A Digital Transformation Discussion with Supply Chain Execs

Alloy recently had the pleasure of joining the Slalom Digital Innovation in Supply Chain Summit, January 23–24 in Seattle. The brainchild of Harshad Kanvinde at Slalom Consulting and Neil Ackerman at Johnson & Johnson, the roundtable was an intimate gathering of supply chain leaders that offered great opportunities to meet and learn about what’s top of mind for enterprises like Procter & Gamble, Mars, The Pokemon Company, and The Coca-Cola Company. One of the most interesting sessions was a breakout on Digital Transformation, led by Slalom. Individually and then in small groups, we brainstormed the definition, key goals, and key challenges of digital transformation.

While there was definitely variation among groups, a working definition of digital transformation emerged around the “implementation of modern digital technologies” to achieve goals like accelerating business processes, connecting the physical and digital flow of goods, and enabling efficiency, speed, and scale.

Over twenty different challenges were brought up, but the larger group culled that down to six key challenges before we got back into our small groups, each focused on distilling one of the different challenges into a core problem statement and ideas for how to overcome it.

1. How does a company establish a clear end state vision for digital transformation?

Often digital transformation initiatives suffer because the teams involved don’t have a clear vision of what it’s trying to achieve, or each has their own vision of what the end state should be. It basically goes without saying that this situation is problematic and can doom your transformation before it even starts.

Think about your end state vision from a “bottoms up” and a “top down” perspective — how it will benefit day-to-day users, as well as achieve the goals of leadership? Also consider the “why now.” In other words, why is your company deciding to embark on a digital transformation initiative now, and what events are driving it? These questions will help everyone on the team evaluate what the end state should be, culminating in a clearly laid out vision that everyone is aligned on.

Doing this up-front work will pay dividends as you continue on your digital transformation journey and questions or other challenges inevitably arise. However, while having a clear and constant end state vision throughout your digital transformation is critical, you can (and should) be flexible on the “how” it is accomplished.

2. How do we set up a trusted single data source?

Everyone agreed data is a competitive advantage in today’s world, but there’s data everywhere and it’s difficult to know which data to trust and how to use it. It can feel overwhelming, making it hard to know where to even start.

A common recommendation is that companies start small and build momentum from there — identify a good data source, establish learnings, and then begin applying them to other data sources. Recognize that messy data is inevitable and just accept it, creating a culture of transparency that focuses on fixing issues with bad data vs. placing blame for it and leveraging technology to help curate the data.

Also remember that data needs to be made accessible to everyone. Not just physically accessible, but accessible through education on how to use data and get the most out of it, understanding not everyone will be as data savvy as your analysts or data scientists. You can’t assume that you know how different teams will use the data, which also means it’s key to establish a flexible solution that will meet varying and evolving user needs.

3. How do you handle change management?

Poor change management is a key reason why teams ultimately stick with tools that they already know and trust, like Excel. It’s also one of the hardest parts of a transformation.

For this challenge, Rebecca Olson, VP of Sales at Alloy, shared tried and tested approaches to change management from her days as a strategy consultant helping companies use technology to fuel growth:

  • Start by diagnosing the current state, and doing a mental “time travel” exercise to help everyone understand why the company can’t stay in the current state
  • Then, articular the future state and associated benefits, whether it’s a specific opportunity for the company to capture or problem for the company to avoid
  • Map out a credible path to achieve change, realistically taking into account the time and resources required, and provide complete transparency throughout the process to build trust
  • Ensure you have executive commitment and identify change agents in the organization who can help provide feedback along the way
  • As you approach different stakeholders across the ecosystem, always keep in mind the WIIFM (“what’s in it for me”) for them in describing the benefits

4. How can you overcome a deeply rooted culture to drive innovation and transformation?

Closely related to the prior challenge, one of the top reasons change is hard is because companies have a certain way they’ve always done things, that they’ve perhaps been doing for decades, that is already ingrained into everyone. It’s also why it’s much easier for new digital-native brands to leverage technology to disrupt an industry; they are unencumbered by a deeply rooted culture.

However, a strong culture can also be an advantage because it has strong, well-established core values. Aligning change and digital transformation goals to those shared core values can be a very powerful force and bring together stakeholders across the enterprise, regardless of team.

5. How do we decide which new technologies to invest in, given the many choices?

Compared to change management and working within a deeply rooted culture, technology choices can seem like the easy (and exciting!) part of digital transformation, but it’s no cakewalk either. There are a plethora of technology solutions and every vendor touts how theirs is the best, so how are you to sort through the noise and determine which is actually the right one for your needs?

While we would all like to get it right the first time, chances are you won’t. That means what may be most important is setting up a flexible “plug and play” framework for easily testing out new technologies, and being able to easily swap them out if they don’t work out or something better comes along. This approach is already common in software development, where teams can easily swap out a tool, like a project management software, in a couple days without disrupting existing workflows.

At least to start, it may also be prudent to keep the group of collaborators small, as the more stakeholders there are, the more requirements will be added in, making it more difficult to align on a technology that everyone is happy with. If that clear end state vision described above has been created, you can feel confident that the choices the small team makes will reflect the organization’s overall goals and priorities.

6. How do we scale more effectively?

It’s easy to execute a small pilot project, but companies often get stuck when it comes to gaining buy-in and approval for a full rollout. Instead of waiting until a pilot has been completed and this challenge starts coming up, ensure you consider it from the beginning.

For example, a common question is where to build vs. buy when it comes to new technologies and capabilities. When making the decision, take it account what each approach will require not only for the initial pilot, but for the full scale rollout as well:

  • How long will it take to implement?
  • How quickly can it scale, to more users, more partners, more markets, etc.?
  • What resources will be required to scale, in the form of people, infrastructure, money, etc.?
  • What are your company’s core capabilities, and how do you want to grow them?

In addition to technology, also lay the foundation for scale by putting in place processes, metrics, and incentives just as you would for any project, even though it’s “just” a pilot. That way, when you are ready to grow, people are ready and excited for the benefits transformation will bring.

There are certainly no shortage of challenges when it comes to digital transformation. However, almost all leaders believe the benefits are worth it, especially for supply chain. In this recent Market Spotlight, IDC describes how supply chain is now a key enabler of business performance and supply chain transformation is cited as a top priority by 90% of manufacturers and retailers.