Digital transformation, not digital duplication

As we step into another fresh new year, manufacturing industries continue to aggressively pursue the development of Industry 4.0. Known as the ‘fourth industrial revolution’, it envisions rapid change to technologies and industries, driven by digital interconnectivity and smart automation, with a goal to blur the physical lines between the physical, digital, and biological worlds.

Digital transformation, or ‘DX’ as the tech industry calls it, has since become a global phenomenon. First mooted in 2011 by the German government, it’s popular today with company managements, many of which have their factories and plants operations joining the trend. Organizations have set up their own digitization departments, creating new positions such as ‘Chief DX Officers’, along with lofty goals to match.

First, pick a framework, any framework

Conveniently however, digital transformation organizations/departments frequently rely on roadmaps from consulting firms, since many consultants have built reputations developing digital transformation frameworks. Some of the regular favorites are, ‘let’s look up a few digital transformation frameworks’ from the usual suspects, such as Goldman Sachs/BCG Consulting/McKinsey/etc. They all look similar, don’t they?

Then let’s digitize

Next, companies will start their ‘transformation’ with buying software: LIMs for R&D, MES for manufacturing, Salesforce for sales, and/or a variety of customer service software offerings from the market.

But what does all this software do? Fundamentally, they’ll store information. It will capture data from practices and make them permanent, accessible, sharable – but it will not change the practice at all. The fact that it’s compatible with the current practice makes it easy-to-sell (or buy), but it doesn’t change the status-quo.

Digital transformation isn’t as simple as that. It should not be confused with digitization. Not only must the entire journey need to be considered, but the type of software, operating systems, access rights, data availability/use and so on, need to be interpreted, integrated, and usefully aligned to a goal that includes improving efficiency, productivity, and outputs.

What are we trying to transform?

My main gripe is that digital transformation is frequently confused with digitization. The basic role of digitization is simply to convert information into a digital format (ie. data). Which means, many digital transformation efforts today are a creation of a ‘digital copy’ of actual operations, eliminating paper trails.

So, the ‘digital copy’ becomes instantly shareable and accessible. Does this have value? Yes. Making information digitally available makes information more transparent (to all need to know), more accessible (anywhere with internet), more usable (data can convert into analytics), more traceable (blockchain or no blockchain, digital information is more traceable than paper trails). But is digitization’s value just about data being accessible & verifiable, or merely about visualization & analytics?

From my observation, I would argue, ‘no’.

The current digitization tools & projects involve workers entering data into a software that captures it in a ‘backend server’ or a ‘cloud’ which digitally stores the entries. Fact is, this takes up more time and labor, so in terms of operational efficiency, nothing has changed. Statistics show that as many as 84% of digital transformation projects fail - a side that few ever talk about.

Industry 4.0 principles

Most of the time, bored staff who enter the data don’t see the benefit of data entry. Day-to-day operations continues to run as before, with no improvement to workflow, output or volume. Ironically, through the misunderstood process of ‘digital transformation’, many end up having more work, and less time to actually follow through. The reality is that digital transformation isn’t really about technology. As MIT Sloan Management Review states, “Instead, digital transformation is about how technology changes the conditions under which business is done, in ways that change the expectations of customers, partners, and employees.”

Did your operations improve with it?

That said, many digitization projects do not end up transforming factory operations into a faster or better horse. Weighed down by data entries, operating system eccentricities, cross-platform complexities, they end up as a slower horse. But just like how the debate shouldn’t be about building a faster/better horse, we should be looking at the invention of the car: it made the horse carriage obsolete, because many didn’t know if there was anything better than a horse back then. We need to look at digitization in a different light.

We should start with a clean slate and consider what’s the best digital tool for revolutionizing business operations. Can we leverage the advancement of sensor technologies, computing, automation, and/or AI to improve or enhance operations in a different way? It’s crucial to think out of the box. The right question isn’t ‘how do I digitize operations’, rather, it should be ‘how can I improve operations through technology?’

Only through a revolutionary improvement can a sizable ROI be obtained. Incremental improvements, though useful, may not show visible returns. It’s one of the many principles we believe in at Thingple, a digital transformation company that helps factories and plants achieve true Industry 4.0 goals.

Digital transformation is what we do best

At Thingple, and our core goal is to revolutionize warehousing and logistics through the intelligent use of digital technology, with a mission to eliminate mundane tasks burdened to many workers today. This provides the opportunity to reassign employees to apply their talent to more meaningful work, as part of the goal of our Imagination Age today?– with creativity and imagination as the primary creators of economic value.

We’ve developed proprietary solutions, empowered with edge intelligence, to provide real-time information and AI decision-making. This minimizes precious resource wastage and maximize efficiency for many WMS (Warehouse Management Systems), reducing labor (repetitive work) and eliminating human errors.

A properly executed digital transformation exercise can lift employee spirits, as staff are elevated to pursue more creative outputs to help businesses achieve or exceed business goals.

For Thingple, we strive to deliver digital transformation with exceptional results, because making a happier workforce makes a more productive workforce. As a bonus, the clear black & white boundaries of digital transformation can also help to create safer, more sustainable workplaces.

So when it comes to the trending act of ‘digital transformation’, always consider how it supports the goals of the business first: efficiency, output, productivity and overall added value. It’s not all just about technology, but how you integrate and unleash the potential of digital into how you operate and deliver value to customers –?not just digitization for digitization’s sake.

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Dr Min is the CEO of Thingple, a digital transformation company dedicated to delivering digital solutions to modernize manufacturing operations through intelligent logistics and smart warehousing.