What Do Roads in Rural Bali Have to Do With Supply Chain Digitization?
Digitization is the buzzword of the moment in Supply Chain. Going by the number of articles and posts on digitization, you would think that the pope has just discovered religion. In fact, I recently read an article which used the word ‘digitization’ nearly 100 times in about 4 paragraphs. It talked about demand digitization, supply digitization, inventory digitization, fulfillment digitization, planning digitization, and many such things. Is this really that new? Since the days of SAP (late 80s), or before, digitization has been gradually gaining pace. Yet, current articles are making out as if there is a switch you flick – and suddenly you have ‘light – aka digitization’ Reality is far more interesting and juicy. Thinking of digitization, I was reminded of our business transformation projects and trouble with getting accurate data. Despite spending hundreds of millions of dollars on ERP systems, (and in many cases over a billion dollars), most companies still fall way short in terms of their data – both in terms of accuracy and completeness. Before starting almost every project we are assured that the data will be in our hands within a few days – at the most. Typically, we count ourselves lucky if the data extracts are available within 3 weeks, and are accurate enough to be useful for analysis. But, this blog post is not about the barriers to digitization, rather it is about the nature of digitization itself. Why the data is not readily available, and why is it of such poor quality that it is barely useful for most analysis – this discussion will open up a pandora’s box of pent up feelings within the companies. Most technology companies are clueless about the human element, and continue to plough ahead in darkness – and blame their customers for technology failures. Reading the recent spate of articles on digitization left me with a distinct impression that another element which they show a marked ignorance about is the nature of digitization itself. The belief that it is a binary switch where you get technology and suddenly your company is ‘digitized’ is far from reality. Recently, I had the occasion of spending nearly a month on a sabbatical and family holiday in the island of Bali. I happened to travel over the entire length and breadth of the island during this period and noticed the state of the roads varied significantly depending on how far I was from the ‘touristy Bali’. What started as paving over the village footpaths, would gradually morph into high quality road, which would later be widened to accommodate growing traffic, and later replaced by a highway/motorway in parts. Most island roads were however, still narrow village paths paved over for modern transport. All this existed simultaneously at the same time and will continue to exist well into the future – with gradual upgrades from one level to next over the years. That is the state of digitization of supply chain and will continue to be, with gradual upgrades from one level to next well into the future. We have no Y2K type crisis (remember that?) that will force upgrades, and dollars are scarce in most companies that do not enjoy some historical or political advantage. No amount of hype from IT vendors is going to change this reality. Also, CEOs and CFOs of long memories of past IT projects that failed to fully deliver. Perhaps the next generation of executives will be gullible enough to fall for the same hype again. You can find comments on “What Do Roads in Rural Bali Have to Do With Supply Chain Digitization?” article on LinkedIn.