Unless you’ve been hiding under a rock, you’ve been hearing a lot about “digital transformation.” Chances are, though, you don’t know what exactly it means—or why you should care. You may think it’s just about replacing your old software with more modern, digital technologies. That’s certainly an important part of going digital, but it’s hardly transformative.
CIO defines digital transformation as “the acceleration of business activities, processes, competencies, and models to fully leverage the changes and opportunities of digital technologies and their impact in a strategic and prioritized way.”
That’s a lot of jargon. But what does it really mean for manufacturers?
At its heart, digital transformation is about more substantive change—how you improve your business with technology. For most manufacturers, the way to bring about the greatest business improvement is by transforming the supply chain.
A recent McKinsey study found that the average supply chain has a digitization level of just around 40%, the lowest of 5 business areas they examined. Less than 5% of executives they surveyed reported that the supply chain is the focus of their digital strategies. This is a major missed opportunity. The same McKinsey research suggests that, on average, companies that aggressively digitize their supply chains can expect to boost annual earnings before interest and taxes by more than 3% and annual revenue by around 2%. This represents the greatest growth potential of any business area.
So how do you transform your supply chain? Start by blurring the lines. Your supply chain likely can’t be represented by a straight line from a resource to your customer. Your suppliers may include distributors, wholesalers, customer contacts and competitors. And there is a good chance that your company is a link in someone else’s supply chain. It’s time to start collaborating up and down your supply chain to cooperatively manage risk, innovate more rapidly, and solve problems creatively. All of which will make your supply chain stronger and more resilient and your business more productive.
Perhaps the easiest way to begin transforming your supply chain is to implement one system of record for all your supplier related data. One system you can trust that’s available anytime, from anywhere, to anyone who needs access. You get all that, and more, with LiveSource, a cloud-based, integrated, flexible platform for all supplier-facing interactions.
With a single system of record for collecting and normalizing data and then pushing it down to transactional systems, everyone along your supply chain will be operating from the same set of information. You’ll be able to improve quality, while cutting costs and improving innovation.
That’s what digital transformation is all about.