Having spent over 25 years in the supply chain industry, I noticed that while companies diligently assess their performance and capabilities, they are often unmotivated to improve as long as they do better or earn more than the year before. Satisfaction with small, incremental gains is a setback. The mindset usually stems from the presumption that additional growth demands significant spend, time, resources, and disruption.
In light of this, I’m launching a blog series to relate my perspective as an actual practitioner who has evaluated, selected, justified, and implemented software solutions for e-commerce fulfillment, warehouse management, supply and demand planning, transportation and logistics management, supply chain control towers, reverse logistics, and depot repair. There’s a lot of misunderstanding surrounding the process of systems upgrades, why they are necessary, and what it takes to set them in motion.Each post will center around one of the many requisite steps of a digital transformation; however, it’s crucial to first highlight why leaders must not only assess the state of their companies, but also what their brands are capable of. Today, most organizations enjoy strong business conditions, a favorable economy, and greater earnings. It’s fine to think things are good – but it’s savvy to ask yourself: “Is simply good, good enough?”
If you’re meeting or beating your plan, why push for more?
Most good operational leaders are meeting their expectations: They are keeping their promises, achieving KPI’s, and performing to their SLA’s. So, what’s the problem?
A few years ago, I was the president and COO of a fast-growing expansion stage dot-com; during this time, the CEO and owner, a high-tech celebrity, passed on a great deal of wisdom. While reviewing our software development roadmap for the year, he expressed that to be competitive, our customer experience had to be at least as good as the perceived best-in-class.
In our case, it meant that the online shopping and order management user experience had to be at least as good as or better than Amazon’s, because that’s what people expect – at a minimum. It’s a tough but worthwhile question to ask: Are you as good as the best-in-class? Because if you’re not perceived as such, your opportunities will decline.
Moreover, in a climate where technological gaps are widening the distance between standard performance and operational excellence, businesses can’t afford to be complacent. Legacy systems hold many organizations back from being truly successful and competitive in their industry.
Unlike the cumbersome enterprise systems of the past, new digital cloud offerings are easy to implement and provide substantial benefits. It’s a matter of time before more competitors embrace the technology to streamline their services and quickly outpace those who cling to the past.
The alternative to complacency? Think big but start small.
The notion of a digital transformation can be overwhelming. A gutting overhaul of the complex and customized systems and processes companies have in place can feel like a tall order for transitioning from “good” to “better.”
However, transformations don’t need to be all-or-nothing undertakings. They can occur at a pace that’s comfortable to you: fast or stretched out over time. For instance, what if you could change any one of the following metrics?
- Improve your order fill rate?
- Increase your inventory turns?
- Decrease spend on premium freight?
- Reduce excess and obsolete inventory?
- Boost order turnaround and delivery speeds?
- Reduce handling, storage, and operating costs?
- Enjoy aggregate and lower transportation spend?
Consider the order fill rate, which recalls the concept of the perfect order. The Supply Chain Council defines perfect order fulfillment as the percent of orders delivered to the right place, at the right time, with the right product, in the right condition, package, and quantity, with the right documentation, to the right customer, with the correct invoice. In the past, 95% was considered very good; today it isn’t.
Even those who agree up until this point – who acknowledge that a critical assessment of their business is in order – might also hesitate to do so for practical reasons. No matter how good your team is, everyone’s got a full plate. The amount of analysis the endeavor requires can seem daunting, and many may wonder: “who will do the work?”
Over the next several months, we will construct a roadmap for digital transformation, the steps you’ll need to take, as well as why this move is so vital to long-term success.
Bryce Boothby is an MPO board advisor and former executive of Flextronics, Celestica, ModusLink, Regenersis PLC, and Lulu.com. His blog series, “Making the Case for a Digital Transformation,” will investigate the topic of “Achieving the perfect order” and how companies can differentiate between solution providers, calculate returns on investment, choose a vendor, integrate with legacy systems, sponsor and sell the business case, and ‘try before you buy.’