Digital Operations: Test-And-Learn Beats Wait-And-See

Dr. Achim Krüger

Digitalization is dramatically shaping supply chain operations in the 21st century.

By embracing the latest Internet of Things (IoT) applications and other cutting-edge technology, supply chain organizations are creating new business models and more efficient ways to work.

Smart logistics processes optimize warehousing operations and delivery, creating enhancements in inventory and transportation. Through smart manufacturing, businesses can accelerate production, increase agility, and make strides toward more easily delivering product customization. Meanwhile, smart engineering enables designers to simulate manufacturing and identify challenges before products are actually built.

Digitalization and a seamlessly digital supply chain clearly have their advantages. The adoption of the latest technology, however, comes with a unique set of challenges. Primarily, leaders seeking to innovate and incite change must strike a delicate balance, walking the knife’s edge between chasing digital initiatives – a metaphorical collection of “shiny objects” – and dismissing every new digital technology as “hype.”

While you certainly don’t want to waste your time implementing initiatives that don’t benefit your enterprise, you can’t afford to hold off on adopting innovative technology too long, or you risk falling too far behind to ever catch up.

Taking a test-and-learn approach at your organization

Contrary to previous technology waves, like enterprise resource planning and mobile communications, sticking to standard business processes won’t lead to the successful application of digital technology.

How should this realization impact your plans for digitalization and your investment in people, processes, and technology moving forward?

SCM World research advises taking a test-and-learn approach rather than clinging to a wait-and-see mindset. Thinking strategically about which technologies to implement and invest in instead of waiting for early adopters to forge the path is key for success in a hypercompetitive business landscape.

To begin instituting test-and-learn at your organization, you should first consider your business holistically through three levels of analysis:

  1. How will digitalization change business processes and customer expectations?
  2. How will digital disruptions and IoT change business models within your industry?
  3. How will digitalization impact the nature of work itself?

Answer these questions to determine where digital investment makes the most sense, then take action – with the intent to constantly refine and improve for the future.

These top companies prosper with test-and-learn

A number of leading companies are already doing just that. From analyzing new data streams and leveraging advanced analytics, to making improvements in 3D printing and advanced robotics, to delivering digital products via the cloud, organizations worldwide are reaping the benefits of taking a test-and-learn approach and experimenting with digitalization.

While heavy hitters such as Amazon and Uber are often-cited digital disruptors, additional examples of companies getting ahead with test-and-learn include:

  • Schneider Electric: Tailored Supply Chain, Schneider’s comprehensive effort to divide its supply chain according to six unique customer segments, uses a series of advanced analytics tools to understand customer behavior. The initiative will help the company enhance data insights and develop a new business process focused on improving demand sensing capabilities. The program, which didn’t require a large investment in new technology, has so far already generated 340 million euros worth of incremental margin contribution.
  • DB Schenker: DB Schenker recently leveraged the concept of the sharing economy and forged a partnership with UShip that connects shippers to trucking companies online – similar to what Airbnb does for travelers looking for a place to stay. So far, this collaboration has not only impacted speed and selection for DB Schenker’s customers, it’s also improved efficiency by making use of previously underutilized assets.
  • Harley-Davidson: Harley-Davidson’s product planning approach decreased from a 21-day fixed plan to a six-hour window. In addition to positively impacting on-hand inventory, the initiative has added more agility and flexibility around scheduling and accommodating orders. All this is largely due to an increasingly digital supply chain, which offers the company greater visibility.

Get smart: Adopt a test-and-learn approach today

These organizations are just a few of the many that are prospering with a test-and-learn approach. From increasing agility and precision to reducing costs and waste, they demonstrate how smart investments in digital technology must strike a balance between inaction and overkill to revolutionize the nature of supply chain.

For more examples of how top companies are using test-and-learn to positively impact business outcomes, and to learn how you can successfully implement the concept at your own organization, download the full SCM World report: Smart Operations and the Internet of Things.

Dr. Achim Krüger

About Dr. Achim Krüger

Dr. Achim Krüger is Vice President of Operational Excellence (EAM and EH&S) at SAP. After starting his career as an officer with the German Air Force, he held several positions in the areas of maintenance of helicopters and transport aircraft as well as systems engineering, before he worked in higher commands as a logistics general staff officer. Joining SAP in 2002, Dr. Krüger first served as a consultant before establishing the SAP for Defense & Security industry portfolio and later assumed several other duties in Solution Management and Development,