hype surrounding the latest trends or innovations, and instead concentrate on the core capabilities and market realities of your business and the consumers you serve. Define your performance ambition and only then look to digital process and technology innovation to help in achieving that ambition.
A company's digital strategy has to be more than an array of disparate "random acts of digital". A business-wide digital transformation that delivers ROI requires careful selection and timing of initiatives. We recommend segmenting your digital solutions portfolio into three main categories: those that stabilize your core processes and decisions required the business; proven off-the-shelf-digital technologies that can improve the performance of key processes; and breakthrough digital innovations that can differentiate you from your competitors.
Ever-changing technology is inevitably going to mean that fewer staff have the necessary skills to use new advances such as machine learning, cognitive planning and robotics. Business leaders will need to invest in different skills and develop new capabilities to stay ahead.
Many leading organizations are establishing Digital Centers of Excellence (DCoEs) to ensure learning is developed cross-functionally and investing in learning platforms with third-party content to train their workforce. In this way, staff can be made aware of new technological capabilities, how they work and how to apply them to various business scenarios. Companies are also investing in new techniques for ideation, solution design, and implementation. These include design thinking concepts, customer journey mapping, and personal development.
So, you've charted your digital supply chain journey. Now it's time to think about the best way to execute against the plan. One word of advice: avoid the trap of thinking you can do it alone. Nobody in the digital world is completely vertically integrated; no one provider can do all the things necessary in order to help you become a digital organization. You'll need to create an ecosystem of partnerships with tech companies, consulting businesses and academic organizations to successfully deliver on your digitally enabled performance ambitions.
To learn more about how to pragmatically build a digital supply chain roadmap, read our comprehensive whitepaper Supply chains for a digital world.