Risky Business: Is Technology Overpromising in Supply Chain?

Technology holds tremendous potential for the logistics and supply chain industry, but we must remember that it is only as good as the human strategy and experienced partners that guide its implementation.

Adobe Stock 271261047

We live in an era where the word "technology" is synonymous with progress, efficiency and the promise of a better future. The logistics and supply chain industry is no stranger to this narrative. Digital transformation promises to revolutionise our industry, enhance efficiency, boost visibility and offer unparalleled agility. By 2025, investments in digital transformation are predicted to reach a whopping $2.8 trillion, almost doubling from 2022's $1.8 trillion. On the surface, it appears a long-awaited renaissance for an industry often left behind when it comes to modernization.

However, we must navigate this path with caution, for technology is not a magic wand. The seductive allure of digitisation hides a stark reality: the high rate of failure in digital transformation and technology projects. A recent study by Everest Group reveals an alarming statistic – nearly 68% of organisations fail to report positive returns on their digital investments.

American Productivity & Quality Center's 2021 survey results corroborate this trend, with a considerable proportion of organizations failing to meet various goals: customer service (43%), cost-savings and sales (41%), inventory control (36%) and ROI for technology (27%). These figures are not to be taken lightly.

Technology: An Enabler, Not a Solution

It's crucial to revisit the first principles. We must clearly discern between the roles of technology and human effort within our industry, that is fundamentally, a service industry. And while technology offers powerful tools, it is not a solution unto itself. In supply chain and logistics, technology should be harnessed to make service delivery more efficient, robust and responsive, but it should not be mistaken for the service.

Consider this: technology can streamline data collection and analysis, offer real-time visibility into operations and automate repetitive tasks. These capabilities can boost efficiency and provide valuable insights. But these same tasks, when not tied to a clear business need or strategic objective, become hollow exercises in tech-savviness. Therefore, technology should be used as an instrument to serve a pre-existing business need, not mere tokens of technological modernity that creates a want in the absence of need.

Digital Transformation: It's About People, Not Technology

No matter how sophisticated our tools become, at the core of our industry are people managing assets. The industry's lifeblood remains the professionals who manage assets, negotiate deals, ensure customer satisfaction, and drive the machinery of our daily operations. People's needs, abilities and perspectives must guide the process of digital transformation, not the capabilities of the technology at our disposal.

From involving internal stakeholders in decision-making processes to considering end-users' needs, it is the human element that will ultimately determine the success of any digital transformation initiative. Technology, however sophisticated, can only be a tool in the hands of these individuals. And a tool is only as effective as its user's skills and understanding allow. Thus, training, change management and continuous engagement become vital components of any digital transformation process, facilitating a smooth transition and fostering ownership and trust among users.

The Right Partner: The Importance of Experience

In the quest for digital transformation, the choice of technology is less significant than the choice of a partner. This partner should not merely be a provider of software solutions, but a collaborator who shares your understanding of the domain, has empathy for your clients and end-users, and can walk alongside you through the transformation journey.

Such a partner can offer insights borne from experience, provide support during the inevitable challenges, and bring a perspective that transcends the myopic view of technology as a standalone solution. Their domain knowledge allows them to contextualise technology within the industry's needs and challenges, and their empathy helps them to align solutions with the experiences and expectations of the users.

Moreover, fostering trust within an organization doesn't happen overnight. It requires consistently delivering on promises, celebrating small wins and resisting the temptation of scope creep. As the fable of the ship repair man suggests, it is not the complexity of the work, but knowing exactly 'where to knock' that counts. An experienced partner knows where to knock, and this knowledge is the difference between effective digital transformation and a costly misadventure.

So, beware of so-called “experts,” especially those claiming proficiency in the vast and complex fields of logistics and supply chain, or in new technologies that are still nascent. Misplaced trust in such "experts" is a dangerous pitfall.

Remember that in our service industry, the customer is king. Understanding their needs is paramount. Technology holds tremendous potential for the logistics and supply chain industry, but we must remember that it is only as good as the human strategy and experienced partners that guide its implementation. Through this balanced approach, we can steer clear of the digital transformation failures that plague our industry and instead unlock the true potential that technology promises for the future in supply chain and logistics.