The Ultimate Guide to Digital Transformation

A digital transformation is no longer an option but a must for businesses. Companies with a low degree of supply chain digitization are twice more likely to suffer from quality and communication issues. Yet by investing in digital technology, they can rapidly gain a competitive edge. The answer lies in capacity optimization and the adoption of digital supply chains, all while employing sustainable, green technologies.

5 Steps to optimizing capacity for digital transformation

Due to their ever-growing responsibilities, teams have a hard time to get their priorities right, which in turn can affects their ability to meet customer experience objectives.

According to a study by Appleseed Partners, more than half of the surveyed companies risk delayed delivery due to the lack of capacity.

On the other hand, those implementing capacity planning are 38 per cent better at prioritizing demand and optimizing their resources. More than half of such organizations work with a Project Manager Officer (PMO), whose main duty is to optimize and schedule work based on capacity.

Another five ways in which companies can optimize capacity planning are:

1. Gain greater visibility into pipeline demand

At most companies, the majority of projects undertaken are not part of the regular planning and approval process and thus, resource demand is often unclear. Hence, it’s essential to understand whether the available resources are working on the right projects. It requires an efficient set of tools to help PMOs gain insight into the pipeline and build a specific strategy for each project according to the resources.

2. Understand resource capacity

Way too often, organizations tend to disregard account capacity (people needed to do the work) when committing to new projects. Less than one-third of those companies who don’t use planning tools take capacity into account, while organizations who aim to understand resource capacity planning are more likely to deliver projects on time.

3. Achieve a comprehensive view of both capacity and demand

More than 60 per cent of companies struggle with managing shared resources, while those who use enterprise software have a holistic view into portfolio pipeline visibility as well as the available tools and people. Thus, they are able to make decisions based on accurate data without using manual workarounds, such as spreadsheets.

4. Conduct continuous prioritization and planning

Due to rapid growth, smaller businesses may not have the resources to effectively conduct ongoing project prioritization and planning activities. This often leads to focusing on a single project while losing the overall balance. Yet as a business improves, so does the ability to conduct these activities. Continual planning helps to generate value from the resources invested in the portfolio.

5. Run and analyze what-if scenarios

The pinnacle of capacity planning is running what-if scenarios on resources in real-time. As organizations mature, response times shorten, accelerating decision-making. Companies are then able to gauge their capacity in hours or days, rather than weeks. In conclusion, effective portfolio management is critical to success, while poor capacity planning can have a negative impact on project costs and timelines.

While a capacity-centered approach may seem intimidating, the risks can outweigh the effort needed to make this adjustment: organizations who lag behind risk increased costs, missing out on business opportunities and a setback in innovation. On the other hand, with the right team and the right set of tools, companies can become more aware of their resources and keep up with the pace of digital transformation.

Covid-19: Poorly Digitized Supply Chains Twice As Likely to Suffer From Disruptions

Companies with a low degree of supply chain digitization were twice as likely to suffer from product quality and supplier communication issues - according to Qima One, who conducted a survey drawing from the input of 700+ businesses around the world.

Among those with low supply chain digitization, 14% of respondents reported product quality issues having a “very serious impact” on their business in 2020, but for those with highly digitized supply chains, that number was cut down to just 7%.

Similarly, one-tenth of respondents reported difficulty communicating with suppliers as having a very serious impact on their operations, compared to about a fifth of respondents with “mostly manual” supply chains.

In addition, more than 40% of respondents reported that disruptions related to COVID-19 had a noticeable impact on their product quality. For nearly 60% of respondents, these disruptions also caused tangible issues in supplier communication, while 38% of respondents observed additional ethical issues in their supply chain as a result of the pandemic.

The adoption of the digital supply chain

A positive consequence of COVID-19 is that it doubled the pace of supply chain digitization in 2020: two-thirds of respondents reported that they have implemented new digital solutions to manage their sourcing.

Those who have done so during 2020 are even more likely to continue on the digitization and optimization trajectory, suggesting that businesses view supply chain digitization not as “one and done” measures, but as a long-term strategy.

Among the respondents who implemented new digital solutions, just over half reported doing so in response to the COVID-19 related disruptions, suggesting that the COVID-19 crisis was a major driving force in the continued digitization of supply chains. Respondents based in Asia were even more likely than the rest to implement digital solutions to manage their sourcing.

A digital supply chain is quickly becoming the norm, with 94% of businesses reporting at least some degree of digitization. It is viewed as an important tool to enable sourcing diversification: among respondents with plans to source new suppliers in 2021, almost 70% had implemented new digital tools to manage sourcing during 2020.

It seems, however, that some businesses are still lagging. Respondents were asked to assess the current rate of digitization in their supply chain, from “mostly manual” to “highly digitized”. Over half of the surveyed businesses have poorly digitized supply chains, with more than 6% still operating mostly on pen and paper.

Company size affected these results, with SMEs being twice more likely to rely on manual tools than large companies. In terms of specific industries, businesses in the Homewares sector and Electrical & Electronics brands were the most likely to have high and very highly digitized supply chains.

Supply chain visibility as a challenge

Visibility remains a challenge across the board: up to 77% of businesses have blind spots in their supply chains. Less than a quarter of all respondents said they have clearly identified contacts and direct communication with suppliers that make their products.

While this is an improvement compared to the results of QIMA’s 2018 survey (where only 11% of respondents reported that they know all of their suppliers), the percentage of businesses with blind spots in their supply chains remains alarmingly high.

Over a quarter of respondents named supply chain visibility among their top sourcing challenges of this year, ranking it even more important than ensuring consistent product quality. More than a tenth of respondents also expect ethical issues to be among their biggest challenges in the coming year.

Two-thirds of businesses would like more visibility into their supply chain processes and schedules. Respondents working in Textile, Apparel and Footwear felt the most confident about having visibility into their production processes and schedules, while Toy, Homeware and Promotional Products businesses were on the opposite end of the scale.

How can Europe become a frontrunner of sustainable digitalization?

Sustainability is often associated with the environment, but in another context it can also refer to the economy or society as a whole. So, what exactly does sustainability mean when it comes to digitalization?

When we talk about sustainable digitalization, we refer to the process that takes place in a friendly, green, organic way as part of Europe’s transition to a green and digital economy - writes the European Digital SME Alliance on their website.

A concept that largely builds on innovative SMEs (small and medium enterprises), sustainable digitalization can strengthen European sovereignty in the long term. But what are the three main pillars that support this process?

1. Sustainable B2B digitalization

To get a clear idea of what we mean by sustainable digitalization, we need to define what unsustainable “short-term digitalization” means. Imagine a business that uses its Covid-19 liquidity to purchase a Zoom subscription! This means they become a minimally-skilled end-user of other companies’ products. With this mentality, a business can not expect to become a digital frontrunner, and will most probably lag behind in the digital race.

According to DIGITAL SME President Dr Oliver Grün, “Sustainable B2B digitalization starts when a traditional business approaches an ICT enterprise to acquire specialized software solutions to transform their business model from analogue to digital. (…) The companies which facilitate this process are often SMEs. We call these SMEs ‘digital enablers.”

SMEs require talent and skills to digitalize sustainably. This means going beyond simply learning to use digital tools: employees need to be trained in emerging technologies, enabling them to develop and innovate.

On a European level, this requires closing the gap of over one million missing workers in ICT. In order to achieve digital sovereignty and foster sustainable digitalization, Europe must build on its strong digital ecosystems. When universities, clusters and large enterprises co-operate with innovative SMEs and startups, Europe’s whole economy can become systematically digitalized.

2. Green(er) technologies and a circular economy

Europe’s ambitious climate goals largely rely on the digital sector. The fourth industrial (digital) revolution can bring about crucial environmental changes: innovations such as big data analysis or 3D printing can significantly reduce pollution as well as our reliance on resources.

LabShare is another good example of a green and innovative concept: our platform helps to regulate market processes and optimize the use of capacities, further decreasing our dependence on physical assets.

On the other hand, existing physical supply chains need to become more circular. One element of a circular economy is the repairability of products. Repairing is not only environmentally sustainable by tackling the “throwaway economy”, it also ensures a growing repair sector and provides a way for people to save money.

The effect of environmental measures can be spread and accelerated by technologies such as artificial intelligence, 5G or blockchain. Such a flourishing digital ecosystem creates the appropriate economic climate for innovative green companies.

3. Innovation-enabling policy and regulatory framework

European policymakers have to allow businesses to use circular economic models and innovate in greener technologies. The so-called “right to repair” is crucial to enable innovation, resource-saving, and save money for citizens.

In turn, repairability dovetails into software- and hardware openness by allowing tech-savvy players to access information for free. Open hardware does the same for physical products; if electronic devices are unlocked for third-party software, businesses can compete and develop better applications to run on them.

If Europe wants digital sovereignty, we need to understand and enable sustainable digitalization. By investing in green technologies, and smart policy, we can enable Europe to become a leading force in the digital age, a force that doesn’t just buy technology from abroad but sells it to the rest of the world.

Digital development is one of the fastest returning corporate investments

Digitization cannot be postponed any longer, and those who do not step in will suffer a significant disadvantage. The good news is that businesses can get a lot of help on how and what they need to change to gain a competitive edge - at least according to Levente Czimbalmos, the professional manager of the Modern Entrepreneurship Program project of the Hungarian Chamber of Commerce and Industry, who was interviewed by the Hungarian economy and business portal porfolio.hu about the digitization opportunities of Hungarian SMEs.

Hungarians are among the first in the EU regarding the use of social media and personalized apps, yet we still lag with digital solutions in business - Czimbalmos explained, responding to the question of where the Hungarian SME sector stands with digitization.

Currently, less than one in ten companies in Hungary use an electronic customer relationship system, while one in five companies in the EU already uses CRM, the only way to stay in high-quality contact with customers and potential clients.

We also face a serious disadvantage regarding the corporate governance systems that support internal processes. At the same time, basic office applications, mobility, and internet device quality are among the strengths of Hungarian businesses.

Czimbalmos stresses the importance of finding an external consultant to help businesses renew their digital tools. The Modern Entrepreneurship Program could be of great help since its main goal is to shape the attitudes of enterprises towards digital technologies with an extensive network of consultants, events, and content.

The Program offers free services to encourage Hungarian companies to introduce digital devices with, however, it also has an exclusive role in the regulation of EU funds to be spent on such development.

During a free audit, a consultant will help to assess the digital maturity of a business and then makes a development proposal for them as required. They provide an overview of the company’s current IT status, examine what needs to be developed and then help to select quality software, services, and even an accredited supplier within the framework of the Program.

According to Czimbalmos, companies often associate software with complex systems and extreme prices, yet in most cases, these products are not expensive or overly complicated. However, the proposed solutions and tools can now be obtained from EU funds, which can certainly have an incentive effect on businesses.

In even better news for Hungarian SMEs, applications are now open for the new GINOP PLUS 1.2.1.-21. tender, with several special conditions that are worth paying attention to have a successful application. The consultants of the Program can assist in compiling the parts regarding digitization. This is because the consultants take a significant part of the survey and planning off the applicant's shoulders during the free audit. The development concept created at the end of the process also contains proposals that can be transferred to the grant application.

Packaged cloud-based and installed software can be included in the construction, as well as IT tools. A total of 14 functional areas can be considered, such as online marketing, finance, records management, controlling, telecommuting and teamwork support, production management, or the CRM mentioned above.

The planned budget is HUF 200 billion, for which micro, small and medium-sized enterprises can apply in three stages between 12 July 2021 and 17 January 2022.