Every time I come across the phrase “digital transformation,” I can’t help but wonder, “Is this just another snazzy IT buzzword?” To be fair, it’s often misused as a marketing ploy to lure you into purchasing some shiny IT solution that you may not even need. But let me emphasize the significance of a solid digital transformation strategy. Indeed, IT is not just a collection of passing fads or just the cost of running a business anymore. In this article, I’ll explain the true meaning of digital transformation and demonstrate how it seamlessly interconnects with a company’s ongoing business strategies. Also, I’ll share with you 14 examples of emerging technologies that are powering digital transformation.
- Digital Transformation: What Needs To Drive It And What Enables It?
- Digital Transformation Strategy: An Approach To Improve Supply Chain Processes And Reinvent Business Offerings.
- The 4 Types of Digitization That An Organization Can Take As Part Of Their Digital Journey.
- Emerging Technology Examples Of What A Digital Transformation Strategy Can Do For Your Supply Chain.
Digital Transformation: What Needs To Drive It And What Enables It?
First, Digital Transformation Is Driven By Business Goals.
Indeed, IT has become embedded in the very fabric of businesses today. In fact, it goes beyond just streamlining processes. Certainly, it now empowers businesses to evolve, reinvent themselves, develop innovative products, and tap into new markets. Further, it is tied to both critical business outcomes and the products they offer. Moreover, digital transformation is not just another project to finance! What’s more, it is important to clarify that digital transformation isn’t about purchasing some cutting-edge software that’ll magically turn your business into an endless cash factory.
Second, A Digital Transformation Is Enabled By Emerging Tech.
On the other hand, it is important to understand emerging technologies that will enable businesses to achieve their goals. To help you get started on your journey toward digital transformation, I’ll share 14 examples of digitization initiatives focused on supply chains. Indeed, these are just a small sampling of tech initiatives that businesses can incorporate into their digital transformation strategy.
Digital Transformation Strategy: An Approach To Improve Supply Chain Processes And Reinvent Business Offerings.
A digital transformation strategy is designed to integrate information technology into all aspects of a business. In particular, this includes supply chains. By embracing a digital transformation strategy, organizations can improve their supply chain processes. Thus, making them more efficient and cost-effective. Further, this can lead to an enhanced customer experience, reduced lead times, and a competitive advantage. Lastly, digital transformation allows businesses to reinvent their product and service offerings using innovative technologies.
Now, there are a lot of definitions for digital transformation. For the purposes of this article, here is the definition I’ll use.
“Digital transformation leverages information technology to move the organization from siloed departments that are project-based and output-focused to being product-based and outcome-focused.”
What I like about this definition is it focuses on business products and outcomes versus focused solely on technology for technology’s sake. Also, this definition addresses how information technology is evolving in its relationship to business organizations. Specifically with a digital transformation strategy, business leaders take a strategic viewpoint of leveraging technology. Further, they stop viewing IT upgrades as just a project or an isolated software enhancement. Most businesses would agree that information technology is now part of their business’ DNA. Moreover, it is a critical part of its business outcomes and how businesses add value to their customers. Indeed, information technology can no longer be thought of only in project-based terms or system outputs.
A Digital Transformation Strategy – Two Outcomes
Per Gartner, the outcomes of a digital transformation strategy fall into two broad categories:
- Digital optimization outcomes result from improving existing processes and customer experiences.
- Digital transformation outcomes result from reinventing how the organization serves its market through net-new products, services or business models
In the recent past, most businesses have implemented IT digital optimization projects to pursue specific technology-based outputs and deliverables. Now, many businesses are beginning to realize they need to take a more strategic approach to IT. This is because most businesses now realize that their IT offers a competitive advantage. Indeed, it is not just another cost to doing business.
So, this is where a digital transformation strategy comes in. Specifically, it combines both digital optimization and transformation into a master plan that encompasses the entire organization. So, with a digital transformation strategy, both optimization and transformation occur in parallel. Ideally with an organizational strategy in place, transformation initiatives take center stage. As a result, businesses bring to market new products, services, and even business models.
The 4 Types of Digitization That An Organization Can Take As Part Of Their Digital Journey.
There are four primary strategies that organizations can adopt when planning their digital transformation journey within the supply chain. Also, these types of strategies are driven by the business goals of the organization, competitive factors, and where the organization is on its digitization journey. Further, these strategies can have limited goals such as to optimize a business process. Or on the other hand, these objectives can be a revolutionary change to fundamentally change the culture of an organization. Lastly, it is not technology that drives these digitization approaches, but the business’ goals to be achieved. Below is a description of the 4 types of digitization strategies a business can adopt based on the outcomes their leadership envision.
4 Types of Digitization
1. Business Process Optimization. Here, organizations focus on more traditional business process optimization to streamline operations and improve efficiency. For example, implementing robotic process automation (RPA) can automate repetitive tasks. As a result, this reduces human error and frees up employees’ time for more strategic activities.
2. Business Model Transformation. This is a type of strategic initiative that adapts to changing market dynamics and leverages new opportunities. For instance, traditional brick-and-mortar retailers can shift to an e-commerce model, expanding their reach and offering customers a convenient online shopping experience. Thus, this transformation allows organizations to tap into new revenue streams, reach a wider audience, and stay competitive in the digital age.
3. Business Domain Transformation. As part of their digital transformation journey, organizations can explore business domain transformation by expanding into new markets or diversifying their product/service offerings. For example, a software company specializing in accounting software may expand its domain by developing project management software to cater to a broader customer base. Hence, this transformation enables organizations to capitalize on emerging trends, enter untapped markets, and drive business growth.
4. Organization or Business Culture Transformation. Also, organizations can focus on transforming their culture as part of their digital transformation journey to foster innovation, collaboration, and agility. For instance, implementing agile methodologies and promoting a growth mindset can encourage employees to embrace change and experiment with new ideas. As a result, this cultural shift enables organizations to adapt quickly to market changes, drive continuous improvement, and nurture a culture of innovation.
Emerging Technology Examples Of What A Digital Transformation Strategy Can Do For Your Supply Chain.
As businesses embark on their digital transformation journey within the supply chain, they may leverage various emerging technologies to optimize processes and drive innovation. Now, it is key to understand that there is no one specific type of technology or software that will enable a business’ digital transformation. Indeed, a digital transformation strategy is owned and executed by the business’ leadership team. Certainly, they are the ones that set the direction for the company and this includes leveraging new information technologies.
To get a better idea of what types of technology initiatives could be part of a business’ digital transformation strategy, below is a list of 14 digitization initiates. Certainly, this list represents only a few information technologies available to supply chains today. For a more comprehensive list of emerging technologies, see my article, Logistics Technology Trends: The Best Advice To Empower Your Supply Chain Right. Again, what is key for businesses is to choose technologies based on their specific situation and business objectives.
1. AI-Powered Autonomous Negotiations For Supplier Sourcing.
Here, businesses can leverage AI-powered autonomous negotiations to streamline supplier sourcing. For example, using natural language processing and machine learning algorithms, companies can automate the negotiation process by analyzing historical data and market trends to optimize supplier contracts and achieve cost savings. For more details, see my write-up, Supplier Sourcing Tech Trends: AI And Data Analytics Game-Changers.
2. Use Of AI and Data Analytics To Power Demand Forecasting.
In this case, businesses can use AI and data analytics for accurate demand forecasting. For instance, companies can leverage historical sales data, customer behavior patterns, and external factors like weather conditions to predict future demand. This allows them to optimize inventory levels, reduce stockouts, and improve customer satisfaction. For more information, see my article, Supply Chain Planning: Data Analytics Advice That Will Result In A Better Way.
3. eCommerce Cloud-Based Software Platforms To Integrate Workflows And 3rd Party Software.
By adopting a digital transformation strategy, businesses can integrate their supply chain workflows and third-party software through eCommerce cloud-based platforms. For example, companies can use platforms like Shopify or Magento to seamlessly connect their inventory management systems with online marketplaces like Amazon or eBay, enabling efficient order fulfillment and real-time inventory updates.
4. Omnichannel Retailing Automation To Offer Customers A Seamless Experience.
Through digital transformation, businesses can automate omnichannel retailing to provide customers with a seamless shopping experience. For instance, companies can implement centralized inventory management systems that synchronize product availability across multiple channels such as physical stores, e-commerce websites, and mobile apps. This ensures that customers have consistent access to products regardless of the channel they choose.
5. Robotics and Automation for Improved Warehouse Efficiency.
Here, companies can leverage robotics and automation technologies to enhance warehouse efficiency. For example, businesses can deploy autonomous robots that navigate warehouses to pick and pack items, reducing human error and increasing operational speed. This improves order accuracy, reduces labor costs, and enhances overall supply chain productivity. For more information on intelligent robots, see my article, Warehouse Robots – 7 Types Of Truly Revolutionary Smart Robotics That You Need To Know About.
6. Internet Of Things (IoT) Trailer and Freight Status Monitoring.
Through digital transformation, businesses can leverage IoT technologies for real-time trailer and freight status monitoring. For instance, companies can install IoT sensors on trailers and containers to track their location, temperature, humidity, and other relevant parameters. This enables proactive management of logistics operations, ensuring timely deliveries and minimizing the risk of product damage. For more details on trucking technology trends, see my article, Trucking Tech – 9 Awesome Innovations That Are Going Mainstream.
7. Drones Technology For The Transport Goods And Inventory Visibility.
In this case, businesses can utilize drone technology for efficient transport of goods or to enhance inventory visibility. For example, companies can employ drones for last-mile delivery in remote areas or use them to conduct aerial inventory scans in warehouses. This reduces delivery time, improves inventory accuracy, and enhances overall supply chain visibility.
8. Leverage Artificial Intelligence (AI) Automation For Invoice Processing Analytics.
Through digital transformation, businesses can leverage AI automation for invoice processing analytics. For instance, companies can use AI algorithms to extract relevant data from invoices, automate invoice matching with purchase orders, and identify discrepancies or anomalies. This streamlines the accounts payable process, reduces manual effort, and improves financial accuracy. For more information, see my write-up, Exploring New Technology And Methods As Alternatives To Traditional Freight Invoicing And Payment.
9. Blockchain for Enhanced Traceability Of Controlled Products.
Here businesses can leverage blockchain technology to enhance the traceability of controlled products. For example, companies in the pharmaceutical industry can use blockchain to create an immutable record of each step in the supply chain, ensuring transparency, traceability, and preventing counterfeit drugs from entering the market.
10. 2D And QR Barcodes Able To Store More Data And Increases Interoperability.
Through digital transformation, businesses can utilize 2D and QR barcodes that can store more data and increase interoperability vs. 1D traditional barcodes. For instance, companies can implement QR codes on product packaging to provide customers with links to detailed information about the product’s origin, documentation, and even related products.
11. Integrating Digital Twins for Accurate Simulations.
In this case, businesses can integrate digital twins into their supply chain operations for accurate simulations. For example, companies can create virtual replicas of physical assets such as warehouses or production lines. By simulating different scenarios and analyzing real-time data from these digital twins, businesses can optimize their supply chain processes and identify areas for improvement.
12. Decision Intelligence (DI) To Automate Decision Flows.
Through digital transformation, businesses can leverage decision intelligence (DI) to automate decision flows. For instance, companies can use machine learning algorithms and predictive analytics to analyze historical data and make data-driven decisions in real-time. This improves operational efficiency, reduces manual intervention, and enables faster response to changing market conditions. For more information on decision intelligence apps, see my article, Decision Intelligence Tech To Empower Logistics: The Ways This New Automation Is Better.
13. Virtual Reality (VR) and Augmented Reality (AR) in Workforce Training.
Here, businesses can incorporate virtual reality (VR) and augmented reality (AR) technologies into workforce training programs. For example, companies can use VR simulations to train employees on complex tasks or AR overlays to provide real-time guidance and information during assembly processes. This enhances employee skills, reduces training costs, and improves overall productivity.
14. 3D Printing for On-Demand Manufacturing.
Through digital transformation, businesses can leverage 3D printing technology for on-demand manufacturing. For instance, companies can use 3D printers to produce customized products or spare parts without the need for traditional manufacturing processes. In some cases, this will radically streamline the supply chain. As a result, this digital solution reduces lead times, minimizes inventory costs, and enables businesses to respond quickly to customer demands.
For more information and resources on digital transformation, see Gartner’s Where and How to Target Your Digital Business Transformation, PlanView’s DIGITAL TRANSFORMATION STRATEGY: WHAT YOU NEED TO KNOW, AWS’ What is Digital Transformation?, and GEP’s Digital Transformation Roadmap for Supply Chains. Also for the latest trends on supply chain technologies, see my article, Logistics Technology Trends: The Best Advice To Empower Your Supply Chain Right.
Logistics Technology 2023 Trends: The Best Advice To Empower Your Supply Chain Right.
The astonishing number of technologies enabling today’s modern supply chains is truly impressive. It’s not just a few new technologies, but rather dozens that are transforming supply chain operations as well as improving dramatically the world’s standard of living. Indeed, it is the key enabler that provides us the luxury of shopping from home, same-day delivery services, and seamless access to a multitude of goods and services.
Click here, to preview the vast array of logistics technology enablers and trends transforming supply chains. Additionally, I’ll examine with you how these groundbreaking innovations impact various supply chain functions. In particular, these trending technologies are changing how supply chain leaders approach supply sourcing, planning, eCommerce fulfillment, warehousing, trucking, supply chain visibility, freight bill auditing & payment, and even automation of supply chain decision flows. So, please enjoy this article and let it guide you towards crucial technologies and resources to improve your own supply chain operation.
Greetings! As an independent supply chain tech expert with 30+ years of hands-on experience, I take great pleasure in providing actionable insights to logistics leaders. My background includes implementing 100s of innovative solutions using emerging technologies and a data-centric development approach. I have also provided business intelligence (BI) solutions for 1,000s of shippers. For more about me, click here.