As a modern CEO, you must embrace the fact that the only constant in the current business landscape is change. Failing to acknowledge or even embrace change is a one-way ticket to business failure.
With markets evolving at breakneck speed, creating supply chain efficiencies, streamlining operations and making better decisions faster have all become pre-requisites to enable any business to compete. And as businesses jostle to stay ahead, digital transformation and Sales and Operations Planning (S&OP) have found a place at the top of boardroom agendas.
In fact, over 50% of firms believe increased digitalisation and automation will increase the resilience of their supply chains.
And yet, when it comes to implementing these innovative approaches, many find themselves ill-equipped. Despite their best laid plans, many companies lack the foundation to deliver a full-scale digital transformation and advance their S&OP process.
A recent report from EY highlights the scale of the challenge, with only 44% of businesses reporting that their employees feel prepared for digital innovation in the supply chain. But this should be no surprise when you consider the size of the leap these companies need to make:
- 42% of companies still depend on legacy solutions that must be replaced
- A staggering 67.4% of supply chain managers report that they are using Excel spreadsheets as their primary management tool.
- More worryingly, a recent report published in the Harvard Business Review revealed that a tiny 3% of companies’ data meets basic quality standards.
So how can you overcome these hurdles to accelerate your digital transformation journey and set a solid foundation for more effective S&OP?
Digital transformation isn’t an easy task to take on. It can be complex and time consuming, and will inevitably involve every corner of your business. But if you put the right foundations in place, and establish a solid S&OP process, you will be able to overcome many of the challenges you’re currently facing.
More importantly, you will unlock new pathways for growth.
By streamlining processes, creating a culture of collaboration, and underpinning your people with digital tools, you can take significant steps to enhance your decision-making capabilities: an important piece of the puzzle as you strive to optimise your supply chain and find an edge over your competitors.
Today’s article is all about helping you on your digital transformation journey. We’ll explore how you can navigate digital transformation to unify your people, processes and technology to enable you to build a more capable S&OP process.
Defining your digital transformation journey
What is digital transformation?
At its core, digital transformation involves leveraging technologies, such as cloud computing, artificial intelligence, data analytics and automation, to enhance decision-making processes and create new business models.
Digital transformation can impact various areas of your organisation, including operations, customer experience, product development and sales. But what does digital transformation mean in the context of your supply chain?
Traditionally, supply chain management involved manual processes, which could be time-consuming and error-prone, and lacked real-time insights. But in today’s volatile business landscape, the way you manage your supply chain can be ‘make-or-break’. Put simply, an Excel spreadsheet simply won’t ‘cut the mustard’.
By adopting intelligent tools to underpin your core supply chain processes, digital transformation should empower your S&OP process to create agile, responsive and resilient supply chains that can adapt to the dynamic market conditions.
This might mean harnessing the power of AI or machine learning. It might mean looking at tools with advanced data analytics, cloud computing or automation, but ultimately you will need to use the right tools in the right way. Do so, and you’ll improve efficiency, visibility and collaboration across your entire value chain.
Building a business case for digital transformation
How can digital transformation support your S&OP organisation?
Digital transformation can significantly enhance your company’s Sales and Operations Planning (S&OP) process at a strategic level. Here’s a few examples of digital transformation enables S&OP and contributes to your overall business strategy:
Data-Driven Decision Making
Start down the path to a full digital transformation, and you’ll collect, integrate and analyse vast amounts of data from multiple sources throughout your supply chain; data that, otherwise, you’d simply miss.
As you attain richer insights into customer demand, evolving market trends and your operational performance, this data will fuel every step of your S&OP process.
Of course, access to data is just a starting point. Your digital tools should help you to analyse, validate and enrich this data to create visibility.
It’s hard to overstate just how much technologies like advanced analytics and machine learning can enhance your forecasting and demand planning capabilities. In fact, digital tools can bring clarity to your entire internal operations as well as your wider supply chain network.
With greater clarity over future demand, supplier performance and inventory flows throughout your network, your S&OP process becomes a more powerful tool to align the various functions and departments involved.
Enhanced collaboration and communication:
The advantages of digital transformation do not end at merely aligning the various teams involved across your business.
By connecting disparate processes and systems, digital transformation will enable you to create the right conditions for effective collaboration between all stakeholders. That goes for everyone in your whole S&OP process: Sales, Marketing, Operations, Finance and Management.
Underpin your growth ambitions
Digital transformation will equip your company with the ability to scale and adapt as the market evolves and shifts. You can employ cloud computing, automation and the latest digital tools to inform your S&OP process and pivot the business accordingly.
What’s more, if all teams are plugged into the same data and KPIs, everyone can work together towards common goals.
Consequently, the whole organisation becomes better positioned to adjust operational priorities, inventory levels and production plans to meet your customers’ changing needs. That equates to scalability on demand and agility around risks, making new opportunities quicker to explore.
Continuous improvement and competitive advantage:
Through attaining and analysing KPIs and performance data, your business will find continuous improvement: a golden chalice for any company.
With greater cost efficiencies come improved customer satisfaction and speed to market. It’ll be easier to spot bottlenecks, inefficiencies and areas of the business you might wish to improve. And by using your S&OP process as a platform to track, monitor and develop, you will attain a competitive advantage over those not as fluid, or who are ‘stuck in second gear’.
Kickstart your digital transformation journey
Undertaking a major digital transformation project can be intimidating. If your S&OP process is in its infancy or your team lacks the expertise, it can be tough to know where to start.
But you might have more capability than you realise. If you’re already forecasting demand, determining your inventory requirement and then placing the order, it’s a good starting point to achieving more.
In the next section, we will explore some of the pragmatic steps you can take to get your digital transformation project off to a flying start.
1. Understand your current status quo
Knowing what you have and don’t have is crucial. Without a strong understanding of your existing processes, systems and capabilities, improvement will be tough to achieve.
Deep dive into your abilities however, and you’ll probably find strengths, weaknesses and gaps in your current S&OP operation, as well as in the technology you use to support it.
You’ll then have a placeholder to measure the progress of your digital transformation and to prove its success with data.
2. Determine your Transformation Goals
Digital transformation takes time, effort, investment and commitment. It won’t happen overnight, and it won’t be easy. Therefore, those involved, which should be many, will need to understand the amount of work it’s going to take. But they must also understand the potential rewards that come with making the leap.
Defining the right goals for your S&OP digital transformation gives you clarity, focus, measurement and alignment with the overall business strategy.
3. Overcome the barriers to success
You already know there will be barriers, struggles and pain points across the company. It’s not just systems you’re changing but how your people think.
Harbouring a culture of innovation and collaboration isn’t an easy undertaking. But it is well worth the effort. Including them in the journey is the very first step to ensuring their commitment to the overall success of your digital transformation.
You’ll need strategic planning, robust supply chain leadership and heavy investment in technology. But you should also think about what you might need in terms of additional infrastructure, data and additional training to upskill the people involved. Finally, you need to think about how all these pieces come together to help you realise your business goals.
Data integration and quality
To effectively utilise S&OP you’ll need data inputs from Sales, Production, your inventory and the market. And so, integrating this data to create a single version of the truth is critical throughout your transformation.
Any untrustworthy data can undermine your entire process. Decisions will be tougher to make and harder to trust. Make sure you place full accountability for its ownership. Validate it regularly, and you’ll secure its strength as a tool for improvement.
Sometimes businesses don’t have the in-house capability to go on the journey of digital transformation. Even where training can be provided, there’s often a need to hire, which leads to another process that can take time and patience.
Only after investigating the skill gaps throughout the company will you be able to draft a training and hiring plan. Both can be expensive, and far more so if you make the wrong decisions and onboard the wrong people.
Alignment with business strategy
Digital transformation is not something you should embark upon for the sake of it. Whether you are reviewing your S&OP process or the technology that supports it, your digital transformation journey must lead towards your business goals.
But to ensure that your transformation initiatives are successful, you must also find your real pain points and align with the company’s long-term vision.
Presumably, one of those will be to achieve greater success for the business as a whole.
Making sure there is internal commitment and a ‘drive towards the cause’ will ensure an improved outcome. You won’t be able to do this without them.
Integration and collaboration
To get your digital initiatives over the line, you will need to engage stakeholders in every corner of the business. However, including Sales, Operations, Finance and Supply Chain in the project team can be another challenge, even for something as simple as finding somewhere for lunch.
Try to harmonise their efforts, and you might be met with silos, communication barriers, or just differing objectives. For instance, do your Sales people want the same as Finance? Often, the answer is, “no”.
It’s your mission to make these teams sing in tune. To help them understand that, with teamwork and knowledge sharing, they can all improve. And the success they find together will be that much sweeter.