Digital Transformation: The Journey to Operational Excellence

June 7, 2018 Gary Neights

Supply chain executives need to increase their digital transformation efforts across their supply chains to gain intelligent visibility, leading to greater efficiencies, less risk, and improved profits. To succeed in the process manufacturing industry marketplace, leaders realize that digital transformation of the supply chain is a journey, not an instantaneous fix. 

Digital transformation helps your company achieve operational excellence and sets your company apart from the competition. However, many companies - are challenged to successfully cross the digital divide. Some lessons learned that help you think about issues other organizations faced as they made the transition.

  1. Know your differentiators.  Critically assess what differentiates you. Is it being a low cost, reliable supplier of commodity chemicals?  Having the rapid ability to create highly engineered products?  Capability to keep many SKUs in stock at the right locations to meet demands?    Knowing your core competence and place in the market helps you focus on what is important to digitally transform- and how best to accomplish it.
  2. Embrace customer variability.  Most companies take demand signals from customers in any form the customer provides. Having the systems and processes to transform this customer variation to what your ERP system needs is critical to operational excellence.
  3. Govern your data. Keep data accurate over time. A lack of data governance leads to incorrect reporting, inability to get system to scale, hidden work around processes and manual data manipulations.  Correcting later is daunting. 
  4. Don’t outsource your core.  Outsourcing to a low-cost provider boosts the bottom line in the short run but risks losing intellectual capital. For example, automating the accounts payable operations in chemical companies is not core. Nor is IDOC to EDI data mapping.  Chemical manufacturing and managing customer relationships are core competencies.      
  5. Work in phases. Designing a 100% automated process day one misses the mark and is very expensive. A solution that automates use cases and pushes exceptions to qualified staff yields high returns at a much more reasonable cost. Phasing it lets you get value early on while building best practices into the system. 
  6. Getting support to make the journey. Assign a knowledgeable leader to develop expected outcomes, costs, opportunities, and challenges. Planning the journey to operational excellence needs process and organizational maturity to pick feasible targets. They say a plan is only an hallucination without execution, so the leader needs to assess cost and timing, systems and process skills to design a to-be approach, and change management to drive it execution.
  7. Technology as a driver. Process automation – either within an organization or with external partners – is an excellent mechanism to improve processes and transform knowledge into organizational assets. 
  8. Importance of a robust Digital Supply Network (DSN).  A proven Digital Supply Networks is part of the operational excellence transformation journey, providing a technology foundation for improving inter-business processes, expanding supply chain relationships, increasing revenues and reducing operating costs.
  9. Gaining end-to-end visibility. Businesses must build collaborative relationships across their network of trading partners to achieve End-to-end visibility. By achieving end-to-end visibility your business will be able to respond more quickly to demand changes and will be better positioned to beat the competition
  10. Learning from the journey. To start the journey, an end-to-end value stream diagram is created that starts from the time an order is received until the time it is delivered to the end customer. As the process and issues are recognized and transformed, it’s important to document what is learned from the experience.
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