Digitalization: So Much More Than Technology

A recent trip to Starbucks to prepare for a briefing tour through Australia on the digitalization of supply chain unexpectedly coincided with a realization, creating a learning opportunity.

As I pulled out of the parking lot I stared at a Marsh Supermarket building. What digitalization lesson could possibly come from a supermarket, specifically this one? For those of you who are digital historians, the connection is likely apparent. On June 26, 1974, a Marsh store in a small U.S. town in Ohio became the first grocery store in the world to use a bar code scanner to check out shoppers.

So what became of this digital pioneer? Did it go on to lead the retail industry in the utilization of new and leading-edge technology? No. Unfortunately, after a number of beleaguered years, it went into liquidation in 2017 and no longer exists as a company.

This vacant building with a “for sale or lease” sign is a stark reminder that single technology leaps, no matter how significant, are not enough to prevent being rendered obsolete if progress isn’t sustained. When planning toward the future, it is easy to get distracted by the shiny objects that come along with the digital discussion. It’s cool to talk about drones, augmented reality, 3D printing, advanced robotics, autonomous vehicles, blockchain, the Internet of Things and so on. The list goes on and on and the pace of advancement does not seem to be slowing anytime soon. Technology will continue to change at a dizzying pace.

Focusing on the technology, however, is not the lesson. The lesson is that there is so much more on the path toward digitalization than the technology itself. If the focus is the technology, we run the risk of applying technology simply for the sake of applying technology which we know is a recipe for failure.

Recent research by colleagues Pier Manenti, Geraint John, Patrick Van Hull, and Beth Morgan found a common trait among organizations with a successful track record of sustained digital advancement. They invest heavily in building capabilities that allow themselves to test, choose, roll out and exploit technology that fits their business goals verses focusing on the technology first.

These organizations are different because they have invested in building six essential organizational capabilities:

• Drive: As the saying goes, too many cooks spoil the broth. Supply chain’s digital roadmap is not something that can be delegated or pushed down the ladder. Digitalization brings the prospect of real-time reaction to demand and supply signals much closer to reality, but that will not happen without a leader who possesses the end-to-end vision.
• Design: Don’t shy away from testing the new stuff. All told, 82% of companies that have advanced the most in their digital journeys maintain a center of excellence to test and learn about emerging digital technologies relevant to supply chain. That’s according to SCM World’s Globalization Survey.
• Organize: Centralized and center-led supply chain organizations break down functional and regional silos — allowing a faster flow of change — and are more common among more digitally mature organizations.
• Skill: Actively developing multidisciplinary talent that possesses a depth of cross-functional expertise in multiple areas, or “M-shaped” people, is required for end-to-end exploitation of technology.
• Technology: A technology roadmap facilitating centralized, end-to-end organizations includes a control tower that creates “one version of the truth” and supports an open and collaborative decision-making environment.
• Operate: The traditional hierarchical approach to decision-making can be slow, crushing innovation originating from employees at the lowest levels of the organizational hierarchy. To compensate, companies are encouraging employees to dynamically group in self-forming teams to address opportunities and challenges closer to real time. These self-organizing teams work on a fast-flowing list of ideas, opportunities and improvements.

That empty Marsh Supermarket building is a reminder that the only way to avoid being passed up by the rapidly changing technology is to have individuals and organizations that can adopt, adapt and exploit just as rapidly.

There’s more to the digitalization of supply chain than technology.

Mike Uskert

Managing Vice President, Supply Chain Research, Gartner