Challenges and Risks in adopting Digital Disruption

David Cahn | Global VP of Marketing | Elemica | Insights Success

Technological innovation is happening at a faster rate than ever before, causing digital disruptions for many businesses. A digital disruption is a transformation that is caused by emerging digital technologies and business models. These innovative new technologies and models can impact the value of existing products and services offered in the industry, actually disrupting the current market and causing businesses to re-evaluate their competitive advantage.

Ignoring digital disruptions can impact businesses. Remember Polaroid? The company led the market with its cameras that created instant pictures. Yet in 2001, the Polaroid Corporation filed for federal bankruptcy protection because the company failed to make the smooth transition from analog to digital cameras. The corporation decided to bet on their past innovations and, as a result, lost to companies who jumped on the digital bandwagon. By keeping abreast of changes in demand, businesses can follow the trends and adjust their strategies to embrace these changes, which will help them to thrive and grow profits.

Today’s digital disruptors are companies like Amazon and Uber, who use technologies to out maneuver the competition and build growth. Disruptors can be startup companies or long-established businesses. A wait-and-see attitude will not give a business sufficient time to make a comeback when the disruptor begins to dominate the industry.

Companies must continuously reinvent their business using digital disruptive technology or watch from the sidelines while they lose market share. Yet, many businesses still struggle with acceptance, and others don’t know where to start the journey.

Accepting Digital Disruption

Digital disruption is fueled by next generation technology, such as artificial intelligence, data analytics, the Internet of Things and software-enabled platforms that tie all these technologies together. C-level executives understand that any industry can be profoundly affected by digital disruption and no one can afford to ignore the threat. In other words, digital disruption rewrites the rules of business.

Digital disruption begins with acceptance of digital transformation using digital technologies within operations and ecosystems. Today’s technology allows all business stakeholders to share a single network, connecting and collaborating on supply chain operations from one end of the enterprise to the other. Each trading partner has access to information generated through the network in order to gain visibility to all aspects of production, procurement, transportation and distribution. With the proper information, executives can make qualified decisions that drive improvements in the business.

Accepting digital disruptions within the enterprise means the business is no longer worried by the disruption and instead leverages strategic planning and technologies to drive the business. Disruption is accepted into the culture of the organization so innovation is a day-to-day experience. Instead of concern, the business will be better able to sense and respond to changes in demand and disruptions to mitigate any risk.

Often a business has to decide whether to respond to the digital disruption or not. While it is not conducive to ignore the disruption, businesses may not always have to respond. Instead, the business can complement the disruption by adding value to it. An example would be to create technologies that augment the disruption, such as software (added value) for an iPhone (disruptor).

Beginning a Digital Transformation Journey

To start the journey, management needs to design a strategy for digital transformation that involves people, processes and partners. The strategy should be broken down into process steps that contain material, information and people flow. Each employee knows that the product moves from process A to process B in a specific quantity, at a specific time, to a specific location. Because of digital technologies, people have visibility into what is happening with each step, giving them the ability to uncover bottlenecks that can cause delays or poor product quality.

Today’s technology allows all stakeholders to share a single network, connecting and collaborating on supply chain activities from one end of the enterprise to the other. Each trading partner has access to information generated through the network in order to gain visibility to all aspects of production, procurement, transportation and distribution. With the proper information, executives can make qualified decisions that drive improvements in the business.

Digital Supply Networks (DSN) are part of  a digital transformation journey, providing a technology foundation for improving inter-business processes, expanding supply chain relationships, increasing revenues and reducing operating costs. DSNs create greater opportunities by integrating suppliers, customers, and logistics service providers in various ways depending on the level of inter-business processes that are performing.

One method is to connect via ERP-to-ERP integrations with high-volume suppliers and customers to streamline and automate sell-side and buy-side transactions. A second technique is through some type of portal for order capture and invoicing for inter-business automation. Finally, some leading DSNs provide email as a simple onboarding method to digitize an inter-business process without requiring supply chain partners to have any integration software.

Benefits of Digital Disruptions

Digital transformation helps customers know where their “stuff” is at all times, similar to the conveniences derived from mobile apps, where a taxi is ordered and the route visualized on the phone screen. Emerging next-gen end-to-end visibility applications in concert with a network of interconnected buyers, suppliers and logistics providers are enabling companies to lower working capital and operating expenses, mitigate risk and improve customer satisfaction by breaking down silos within the organization. With digital transformation, the supply chain is now a completely integrated ecosystem accessible by all stakeholders.

With end-to-end visibility as the key driver for an effective supply chain improvement strategy, businesses must rely on building more collaborative relationships across their network of trading partners. Gaining end-to-end visibility across transportation processes can deliver 6% or more in transportation savings, remove the equivalent of 15 people from operating costs by improving productivity, and reduce the Cash-to-Cash cycle by 4 days or more.

Digital systems gather data, which can be used for predictive analytics and machine learning to continually improve the organization. More informed decisions can be made by management. Disruptions from digital technologies can reshape markets and help with launching new products or services for less cost.

With a digital transformation in the supply chain, silos dissolve and every part of the ecosystem has full visibility to what is happening from end-to-end. Supply and demand signals can travel through the network uninhibited, alerting the appropriate parties to low levels of raw materials or inventory, or seasonal spikes in demand. Because trading partners get this information in real time through the digital supply network, they can react accordingly. Digital disruptions from digital transformations will results into huge gains in customer satisfaction, profits and efficiencies.

About the Author:

David Cahn is Global VP of Marketing for Elemica, the leading provider of a Digital Supply Network for process manufacturers.

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