The current age of digitizing reminds me of a historic event. 140 years ago, the then common way of communicating experienced a major disruption: the invention of the telephone. The communication by use of this brand new tool started to replace the conventional form of communication via post through horse carriage. Similar to the invention of the telephone, business leaders seem to acknowledge the huge potential of digitizing essential supply chain processes, as the ‘Digital Transformation’ workshop in Antwerp has shown.
Rooted in a modern business environment in which consumers have high demands for quickly delivered, diversified products today’s supply chains are characterized by an ever increasing size and the associated complexity. However, the standard communication practice via P2P relations is incapable of dealing with this complexity and responsible for major cost deficiencies. Digitizing allows companies to cope with this complexity by enabling transparent real-time collaboration on a cloud-based network in a standardized data format. Or as one participant of the Antwerp workshop called the desired effect of digitizing: “We want every SC partner to be able to see the same data at the same time”.
Unleashing the full potential of digitization
However, just like the installation of a telephone connection itself at the end of the 19th century did not improve the speed and reliability of communication between supply chain partners, simply replacing paper by e-mail or pdf is far from unleashing the full potential of digitization. As one of the workshop participants pointed out with a grin, “many tend to think that simply adopting a new technology solves all of their problems”. In fact, simply introducing a new technology without leveraging its real capabilities through the right use is not only incapable of creating any value but also represents a significant cost factor as it involves disruption to existing processes. Therefore, instead of the adoption itself the key to success lies in the way a new technology is applied. In terms of digitization, success specifically depends on how digital technology is applied to allow for communication on a single, electronic platform that is visible and accessible to all SC partners. Yes, making the switch requires commitment, bravery, and patience. But more importantly, it ensures future competitiveness and helps to avoid being replaced by innovative entrants because a common platform enables the flexibility needed to serve high consumer demands at a low cost.
Embracing digital transformation
For incumbents, the uncertainty related to changing established processes within the digital transformation of supply chain processes often illustrates a temptation to wait for others to make the first step. But this bide-and-observe-attitude can be fatal because it provides first-movers with an opportunity to outpace the incumbents. The sooner the chance of digital transformation is embraced, the more a firm can benefit from it as there will be more time learning to leverage the new technology compared to competitors that are late in adopting. The agility that results from standardized, real-time data transmission significantly facilitates meeting the consumers demand for fast, reliable, sustainable, and individualized products and services.
Conclusion
Today, no business could survive without using the phone as one of its primary communication tools. The participants of the workshop understand that digitization of their company’s supply chain processes is becoming equally important for the collaboration with their supply chain partners. The fruitful exchange of ideas among participating supply chain professionals for improvement through digitization helped to mature their initial understanding and created inspiration for more tangible steps towards implementation.
What kind of commitment and procedures are you willing to take/implement to digitize your Supply Chain Process(es)?
