- One of the ways
that I like to explain digital transformation is
using a model called the information value chain.
Let me explain how it works.
We'll start with data.
A phone number is a piece of data so is a name.
Part of what's happening these days is
that we're collecting lots and lots of data.
By itself, most of that data isn't very useful
but that data becomes valuable when we start to organize it.
For example, we could create a relationship
between a name and a phone number.
So, now you know that this is the number to call
if you want to reach a certain person.
Creating that relationship transforms the data
into information and you can use information
to make decisions and take action.
Once we have information, we can organize it more
by filtering and sorting it.
This helps us look for patterns
and makes it easier to find things quickly.
Then, the information becomes knowledge.
As we create relationships between the things that we know,
we can start to apply intuition and develop judgment.
In other words, we convert knowledge into wisdom.
We can look at each of these four steps
on the information value chain
in relation to computers and people.
Computers are really good at processing data,
but as we add more and more relationships,
computers become less effective
but for people it's basically the opposite.
Honestly, I have a hard time remembering phone numbers
and birthdays but I have an opinion
about almost everything.
Now, let's take this model
and think about the task that we perform in a supply chain.
We create production schedules, place orders with suppliers,
book transportation, and a lot more.
Some of these tasks
just involve collecting and processing data.
These tasks should be automated
because computers are better at that kind of work
than people are.
As we move into tasks that involve making decisions,
taking action and using judgment,
people are better at a lot of those tasks,
but somewhere in the middle,
there's always a hand-off between people and machines,
a human machine interface
that allows them to communicate with each other.
Computers are getting smarter every year.
That means the curve for computers is moving up
and the human machine interface is moving further
to the right.
As that happens, more and more of the tasks
that we do in supply chain become ripe for automation.
That's what digital transformation looks like
in the supply chain.
It's what happens is new technologies allow computers
to do tasks better than people
and in order to stay competitive,
we need to learn how to adopt those technologies
as they emerge and to be strategic
about which tasks we choose to automate.