Digital transformation, the real challenge for today’s businesses
Digital transformation is the subject on everyone’s minds these days. According to PWC, 66% of businesses today say they have a long term digital strategy.
From an organizational point of view, digital transformation is about better serving the increasingly digital demands of customers. But incorporating digital technology into internal business processes is just part of the story.
Since every organization can be both a supplier and a customer, it’s important to look at the entire ecosystem of their supply chain, as each step in the process influences the others. From raw material suppliers, manufacturing partners, transportation and logistics providers, to the final customer, everything is interconnected and the digital transformation of one step directly affects the others.
Digitization for better accuracy and availability of information
Data is the key to any business. As documents flow through the supply chain, so does information. Placing an order, creating an invoice, drafting a contract, proving a delivery, each of these documents represents a touch-point in the value creation chain. Most of this is done on paper, but the data these documents carry is far too important to be subject to paper-related inefficiencies.
The problems with paper are well known and it all comes down to the availability of information and its accuracy. Paper-based information is only available locally and that means that it can be difficult to retrieve, share and analyze. In the supply chain, someone’s outgoing documents are someone else’s incoming data, but to work, this information-sharing process has to be smooth and transparent. Properly managing and leveraging this data can only be made possible if it is digitized.
Quocirca’s research shows that the top cited reasons that companies still use paper are:
- Industry requirements (the need for physical signatures 55%)
- Their suppliers / customers continue to send paper (48%)
- Their employees prefer paper (41%)
Automation is the next step towards digitization
Peter Drucker, the father of modern management, famously said: “What gets measured gets improved”. We can take this one step further and say that what gets digitized can be automated. Automation is the next level of digitization.
True automation means complete execution of a process without the need of rekeying data or manual intervention. And according to Capgemini, this can result in up to a 20% savings. A company’s workforce can be liberated from mundane, repetitive and boring tasks that cause mistakes, and focus instead on tasks that create value.
A blueprint for the future
Thinking about digital transformation in the context of the supply chain forces us to recognize the interdependencies between each of the steps in the chain. Suppliers often provide a mix of paper and digital documents that need to be handled differently. Within an organization itself, a mix of document types may exist, and customers also have their own combination of digital and paper documents. This will be the case for the foreseeable future, because paper is still very much a part of the day to day in most businesses.
Moving forward, what organizations need to do is carefully assess their supply chain processes to see where paper is coming from, which of their internal processes are paper-based and finally how their customers prefer to receive their communications. Once these have been identified, opportunities for digitization and ultimately automation, can be explored.
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