How to ensure that your digital supply chain transformation creates value
Jose Guzman - June 10, 2021
As a supply chain expert, I’m often asked “How can I be sure that my digital supply chain transformation will have a positive impact on my company?” Usually, this happens during a coffee break or a networking dinner. So, I’m putting pen to paper to share my insights in a brief blog post.
Overdeliver or overpromise?
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Why does this question pop up so frequently? Business leaders have to juggle budgets and priorities every year. Many of them see digital planning transformation as a project which will put a significant load on their teams, so they want to be sure of the returns. That’s why the initiatives are usually accompanied by a preliminary business case outline, listing costs and expected benefits in strictly financial terms.
They may also, for example, rely on reducing inventory levels and accelerating throughputs – goals that can be quantified and measured pretty easily. But this approach often results in rather modest ambitions and only a limited impact on the company’s overall performance and resilience. In fact, the numbers in the business case are usually very conservative because it feels more comfortable and less risky to overdeliver than to overpromise. As a result, the business case could cast doubt on whether the project is going to make a real difference.
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Adding qualitative goals to the equation
In my experience, this exclusive focus on quantifiable results tends to cloud the real weaknesses in the planning process because it reduces the effort to a game of math. Think about your volume planners losing a lot of valuable time collecting data and information. Or how about planners who need to make crucial decisions based on just gut feelings about changing demand or faltering supply (hot topics in times of a pandemic)? Traditionally this leads planners to optimize the plan for their division but at the risk of putting colleagues upstream and downstream in firefighting mode.
The question of how to make a big difference then boils down to including qualitative goals in the equation, such as supply chain visibility, the quality of decision making, employee satisfaction and engagement, and the ability and willingness of all teams across the value chain to work together for the benefit of the whole. That’s true value. That’s what you’re trying to achieve, and what eventually should impact your quantitative KPIs.
Identifying pain points and improvement opportunities
But this approach inevitably leads to scrutinizing and reshaping organizational processes, which is why some business leaders might back away from the challenge. Yet I’m convinced it’s the way to go.
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I would certainly recommend you upgrade or strengthen your business case from the very beginning of the project by engaging with business executives and sponsors as well as business leads and planning managers. This extended input could help your organization better identify all the supply chain pain points and weaknesses, along with improvement opportunities and expected quantifiable and qualitative benefits. Your company could then prioritize in multiple dimensions the actions to be included in the digital transformation.
I also recommend you set up a program for continuous monitoring and improvement to be sure that value remains a priority for everyone involved. This brings a much bigger financial return in the end.
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Jose Guzman
Regional Commercial Lead at OMP USA
Biography
Jose has been connecting with OMP customers since 2013, achieving highly productive supply chain outcomes. He is passionate about creating long-term partnerships, leveraging great ideas, problem-solving skills, and the power of transformational technologies.
