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December 1, 2023

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.

The Takeaways

  • 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.

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