Digital transformation for supply chain professionals
Discover how digital tools can elevate your operations
Traditionally, most supply chain and procurement tasks have relied on manual processes. That’s a problem in increasingly digitized industries—managing contractor relationships, budget line items, or project safety requirements often still rely on pen-and-paper processes.
As a result, professionals managing these tasks are frequently stuck on the back foot. They’re forced to react to the problems and challenges they face well after the fact. By the time they see a problem on a spreadsheet or report, it’s already old news.
Put simply, the intricacies of supply chain and procurement tasks are all too often playing second fiddle to managing paperwork—there are better ways for you to spend your time.
For too long, tedious processes have been the name of the game, brought about by stacks of paper invoices, bloated spreadsheets, and the nightmare of managing siloed, out-of-date tools.
The good news? There is a solution, and it’s one that offers a host of benefits for any business.
In this blog, we’re going to explore what digital transformation is, why it’s so beneficial in the supply chain, and how you can kickstart digital transformation in your own business
What is digital transformation?
First, the basics: What is digital transformation?
Put simply, digital transformation is a process that involves assessing the existing procedures, processes, and tools of a business, followed by the integration of digital technology to fundamentally change operations for the better.
Or, in other words, digital transformation is about rethinking how a business operates, with a specific focus on the potential applications of digital technology.
It’s also worth noting what digital transformation is not:
- Digital transformation is not digitization—simply converting paper files into digital databases or spreadsheets doesn’t qualify.
- Digital transformation is not just using the latest technology.
- Digital transformation is not maintaining the status quo—it focuses on enabling innovation in business operations.
Chances are, your business is already using a degree of digital technology. But it’s important to understand that digital invoicing, time tracking, or compliance reporting alone don’t constitute transformation.
Without considering how these tools work in concert with one another and how they affect your overall operations, you’re relying on digitized processes. Digitizing alone just takes existing processes and puts them on a screen instead of a stack of paper. Worse, digitization can leave you with a bloated stack of tools, creating further headaches for supply chain and procurement tasks.
Why digital transformation matters for your supply chain
Now that you have a better sense of what digital transformation is, let’s dig in on what it means for your supply chain.
A lot has been written on this topic, and for good reason: the supply chain represents a wealth of data that is historically challenging to manage and maintain.
Digital transformation gives professionals in this space a better way to approach these tasks while also providing four major benefits for business:
- Greater efficiency
- Data-driven decision making
- Enhanced collaboration
- Improved risk management and resiliency
Let’s take a closer look at each one.
Unlocking greater efficiency
The first and most obvious benefit of digital transformation? It can help businesses drive efficiency throughout their operations, especially when it comes to supply chain and procurement tasks.
At the risk of sounding like a broken record, taking manual processes and rethinking how they operate in a digital context is the heart of digital transformation. The most apparent outcome of this is uncovering new operational efficiencies and ways to automate operations.
In fact, automation is a key component in digital transformation—one report by McKinsey found that 57% of surveyed businesses have begun to introduce some element of automation to their operations as part of ongoing digital transformation efforts.
Consider the benefit this would have for your typical supply chain tasks—instead of wrangling spreadsheets or documents across multiple dashboards, you’d be able to automate data entry and management within a single, always-on database to serve as your source of truth for all relevant information.
Suddenly, instead of jumping from tool to tool, you’re able to access vital information you need in one go—like contractor rates, contract terms, labor hours, and even compliance requirements.
The knock-on effects of this are clear, too:
- With every element connected in one place, you’re more able to access information in real time.
- Real-time data availability and access helps reduce the risk of human error.
- It’s much easier to scale your supply chain and procurement tasks with digital processes.
Let’s use contract compliance as an example. Ensuring contract compliance means reviewing LEMs, timesheets, and more to make sure that what your contractors submitted lines up with contract terms.
This is, to put it bluntly, incredibly tedious if you’re stuck reviewing things manually, line-by-line.
Applying digital tools and technology here automates the process—instead of manually reviewing reams of data to assess historical performance, a digital system compares line items for you, flagging the things that are out of compliance for your intervention (or even rejecting them automatically).
This frees up your internal resources to focus on other tasks, like looking for negotiation opportunities or assessing performance trends.
Turning data into data-driven insights
We’ve already touched on better decision making, but we’ll explore it a bit more here.
It bears repeating: access to real-time, accurate data can make the difference between a project staying on-budget versus encountering costly delays and compliance concerns.
Digital transformation lets supply chain and procurement collect, store, and analyze data, transforming that information into actionable insights that improve decision making.
Consider industries like heavy manufacturing or large-scale construction. Decisions need to be made quickly on job sites, which often means referring to past events and information—both of which are out of date, lacking up-to-the-minute data.
But by making data available to job site managers in real time (not to mention ensuring real-time reporting), it’s far easier for everyone involved to make an informed, timely decision for the best of the project.
Spend analysis is a great example of how digital transformation drives efficiency and accuracy. Instead of poring over invoices or budget items to track these expenses, analytics tools automatically compile spend data to categorize it and generate reports as needed.
This helps show where, exactly, money is being spent—not to mention where savings can be found. That level of insight would be a boon for any procurement team looking to reduce costs and increase the value they get from their contractors and suppliers.
Improved collaboration and transparency
Centralizing data has far more benefits than simply informing decision making, though. One of the most significant challenges in supply chain and procurement operations, especially in complex industries, is data availability. Ensuring all stakeholders have access to the information they need, when they need it, is critical.
But this has the added effect of increasing transparency, making it easier for teams to see the status of other tasks and projects at a glance.
When everyone is working off the same set of information, it’s much easier to ensure all parties are kept in the loop and can collaborate with greater ease.
As an example, if a contractor’s performance is lagging, the procurement team can immediately address the issue with the contractor and project manager, taking corrective action well before it impacts the overall project timeline.
All of this contributes further to accountability on all projects. It’s easier to track who did what, when, and why they did it.
And best of all? There’s a clear trail and record for easy auditing with regards to safety standards and job site compliance.
Risk management and resilience
If, by now, you’ve noticed that each of these benefits feed into the next, then you’re ahead of the game and understand just how far-reaching digital transformation is.
At the end of the day, businesses like yours are heavily invested in managing and reducing the risks they face. In industries like construction, heavy engineering, heavy manufacturing, or oil & gas, risk management and resilience aren’t just nice features to have—they’re non-negotiable.
In these highly regulated environments, risk management is heavily wrapped up in compliance tasks. You need to adhere to strict safety, environmental, and legal standards, all while ensuring contractors are just as compliant as you are.
Digital tools give you a means of automating the process of monitoring contract terms in real time, flagging issues the moment a contractor encounters a hiccup or is otherwise non-compliant.
This level of automation helps eliminate human error while ensuring your safety standards and the regulatory guidelines you’re in scope of are followed to the letter.
A centralized digital platform gives teams complete visibility across all job sites, ensuring that compliance is always top of mind. This not only improves safety but keeps projects running smoothly and the standards and requirements a business is subject to.
By catching these issues early, digital systems help avoid costly fines, delays, and most importantly, accidents.
Getting started with digital transformation
Digital transformation promises to live up to its name for supply chain professionals, but it is a massive commitment. Moving away from existing processes and systems is hard. Navigating digital transformation has become a major industry of its own.
As intimidating as it may be, however, embracing digital transformation offers immense potential for supply chain and procurement tasks. Breaking down silos, driving efficiency, improving data availability, and reducing risk are simply the most immediate benefits.
In other words, that’s just the tip of the iceberg.
The deeper value of digital transformation is how it helps businesses unlock untapped potential. Making the concerted effort to fully integrate digital processes and technology into every aspect of supply chain and procurement operations dramatically changes how a business operates—a bit like suddenly being able to see the forest despite the trees.
Not sure where to start? Most digital transformation undertakings can be boiled down to six simple steps:
- Assess current processes: Identify inefficiencies in manual, paper-based tasks.
- Prioritize digitization: Start with digitizing timesheets, invoicing, and contract management.
- Centralize data: Implement tools that provide real-time insights and automate compliance tracking.
- Collaborate with stakeholders: Ensure smooth adoption across departments.
- Pilot projects: Test technologies on a small scale to refine the approach.
- Continuous evaluation: Adapt and evolve with emerging technologies for long-term success.
Continuing to invest in digital tools and processes gives procurement and supply chain teams a way to solve the challenges they face today while future-proofing against the challenges further down the road.