Supply chain disruption during the global pandemic offers chief supply chain officers (CSCOs) a prime opportunity to get leadership backing for supply chain digital transformation.
Gartner research shows that the pandemic has only increased the urgency for digitalization. Many CEOs expect to accelerate digital initiatives, and the vast majority of CSCOs intend to dramatically speed up their supply chain digital maturity progress over the next five years.
CSCOs must build a sound business case to support their digital vision’s business value
“Supply chain leaders should take advantage of this once-in-a-lifetime chance to raise the profile of the supply chain function and develop supply chain capabilities to support business priorities,” says Pierfrancesco Manenti, VP Analyst, Gartner. “But CSCOs must build a sound business case to support their digital vision’s business value and priority alignment.”
Consider new approaches to building a case for supply chain digitalization
Before you begin, keep in mind that the traditional business case framework has changed in several ways:
- Organizations approach digitalization differently. In the unfolding business environment, digital will stop being a distinctive venture. Rather, digital is being embedded into the core of the organization. When confronting any new problem or challenge, see if technology can be the answer. For example, instead of searching for low-cost-country manufacturing options, think of a highly automated packaging line.
- Getting investments approved is more difficult. In the recent past, many organizations rushed into all things digital. In the current uncharted environment, expect more pragmatic scrutiny from the C-suite to identify the initiatives best aligned to the company’s most critical business priorities.
- Financial metrics alone won’t benchmark success. The most common approach to gain digital investment approval is by calculating return on investment (ROI) or net present value (NPV). However, the full value of a digital supply chain transformation can’t be captured with financial metrics alone. CSCOs must embrace a long-term, holistic approach — one that accounts for the health and human impact of business operations.
Rapid growth, cost optimization and agility will drive digital investment
To ensure a successful business case, learn, understand and align with your organization’s business priorities. Three factors will most likely steer digital investments.
Pursue digital initiatives that drive quick business growth
Any digital investment that helps the organization return to revenue growth will be approved quickly and efficiently. Revisit your supply chain operating model to support new digital business models, such as e-commerce, and digitally enabled products, such as subscription-based and pay-as-you-go options. Artificial intelligence (AI) and advanced analytics are among the technologies that will significantly impact business growth.
Leverage digital supply chain initiatives to support cost optimization
Supply chain is often the go-to function for CEOs to optimize organizational costs. Be prepared with ideas on how to leverage digitalization to optimize the supply chain while protecting it from linear cost-cutting. Three technologies can help optimize supply chain costs through operations automation: Robotic process automation, advanced analytics and collaborative/smart robots.
Enhance supply chain agility through digitalization
The pandemic exposed supply chain capability gaps that CSCOs are now pressured to close. An agile supply chain is one that can sense and respond to unanticipated changes in demand or supply and do so quickly and reliably, without sacrificing cost or quality.
Digitalization is a key enabler of agility, as it supports a more transparent, automated, intelligent and orchestrated end-to-end supply chain. AI and advanced analytics, along with big data/data lakes and the Internet of Things, are the technologies that best support agility and responsiveness.
Building a successful business case for digital transformation is as much about winning hearts as it is about engaging intellects. To secure C-suite support, walk senior leaders through the short-term initiatives necessary along the journey and define the associated business benefits. Also articulate a bold long-term digital vision, clearly explaining how it will help the CEO achieve the company’s future goals.