Supply chain 4.0: are we getting it right? | by Ndabeni Bagosi

Ndabeni BagosiAs companies embrace opportunities presented by the fourth industrial revolution (industry 4.0), many are moving towards digitalising their processes. This change prompts several questions, such as: are they doing it right? Are companies getting the business-flow right by implementing digital solutions? Are their efforts synchronised as well as focused on enhancing customer value?

Evidence from many corporate initiatives is that although companies are implementing digital solutions, these solutions are implemented in silos: they are incoherent and not linked to the business’ digital master plans. In some instances, the master plan, which is supposed to anchor digital strategies, does not even exist.

Despite this seemingly prevalent disconnect, many businesses have placed digitalisation and agility top of their agenda. But, why? What makes digitalisation so urgent? Possible reasons could be:

• Most business is conducted online;
• Accurate information is required to make the correct decisions;
• Bespoke services are key for customers;
• Speed is key to enhancing customer value;
• Greater supply chain agility can be introduced, which, in turn, is a catalyst to unleash value.

Traditional supply chain versus supply chain 4.0
While everybody acknowledges the inevitable impact of digital transformation, it is worth comparing the traditional supply chain to supply chain 4.0. In 2016, a PricewaterhouseCoopers (PwC) report highlighted a few key differences between the traditional supply chain model and the integrated supply chain ‘ecosystem’ that is 4.0:

Tradistional SCM Model
However, even if the table is viewed as a task-list of changes required to move towards an integrated supply chain ecosystem, there are additional steps that organisations must take to ensure that the transformation is successful. These steps include:

• Having a clear digitalisation strategy and vision for the organisation;
• Knowing the organisation’s skills and capabilities;
• Setting clear implementation objectives;
• Determining how success will be measured.

What attributes are required to make digital transformation a reality?
Many organisations driving digital transformation in supply chain have failed to achieve the value that they expected, because their focus was on technology, while ignoring the people factor. The mix between technology, people and processes is a condition for success.

According to The Hackett Group, the success of a digital-transformation deployment depends on whether supply chain professionals possess certain attributes:

Hacket Group Digitla Trnsformation Image
Digitalisation does not require supply chain and procurement professionals to be data scientists, it requires them to be informed, understand the trends and appreciate the impact on the top and bottom lines. A business’ digitalisation investment must be deliberate, as the benefits far outweigh the burden of doing it right for the right reasons.

Approaches to implementing digital solutions
One size does not fit all when creating and deploying collaborative value in digital solutions, as organisations are at different phases of their maturity. When assessing the maturity of an organisation for readiness, the focus remains the same:
• Optimising processes;
• Using the right technology and systems;
• Up-skilling people;
• Adapting the organisational structure.
The aforementioned should give you an indication of an organisation’s level of maturity and whether it is ready to take on the burden of digital transformation.

Implementing digital transformation takes place at both internal and external levels:

Implementing Digital Transformation
This parallel approach enables companies to manage digital transformation effectively, within the framework of a digital transformation roadmap. Well implemented, a roadmap could lead to entirely new business models, such as Uber, Amazon, B2B and Airbnb.

In supply chain 4.0, the objectives of advanced digital initiatives can assist organisations to reduce working capital, improve cash positions through smart warehousing and contain costs through predictive shipping and robotics. The benefits of digital transformation are many. Organisations that have successfully implemented digital transformation in their supply chain are:

• Strategic: they have a clear vision around deploying technology (holding functionaries accountable);
• Insight-driven: by having information available and data analytics they can make better decisions;
• Collaborative: through increased visibility they enforce a collaborative culture across the business.

There is value in pursuing digital transformation. However, when implementing digital solutions to boost operational excellence the focus has been on technology – an approach that misses a critical component of business, namely the people who work in an organisation along with their skills.

Thus, to gain maximum value out of digital transformation, people’s skills and attitudes towards technology are key success factors. Change-management principles tell us that barriers to change are resistance to change and there is often a lack of skills to implement solutions. The change to supply chain 4.0 is no different.

Finally, a digital transformation roadmap is a fundamental requirement when it comes to digital initiatives. This roadmap must answer the following questions:
• Where is the organisation right now in terms of implementing digital solutions?
• Where does the organisation want to go? What is needed to get there?
• What organisational capabilities does the organisation have?
• How is this benefitting our customers?
• How do we measure success?

Once these questions have been answered, it will be easy for an organisation to implement digital solutions.

Ndabeni Ngosi is Head of CAP Project, Total Africa - 

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Posted on November 14, 2018

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