Assignment 1

Digital Technology
Management
BSS059-6

1-17-2020
1814903

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Executive Summary

Stemming from the incomplete report submitted on December 17th 2019 which sought to identify
and evaluate the impact of Strategic Information Systems on a company’s strategic position,
namely WesBell Electronics; this report serves as a continuum and has proposed a design and
plan of a specific information system suited to WesBell, namely digital supply chain
management.

Mentioned prior, WesBell Electronics is a cable and wire distributor company. It offers value
added services with emphasis on the needs of Original Equipment Manufacturers, large and
small industrial manufacturing companies, maintenance and repair of organizations and electrical
contractors that need specific requirements. Their small size hampers their ability to compete
with their biggest competitors on a national level and to compensate for this, a digital supply
chain management system is proposed.

The design and plan of the digital supply chain management system is explored through the lens
of automated replenishment solutions, Internet of Things sensors to gather feedback from
equipment in real time, predictive analytics to forecast demand and optimize inventory allocation
and robotics for accuracy and speed.

Additional elements considered in this report include the specific data requirements needed by
WesBell, specific features of the digital supply chain management system, the information
generated from said system and its potential users.

Finally addressed in this report are the challenges experienced by management during the
implementation of the digital supply chain management system in various departmental settings,
namely Finance, Sales and Marketing, Human Resources and Manufacturing and Operations.
One such challenge included is the inability to cope with new technology in a healthy manner,
initially coined as technostress in the 1980s but is still considered today a modern disease of
adaptation.

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Recommendations in treating with these challenges are also proposed in this report and includes,
but is not limited to, committing to a culture of learning and responsiveness and creating a brand
to attract and retain the right persons.

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Table of Contents
Executive Summary....................................................................................................................................... 2
Introduction .................................................................................................................................................. 5
1.0 Analysis – Planning and Design ......................................................................................................... 7
1.1 Planning............................................................................................................................................... 7
1.2 Design Elements ................................................................................................................................ 11
1.2.1 Automated Replenishment Solutions & Predictive Analytics to Forecast Demand and Optimize
Inventory Allocation ............................................................................................................................ 12
1.2.2 Internet of Things (IoT) sensors to gather feedback in real time .............................................. 13
1.2.3 Robotics for Accuracy and Speed............................................................................................... 13
2.0 Implementation .............................................................................................................................. 15
2.1 Managerial Challenges – Human Resources ..................................................................................... 15
2.2 Managerial Challenges – Finance...................................................................................................... 16
2.3 Managerial Challenges – Sales and Marketing ................................................................................. 16
2.4 Managerial Challenges – Manufacturing and Operations ................................................................ 17
3.0 Recommendations .......................................................................................................................... 17
References .................................................................................................................................................. 18

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Introduction

The rapid development of the Internet and Information Technology has significantly impacted all
aspects of the organization through disruptive digital transformation (Savastano, et al., 2018).
According to Li, et al (2009) and Markowitch & Willmott (2014), many organizations have
attempted, in one form or another, to accelerate the digitization of their business processes, to
gain operational and market efficiency whilst simultaneously meet increased customer
expectations.

Even so, in order to effectively exploit the potential of Information Technology, it is insufficient
to simply attempt to digitize business processes without the redesign and alignment of the
business models with the innovative tools (Nanry, et al., 2015).

Digital innovation is crucial for creating value and addressing manufacturers’ key business
drivers in today’s extremely competitive environment. Digital tools and technologies create
several avenues for manufacturing companies to reduce costs whilst increasing productivity,
improving product development, achieving quicker time-to-market and enhancing customer
focus (Markowitch & Willmott, 2014) across several elements of the value chain, including
Marketing, Sales and Services, Product Design and Innovation, Manufacturing and Supply Chain
Management (Ebner & Bechtold, 2012).

The inability to provide end-to-end visibility, connect disparate systems, and integrate and
manage complex data flows has created operational limits preventing organizations from
realizing the full potential of their supply chains (Deloitte, 2015). According to Gezgin et al,
(2017), a McKinsey study revealed that the average supply chain had a digitization level of 43%,
which was the lowest of five business units examined. Additionally, only 2% of executives
surveyed makes supply chain the focus of their digital strategies.

Supply chain digitization systems allows organizations to treat with supply challenges, address
new requirements of customers and meet expectations of efficiency and improvement (Kochar,
2019). This digitization results in a supply chain 4.0 that is rapid as it slashes delivery time of
product distribution; agility as real-time planning allows for omni-channel distribution and
flexible reactions to changing supply and demand situations; granularity and micro-segmentation

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as customers demand more individualized products; accuracy with real time, end-to-end
transparency through the supply chain; and efficiency boosted by automation of tasks (McKinsey
& Company, 2016).

Wesbell Electronics Inc. is a distributor for electrical wire and cables for over 25 years. They
stand out as a supplier with on-time delivery, 100% guaranteed customer satisfaction and ISO
9001 certification (WesBell Electronics Inc., 2020). Over the years, they have expanded their
product offering with new vendors and products to address the new technologies in the dynamic
wire and cable market (WesBell Electronics Inc., 2020). From a SWOT analysis previously
conducted, attached as Appendix I, two of WesBell’s challenges, amongst others, are its lack of
corporate knowledge as it relates to logistics and financial management, leadership and increased
online competition.

To this end, the aim of this report is to design and plan a strategic information system, namely a
digital supply chain system for WesBell Electronics, highlighting possible managerial challenges
during the implementation phase. To achieve this goal, literature relating to digital supply chain
was accessed using electronic databases for both primary and secondary data collections,
including scholarly articles and journals from reference websites and BREO. This structure of
this report will continue with a review of the various elements to be considered for the design
and plan of the digital supply chain system, including features, information generated and users
of the system. This will be followed by an analysis of the possible managerial challenges during
the implementation stage, particularly as it relates to the four business functions of Sales and
Marketing, Manufacturing and Operations, Human Resources and Finance. Recommendations
for both the digital supply chain ecosystem and managerial implications are similarly included.

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1.0 Analysis – Planning and Design
1.1 Planning
According to Kochar (2019), it is crucial that WesBell Electronics understand that successful
digital deployment is only one step in a longer process of discovery and planning that leads to
digitization implementation; and a successful journey begs that the following questions be asked:
 What is WesBell’s digital ambition level or end vision when the transformation is complete?
 How is their current digital capabilities compare with that end vision?
 What technologies or digital cases are needed to bridge the gap?
 What are the business impact of implementation on the organization?

In order to answer these questions, WesBell Electronics should embark upon a workshop or staff
retreat for a week to conduct a digital supply chain quick scan program. This program consists
of the following four steps, which can be done one per day with plenary on the last day. Table 1
shows how the agenda will be reflected.

Table 1 Draft Agenda for WesBell Electronic’s Staff Retreat for its Digital Supply Chain Quick Scan Program

Digital Supply Chain Quick Scan Program

Date:
Venue:
Time: 8 am – 4 pm
Day 1
Time Topic to be discussed Aim Task
7:30 am Registration
8:00 am – Development of a Digital To assess the digital awareness and 1) Completion of initial cross-
4:00 pm Target ambition levels across WesBell and functional survey to assess awareness
develop a future vision or ‘digital target levels and perceived data, analytics,
picture’ reporting and automation needs of the
principal supply chain stakeholders.
2) Use the survey to build a base of
knowledge that can be used to define
a set of realistic digital capabilities,
implementation strategies and
applicable technologies that will yield
specific, predictable benefits.

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 Day 2
Time Topic to be discussed Aim Task
8:00 am – Evaluation of Current To evaluate the digital capabilities of 1) After obtaining the target picture
4:00 pm Capabilities WesBell’s key stakeholders at each point from day 1, a deep-dive interview,
of the supply chain; then measure the gap with representatives from all core
between those and the capabilities needed functions should be conducted.
to realize the target picture. 2) A baseline of WesBell’s current
digital capabilities must be
established (Figure 1).
3) Establish a list of all ongoing and
planned digital initiatives. This must
span the entire planning,
manufacturing, sourcing and delivery
value chain.
4) For each of WesBell’s digital
element or capability, that is, data
sources, analytical tools or reporting
systems, WesBell must record its role
across functions and processes; the
supporting technology; and its impact
in terms of cost, service and working
capital.
5) The acquired baseline should be
shared and used as the basis for
measuring and closing the gap
between the WesBell’s existing
capability set and its digital target.
Day 3
Time Topic to be discussed Aim Task
8:00 am – Assessment of Technology options should be explored, 1) Explore various technology options
4:00 pm Technology Options the value and impact of potential use to address specific current and future
cases should be assessed and an needs.
appropriate project short list should be 2) Identify and prioritize desired
created. digital capabilities in the context of
immediate needs, long-term strategic
goals, required investment in facility
and workforce upgrades for
successful execution and buy-in
throughout the organization (Figure
2).

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 3) Benchmarking of best practices
among similarly situated
organizations should be conducted.
4) Roughly quantify the productivity,
asset utilization, cost reduction and
other benefits estimated to be
delivered by each measure of
improvement.
Day 4
Time Topic to be discussed Aim Task
8:00 am – Prioritization of Potential Prioritize measures and revise digital 1) With the short list of potential
4:00 pm Projects and the creation target pictures based on the findings in projects and technology, each
of a Digital Roadmap order to create a high-level digital project’s benefits versus the length of
roadmap for proceeding with the time for implementation should be
transformation. assessed (Figure 3).
2) Prioritize digital projects over the
short, medium and long term (Figure
3).
3) Provide a clear, pragmatic roadmap
to digital transformation.
Day 5
Plenary

Figure 1 Sheet used to Capture the Results of the Deep-Dive Interviews in order to Establish a Digital Capabilities Baseline -
Source: Kearney Analysis, 2019

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As mentioned in Table 1 above, this sheet will be used to establish a digital capabilities baseline.
In WesBell’s case, though all core functions will be interviewed, the focus remains the supply
chain as this was reflected as one of their weaknesses in their SWOP analysis. Under the
heading ‘Structuring Along 3 Dimensions’ the process or function applicable to WesBell would
be used across end-to-end supply chain; technology would be multiple technologies as a
combination of automated replenishment solutions, Internet of Things sensors, predictive
analytics and robotics for accuracy and speed; and impact would include significant economic
benefits as, according to PwC (2016), organizations with significantly digitized supply chains
and operations can anticipate efficiency gains of 4.1 percent annually and boost revenue by 2.9
percent annually. Additional expectations for impact include rapid demand sensing, empowered
by machine learning as well as alternate data sources that could assist in lowering inventory costs
and improving fill rates. Lower freight costs and improved on-time deliveries enabled by real-
time asset tracking. Lastly automated distribution centres that can lower production costs and
improve yield.

Figure 2 Key Digital Capabilities and Related Technology - Source A.T. Kearney Analysis, 2019

Figure 2 represents key digital capabilities and its related technology. WesBell Electronics can
use this as a starting point to identify the key capabilities needed and which technology can
support said capabilities.

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Figure 3 Development of the Digital Supply Chain Roadmap - Source: A.T. Kearney Analysis, 2019

Lastly, Figure 3 reflects a sample format of the Digital Supply Chain Roadmap to be used once
the short list of potential projects is made. This makes it easy for WesBell to then prioritize the
potential projects and what are most suited for the long, medium or short term given the ease of
implementation and benefit.

1.2 Design Elements

WesBell Electronics implementation of a Digital Supply Chain Management System (Figure 4)
will prioritize:
 Automated replenishment solutions
 Internet of Things sensors to gather feedback in real time
 Predictive analytics to forecast demand and optimize inventory allocation
 Robotics for accuracy and speed

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Figure 4 WesBell's Prioritized Projects for its Digital Supply Chain Management System – Source: BCG Analysis

Neutral Neutral

Low Low

On hold On hold On hold

1.2.1 Automated Replenishment Solutions & Predictive Analytics to Forecast Demand and
Optimize Inventory Allocation

Traditionally, Demand Planners would collect sales information to be used as a forecasting

mechanism for the replenishment of products. However, digital technologies often require
substantially different skill sets than traditional supply chains. Today, automated replenishment
requires highly developed analytical skills. Additionally, statistical forecasting engines
necessitates constant maintenance from data scientists to adjust parameters, blend statistical
methods and check and adapt the algorithm that guides replenishment within its warehouse
network (Gstettner, et al., 2016).
Features of this system will include computational power for accurate and efficient forecasting;
forecasts at any level of granularity or aggregation that can also take into account the impact of
holidays and weather conditions. Intraday replenishments with a 15-minute window of accuracy.
Unified planogram and replenishment planning that keeps shelves full by automatically flagging
spaces or demand mismatches (Relex, 2020).

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1.2.2 Internet of Things (IoT) sensors to gather feedback in real time

Internet of things refers to the sharing, collecting, analyzing and creating value from data (AV
System, 2019). However, the data collected must be accurate in order for the value created to be
of any use. Hence, the importance of the sensors. The sensor, also known as a transducer, is
used to detect changes or events in the immediate environment and then converts the changes
into electrical impulses which can be meaningfully interpreted (Edwards & Hopkins, 2018).

WesBell Electronics has recently decided to open a second location in order to decrease transit
time, especially for online orders which has increased (Bell, 2018). At this new location, all
objects will be networked through the IoT and embedded sensors will collect and communicate
data over the Internet. With this integration, signals that trigger events in the supply chain can
emanate at any point in the network and raise alerts to issues affecting demand, supply and
shortages, creating a fully responsive supply chain in real time. Impact and solutions can also be
immediately shared with suppliers, customers, manufacturing outsourcers, logistics providers
and other partners. This creates logistics visibility allowing WesBell to be more agile with their
choices depending on the condition and to manage risk more successfully, increasing
competitive advantage.

1.2.3 Robotics for Accuracy and Speed

Robotics here will be used as an alternative material handling solution through the use of
Automated Guided Vehicles (AGV). The automated guided vehicle is a programmable mobile
vehicle used to transport material around in a warehouse or manufacturing facility. This is
accomplished through different methods such as frequency selected mode, path selected mode
and vision based mode. The central processing unit of the AGV is the steering command and
speed command and the main components of its system includes a vehicle, guidance path system
and floor control and traffic management system. A pre-defined map of the warehouse
environment must be saved to the memory of the AGV and controlled by a stationary control
unit in the warehouse (Kumar, 2016).

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WesBell will utilize the vision based system at its newly planned warehouse as it can operate
without a continuously defined pathway and with a certain degree of autonomy. This robot is
designed for a dynamic environment as it integrates both the central system and sensor system as
well as bar codes or QA codes to navigate the warehouse and detect obstacles (Rajiv & Atri,
2003).

This system can also be included on the IoT network and if combined with an integrated parcel
delivery system, this solution improves the efficiency and accuracy of storing and picking up
goods. It also enhances productivity through improved order fulfilment and increased order
accuracy. Lastly, according to Yong (2018), it can improve productivity through reduced
training and down time, reduced electricity costs as the warehouse can be kept dark, reduced real
estate by 20% and reduced manpower by 65%.

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2.0 Implementation

The use and development of strategic information systems is a risky and expensive undertaking,
although it offers significant savings and increased revenue for those who embrace the change
early (Tupa, et al., 2017). In industries such as automotive and electronics, progress,
development and rapid deployment of applications are crucial in order to remain competitive.

A global industry 4.0 survey was conducted amongst 2000 experts from 26 countries and
produced in 2016 by PricewaterhouseCoopers. Approximately 52% of organizations surveyed
identified their biggest obstacle to implementation as a lack of clear digital strategy and support
for executives for the introduction of digital technology (PwC, 2016) (Figure 5).

Figure 5 Factors Hindering the Implementation of Digital Technology - Source: Porter and Heppelmann; PwC

2.1 Managerial Challenges – Human Resources

The impact and potential of IT-based technologies have always created ‘anxiety over
automation’ (Akst, 2013) that it would replace tasks and jobs that traditionally were performed
by individuals. Additionally, there are numerous studies that predicts significant percentages of
employment such as 47% in the United States, 25% in Finland and 59% in Germany were at risk
of automation (Frey & Osborne, 2017) (Pajarinen & Rouvinen, 2014). These fears result in the
reluctance by employees to adopt and accept IT-based technologies.

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The process of training and learning is also another challenge as older generations may be
unwilling to learn due to their own technical limitations or lack of knowledge. They may not
find systems user friendly and opt out of learning and development initiatives if they find it
cumbersome or time consuming, making adaptation more difficult (Banerji, 2013).
Work culture also affects the implementation of new systems in the organization. WesBell
started as a family run business with no more than 10 employees and a casual work atmosphere
and culture; and manufacturers were often blamed for the products they sold to customers that
was faulty (Bell, 2018).
Other Human Resource factors would include new skills required, organizational structure, top
management support and championship and security concerns.

2.2 Managerial Challenges – Finance

According to Mittal, et al (2018), lack of financial and human resource is one of the greatest
obstacles for small and medium sized companies in the adoption of IT-based technologies and
that the cost of hardware and software serves as an inhibitor for adoption (Premkumar &
Roberts, 1999). Tornatzky & Klein (1982) highlighted that the most cost-effective technologies
are the ones more likely to be adopted. (Tornatzky & Klein, 1982). Other factors mentioned by
Premkumar & Roberts (1999) and Jeon, et al (2006) include that the cost of adoption of IT-based
technologies and digitalized processes are significantly costlier than the benefits; the cost of
maintenance and support for these technologies are too extravagant and unaffordable; and cost in
terms of both money and time invested in training employees are excessive and wasteful. (Jeon,
et al., 2006).

2.3 Managerial Challenges – Sales and Marketing

Top management and ultimate users have to buy into IT-based technologies to make it succeed,
however, marketing the idea to these two groups requires extremely different approaches (Leonard-
Barton & Kraus, 1985). It is therefore not enough to sell IT-based technologies to top management
without the users also developing ‘ownership’ of the technology. Secondly, novel IT-based
technologies tend to be susceptible to marketing hype. Articles in the media and promotional
campaigns surrounding new technology tend to raise expectations much higher than the actual

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performance leaving potential users disillusioned when hyped IT-based technologies perform at
sub-standard levels. Lastly, a marketing perspective aids in preparing an organisation to receive the
new technology, however underestimation of the scope or importance of this preparation can result
in implementation failure (Leonard-Barton & Kraus, 1985).

2.4 Managerial Challenges – Manufacturing and Operations

The degree to which IT-based technologies can be easily integrated within the organization’s
existing operational processes and manufacturing infrastructure can determine whether adoption
is more or less likely to occur as old production systems, including IT infrastructure, are strong
inhibitors to the implementation of digitalized processes. (Cooper & Zmud, 1990) & (Chatterjee,
et al., 2002).

3.0 Recommendations

There are numerous financial and non-financial benefits to be obtained from the successful
implementation of digital processes. It is therefore best to take precautionary measures and be
proactive in addressing managerial challenges as they arise. Some of these measures include
obtain staff buy-in by highlighting the benefits to the organization and them by extension. If not
all the employees in the first instance, at least everyone who is expected to be users of the
technology. Train staff adequately. Training is an expense that must be budgeted for as a part of
the implementation cost of the IT-based technology. Regardless of whether the technology is
similar to the previous one or more ‘user friendly’ it is expedient that substantial training be
conducted.

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