What is Digital Transformation?
There’s a technology-enabled business revolution occurring right now that knows no borders and seemingly has no limits. It represents the relentless pursuit of the conversion of our physical world into an environment represented by information, software, analytics, technology-enabled business processes, bits and bytes. Digits that move across the globe at lightning speed connecting people and businesses in new, innovative and ground-breaking ways.
This revolution is called Digital Transformation, or DT, and while it seems to be the thing everyone is currently talking about, it really is nothing new. It was put into motion with the advent of the first computer, and with every passing year it gains tremendous speed, depth and breadth. It grows only stronger as each mobile device, tablet and connected sensor is imagined and sold. It has the same exponential growth curve as the Internet, and as more people and devices connect it only gains more strength.
Those established supply chains and value chains on which your company depends are transforming into networked, digitized business processes and services at an ever faster pace, whether you like it or not. Technology trends like hyper-connectivity, big data, cloud, Internet of Things and security provide new opportunities for companies to reimagine their business and how they engage with their customers and users.
Impact of Digital Transformation on Supply Chains
Digital Transformation is a hot topic because there are industries who are more digitally inclined than others. While it is more natural to certain industries, slowly but surely all businesses will move towards digital transformation because at the heart of it the changes are in place to help organizations’ relationship with their customers.
Supply chain tends to be one of the industries that is a bit slower to transform but full digitalization is doable. The value proposition for fully supply chains is that it increases efficiency.
Research shows that in the supply chain sector, technologies such as RFID, GPS, and sensors enable organizations to transform their existing hybrid supply chain structures into more agile and collaborative digital models. Supply Chain Visibility Platforms/Tools, Big Data Analytics, Simulation Tools, and Cloud are seen as the biggest technology enablers of digital supply chain transformation.
Unlike hybrid supply chain models, digital supply chains enable business process automation, organizational flexibility, and digital management of corporate assets. In order to reap maximum benefits from digital supply chain models, it is important that companies internalize it as an integral part of the overall business model and organizational structure. Localized disconnected initiatives, and silo based operations pose a serious threat to competitiveness in an increasingly digital world.
The expected benefits of digital supply chain transformation include, but go well beyond, cost reductions for logistics, inventory, and maintenance, improvements in customer service and higher overall equipment effectiveness. Perhaps more importantly, digital supply chain transformation is expected to dramatically improve an organization’s agility. Agility is necessary to respond to changing market conditions, to new market entrants that can threaten existing business models or to unexpected supply chain disruptions. Such disruptions have already caused major harm to the financial performances and reputations of countless organization over the years.
But in today’s globalized and outsourced world, digital transformation can only be successful if companies approach it with a holistic view of their entire value chain. That value chain can include hundreds of partners. So connectivity between partners, cross-company access to data, and the use network-wide analytics become the key focus areas.
Supply chain leaders must take advantage of the opportunities that come with digital transformation in order to stay competitive in today’s global market. Digitization does not mean applying the latest technologies, it means aligning digital initiatives with supply chain goals and adopting a Digital Operating Model to find the untapped potential of existing resources and capabilities, thus resulting in a higher level of performance.
Where does SAP fit in Digital Transformation plans?
Those who recognize the reality of Digital Transformation should think about investing in the latest SAP innovations. This means evaluating SAP HANA and SAP S/4HANA , as well as SAP Ariba, Concur, SAP Fieldglass, SAP Hybris, SuccessFactors and SAP Cloud for Customer.
In July 2014, SAP announced the launch of a new cloud-based architecture for supply chain management that includes S&OP. The product naming is SAP IBP and includes SAP Integrated Business Planning for Sales and Operations, SAP Integrated Business Planning for Inventory, SAP Integrated Business Planning for Supply, and SAP Supply Chain Control Tower. It is a unified data model for demand management, supply planning and financial modeling deployed as a cloud-based solution operating natively on the HANA architecture. The solutions within IBP contain new capabilities for collaborative workflow and optimization.
Implementing SAP Integrated Business Planning at Cargill
Cargill began its journey with SAP Integrated Business planning with a robust, end to end implementation in the Cargill Salt Business, which started in April 2015 with a design workshop. During the summer months, the team conducted an iterative functional build, test, and training approach to enable a Go Live in the 4th quarter of 2015. The goal of the program, which included SAP Integrated Business Planning for Sales and Operations and SAP Integrated Business Planning for response and supply, was to enhance the company’s existing sales and operations planning (S&OP) process and increase the robustness of its what-if analysis capabilities.
The business benefits of the transformation at Cargill
Cargill is seeing business benefits through a ‘’ single data model tying together supply chain, commercial, and financial information, enabling true integrated business planning processes’’.
- Generating additional revenue, cost, and margin projections supporting the S&OP process and what-if analysis
- Increasing efficiencies and capabilities in what-if analysis
- Enhancing user-friendliness, reducing learning curves and improving user adoption
- Enabling real-time analytics and improving decision-making effectiveness
- Accelerating delivery time
- Gaining the scalability and flexibility to meet diverse business and process maturity levels
No matter where your company is on the Digital Transformation adoption journey, there is a good chance there are hundreds of other companies grappling with the same difficult questions. This is why you should attend ASUG New England event on July 28th at EMC premises to be educated, to network and learn from ASUG members but also influence SAP as it continues to refine and mature its solutions.