Achieving Operational Excellence through Digital Transformation

Achieving operational excellence in the face of competing priorities can be challenging. Even with all the bells and whistles technology has to offer, it is still up to business operations leaders to identify and execute. This is where digital transformation comes in handy by bridging the gap between technology and operational excellence that was not achievable before. Achieving Operational Excellence through digital transformation is a transformation process that enables the organization to gain competitive advantage on business level and improve operational efficiency. It is a process that combines operational excellence thinking and software solutions within an organization.

The Power of Digital Transformation for Operational Excellence

The adoption of digital technologies enables organizations to improve their business operations and to achieve very ambitious operational targets. This is the main reason why modern executives must understaned basic terms related to enterprise digital transformation strategies, as well as how to reduce costs and increase productivity with technology. Even in cases where senior managers and C-level executives know little about cutting edge technologies, they must understand and appreciate the value of it. In practical terms, the digital transformation of an enterprise drives the following benefits:

• Improved customer experience: Digital technologies such as BigData analytics and Artificial Intelligence (AI) enable enterprises to personalize the customer experience in ways that drive customer satisfaction and revenue growth. At the same time, the use of mobile devices allows companies to offer personalized offers based on their users’ preferences or location.
• Reduced costs: State of the art digital tools enable the automation of business tasks leveraging technologies like Robotic Process Automation (RPA), smart objects and the Internet of Things (IoT). Automation reduces human errors and leads to cost efficient operations.
• Increased productivity: Digitalization makes work easier by automating tasks that used to require manual interaction such as filling out forms or booking tickets online. In addition to reducing error prone processes, it allows enterprises to do more in less time. For instance, modern AI systems process way more information than humans can analyze. This results in tangible productivity benefits.
• Increased revenues: Thanks to state-of-the-art digital technologies companies can make more money by finding new markets that they did not have access to. Moreover, they can increase their sales and marketing outreach in cost effective ways.
• Improve agility and flexibility: Digital technologies enable organizations to remain agile and to flexibly adapt to changes to their business environment. Specifically, they help companies develop fast and effective responses to changing conditions such as supply chain disruptions and economic crises.
• Shorter innovation cycles: Using digital tools like generative AI for product design and powerful digital twins for production operations, modern organizations can accelerate their innovation cycles. For instance, they can test different business scenarios and product configurations in shorter times that ever before.
• Better business decisions: Enterprise digital transformations facilitate companies to collect and use vast amounts of data for effective decision making. In this way, they help organizations to realize a shift from heuristic decisions to educated, evidence based, data-driven and overall, more effective decision making.
• Talent attraction: In recent years, it has turned out that the proper digital transformation of an organization is a prerequisite for attracting, engaging, and retaining talent.

These benefits are among the main factors that improve operational capabilities drive operational efficiency within an organization. For instance, employing people with the right skills is a key to achieving operational excellence. As another example, operational excellence is usually rooted on evidence based managerial decisions, as well as on the ability of an enterprise to continually adapt itself to the dynamics of volatile and rapidly changing business environment. Likewise, to remain operationally excellent, organizations must be able to reinvent themselves towards implementing excellent products and services that set them apart from competitors.

Achieving Operational Excellence in Various Sectors

Digital transformation is not only about using new technologies but also about changing business processes in order to increase productivity and efficiency. Most importantly, it is about streamlining digital capabilities with enterprise processes towards excellent results. For over a decade, enterprises in different sectors are successfully implementing the alignment between digital technologies and business operations. Here are some examples from different sectors:

• Retail Industry: In recent years, the retail industry has been experiencing a paradigmatic leap. The emergence of digital technologies as well as new business models has led to a more competitive and complex environment. In practical terms, digital transformation has helped retailers to offer a better customer experience with personalized recommendations and predictions. In addition to that, it has enabled them to achieve operational excellence in their supply chains by predicting demand or optimizing delivery routes.
• Healthcare: In the healthcare sector, digital transformation leverages data analytics to improve patient outcomes, reduce costs, and increase efficiency. Moreover, digital transformation helps healthcare providers to manage their costs more effectively by reducing expenses on drugs and medical equipment as well as improving the quality of care through data analytics. Thus, healthcare organizations take advantage of digital technologies to achieve excellence in processes like healthcare delivery and drug discovery.
• Manufacturing: In the manufacturing sector, digital transformation helps improving production quality and implementing excellence approaches like SixSigma and Total Quality Management. Manufacturers can nowadays implement powerful digital twins that eliminate errors in production processes and improve their performance. Moreover, the digital transformation of the industry involves the use of connected machines and production lines that are able to perform data gathering, analysis and optimization. The idea behind this concept is to gather data from different sources (e.g., machinery, sensors, people), analyze it through AI algorithms, and optimize production based on the results of these analyses. Also, connected machines give manufacturers more control over their supply chains because they have access to real-time information about what’s happening at each stage of production so they can react quickly if something goes wrong with one of their suppliers or partners. In addition, digital transformation allows manufacturers to quickly respond to customer demands by creating new products faster than ever before possible. These supply chain optimizations and flexibilities in fulfilling customer requests are foundations of excellent production operations.
• Banking and Finance: Financial institutions are increasingly embracing digital technologies to enable new levels of efficiency, effectiveness, and customer engagement. These technologies include artificial intelligence (AI), cloud computing and blockchain technologies. Using such technologies, financial organizations implement digital transformation processes that boost excellence in anti-money laundering and other compliance processes. Furthermore, with the advent of such digital technologies, banks have been able to improve the way they operate, making it easier for customers to do business with them. Also, using digital tools banks have undergone a tremendous change in terms of their operations. With the increasing number of customers, banks must employ various strategies to ensure that they can continue to provide excellent service, while still meeting regulatory requirements. The main aim of these strategies is to ensure that they provide better services at lower costs. As competition intensifies among banks, they are forced to find ways of reducing costs so as not lose market share. This has led to a lot of innovation in both technology and business processes which has enabled most banks to offer services at lower costs than ever before.

Overall, digital transformation is the process of shifting business operations to a digital platform. It is a continuous process, which means that it’s never done: It’s a journey that has no end. The same holds for operational excellence: It is not a static status quo, but rather a continuous journey where organizations must prove themselves every day. Digital technologies and tools are powerful vehicles for realizing this operational excellence journey, through helping enterprises in improving customer service, increasing revenues, reducing costs, and providing a better brand experience. In this context, modern executives need to know how to adopt and use digital tools to realize operation excellence. Moreover, they must strive to build a culture that encourages employees to take advantage of what the digital transformation has to offer.