Significant, long-lasting performance gains may be achieved by integrating digital applications with adjustments to business processes. Despite firms' best efforts, only a small fraction of them have fully realised the benefits of digital technology in optimising their supply chains. According to a recent McKinsey analysis, supply chain digitalization lags behind the other four industries studied by a wide margin. Only 2% of business leaders polled said that supply chain management was the primary goal of their digital initiatives. Do they have their priorities mixed up? Perhaps. McKinsey found that the yearly growth rate of EBIT for firms that actively digitised their supply chains was 3.2%, the highest rise from digitising any business segment, and that annual revenue growth rate was 2.3%. This research shows that a lack of adequate technology and poor management decisions are mostly to blame for the gap between expected and realised benefits of supply-chain digitalization.
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“Significant, long-lasting performance gains may be achieved by integrating digital applications with adjustments to business processes. Despite firms' best efforts, only a small fraction of them have fully realised the benefits of digital technology in optimising (Kumar Pandey, B. et al., 2021) their supply chains. According to a recent McKinsey analysis, supply chain digitalization lags behind the other four industries studied by a wide margin. Only 2% of business leaders polled said that supply chain management was the primary goal of their digital initiatives. Do they have their priorities mixed up? Perhaps. McKinsey found that the yearly growth rate of EBIT for firms that actively digitised their supply chains was 3.2%, the highest rise from digitising any business segment, and that annual revenue growth rate was 2.3%. Our research shows that a lack of adequate technology and poor management decisions are mostly to blame for the gap between expected and realised benefits of supply-chain digitalization. Insufficient innovation in supply-chain technology has led to a widening technological disparity. As a result, new tools emerged to help businesses standardise processes, expand the scope of certain systems, and improve their analytical methods (Bessant, Y. A. et al., 2023). Despite their usefulness, these tools have not been able to carry out the complex tasks that really revolutionise supply-chain management. The accumulation of technological advancements into coherent markets has been a slow process.
With the advent of superior digital solutions, businesses may boost supply-chain efficiency to an unprecedented degree (Madhavi, 2021). It has been unexpectedly difficult for many businesses to take advantage of this opening. The failure to make the necessary adjustments to business procedures in order to take full use of digital technology is a typical pitfall. To combat a precipitous drop in supply-chain service standards, a large healthcare provider improved its “Enterprise-resource planning (ERP) system” (Rathi & Asava, 2021). The company's service standards continued to decline, though, until it revised techniques like demand forecasting. Repairing processes without also upgrading underlying technology might be just as challenging (Palanivelu & Vasanthi, 2020). Supply-chain service at a major consumer products firm improved fast after a series of operational improvements, but then declined again when the necessary technologies weren't in place to support the new operations (Roundy, 2022). The most effective methods for digitising supply chains combine the use of cutting-edge technology with redesigned processes.
The fundamental transformation strategy is well-known to many managers and consists of three steps: creating a future supply chain vision, analysing the present supply chain, and planning the change (Soni, Sharma, Singh, & Kapoor, 2020). This method incorporates some of the latest developments in the digital revolution. This method has certain novel characteristics in the context of digital transformation (Mishra & Tripathi, 2021). When evaluating a firm, it's important to take into account not just how well its operations and technology are linked, but also whether or not its personnel strategy and organisational structure encourage innovation and steady progress. Due to the rapid scalability of cutting-edge digital technologies, the transformation road plan will also have accelerated timelines. In this existing book chapter, the study provides chief executive officers and other high-level executives with more specifics on each phase, along with examples that illustrate how digital transformations operate in reality (Anute, Paliwal, Patel, & Kandale, 2021).