Do You Understand Digital Transformation?
The recent Best Practices for Chemicals event in Houston included an industry roundtable discussion hosted by IDC’s John Santagate on the topic of digital transformation of the chemicals supply chain. The session started with a question: Do you understand Digital Transformation?
Answers from the 30 or so participants were collected in real time via Poll Everywhere and displayed to drive the discussion.
At least 40% of the attendees who responded to the poll indicated that they had no idea what digital transformation meant. 35% said they thought they understood, but would be hard pressed to explain it. One audience member expressed the opinion that digital transformation is not a business issue.
But as the session went on, it was clear that the audience had some very concrete ideas about ways in which their supply chain processes could be improved – for example by sharing data with suppliers and customers over a business network. Whether this data exchange supports collaboration around procure-to-pay processes, track and trace, or more complicated toll manufacturing scenarios, the audience agreed that process improvements had to provide value, no matter what label is put on them. And that this value is easier to measure incrementally, project by project, than as part of a broad enterprise “transformation”.
The definition of digital transformation they found easiest to apply to the operational reality of supply chain practices was the one proposed by John: digital transformation is “transforming decision making with technology”. If we look at the chemicals supply chain with this definition in mind, we can find examples of companies using technology make better decisions:
- Using predictive analytics to identify consumption patterns and predict demand. The goal: to make better decisions about production plans and inventory levels.
- Using supplier risk analysis that marries internal data with external signals to provide a 360-degree view of suppliers. The goal: to make better decisions about which suppliers to contract with and what pricing to negotiate
- Using logistics networks to collect and analyze tracking data on goods movements. The goal: to make decisions based on real-time locations of materials and transportation resources
Are these examples transformative? Perhaps not in and of themselves. The question is how companies would change if these technology-enabled decisions were routine, ubiquitous, and, most importantly, better than the decisions companies made in the past. That question has yet to be answered.
If you have ideas about new business models enabled by digital transformation, we invite you to share. It might get you a job hosting an industry roundtable at the next Best Practices for Chemicals event next Spring.