In my previous blogs, I wrote about the lack of transparency, visibility, and traceability in the automotive finished vehicle industry and then with regard to other industries in general. In this blog, I will touch on ‘digitization’ and ‘digitalization’, which are often considered just technical solutions. We will explore what digitization & digitalization are and how they can enhance your supply chain and logistics operations.
When you google both words for definitions, you find “Digitization is the process of converting information into a digital (e.g. computer-readable) format. The result is the representation of an object, image, sound, document, or signal (usually an analog signal) obtained by generating a series of numbers that describe a discrete set of points or samples.” Additionally, you also discover, “If digitization is a conversion of data and processes, digitalization is a transformation. More than just making existing data digital, digitalization embraces the ability of digital technology to collect data, establish trends, and make better business decisions.”
I worked for several large OEMs in supply chain and logistics capacities during my career, and in all cases, day-to-day executions relied heavily on MS-Excel spreadsheets, fax, email, and telephone calls. We spent many meetings trying to standardize processes and improving overall day-to-day execution, which for regular business worked. Unfortunately, when there was any disruption or larger crisis, immediately manual execution took over, bypassing any agreed ( standard) processes.
In the world of today, we deal with almost a constant crisis mode in supply chain and logistics. It has been fascinating to see that many OEMs/BCOs in several industries have been operating in this modus operandi almost by default.
With a mindset that technology can solve this issue, it is a good development that many companies are transforming from traditional IT into a digitization/ digitalization mindset. However, what we have experienced many times though, is that the key focus then still remains on IT solutions, rather than process mapping and workstream optimization first. In many cases we have seen a lack of the latter or we had to support such companies with closing gaps and/or eliminating waste in their processes or value stream.
We have to do this before we can even start with any form of automation or digitization. In some other cases, we had to map their modus operandi completely first.
The latter is always the most interesting or challenging cases since subject matter experts have been operating in a long-term reference or comfort zone, requiring a change in mindset or overall change management to realize that there are other ways to solve their day-to-day issues.
In the case of the automotive industry, we have seen an interesting different phenomenon. The traditional automotive OEMs are in a situation as described above. The new (EV) OEMs which are now entering the market have been so focused on designing, assembling, and launching their vehicles into the market, that they overlooked the need for supply chain and logistics technology in support of proper execution. For a first launch, traditional means like MS-Excel can potentially work. However, the moment volumes start ramping, a business can lose control very rapidly.
While this may sound concerning, the moment these companies realize that they do not have any heritage in traditional supply chain and logistics technology, they will move straight into new technology, supporting process and workflow automation in support of digitization and digitalization overall. In these cases OEMs also make cautious decisions to ‘make or buy’ such new technology.
So, while new EV brands create an evolution in the automotive industry, so could the way they are handling their supply chain and logistics.
In this third blog, I have been writing about Digitization and digitalization in relation to process and workflow automation, and how this could transform supply chain and logistics management. In the next blog messages, I will reflect on previous blogs and share other experiences and potential solutions to solve issues that I believe impact multiple industries.
We will post our blogs on Vinturas.com and on our Vinturas LinkedIn page.