Why Digital Transformation Is Fundamental To A Resilient Supply Chain

Author PhotoBlueGrace Logistics - September 18, 2023

Logistics stakeholders are continuing to utilize digital transformation to meet customer expectations and keep up with global trade challenges.

What this blog is about:

  • Using automation and digital disruption to transform supply chains

  • Defining digital transformation and its customer-focused capabilities

  • 5 steps to define and implement a proper strategy for digital transformation

  • The importance of digital transformation in remaining competitive and resilient

In the last two decades, digitalization has had a seismic impact in the world, including the logistics industry. Logistics stakeholders are continuing to digitalize operations—and supply chains—through new technologies that meet customer expectations and keep up with global trade challenges.

There will be no turning back in the post-Covid times—the digital transformation is here to stay.

Companies were forced to adapt quickly to a volatile market and supply chain disruptions throughout the pandemic. Players with a flexible value chain and adaptable business operations withstood the crises more resiliently than their competitors. But it is already foreseeable that there will be no turning back in the post-Covid times—the digital transformation is here to stay.

Today, digital transformation is not just a recommended business model, it’s the lynchpin that governs the survival of a company in the highly competitive market.

Transforming Supply Chains — From Automation To Digital Disruption

Advances in technology have changed the face of business transactions. The Capgemini Research Institute found that the worldwide spending on digital transformation technologies such as hardware, software, and services will cross the $2 trillion mark over this year.

In a changing industry, digital transformation often feels like a buzzword that leads companies to rush towards streamlining operational efficiency. Businesses may also recognize the opportunity to impress their clients with new fancy interfaces. Running the digital marathon with blinders on makes it easy to lose sight of the big picture and to set wrong priorities.

Streamlining and digitizing data and automating internal and external operations increases the efficiency of the whole industry.

Automation and digitization are the first step towards digital transformation. They are cornerstones to enable modern business models, simplifying the way to do business for customers and organizations. Streamlining and digitizing data and automating internal and external operations increases the efficiency of the whole industry.

That said, digital transformation is more than that. It addresses the customer’s needs and expectations through modern technology and connectivity between different stakeholders. Digital disruption takes it one step further, disrupting the existing industry with an unprecedented business model—like what can be seen from Uber or Airbnb.

Covid-19 accelerated the necessity of end-to-end digitalization to gain efficiency and resist supply chain disruptions and market fluctuations. According to Dell’s Digital Transformation Index 2020, 89% of the 4000 surveyed business leaders stated that the pandemic highlighted the need for a more agile and scalable digital environment. Despite the existing statistic that there is significant disruption estimated every 3.7 years, the pressure for companies to adapt and survive “the new normal” was never as great as now. Recent research from McKinsey Global Institute found that up to 45% percent of one year’s revenue could be lost each decade because of disruptions.

What Digital Transformation Really Means

For companies, it is crucial to understand what digital transformation really means to take advantage of it. Digital transformation is often associated with high-end technology, such as blockchain and IoT. Industry 4.0 is another platform that enables new opportunities for companies to gain efficiency and flexibility.

The connectivity between the company and the different stakeholders is the driving force when it comes to digital transformation

Digital transformation can make the difference between a company’s success and failure. The connectivity between the company and the different stakeholders is the driving force when it comes to digital transformation. Using modern technologies makes business more accessible and more efficient but redefining an adequate mindset must not be neglected.

The heart of the digital transformation is the customer, converse to mainstream operations. Companies that don’t understand this principle are doomed to fail. It is not about using as much technology as possible nor is it about disrupting the industry; digital transformation is about creating a better customer experience. All decisions and actions should be taken around this premise. Because of this, the size of the company is immaterial, and the fear of a costly implementation or replacing the physical work is baseless. A digital transformation program has considerable potential for a high return on investment. It can ensure the business’s survival, enabling channels and capabilities to meet the new customer expectation and endure future crises.

The Proper Implementation Of Digital Transformation For A Resilient Supply Chain

Digital transformation is not a futuristic vision but a current necessity to create a resilient supply chain and business operations. It is not only about growth and profitability; it is about survival. Transforming the operating system successfully within a company is not an easy task. Agility is key when choosing the right technologies to work with; the right mindset is a must.

5 Steps To Defining A Successful Digital Transformation Strategy

There are several steps to consider defining a successful digital transformation strategy:

1.    The Customer Is King

Digital transformation is all about the customer. Automation of back-office tasks or streamlining data can be helpful, but it should always have the goal to make the customer experience better.

2.    The Roadmap

Each business must develop a clear vision of how business interactions between the company and the customer should look like. The analysis is intended to highlight key areas that don’t yet provide the desired customer experience. Based on this vision, a roadmap must be created to identify the needed capabilities to execute this plan.

3.    Leveraging Digital Technologies

Once the roadmap is created, the business must identify tools to bring the needed capabilities into the picture. Digitalization, data streamlining, or end-to-end visibility play a vital role in optimizing business operations. An investment in the right equipment will enable transparency across the value chain and therefore gain more efficiency.

4.    Company’s Culture + Mindset

To move from the existing state of affairs of the company, a digital transformation is required. Most digital technology provides efficiency gains, but if the company lacks the right mindset to change the thought process of all involved business parties, the implementation of new strategies and technologies most likely has not the desired effect. Creating a new culture within the company that is aligned to create an exceptional customer experience is key to success.

5.    Collaboration With Key Stakeholders

An essential part of digital transformation is to align partners and key stakeholders within the value chain to the same strategy. A resilient supply chain ultimately depends not on one but all involved parties.

Digital transformation is a journey driven by a company’s goal. It is about using digital technologies to optimize business operations and culture to meet market changes and create a unique and satisfying customer experience. A solid road map, liable partners and stakeholders are critical for success.

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