A CBO’s Insights on Digital Transformation
Harshit Garg, Chief Business Officer at HCODE Technologies, explains the prerequisites, obstacles to, and opportunities of digitally transforming enterprise planning and decision-making.
What are the Prerequisites for a Successful Digital Transformation?
The core of the digital transformation journey is data. It's important to ensure that we have the right data coming into our systems because all these digital transformations will be built on top of them. You need to make sure that your ERP is robust and that the data coming into it is clean, relevant, and updated in real time. We often see that data coming into ERP systems is not maintained as it should be, which is one of the most important prerequisites for digital transformation.
Another important factor is having a team in charge of the supply chain. If you don't currently have a supply chain function or it's not properly set up, the first step is to establish a proper function with defined processes. Once the processes are defined, you can automate them and move on to the digital transformation of the supply chain.
The third important thing is having the right team for the digital transformation. You need an in-house team that knows the ins and outs of the business, what's happening in the business, and what needs to be transformed.
The fourth pillar is patience. Digital transformations don't come easily or quickly. You need to set a time period for implementing the transformation and then to see the benefits. It's not easy, but it's not impossible either. You need to be patient and give your team the autonomy to implement the transformation and go through the process of understanding, implementing, and seeing the benefits.”
What are the Common Challenges Companies Face During the Process?
There is a lot to consider when preparing for a digital transformation. One important aspect is selecting the right solution for your specific needs. What do you want to transform? Demand planning, production planning, procurement planning, or something else? You need to understand what you want to transform from a business perspective and select a solution that meets your needs and future plans. Keep in mind that digital transformation is not just a supply chain or IT issue, it's an organization-wide effort. You need to have consensus within the organization and among all functions that this is a program that will impact everyone. Each function will play a key role in the transformation.
If you don't currently have any tools, starting from scratch may be easier because people aren't trained on anything other than Excel. However, if you are already using a tool, it can be difficult to switch to a new one. Consider whether you need to continue using the current tool or switch to an end-to-end system. This can be a difficult choice because you have already invested time, resources, and money in the current software.
Finally, selecting the right team is essential. You need a team that is passionate about digital transformation and has leadership support. Finding the right team can be a challenge, but it is possible to find the right people in-house and implement the transformation.
What Business Value is Realized through Digital Transformation?
The benefits of digital transformation will come in time, as the systems mature, people become accustomed to them, and things move faster. Once the transformation is complete, you will see better inventory management, a decrease in inventory and working capital due to complete visibility of inventory at each location in the supply chain. You will be able to manage inventory more effectively, which will reduce working capital. If you reduce inventory, you will also reduce inventory waste and have faster inventory cycles. You will be able to replenish more quickly, which will improve the quality of inventory by maintaining its freshness.
Productivity will also improve. Currently, you may have a team of 100 people managing your entire supply chain. Once everything is connected, digitized, and automated, you may not need that many people to do the same work. The same team of 100 people will be able to manage a larger supply chain while maintaining productivity. As you expand, you may not need to add additional human resources to manage the increased complexity. Instead, the same team will be able to handle it by relying on processes rather than people. This will allow you to move human resources to different functions without impacting the supply chain and give them the career moves they need without disrupting your supply chain.
Overall, digital transformation will also lead to cost savings through inventory savings, reduction in waste, and improved on-time, in-full (OTIF) performance. This will increase customer satisfaction and give you an edge over competitors who may not have products on the shelf while yours are available.
1.Digital transformation is important for companies to adapt to a rapidly-changing, complex world and improve their operations, and can help them manage customer requirements and uncertainties, enhance the productivity of their human capital, and improve their business overall.
2.Data management and a strong, properly functioning supply chain team are important prerequisites for a successful digital transformation, and patience is necessary to see the benefits of the transformation.
3.Selecting the right solution and team, and ensuring organizational consensus and involvement, are important considerations in the preparation for a successful digital transformation.
4.Digital transformation can lead to improved inventory management, reduced inventory and working capital, enhanced productivity, cost savings, and increased customer satisfaction.
Let's get right into it. If you can start first by please introducing about yourself and you can share what you do. Yeah. So I'm based
in New Delhi, India, and I've been working in supply chain operations for around five years, working in different aspects of supply chain from logistics, supply planning, digital transformation, production management.
And in my last role, I've been working with the CEO office of Godfrey Philips, where I was managing the digital transformation and implementing the end to end supply chain planning solution for the company. Thanks. Thank you for sharing Harshit. I see that you've been working on digital transformation for quite some time and even your most recent role in Godfrey Philips.
So maybe my question is what excites you about your current field on digital transformation? So I think with respect to digital transformation, as we all know, like the world is a VUCA place, like it's very volatile, uncertain, and there is a lot of ambiguity around there, right? And with COVID, we have seen how things change rapidly and there is a lot of resilience that is required in the operations that we perform nowadays. So I believe digital transformation gives that edge to the company where they can have the business strategy combined with their digital strategy, which gives them a great edge with respect to managing the customer requirement, managing the uncertainties that are happening around the world and gives the human capital a digital brain kind of to enable them to do better, faster, more productive and improve the overall business for the company.
Thanks. Thank you for sharing Harshit. So maybe on this note, since you've already started talking about digital transformations, we can then spend a bit more time to discuss about this. You already preluded it a bit during your introduction, but the
topic of digital transformation has been a very important discussion, especially with the recent supply chain disruptions.
So maybe if you can share why exactly is supply chain digitalization important ? Why do organizations need to focus on it and what challenges does it address for companies? Thank you. I think there are broadly three major areas I believe that can be addressed by digital transformation and supply chain, and these are the major key blockers that we see in supply chain.
I think one important part is end-to-end supply chain visibility. Right now, different functions of supply chain work to bring together a supply chain. It's the procurement team, it's the planning team, then it's the execution team, and all of them work in different silos where the information sharing between these silos is either not on the fly, not for your time, or it's the information sharing is happening in bits and pieces. So they are not receiving the exact information that is required.
One function is not having entire visibility of what is happening in the entire chain. I think digital transformation helps in solving that problem of giving end to end visibility to everyone in the business, from sales to logistics, from planning to procurement to understand what is happening in the business at each point of time in real time. The other important thing is improving the productivity. Right now we see a lot of time goes into gathering the data, managing the data, sorting the data, and a lot of time then goes on into understanding the data and finding the relevant data points or knowledge points from this data point to come to a conclusion and take a decision.
Now, decision making should take maximum time, whereas a lot of time is getting spent in to data collection, data gathering and then analyzing the data. So in a way, digital transformation of supply chain will help in getting this chunk to be done digitally through the platform, through the technology, through the software. Right? And people can spend more time on taking these informed decisions when they have better data, better insights and better knowledge.
I think the other aspect is improved planning. How we can have improved planning in supply chains? Right now, we see companies struggle in understanding where does the demand that they have to fulfill the next day, the next month, the next six months or the next year? And how can we take all that data that we have already available among us?
Then we can utilize that data to come up with better planning. How can we take all the levers that we already have in the supply chain, the procurement lead time, the logistics lead time, right? And anticipating the footfall, anticipating the demand that we would have. Right.
So nowadays we can use all this data along with the different models that are available, which are more sophisticated, which are using AI and ML techniques, to come up with better demand. If their demand is corrected and you have a better understanding of what you are going to solve the next month or next six months, you can plan your backward operations pretty well. You can have better understanding of what to procure or when to procure, and you can negotiate with your vendors who can have their inventory sorted, you can have their inventory positions understanding, you can understand your risks and you can manage those risks.
You will not be like in COVID, like we don't know like what is happening with my vendors. Like everyone is there, but everyone is not connected and we don't know what is going to come next. The digital transformation in that way can help us with better understanding of the end-to-end supply chain, better visibility, improve our productivity with respect to not spending time on irrelevant tasks and also improve our planning overall. Thanks for your sharing Harshit.
I think those challenges are very relatable for companies with having end to end deals and visibility is very hard. Improving productivity has definitely added value to the companies and of course improved planning from demand planning to supply planning. But let me touch a bit on your experience also in terms of implementing digital transformations. So when
when you had the chance to do this before, what were some prerequisites for companies to embark on a digital transformation journey?
I think that's a very important question to answer. Like before any company wants to begin their digital transformation journey, it's more important to understand first the why, then the how. I mean, if you want to go into a digital transformation journey, the core part of the digital transformation journey is the data - the data that we already are using in our current systems, the ERP that we have in place, right? We need to ensure that we have the right data coming into our systems because all this digital transformation will sit on top of your current data systems.
Right. You have some ERP, you implement these digital transformation on top of these ERPs. So you need to ensure that your ERP is very robust, the data that is coming into the ERP is clean, is relevant and it's updated real time. We find that a lot of ERP systems are not maintained in a way they should be because the data that goes into the digital transformation platforms has to be very clean, has to be very sorted, has to be very structured.
So this will be one of the most important prerequisites while moving into a digital transformation. The other is - do we have a team who is taking care of supply chain? Right now, there might be that you do not have a supply chain function. The function itself is not very proper right now.
Right. So the step one would be to go into a proper function formation where the steps are happening properly, where the processes are defined. Right. Once the processes are defined, then as the next step you can do the automation, automating these steps, and going into the digital transformation of the supply chain.
So first, starting the data. Then second, sorting the process, the current process that you have. The third important thing is do you have the right team who can do their digital transformation? You will always need the in-house team who can help in implementing the digital transformation.
The one team who knows in and out of the business, who knows in and out what is happening in the business and what is it that we need to transform in the business. And the fourth pillar is we need to have patience because digital transformations don't come very easy and don't come very fast. You would need to have a time period set for implementing the transformation and then to have the benefits of this transformation. It's not an easy thing to do, but it's not an impossible thing to do.
You need to have that patience of implementing the transformation and letting your team, having that autonomy to implement it and go through that lifecycle of understanding the process, implementing it and getting the benefits out of that. Thanks, for sharing Harshit. I think that's a very, very helpful advice. Because knowing the why of digital transformation first before the how is very useful.
And I think that from your experience, this is a clear, helpful advice for companies to make sure that their master data is clean and sorted, they have a functioning supply chain team and department to sort out the processes. And of course, like having the right in-house team who is familiar within the company to embark. And finally, the most important issue is patience. But even if all companies would prepare all this stuff, right.
And also, in your experience, right, along the digital
transformation journey, companies would face challenges when they're embarking on this journey. So what challenges do companies need to expect and how can they try to mitigate those? Right. As I said, like, there's a lot that you need to prepare before you go into the digital transformation you need to see.
Another important part is selecting the right solution for your digital transformation. Right. What is it that you want to actually transform? Is it just the Demand Planning side?
Is it the production planning? Is it the procurement planning? Or are you looking to have end-to-end digital transformation? So from a business point of view, you need to understand what is it that you are looking to transform right now?
Right. That will be the key of selecting the right solution that you want to implement. Because selecting the right solution which caters to your business needs to your future plans, is a key thing. The other thing is.
Digital transmission is not just a supply chain thing. And it's not just an IT thing. I do think it's an organization wide thing, right. So you need to have consensus within the organization, right, within the functions, that this is a function wide program that we are going to run.
And each function will have a key role playing into this digital transformation. Because this cannot be completed just with IT and supply chain. This will be an amalgamation of all the functions working in parallel with each other enjoined to transform this. The other important thing is like if you had a company who do not have any tool right now and you are starting from scratch today, this might be an easy transition for you because the people are not actually using any software right now.
Right? So they are not trained on anything other than Excel. Right. But if you are already using a tool, then it becomes difficult for people to change from one tool to another.
And you need to understand the in-house tools that you already have or some other third party software that you have implemented for a bunch of work to be done right, you need to take cognizance of, do you need this software going forward or do you need this one end-to-end system right? Because it's a difficult choice that you have to make because you have already spent a lot of time, money and resources on that particular software. Right. So you need to take a wise decision where you want to take it.
The other thing is selecting the right team for it. You need to have a team who is passionate about digital transformation along with the leadership. Leadership has to drive this, but you need to have a team. who is passionate about digital transformation.
Who wants to make this success. Who wants to have the supply chain transformed. So I think finding that right team is a challenge, but I'm sure companies do find that talent in-house and implement this solution. Definitely.
Thanks, Harshit. I think today we already learned a lot about supply chain digitalisation. Why is it important? And our viewers now know like, what are the prerequisites and the common challenges.
Right? But as in all implementation projects, we
want to maximize the value or the benefit from the company's investments. Right? And so with this, right, how can companies be able to maximize the value and benefits of digital transformation?
So the important point here is maximizing the value with the time frame. Right. As I say, like digital transformation benefits will come in some time when the systems mature, when the people get accustomed to it, right, when things will move faster. But in any digital transformation, it's a learning curve.
When we start to implement it, you will have to spend a little bit of more resources. You will have to train your employees, you will need to give extra time. You need a little bit more resources. You need to rectify the data.
You need to have better controls over the master data management, the transactional data management. Once that is done, you will see that inventory is getting managed better. So you will see a dip in the inventories, you will see a dip in the working capital that you are investing because now you will have complete visibility of the inventories at each location in the supply chain. Right.
So you will be better managing the inventory and that will be reducing the working capital. If you are reducing your inventory, then not just your working capital is getting reduced, but your wastage of inventory will get reduced. Your inventory cycles will become faster, you will be replenishing it in a much faster way, which will improve the quality of the inventory because the freshness of inventory will maintain - that will be more better. Right.
The other thing is productivity. Maybe right now you are having a team of hundred people to manage your entire supply chain. Once everything is connected, digitised, automated, you might not need that hundred people to that much of stuff. So the productivity will come in and maybe these hundred people will be able to manage a bigger supply chain for you.
So while you expand, you might not need additional set of human resources to manage the complexity. The complexity can be managed by the same set of people, so you can expand your business without expanding the human capital need. This will make your system from people dependent to process dependent. Right now, the process of supply chain somewhere is people dependent.
If you implement the digital transformation, you will be process dependent so that you can easily move your human resource from one function to another function without impacting the supply chain function. I mean, you can give them the career moves that they need without giving, without impacting your supply chain. And overall, it's like the overall cost saving aspect is there. Digital transformation will always get you cost savings in terms of all the inventory savings, the reductions in the wastages.
The most important point is you'll be serving the customers on time in full. Your OTIFs will improve, right? And that's like how you reduce on your sales losses. You reduce on the wrong inventory the wrong place.
Right. So your customer satisfaction is definitely going to improve and you will have edge with respect to your competitors who do not have product on the shelf, but your products are on the shelf Thanks Harshit. I think today, we discussed quite a bit about supply chain digitalisation. So throughout our conversation today we discuss about what is digital transformation, why is there a need for companies to embark on supply chain digitalization, what challenges to address, what are the requisites, and then what are the benefits.
maybe a quick few one-two sentences from you, if you have any final advice for leaders who are undergoing a supply chain digital transformation journey. before we close the call. I think just be patient and this will bring a lot of change in the supply chain domain itself, not just the companies. But implementing this in one company gives confidence to other companies how the supply chain is transforming and it gives them the power to transform themselves also.
Thank you. Thank you for for your time today. Thank you.
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