Digital Transformation impact on Value Chain

New forces are impacting the entire value chain of an enterprise. Availability of large amounts of digital data, automation of the production processes, inter-connectivity of the supply chains, and digitization of the customer experience is re-organizing entire industries leading to the transformation of business models.

Let’s look at the some of the critical pieces of the value chain and see the impact of the new technologies.

• Manufacturing – For any enterprise that is manufacturing or sourcing raw materials/parts/products, global sourcing has become the norm. Inter-connectivity of the entire supply chain via telecom networks has synchronized supply chains and shortened the production cycles. The advent of the Internet of Things (IoT) has enabled this inter-connectivity across the value chain
• Distribution and Logistics – the distribution model is moving online, market boundaries are blurring, business and people are ordering from all over the world, leading to changing dynamics in the distribution and logistics part of the supply chain. The advent of 3D printing will bring changes in the way logistics are managed. Parts can be printed on location, saving on costly logistics and [asks for differential] warehousing strategy from today. Third party warehouse and fulfillment centers (e.g. Amazon fulfillment) changes the whole cost model. The advent of Geo location has allowed real time tracking of the item enabling more transparency allowing faster decisions.
• Customer, Employees – With smart devices everywhere, consumers are starting to ask for information that is contextual, real-time and pushed to them. When the same individuals go to work in their companies, they expect the same quality of customer experience. The entire social revolution focused only on the social aspects of the customer journeys, but what digital millennial need is the digital transformation of the end to end customer journey. Large amounts of customer from social networks combined with knowledge of the customer from internal systems needs to be combed for creating a personalized, contextualized customer experience - a 720 degree of the customer.
• Enterprise Systems – Businesses are not investing enough in Change to keep pace with the digital transformation happening all around them. Digital transformation is being enabled by technology and enterprises need to upgrade/enhance their legacy systems and technologies to support the new digital processes/models. Availability of SaaS solutions, open source software, big data, cloud computing is changing the enterprise landscape. The skill sets required to manage and make sense of these new plethora of technologies is driving the transformations.

The impact of the transformation can be seen in pioneering industries such as music (digital products are delivered via digital channels), media (traditional print news media is already on downward spiral, media giant Facebook does not create any content), retail (brick and mortar stores are getting replaced with online eCommerce stores, today largest retailer Alibaba does not own any inventory), taxi services - online ride aggregators are changing the dynamics of traditional taxi services, Uber does not own any taxis and electric cars are changing the dynamics of entire auto industry - imagine no car recalls but OTA software updates to fix the issues. Signs of similar digital transformation can be seen across most of the industry domains.

What signs are you seeing impacting your industry value chains?


This post originally appeared at www.techspot.co.in