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Introduction
Digital business transformation is the strategy of using digital technology to strengthen business operating models and revolutionize a company’s goods and consumer engagement; it involves developing innovative goods and processes that provide value and linking people to objects, information, and interactions. It is more than just procuring software and hardware. Thus, it is about transforming organizations via digital technology in order to significantly increase the productivity and profitability of the business. The purpose of this report is to analyze Farmhispania’s condition and propose, from a holistic perspective, the strategies necessary to carry out the company’s digital transformation.
Current Situation of Farmhispania
Farmhispania is a pharmaceuticals firm that specializes in the production and distribution of Active Principal Ingredients (APIs) used by the pharmaceutical sector. They have a long list of goods, and several of them are leading brands internationally, such as Metformin HCI, amongst the most common Type II antidiabetic drugs. The Statement of profit and loss for the 2020 financial year showed revenues of 80 million euros (15 percent greater than FY2019), EBITDA of 17 million euros (22 cent growth over FY2019), and a Net Earnings of 14 million euros (18 percent higher than FY2019).
The firm employs 450 people of approximately average 47.4 years of age in two sites in Spain: the first one is situated at Montmeló while the other is based in Zaragoza. The enterprise is developing a Strategic Plan over the next 5 years, 2022-2025, and during their assessment of the current, they discovered that their Information technology old systems are restricting the company’s growth and potential advancement into new markets or product lines, either organically or through acquisitions. As a result, they must identify and develop the strategies required to achieve one of the primary objectives: the company’s digital transformation.
The only technology that the manufacturer has adopted so far is Enterprise resource planning software called Microsoft Dynamics Business Central developed by Microsoft. Business Central is a low- and medium business management system that streamlines and simplifies business procedures while also assisting in managing your company. It is a highly customizable and feature-rich platform that helps businesses manage all aspects of their operations, including finances, production, sales, shipment, project planning, and operations.
Companies can quickly add new features that are specific to their operating location and can be adapted to support even the most specialized businesses.
Strategies for Digital Transformation
Strategy is a series of deliberate decisions made by a company to consistently develop competitiveness in the marketplaces where it is or would at the present, as well as to change to their circumstances. The following strategies need to be applied to Farmhispania to achieve digital transformation at the manufacturer.
Information System
An information system is an integration of information technologies and workers’ tasks that uses technology to assist business operations, administration, governance, and decision-making at various levels of an enterprise. The daily running of corporations and practically every business line inside an enterprise rely on technology. The current information system architecture is inadequate for the manufacturing business since it is centralized only at the headquarters at Montmeló. The other production facility at no information system installed and as a result, conducts the manufacturing process independently. They need to procure are a more advanced system that can capture all the production processes, employees as well as customers.
The current ERP software, Windows Dynamic Business Central is complicated for the employees of Farmhispania whose average age is 47.4 years. This Windows ERP misses a crucial part of the business, that is the customers. This software is not easy to use hence most users at the company have difficulty in executing simple tasks such as the generation of invoices to customers. In addition, since the company wants to expand it should switch to advanced ERP software because Windows ERP is very slow. In fact, it is best suited for small companies located at one facility.
The currently installed system lacks Customer Relationship Management (CRM) capability. Consumer engagement and retention are at the center of a CRM’s functionality, helping the company to keep solid interactions and track prospective customers. Everything will be in one place: a straightforward, customizable dashboard that tells you about a client’s previous interactions with you, the progress of their orders, and any remaining customer support issues. CRM will allow Farmhispania to build stronger bonds with its consumers, collaborators, affiliates, and suppliers.
Cloud Computing
Cloud computing, also known as Software as a Service (SaaS), provides users with web connectivity to software programs that are run on distributed computing resources. The computing features that are shared include processing capacity, bandwidth, and storage media. These software applications are housed in off-site data centers that support a variety of applications across several platforms. Since Farmhispania is located at two locations and seeks to expand to new locations there is a need for all locations to be integrated through cloud computing. A good starting point is the incorporation of the current windows ERP software for Zaragoza as well. Windows already have a cloud computing capability hence Farmhispania needs to pay for additional features such as cloud computing.
Farmhispania will benefit from cloud computing since it will allow them to access full-featured apps at a low cost without having to invest in expensive infrastructure upfront. The business will easily scale its manufacturing efficiency and enhance the production process as the company grows and new entities are added (Albukhitan, 6). Cloud-powered ERP will allow the business to obtain information on their critical processes from every location at any given time.
Internet of Things
The current manufacturing and supply chain of Farmhispania is traditional in nature where manufacturing processes are manually monitored and the supply chains are not monitored during transportation at all. IoT can provide visibility throughout the manufacturing supply chain by collecting data on geolocation and attributes, such as the manufacture date and storage time of each specific stock holding unit item (Trenkle, 89). Fairmhispania is a pharmaceutical company that transports its temperature-sensitive products to distribution centers for shipping. Thus for quality to be maintained during transportation, the temperature within the containers needs to be monitored by sensors affixed to the wall of the containers.
Assume that the temperature inside the vessels is beginning to rise due to the cooling system malfunction. The variation from the acceptable threshold is detected by an IoT temperature sensor connected to the container’s inner wall. This IoT solution will alert the Farmhispania support team that the distribution parameters have been breached. The company will immediately notify the driver to restart the cooling system, keeping the transported drugs and active ingredients from spoiling.
Artificial Intelligence
Artificial Intelligence is a field of computer science that focuses on emulating intelligent human-like activity in computers. It also has the ability to become one of the 21st century’s biggest disruptive technologies (Chanias, 4). It is fuelling innovation in industries as diverse as in pharmaceutical manufacture. One area where Artificial Intelligence can be applied in Farmhispania is in supply chain management. Chatbots have come a long way over the years, and although they are most commonly associated with customer care, they can also help in procurement.
Chyme, for instance, provides conversational interfaces involving human workers and sales automation technologies. Staff members at Farmhispania suffer inefficiencies when seeking answers to procurement inquiries, hence the need to integrate Chyme. Workers are compelled to call a hotline and queue for operators to provide them with the information they need. Inefficiencies will significantly be reduced by adopting the AI-powered acquisition bot and interfacing it with several ERP systems enabling real-time data access. Chatbots answer questions about shipping status, product availability, company stock, as well as other procurement issues in real-time. This is a clear example of AI assisting supply chain management by complementing staff duties and enabling them to concentrate on important tasks rather than becoming upset by simple inquiries.
The current inspection practice at Farmhisppani is manual hence packages are inspected for damage during transportation at container terminals. With the advancement of AI, the possibility of automating quality inspections has developed (Langer and Yorks, 56). IBM Watson, for example, is an Artificial Intelligence device that is being used to analyze industrial equipment faults automatically. Image recognition is used by the computer to inspect for damage using machine learning algorithms. The use of artificial intelligence (AI) at Farmhispania will enable automated quality inspections to minimize the likelihood of providing substandard drugs to clients.
Machine Learning
Machine learning is focused on applying statistical methods and algorithms to help computer systems increase their productivity on certain tasks without having to be specifically programmed. One application of machine learning at Farmhispania is predictive analysis such as in-demand forecasting. Customer demand is analyzed through demand forecasting to streamline supply chain activities. Reliable demand forecasting provides optimal stock levels and lowers associated expenses of holding stock (Lee, 45). Predictive modeling for sales forecasting is a skill that machine learning models excel at. These models can spot hidden trends in demand data from the past. Customers’ purchase habits of certain drugs, for example, can be easily linked to weather patterns using these models.
Improving the computer vision abilities of ERP machinery is a significant use case for machine learning. Computer vision is a branch of computer science concerned with making it possible for computers to view, recognize, and process images. Classification of images has become more possible due to machine learning algorithms (Langer and Lyle, 37). This means computer systems nowadays can identify and categorize objects in photographs with a high degree of precision — in some circumstances, even exceeding people. Computer vision can help Farmhispania with supply chain management by allowing for more precise inventory management
Improved Compliance
Manufacturers in pharmaceutical businesses are required to follow a set of industry-specific drug quality standards. In addition, supplier quality is very important since a wrong combination of ingredients that fails to follow industry norms could result in human casualties. Hence manufacturers in pharmaceutical industries must track and monitor hundreds, if not millions, of constituent ingredients from many suppliers to guarantee they satisfy compliance criteria (Chanias et al., 5). Machine learning models will help Farmhispania with ingredient quality auditing as well as compliance monitoring.
Human Resource Factors
Many businesses are investing in technological innovations and conducting digital business transformations to stay ahead of the competition and appeal to an evolving digital market. According to research, more than 80% of companies increasingly consider their IT departments responsible for creating an integrated customer experience (Kane et al., 5). While choosing the proper technology is key, it’s also crucial to match Farmhispania’s core values with the new path and ensure that the personnel is capable of long-term commitment for the new digital transformation strategy.
Organization Culture
Farmhispania has a culture, even though it wasn’t explicitly stated in the employee manual. In a nutshell, this is your workers’ and management’s combined attitude, habits, aspirations, and routines. It has a direct impact on how staff members conduct internal business choices as well as how they handle external business activities. The people hired, the methods used, and the principles you uphold all contribute to the company’s culture. These cultural elements will interact with the new changes brought about by the digital transformation. As a result, digital transformation will struggle if these variables do not alter to accommodate incoming change.
Farmhispania can have the most advanced digital strategies in the globe, but it would be useless unless its employees are committed to implementing them. This is the case since the average age of all the employees is 47.4 years. This is a challenge to the implementation of a digital strategy since the older generation is hesitant to embrace new and innovative technological changes compared to the younger employees. The company should examine the current culture before making any major expenditure. Understand what modifications are required to guarantee that workers accept the values embodied by the digital transformation? If digital transformation isn’t in sync with the company’s culture, a drop in user acceptance and performance should be expected. Thus, should the corporate culture contradicts the attitude of digital transformation it should be modified.
Farmihispania must provide training programs focused not just on technical expertise but also on innovative behavior and attitudes to achieve a successful digital transformation. Furthermore, the company should cultivate a culture of openness, responsibility, and willingness to explore in order to reap the full commercial benefits of digital transformation within the timescales envisioned. A continual improvement culture, on the other hand, is much more favorable for timely value realization.
Change Management
The actions necessary to manage the human side of change are referred to as change management. It is all about assisting employees in adopting new technology and business procedures. As the company’s digital transformation strategy is being formulated, it is critical to determine any potential change obstacles (Hess, 2016). They will have a detrimental influence on the digital initiative until they are rectified. Developing a change management policy that outlines workplace evaluations is the best approach to mitigate this.
Employees should be aware of the precise cultural characteristics that will aid in the digital transformation’s success. This allows management to start changing the organization’s core beliefs and enforcing desired behavior. Will workers be required to be more customer-focused as a result of the transformation? Will they have to work together more with other business units? What about responsibility and involvement? Accurately describe company requirements so that everyone can join in (Mubako, 98). Communication about change management ought to be unambiguous, with room for responses and queries. Otherwise, opposition and reluctance to change are to be expected.
Development of New Performance Metrics and Incentives
It’s critical to measure benefits realized using key performance indicators (KPIs) during the execution of the digital strategy and monitor performance over the years afterward. These measures should be in line with your new company culture. For example, suppose you built a Customer Relationship Management (CRM) system while also cultivating a customer-centric culture. Lead reaction times, as well as conversion rates, are two indicators that Farmhispania should consider while evaluating staff performance. In addition, it is advocated that these KPIs be used to create incentive systems. To put it another way, Farmhispania workers ought to be rewarded anytime their participation or new ideas help the business reach the goals of digital transformation.
Workers and the Company
Farmhispania is about to go through a lot of adjustments to support the digital transformation. Certain parts of your firm, on the other hand, are unlikely to alter, and the new technology will almost certainly correlate with at least some of these current characteristics. The management should develop enthusiasm in the early stages of the project by detecting these links before the implementation of cultural changes (Hinterhuber et al., 69). Since digital transformation necessitates individuals who are prepared to take chances and embrace opportunities, this alignment has an impact on the company’s rate of digital transformation. When these principles are intertwined with the company, any new digital system introduced will help the firm achieve business objectives.
Digital Transformation Objectives
Companies frequently desire to improve their digital performance, yet their stated goals are too broad and ambiguous. To avoid this trap Farmhispania should clearly point out where it intends to go before identifying how to arrive there (Greenway et al., 47). There are five characteristics of a good digital transformation objective: exact (correct), practical (achievable), inclusive (aligned), short (memorable), and quantifiable (to monitor progress) (Echeberria, 105). It is critical to think broadly, incorporate changes, carry out tests and revise goals with a diverse group of stakeholders. Furthermore, even if you’re hesitant to do so, it’s critical to create clear goals. An example of a digital transformation objective for Farmhispania that fits the five characteristics is triple the turnover while halving energy consumption.
Conclusion
Formulation of a digital transformation strategy entails developing a long-term vision, incorporation of business objectives, goal setting, and final implementation of the strategy. To have a competitive edge, Farmhispania needs to include a robust Information System, Cloud computing, the Internet of Things, Artificial Intelligence, and machine learning. Also to be included are human resource factors such as workplace culture, change management, Key Performance Indices, and digital transformation objectives. This strategy maintains the company’s focus on its mission and the necessary change required. It is used to offer information about the business’s current position. It is a conceptual structure that aids in the comprehension of an organization’s current and future digital operating environment. A strong digital transformation strategy is critical to Farmhispania’s success. It is critical that employees are on board with these initiatives so that everyone is working toward the same goals.
References
Hinterhuber, Andreas, Tiziano Vescovi, and Francesca Checchinato. (2021) Managing Digital Transformation. Routledge.
Echeberria, Ana, Landeta. (2020) A digital framework for industry 4.0. Springer Nature.
Greenway, Andrew, Ben Terrett, Mike Bracken, and Tom Loosemore. (2018) Digital Transformation at Scale: Why the Strategy Is Delivery. London Publishing Partnership.
Lee, Jason. (2021) Digital transformation strategy of traditional companies. Viking Publishers.
Trenkle, Johannes. (2020) Digital transformation in small and medium-sized enterprises. Nomos Verlag.
Mubako, Albert. (2017) Digital transformation. The realignment of information technology and business strategies for retailers in South Africa. Anchor Academic Publishing.
Langer, Arthur, M., and Lyle Yorks. (2018) Strategic information technology. John Wiley & Sons.
Chanias, Simon, Michael D. Myers, and Thomas Hess. (2019) “Digital transformation strategy making in pre-digital organizations: The case of a financial services provider.” The Journal of Strategic Information Systems 28.1.17-33.
Chanias, Simon. (2017) “Mastering digital transformation: the path of a financial services provider towards a digital transformation strategy.” Web.
Hess, Thomas, et al. (2016) “Options for formulating a digital transformation strategy.” MIS Quarterly Executive 15.2.
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