We don’t know what a post-COVID world will look like. But it’s becoming increasingly obvious that it will be fundamentally re-shaped.
Social distancing and reduced ‘contact opportunities’ will be key to workplace safety.
When it comes to the workplace, many of the needs to be ‘in the office’ are driven by the location of documents, tools, machines and non-portable devices. Physical meetings are less of a constraint now. We are now able to ‘Zoom’ ourselves together from any location to meet. But these other artifacts are generally located on site or are harder to share virtually.
For example, we cannot process a delivery note remotely because the shipment arrived at the warehouse and the delivery note is in the box with the goods. In the invoicing world, many companies still send paper invoices. These need to be typed in or OCR’d/scanned at the office because that’s where the mail is. Manufacturers send paper certificates with their goods. These need to be assessed by the customer’s quality organization for approval.
Examples abound - spanning all business processes, internally and externally between business partners.
Wealthy organizations, those with greater capital and technology talent, have made great strides in adopting business technology. ERP, CRM, PDM etc. solutions largely integrated functions inside the business. However, the ‘paper interface’ – between organizations is still very much alive and well. Furthermore, less wealthy businesses (small and medium enterprises or SMEs) have been unable to take advantage of technology at the same rate – UK SMEs are at 17% ERP adoption levels. And when we are in a situation where over 99% of the manufacturing supply chain are SMEs, it’s easy to see where room for improvement lies.
Today’s supply chain processes are still saturated with paper. Granted, some industries are better than others for various reasons. Together with a U.K. aerospace SME customer, we looked at a simple part manufactured with a yearly volume of 2,500 pieces. Each part is serialized and drives significant amount of paper – most of it being technical certifications proving quality and regulatory compliance. Over the 6 organizations that interacted with the part, it drove 52,500 yearly process hand-offs, 265,000 pages of paper (much of this duplicated) and contributed around $441,666 of labor cost while producing around 2,400 lbs of CO2 from the paperwork alone. When a Boeing 747 has around 6M parts, you can see where we are going with this line of thinking.
Insights we gained
Duplication - Many documents are unnecessary duplicates held by different parties across the supply chain
Pain not acute/obvious enough - Cost of authoring and managing paper is absorbed into overhead and is not acute enough to draw attention and generate leadership action
Poor storage/retrieval - A wide variety of filing systems (including email) are used to store documents making it difficult to find things when they are needed
Digital to Paper to Digital again - Documents are often created by inputting data that may already exist in digital format somewhere else – at the supplier sending the shipment for example, and
Tribal knowledge - Workers don’t often question the need for a specific document or the process
One size doesn’t fit all - There’s a ‘homogeneity fallacy’ – solution providers have targeted large organizations that all behave the same mostly because that’s where lucrative licensing deals are to be found. But when 98% of the supply chain are actually smaller players, solutions need better product-market fit
It’s time to change
The world is recognizing that now is the time to digitize. We are seeing this globally - en masse. Microsoft recently reported a 775% increase in cloud services from regions with enforced social distancing.
Opportunity to reimagine how work gets done
The silver lining in all of this is that businesses now have the opportunity to re-imagine how work gets done. Which drives five extremely important side effects, starting with the most obvious:
Efficiency - Replacing the ‘paper interface’ drives significant process efficiencies, reduces errors, increases inventory turns and improves forecasting amongst other things. We see a 67% process step reduction in receiving goods using data exchange vs. paper for example. A feature which helps both parties, supplier and customer
Quality/Trust – When data quality and trust increases, goods flow more easily, velocity and inventory turns are improved because parts no-longer held due to paperwork issues. This frees up working capital which is vital for most businesses. Perfect document quality increases trust and delights customers
Competitiveness – When your supply chain has greater visibility, variables used in planning and forecasting become more accurate which leads to improved competitiveness. When your suppliers are no longer padding their lead-times, you don’t have to buy as much because you have greater confidence in the outcome. Lead-time padding is a pervasive issue in multi-tier supply chains and leads to a more expensive end product
Environment - Removing paper greatly reduces the CO2 burden on the environment and helps ease water consumption (it takes 10 liters of water to produce a page and each page contributes 0.092 lbs of CO2 meaning roughly 22,870B liters of water and 210.4B tons of CO2 from European office workers each year alone)
Employee morale - Workers that previously labored over meaningless tasks like data entry, can now grow into the problem-solving space – which improves morale and makes the job more interesting while increasing their sense of ownership
Drive for Five
Given the size of the problem and the commensurate upside in solving it, the question becomes:
How do we give all organizations the opportunity to participate in a digital-driven economy?
Essentially, how can every business be in a position to ‘Drive for Five’?
We will explore this in our next chapter of the digital journey.