Effects Of Digital Transformation On Businesses: Helpful Use Cases

Sven Denecken

Digital transformation is a well-known concept in today’s business environment. The growing connectivity of people, machines, and businesses has changed market demands. In order to keep up and stay competitive, business must adjust to these demands by digitizing their processes and business models.

But digital transformation also holds many new opportunities to grow and even establish new branches of business. Therefore, companies should embrace innovation, ensure effective customer engagement, bring in fresh ways of thinking, and empower a company to make well-informed decisions as a collective whole.

Many businesses have already begun to transition toward digital transformation as they realize that it cannot be left for tomorrow. In this series we will illustrate, using industry-specific use cases, how businesses can reimagine their business models, processes, products, and services to achieve the benefits of digital transformation. To do this, organizations are increasingly looking to adopt technology enablers like Big Data, mobility, collaboration, analytics, and cloud computing.

Use case business intentions

Let’s begin with the first digitization use case within the consumer product industry: real-time supply chain visibility.

In order for a business to achieve real-time supply chain visibility, it needs to move from manual to system-based production planning and scheduling, automate sales order management, and enable traceability and visibility of operations and shipments within and outside the organization. By leveraging Big Data and analytics capabilities, the company can analyze the demand for production, delivery and process times, and can create event based notifications for better monitoring of the supply chain. So in this case, Big Data and analytics are the technology enabler that will help enterprises to realize the digital transformation goals.

FMCG customer example

To make this use case more relatable, we will illustrate a before-and-after situation with an anonymized fast-moving consumer goods (FMCG) customer.

This company is an example of digital transformation done right, with Big Data and analytics as technology enablers. The idea was to track and analyze real-time data to reimagine the process of work to help reduce costs and improve process flow.

Before digital transformation

The purchase data across various auctioning platforms was captured manually, with buying prices varying significantly. The lack of real-time purchases visibility hindered the mid-market price interventions. There also was a manual production planning process with lengthy planning cycle times. Time stamps for various processes were captured in disparate systems, which did not facilitate backward calculation of customer “need by” dates. The company was unable to demonstrate traceability to customers quickly or efficiently. As it was not able to track and monitor warehouse utilization in real time, it monitored decision-making manually, which is of course not the most efficient approach.

In a digitized environment, these circumstances posed a threat to the company’s position in the market, and even to its existence. Hence, it acknowledged the need to immediately transform digitally. The need for change becomes clear when a business is unable to work in real time or with a great analytics tool to make the best decisions based on accurate information. Overall, the time-consuming, error-prone processes of sourcing data for planning in this company needed to be reimagined.

After digital transformation

The company started with live tracking and reporting to facilitate quick responses to changing situations, to achieve cost benefits, reduce decision times, and improve opportunity captures. Next was better monitoring of the supply chain by event-based notifications to correct any schedule non-conformance issues. The company also facilitated traceability both within the organization and outside through a single lot traceability report.

Immediate results

When implementing digital transformation, the results are instantaneous. In this example, there is a long list of business benefits:

  • Ÿ INR 120+ million saved by optimized sourcing
  • Ÿ Reduced the time lag of price visibility, from 1 day to 20 minutes
  • Ÿ Improved bale-to-box time
  • Ÿ 5% improvement in on-time delivery performance (OTIF levels)
  • Ÿ Speed improvement by over 100x for root-cause analysis: traceability reports will now be ready in <30min (previously, they required 18 hours)
  • Ÿ Optimized warehouse utilization and reduced supply chain costs by INR 4.2 million

This is just one example of many more to come. There is no doubt that digital transformation is the next step for businesses to stay competitive and prepared for the future. Stay tuned for more digitization use cases, with hands-on business examples.

Stay tuned for more examples, and follow me via @SDenecken.

This article originally appeared on ZDnet.

Sven Denecken

About Sven Denecken

Sven Denecken is Senior Vice President, Product Management and Co-Innovation of SAP S/4HANA, at SAP. His experience working with customers and partners for decades and networking with the SAP field organization and industry analysts allows him to bring client issues and challenges directly into the solution development process, ensuring that next-generation software solutions address customer requirements to focus on business outcome and help customers gain competitive advantage. Connect with Sven on Twitter @SDenecken or e-mail at sven.denecken@sap.com.