Digital Transformation Needs Great Technology

by IBA Group for IBA Group
Posted on August 20, 2018

IBA Group
Mark Hillary

Digital Transformation today can mean a lot more than just changing the way your brand delivers a service online. In many cases, companies many need to entirely redefine their business model to keep up with a changing industry that is being shaken by new market arrivals and constant innovation.

In some cases this means old brands die and new ones takeover the market. Instagram is a good example. The entire business of taking and sharing photographs is completely different today and the entire infrastructure that involved cameras, films, and development facilities has almost entirely disappeared in the last 5-10 years. However, in some cases a digital transformation can mean a completely new way of working inside a business that, on the surface, appears to be doing what they have always done.

This Forbes case study of Lufthansa Technik Logistik Services (LTLS) is a good example. LTLS provides logistics, transport, and warehousing services inside the airline industry. LTLS is itself owned by Lufthansa Technik, which provides maintenance, repair, and overhaul services for airline engines. On the surface these businesses sound like traditional engineering and logistics companies that exist to help keep airlines flying safely.

This remains true and nothing has changed in that regard since LTLS started a major digital transformation project a year ago, but there are some areas of process that have changed dramatically, especially around warehousing. Around half their revenue comes from their warehousing service so any way that innovative digital technologies can help to improve these processes will directly impact on the success of the business.

LTLS has implemented nine different projects all focused on assessing digital technologies. These include: using optical character recognition in combination with AI software to automatically fill in input screens and eliminate paper in the receiving department by scanning 10,000 documents each day; smart, light weight, gloves with 2D scanners that allow for hands free picking; integrating their warehouse management system to smart watches; and the use of mobile logistics robots to reduce worker travel.

One of the critical aspects the LTLS highlight about their own digital transformation is the cultural adoption of new processes. They tested the robot technologies in warehouses by buying a single robot and testing it alongside the existing processes, building cultural support for a complete rollout and replacement of the old practices.

This is where your approach to culture can be critical. Not every digital transformation springs from nowhere and transforms the industry overnight. This can happen, as we have seen, but most plans resemble the LTLS approach. There is a clear need to improve the way the business functions and digital technologies can help to transform the business processes – there is a clear sense of where we are now and a future state for the business.

In all these transformations you will require the team to support the changes being proposed, or the implementation is likely to fail. LTLS were smart by slowly introducing changes that could work alongside existing processes and the workers could quickly see how their life would be improved if robots did most of the heavy work inside the warehouse. It’s an agile approach that not only allows for support to develop, it allows for process errors for be fixed during the implementation and avoids the potential disaster of switching from one system to a new one and finding that it is full of errors.

Clearly this approach is worth some extra consideration by any executive team currently studying the opportunities for digital transformation in their business.

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