The (forced) acceleration of digital transformation in companies: a winning strategy for the future
05 May 2020Article by Joana Moreira, INEGI’s Industrial Engineering and Management junior consultant.
For many Portuguese companies, the past few months have been marked by instability, uncertainty and falling revenues. According to a survey carried out by CIP - Confederação Empresarial de Portugal to its associated companies 1, the reduction in demand was the main negative impact pointed out by companies, being considered very strong in most sectors. AEP - Associação Empresarial de Portugal also pointed out the difficulties in supplying raw materials and reducing orders 2as the main obstacles experienced.
But opportunity often arises from adversity, and many companies have sought to reduce the impact on the sustainability of their businesses by entering or reinforcing their presence in the online world.
If we look at the data provided by SIBS Analytics 3, for example, at the beginning of April there was a significant increase in online purchases made in Portugal. Noteworthy is the growth in the Entertainment and Culture sector, which registered a 64% increase, in Food & Retail with an increase of 45%, and in Catering, Food Delivery and Take Away with 52%.
For many companies, the online market has become an asset, helping to bridge the revenue shortfall felt in the traditional aspect. However, what was born as a result of impulsive and reactive action must now become a strategic bet that privileges a potential gain in the medium and long term.
This means rethinking business models and processes, in order to adapt operations to an increasingly digital reality. There are certainly companies whose operation cannot be fully adapted to the reality of online. Still, our experience in consulting projects allows us to affirm that the flexibility of the processes, results in several benefits to the operation.
DIGITAL TRANSFORMATION AS SUPPORT FOR MORE FLEXIBLE ONLINE BUSINESS MODELS
Digital transformation is the process of integrating digital technology and adjusting it to the reality of the company, requiring changes in terms of technology, culture, operations and delivery of value. In the long run, it is a successful bet because it allows companies to provide tools that are flexible enough to better withstand moments of instability and change.
In this context, it’s essential to understand what are the most important aspects to consider during the digital transformation process. While the reality of each company is unique, however, there are 3 transversal and fundamental áreas:
1. Human resources
Human resources must be seen as agents of transformation. In other words, it is necessary for teams to be able to understand the advantages of digitization and to be an integral part of the solution.
For an efficient adaptation, it is important to provide the workforce with skills adjusted to the new market reality. Training in terms of interaction with technology and teleworking for all the functions that allow it are tactics with benefits, and not only when it becomes imperative.
2. Operations
Many companies have recently faced the fact that their operations are set up too rigidly for todays reality.
Think, for example, of the scarcity of raw materials that compromise the activity of companies. Counteracting the problem requires effective management, namely through the application of new sourcing strategies and the implementation of new approaches that allow better management of the supply chain. Other factors external to the company, such as flight cancellations or restrictions on delivery and distribution systems, have a huge impact on logistics operations and can affect the service provided to the customer. That is why it is important to ensure efficiency at all points in the supply chain that are likely to increase customer service.
These, and other problems, benefit from the use of information systems and technologies in order to be able to analyze data in real time that allow to define adaptation strategies and to communicate in advance with the different stakeholders.
3. Customers
The decrease in demand on offline channels leads to the need to present online alternatives to consumers, so that they can comfortably receive their products and avoid travel.
Therefore, sales channels must also be revised so that they can adapt to different realities. For young customers with high digital literacy, online is a simple and easy solution. However, in the case of customers of a higher age group and less accustomed to technologies, they will experience difficulties, so alternatives such as telephone orders and home deliveries, for example, may be relevant strategies.
Decision making in a crisis situation depends, above all, on the information that the manager has available. That is why the implementation of information systems and the digitization of processes is essential to prepare for sudden changes, such as those we are experiencing today, and that we can once again experience in the future.
The bet on e-commerce was a good bet, and will continue to be so, both in times of "war" and in times of "peace", for the long-term sustainability of companies. And if the current crisis has served as an impulse, now we must recognize the importance of having a clear vision of the future and the need to reinvent ourselves in depth and with strategy.