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Why becoming demand driven is crucial for a successful digital transformation

Author

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  • Rigoni, Patrick

    (SmartChain International LLP)

Abstract

As companies are moving aggressively to digitally transform their supply chains, one needs to take a step back and consider the facts. Many digital transformations in supply chain fail to deliver. Operational and financial performance in many manufacturing organisations is not improving. Something is going wrong. This paper explores what it is that is going wrong: namely that supply chains are designed based on a theoretical model that is not matched to reality and that the increase in volatility experienced in today’s environment is bringing supply chains to their breaking points. Digital transformations therefore may often make things worse by accelerating bad practices and the speed at which managers take wrong decisions. To redress things, companies need to redesign and operate their supply chains to reflect how supply chains really work. Then, and only then, can digitisation and automation be successfully used to increase operational performance, cash flow and returns on invested capital (ROIC).

Suggested Citation

  • Rigoni, Patrick, 2019. "Why becoming demand driven is crucial for a successful digital transformation," Journal of Supply Chain Management, Logistics and Procurement, Henry Stewart Publications, vol. 2(2), pages 167-180, December.
    • Handle: RePEc:aza:jscm00:y:2019:v:2:i:2:p:167-180
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    More about this item

    Keywords

    digitisation; flow of relevant materials and information; demand driven supply chain; demand driven MRP (DDMRP); complex systems; systemic thinking;
    All these keywords.

    JEL classification:

    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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