As business complexities evolve and organizations increasingly focus on patient experience, many are using digital transformation initiatives to produce data-driven insights. These initiatives are shaping the next generation of supply chains by enabling resiliency, risk management and efficient decision-making, while also introducing new ways to meet or exceed expectations.
ZS recently hosted a panel of experts to discuss what digital means to them and how it can positively affect a supply chain network. The panelists shared insights and learnings from successful transformations and offered advice for staying ahead of the competition. They also discussed the potential for enhanced automation, accuracy and resilience.
The three panelists were:
- Denise Sena, the executive director of integrated supply chain at Celularity
- Rajiv Anand, the founder of Quartic.ai
- Sunil Chopra, the deputy dean and IBM professor of operations management and information systems at the Kellogg School of Management at Northwestern University
ZS: The COVID-19 pandemic and geopolitical challenges have disrupted the global supply chain across industries. What key trends have you observed?
Denise Sena: Prior to COVID-19, digital transformation initiatives were focused primarily on improving the customer experience. Although the supply chain continued to keep the customer at the forefront of all activities, since COVID, digital transformation has become the centerpiece for operational efficiency and innovation. As a result of the recent supply chain issues, many organizations have established or are in the process of establishing digital transformation strategies to better mitigate the next disruption.
Rajiv Anand: The pandemic exposed a long-existing automation disconnect between supply chain and manufacturing, as it was clear firms were not prepared for the disruptions. One key outcome was that regulators were more accepting of new manufacturing processes and innovations that enabled firms to mitigate the issues caused by the pandemic. Organizations have taken advantage of this allotted flexibility and are making smart investments in workforce and technology to drive digital transformation. Investments in key technologies such as the industrial internet of things, artificial intelligence (AI) and digital twins have enabled applying analytics to data gathered from industrial assets and control systems. This has allowed organizations to gain insights into operations and trigger proactive countermeasures to potentially disruptive outcomes.
Sunil Chopra: Most organizations were focused solely on building efficiency into business operations, especially supply chain and logistics. However, a healthy supply chain network requires a balance between efficiency and resiliency, and the pandemic highlighted a long-standing imbalance. We saw the strategy to develop operational efficiencies without contingencies ended up working against most organizations. Organizations have learned from this and are starting to build regional supply chain operations to help protect them from global disruptions.
ZS: What does digital transformation mean to you? And what business challenges and pain points have been solved by going digital?
RA: Digital transformation is a concerted, organization-wide effort to build an ecosystem of integrated business systems to enable process efficiency, real-time visibility and continuous improvement. One major pain point for most firms was limited process visibility, both within and outside the organization, because it can lead to delayed reactions to disruptions and poor production planning. Improving visibility-enabled process agility has allowed companies to adapt faster to variability across supply chain networks.
DS: Both emerging and big pharma companies have made significant strides in digital transformation—albeit with different approaches. Emerging pharma companies have made incremental progress through measured investments in workforce and technology. They have targeted pain points based on the value proposition of each initiative—these include digital sales and operations planning workflows, financial planning, single source of truth and more. Emerging companies have been efficient with limited resources but lack the agility and nimbleness to achieve digital at scale.
Big pharma companies, meanwhile, have ample resources and funding. They have invested in scalable digital platforms that enable them to focus on multiple connected initiatives simultaneously, such as integrated business planning, scenario planning and more.
SC: Digital transformation pain points haven’t changed much from what they were many years ago, even with superior tools and technology. Organizations early in the transformation journey face challenges to understand how to capture the right data at the right time for the right audience. More digitally mature organizations are trying to recognize how to leverage the right stakeholders to analyze the captured data and make impactful decisions. Very few organizations are at a stage to discuss alternatives if decisions do not result in the anticipated impact. Organizations should take stock of their position in their journey and set the right goals to maximize the effect of digital transformation.
ZS: What were the key business outcomes and impacts from digital transformation initiatives?
DS: I’ve seen three major business impacts. The first was connected processes: enabling breakthroughs in operational efficiency. The second was connected people: increasing workforce productivity and service quality. Lastly, connected products: driving critical products to serve diverse needs. With a focus on business outcomes, digital transformation has opened the door to improve customer success and reduce costs.
RA: One key business outcome was smarter investments in targeted solutions across the supply chain, with the goal of enhancing resilience and increasing flexibility. Quantifying an organization’s pain points into measurable metrics, including dollar value, helped prioritize digital initiatives based on proposed value and return on investment. Increased and enhanced visibility, both within and outside organizations, had the highest priority among digital transformation initiatives, as it significantly reduced the effort and complexity of most initiatives, such as product development and design time.
SC: Organizations that leveraged technology to master data capture and data visibility put together teams to collaborate and estimate the scope and effects of supply chain issues. Such exercises enabled timely reactions to changing business conditions, thereby building resilience into supply chain operations. Furthermore, some businesses incorporated risk management techniques into supply chain planning by proactively identifying plausible outcomes and developing tactful responses to avoid worst-case scenarios. With that said, organizations should carefully assess the severity of outcomes before choosing to respond.
ZS: What is the key to successfully deploying digital transformation initiatives?
DS: Digital transformation requires cultural and behavioral changes, as well as calculating risk across the organization. Leadership should have a clear strategic vision for its digital transformation and an understanding of innovative solutions, and how they tie to the overall goals. Furthermore, management must enable people and functions to see how data, algorithms and AI open new possibilities and chart a path for success. Management should also focus on building trust and collaboration.
RA: Digital transformation is a coordinated effort that drives alignment between different teams. There needs to be investment in the workforce to ensure all employees are equipped with the right set of skills and understanding of technology so that you can build a team with diverse skills, experience, cultures and more. This creates a continuous learning environment where people learn and evolve together.
SC: Organizations must exhibit a wide scope of planning for any digital transformation initiative. Teams should work together to evaluate the complete scope of the business problem and then carefully design the digital transformation initiative so they can develop solutions to address the problem. Collaborative planning is the cornerstone of a successful digital transformation.
ZS: What do you expect for the future of supply chain digital transformation? Where is it headed and what should we anticipate?
DS: The digital transformation roadmap will continue to focus on improving human decision-making to raise the level of service quality. Innovations in demand forecasting methods will generate a more accurate and reliable prediction of customer expectations. Autonomous planning systems, powered by advanced analytics and AI, will work together to evaluate critical decisions across the supply chain to answer two key questions: “Can we meet customer expectations?” and “What is the best course of action?” These answers will help generate an integrated and efficient business plan to fulfill customer expectations.
RA: Organizations will start investing in smart modular systems that can seamlessly alter production to keep up with the variability in supply and demand. Powered by AI, manufacturing systems will become more resilient by using a closed-loop principle for scheduling and planning production cycles, as these systems will be able to predict and react faster to changes across the supply chain. Increased bidirectional visibility of the supply chain is key to enabling the closed-loop mechanism because it heightens the sensitivity to upstream disruptions and triggers adequate measures to mitigate downstream impact. Assets and humans will be equal players in the future.
SC: In uncertain business environments where planning cannot be performed in a steady state, scenario planning will help improve the dialogue and decision-making process and build resilience into the supply chain. Digital transformation initiatives will empower scenario planning by leveraging AI and automation to predict the likelihood of outcomes while events unfold. They will also trigger the best possible reactions to likely events. Operational resilience will be the next frontier.
ZS: What advice and takeaways would you offer to readers on their supply chain journey?
RA: Collaborative planning between supply chain and manufacturing leaders is needed to build resilience and increase flexibility. I urge everyone to embrace variability to achieve agility. Building a truly agile supply chain requires being prepared for the fact that the steady state will be constantly challenged. We must embrace variability.
DS: People grow when they go through a transformation or change. The power is within each of us to influence our peers on better ways to approach and manage the supply chain flow. We all can build and increase our network, build trust with new people, recruit the best and diverse talent and collaborate around data and technology.
SC: No matter the size or scale of the digital transformation, leveraging the right people and entities is key. They’re needed to evaluate the entire scope of a business problem and identify the potential risks and vulnerabilities of the proposed solutions. Reality rarely resembles the plan and forecasts are often wrong. Be realistic about the potential of things not always going to plan and develop timely countermeasures to stay on course.