Inside Supply Management Magazine
Making Digital Transformation Manageable
Digital transformation — and how it could change the way supply management organizations function — is the topic of many a conversation these days. However, the process can be daunting.
“When you think ‘transformation,’ it sounds like a big scary thing. I think companies can be scared of it, thinking they’re not ready,” says Erin McFarlane, head of strategy at Fairmarkit, a Boston-based software provider.
But transformation doesn’t have to be huge. Her recommendation: Rather than embarking on an end-to-end supply chain transformation that can take years and cost millions of dollars, start small. “Rather than trying to do a big-bang transformation, I think the key to moving a big organization is taking incremental changes and slowly making things better for your employees, stakeholders and bottom line,” she says. “At Fairmarkit, we focus on tail-spend pricing, for example. Rather than trying to solve all of procurement’s challenges with a big suite, we focus on incremental improvement to your process.”
By solving pain points with micro solutions that are deployed in a matter of weeks instead of years and at less cost, companies can quickly start to see the ROI, McFarlane says: “Change one little thing, and then once you’ve got that, change the next little thing, and you’ll leapfrog up to the future. You’ll probably get there faster than people who are trying to do it all at once.”
She equates digital transformation to software development: “It’s like comparing agile and waterfall,” she explains. “Waterfall would be: ‘We’re going to implement a huge project, which will take us three years and (US)$10 million, and at the end, we’ll have a big monolithic software’ versus the way that software is developed now,” where new updates or features are continually rolled out. “I think when executives are considering digital transformation, they have a tendency to think of that big-bang process, when they might be better served by making little changes over time that amount to big changes in the end.”
To determine where to start, McFarlane recommends looking for processes or situations where employees aren’t necessarily adding value, such as repetitive activities, form processing or compliance checks. “Where digital transformation can change things is by moving those people to activities that require strategic thinking and taking advantage of artificial intelligence and machine learning to automate the processes that are repeatable,” she says.
The key to implementing micro solutions — and software in general — is knowing the problem you are planning to solve and measuring the results, McFarlane says. Setting key indicators of success at the outset of the project, and then reporting on the progress of implementation, is critical.
“Incremental change — agile change — only works with regular feedback,” she notes. “When you try something, make sure you know what you’re trying to get out of it, and then track the results. If you’re not getting the results that you expected to get, make another change. Otherwise, you end up with a bunch of shelfware, and nobody wants shelfware.”