In 2020, Chief Financial Officer Anna Agafonova, of banking conglomerate SWIFT, published “Digital Transformation of Logistics and SCM (supply chain management),” and pointed out the significant digital transformation made in the last few decades including organizational forms, tools and technologies for managing the logistics of companies and supply chains.
“This is mainly a result of the paradigm of business digitalization,” Agafonova reported. “Companies switch to large-scale automation of corporate information systems, become participants of electronic trading platforms and e-commerce services and form their virtual clones.”
Agafonova said consumers are loving the advancements in information systems and faster responses to changes in demand. That enthusiasm is invading the business environment as well.
“Despite the existence of numerous research works in this area, there is uncertainty in understanding the goals, directions and technologies of the digitalization of logistics and SCM.”
Digital transformation raises a lot of questions across all industries. One of them is how to simplify the integration of digital transformation applications and processes into day-to-day operations. It’s always evolving, and at times it may be hard to keep up with all the new innovations and processes.
Three experts from academia and the transportation logistics and supply chain management industry shared the ins and outs of digital transformation, ideas of what’s in its future and suggestions on the end goal.
What is Digital Transformation, Really?
Marisa Brown, Senior Principal Research Lead of Supply Chain Management at APQC (American Productivity & Quality Center) in Houston, Texas, said her organization defines digital transformation as the strategic integration of multiple technologies, with its primary components being the digitization of data and information, automating processes, applying analytics, and enabling digital interactions to improve collaboration efforts.
“This definition is a good starting point for organizations to define what digital transformation means for them,” she said. Brown said organizations often launch digital transformation initiatives without a clear and common understanding of what digital transformation means. She said the nature of each organization’s digital transformation is influenced by three design factors: scope, governance, and strategic intent.
“These three factors define the “what,” “who,” and “why” of digital transformation,” Brown said. “Moreover, technology is evolving so rapidly that today’s initiative can morph into something entirely different tomorrow.”
Brown said ambiguity around digital transformation creates stress across the organization, from the employees who are expected to adopt it to the leaders who are expected to measure its success.
Gary La Point, Syracuse University Co-Director of the Whitman School of Management H.H. Franklin Center for Supply Chain, said digital transformation is really about transparency, technology and data.
“It’s about capturing data in all aspects of the supply chain, and analyzing this data to make better predictions and smarter decisions,” La Point said. “Information is being collected everywhere from sales information, the demographics of the buyers, how and when materials are being transported, and warehoused, just to name a few examples.”
Why is Digital Transformation (DX) Important?
“In many ways in the supply chain, it drives greater efficiency in terms of removing manual processes which generally creates lag in information sharing, engagement, and decision making,” said Donnie F. Williams, Jr., Ph.D., executive director of the Supply Chain Management Research Center for the Sam M. Walton College of Business at the University of Arkansas.
Williams said, “Digital technology allows greater connectivity across all activities in the supply chain, which translates into real-time information sharing, which started back in the 80's and 90's through the application of Enterprise Resource Planning software technologies.”
Digital is not new, Williams said, but it has accelerated over the last several years. He said digital transformation is considered a buzzword among experienced industry experts, and there is no doubt that the growth in digital technologies to solve some of the supply chain inefficiencies is moving at an unprecedented rate.
Williams said many firms are entering the market with various tools that can “solve” supply chain issues and funding is being poured into these industries to finance start-ups with innovative platforms and tools. And, some of those firms are taking a shot at developing their own digital tools that can give them a competitive advantage in the market.
As for his reasoning behind the word “solve,” Williams said one of the downfalls of digital transformation is firms believing that digital applications will solve all of their problems.
“In reality, digital tools will only enhance our processes, whether good or bad,” he said. “If we have bad processes, digital technology will only make things worse, because the tools will not be applied properly. If we have 800 strong processes, then digital technologies can provide great benefits through capturing greater efficiencies, which allows the firm to move faster and have a great impact.”
What’s the Next Big DX Innovation?
La Point pointed to greater development and adoption of artificial intelligence tools (AI) in all modes of transportation when asked about the next big innovation for transportation and supply chain digital transformation. With the exception of pipelines, La Point sees the expansion of AI use with ships, trains, trucks, aircraft (planes and drones), and re-routing of freight to better optimize networks.
“AI will be used in places and do things we haven’t even thought of yet,” La Point said.
Williams said AI/ML, robotics, blockchain, electronic bills of lading, digital load matching, the Internet of Things (IoT), and supply chain digital control towers all accelerated in popularity during the COVID-19 pandemic. He said greater connectivity to customers through digital apps also has a consistent increase in interest, which leads to more investment in last-mile delivery options.
La Point said further down the road will be quantum transmission of data.
“I believe this technology will actually leapfrog Blockchain,” he said. “This technology is revolutionary in that data will automatically be encrypted and essentially makes it impossible to hack. This technology will eventually become a utility that we will pay for just like electricity because all information will be sent using this technology.”
What is the Ultimate Goal?
Brown said the real end goal is to get work done better, faster, and cheaper. She said technology should be an enabler in service to the organization's overarching business strategy rather than being seen as an end goal on its own.
“There is too much data facing organizations today for them NOT to automate,” Brown said.
“Employees need the tools to make sense of these vast amounts of data coming from internal and external sources, including social media, Internet of Things sensors, etc,” Brown said.
“However, in the face of all this automation, it's important to not lose sight of the fact that people still matter, and employees will still be needed—albeit with different skills.”
La Point said this is a great time for transportation and logistics.
“For a long time transportation and distribution was not an appealing industry for many young people, but now these areas are “sexy,” he said. “Much of the latest technology in business is being developed for transportation and distribution industries. It has some of the greatest applications for artificial intelligence and augmented reality. The pandemic has really opened everyone’s eyes to the importance of transportation and distribution to the world. It was always there, but not as noticeable as this past year. Transportation is becoming a hotbed for jobs and technology development.”
Accelerate Your Digital Transformation with Trimble
Regardless of where you fall in the transportation supply chain, focusing on the digital transformation of your operations is a crucial part of staying ahead in an increasingly connected and competitive environment.
Talk with us today to discover how Trimble’s wide range of supply chain-focused solutions can help you harness technology to accelerate your digital transformation and set you up for success, both today and in the years ahead.