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While BDO has been operating its full gamut of services – spanning audit, insurance, tax, compliance, and advisory services for a range of industries since 1975 – in the last six years, they have amped up their technology and digital focus; allowing them to help manufacturer’s optimise value from their digital implementation.
BDO’s technology advisory partner, Kamal Prasad, says technological change complicated the manufacturing sector a decade ago, when the predictability of the supply chain was disrupted, and these changes have accelerated today.
“Ten years ago, manufacturing was a linear process. Manufacturers would buy the product, manufacture, and distribute it. Today, the supply chain has become an interconnected network, driven by technological change and globalisation,” Kamal Prasad said.
“Now, manufacturers have more options. They can buy from a network of suppliers; they can manufacture beyond their own borders and they have multiple paths to distribution. This speed and movement across networks have increased complexity for manufacturer’s, making it hard for old systems and processes to keep up.”
What the firm noticed when they made the decision to expand their offerings to include technology and digital advisory services, was the speed and its inevitable complexities that were impacting organisations across the spectrum. For manufacturers, managing and optimising value from digital innovation was becoming overwhelming.
BDO believed there was opportunity for manufacturers to harness new technologies; create new business models; reinvent their existing practices to deliver profitable growth; create leaner organisations to drive efficiencies; create a data-connected business and leverage data to make more effective day-to-day decisions.
However, with studies showing that only 30 per cent of digital programs are successful, to harness the power of digital requires a change in organisational mindset.
As such, BDO expanded its technology and digital advisory services in order help their clients optimise value from and help de-risk digital programs – with a focus on the selecting and enabling the right digital capability and bringing processes, people and system to fundamentally shift the dial on digital for their clients.
Kamal says this distinction between technology and digital implementation is important in the way you tackle change.
“When we talk about digital, it’s about how you use the information enabled by constant technological disruption. To make the most of it can mean a whole of company change,” Kamal said.
He says this change needs to be a continuous strategic negotiation for business.
“The first challenge we tackle with our clients, is that change is ongoing – how your business sets itself up to handle adaption is key. Clients tend to think of digital as a project with a defined start date and a defined end date. This is not the case, digital is here to stay.”
“Whereas previously, we had the luxury of time to implement a project for a set period and a predictable outcome, the speed of change and disruption makes that harder today.”
He explains that because new functionalities, apps, and other such disruptors, such as Industry 4.0 technologies, are constantly emerging, this presents a new way of adopting and embedding these digital innovations.
“Disruption is not an isolated event, it’s an entirely different way of doing business. So, you have to pursue a whole of company change, rather than just a technology implementation.”
“Today, organisations must think about how they apply digital more broadly in terms of its effects on the whole business. However, for successful adaption they must implement technology in a small and agile manner – it’s quite a paradox really.”
“If you start thinking like that, you will start to see your customers differently; you will see your distribution differently, and you will see your suppliers differently.”
BDO guides their clients in undertaking this challenge but acknowledges that there is no silver bullet, with each digital transformation being different from the next. According to Kamal, trying to apply the concepts of a successful case study or imitate it does not lead to success.
“There are two big things challenges clients tend to struggle with. The first is where to start, and then the second one is at what pace to change?”
Defining the issues, breaking it down and adjusting methodologies for each client is critical, otherwise it can quickly become overwhelming. Then it is about adjusting the pace so that it becomes whole organisation initiative and aligned with their objectives and culture. These things make the digital transformation journey unique to every client.”
For example, one of the clients that Kamal was working started with the question: Why is your working capital not in line with where your industry peers are?
“The moment we started unpacking the business issues, we realised that there were challenges around their business processes – in terms of how they engage with their customers, how they get their customer information and how they feed that back into the manufacturing. The existing setup did not enable the speed that is required in the fast-changing business environment. So, the focus shifted quickly to process changes that are required and then came the technology part.”
When the team started working on the initiatives to implement digital processes throughout the firm, they did so in an agile manner, by defining what challenges and issues should be tackled every four weeks.
“At the end of every four weeks we would take stock of what we had achieved, or not, and what types of adjustments we needed to make. So, we did it in a more incremental manner rather than doing it all at once, then we could reflect on the whole project after three months’ time. As part of this process, there were elements around technology, analytics, process change, that arose and were addressed quickly and appropriately. The agile approach quickly started delivering business outcomes through improved customer service and also started to create a positive impact on working capital.”
Kamal gives another example of a robotics process change that enabled a client to significantly improve their productivity. The client had a large team supporting order management processes and the team’s workload was only growing – exponentially.
“The business was growing, but with growing product portfolio and customer service offering, the load on the team was growing. When we looked at their processes, we realised that a good percentage of what they were doing had the ability to be automated by a robot,” he said.
“The pilot was extremely successful – we were able to improve responsiveness and streamline the process. However, the biggest impact was the improvement in employee engagement – their people now had more time to focus on more meaningful and strategic challenges. While, initially, we thought there might have some level of resistance to the change, with the bot ‘taking’ their job; they were actually so much happier that they didn’t have to do all those repetitive tasks anymore.”
Kamal says apart from process and cost improvements, digital has the potential to address a range of challenges.
“A lot of their workforce is aging, the people who are working on that production line are now they are reaching retirement age. A lot of the knowledge about how manufacturing happens, how the machine needs to be adjusted, how the product needs to be handled, all of that knowledge will leave the company. So, the big challenge for companies is how they overcome the risk of losing all of that knowledge, as their people enter a phase where they will no longer be able to work. This is where Industry 4.0 can add value.”
“By capturing sensor data from their production lines, we can now track the types of changes that operators make and whether it’s because of the type of product that’s going in, the level of humidity, the temperature, or other environmental factors. Advanced analytics can help correlate all of those things. And done over a period of time, you can codify all of that information to make it more systematic,” Kamal said.
Overall, Kamal says being able to keep an open mind to keep refining or adjusting their digital transformation journey is the hardest challenge facing manufacturers, above implementation.
“When you’re setting the business direction, you need to be broad minded and when you implement you need to do so in small steps, so that you can measure value and interpret it along the way, not at the end of a period of time.
“New disruptors could emerge at any time, you need to respond to these changes as quickly as possible, even if it takes you from the path you were originally on.”