Digital supply chain transformation: Overcoming the fear of change

Cold chain management   10 Oct 2018

Digital transformation in the supply chain is no longer a nice-to-have; it’s table stakes. Business leaders are quickly realizing that without an effective transformation strategy in place, they’ll be surpassed by their competition.

This need also holds true in the cold chain, where globalization, an aging population, and consumer demands, among other factors, are driving complexity and making it increasingly challenging for businesses that are moving perishable products to maintain end-to-end visibility and product integrity across all lanes (air, road, rail, and sea).

But, why are businesses investing in digital transformation at all? Where do they see the profits being reaped? And how successfully are they selling digital change throughout their organization and supply chain?

Beyond visibility and efficiency

Aside from the serialization and traceability regulations and requirements that are driving businesses operating in the food & beverage and pharmaceutical supply chains to implement change, companies are seeing the added benefits to digitizing their global supply chain by adopting innovative technology and solutions.

In a LogiPharma benchmark report, “Digitizing the Supply Chain,” 97 percent of respondents said digitization is a priority for their organization. The majority of respondents said that digital transformation will make them more competitive, accelerate innovation, improve quality and traceability as well as end-to-end visibility, and facilitate supply chain management after a merger or acquisition.

Companies using digital transformation to ask wider strategic questions, like “can we get to a larger market share or increase our product portfolio?” are making the most of the long-term strategic opportunities. They’re seeing how it can transform even seemingly small tactical decisions into key strategic differentiations, including the ability to unleash innovation opportunities.

Many businesses are also viewing digital transformation as necessary for improving internal process efficiencies. Simplicity and scalability are key to any digital transformation strategy, with the question being: which technology solutions are the easiest to implement across the entire supply chain, the most cost-effective, and will deliver the most benefits to our organization?

Implementing digital transformation may seem daunting, particularly for supply chain logistics leaders who are managing complex, rapidly changing, and global value chains. Speed to market, agility, visibility, and cost-savings are paramount, along with ensuring product quality and safety end-to-end and working with the best logistics partners.

With the rapid rate of innovation today, change is inevitable. Businesses need to think about change or, simply put, they may face a bleak future if they don’t consider how to transform and adopt new practices, processes, and channels. Ultimately, digital transformation is needed to support business growth and to empower companies to improve their strategy, make better forecasts and decisions, improve operational efficiencies, and invest saved costs on innovation.

Overcoming fear of change

Change is hard; most people want security and feel comfortable with the status quo. Aversion to change is often identified as a primary barrier to digital transformation. How can executives balance this need for security and familiarity with the equally important need to change your business as the market demands?

The first step is to accept that digital transformation is not just about the technology; it will also require a review of your corporate culture and priorities, as well as internal operation procedures and other processes. Inertia and resistance need to be tackled head on with open communication, explaining why the company needs to change and why the future state will be better — or, to simply state that the present situation will inevitably lead the company into dire circumstances if it doesn’t pivot. 

  • Present a game plan:  During any time of change, business leaders need to step up and effectively communicate with their stakeholders why the change is happening, specifically how it will happen, and how it will benefit the company in the end. They need to build a story around their vision and repeat it. The story might relate to customer-centricity, or the need to innovate and maintain a competitive stronghold. This will only foster and facilitate stakeholder buy-in. In the cold chain, digital transformation may mean moving data into the cloud or a blockchain, consolidating temperature and product movement monitoring and traceability technology, figuring out how to leverage new types of data that had been previously unavailable, and updating new internal quality and other processes to support these changes, which may ultimately affect a number of stakeholders and partners throughout the supply chain.
     
  • Focus on the right technology and solutions: The technology and solutions aspect is should be driven by experts with familiarity in implementing change management. This may require working with a solution and services provider who can help to onboard and train all internal stakeholders and across all distribution centers and logistics partners. The main question is whether the right solution is being focused on at the right time. Is your organization simply following the status quo, or is it seeking to drive transformation that will lead it into the future from a competitive vantage point?
     
  • Listen to feedback:  People may feel a variety of concerns related to any change. SOP’s need to be updated, relationships with partners may need to end or be substantially improved, and new roles may need to be added to support the company’s growth. Ensuring there are open opportunities for dialogue and feedback will help to ensure that issues and concerns are addressed before they escalate.
     
  • Foster a culture of learning:  Your business culture needs to accept that from now on, things will be changing. Business cycles are shorter and faster, so the only way to approach constant transformation is to encourage a culture of constant learning and growth. To foster learning and growth, teams may need to be encouraged to devise a plan, take initiative, and even fail.
     
  • Use data and feedback to iterate:  Most supply chain leaders today are looking to continuously improve their operations to drive efficiency. Digital transformation doesn’t simply mean that data is collected and available. Rather, it’s about collecting the right kinds of data and making it work for your organization. Over time, data provides insights that can help illuminate the dark spots in the supply chain, identifying weak areas and areas that require attention, and then mitigate those risks. It can help to improve supplier and distributor relationships and encourage top performers. Businesses cannot improve what they aren’t measuring or aware of. 
     
  • The leaders should lead:  Digital supply chain transformation requires buy-in at all organizational levels. If the C-levels don’t really believe in the change and are doing it because consultants said “this is what you’ll need to do in order to survive,” then it will prove challenging to get others to buy into the change. Why bother changing if leadership isn’t in full agreement?
     
  • Don’t try to fix everything at once:  Effective change management across a global supply chain requires starting small, then incrementally and strategically rolling out improvements throughout. The right solution provider can work directly with your team to formulate your roadmap for roll-out. 

Change isn’t easy for anyone, but it doesn’t need to be hard. In today’s increasingly complex supply chain, companies operating in the cold chain in particular, where temperature controlled products must be kept with strict temperature boundaries and visibility has historically been limited, face a bleak future if they don’t consider how to transform and adapt.

However, competition for margins and market share alone won’t drive the digital transformation. Companies need to think carefully about how they position IoT, data analytics, and other disruptive technologies and solutions, how they tell the story of why they are using them, and how they communicate the benefits to their employees, producers, growers, manufacturers, and logistics partners — transforming them from data-phobes to data fans. 

The most successful technology shifts are embraced from the bottom-up as well as the top-down. They’re driven by people, and buy-in is mission-critical. Proper planning, ongoing communications with affected stakeholders, and working with the right solutions provider can facilitate an effective and painless transformation strategy.

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