Digital Transformation: Major Gains with Minimal Pain
By: Earl Van as
Whether you know it as the “fourth industrial revolution” or industry 4.0, there is no denying that a fundamental shift in the supply chain is changing the way manufacturing and distribution industries operate. These sectors must undertake major digital transformations to remain competitive. Most strategies go beyond simple automation and straightforward technology implementation. A recent article by Deloitte breaks down the variety of digital platforms and infrastructures associated with Industry 4.0. These innovations vary from 3D printers and sensor technologies to telepresence robotics and global connectivity systems.
Leading senior executives know that implementing digital improvements to business processes is the key to growth. Most are already integrating machine learning or wearable technologies, or have these transformation methods on their strategic digital roadmap.
Artificial intelligence/robotized supply chain
The automation of the supply chain is not a new revelation. Manufacturers and distributors have been implementing robotic process automation (RPA) solutions to allow for more advanced processing for some time. RPA uses extensive parallel processing power, advanced algorithms and massive data sets to process tasks. Robotizing key business processes requires minimal human intervention, optimizing efficiency and allowing staff to be refocused on profit generating tasks. Supply chain executives have already started implementing RPA or are planning to invest in this technology due to its overall scalability of productivity.
From voice command technology linking to Enterprise Resource Planning (ERP) software that manages inventory, to smart glasses that assist in picking and eliminating visual search, wearable technology is beneficial to many areas of the supply chain business. With a warehouse productivity increase of 30%, it is clear why this process has seen such a dramatic increase in usage over the past few years.
Artificial Intelligence and Wearable Technology are seen as pillars of digital transformation. An upgrade of legacy platforms was critical to the implementation of these innovations. IT infrastructure now requires connectivity and collaboration with immediate access and processing. Companies that are integrating digital transformations have to first upgrade to cloud-based platforms to operate in this digital ecosystem.
While major digital transformation processes optimize business processes and efficiencies in the long run it can also bring challenges to organizations that are not fully prepared for the requirements. A Deloitte study found that only 32% of companies had the appropriate IT infrastructure to support the transfer to Industry 4.0. The same study found warehousing and logistics to be the two company segments with the least transformation to industry 4.0, which may reflect the cost and effort of digital implementation.
Industry leaders typically look at large scale process transformations that require substantial investments and complex system changes. However, they may be unaware of other simpler and far more economical strategies that also delivery positive outcomes, including streamlined workflow, reduced costs, and increased customer satisfaction.
Apart from being one of the most time-consuming and labor-intensive business activities involved in distribution and manufacturing, document processing can make or break customer relationships and affect profitability. It also requires manual entry and scrutiny to process by staff, with virtually no additional ROI beyond the initial sale. According to a 2012 survey by IDC, document processing challenges cause a 21.3% loss in productivity. Document automation systems are easy to deploy and cost efficient to implement. Several different documents can be easily integrated into the automation process, which can bring about many benefits.
Purchase order automation
Processing sales orders is traditionally seen as one of the biggest bottlenecks for most manufacturers and distributors, as data entry involved with each order can be cumbersome and time-consuming and ultimately affects aspects of delivery. Applying automation not only leads to faster order cycles, but also reduces errors and improve overall efficiency. By eliminating the manual work, sales reps can spend more time serving customers and increasing customer satisfaction.
Requests for quotes
Quote automation allows sales or customer service staff to respond to requests for bids and quotes in minutes with 100% accuracy, 24 hours a day. This technology can handle unique formats and transform customer’s requests for quotes into standardized, structured electronic quotes for direct input into enterprise resource planning (ERP) or quote application systems. With a quick response time, companies can gain an advantage by winning bids despite the time of day they are requested.
Converting faxed and emailed incoming accounts payable (AP) invoices into payable postings automatically reduces costs and eliminates manual entry. With invoice automation, invoice details can be extracted and transformed automatically into ERP or financial systems. Invoice automation not only eliminates manual entry, takes advantage of early payment discounts, and prevents duplicate payments, it also allows AP staff to focus on value-added tasks and addressing supplier requests.
Automating the contract management process is essential for companies looking to increase efficiency and reduce risk. Streamlined workflow for pricing agreements and task management, digital signature capabilities, automated alerts, and record management are just a few of the benefits of contract pricing. In cases where custom pricing is involved, keying in each pricing agreement increases manual labor where errors can be compounded when they occur. Automation of special pricing contracts can decrease the number of line item rejections or discrepancy claims.
Eliminating the manual labor of data entry involved with Bill of Lading and Material Handling Invoices, not only dramatically reduces errors, but speeds up the documentation process while allowing employees to focus more on value added tasks. Transport documentation is a simple-to-implement automation initiative that companies can deploy to improve efficiencies and cut costs.
Decision makers often think about digital transformation of the customer experience strictly in the context of the digital platform being used by the customer for a sale. But digital transformation in the context of processing orders and other documents can increase productivity and assist in elevating the customer experience. Automation frees up staff to become product experts and perform more customer service related tasks. Showcasing deep product knowledge, staff can inspire confidence in customers, and provide product solutions to technical problems.
Supply chain executives consider digital transformation as large scale undertakings that require substantial investments and are on the roadmap for 18months or more. Such initiatives do not have to be viewed as an insurmountable endeavor. There are other easy-to-implement and more accessible process transformation solutions like document automation that also improve key business inefficiencies and deliver immediate results.
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