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Digital Transformation Must Be Wholistic
Companies that apply digital technologies to parts of their business are creating new silos that will limit their competitiveness.
Jul 11, 2018—
For the past few weeks, I have been working on a white paper about digital transformation by retailers. The approach I spell out could apply to brand owners, manufacturers, logistics companies and almost any other firm. What I advocate is a wholistic approach that leads to complete transformation and enables a company to collect online and off-line information and share it across the enterprise.
I started this endeavor because I was reading a lot of articles about digital transformation that advocated changing one aspect of the business or another. Some authors suggested that retailers use artificial intelligence to understand trends on social media sites and adjust their marketing accordingly.
That’s all well and good. But what if your marketing campaign goes viral on social media and stores are suddenly hit with a wave of millennials wanting to buy the item you successfully promoted on social media? More than likely, the item will quickly be sold out and you will have a lot of unhappy customers who might be reluctant to visit your store again.
I also see experts advocating that brick-and-mortar retailers offer buy online, pick up in store (also called “click and collect”) and same-day delivery. Great. But what happens when you can’t find the items in the store to deliver to the customer or to give them when they come in to pick them up?
Digital transformation has to be enterprise-wide and it needs to link all aspects of the business. For retailers, it means integrating online and physical store supply chains, point of sale systems, marketing, data analytics and so on. This enables all aspects of the business to understand what is happening in the real world and react to it.
For manufacturers, true digital transformation means having the ability to collect data on everything that is happening within factories, warehouses and supply chains. It means being to identify, track and manage raw materials, work-in-process, finished goods. And it means being able to analyze data and react to it quickly.
This effort is akin to the introduction of enterprise resource planning initiatives in the 1990s. Companies had many silos and could not share data among departments. ERP software was designed to break down the walls between departments and give department managers access to data across departments. It also gave senior managers a wholistic view of the company.
But ERP covered only digital information. Sales projections, output data, inventory data and so on. The data was often inaccurate because ERP systems had no way to deal with the real-world. If an item was stolen by an employee, the ERP system assumed it was still there. If interest in one of the company’s products was exploding on social media, ERP software had no way of knowing that.
I think of digital transformation as capturing data about the real world – what a shopper is doing in the store, what a thief is taking, what people are talking about on Instagram – and integrating it with existing ERP systems to create a digital platform that enables managers to manage every aspect of their business.
T he white paper we will publish in a couple of weeks will provide a step-by-step guide to achieving this. I hope people will read it and pass it up the chain of command, because it is really the CEO that needs to drive digital transformation.
Mark Roberti is the founder and editor of RFID Journal. If you would like to comment on this article, click on the link below. To read more of Mark's opinions, visit the RFID Journal Blog, the Editor's Note archive or RFID Connect.
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