Digital transformation of the Value Chain is going forth at a rapid pace. Moreover, digital transformation, a strategic imperative even before, has accelerated its pace across corporations, given the new realities of the pandemic, including the way we work, shop, interact, and live.
Digitalizing physical interactions and re-envisioning the interaction and transaction paradigm has become the critical focus of most businesses. In this race to succeed in a brave new world and compete against the new generation of digital natives, companies examine every aspect of their business footprint across the entire value chain.
The seminal concept of Value Chain and its impact on corporate strategy, operational optimization, and technology enablement has accelerated in the digital era.
Michael Porter introduced the concept of Value Chain, and it covers primary and supports capabilities that result in a sustainable advantage for each company.
Simple Value Chain Diagram:
There are several opportunities for the digital transformation of the value chain, particularly around the primary activities for boosting revenue and profitability. In some cases, the support activities for cost takeout and streamlining of operations.
Based on our discussions with digital transformation experts, here are some of the areas companies are embracing and implementing digitalization efforts:
Popular Areas for Digital Transformation of the Value Chain
Improving Customer Experience: Enhancing customer experience is one of the critical business outcomes of digitalization. And it is not just about customers, but employees and other stakeholders. The ability to remove friction from interactions and make those experiences memorable is the desired outcome of these endeavors.
Traditional customer experience spans removing friction points in the customer journey across the so-called omnichannel and provides support in every aspect of researching, purchasing, fulfillment, and returns management processes. From deploying chatbots to natural language search, from painless returns to payment flexibility, many areas companies are tackling with digital tools and technologies.
For example, companies are improving the onboarding process, managing benefits, online tools for collaboration and cooperation, and a more transparent employee evaluation process in the HR arena. Employee experience, in turn, influences the customers they interact with and determines customer satisfaction or lack thereof.
Reducing cost structures and automating work: Given margin pressures, there is a strong reliance on automation, particularly intelligent automation, to digitize and automate work. For example, companies rely on RPA (Robotic Process Automation) to deploy digital bots to handle routine, repetitive, and voluminous work. Furthermore, they are leveraging IA (Intelligent Automation), which primarily incorporates AI technologies, to automate processes with more ambiguity, variability, and nuance.
Machine learning, deep learning, and computer vision have emerged as essential in intelligent automation sweepstakes.
Product Engineering: Companies are striving to become responsive to market changes and launch products quicker. Most of the digital natives can launch new initiatives and new products almost daily. So, in large firms where a typical product launch or even an extension takes a couple of quarters to a couple of years, it is essential to accelerate time to market. From adopting agile methodologies to low code and no-code platforms, large corporations are making faster product development and launch a reality.
Foster data-driven decision-making: Historically, gutfeel and instinct were the sole drivers of decision-making in large companies. However, most companies are striving to harness and leverage data to help in real-time decision-making. Companies are utilizing machine learning, cloud-based database frameworks, and more intuitive business intelligence and visualization tools to facilitate predictive and prescriptive analytics to aid decision-makers.
Managing and Minimizing Enterprise Risk: Lowering enterprise risk and ensuring the franchise continues to thrive. Enterprise risk is a broad spectrum of activities ranging from cybersecurity, information security, minimizing fraud, and a slew of other things.
The cybersecurity challenge is particularly severe, with social engineering, malware, ransomware, and denial of service attacks increasing exponentially.
Supply Chain Digitalization: Initially, most companies focused on the demand side of the equation, and justifiably so as it impacts the top line. But with risks and challenges in the procurement of raw materials and supplies, companies are digitalizing the supply chain to make it robust, resilient, and responsive.
Companies are investing heavily in supply chain capabilities, whether in e-sourcing to engage global suppliers or using IoT for logistics, shipping and transportation visibility, from just-in-time order placement to building supplier ecosystems.
New Business Models and New Revenue Opportunities: Firms are also looking at how to reinvent themselves as a part of the digital transformation efforts. Whether monetizing data to launching value-added services or bundling or unbundling products, there is a concerted effort to capitalize on all corporate capabilities and generate new revenue streams.
What is your company doing in terms of the digital transformation of the value chain? What activities are your focus for rethinking and re-platforming? Please share with us.