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How to Prevent Supply Chain Digital Transformation From Failing

May 20, 2022
What factors cause a supply chain digital transformation to succeed? Knowing about them can help company leaders ensure their initiatives don’t fail.

Many of today’s decision-makers are planning their supply chain digital transformation efforts. However, they must proceed carefully to avoid some of the common pitfalls that can make those endeavors fail. Here are some practical tips to help make the transition as successful and profitable as possible.

Find the Most Appropriate Technological Options for the Business

Sometimes, digital investments in the supply chain fall short because the decision-makers involved aren’t knowledgeable enough about which technological solutions are best suited for a company’s needs. It’s not sufficient to get on board with the latest technology primarily because competitors already have.

The people guiding the digital transformation of a supply chain should give themselves enough time to become familiar with many of the leading options on the market. However, before doing that, they must carefully consider what they hope tech solutions will do for the company. What gaps exist for an innovative product or platform to fill?

Carmelo Mariano, a partner at KPMG Italy, outlined some of the top reasons why tech integrations can fail. “New technologies, in themselves, do not improve performance; also required is the ability to incorporate new technologies into existing or redesigned business processes,” he noted. “The three biggest challenges to integration relate to digital overwhelm, the need for cross-functional data and, as always, change.

“Digital overwhelm can be paralyzing,” Mariano continued, “Many supply chain leaders are aware of the need to urgently digitalize their supply chains but do not know where to start. The sheer variety of available solutions can seem at best confusing, and at worst, completely overwhelming.” That’s why extensive research can be immensely beneficial. It helps people learn what’s available and ponder how those options could improve their operations.

Company leaders must also decide which business models they’ll use to facilitate the necessary tech transformations. As Mariano noted, “Adding to the choice between software solutions, ‘as-a-service’ business model iterations, cloud-based technologies, robotics and more, organizations face pressure to not only emulate their competitors but to outperform them—while at the same time making the best possible use of their technology budgets in order to do so.”

Break Down Organizational Silos and Encourage Growth

Many organizational leaders have reached a point where they realize there’s no time to waste going forward with a supply chain digital transformation. That’s happening in other industries, too.

As a case in point, a survey of executives in the oil and gas industry found that 58% believed COVID-19 had accelerated the need to pursue digital transformation. However, regardless of whether the digital transformation affects the supply chain or another part of the supply chain, it’ll be less likely to succeed if a company is stuck in organizational silos and leaders refuse to be open-minded about doing things differently.

When people or departments assert ownership over data, technologies or processes, there are often too many obstacles and resistance that prevent the company from going through the required growth that makes a digital transformation successful. Moreover, when data can travel throughout the organization, it’s easier for people to weigh in about what worked well and what didn’t.

Perhaps a new supply chain process worked well for people in the accounting department, but it caused unexpected friction for the employees handling the company’s customer service needs. Maintaining the siloed structure in that case may mean the necessary feedback between departments can’t happen. Tech-driven transitions aren’t easy, but they’ll proceed more smoothly when people can share insights.

Organizational leaders should help everyone at the organization see that the supply chain digital transformation is necessary for growth. The type of technology invested in can also take a company to the next level. For example, many companies now use artificial intelligence (AI) to reduce manual tasks and increase accuracy throughout the organization, which boosts productivity. Breaking down silos and putting the organization on a path to growth takes time and commitment, but it can help the supply chain’s digital transformation succeed.

Ensure the Supply Chain Digital Transformation Has Organizational Support

Building a strong supply chain with digital upgrades requires obtaining support from all levels of the organization. Getting executive buy-in is an excellent first step, especially because the decision-makers at the top are likely those who’ll need to approve major necessities, such as expanding the company’s tech budget to accommodate the upgrades and hiring more people to fill skills gaps.

Executives Share What Worked for Them

It’s even better if the business has a primary person overseeing the digital transformation, putting dedicated effort into steering the initiative and tackling any challenges as they arise. A 2022 survey of executives who had been involved in digital transformations revealed some helpful takeaways. More specifically, nearly 50% of the respondents believed setting clear project expectations and outlining a return on investment timeline were critical for success.

Additionally, 38% believed having a compelling and consistent guiding narrative was vital to the success of their digital transformation projects. Having a primary person responsible for that can help get the rest of the team on board and answer any questions they have during the rollout of the new supply chain processes and technology. People in the survey referred to that individual as the chief transformation officer (CTrO).

They noted that the CTrO must be an empowered and dedicated person with enough energy to keep the project moving forward. The total time spent was also a critical metric. For example, the average CTrO spent half their week on digital transformation duties. However, most of the executives polled believed they got better results when they upped their commitments to 60-65% of the total time spent.

Learning from what happened during other digital transformations and adjusting accordingly is also crucial for success. For example, the survey found that 52% of executives realized they did not invest enough in talent. Other areas of underinvestment related to change management and communications initiatives. The respondent explained how that mistake often led to preventable challenges regarding behavior changes, uptake or confidence in the new digital transformation program.

Upgrading a Supply Chain With Digital Technologies is Worthwhile

A supply chain digital transformation cannot and should not happen quickly. However, if company leaders can navigate one successfully, all the time and money they’ve invested in one will pay off. The tips here will help them understand what’s necessary to steer their transitions towards positive outcomes rather than getting stuck due to some of the common pitfalls.

It will become increasingly clear that failing to update supply chains with the most appropriate digital technologies could hurt a company’s competitiveness. That’s why decision-makers should at least begin the planning process now to keep their businesses resilient and adaptable.

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About the Author

Emily Newton

Emily Newton has eight years of creating logistics and supply chain articles under her belt. She loves helping people stay informed about industry trends. Her work in Supply Chain Connect, Global Trade Magazine and Parcel, showcases her ability to identify newsworthy stories. When Emily isn't writing, she enjoys building lego sets with her husband.