Prioritizing Digital Investments For Supply Chains In A New Age

Digital transformation is a key priority for most supply chain leaders, but one of the greatest inhibitors is poor stakeholder management and misalignment on business goals and objectives.

This post was originally printed on Forbes.com

For today’s unexpected (and seemingly routine) disruptions, a company’s bottom line needs more stability than ever before. Recent shocks like the global pandemic, manufacturing shortages, cyberattacks and a trapped cargo ship have evolved supply chain management from an overlooked “back office” operation into a critical and value-driving business operation splashed across front-page news.

As noted in Fortune last November, “Over the course of a decade, companies can expect disruptions to erase half a year’s worth of profits at a minimum.” No matter the industry or size and scale of disruption, building a resilient supply chain will always come with a present-day cost. But by prioritizing the right investments with a strategic approach to digital transformation, any organization can foster the right capabilities for a future-ready supply chain.

The Inhibitor To Transformation

Organizations face a myriad of challenges; however, one of the greatest inhibitors to digital transformation is poor stakeholder management and misalignment on business goals and objectives. They also face the difficulty of absorbing new and complex technologies while continuing to operate on legacy applications and processes. In my experience, a risk factor to supply chain digital transformation success is ineffective program governance — often resulting in excessive costs, project delays and poor execution of strategy.

The functionality of supply chain management will always be to find a means to an end, but it cannot promise all things to all stakeholders. As organizations embrace digitalization, many people, process and technology evolutions will occur across their ecosystems. To ensure proper alignment, collaboration with a digital partner helps integrate centrally owned operations into a digitally enabled, interconnected network of internal and external stakeholders.

Making The Most of Investments

Digitalization helps, but only if your supply chain works smarter, not harder. In the second quarter of 2020, 85% of supply chain leaders struggled with “inefficient digital technologies,” according to McKinsey. While digitalization for its own sake will never be enough to fully prepare for the disruptions of tomorrow, short-term investments pay off over time by minimizing future losses and boosting the overall bottom line.

To build more resilient supply chains, organizations should consider investing in technologies that touch all stakeholders including internal teams, suppliers, trading partners and end customers. Digitization will empower firms to improve efficiency, increase agility, lower costs and deliver on more demanding customer expectations.

Implementing A Digital Transformation Road Map

Even with the right investments, implementation will only be as good as the strategy behind it. To implement strategic capabilities and yield business-related gains, keep four overarching goals top of mind while developing a pragmatic technology road map.

• Link business strategy to an agile development plan. Bridge the communication gap between business and technology by clearly linking business priorities to innovation use cases. Agile development frameworks can create a prioritized and phased implementation approach to gain quick wins and demonstrate value.

• Improve collaboration across the ecosystem. Due to an increase in remote work, efficient internal and external collaboration is even more critical. Leveraging automated product management collaboration tools can help facilitate road map creation, expose the road map for interactive input and provide real-time visibility for improved agility and speed to value.

• Augment the existing capabilities of supply chain technology. The data and analytics in existing enterprise resource planning (ERP) and other software are valuable but limited only to the use cases of that software’s data and functionality. With a bimodal innovation approach, organizations can create a supply chain “command center” that integrates and augments those capabilities for end-to-end data, visibility and decision-making.

• Implement a portfolio governance model. Supply chain digital transformations often span multiple years with dynamic changes in stakeholders, strategies, processes and technology that require active management and governance. Over time, treating digital use cases as a portfolio of opportunities and adopting automated tools to support governance, alignment and decision-making can reduce transformation risks and improve success rates.

For supply chain leaders to navigate disruption while meeting end goals and maintaining economic viability, the right investments and strategic implementation are critical.

A New Age

While global supply chains have only just begun to embrace digital transformation, prioritizing investments with a strategic approach will inevitably pay off — not if, but when the next crisis emerges.

At the end of the day, building a future-ready supply chain is not immediate, but a proactive journey toward the benefits digitization provides. In due time, organizations that commit to digital transformation with a strategic implementation plan across their organizations, especially in the supply chain, will find success in a new age.