A three-step approach to lightweight digital transformation for SMEs through optimizing processes, digital tools and data analytics

  In the MBA classes these days, I found that student W always looked sad and absent-minded. After class, I invited Mr. W to have lunch and asked him if there was anything bothering him. Sure enough, it was the company run by Mr. W (hereinafter referred to as “Company A”) that was in trouble.
  Mr. W told me that he received complaints from customers about delayed delivery a few days ago. “This is the third time this month.” Mr. W was a little excited. “Because we failed to deliver the packaging bag products according to the date specified in the order, it seriously interfered with the customer’s production and sales plan. They are already considering looking for other supplies. It’s done.”
  Company A is a small and medium-sized manufacturing enterprise specializing in the production and sales of plastic packaging bags and roll films. Although the company is not large in scale, it has established a firm foothold in the industry. The customer Mr. W mentioned is one of Company A’s important customers and contributes a lot of orders to Company A every year.
  ”What’s causing the delay in delivery?” I asked.
  ”The raw material plastic film goes through a series of processes such as composite production and printing 3 to 5 times, and is finally cut into bags to form the final product. During this process, losses will inevitably occur.” Mr. W replied, “But the shortage of products caused by normal losses , often only discovered when the bag-cutting process is completed and the final quantity is counted. Rework at this time will easily delay the delivery time.” W Jun swallowed a mouthful of rice and continued: “Under normal circumstances, we have to rush the work
  . It can also be delivered on time, but I found that there were several delays, all due to insufficient raw materials.” ”
  Then what is the reason for insufficient raw material stocking?” I continued to ask.
  ”I have carefully investigated and found that the reasons for missing raw materials are often due to delays or omissions in manual statistical recording during the production process. For example, the buyer responsible for recording raw materials may ignore certain workshop materials reported by the planner when registering Information, or the planner himself forgot to report it. In addition, the production workshop may not have properly recorded the raw materials after using them.” For these human reasons, Mr. W is quite helpless, “In the daily heavy work, human negligence seems to be It is difficult to avoid, but it does lead to frequent problems.”
  ”Production data statistics errors and poor information flow affect the company’s decision-making efficiency and accuracy, which in turn leads to low production efficiency and the failure to deliver on time. situation.” Based on Mr. W’s description, I quickly summarized the crux of Company A’s problems and told him, “At the same time, it will also cause unnecessary losses and waste, and even increase production costs, seriously weakening the competitiveness of the company. , thus falling into a vicious cycle.”
  Seeing Mr. W frowning, I comforted him: “This is very common in many small and medium-sized manufacturing companies, and it is a common problem faced by everyone.” In the afternoon class, I arranged for the students to
  discuss A The dilemma the company encountered and came up with my solution – lightweight digital transformation. Unexpectedly, this suggestion attracted a lot of opposition and doubts from the students.
Solve doubts

  The reasons for everyone’s opposition can be roughly summarized as follows:
  First, during the epidemic, small and medium-sized manufacturing companies were greatly affected, and many companies faced economic downturns and even risks of bankruptcy. Compared with large enterprises, there is a clear gap in innovation and product quality among small and medium-sized enterprises, which affects their market competitiveness and profitability.
  In addition, in the face of continued challenges and uncertainties, small and medium-sized manufacturing companies generally face a shortage of funds. Although the government has launched a series of support policies, many companies still mainly rely on loans and other methods to obtain financial support to maintain daily operations. However, because many small and medium-sized enterprises are small in size and have low credit ratings, it is difficult to obtain loans from banks, which further exacerbates the financial difficulties of enterprises.
  Secondly, most students’ understanding of digital transformation is that digital transformation is a comprehensive change involving business models, operations management, organizational structure, product and service forms and other fields. It not only involves a wide range of businesses, the transformation is difficult, but also requires a large number of Capital investment is a big and arduous change for enterprises.
  “In my opinion, digital transformation can only be achieved by large companies. They are not short of money or people. Small businesses like us, who are still on the verge of life and death, don’t have anything they want in terms of people, money, and materials. “Student S’s speech caused bursts of nods of agreement from the students.
  Mr. W has a deeper understanding of digital transformation: “There is no doubt that digital transformation can effectively improve the competitiveness of small and medium-sized enterprises. As far as I know, the Chinese government has given great support to the digital transformation of small and medium-sized enterprises. The Ministry of Industry and Information Technology announced in 2020 From March 2020 to August 2022, a number of documents were released on supporting the digital transformation of small and medium-sized enterprises. Internationally, the digital transformation of small and medium-sized enterprises has been relatively mature, and the European Union has even formulated a target for the digital transformation of small and medium-sized enterprises to reach 90% by 2030. Goal.”
  ”But -” Jun W paused, “Digital transformation requires a long cycle, high capital investment and complex technical support. Once started, there is no turning back, and small businesses often have to stay away.” I heard everyone discussing the same thing
  . , I said: “Everyone’s focus is on digital transformation, but my advice to Company A is lightweight digital transformation.” Then, I explained further.
  Lightweight digital transformation is to improve business efficiency, reduce production costs, improve product quality, and improve customer experience by introducing digital technologies and tools without changing the company’s core business processes and business models.
  Lightweight digital transformation has the advantages of rapid deployment, easy operation, and cost savings. At the same time, the deployment and maintenance process does not require large-scale IT infrastructure and professional team support. It pays more attention to results and follows the principles of “top-down, continuous, adaptable to local conditions, and innovative breakthroughs” to achieve the goal of rapid iteration and flexible response to various challenges.
  Small and medium-sized manufacturing companies can choose suitable digital tools and platforms based on their own business needs, such as CRM (customer relationship management), ERP (enterprise resource planning) and various cloud-based SaaS digital service platforms. This flexible and agile approach can help enterprises achieve digital transformation more efficiently, reduce their burden, and enhance their competitiveness.
  For small and medium-sized manufacturing enterprises like Company A, if they can seize this opportunity and use digital solutions to optimize the way of acquiring customers, improve risk control, increase cost control efficiency, and optimize operation and management processes, they will provide a strong foundation for the future development of the enterprise. Power and wide space.
  Three steps
  : Eliminating misunderstandings is not enough. The key lies in how to implement it in detail, such as where to start, what are the specific process steps, etc. Later, Mr. W followed my suggestion and implemented lightweight digital transformation in Company A, mainly focusing on procurement, warehouse, finance, production, business and other links. It realized data interconnection between various processes and broke down information silos. It promotes data connectivity, resource sharing and business collaboration within the company and between upstream and downstream enterprises in the industry chain, thereby assisting the business development of enterprises.

  Combined with the practice of Company A, the implementation of lightweight digital transformation can be roughly divided into the following three steps.
  The first step is to assess and prepare.
  Despite the support of national policies, enterprises will still encounter many challenges in terms of capital, technology, talent, and data security during digital transformation. Therefore, comprehensive software and hardware research and preparation before digital transformation are crucial. Let’s take a look at how Company A prepares for assessment before transformation.
  1. Cultivate digital thinking. Transformation needs to be driven from top to bottom, and management must fully understand the importance of digital transformation. Company A arranged for the management to participate in industry forums and training related to digital transformation, allowing them to understand how other companies in the same industry optimize production processes and improve efficiency through digital means, and based on this, Company A’s digital transformation blueprint was drawn.
  2. Evaluate feasibility and necessity. Only by understanding itself, the market and industry trends can an enterprise survive in every battle. Company A studied the existing digital supply chain management systems on the market, evaluated the investment costs and possible benefits, and selected the transformation plan that best suited it.
  3. Make use of national policies and external resources. Company A conducted a detailed study on the country’s encouraging policies for the implementation of digitalization in the manufacturing industry, as well as funding and consulting services for digital transformation. With the support of these resources, Company A’s transformation process was able to proceed smoothly.
  4. Review business processes and look for digital opportunities. Company A’s production process is complicated, and the transmission of information and data in many links is blocked, forming an information island. By reviewing core business processes, establishing corresponding process standards, and identifying key links that can be optimized through digitalization, the transparency and risk prediction capabilities of the entire production process can be improved.
  5. Estimate cost and lead time. Before implementing lightweight digital transformation, Company A estimated the cost and cycle of digital transformation and developed a detailed financial plan.
  The second step is to choose the appropriate digital platform.
  Based on the previous review of the company’s business processes and assessment of the current status, focus on core business pain points. Based on the nature of the industry, business characteristics, and strategic positioning of the enterprise, clarify the goals of digital transformation, and finally determine the scope of transformation—the aspects in which the enterprise can make changes.
  1. Leverage the support of a third-party digital transformation services organization. Company A evaluated several digital transformation suppliers to understand key factors such as product functionality and adaptability, stability and security, customer service and technical support, price and cost-effectiveness, as well as the supplier’s market reputation and industry experience. , and finally determined a company that suits the company’s own situation as a service provider.
  2. Make full use of lightweight cloud services. When choosing cloud services, Company A encountered difficulties again. Many cloud service providers had expensive services and high technical requirements, which made Company A not sure what to do for a while. Until they discovered that they could choose industrial Internet platforms and lightweight cloud services to adopt new, more agile and effective methods and paths for digital transformation. This greatly reduces the independent investment costs and risks required for informatization and digital transformation, allowing Company A to achieve digital transformation and upgrading with minimal investment.
  3. Comprehensive training for company employees. Company A reduces employees’ resistance to digital transformation by organizing internal training and inviting external experts to give explanations, and improves employees’ understanding and application capabilities of new digital tools and technologies based on actual business.
  Step three: Continuous optimization of business.
  Completing the deployment of digital systems is not the end of lightweight digital transformation. It is more important to continuously optimize and improve business processes to better adapt to the new digital environment and bring better economic benefits.
  1. Digital collaboration. Company A uses information technology to continuously optimize business processes such as manufacturing processes, production planning, logistics and inventory management, thereby achieving digital collaboration. For example, through the introduction of digital tools and systems such as production planning systems and warehouse management systems, the efficiency and controllability of business processes have been significantly improved, while errors and delays caused by human operations have been reduced.
  2. Data management and analysis. After the digital platform was built, Company A used data collection tools such as sensors and monitoring equipment in the production process to monitor the production process and product performance; it used data analysis technology to process the production data collected in real time to help identify potential production problems and Optimize production efficiency. At the same time, data analysis can also explore potential business opportunities and market demands, thereby helping Company A formulate more precise marketing strategies.
  At the same time, data protection cannot be ignored. Company A followed the supplier’s recommendations and established corresponding data management and storage measures, such as regular backups, encryption, and permission control, to ensure data security and privacy. Company A has also introduced corresponding rules and regulations to ensure that employees comply with data protection-related regulations and policies during their work to safeguard the interests of the company and customers.
  In the past, Company A’s over-reliance on manual statistics and paper-based information transmission resulted in chaotic management of each link and lagging information, which had a great impact on operational efficiency. However, with the advancement of lightweight digital transformation, these situations have fundamentally changed.
  Taking warehouse management as an example, company A’s inventory, reserved, unshipped orders, purchases and other information can be clearly reflected on each operating platform. Warehouse managers only need to use tablet computers to check material inventory, and complete the accurate entry of warehousing documents within a few minutes. Through the implementation of digital transformation, Company A’s entire order cycle from order scheduling, material distribution and procurement, product production to finished product delivery has been shortened by 15%, and the communication and coordination efficiency between departments has increased by 80%.
  The issues such as delayed delivery mentioned at the beginning of the article have also been effectively solved after the implementation of lightweight digital transformation. In the ERP system, every time a process is completed in the production workshop, the actual quantity of semi-finished products produced can be entered into the system and compared with the expected production requirements and expected losses. Managers can understand the production status at the first time, and if there is an emergency situation, remedial measures can be taken in a timely manner. The problem of raw material inventory is also easily solved. Production personnel update the production status in the system every day, and the raw material inventory situation is also updated simultaneously. This solves the problem of work errors caused by manual Excel table statistics and improves production efficiency and work quality.

  In the increasingly competitive market environment after the epidemic, the only way out for small and medium-sized manufacturing enterprises is to proactively seek change. Abandoning the inherent thinking of “discussing digitalization” is probably the first step that small and medium-sized enterprises must take. Through lightweight digital transformation, they can make full use of the empowerment of emerging technologies such as cloud computing, big data, and artificial intelligence to improve the quality of operation and management. level and efficiency, optimize resource allocation, reduce costs, and improve performance. This will not only improve the company’s ability to resist risks and market competitiveness, but also achieve growth in corporate efficiency.
  Not only that, digital transformation can also help small and medium-sized enterprises keep pace with the digital economy era and promote corporate innovation, thereby injecting new vitality into corporate operations and providing continuous driving force for the future development of enterprises.