Top 4 challenges companies face when digitally transforming their supply chain and how to avoid them

Global stressors have reshaped the world of supply chain as we know it. With an ever-present risk of challenges, what can supply chain leaders do to protect their organizations? A recent study conducted by McKinsey found that a staggering 93% of supply chain leaders plan to take the necessary steps in digitally transforming their supply chains to keep up with such an ever-changing market. Let us explore what this means for your supply chain, along with the some of the challenges these industry leaders are successfully combating today.

What is supply chain digital transformation?

A digital transformation goes beyond implementing a new software or system, rather, it is also a cultural adjustment, embedded in your company’s values and goals. It’s the adoption of efficiency and the proactive effort to reimagine dated systems and practices to ultimately optimize and grow your supply chain. A digital transformation entails changes spanning all areas, including management, logistics, transportation, customer service and more. The main driver of a digital transformation is the realization that old practices no longer work as efficiently as we’d like them to and working to implement modern tools and mindsets that combat this issue.

Why companies must transform their supply

If supply chain leaders have learned one thing from the last few, especially turbulent years, it is that preparedness is everything. Gone are the days when legacy systems and processes satisfied your supply chain and more importantly your customers. Now more than ever, it’s imperative to integrate the proper practices and mindset shifts to set your supply chain up for success, not scrambling to save what’s left after being hit with another pandemic or political crisis. Undergoing a digital transformation ensures security and stability, enforcing the necessary measures to protect your supply chain, people, and customers.

The top 4 challenges every company is facing today:

Unable to develop a winning change management strategy. Developing a solid change management strategy is the first and most crucial piece of any company’s digital transformation journey. Planning your transformation by putting your issues at the forefront and making it everyone’s priority to tackle these problems in a reimagined way is key to your supply chain’s success.

Studies have shown that companies that execute a winning change management strategy effectively are six times more likely to surpass the digital transformation objectives they initially set out to accomplish.

Prosci

Improper use of systems and tools. When companies first attempt a digital transformation, they often forget a crucial piece: setting your people up with the necessary training. While many new softwares and systems are built to be user friendly and easily integrated, they still come with a degree of learning. The goal is to ensure your organization feels comfortable with the new systems and technologies, they know how to use them, and they see the benefits that comes from it. Based on our extensive experience in complex global organizations, legacy systems and tools are still being used as people see them as more efficient having worked with them for decades. They don’t have the training necessary to know how to make the best out of the new systems- a pitfall many organizations find themselves in.

External disruptions. Do not allow yourself to get caught up in the excitement; remember why a digital transformation is vital in the first place: to mitigate disruptions. The needs of your customers are constantly changing, along with stressors such as pandemics, political uncertainties, port blockages and congestion and more. This quickly shifts the perspective of any organization, with outside challenges becoming priority.

Loose company culture. A loose company culture is detrimental to your supply chain transformation process. Often, supply chain leaders focus so much time, energy and resources on the technological aspect and not nearly enough integrating this change into the company culture. New technologies will always provide a competitive edge, but you mustn’t forget who is still at the heart of your organization: people. If you fail to make this a priority in the beginning, your transformation will surely fail, leaving your people confused and frustrated.

How to mitigate these issues

A clear path. Mapping out the key steps needed for your tailored digital transformation is key. Ensuring a clear path and project plan includes knowing when to involve whom, delegating enough time for your organization to get acquainted with the new system, ensuring clear and open communication, keeping everyone informed and involved, and testing systems and new technologies in pilot projects before rolling them out globally. All these pieces in conjunction will allow for a smooth digital transformation and leave little room for mishaps or miscommunication.

Train your organization. The ultimate tipping point is when you understand that the people are what makes a transformation successful. As the people will be using the new tools, they must know how to use them as efficiently as possible. People in different roles may utilize different aspects of a certain tool. This is crucial to understand, as it goes that much further in tailoring your transformation to fit your specific supply chain. Not only this, but you must understand where other issues might lie and how to seek them out; there could be a function you’re hard pressed to learn on your own, and may rather rely on industry experts who have done this hundreds of times.

Foster a people first mindset. When employees are sticking to the 'old way of doing things' and are unwilling to change, making the leap to a new digital work environment can be a challenge. A digital transformation always means a cultural transformation; values may need to be revised and new ones added. An emphasis on team culture is crucial when undergoing a digital transformation. Putting your people at the forefront and valuing their input can make the process much easier in the long run. Focusing your people on the “why” is crucial here; no one will put in the effort into something they don’t fully understand. Show them how much easier and more efficient their day-to-day life will look like and get them excited about a reimagined way of working. Remember, a digital transformation is run by people, not systems.

Conclusion

Undergoing a digital transformation is an exciting change, but supply chain leaders must keep in mind the challenges that come along with it. Internal and external stressors are a pressing reality for all supply chains and can cause roadblocks in your digital transformation journey. By mapping out a clear action plan, having modern tools and systems in place that ensure efficiency, and putting your people first, you will surely succeed in mitigating these issues and digitally transform your supply chain for the better.