A blueprint for unleashing digital transformation for a connected cold chain

Cold chain management

Supply chains are an important part of any business operating in the food supply and pharmaceutical sectors — strong, flexible, and supporting the mission-critical function to safely deliver products to consumers and patients. But in many ways, they can also be fragile — too much pressure or change can dramatically impact a business.

Like any aspect of a business, adopting digital innovations, technologies, and processes can make them stronger and more resilient in the face of changing market conditions and new market entrants that can threaten existing business models. Yet, for all the effort that businesses devote to optimizing supply chain performance, many have yet to unleash the full potential of digital technologies.

According to a recent McKinsey study, the average supply chain maintains a digitalization level of 43 percent — the lowest of five industries examined. The same research also suggests that, on average, supply chain businesses that focus on digitalization can expect to boost annual growth earnings by 3.2 percent.

Driving meaningful digital innovation in the cold chain requires dedication and a balance of art and science. Digital transformation is about digitizing processes and services so businesses can become more agile and adaptive to change, operate more efficiently — from delivering customer service or working with partners — and drive profitability.

Organizations need to bring together people, process, and technology in the planning and strategy phase, offering stakeholders the opportunity to see where technologies like cloud, data analytics, internet of things (IoT), and mobile can make a difference. Below is a blueprint for unleashing the potential of cold chain innovation.

Define your long-term cold chain vision

Performance goals can help drive the speed of digital adoption. A food restaurant chain might define its cold chain vision with respect to brand protection, food quality, and food assurance. A food retailer, for example, might define its cold chain vision with respect to its aims for enhancing customer loyalty. A pharmaceutical company, on the other hand, might define its vision in a way that will help it penetrate new markets and adapt to ever-increasing regulatory requirements.

Once a business has established a vision for its cold chain, it should articulate the vision in terms of business and technical capabilities. Considerations should include automation (how can work and processes be streamlined), decision making (how can digital technology drive recommendations based on particular situations), and end-to-end engagement (how can digital solutions drive more efficient and effective collaboration).

Assess your current cold chain

Identifying a supply chain vision provides a business with reference points to then look at the current technical capabilities, identify gaps, and plan a roadmap. Considerations should include: data (are we collecting and generating all the data we need to facilitate our larger vision?), analytics (do we have the analytics needed to extract useful insights and drive better decisions?), software and hardware (do our current systems enable the data and analytics needed?), talent (are we attracting and retaining the people needed to run and transform our cold chain?), and processes (do we have the optimal processes in place across the cold chain, and are they clearly defined and understood?).

Consider the impact across your networks

Transformation initiatives inside the walls of a supply chain enterprise poses important challenges within themselves. However, in today’s globalized and outsourced economy, digital transformation can only be successful if businesses approach it with a holistic view of their entire cold chain. The value chain impacted by digital innovation can include hundreds of partners across a network. Connectivity among stakeholders, cross-company and cross-network access to data, and the use of network-wide analytics should be key focus points.

Don’t think about adopting the latest buzz worthy technology

When approaching innovation, we often only think about adopting the latest technology — blockchain, drones, driverless trucks. But real and meaningful business impact happens when there is a widespread adoption of technology and processes that have been proven and tested.

Piloting and testing new technologies as they are fine tuned into mature solutions helps businesses to define use cases and refine future roadmaps. Focusing on the gains realized from process improvements and enhancing current technologies is what leads to impact today.

Move away from fixation on cost

Innovation and digital transformation is an investment for any company. Often, businesses fixate on costs, which halts the process of adopting new technology that can help them automate and scale. Without some risk, there is no return; embracing change and investing in innovation today can help save valuable time and resources once adopted.

Break down organizational silos and focus on collaboration

Innovation and growth happens when teams and other organizational silos are dismantled. Open communication and collaboration across teams facilitates the development and adoption of new solutions that can increase efficiency, improve partner and customer communications and increase profitability. To efficiently and effectively deploy a digital transformation strategy, stakeholder buy-in will be critical.

Include your security team from the very beginning

As IT and business fast-track efforts improve speed to market, security’s role is often confined to asking questions afterwards about the impact on risk and security. Digital transformation can be so rooted in delivering value to customers or partners that consideration on the impact on core security functions becomes secondary.

The rise in data vulnerabilities and breaches has let. Gartner recently predicted that 60 percent of digital businesses will suffer a major service failure by 2020 due to the inability of security teams to manage digital risk. Digital business tends to move at a faster pace than traditional business, and therefore, traditional security approaches will often no longer work in the era of digital transformation.

Prioritize and plan a roadmap

Once stakeholders are involved and a vision is articulated, and possible changes have been identified, a business needs to prioritize them. Traditional methods of prioritization, which weight the expected value of a change against ease of implementation, are valid. Companies benefit the most from adopting changes that have high value, and the lowest barriers to implementation, while preparing to make other changes that may present greater uncertainties.

Not all digital innovations should come from within

While Amazon’s innovative model — which purports to maintain around 4,500 employees that are focused on digital research and development initiatives — is an impressive strategy for supply chain innovation generally, it’s not an attainable goal for many businesses. The company demonstrates what one model of success might look like. There are, however, other ways to generate impact through digital transformation, which includes looking to the market for digital solutions that can drive long-term growth and sustainability.

Wrapping it up

An effective digital transformation depends on a creative, forward-looking concept for the future cold chain. This requires thinking about the outlook for the business, as well as changing expectations of its customers and partners.

Ultimately, the cold chain vision should be aligned with the company’s strategic goals. While the need for alignment has always existed, what is new is that both the strategic goals and the vision must account for the pressures and opportunities that businesses face in an increasingly digitized economy.

Cold chain transformation is an undertaking that requires leadership and vision, and a holistic transformation approach that fosters automation, connectivity, data sharing, and collaboration across the entire value chain. Leaders have the ability to influence and transform the way that innovation is developed, considered, nurtured, adopted, and implemented across their industry. Its future rests on that information sharing, connectivity, agility, and resilience in the face of ever-increasing global change.

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