Digital Transformation: Why It’s Not an “Easy Button”

There is a lot of discussion today about digital transformation, including why it’s important and what the benefits can be. It would be nice if you could just press an “easy button” to be digitally transformed and have all of the supply chain visibility you need, but the reality is that there are many factors that go into making digital transformation a reality. It goes well beyond just digitizing data and displaying it on a dashboard. What are those critical first steps and success factors? What benefits are companies starting to achieve on their digital transformation journeys? Those are some of the questions I posed to Roger A. Ciarleglio, SVP Sales, North America at Elemica, in a recent episode of Talking Logistics.

The Digital Transformation Journey

There is so much talk, and varying interpretations, about digital transformation, that I began our discussion by asking Roger for his definition and what he sees as the current adoption rate. Roger defines it as automating your key business processes, such as buying, selling and moving products, within your four walls and with your external trading partners to eliminate paper and manual processes. “By digitizing, everything happens in real time so you can respond quickly,” says Roger.

Roger continues, “As far as where companies are on this journey, most are just formulating plans, while a few have started to implement pieces, but they are only about 15-20 percent of the way there. Typically, they have worked for some time on EDI or portal connections with partners, and a few may have implemented software such as control towers or business intelligence systems. The problem is they don’t have the data to effectively feed those BI tools.”

The goal

I asked Roger what companies are hoping to achieve through digital transformation. He notes, “The nirvana companies are working toward is getting to a real-time dashboard showing the status of their supply chain with alerts and exceptions. What they really want is for it to be predictive rather than reactive. They don’t have that today. What they have is after-the-fact reporting — essentially old data. Their ERP system loses sight of the shipment once it ships and they don’t find out there is a problem until a customer calls to complain they didn’t get their order.”

Keys to success

As much as we would like to have an “easy button” for this digital transformation, the reality is that it is a long and difficult process. Therefore, I asked Roger what the keys to success are for this journey.

“First of all, this is not an IT project,” emphasizes Roger. “Because of the word ‘digital,’ people assume IT should handle the process. The reality is that it must be a joint business-IT initiative because it’s the business that has to figure what the desired goals and processes are and then IT can help them get there. And because it is transformational, there has to be executive sponsorship and involvement.

“The first step is for the business to define the digital record they want to have internally and share with their partners,” continues Roger. “The stumbling block is most companies currently only have digital connections with 15-20 percent of their partners. The critical error is that companies see the nirvana of the real-time dashboard and they go out and buy one before they have the partner connections to feed it good data.

“For example, when a customer wants to buy something from you, they send you the order with a purchase order number. You then create a sales order (and number) in your ERP. When the order is ready to ship, you create a shipment order (and number) and send it off to the customer who has no idea what that is. There is a disconnect between these multiple numbers for what is, in fact, one order. Plus, the trucking or shipping company has their own numbers for the shipment which they may use to provide real-time updates. Unless you can link all of these numbers together, you can’t provide real-time order status to the customer.”

Just get started

When discussing the journey to digital transformation, one of the things Roger and I agreed upon was that companies just need to get started now. Don’t let the enormity of the ultimate goal stymie you in “analysis paralysis.” Roger points out that an important step is for companies to ignore the common ROI analysis requirement and instead do trial and error to see what works best for their company.

Roger provided other suggestions for how companies should get started, as well as thoughts on why BI is much different than digital transformation. He also shared some examples of customer success stories. I encourage you to watch the full episode for all the details. Then keep the conversation going by posting a comment and adding your own thoughts and experiences.