Top 11 motivations for Digital Transformation
Low labor costs and repetitive mass production are no longer a winning strategy. Frankly speaking, running production half-way around the world and shipping the products from the other side of the globe over several months was never a sustainable business model, when you think about it.
Businesses that adopt digital enablers seek to foster new business models, since they realise, low labour rates and repetitive mass production are no longer a winning strategy
Digitalization has never been more important in a current business landscape. And small to medium businesses have the agility to adopt these new tools to accelerate their growth and surpass larger and therefore, slower competition.
Here are the top 11 motivational factors for businesses to adopt digital enablers and bring them to the next age of connected manufacturing:
1. Performance of the existing systems
Often available data is usually handled manually – excel documents, production spreadsheets and other manual entry documents (bureaucracy). This data is usually not updated regularly, gets duplicated, often gets lost and becomes so inconsistent and confusing that is rendered useless. Master data on suppliers and product delivery times gets entered once and then is not updated for years.
All this data is usually kept, but never used for optimisation of internal processes. Therefore, transition to a digital systems is so important and can be achieved with a smart use of few simple tools. Cloud based systems with multiple user capabilities can transform how the data is gathered and utilized within the organisation, thus boosting the performance of the existing processes. This is, therefore, so important for businesses seeking to shift their routines to digital tools.
By doing so, not only the data is consistent and kept updated, but it also enables businesses to gather critical insights into their processes, helps to spot critical bottlenecks and assists management in taking more educated decisions about operational improvements.
2. Return on investment
Just like any decision made by a business, it has to bring value to the company. Same applies for digitisation within the organisation, which, if handled carefully, should return the investments over the lifetime of the practice implemented. This is rather straight forward, if you cannot improve your business good enough, so your efforts pays off- there is no point even starting.
Cost and how the funds are utilised should be carefully managed and can go out of control very quickly (if not managed carefully). For instance, using external consultants and 3rd party companies for setting up your system can be a good thing. It will most likely have shorter setup times and more stable initial state of the systems. However, it is extremely important to have internal people who are well trained and closely familiar with the system as often small adjustments and improvements have to be made along the way. These small changes can quickly add up to considerable amount of money if done by external resources. Thus, keeping some knowledge “in-house” is always a winning strategy.
3. Consumer image
Around 71% of firms point out consumer image of the company as one of the main motivators for digital transformation. This is no surprise, as it is always important to build correct image in the eyes of your current or potential clients. Companies that show they are playing the long game, inspires trust and creates an image of value. Nobody wants to start doing business with a company that clearly is slacking behind the competition and has a higher risk of failing because of the same reason.
Enhancing your company reputation is not complicated and can be done without spending a single penny! Start by posting these updates on your website or sharing them on social media.
4. Operational costs and efficiency
Efficiency in the supply chain is boosted by the automation of both physical tasks and planning. In larger businesses tasks could be done by robots picking up pallets, moving them completely automatically along the warehouse processes. For smaller organisations, where this is not an option, a number of more delicate improvements can be done, where small repetitive tasks are identified and optimised.
This, same as return on investment, is focused on management of company resources. For a successful business strategy there should be a long term improvement plans in place to reduce operational costs. This is often achieved through efficiency in the tasks performed. It is clear that Digitisation and Efficiency of processes are closely related and, therefore, is a big motivator for business improvement.
5. Employee productivity
Employees, up to this day, remain one of the biggest expenses for a business. Companies point out that motivation for employee efficiency is of a great importance to them. By ensuring that repetitive tasks done by their employees can be replaced with digital automated systems. Then businesses can utilise their labour resources for more complicated tasks.
Looking at the trends of automation and IOT applications- brought to us by Industry 4.0 it is clear, that human-robot systems will be working hand-in-hand to increase efficiency, reduce errors and lower operational costs.
6. Reductions in error and rework
As mentioned in the previous point, reduction of errors is a quite important area that motivates over 83% of businesses to implement Digital systems. Ensuring quality and reducing production errors can result in major cost reductions and positive increase in the consumer image, which in turn drives the revenues up. Consequently, Quality focused businesses find it easier to survive in the competitive markets and can leverage their strengths for further expansion.
7. End to end connectivity
End-to-end describes a process, that takes a method or service from its beginning to its end and delivers a complete functional solution, usually without needing to procure anything from a third party.
The term also embraces a philosophy that eliminates as many middle layers or steps as possible, which helps to optimise a business’s performance. While other motivations can be focused on a more specific goals and achievements, end-to-end connectivity stands for a uniform and complete grid of systems that work together and achieve results without input from 3rd parties. This, therefore brings immense value for the businesses, that succeed in implementing such solutions through custom integration.
8. Competitive advantage
This is a rather obvious motivation, that takes into account a combination of other mentioned aspects and thus, gives a company advantages over it’s competition. This advantage can be either seen as technological or strategic superiority over direct and indirect competitors.
9. Flexibility and organizational activities
Flexibility within business operations can also be extrapolated from a combination of the already mentioned points. Where a uniform end-to-end system allows businesses to utilise their resources in different ways. This could be done by offering a wider range of services of diversifying productions lines for smaller batch, but more versatile products. Thus, giving a company the advantage to react quickly to supply-demand fluctuations in the industry.
10. Output volumes
Probably one of the most important motivations for any business in any industry. It serves as a primary goal for any technological or operational improvement done by a business. More output- more revenue thus, quicker return on investment.
11. Partner relationships
One of the most under-looked strategical motivations out there in terms of improvement methodology. While daily business relations in B2B are constantly effecting health of the partnerships, it is almost equally important to foster these relationships through business improvement.
In a digital world it will become harder and harder to foster close and personal relationships with your suppliers. These challenges will have to be overcome due to inevitable digital transformation.
More output- more revenue thus, quicker return on investment
It is clear that digital transformation should be handled with great care and acute sense of balance between many factors that affect your business performance. But, if done gradually and with the use of right tools, it is an achievable task, even for small businesses seeking to modernise.
Cloud based tools and ERP systems tuned for small businesses demonstrate that the future of manufacturing supply chain is in the cloud-based platforms such as sathive.com where transparency, cloud computing and omni-channel market comes together to form future-proof strategic procurement tools. Register your free account now or learn more about what Sathive has to offer for Small to Medium Enterprises in Europe.