The manufacturing industry has been historically averse to change and innovation. However, the successful implementation of digital technologies in other industries has led many to re-evaluate their stance on digitization. A recent study by McKinsey & Company found that the majority of respondents from the manufacturing sector believe that supply chain management will be one of the most important areas for digital transformation over the next five years.
For centuries, machine parts manufacturers have to rely on their supply chain to obtain and transport raw materials. Once they have the raw materials, they need to make the product and distribute it to marketers to help them sell it to potential buyers. Today, this complex traditional manufacturing supply chain is gradually disappearing. Digital technology is changing the industry. It transforms the underperforming parts of the supply chain into more efficient processes for customer-oriented and digital manufacturing services?using the capability of machining and 3D printing to help companies reduce costs.
1. Digitization is not the upgrade and expansion of information system.
“Informatization” is from business to data, “recording what you have done”. “digitization” is from data to business, “telling you what to do”.
From “recording what you did” to “telling you what to do” is not a simple reverse process, the core of which is to achieve intelligent decision-making through the abstraction and modeling of business logic. This is not only a process that can be accomplished by understanding technology, but also a process of integration of business and technology. The final result is the realization of management intelligence and the transformation and transformation of decision-making system.
Therefore, digitization is the reverse process of informatization, from business to data, and then from data to business, and its emergence will challenge the traditional management model driven by organization, process, experience and performance. the subject of decision-making has changed from “people” to “algorithms”.
- Digital transformation is not only IT system-oriented transformation.
As mentioned above, the digital transformation is the intelligent transformation of the decision-making system based on data and business logic, and the IT system is one of the carriers of the digital decision-making system that carries the digital transformation. At present, the complex IT architecture of most enterprises has brought huge application and maintenance costs, digital transformation should try to reduce the dependence on more IT investment and integrated development, so as not to increase its complexity. Therefore, the digital transformation needs to adopt a new approach.
Digital transformation should be a business-oriented application of lightweight technology. This kind of application is mostly built through modularization and open source technology, in this way, to achieve a loosely coupled, highly flexible, self-iterative application model. At the same time, iterations are deeply led and maintained by the business unit. Because the business itself is also likely to change at any time. By independently mastering these zero-code or low-code open source technologies, business personnel can reduce the cost and risk of inter-departmental communication, while enhancing the agility of the entire digital decision-making system in dealing with actual business changes.
With this new digital method, it takes only half the time and cost to create twice the value generated by the transformation of the core system. In short, this new approach will encourage the rapid construction of business-oriented application platforms through business people, using the data sources of the core IT system and the open source algorithm engine.
3. Digital transformation is not data governance itself.
Many enterprises equate data governance with digitalization, and the quality of data is indeed the basis of digitization, but data governance itself is not digitization, at most, it is only a part of the digitization process, but not the core link.
The core of digitization is the new business value generated by the secondary application of data. The relationship between digitization and data governance should be to structurally reveal the problems of current data resources through the application of digital data resources provided by the core system, so as to reverse the governance of data. and the direction of this reverse data governance is more clear, and its effect is much higher than that initiated only for governance.
4. The main force of digital transformation should be business personnel.
In the information age, IT people are the main force, turning business into numbers and recording what we have done. But digitalization is built on the IT architecture, which is to realize the development and application of the data precipitated by informatization with the help of the computing power and algorithms driven by new technology, and reverse guide the business operation.
The main force of this kind of business scenario and value-oriented application development will change from IT to business personnel, the zero code or low code mode based on the new technology can be fully mastered by business personnel, and the IT department will become a digital enabling team.
5. The organizational change brought about by digital applications is not just the integration of IT and business teams.
Many articles talk about the impact of digitization on organizations and people, but little is said about what kind of impact it is and how to change it. From the enabling position of IT in digitalization mentioned above, the integration of business and IT team may indeed be a new organizational model.
But we believe that the organizational change caused by digitization refers to the organizational change caused by the application of data that penetrates the boundaries of the business. For example, the work that requires the cooperation of multiple departments under the existing mode may be due to the integration of digital decision-making to multi-department data flow, or even to the integration of financial data.
Because the highly integrated and intelligent data application penetrates the business boundary of the department, it leads to the change of new process and organization, and the formation of new collaborative way is the core of the organization and process change caused by digitalization.
- Digital transformation should not put too much emphasis on overall planning.
Digitization requires a consensus at the conceptual level, but it is more important to encourage concrete landings based on certain business scenarios. Even before there is no overall promotion plan at the initial stage, local pilots need to be encouraged to adopt exploratory, local applications to feel the changes that digitization brings to enterprises. And further deepen the application, gradually transition to coordination, centralized management, and finally realize the embedded application.
Conclusion
Digital understanding of supply chain management can help improve communication and collaboration between different departments within a company, as well as between different companies in a supply chain. This can lead to shorter production cycles, lower inventory levels, and improved customer satisfaction. In addition, digitizing supply chain management can help reduce costs and improve transparency.