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Digital Transformation – Choose what makes business sense

Amitava Sengupta
30th November 2020

Amitava Sengupta, Executive Vice President, Digital Consulting, HCL Technologies talks to Girish V S from SCMPro Knowledge

Amitava Sengupta, Executive Vice President, Digital Consulting, HCL Technologies The current crisis has thrown up a clear trend – increasing use of technology in supply chains. technology is fast becoming the backbone of an efficient supply chain – allowing companies visibility and control over their supply chain. But technology is a difficult partner. There are a number of competing technologies that can be harnessed. In this interview, Amitava Sengupta, Executive Vice President, Digital Consulting, HCL Technologies talks to Girish V S from SCMPro Knowledge on the critical decisions in digital transformation of supply chains.

What is a Digital Supply Chain, and why is it a big deal?

Today’s supply chains need more efficient planning, smarter operations, transparency and tracking, and seamless, real time collaboration. Current digital technologies enable Organizations to enable these requirements.

In simple terms, Digital Supply Chain Management is Supply Chain Management enabled by Digital technologies.

Digital Supply Chain Management is critical today because of its ability to impact business outcomes directly through core digital interventions to improve visibility, minimize cycle times and optimize operations.

How can digitization make the supply chain more efficient, agile, and customer-focused?

The core requirements for a Global Supply Chain today include good visibility and accuracy to enable business agility, operational efficiency through cycle time minimization and lean and focused operations – all these elements combine to create resilient, customer focused supply chains.

While looking at Supply Chains, we usually consider multiple variables like lead time, inventory levels, costs, and flexibility – and these are often at loggerheads with each other. Moving towards one can lead you away from another.

Digitization helps drive the right choices – determining the right levels of cost to serve, forecast accuracies, optimized cash conversion cycles etc. All these contribute towards achieving customer delight.

What technologies converge to create a digital supply chain?

The right way to look at it is to first zero down on the business outcomes to be achieved. What are the key variables that are core to what our customers want – is it agility? Is it cost? Is it resilience? And then work our way backwards to which areas and which KPIs need work – Is it planning? Is it procurement? Is it logistics? Finally look at what would improve the KPIs in those areas and then choose the digital technologies that can be combined to deliver the desired outcomes.

IOT, Advanced Analytics, RPA, AI/ML, Blockchain and all other digital technologies have a role to play in driving these outcomes.

Do you have any examples of how real time information has helped supply chain performance?

There are several examples in the real world – I can quote a few that we work closely with. Supply Chain Control tower to enable visibility into the nodes of supply chain, warehouse operations automation to improve cycle times and optimize costs, network simulation and optimization, spend analytics, sensor-driven replenishment – there are numerous areas where we see how real time information and analytics has helped build responsive and resilient supply chains.

What are the essential organizational capabilities to be built before firms embark on digitization of supply chains?

I think the core idea behind driving digitization of supply chains are to drive a faster, more flexible, more granular, more accurate and more efficient supply chain. In addition to the digital backbone and foundation that would enable the same, availability and usage of such information within the enterprise would need core organization level changes. These would impact areas across the value chain – starting from the product design and development, plan, source, make, store, move and return processes – possibly touching all functional areas within the enterprise.

There are several tools that are extremely helpful in planning for and enabling this change – one such concept is creating an experience-centric supply chain. This involves looking at each of the capabilities and mapping the journeys of each key player in the impacted areas designing around expectations of these players and optimizing the journeys. This includes looking at the goals of such a role, mapping the activities, creating a day in life scenario, and creating and sharing back a target state view for the role. Doing this across the value chain would enable each of the key roles within the supply chain to not only understand how the change would help, but also optimize or even reimagine the process paths innovatively to drive change.

How would you prioritize areas within a supply chain for digitization? Can you establish a road map? What are the best practices you have observed across the globe?

Each organization would have its own set of priorities and unique peculiarities to be taken care of. Like I said before, this would have to be driven by the desired business outcomes and then mapped to the KPIs that the organization would like to impact.

Organizations approach digitization in a siloed manner with different methodologies, technology stacks and without a comprehensive thought process

There are several frameworks that we can use to drive prioritization when we create a roadmap. We use a framework where we look at differentiating and non-differentiating capabilities, and look at areas that see traditional and digital transformation spend and map and prioritize initiatives in a four by four matrix outlining areas to innovate, areas to scale, areas to modernize, and areas to run or retire. This is largely built from our experience gleaned from assignments that we have completed with enterprises across the globe.

What are the next game changers for Technology in Supply Chain services?

There are several technologies out there that have the potential to be game changers including IOT, AI/ML, Blockchain and. others that I have already mentioned earlier and we have worked extensively on how each one of them could help build and run responsive and resilient supply chains.

However, there are many more interesting technologies that we need to watching and the full impact remains to be seen – including voice, drones going mainstream, driverless trucks for long haul trucking, hyperloops, 3D printing or even to get to the next stage augmented humans.

As one of our customers put it last year“…the possibilities that technology holds today are immense… almost anything looks possible today, but in business what is important is that it has to make business sense.”

What are the opportunities and risks that AI, IOT and Blockchain poses for Indian industry?

I think that the biggest risk that these technologies pose and what needs to be planned for and addressed rigorously is security. There is immense amount of critical information flowing through the system – and it needs to be secured.

Businesses must guard against data theft, cyber extortion, service disruption, and unauthorized access.

Hence any roadmap to enable large scale digitization of supply chains need to take care of these concerns.

What are the big themes you see in AI, IOT and Blockchain? What will be its trajectory?

It’s very clear that each of these technologies have the potential to revolutionize businesses. Almost all kinds of businesses will have the opportunity to radically streamline and reimagine their business processes and stakeholder experience, create entirely new business models, and probably develop innovative products and services for previously underexplored customer segments.

IOT will impact some industries more than others – manufacturing, transportation, automotive, consumer goods will be dramatically revolutionized once IOT becomes truly mainstream. However, to get there, enterprises need to invest in the Digital backbone that will enable organizations to truly leverage this transformation.

In the field of AI, I believe that ML will be true game changer. Insights generated by machine learning will help organizations become truly customer centric in ways that we cannot even think of yet. Examples can be found in domains like autonomous vehicles, self-correcting networks, customer service and so many others.

I think Blockchain will take more time to become mainstream though there are already areas where we see widespread usage of the technology, for instance crypto currencies. There are several barriers to blockchain adoption that needs to be addressed and we will have to see where it goes.

What would be the technology challenges you foresee for Supply Chain services firms in digitization?

Today’s supply chains are volatile and complex, issues more common and impact more profound than ever before. The product portfolios are complex, replenishments are more frequent, lead times are usually shorter, route to markets more convoluted, and collaboration critical. Digital technologies help balance and address these issues and influence the business outcomes positively.

As organizations accelerate their digital transformation journey, there are several challenges they need to address. Let me outline a few of them.

The first challenge, is the lack of an overall digitization strategy. Organizations approach digitization in a siloed manner with different methodologies, technology stacks and without a comprehensive thought process. I have seen several places where this approach has led to a very diversified and unmanageable landscape where it becomes difficult to measure business outcomes.

The second key challenge is execution – once the strategy is in place, digital programs need an agile approach – this is true across org design, methodologies and program and project approach. Using traditional approaches to run large digital transformation programs don’t work well.

The third key challenge is an understanding of and expertise in not only the technologies itself but also the product, program, and change management aspects. Most organizations have a large workforce that is not digital ready – transforming the current workforce to shape up to the digital future is another key aspect. There are several methods to address this as well.

What disruptions do you see coming in when we digitize our supply chains?

There are several disruptions that you will see as we do large scale digitization across Supply Chains – these disruptions are not accidental – they are intended results of the digitization exercise.

I can think of several such disruptions including customer segmented product lifecycle management, risk adjusted inventory optimizations, multi enterprise business network visibility & collaboration and so many others.

At a broader or more abstract level disruptions will be at a business model level, significantly felt/ experienced by the workforce, driven by visibility and through hyper automation.

Digitization will change the profile of the SCM Professional. What do you think are the major changes?

The Supply Chain professional of tomorrow will have to adapt to the new Digital technologies that will be widespread across the globe.

The new Digital enabled Global Supply Chains will give rise to new roles – some of which will need the ability to understand and interact will complex data

a. The new age SCM professional must have a good understanding of supply chain technologies
b. Ability to understand and interact with new age digital technologies like AI/ML, IOT, Robotics and Automation as this will be ubiquitous
c. Will have to understand risks and build contingencies
d. The new Digital enabled Global Supply Chains will give rise to new roles – some of which will need the ability to understand and interact will complex data
e. Understanding and quantification of technology impacts on business

How can we build a smarter supply chain? What kind of new business models do you see evolving?

Have addressed this in multiple ways above.

But taking an overall view, I think there are four dimensions that needs to be looked at – Providing a differentiated experience and leveraging the eco system, Relooking at Data and Intelligence, Reimagining Business Processes and operations, and finally Technology platforms including Integration platforms, Security and Cloud.

What Strategic Recommendations would you provide to Indian firms?

India is on a digital surge. In terms of internet subscribers alone, India is at #2. The country is digitizing faster than almost any other country in the world.

However, if you look at the business side, businesses are adopting digital in an uneven way – the gap between the leaders and laggards is widening.

India is on a digital surge. In terms of internet subscribers alone, India is at #2. The country is digitizing faster than almost any other country in the world.

If you look across the aspects of Digital Strategy, Organizational Change, and Capabilities, it is very clear where the opportunities lie though these vary widely across the digital leaders, followers and laggards.

There are some areas that are easy to address and offer great opportunities for quick wins, including Digital Payments, Digital Retail and Digital Healthcare.

I think it is imperative for every enterprise to look at their digital strategy immediately and create a roadmap for short, mid and long term wins along with their understanding of the business value that it would impact. Once we start seeing the returns, there is no slowing down. ♦♦♦♦♦

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