Daunted by Digital?

Rob Barrett, Advisory Principal, KPMG U.S.

No doubt you’re thoroughly aware of digital disruption and how it has given rise to new offerings, competitors, and heightened customer expectations. Every company is at a different stage in its digital evolution with some successfully executing pilots or launching new business models and an equal or greater number perplexed as to where to begin in creating and implementing an effective digital strategy. Further, how do you build in the ability to continue any momentum your business is currently experiencing to leverage disruption for new opportunities?

Whether you want to optimize existing processes or transform entire operations, this article will cut through the hype and help make your digital journey feel a little less daunting. Here is some brief pragmatic advice for companies preparing to build a digital supply chain strategy to compete and provide superior customer service in a digital world.

1. Aim for frictionless processes and effortless decision-making

When it comes to the performance of a supply chain, it’s really just a function of two things; how efficient the processes are and how effective the decision-making is. No matter how well an organization streamlines its processes and optimizes its operating model, if it still makes bad decisions its performance will suffer. Conversely, if an organization is adept at decision-making, but doesn’t have the necessary processes to execute them, then it will perform poorly.

The objective of any digital transformation program should be to improve performance. If the effort is not going to remove friction from a process or improve decision-making, it should not be part of your digital strategy.

2. Start with performance, not with data or technology

It’s easy to get distracted and captivated by the newest, shiny technology. Absolutely impressive things are currently possible with big data and powerful technologies. But performance should always be the starting point. Business leaders need to first ask, “‘What is the performance challenge?” and “What levers can I use to influence performance?”

Forget the hype surrounding the latest trends or innovations, and instead concentrate on the core capabilities and market realities of your business and the consumers you serve. Define your performance ambition and only then look to digital process and technology innovation to help in achieving that ambition.

3. Focus on ROI and payback: ‘Smart-sequence’ your initiatives

A company’s digital strategy has to be more than an array of disparate “random acts of digital.” A business-wide digital transformation that delivers ROI requires careful selection and timing of initiatives. We recommend segmenting your digital solutions portfolio into three main categories: those that stabilize your core processes and decisions required by the business; proven off-the-shelf digital technologies that improve the performance of key processes; and breakthrough digital innovations that can differentiate you from your competitors. “Smart-sequencing” involves blending the simple foundational enablers with proven off-the-shelf solutions and select innovation areas to achieve acceptable returns.

4. Nurture and develop new capabilities

Ever-changing technology is inevitably going to mean that fewer staff have the necessary skills to use new advances such as machine learning, cognitive planning and robotics. Business leaders will need to invest in different skills and develop new capabilities to stay ahead.

Many leading organizations are establishing Digital Centers of Excellence (DCoEs) to ensure learning is developed cross-functionally and investing in learning platforms with third-party content to train their workforce. In this way, staff can be made aware of new technological capabilities, how they work and how to apply them to various business scenarios. Companies are also investing in new techniques for ideation, solution design, and implementation. These include design thinking concepts, customer journey mapping and personal development.

5. Partner for success: Build an ecosystem

So, you’ve charted your digital supply chain journey. Now it’s time to think about the best way to execute against the plan. One word of advice: avoid the trap of thinking you can do it alone. Nobody in the digital world is completely vertically integrated; no one provider can do all of the things necessary in order to help you become a digital organization. You will need to create an ecosystem of partnerships with tech companies, consulting businesses and academic organizations to successfully deliver on your digitally enabled performance ambitions.

Building a digital supply chain strategy does not have to be daunting. Start with your performance ambition. Look for opportunities to improve performance by removing friction in your processes or decision-making. Think about how best to sequence initiatives. Prepare your people and build an ecosystem around you that is invested in your success.

These recommendations may seem like a lot to absorb without some amplification—we just wanted to whet your appetite. To learn more about how to pragmatically build a digital supply chain roadmap and to read our more comprehensive white paper, click here.