As the competition to satisfy customer demand for ever-faster deliveries has made supply chain automation a necessity, and as new technologies such as Internet of Things (IoT), artificial intelligence (AI), machine learning (ML) and robotics have transformed supply chain best practices, data has become the new supply chain currency. So why haven’t more companies forged ahead with their digital transformation?
The answer is people. Technology has moved ahead faster than people’s ability to understand its benefits. That’s the consensus of a Chief Executive roundtable co-sponsored by JDA at the Strategic Logistics Summit in Memphis. Associates at all levels of the organization are struggling to perceive the necessity and value of digital transformation through a forest of “we’ve always done it that way,” fear of job loss and change, cost and time issues, and memories of past implementation failures.
The Digitization Journey
IoT, AI and ML can produce tremendous amounts of data, but that data is meaningless if companies can’t understand what they’re seeing and how to use it for greater speed, efficiency and customer satisfaction. The first step on the digitization journey, therefore, is to pick out which data points are important among the flood of data.
The next, and far more difficult step, is to use prescriptive analytics to determine potential supply chain disruptions and formulate both human and autonomous responses. The challenge to achieving a prescriptive and autonomous supply chain is not primarily the technology, however. It’s the people.
The “People Roadblock”
From mid-level management down to the picker or forklift driver, knowing your job and doing it well equates to job security and comfort level. Introducing automation and new technologies disrupts this comfort level, so associates naturally resist it.
Higher management can also be resistant to change. Oftentimes they have risen to where they are due to past accomplishments that did not involve the new technologies. They are also likely to be less knowledgeable and comfortable with digital technologies than younger associates. Furthermore, they are usually judged and rewarded based on factors such as cost and proven results.
The roundtable executives had several solutions for overcoming the human resistance to change. The first is recognizing the reasons behind the resistance at each level and creating a transformation team dedicated to changing mindsets. This involves explaining why the changes are necessary, what the benefits are for changing, and an honest assessment of the impact on all parties. Fear of the unknown is the biggest factor in resistance to change, so providing as much info as possible helps alleviate those fears.
Another important factor for management to consider is that regardless of how much information they share, some people are still going to be resistant to change. Management must decide how to deal with these issues. Some associates may not be able to move forward with you. But most people respond well to incentives.
For example, one retailer decided to fulfill e-commerce orders from their stores. This created more work for the stores without adding to store revenue. The retailer solved this challenge by rewarding store managers for the e-commerce orders they fulfilled as if the sales had occurred within their stores.
Another group to consider is supply chain partners. Not all partners will move along on transformation at the same pace, slowing down the supply chain transformation. Supply chain leaders must educate and motivate partners just as they do with their associates to keep the process moving forward.
With all of the work and challenges to overcome in digital transformation, it’s easy to forget that the objective is to better serve the customer. While digital transformation requires a whole new set of measurements of success—the most important one is customer satisfaction. Many companies are using net promoter scores as a means to measure this. Is customer satisfaction increasing or not? Are customers continuing to buy from you and will they recommend you to others? That is where the ultimate ROI of digital transformation can be measured.
Digital transformation is inevitable for all companies, but success in this process is not guaranteed. For more information on how you can be one of the winners, see Digital Transformation, The Secret to Supply Chain Success.