Digital transformation and the value drivers of SCM

The latest organization research has recognized the importance of digital transformation in supply chain management. In the management literature, digitalization has become a crucial part of the strategic management discussion. Companies operating in the manufacturing ecosystem, have become familiar with cloud technologies. Today, they are getting rid of their legacy systems and joining platforms matching best with their needs. Traditional company-specific portals are at the end of their life-cycle and business ecosystems and platforms are here to stay.

Digital Transformation of Supply Chain Business Processes

Recently, Janet Hartley and William Sawaya published an article Tortoise, Not the Hare: Digital Transformation of Supply Chain Business Processes (Harvard Business Review, 2019). It tackles the paradigm on how should supply chain professionals move forward with the rapid development of digital technologies.

The researchers suggest that organizations should ensure their readiness to adopt new technologies with these actions:

  • Identify a supply chain technology visionary who can lead through the maze of technologies and the changing digital landscape
  • Develop a digital technology roadmap for their supply chain processes
  • Update foundational information systems

I find these suggestions very interesting and relevant. The leader needs to be aware of the technological hype, follow actively the changes and progress of the digital landscape and understand comprehensively the supply chain processes between the companies.

The technological hype

Technological hype can be described in three layers. Firstly, there is a Digital Technology layer with basic research and innovation including Artificial Intelligence, Machine Learning, Blockchain, GPS tracking, APIs and Cloud technologies.

Secondly, the application type of layer consists of various platforms with certain functionalities. There are many kinds of platforms such as Content Service Platforms, IoT Platforms, Platforms for Workflow Collaboration, Business Intelligence (BI) systems and System Integration Platforms.

Thirdly, the SCM practice is directly influenced by the hundreds of Commercial Applications available in the market. From the supply chain process’ point of view, it seems that most of the solutions are designed for intra-organizational collaboration. However, most of them have special features to inter-organizational collaboration but these features seem to be underdeveloped and rigid, using the traditional portal-logic.

The Value Drivers of SCM

To develop and establish a digital technology roadmap the leaders need to understand the value drivers of supply chain management. We suggested in a Playbook for Digital Supply Chain four value drivers: Resource Planning, Order & Delivery Management, Relation Management and Performance Management. All these drivers include many practices with collaborative value such as Capacity Management, Product Data Management, Boundary Spanning and Continuous Improvement.

To follow and understand the technological hype and connect it with the value drivers of SCM is an ambidexterity problem the supply chain leaders must face in their digital transformation journey. To cope with this challenge, a holistic and critical Digital Technology Roadmap for SCM is needed. Just make sure you have all the needed knowledge on board when designing the roadmap.

 

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