More businesses are making meaningful progress towards the goal of becoming digital enterprises. But while digital transformation pushes brands to innovate from the bottom up, change needs to begin at the top.
When Adidas released its AM4LDN shoes, it was the culmination of a long journey to digitally transform the business to become faster, leaner and closer to the customer than any athletic brand that had come before it. Built by robots in Adidas’s largely-automated Speedfactory, the shoe was designed to meet the specific needs of London’s runners. It is a taste of what is ahead as more brands digitise the supply chain to provide the right products – which will become increasingly customised – to the right customers, wherever and whenever there is demand.
Even before it announced the Speedfactory initiative, Adidas had already begun to see how new technology could enhance the business. It started by connecting its suppliers and logistics partners on a networked platform to enhance visibility and collaboration across the entire supply chain. That visibility led Adidas to rethink the way it made shoes. The ability to track a single item all the way through the production process helped pave the way for mass customisation through its miAdidas programme. Today, customer-designed shoes are made right alongside mass-market models, allowing Adidas to get personalised products to customers without disrupting the traditional manufacturing process.
The Adidas example is a blueprint for what successful transformation looks like. When it embarked on its journey, the brand was lagging behind its competition. Today, it is outpacing nearly everyone else in the sportswear industry.
Many brands have already learned – often the hard way – that meaningful digital transformation is not as simple as flipping a switch. It takes vision and the tenacity to follow through
That kind of innovation does not happen overnight. Many brands have already learned – often the hard way – that meaningful digital transformation is not as simple as flipping a switch. It takes vision and the tenacity to follow through, even when significant change seems like an impossible goal. Transformation is not just a function of the supply chain; it also requires commitment from the executive ranks to align departments and ensure resources are available where they are needed most.
Digital transformation is a journey
With each digital transformation success story, we see more evidence that brands are ready to embark on an evolution of their own. But it is worth noting that no two businesses are alike. The reality is, each brand has its own vision for success and has already invested heavily in software they believe will help achieve it.
However, no business is an island unto itself. Especially in today’s supply chain, where about 80% of the data needed to run a business exists outside the four walls of the enterprise. Today’s brands are highly distributed, relying on countless suppliers, trading partners and carriers to take a product from inception all the way to the store. Transformation is not just about what happens within an organisation, but also its ability to collaborate with its partners.
We have heard plenty of talk about digital transformation over the past several years. Now the industry has a better picture of what that means, and in 2018 we will see more businesses make meaningful progress towards the goal of becoming digital enterprises. Although each business has its unique challenges and no two brands will change at the same pace, it is still possible to measure progress based on the technologies deployed and the outcomes produced.
4 stages of digital maturity
Stage 1: Intra-enterprise visibility
Transformative journeys begin with communication, especially within an enterprise. The first step is about aligning systems and processes internally to eliminate departmental and functional silos within the business. While it may seem low value, many executives would be surprised at how many internal challenges an assessment might show.
Stage 2: The networked supply chain
It is said that individual businesses do not compete – their supply chains do. Success today depends upon orchestration across the extended value chain. Traditionally, many enterprises have leaned on Electronic Data Interchange (EDI) for visibility across individual business partners, or data from a third-party logistics provider for comprehensive transportation visibility. But point systems do not show the big picture, and logistics partners do not always have information that covers the supply chain at great depth. To truly extend visibility and communications across the supply chain, all partners and suppliers must be connected across the same network, sharing a single view of the truth.
Stage 3: Customer integrated
End-to-end supply chain visibility opens new possibilities to collaborate, improve/streamline processes, and turn insight into action. Businesses at this stage of maturity have a better sense of what customers want and when they want it; they gain the ability to sense and respond to demand patterns. At this stage, enhanced analytics and business intelligence turn insight into action through increased automation of systems, effectively extending systems like ERP (Enterprise Resource Planning) or PLM (Product Lifecycle Management) beyond the business.
Stage 4: Predictive
The first three stages of digital maturity focus on breaking down silos and building out a network of connected, integrated, and responsive nodes across the global supply chain. Now businesses can build upon all the preceding work, truly taking themselves into the future. At this point, the business is fully connected to its suppliers, takes advantage of advanced analytics and machine learning to sense and respond to demand, and uses automation and advanced manufacturing techniques to produce the right products for the right customers at the right time. The network becomes predictive.
Focus on the outcome
No single piece of hardware or software can propel a company’s digital transformation journey, but the ability to connect disparate systems and a large ecosystem of suppliers can help break some of the biggest barriers that exist today. The flexible computing power and extensibility of cloud-based networks provide the underpinnings for meaningful change. But as we have seen with brands like Adidas, strong leadership and commitment to vision also play a significant role.
We have only just begun to see the effects of meaningful change. As brands look ahead, it can be easy to get caught up in the latest technology – but it is crucial to keep sight of the outcomes and consider how each new piece helps propel the enterprise towards a digitally connected future.
About the author: Guy Courtin is vice president of industry & solution strategy, retail – Infor.